Persistence Gold Group Ltd — Board/Management Information 2019

Oct 11, 2019

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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APAC RESOURCES LIMITED 亞太資源有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1104)

UPDATE ON REQUEST TO CALL SHAREHOLDERS MEETING OF METALS X LIMITED

We refer to our announcements dated 5 September 2019 and 2 October 2019 relating to the request by APAC Resources Strategic Holdings Limited (“ APAC Strategic ”), a wholly owned subsidiary of APAC Resources Limited (“ APAC ”), to appoint Mr. Brett Smith as a director of Metals X Limited (“ MLX ”) and to remove Mr. Peter Newton, Chairman of MLX, and Mr. Milan Jerkovic, Non-Executive Director of MLX, from their position as directors of MLX.

After APAC Strategic’s request, Mr. Jerkovic resigned as a director of MLX and it was announced that Mr. Newton intended to step down from the MLX board (“ MLX Board ”) at the next annual general meeting of MLX which will be held on 24 October 2019 (“ AGM ”). The resolution for the appointment of Mr. Smith as a director of MLX will be put to shareholders at the AGM as set out in Resolution 6 of the Notice of Meeting.

APAC is concerned about the recent developments in relation to Resolution 6 and will be sending a further letter to MLX shareholders (which is set out in full at the end of this announcement) to encourage them to vote for Resolution 6. The highlights of the letter are summarised below:

• Mr. Smith’s appointment should not be controversial. Despite Mr. Smith’s unquestionable qualifications for the proposed position as a non-executive director of MLX, the current MLX Board is opposing his appointment.

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• ASX Releases issued by MLX in relation to Resolution 6 and the Board Refresh Update distort events. The timing of the ASX Releases regarding the Board Refresh process and omission of certain information created the impression that the resignation of Mr. Jerkovic, the intention of Mr. Newton to resign at the AGM and the initiation of the Board Refresh process were unrelated to APAC Strategic’s request to change the MLX Board. MLX’s statement that Mr. Smith declined to be interviewed by MLX is incorrect and taken out of context.

• Mr. Smith satisfies all of the criteria established by the MLX Board as set out in the Board Refresh Update dated 4 October 2019. Mr. Smith squarely fits within each of the criteria identified by the MLX Board for the successful candidate. Mr. Smith will provide additional oversight and assist in reviewing the Nifty operation without the history of the Nifty acquisition and Nifty’s poor performance over the past three years. Being only one out of four directors on the MLX Board, Mr. Smith will not be in a position to enact policy without the support of additional MLX directors.

• MLX Board has obstructed the communication between APAC and the MLX shareholders in relation to Resolution 6. APAC Strategic (through its nominee Sun Hung Kai Investments Services Limited) was forced to initiate legal proceedings against MLX in the Federal Court of Australia to seek an urgent Court order for the provision of requested proxy information. By initially refusing to provide the requested information, MLX has incurred unnecessary costs to MLX (and indirectly its shareholders) and has caused unnecessary delay to the disadvantage of APAC Strategic.

• Leading independent provider of proxy research services recommends voting “FOR” Resolution 6. A leading independent provider of proxy research services has analysed information from public sources in relation to Resolution 6 and has recommended that MLX shareholders vote “FOR” Resolution 6.

APAC continues to encourage all MLX shareholders to vote “FOR” Resolution 6 at the AGM (Appointment of Mr Smith as Director) and is in the process of sending further information to the MLX shareholders supporting Resolution 6.

A letter which is being sent by APAC to MLX shareholders is set out as below.

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LETTER TO FELLOW METALS X SHAREHOLDERS

We are writing to you as a fellow shareholder in Metals X Limited (“ MLX ”) to provide you with an update on our Resolution 6 for the appointment of Mr Brett Smith as a director of MLX which will be put to shareholders at the Annual General Meeting of MLX on 24 October 2019 (“ AGM ”).

1. BRETT SMITH’S APPOINTMENT SHOULD NOT BE CONTROVERSIAL

Despite Mr Smith’s unquestionable qualifications for the proposed position as a nonexecutive director of MLX, the current MLX board (“ MLX Board ”) is opposing his appointment.

The appointment of a suitably qualified candidate nominated by a long standing major shareholder of MLX should be non-controversial. APAC Resources Limited (“ APAC ”), a strategic MLX investor since 2007 currently holds more than 15% in MLX.

The Nifty Reset Plan was adopted in May 2019 by a MLX Board that included two of MLX’s current directors who supported the Nifty acquisition in 2016 (Chairman Mr Peter Newton and Mr Simon Heggen) and one former MLX director, Mr Jerkovic (who has recently resigned).

Since MLX’s acquisition of Nifty, the following has occurred:

• MLX has consistently failed to meet Nifty production targets, including missing 2H 2017, JunQ 2018 and end of 2018 production targets by 47%, 62% and 48%, respectively;

• MLX’s market capitalisation has declined from a peak of A$740m to A$96m as at 2 September 2019;

• MLX’s share price has declined 76% from the spin-out of Westgold on 29 November 2016 through 27 August 2019, destroying significant shareholder value and underperforming relative to a peer group of ASX-listed base metals producers including OZ Minerals, Sandfire Resources, Finders Resources and Avanco Resources, which returned 10%, -7%, 36% and 129%, respectively, over that same period;

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• Nifty production has fallen by 59% in the three years that MLX has owned the mine, while cash operating costs increased 31% over that period;

• since announcing the Nifty Reset Plan in May 2019, MLX downgraded its Nifty outlook less than five months later, including reducing the FY2020 production guidance by 18%;

• MLX has been removed from the S&P/ASX 300 Index; and

• MLX has raised more than A$117m in debt and equity in the last 15 months, including a:

  • A$50m placement in July 2018;

  • A$35m debt facility announced on 29 August 2019; and

  • A$32.7m equity raising announced on 19 September 2019.

In order to restore and preserve shareholder value, new eyes are urgently required to assess whether MLX’s current targets for Nifty are realistic and whether MLX shareholders should continue to fund the operation. All options must be considered including whether the mine should be put on care and maintenance.

2. MLX’S ASX RELEASES DISTORT EVENTS

In APAC’s view, the ASX Releases issued by MLX in relation to Resolution 6 and the Board Refresh Update distort events.

• MLX has created the impression that the resignation of Mr Jerkovic, the intention of Mr Newton to resign at the AGM and the initiation of the Board Refresh process occurred independently of and were not triggered or influenced by notices given by APAC Resources Strategic Holdings Limited (“ APAC Strategic ”) requisitioning a shareholders meeting to change the board (“ Notices ”).

• The Board Refresh process appears to have been implemented as a countermeasure to APAC Strategic’s Notices. It is reactive rather than proactive.

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• Despite MLX’s statements that it would consider Mr Smith for appointment as a director as part of the Board Refresh process no real attempts were made to include Mr Smith as a candidate.

• MLX’s statement that Mr Smith “ declined to be interviewed by Metals X, making it difficult to appraise cultural fit ” is incorrect and taken out of context.[1]

3. MR SMITH SATISFIES ALL OF THE CRITERIA ESTABLISHED BY THE MLX BOARD

Mr Smith meets all of the criteria established by the MLX board as set out in the Board Refresh Update dated 4 October 2019:

• Mr Smith has relevant and recent operational experience, especially in underground mining turnaround situations:

Mr Smith has over 30 years’ experience in the minerals processing sector. Two recent examples are that as the Executive Director of Dragon Mining Limited, Mr Smith has returned the business to profitability from a A$23m loss through a restructure of management, acquisitions and the opening of two new mines and at Prodigy Gold NL, Mr Smith as Non-Executive Director, contributed to its turnaround as a successful gold explorer through restructuring the board and employing new management. Mr Smith has significant project and risk management experience together with due diligence of mineral processing and mining operations. Mr Smith has been responsible for major organisational changes involving several hundred people, and company restructuring including shutdowns.

1 Shortly after APAC Strategic served its Notices, Mr Smith was “cold called” by a person who introduced themselves as a “headhunter” and stated that Mr Smith’s name had been put forward as a director of MLX. Mr Smith thought it was inappropriate to talk to the person at that time because APAC Strategic had just sent the Notices and was waiting on a response from MLX as to whether it would support the resolutions. No request was made during the call for Mr Smith to participate in any interview and no further contact was made after that call by or on behalf of MLX with Mr Smith.

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• Mr Smith is capable of representing the interests of ALL shareholders:

Even though Mr Smith has been nominated by APAC, he is capable of acting independently and in the best interest of ALL shareholders. Mr Smith will provide additional oversight and assist in reviewing the Nifty operation without the history of the Nifty acquisition and Nifty’s poor performance over the past three years. Being only one out of four directors on the MLX Board, Mr Smith will not be in a position to enact policy without the support of additional MLX directors. APAC’s interests and the interests of ALL shareholders are aligned in that they wish to restore and preserve shareholder value by conducting an objective review of the Nifty project and its continuing underperformance.

• Mr Smith has strong director capability and experience:

Mr Smith serves on the board of a number of public and private resource companies, including as Executive Director and Deputy Chairman of APAC Resources Limited, Executive Director of Dragon Mining Limited and as a Non-Executive Director of Prodigy Gold NL and Tanami Gold NL.

• Mr Smith has financial capability and significant exposure to capital markets and corporate activities:

In addition to his chemical engineering degrees, Mr Smith holds an MBA from Henley Management College in the UK which gives him the necessary financial qualifications to perform his role as a director of a public listed company. As noted above, Mr Smith has served on the board of several public listed resources companies, including APAC Resources Limited, an established natural resources investment and commodities company listed on the Hong Kong Stock Exchange which owns strategic interests in multiple natural resource companies.

It is quite astonishing how the MLX Board (without conducting a personal interview or requesting any formal application documents) can form the view that Mr Smith does not bring the necessary qualifications and that his appointment would not be in the best interest of all MLX shareholders. As demonstrated above, Mr Smith squarely fits within each of the criteria identified by the MLX Board for the successful candidate.

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Furthermore, there is no “ misalignment of the strategic intentions of APAC Resources Limited with the Company’s objectives ” as alleged by MLX, since APAC’s strategic intentions simply are to restore and preserve shareholder value by conducting an objective review of the Nifty project and its continuing underperformance. This should be in line with the objectives of MLX and all other shareholders.

4. MLX BOARD HAS OBSTRUCTED THE COMMUNICATION BETWEEN APAC AND THE MLX SHAREHOLDERS IN RELATION TO RESOLUTION 6

Despite MLX’s statement that the MLX Board “ respects the right of shareholders to put forward resolutions and to express their views ”, the MLX Board has obstructed the communication between APAC and the MLX shareholders in relation to Resolution 6.

In particular, on 2 October 2019 APAC Strategic requested certain proxy information from MLX in order to enable it to lobby MLX shareholders and proxyholders in relation to Resolution 6. However, MLX refused to provide the requested information on the basis that APAC Strategic had not given sufficient information to demonstrate a personal interest, despite MLX being aware of all of the relevant facts. APAC Strategic (through its nominee Sun Hung Kai Investments Services Limited) was forced to initiate legal proceedings against MLX in the Federal Court of Australia seeking an urgent Court order for the provision of the requested proxy information. Once the application was filed in Court, MLX reassessed its position and agreed to provide certain proxy information to APAC Strategic.

By initially refusing to provide the requested information, MLX has incurred unnecessary costs to MLX (and indirectly its shareholders) and has caused unnecessary delay to the disadvantage of APAC Strategic.

5. LEADING INDEPENDENT PROVIDER OF PROXY RESEARCH SERVICES RECOMMENDS VOTING “FOR” RESOLUTION 6

A leading independent provider of proxy research services has analysed information gathered from public sources in relation to Resolution 6 and has recommended that MLX shareholders vote “FOR” Resolution 6.

6. VOTE FOR RESOLUTION 6

APAC continues to encourage all MLX shareholders to vote “FOR” Resolution 6 (Appointment of Mr Brett Smith as a Director) at the AGM on 24 October 2019. If you should not be able to attend the AGM in person, we encourage you to submit your Proxy Form and to direct your proxy to vote “FOR” Resolution 6 by marking that box. DO NOT GIVE AN UNDIRECTED PROXY.

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By Order of the Board APAC Resources Limited Andrew Ferguson Executive Director

Hong Kong, 10 October 2019

As at the date of this announcement, the directors of APAC are:

Executive Directors

Mr. Brett Robert Smith (Deputy Chairman) and Mr. Andrew Ferguson (Chief Executive Officer)

Non-Executive Directors

Mr. Arthur George Dew (Chairman) (Mr. Wong Tai Chun, Mark as his alternate) , Mr. Lee Seng Hui and Mr. So Kwok Hoo

Independent Non-Executive Directors

Dr. Wong Wing Kuen, Albert, Mr. Chang Chu Fai, Johnson Francis, Mr. Robert Moyse Willcocks and Mr. Wang Hongqian

• For identification purpose only

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