Persistence Gold Group Ltd — Capital/Financing Update 2007

Jul 8, 2007

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.

APAC RESOURCES LIMITED

*

(Incorporated in Bermuda with limited liability) (Stock code: 1104)

(1) PLACING OF NEW SHARES AND (2) RESUMPTION OF TRADING

Placing of new Shares

On 4th July, 2007, the Placing Agreement was executed, pursuant to which the Company has agreed to place, through the Joint Placing Agents and on a best efforts basis, 665,000,000 new Shares to independent investors at a price of HK$1.29 per Share.

The Placing Shares represent approximately 19.80 per cent. of the issued share capital of the Company as at the date of this announcement and approximately 16.53 per cent. of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares.

The Placing is conditional upon the Stock Exchange granting the listing of and permission to deal in the Placing Shares. The Placing is conditional and may or may not proceed. Accordingly, shareholders and prospective investors are reminded to exercise extreme caution when trading in the Shares and Warrants.

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Net proceeds and gross proceeds from the Placing of approximately HK$831,250,000 and HK$857,850,000 respectively (being a net placing price of approximately HK$1.25 per Share) will be applied (i) approximately HK$781,250,000 for further investments in the resources industry and acquisition in shares in listed companies; and (ii) approximately HK$50,000,000 for general working capital of the Group. The Company had not identified any investments in the resources industry in relation to the use of such proceeds as at the date of this announcement. Immediately following completion of the Placing, the beneficial interest of Profit Harbour, Ms. Chong and Shougang in the issued share capital of the Company will be reduced from approximately 14.69, 20.08 and 23.82 per cent. to approximately 12.26, 16.76 and 19.88 per cent. respectively.

Resumption of trading

At the request of the Company, trading in the Shares and Warrants on the Stock Exchange was suspended with effect from 9:30 a.m. on 4th July, 2007 pending the release of this announcement. The Company has applied for the resumption of trading in the Shares and Warrants with effect from 9:30 a.m. on 9th July, 2007.

PLACING OF 665,000,000 NEW SHARES

Placing Agreement dated 4th July, 2007 made between the Company and the Joint Placing Agents

Issuer:

The Company.

Number of Placing 665,000,000 new Shares to be placed, representing Shares: approximately 19.80 per cent. of the issued share capital of the Company as at the date of this announcement and approximately 16.53 per cent. of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares.

Under the Placing Agreement, the Joint Placing Agents have agreed to be appointed as joint placing agents to procure, on a best efforts basis, subscribers for the Placing Shares.

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Placing price:

HK$1.29 per Placing Share, which was agreed after arm’s length negotiations by reference to historical performance of the prices of the Shares and represents:-

• (i) a discount of approximately 12.24 per cent. to the closing price of HK$1.47 per Share as quoted on the Stock Exchange on the last trading day of the Shares immediately before the date of this announcement;

• (ii) a discount of approximately 4.44 per cent. to the average closing price of HK$1.35 per Share as quoted on the Stock Exchange for the last five trading days of the Shares immediately before the date of this announcement;

• (iii) a discount of approximately 3.00 per cent. to the average closing price of HK$1.33 per Share as quoted on the Stock Exchange for the last ten trading days of the Shares immediately before the date of this announcement; and

• (iv) a premium of approximately 1,152 per cent. over the net asset value of HK$0.103 per Share as stated in the audited consolidated accounts of the Company for the year ended 31st December, 2006.

Joint Placing Agents:

The Joint Placing Agents and their ultimate owners are all:-

• (i) independent of, and not acting in concert with, any shareholder of the Company and parties acting in concert with it; and

• (ii) independent third parties not connected with the Company or its subsidiaries or any of their respective associates, or any of the connected persons of the Company or its subsidiaries or any of their respective associates.

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Placing commission:

Placees:

The Joint Placing Agents will receive a placing commission of two per cent. on the gross proceeds of the Placing. The placing commission is arrived at after arm’s length negotiations between the Company and the Joint Placing Agents. SHKIL will receive a management fee of one per cent. on the gross proceeds of the Placing.

The Placing Shares will be placed to not less than six placees (which intends to include various PRC steelmills enterprises, corporate or institutional investors, individual or a combination of them).

The Joint Placing Agents agreed to procure that Placees and their respective ultimate owners are all:-

• (i) independent of, and not acting in concert with, any shareholder of the Company and parties acting in concert with it; and

• (ii) independent third parties not connected with the Company or its subsidiaries or any of their respective associates, or any of the connected persons of the Company or its subsidiaries or any of their respective associates.

None of such placees is expected to become a substantial shareholder (within the meaning of the Listing Rules) of the Company as a result of the Placing.

General Mandate:

Ranking of Placing Shares:

The Subscription Shares will be issued pursuant to the general mandate to allot, issue and deal with Shares granted to the Directors by resolution of its shareholders passed at the annual general meeting held on 25th May, 2007, which authorised the Directors to allot and issue a maximum of 665,141,832 Shares. As at the date of this announcement, no Shares has been issued under the general mandate.

The Placing Shares will rank equally with Shares in issue at the time of allotment and issue of the Placing Shares.

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Use of Proceeds:

• Net proceeds and gross proceeds from the Placing of approximately HK$831,250,000 and HK$857,850,000 respectively (being a net placing price of approximately HK$1.25 per Share) will be applied (i) approximately HK$781,250,000 for further investments in the resources industry and acquisition in shares in listed companies; and (ii) approximately HK$50,000,000 for general working capital of the Group. The Company had not identified any investments in relation to the use of such proceeds as at the date of this announcement.

Condition:

• The Placing is conditional upon the Stock Exchange granting listing of and permission to deal in the Placing Shares.

• The above condition cannot be waived. If the condition sets out above is not fulfilled on or before 25th July, 2007 (or such later date as may be agreed by the Company and the Joint Placing Agents), the Placing Agreement will terminate, upon which the parties shall not have any claim against the other for costs, damages, compensation or otherwise.

Completion:

• The fourth business day after the day on which the condition sets out above is satisfied, or such later date as may be agreed by the Company and the Joint Placing Agents in writing.

Application will be made to the Stock Exchange to grant the listing of and permission to deal in the Placing Shares.

The Placing is conditional and may or may not proceed. Accordingly, shareholders and prospective investors are reminded to exercise extreme caution when trading in the Shares and Warrants.

Costs and expenses

Subject to completion of the Placing, the Company will bear the costs and expenses (excluding placing commission) in connection with the Placing, which are estimated to be not more than approximately HK$400,000.

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EFFECT OF THE PLACING

The shareholding structure of the Company immediately before completion of the Placing and immediately after completion of the Placing are and will be as follows:-

	Approximate shareholding percentage	Approximate shareholding percentage
	in the Company (Note 4)
	Immediately	Immediately
	before completion	after completion
Name	of the Placing	of the Placing
Profit Harbour Investments	14.69%	12.26%
Limited (“Profit Harbour”)	(493,399,602 Shares)	(493,399,602 Shares)
(Note 1)
Shougang Holding (Hong Kong)	23.82%	19.88%
Limited (“Shougang”) (Note 2)	(800,000,000 Shares)	(800,000,000 Shares)
Ms. Chong Sok Un (“Ms. Chong”)	20.08%	16.76%
(Note 3)	(674,400,000 Shares)	(674,400,000 Shares)
Placees	—	16.53%
		(665,000,000 Shares)
Public	41.41%	34.57%
	(1,391,261,561 Shares)	(1,391,261,561 Shares)
Total	100.00%	100.00%

Notes:

1. The entire issued share capital of Profit Harbour is owned by Mr. Yue Jialin.

2. This represented an interest in 600,000,000 and 200,000,000 Shares held by Benefit Rich Limited and Easymade Investments Limited respectively, both of which are wholly-owned subsidiaries of Shougang.

3. This represented an interest in 674,400,000 Shares held by Sparkling Summer Limited, which is an indirectly owned subsidiary of COL Capital Limited (“COL”). COL is 38.49 per cent. owned by Vigor Online Offshore Limited which in turn is a wholly-owned subsidiary of China Spirit Limited in which Ms. Chong maintains 100% beneficial interest.

4. The figures assume that other than the Placing Shares, no new Shares are issued or purchased by the Company after the date of this announcement and up to the date of completion of the Placing.

Immediately following completion of the Placing, the beneficial interest of Profit Harbour, Ms. Chong and Shougang in the issued share capital of the Company will be reduced from approximately 14.69, 20.08 and 23.82 per cent. to approximately 12.26, 16.76 and 19.88 per cent. respectively.

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INFORMATION ABOUT THE GROUP

The Company is a company incorporated in Bermuda with limited liability. Its securities are listed on the Main Board of the Stock Exchange.

The Group is principally engaged in (i) trading in base metals and commodities trading portfolio primarily focused on natural resources and related sectors; and (ii) trading in fabric products and other merchandises with investment in the resources and related industries and listed securities as trading portfolio.

REASONS FOR AND BENEFITS OF THE PLACING

In view of current market conditions, the Directors consider that the Placing represents a good opportunity to raise further capital for the Company while at the same time broadening its shareholders base to include steelmills enterprises in the PRC and capital base.

Net proceeds and gross proceeds from the Placing of approximately HK$831,250,000 and HK$857,850,000 respectively (being a net placing price of approximately HK$1.25 per Share) will be applied (i) approximately HK$781,250,000 for further investments in the resources industry and acquisition in shares in listed companies; and (ii) approximately HK$50,000,000 for general working capital of the Group. The Company had not identified any investments in relation to the use of such proceeds as at the date of this announcement.

The price of the Placing Shares is arrived at after arm’s length negotiation between the Joint Placing Agents and the Company and with reference to the market price of the Shares traded on the Stock Exchange. The Directors believe that the terms of the Placing Agreement are fair and reasonable and are in the interests of the shareholders of the Company taken as a whole.

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FUND RAISING ACTIVITIES IN THE PAST 12 MONTHS PRIOR TO THE DATE OF THIS ANNOUNCEMENT

The following table summaries the fund raising activities of the Company for the 12 months prior to the date of this announcement:-

					Net proceeds not
					yet used as at the
	Fund raising	Net proceeds	Proposed use	Actual use	date of this
Date of announcement	event	raised	of net proceeds	of net proceeds	announcement
11 May 2006	First rights	Approximately	Approximately	Approximately
	issue	HK$81,000,000	HK$25,000,000 to	HK$16,000,000 has
			invest in fabric and	been used in the
			other merchandises	fabric and other
			trading business	merchandises
				trading (including
				HK$8,000,000
				increase in pledge
				bank deposit for
				obtaining bank
				facilities)
				Approximately
				HK$9,000,000 has
				been used as a
				pledge deposit to
				the bank for
				facilitating fabric
				and other
				merchandises
				trading of the
				Company
			Approximately	HK$20,000,000 has
			HK$20,000,000 to	been used as
			invest in base	deposit for the
			metal trading	acquisition of
			business	48,373,197
				ordinary shares
				(“MG Shares”) in
				the issued share
				capital of Mount
				Gibson Iron
				Limited
			Approximately	Approximately
			HK$36,000,000	HK$26,000,000 has
			reserved as general	been used for the
			working capital	acquisition of
				shares in Aztec
				Resources Limited
				(“Aztec”) as a
				stock in its trading
				portfolio

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					Net proceeds not
					yet used as at the
	Fund raising	Net proceeds	Proposed use	Actual use	date of this
Date of announcement	event	raised	of net proceeds	of net proceeds	announcement
				Approximately
				HK$3,000,000 has
				been used for the
				acquisitions of
				stocks listed on the
				Stock Exchange as
				stocks in its
				trading portfolio
				Approximately
				HK$2,500,000 has
				been used to settle
				outstanding
				payables before the
				first rights issue
				and expenses
				incurred in the
				second half of
				2006
				Approximately
				HK$4,500,000 has
				been used for the
				operational
				expenses of the
				Company
9 November 2006	Second rights	Approximately	Approximately	Approximately
	issue	HK$375,526,000	HK$224,475,000	HK$224,475,000
			will be used to pay	has been used to
			for the balance of	pay for the balance
			consideration of	of consideration of
			acquiring	acquiring
			48,373,197 MG	48,373,197 MG
			Shares	Shares

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					Net proceeds not
					yet used as at the
	Fund raising	Net proceeds	Proposed use	Actual use	date of this
Date of announcement	event	raised	of net proceeds	of net proceeds	announcement
			HK$20,000,000	HK$2,000,000 has	HK$18,000,000 has
			will be returned to	been used for the	been reserved as
			the Company’s	operational	base metal trading
			account, previously	expenses of the	deposited in the
			used as the deposit	Company	bank
			paid in respect of
			acquiring
			48,373,197 MG
			Shares, to recover
			the same amount of
			money which has
			been previously
			reserved for base
			metal trading in
			the first rights
			issue of the
			Company
			Approximately	Approximately
			HK$1,526,000 will	HK$781,000 has
			be spent for the	been used to pay
			professional fees	professional fee
			and expenses in	and expenses in
			relation to the	relation to the
			second rights issue	second rights issue
			Approximately	Approximately
			HK$129,525,000	HK$40,971,000 has
			will be used by the	been used to pay
			Company to	deposit for the
			acquire further	acquisition (the
			investment	“Acquisition”) of
			interests in the	the 19,754,646 MG
			resources industry	Shares and
				approximately
				HK$89,299,000
				was used to reduce
				margin financing of
				the Company in
				acquiring MG
				Shares
9 November 2006	placing of new	Approximately	Approximately	Approximately
	Shares	HK$230,400,000	HK$900,000 will	HK$592,000 has
			be used to pay	been used to pay
			professional fees	the professional fee
			and expenses in	and expenses in
			relation to placing	relation to placing
			of new Shares	of new Shares

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								Net proceeds not
								yet used as at the
			**Fund **	raising	Net proceeds	Proposed use	Actual use	date of this
**Date **	**of **	announcement	event		raised	of net proceeds	of net proceeds	announcement
						Approximately	Approximately
						HK$229,500,000	HK$61,457,000 has
						will be applied by	been used to pay
						the Group to fund	the balance of the
						new investments	Acquisition and
						and acquisitions in	HK$168,351,000
						the future as and	has been used to
						when opportunities	acquire shares in
						arise and for	Australasian
						general working	Resources Limited
						capital purposes	as long term
							investment

RESUMPTION OF TRADING

At the request of the Company, trading in the Shares and Warrants on the Stock Exchange was suspended with effect from 9:30 a.m. on 4th July, 2007 pending the release of this announcement. The Company has applied for the resumption of trading in the Shares and Warrants with effect from 9:30 a.m. on 9th July, 2007.

DIRECTORS

As at the date of this announcement, the Directors are:-

Executive Directors:

Mr. Cao Zhong ( Chairman ), Mr. Lau Yau Cheung ( Chief Executive Officer ), Ms. Chong Sok Un and Mr. Yue Jialin

Non-executive Directors:

Mr. Liu Yongshun, Mr. Zhou Luyong and Mr. Chen Zhaoqiang

Independent non-executive Directors:

Mr. Chang Chu Fai, Johnson Francis, Mr. Wong Wing Kuen, Albert, Mr. Tsui Robert Che Kwong, and Mr. Yang Weiming

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DEFINITIONS

“associates”

• having the meaning ascribed to it under the Listing Rules

• “Company”

• APAC Resources Limited, a company incorporated in Bermuda with limited liability, with its shares listed on the Main Board of the Stock Exchange

• “Directors” directors of the Company

• “Group” the Company and its subsidiaries

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “Joint Placing Agents” SHKIL and 3V Capital

• “Listing Rules” Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

• “Placing” the placing of the Placing Shares pursuant to the Placing Agreement

• “Placing Agreement” the placing agreement dated 4th July, 2007 made between the Company and the Joint Placing Agents in relation to the Placing

• “Placing Shares” 665,000,000 new Shares

• “PRC” People’s Republic of China

• “SHKIL” Sun Hung Kai International Limited, a licensed corporation to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activity under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), which is not a connected person (as defined in the Listing Rules) of the Company

• “Shares” ordinary shares of nominal value of HK$0.10 each in the issued share capital of the Company

• “Stock Exchange”

• The Stock Exchange of Hong Kong Limited

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“Warrants”

• warrants of the Company entitle the holders thereof to subscribe at any time during the period from 5th February, 2007 to 4th February, 2010 (both days inclusive) for fully paid Shares at an initial subscription price of HK$0.30 per Share (subject to adjustments)

• “3V Capital”

• 3V Capital Limited, a licensed person registered under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) to engage in Type 1 (dealing in securities) and Type 4 (advising on securities) activities

On behalf of the Board APAC RESOURCES LIMITED Cao Zhong Chairman

Hong Kong, 6th July, 2007

• For identification purpose only

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