Persistence Gold Group Ltd — Capital/Financing Update 2007

Mar 23, 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 the Bermuda with limited liability)

(Stock code: 1104)

DISCLOSEABLE TRANSACTION AND

RESUMPTION OF TRADING IN THE SHARES AND THE WARRANTS

SUBSCRIPTION OF 28,000,000 ORDINARY SHARES AND 14,000,000 OPTIONS IN AUSTRALASIAN RESOURCES LTD

On 20 March 2007, the Company and ARH entered into the Conditional Subscription Agreement in respect of (i) the subscription of 28,000,000 ARH Shares at A$1.00 per ARH Share, at an aggregate consideration of A$28,000,000 (equivalent to approximately HK$174,846,000 at an exchange rate of approximately A$1.00 to HK$6.2445), representing approximately 7.29% interest in the existing issued share capital of ARH as at 22 March 2007 and approximately 6.80% interest in the issued share capital of ARH as enlarged by the issuance of 28,000,000 ARH Shares, and (ii) the grant of 14,000,000 ARH Options exercisable over the same number of 14,000,000 ARH Shares at nil consideration at an exercise price of A$1.50 per ARH Share for each ARH Option within a period of three years after the date of Completion, representing approximately 3.65% interest in the existing issued share capital of ARH as at 22 March 2007 when all the 14,000,000 ARH Options are exercised in full for the 14,000,000 ARH Shares and approximately 3.29% interest in the issued share capital of ARH as enlarged by the issuance of the 28,000,000 ARH Shares and 14,000,000 ARH Shares which fall to be issued when all the 14,000,000 ARH Options are exercised in full. Upon the Completion, the Company has the right to nominate and appoint a director of ARH.

Completion of the Conditional Subscription Agreement is conditional upon the fulfillment of a condition precedent.

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LISTING RULES IMPLICATIONS

The Conditional Subscription constitutes a discloseable transaction for the Company under the Listing Rules on the basis that the calculation of the consideration ratio for the Company is within the range of 5% and 25%. The taking of the 14,000,000 ARH Options does not constitute a transaction for the Company under the Listing Rules, and is therefore not subject to the requirements thereunder. A circular of the Company containing, amongst other things, details of the Conditional Subscription Agreement will be despatched to the Shareholders as soon as practicable.

The Company will comply with the relevant requirements of the Listing Rules upon the exercise, transfer or expiry of the ARH Options.

SUSPENSION AND RESUMPTION OF TRADING

At the request of the Company, trading in the Shares and the Warrants were suspended with effect from 2:30 p.m. on 20 March 2007 pending the release of this announcement. An application has been made by the Company to the Stock Exchange for resumption of trading in the Shares and the Warrants with effect from 9:30 a.m. on 23 March 2007.

THE CONDITIONAL SUBSCRIPTION AGREEMENT

Date

20 March 2007.

Parties

• (1) Australasian Resources Limited.

• (2) The Company as subscriber.

To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, ARH and its ultimate owners are independent third parties not connected with the Company, any of its subsidiaries or any of their respective associates, or any of the connected persons of the Company, any of its subsidiaries or any of their respective associates.

The 28,000,000 ARH Shares to be subscribed

Pursuant to Conditional Subscription Agreement, the Company or its wholly-owned subsidiary as nominee shall subscribe and ARH shall allot and issue 28,000,000 ARH Shares at A$1.00 per ARH Share, at an aggregate consideration of A$28,000,000 (equivalent to approximately HK$174,846,000 at an exchange rate of approximately A$1.00 to HK$6.2445), representing approximately 7.29% interest in the existing issued share capital of ARH as at 22 March 2007 and approximately 6.80% interest in the issued share capital of ARH as enlarged by the issuance of the 28,000,000 ARH Shares but before the issuance of any ARH Shares which fall to be issued upon exercise of any ARH Options. Upon the Completion, the Company has the right to nominate and appoint a director of ARH.

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The 14,000,000 ARH Options to be subscribed

Pursuant to Conditional Subscription Agreement, ARH shall grant 14,000,000 ARH Options to the Company at nil consideration exercisable over the same number of 14,000,000 ARH Shares, representing approximately 3.65% interest in the existing issued share capital of ARH as at 22 March 2007 when all the 14,000,000 ARH Options are exercised in full for the 14,000,000 ARH Shares and approximately 3.29% interest in the issued share capital of ARH as enlarged by the issuance of the 28,000,000 ARH Shares and 14,000,000 ARH Shares which fall to be issued when all the ARH Options are exercised in full.

Entitlement

Each ARH Option entitles the Company to subscribe for one fully paid ARH Share.

Issue Price

No amount is payable on each ARH Option.

Exercise Price

The exercise price of each ARH Option is A$1.50 per ARH Share.

ARH Option Period

The 14,000,000 ARH Options are exercisable (in whole or in part by multiples of 500 ARH Options) at any time at the discretion of the Company within three years after the date of the issue of the ARH Options, i.e. the date of Completion, failing which, the outstanding ARH Options over the ARH Shares will lapse.

Transferability of the ARH Option

The ARH Option may be transferred by an instrument of transfer acceptable to ARH to a related body corporate of the Company but otherwise may not be sold, assigned, transferred or otherwise dealt with in any way.

Consideration

The aggregate consideration payable by the Company for the Conditional Subscription of 28,000,000 ARH Shares shall be A$28,000,000 (equivalent to approximately HK$174,846,000 at an exchange rate of approximately A$1.00 to HK$6.2445), i.e. A$1.00 per ARH Share.

The Company shall pay the consideration in cash to a deposit account held by ARH within 5 Business Days after the date of the Conditional Subscription Agreement. Pending the Completion, ARH shall hold the consideration as stakeholder. If the Conditional Acquisition Agreement is terminated for any reason and the Completion does not occur, the consideration together with interest accrued shall be refunded to the Company.

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The consideration is arrived at after arm’s length negotiation between the Company and ARH and with reference to the price of ARH Shares (i.e. A$0.115 per ARH Share) on the last trading day (i.e. 14 December 2006) traded on the Australian Stock Exchange and the theoretical price of ARH Shares at A$1.15 per ARH Share as a result of of every ten ARH Shares for one ARH Share consolidation taken effect on 19 December 2006.

The consideration of the 28,000,000 ARH Shares at A$1.00 per ARH Share represents:

• (i) a discount of approximately 4.40% to the average closing price of the ARH Share (i.e. A$1.046 per ARH Share after share consolidation adjustment) quoted on the Australian Stock Exchange on the last 5 full trading days up to and including 14 December 2006; and

• (ii) a discount of approximately 13.04% to the closing price of the ARH Share (i.e. A$1.15 per ARH Share after share consolidation adjustment) quoted on the Australian Stock Exchange on 14 December 2006.

The exercise price for each of the 14,000,000 ARH Options at A$1.50 per ARH Share represents:

• (i) a premium of approximately 43.40% over the average closing price of the ARH Share (i.e. A$1.046 per ARH Share after share consolidation adjustment) quoted on the Australian Stock Exchange on the last 5 full trading days up to and including 14 December 2006; and

• (ii) a premium of approximately 30.43% over the closing price of the ARH Share (i.e. A$1.15 per ARH Share after share consolidation adjustment) quoted on the Australian Stock Exchange on 14 December 2006.

Condition precedent

Completion of the Conditional Subscription Agreement is conditional upon the satisfaction of the Australian Stock Exchange notifying ARH in writing that the ARH Shares will be re-instated to official quotation on the Australian Stock Exchange subject only to the Completion occurring.

Completion

Subject to the satisfaction of the condition precedent as aforesaid, the Completion shall take place on the 5th Business Day before the ARH Shares are reinstated to official quotation on the Australian Stock Exchange. On the Completion, ARH shall allot and issue the 28,000,000 ARH Shares and grant the 14,000,000 ARH Options to the Company.

According to the Conditional Subscription Agreement, if the above condition is not satisfied or waived by the Company on or before 30 June 2007 (or such later date as may be agreed between the parties in writing), all rights and obligations under the Conditional Subscription Agreement shall be terminated. The Company will not waive the above condition.

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After the Completion, the Company shall hold:

• (i) 28,000,000 ARH Shares representing approximately 6.80% interest in the issued share capital of ARH as enlarged by the issuance of the 28,000,000 ARH Shares but before the issuance of any ARH Shares which fall to be issued upon exercise of any ARH Options; and

• (ii) 14,000,000 ARH Options, representing approximately 3.29% interest in the issued share capital of ARH as enlarged by the issuance of the 28,000,000 ARH Shares and 14,000,000 ARH Shares which fall to be issued when all the 14,000,000 ARH Options are exercised in full.

After the Completion where the Company has subscribed for the 28,000,000 ARH Shares and assuming the Company exercises in full all the 14,000,000 ARH Options for 14,000,000 ARH Shares, the Company shall hold approximately 9.86% interest in the issued share capital of ARH as enlarged by the issuance of the 28,000,000 ARH Shares and 14,000,000 ARH Shares which fall to be issued when all the 14,000,000 ARH Options are exercised in full.

All the ARH Shares shall be held by the Group for strategic investment purpose and will be classified in the accounts as Available for Sale Financial Assets as defined under HKAS39 issued by the HKICPA.

Source of funding

The payment of the consideration for the Conditional Subscription will be financed by short-term borrowings from a stock-broking firm in Hong Kong.

INFORMATION ON ARH

ARH is a company incorporated in Australia with limited liability whose shares are listed on the Australian Stock Exchange since 7 June 1984.

The principal activity of ARH is mineral exploration. According to the directors’ report of ARH contained in its annual report 2006, ARH pursued major energy and iron ore projects which have the potential to capitalise on opportunities from the developing economies of China, India and other emerging Asian nations. With reference to the information posted on the website of ARH, the recent development of ARH includes (i) the Balmoral South Iron Ore Project in respect of acquiring the right to mine 1,000,000,000 (1 billion) tonnes of magnetite ore from part of the Balmoral South Project, situated in the Pilbara region of Western Australia; and (ii) the Sherlock Bay Nickel Project, situated in the West Pilbara region of Western Australia, in respect of exploiting the nickel sulphide deposit contained in that project area.

On 14 December 2006, ARH requested and the Australian Stock Exchange granted a trading halt and on 15 December 2006, ARH Shares were suspended from quotation. ARH requested the trading halt pending the outcome of the ARH annual general meeting (the “Meeting”) which was held on 15 December 2006. The Meeting was convened to consider the resolutions and explanatory materials contained in the respective notice of the Meeting (the “Notice”). The shareholders of ARH resolved in the Meeting, amongst other things, the acquisition of

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International Minerals. The Notice explained that the acquisition of International Minerals would result in a change in the nature and scale of activities of ARH and that ARH was exploring several funding alternatives in this regard. To be re-quoted (i.e. resume trading on the Australian Stock Exchange), ARH needs to demonstrate that it has the capital to fund the change in the nature and scale of its activities. The Company’s investments by the Conditional Subscription contribute towards the funding of ARH.

The trading of the ARH Shares on the Australian Stock Exchange has been suspended since 14 December 2006. The price of each ARH Share on the last trading day (i.e. 14 December 2006) traded on the Australian Stock Exchange was A$0.115 per ARH Share. After a share consolidation of ARH for every ten ARH Shares for one ARH Share being taken place on 19 December 2006, the theoretical price of each ARH Share was A$1.15 per ARH Share.

The audited financial information of ARH for the two years ended 30 June 2006 and 2005 are as follows:

		Year ended		Year ended
		30 June 2006	30 June 2005
		Audited		Audited
		A$		A$
Net	assets value	18,266,665		3,074,479
Net	loss before taxation and minority interest	(11,598,978)		(4,431,521)
Net	loss after taxation and minority interest	(11,598,978)		(4,431,521)

The Company confirmed that no dividends had been paid or declared and no recommendation had been made as to dividends for the past two years for ARH.

INFORMATION ON THE COMPANY

The Company is incorporated as an exempted company with limited liability in Bermuda under the Companies Act 1981 of Bermuda (as amended). Its securities are listed on 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, investment in the resources and related industries, and listed securities as trading portfolio.

REASONS FOR AND BENEFITS OF THE CONDITIONAL SUBSCRIPTION

The Company sought (as disclosed in the Previous Circular) and will continue to seek to become a significant natural resources trading and investment company through the identification, evaluation and acquisition of strategic interests in quality natural resource assets (either indirectly through investment in, and support of, resource corporations or by direct investment in mineral projects) as a means to build an extensive portfolio of long term cash generating investments so as to enhance the Company’s value in the context of natural resource industry consolidation and rationalization where it believes value can be maximized

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for all concerned stakeholders. The Company has still been (as disclosed in the Previous Circular) on the lookout for good investment opportunities to maximize return for the Shareholders. It has always been the intention of the Company to seek to lock in the supply of iron ore materials and to trade in such materials for higher profit.

The Conditional Subscription is consistent with the Company’s strategy of exploring geographic regions and commodity markets which it believes present attractive opportunities and where rationalization and consolidation is likely to occur. The Conditional Subscription is anticipated to produce higher return on asset with increase in profit and value of the Company to the benefit of the Shareholders as a whole.

In view of current market conditions, the Directors consider that the Conditional Subscription represents a good opportunity for the Company to further increase its investment in the Australian resources sector upon which to build a significant investment and commodities trading company primarily focused on the natural resources and related sectors.

The Company, International Minerals and ARH have entered into a commission agreement on 20 March 2007 which set out the intention of the parties for the Company to procure the relevant buyer(s) the signing of certain offtake agreements for the sale of iron ore products (including iron ore concentrate, iron ore pellets and hot briquetted iron) produced by International Minerals in return for a commission of US$1.00 per dry tonne of iron ore products to the Company.

The Company has been advised by ARH of its right to mine 1 billion tonnes of magnetite irone ore from Susan Palmer deposit within the larger Balmoral deposits in Pilbara region of Western Australia. ARH has announced a 346 million tonnes ore reserve estimate in accordance with JORC guidelines. The actual output remains uncertain at the moment, but the current proposed development plan of ARH involves the production and export as final products of 5 million tonnes of iron ore concentrate, 5 million tonnes of iron ore pellets and approximately 1.5 million tonnes of hot briquetted iron. The implementation of the detailed arrangements under the commission agreement depends therefore on the development plan of ARH, which may or may not materialise. In the event such development plan of ARH materialises, the Company may receive commission only on the basis that it successfully procures the relevant buyer(s) the signing of the relevant offtake agreement(s).

The commission agreement is consistent with the Company’s strategy of exploring geographic regions and commodity markets, and the procurement of signing the offtake agreements, if successfully implemented, will enable the Company to generate income and cash flow from the Company’s investment and trading activities in the resource sector in the near future.

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Having regard to the nature of and the benefits resulting from the Conditional Subscription and the commission agreement, the Directors believe that the Conditional Subscription is fair and reasonable and in the interests of the Shareholders taken as a whole.

LISTING RULES IMPLICATIONS

The Conditional Subscription constitutes a discloseable transaction for the Company under the Listing Rules on the basis that the calculation of the consideration ratio for the Company is within the range of 5% and 25%. The taking of the 14,000,000 ARH Options does not constitute a transaction for the Company under the Listing Rules, and is therefore not subject to the requirements thereunder. A circular of the Company containing, amongst other things, details of the Conditional Subscription Agreement will be despatched to the Shareholders as soon as practicable.

The Company will comply with the relevant requirements of the Listing Rules upon the exercise, transfer or expiry of the ARH Options.

SUSPENSION AND RESUMPTION OF TRADING

At the request of the Company, trading in the Shares and the Warrants were suspended with effect from 2:30 p.m. on 20 March 2007 pending the release of this announcement. An application has been made by the Company to the Stock Exchange for resumption of trading in the Shares and the Warrants with effect from 9:30 a.m. on 23 March 2007.

DEFINITIONS

“A$” Australian dollars, the lawful currency of Australia “ARH” Australasian Resources Limited (A.C.N. 008 942 809), a company incorporated under the laws of Australia with limited liability, the shares of which are listed on the Australian Stock Exchange and having 383,838,092 ordinary fully paid shares in issued as at the date of this announcement “ARH Options” the options granted by ARH to the Company under the Conditional Subscription Agreement “ARH Shares” the ordinary shares in the issued share capital of ARH “associates” having the meaning ascribed to it in the Listing Rules “Australian Stock The Australian Stock Exchange Limited Exchange”

“Company” APAC Resources Limited, a company incorporated in Bermuda with limited liability, with its securities listed on the Stock Exchange

“Completion” the completion of the Conditional Subscription Agreement pursuant to the terms and conditions stipulated thereunder

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“Conditional the conditional subscription of 28,000,000 ARH Shares and Subscription” 14,000,000 ARH Options by the Company pursuant to the terms and conditions of the Conditional Subscription Agreement

• “Conditional Subscription the conditional share and option subscription agreement Agreement” dated 20 March 2007 entered into between the Company and ARH relating to the subscription of 28,000,000 ARH Shares and 14,000,000 ARH Options

• “Directors”

the directors 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 People’s Republic of China;

• “HKAS” Hong Kong Accounting Standards issued by the HKICPA “HKICPA” Hong Kong Institute of Certified Public Accountants

• “International Minerals” International Minerals Pty Limited (A.C.N 058 341 638), a company incorporated under the laws of Australia with limited liability and a wholly-owned subsidiary of ARH

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

• “Previous Circular” the circular dated 19 March 2007 of the Company in respect of, amongst other things, a major transaction and a very substantial acquisition and connected transaction for the Company relating to the acquisition of shares in Mount Gibson Iron Limited

• “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Shareholders” shareholders of the Company

• “Share(s)” ordinary share(s) of HK$0.10 each in the issued share capital of the Company

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “US$” United States dollars, the lawful currency of the United States of Amercia

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“Warrants”

251,795,622 warrants of the Company listed on the Stock Exchange

By Order of the Board APAC RESOURCES LIMITED Yue Jialin Chairman

Hong Kong, 22 March 2007

As at the date of this announcement, the board of Directors comprises Mr. Yue Jialin (Chairman), Mr. Lau Yau Cheung (Chief Executive Officer), Mr. Michael Joseph Bogue being the executive Directors and Mr. Wong Wing Kuen, Albert, Mr. Tsui Robert Che Kwong and Mr. Yang Weiming being the independent non-executive Directors.

• For identification purpose only

Please also refer to the published version of this announcement in The Standard.

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