Persistence Gold Group Ltd — Interim / Quarterly Report 2009

Sep 28, 2009

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Interim Report 2009

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• For identification purpose only

APAC Resources Limited

CONTENTS

Corporate Information	2
Condensed Consolidated Income Statement	3
Condensed Consolidated Statement of Comprehensive Income	5
Condensed Consolidated Statement of Financial Position	6
Condensed Consolidated Statement of Changes in Equity	7
Condensed Consolidated Statement of Cash Flows	8
Notes to the Condensed Financial Statements	9
Independent Review Report	24
Management Discussion and Analysis	26
Other Information	30

Interim Report 2009 1

APAC Resources Limited

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors:

Mr. Cao Zhong (Chairman)

Mr. Liu Yongshun (Chief Executive Officer) Mr. Zhou Luyong (Deputy Chief Executive Officer) Ms. Chong Sok Un Mr. Chen Zhaoqiang Mr. Yue Jialin

Independent Non-Executive Directors:

Mr. Wong Wing Kuen, Albert Mr. Chang Chu Fai, Johnson Francis Mr. Alan Stephen Jones

Mr. Robert Moyse Willcocks

AUDIT COMMITTEE

Mr. Wong Wing Kuen, Albert (Chairman) Mr. Chang Chu Fai, Johnson Francis Mr. Alan Stephen Jones Mr. Robert Moyse Willcocks

REMUNERATION COMMITTEE

Ms. Chong Sok Un (Chairman)

Mr. Cao Zhong

Mr. Wong Wing Kuen, Albert

Mr. Chang Chu Fai, Johnson Francis

Mr. Alan Stephen Jones

Mr. Robert Moyse Willcocks

COMPANY SECRETARY

Ms. Fung Sam Ming

AUDITORS

LEGAL ADVISERS

P.C. Woo & Co Robertsons Conyers Dill & Pearman Mallesons Stephen Jaques

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS

32/F China Online Centre 333 Lockhart Road Wanchai Hong Kong Tel: +852 2541 0338 Fax: +852 2541 9133

REGISTERED OFFICE

Clarendon House 2 Church Street Hamilton HM11 Bermuda

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

Butterfield Fulcrum Group (Bermuda) Limited Rosebank Centre 11 Bermudiana Road Pembroke HM08 Bermuda

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Tricor Secretaries Limited 26/F Tesbury Centre 28 Queen’s Road East Wanchai Hong Kong

WEBSITE

www.irasia.com/listco/hk/apac/index.htm

STOCK CODE

WARRANT CODE

Graham H.Y. Chan & Co

1104 324

2 Interim Report 2009

APAC Resources Limited

The board of directors (the “ Board ”) of APAC Resources Limited (the “ Company ”) is pleased to announce the unaudited interim results of the Company and its subsidiaries (collectively the “ Group ”) for the six months ended 30 June 2009, which has been reviewed by the auditors of the Group and the audit committee of the Company.

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2009

Notes	Six months ended 30 June 2009 2008 HK$’000 HK$’000 (Unaudited) (Unaudited) (Restated)	Six months ended 30 June 2009 2008 HK$’000 HK$’000 (Unaudited) (Unaudited) (Restated)
Revenue 3 Continuing operations Revenue from sales of goods Net gain from sales of trading securities Gain on disposal of available-for-sale investments Change in fair value of trading securities Interest income Other operating income Purchases Equity-settled share option expenses Salaries and allowances Operating lease rental on buildings Provision for doubtful debt Share of profit of associates Other operating expenses Finance costs 4 Profit before taxation 5 Income tax expenses 6 Profit for the period from continuing operations Discontinued operation Profit for the period from discontinued operation Profit for the period	– – 19,467 – 115,892 1,132 34,977 – (12,373) (7,636) (1,544) – 67,346 (7,614) (13,412) 196,235 (32,864) 163,371 – 163,371	170,215
		170,215 35,079 22,488 258,773 4,765 4,743 (162,538) (36,637) (7,908) (1,670) (17,025) – (11,701) (3)
		258,581 (521)
		258,060 442
		258,502

Interim Report 2009 3

APAC Resources Limited

Six months ended 30 June

Notes	2009 HK$’000 (Unaudited)	2008 HK$’000 (Unaudited) (Restated)
Attributable to: Owners of the Company Earnings per share 8 From continuing and discontinued operations – Basic (HK cents) – Diluted (HK cents) From continuing operations – Basic (HK cents) – Diluted (HK cents)	163,371 3.45 3.41 3.45 3.41	258,502
		5.47
		5.32
		5.45
		5.31

Details of dividend payable to owners of the Company are set out in note 7.

4 Interim Report 2009

APAC Resources Limited

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2009

	Six months ended 30 June 2009 2008 HK$’000 HK$’000 (Unaudited) (Unaudited) (Restated)	Six months ended 30 June 2009 2008 HK$’000 HK$’000 (Unaudited) (Unaudited) (Restated)
Profit for the period Other comprehensive income Exchange differences arising on translation of foreign operations Share of reserve movements of associates Fair value change of available-for-sale investments Other comprehensive income for the period, net of tax Total comprehensive income for the period Total comprehensive income attributable to: Owners of the Company	163,371 1,183 264,745 33,154 299,082 462,453 462,453	258,502 15,887 – 280,199
		296,086
		554,588
		554,588

Interim Report 2009 5

APAC Resources Limited

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2009

Notes	30 June 2009 HK$’000 (Unaudited)	31 December 2008 HK$’000 (Audited)
Assets Non-current assets Property, plant and equipments 9 Available-for-sale investments 10 Interest in associates 11 Current assets Trade and other receivables 12 Trading securities 13 Pledged bank deposits 14 Cash and cash equivalents 14 Total assets Equity and Liabilities Capital and reserves Share capital 15 Reserves Total equity Current liabilities Other payables Bills payable Margin financing 16 Tax payable Total liabilities Total equity and liabilities	1,324 117,741 1,291,805 1,410,870 139,708 334,908 89,308 227,871 791,795 2,202,665 562,882 1,624,213 2,187,095 2,564 – – 13,006 15,570 15,570 2,202,665	1,643 84,585 591,817
		678,045
		470,732 113,898 90,004 131,019
		805,653
		1,483,698
		472,866 798,395
		1,271,261
		15,123 35,934 161,043 337
		212,437
		212,437
		1,483,698

6 Interim Report 2009

APAC Resources Limited

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2009

	Share capital HK$’000	Share premium HK$’000	Special reserve HK$’000	Investment revaluation reserve HK$’000	Exchange reserve HK$’000	Share option reserve HK$’000	Net unrealised gain/(loss) reserve HK$’000	Retained earnings/ (accumulated losses) HK$’000	Total HK$’000
At 1 January 2008 (audited) Total comprehensive income attributable to owners Issue of shares upon exercise of warrants Equity-settled share option expenses At 30 June 2008 (unaudited) At 1 January 2009 (audited) Total comprehensive income attributable to owners Issue of placing shares for cash, net Issue of shares upon exercise of warrants Equity-settled share option expenses At 30 June 2009 (unaudited)	472,629 – 28 – 472,657 472,866 – 90,000 16 – 562,882	1,987,747 – 56 – 1,987,803 1,988,220 – 350,960 32 – 2,339,212	(14,980) – – – (14,980) (14,980) – – – – (14,980)	1,817,762 280,199 – – 2,097,961 (41,594) 33,154 – – – (8,440)	1,350 15,887 – – 17,237 (64,586) 160,218 – – – 95,632	214,889 – – 36,637 251,526 262,627 – – – 12,373 275,000	– – – – – (15,331) 105,710 – – – 90,379	258,899 258,502 – – 517,401 (1,315,961) 163,371 – – – (1,152,590)	4,738,296 554,588 84 36,637
									5,329,605
									1,271,261 462,453 440,960 48 12,373
									2,187,095

Interim Report 2009 7

APAC Resources Limited

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2009

	Six months ended 30 June 2009 2008 HK$’000 HK$’000 (Unaudited) (Unaudited)	Six months ended 30 June 2009 2008 HK$’000 HK$’000 (Unaudited) (Unaudited)
Net Cash From Operating Activities Net Cash Used In Investing Activities Net Cash From/(Used In) Financing Activities Net Increase/(Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at 1 January Effect of foreign exchange rate changes Cash and Cash Equivalents at 30 June Analysis of the balances of cash and cash equivalents Bank balances and cash Cash held in securities accounts maintained in securities companies	334,844 (469,793) 230,618 95,669 131,019 1,183 227,871 215,225 12,646 227,871	225 (379,470) (1,710)
		(380,955) 694,945 15,887
		329,877
		302,127 27,750
		329,877

8 Interim Report 2009

APAC Resources Limited

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2009

1. General

The Company is incorporated as an exempted company with limited liability in Bermuda under the Companies Act 1981 of Bermuda (as amended) and its shares are listed on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”). The address of its registered office is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda and the address of its principal office in Hong Kong is 32/F., China Online Centre, 333 Lockhart Road, Wanchai, Hong Kong.

The Company and its subsidiaries (collectively referred to as “ the Group ”) are principally engaged in the (i) trading of base metals and commodities primarily focused on natural resources and related sectors and (ii) trading of and investment in listed securities in the resources and related industries.

These condensed consolidated interim financial statements (“ Interim Financial Statements ”) are presented in Hong Kong dollars (“ HK$ ”), which is the Company’s functional and presentation currency. These Interim Financial Statements were approved for issue by the Board of Directors on 21 September 2009.

2. Basis of Preparation and Accounting Policies

These unaudited Interim Financial Statements are prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“ Listing Rules ”), including compliance with Hong Kong Accounting Standard (“ HKAS ”) 34, “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”).

These Interim Financial Statements should be read in conjunction with the 2008 annual report.

This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the 2008 annual report. The condensed consolidated interim financial statements and notes thereon do not include all of the information required for full set of financial statement prepared in accordance with Hong Kong Financial Reporting Standards (“ HKFRSs ”, which term collectively includes HKASs and Interpretations).

Interim Report 2009 9

APAC Resources Limited

2. Basis of Preparation and Accounting Policies (Continued)

In the current period, the Group has applied, for the first time, the following new standards, amendments and interpretations (hereinafter collectively referred to as ‘ ‘new HKFRSs’ ’), issued by the HKICPA, which are effective for the current accounting period of the Group.

HKAS 1 (Revised) Presentation of financial statements HKAS 23 (Revised) Borrowing costs HKAS 32 & 1 Puttable financial instruments and obligations arising (Amendments) on liquidation HKFRSs (Amendments) Improvements to HKFRSs, except for amendment to HKFRS 5 HKFRS 1 & HKAS 27 Cost of an investment in a subsidiary, jointly (Amendments) controlled entity or associate HKFRS 2 (Amendment) Share-based payment-vesting conditions and cancellations HKFRS 7 (Amendment) Improvement disclosures about financial instruments HKFRS 8 Operating segments HK (IFRIC) – Int 9 & Embedded derivatives HKAS 39 (Amendments) HK (IFRIC) – Int 13 Customer loyalty programmes HK (IFRIC) – Int 15 Agreements for the construction of real estate HK (IFRIC) – Int 16 Hedges of a net investment in a foreign operation

The adoption of the new HKFRSs had no material effect on how the results and financial position for the current or prior accounting period have been prepared and presented. Accordingly, no prior period adjustment is required.

The Group has applied the disclosures requirements under HKAS 1 (Revised) “Presentation of Financial Statements”. Under HKAS 1 (Revised), the “Balance Sheet” is renamed as the “Statement of Financial Position” and the “Cash Flow Statement” is renamed as the “Statement of Cash Flows”. All income and expenses arising from transactions with non-owner (i.e., the non-owner changes in equity) are presented under the “Statement of Comprehensive Income”, while the owner changes in equity are presented in the “Statement of Changes in Equity”.

10 Interim Report 2009

APAC Resources Limited

2. Basis of Preparation and Accounting Policies (Continued)

The Group has not early applied the following new standards and interpretations that have been issued but are not yet effective. The directors of the Company anticipate that the application of these standards, amendments and interpretations will have no material impact on the financial statements of the Group.

HKFRSs (Amendments) Improvements to HKFRSs 2009[1] HKFRSs (Amendments) Improvements to HKFRS 5[2] HKAS 27 (Revised) Consolidated and separate financial statements[2] HKAS 39 (Amendment) Eligible hedged items[2] HKFRS 1 (Revised) First-time adoption of Hong Kong Financial Reporting Standards[2] HKFRS 2 (Amendments) Group cash-settled share-based payment transactions[4] HKFRS 3 (Revised) Business combinations[2] HK (IFRIC) – Int 17 Distribution of non-cash assets to owners[2] HK (IFRIC) – Int 18 Transfer of assets from customers[3]

• 1 Effective for annual periods beginning on or after 1 January 2010, unless otherwise specified

• 2 Effective for annual periods beginning on or after 1 July 2009

• 3 Effective for transfers on or after 1 July 2009 4 Effective for annual periods beginning on or after 1 January 2010

Interim Report 2009 11

APAC Resources Limited

3. Segment Information

Business segments

For management purposes, the Group is currently organised into two operating divisions – trading of base metals and trading of and investment in listed securities.

Segment information about these businesses is presented below.

Six months ended 30 June 2009

		Continuing operations	Continuing operations	Continuing operations	Discontinued operation
		Trading of base metals	Trading of and investment in listed securities	Total	Trading of fabric products and other merchandises	Consolidated
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Revenue Gross sales proceeds from trading of and investment in listed securities Segment result Share of profit of associates Unallocated corporate incomes Unallocated corporate expenses Finance costs Profit before taxation Income tax expense Profit for the period
		–	–	–	–	–
		–	56,850	56,850	–	56,850
		(932)	133,162	132,230	–	132,230
						67,346
						34,622
						(24,551)
						(13,412)
						196,235
						(32,864)
						163,371

12 Interim Report 2009

APAC Resources Limited

3. Segment Information (Continued)

Business segments (Continued)

Six months ended 30 June 2008

		Continuing operations Trading of base metals Trading of and investment in listed securities Total HK$’000 HK$’000 HK$’000	Continuing operations Trading of base metals Trading of and investment in listed securities Total HK$’000 HK$’000 HK$’000	Continuing operations Trading of base metals Trading of and investment in listed securities Total HK$’000 HK$’000 HK$’000		Discontinued operation Trading of fabric products and other merchandises HK$’000	Consolidated HK$’000
		Trading of base metals HK$’000	Trading of and investment in listed securities HK$’000
Revenue Gross sales proceeds from trading of and investment in listed securities Segment result Unallocated corporate incomes Unallocated corporate expenses Finance costs Profit before taxation Income tax expense Profit for the period		170,215 – 4,594	– 231,444 322,443	170,215 231,444 327,037		– – 442	170,215
							231,444
							327,479 2,444 (70,897) (3)
							259,023 (521)
							258,502

Interim Report 2009 13

APAC Resources Limited

3. Segment Information (Continued)

Business segments (Continued)

An analysis of the Group’s assets by operating segment is set out below:

At 30 June 2009

	Continuing operations Discontinued operation
	Trading of base metals Trading of and investment in listed securities Total Trading of fabric products and other merchandises	Consolidated
	HK$’000 HK$’000 HK$’000 HK$’000	HK$’000
Segment assets Interest in associates Unallocated assets
	328,480 472,973 801,453 –	801,453
		1,291,805
		109,407
		2,202,665

At 31 December 2008

	Continuing operations Trading of base metals Trading of and investment in listed securities Total HK$’000 HK$’000 HK$’000	Discontinued operation Trading of fabric products and other merchandises HK$’000	Consolidated HK$’000
Segment assets Interest in associates Unallocated assets	375,919 198,649 574,568	–	574,568 591,817 317,313
			1,483,698

14 Interim Report 2009

APAC Resources Limited

4. Finance Costs

Six months ended 30 June

	2009 HK$’000 (Unaudited)	2008 HK$’000 (Unaudited)
Interest on margin financing Interest on short-term loan Interest on other bank borrowings	8,211 5,194 7 13,412	– – 3
		3

5. Profit Before Taxation

Six months ended 30 June

	2009 HK$’000 (Unaudited)	2008 HK$’000 (Unaudited)
Profit before taxation has been arrived at after charging/(crediting) the following: Depreciation Exchange gain, net Legal and professional fees Consultancy fee Staff costs, including directors’ emoluments – salaries and allowance – equity-settled share option expenses – staff quarter – retirement benefits scheme contributions, net of nil forfeited contributions Total staff costs	329 (1,138) 1,778 927 7,636 12,373 119 266 20,394	405 (4,688) 3,756 621
		7,908 36,637 111 30
		44,686

Interim Report 2009 15

APAC Resources Limited

6. Income Tax Expenses

	Six months ended 30 June 2009 2008 HK$’000 HK$’000 (Unaudited) (Unaudited)	Six months ended 30 June 2009 2008 HK$’000 HK$’000 (Unaudited) (Unaudited)
Hong Kong profits tax provided for the period Overseas tax provided for the period	12,769 20,095 32,864	– 521
		521

Hong Kong profits tax has been provided for at the rate of 16.5% on the Group estimated assessable profit for the six months period ended 30 June 2009. No provision for Hong Kong Profits Tax has been made as the Group had no assessable profit for the six months period ended 30 June 2008.

Taxation arising in other jurisdictions are calculated at the rate prevailing in the respective jurisdictions.

The Group’s share of associates’ tax charge for the six months period ended 30 June 2009 of approximately HK$19,841,000 is included in the overseas tax provided for the period above.

The Group has no significant unprovided deferred taxation at the balance sheet date.

7. Dividend

No dividends had been paid or declared by the Company during the period (2008: nil).

8. Earnings Per Share

• (a) The calculation of the basic earnings per share is based on the profit attributable to owners of the Company of approximately HK$163,371,000 for the period ended 30 June 2009 (six months period ended 30 June 2008: HK$258,502,000) and the weighted average of 4,738,626,348 (six months ended 30 June 2008: 4,726,524,901) ordinary shares in issue during the period.

16 Interim Report 2009

APAC Resources Limited

8. Earnings Per Share (Continued)

• (b) The weighted average number of ordinary shares for the purpose of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share is as follows:

Six months ended 30 June

	2009	2008
Weighted average number of ordinary shares used in the calculation of basic earnings per share Shares deemed to be issued for no consideration in respect of: – warrants – share options	4,738,626,348 50,130,434 – 4,788,756,782	4,726,524,901 129,714,824 –
		4,856,239,725

The calculation of the diluted earnings per share did not assume the exercise of the Company’s outstanding share options as their exercise prices were higher than the average market price of the Company’s shares during the period.

9. Property, Plant and Equipments

During the period, the Group incurred approximately HK$8,000 (six months ended 30 June 2008: HK$191,000) on acquisition of property, plant and equipment.

10. Available-for-sale Investments

	30 June 2009 HK$’000 (Unaudited)	31 December 2008 HK$’000 (Audited)
Listed equity securities, in Hong Kong, at fair value Listed equity securities, in overseas, at fair value	47,460 70,281 117,741	43,145 41,440 84,585

Interim Report 2009 17

APAC Resources Limited

11. Interest in Associates

	30 June 2009 HK$’000 (Unaudited)	31 December 2008 HK$’000 (Audited)
Share of net assets of associates Goodwill on acquisition of an associate Less: impairment loss	1,291,805 – 1,291,805 – 1,291,805	591,817 466,553
		1,058,370 (466,553)
		591,817

At 31 December 2008, the Group held 17.95% interest in Mount Gibson Iron Limited (“ MGX ”) and accounted for the investment as an associate. In January 2009, the Group further subscribed 115,729,630 new shares of MGX at an aggregate consideration of A$69,437,777 (equivalent to approximately HK$366,496,000). The Group’s interest in MGX was increased to 26.03%.

12. Trade and Other Receivables

	30 June 2009 HK$’000 (Unaudited)	31 December 2008 HK$’000 (Audited)
Trade receivables Other receivables Purchase deposits Deposit for underwritten right issue of an associate Other deposits and prepayments	– 10,487 124,406 – 4,815 139,708	35,933 110 168,896 260,985 4,808
		470,732

The Group allows an average credit period of 0 – 90 days to its trade customers.

All the trade receivables that are not considered to be impaired had not been past due.

18 Interim Report 2009

APAC Resources Limited

13. Trading Securities

	30 June 2009 HK$’000 (Unaudited)	31 December 2008 HK$’000 (Audited)
Trading securities, at fair value Listed equity securities, in Hong Kong Listed equity securities, in overseas Cash and Cash Equivalents	177,445 157,463 334,908 30 June 2009 HK$’000 (Unaudited)	13,225 100,673
		113,898
		31 December 2008 HK$’000 (Audited)
Pledged bank deposits Cash at bank and in hand Cash held in securities accounts maintained in securities companies Less: Pledged bank deposits Cash and cash equivalents	89,308 215,225 12,646 317,179 (89,308) 227,871	90,004 130,943 76
		221,023 (90,004)
		131,019

14. Cash and Cash Equivalents

Interim Report 2009 19

APAC Resources Limited

15. Share Capital

	Number of ordinary shares of HK$0.10 each	Amount HK$’000
Authorised: At 1 January 2009 and at 30 June 2009 Issued and fully paid: At 1 January 2009 Issue of shares under placement Issue of shares upon exercise of warrants At 30 June 2009	8,000,000,000 4,728,659,055 900,000,000 160,000 5,628,819,055	800,000
		472,866 90,000 16
		562,882

16. Margin Financing

The margin loan facilities were secured by part of the investment in a listed associate, part of the available-for-sale investments and part of the trading securities with carrying amount of approximately HK$1,200,280,000 as at 30 June 2009 (31 December 2008 (audited): HK$661,502,000).

17. Share Option Scheme

The Company operates a share option scheme (the “ Scheme ”) for the purpose of providing incentives or rewards to selected persons (including the Company’s directors, employees of the Group and other eligible participants as defined under the Scheme) who contribute to the Group. The Scheme was adopted on 22 September 2004 and will remain in force for 10 years from the date of adoption until 21 September 2014.

During the six month period ended 30 June 2009, no share option granted (year ended 31 December 2008 (audited): 11,000,000 share options) was lapsed. As at 30 June 2009, there were 500,000,000 (as at 31 December 2008 (audited): 500,000,000) share options outstanding.

20 Interim Report 2009

APAC Resources Limited

18. Warrants

On 5 February 2007, the Company issued a total of 251,800,000 bonus warrants (the “ Warrants ”), as a result of the rights issue completed on 1 February 2007, with an aggregate subscription amount of HK$75,540,000. Each of the Warrants entitled the warrant-holder to subscribe for one ordinary share of the Company of HK$0.10 each at the initial subscription price of HK$0.30 (subject to adjustment, if any) during the period from 5 February 2007 until 4 February 2010 (both dates inclusive).

During the six months period ended 30 June 2009, 160,000 Warrants were exercised for 160,000 ordinary shares (year ended 31 December 2008 (audited): 2,368,000 Warrants were exercised for 2,368,000 ordinary shares) at a price of HK$0.30 each. As at 30 June 2009, there were 193,618,450 Warrants (as at 31 December 2008 (audited): 193,778,450 Warrants) outstanding.

19. Operating Lease Commitments

At the balance sheet date, the Group had commitments for future minimum lease payments under non-cancellable operating leases in respect of rented premises, which fall due as follows:

	30 June 2009 HK$’000 (Unaudited)	31 December 2008 HK$’000 (Audited)
Within one year After one year but within five years	1,870 270 2,140	1,933 740
		2,673

Operating lease payments represent rental payable by the Group for its office premises, director’s quarters, a photocopying machine and car-parking space. Leases are negotiated for the term of between six months to five years.

Interim Report 2009 21

APAC Resources Limited

20. Pledge of Assets

	30 June 2009 HK$’000 (Unaudited)	31 December 2008 HK$’000 (Audited)
(a) Margin financing loan facilities secured by investment in a listed associate, available-for-sale investments and trading securities (b) Banking facilities of HK$10 million and US$60 million (2008: HK$10 million and US$60 million) granted by banks and secured by bank deposits of the Group	1,200,192 89,308 1,289,500	661,502 90,004
		751,506

21. Related Party Transactions

During the six months period ended 30 June 2009, the Group entered into corporate consultancy and sales co-ordination service to related companies for the amount of approximate HK$470,000 and USD288,577 (equivalent to HK$2,250,900) respectively.

Compensation of key management personnel

	Six months ended 30 June 2009 2008 HK$’000 HK$’000 (Unaudited) (Unaudited)	Six months ended 30 June 2009 2008 HK$’000 HK$’000 (Unaudited) (Unaudited)	Six months ended 30 June 2009 2008 HK$’000 HK$’000 (Unaudited) (Unaudited)
	2009
	HK$’000
	(Unaudited)
Short-term employee benefits Post-employment benefits Share-based payment			4,311 – 36,637
	4,339
	23
	12,373
			40,948
	16,735

22 Interim Report 2009

APAC Resources Limited

22. Events After the Reporting Period

Subsequent to the period-end-date, the subscription of 431,456,260 new shares in respect of the Right Issue of China Primary Resources Holdings Limited (“ CPR ”) was all taken up by the Group in July 2009 at an aggregate consideration of HK$8,629,125 which was funded by the Group’s internal resources. As a result, the Group’s interest in CPR increased to 1,294,368,780 shares, representing approximately 10.53% of the issued share capital of CPR. At the extraordinary general meeting held on 20 August 2009, the proposed share consolidation of every ten issued and unissued shares of HK$0.00125 each in the capital of CPR into one consolidated share of HK$0.0125 was approved. The Group’s interest in CPR then reduced to 129,436,878 shares, representing approximately 10.53% of the issued share capital of CPR.

23. Approval of Interim Financial Statements

The Interim Financial Statements were approved by the Board on 21 September 2009.

Interim Report 2009 23

APAC Resources Limited

INDEPENDENT REVIEW REPORT

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REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION TO THE BOARD OF DIRECTORS OF APAC RESOURCES LIMITED

(incorporated in Bermuda with limited liability)

Introduction

We have reviewed the interim financial information set out on pages 3 to 23, which comprises the condensed consolidated statement of financial position of APAC Resources Limited (the “ Company ”) and its subsidiaries (together the “ Group ”) as of 30 June 2009 and the related condensed consolidated income statement and condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on the interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard (“ HKAS ”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with HKAS 34. Our responsibility is to express a conclusion on this interim financial information based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

24 Interim Report 2009

APAC Resources Limited

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is not prepared, in all material respects, in accordance with HKAS 34.

Graham H. Y. Chan & Co.

Certified Public Accountants (Practising)

Hong Kong, 21 September 2009

Interim Report 2009 25

APAC Resources Limited

INTERIM DIVIDEND

The Board has resolved not to declare the payment of an interim dividend for the six months ended 30 June 2009 (2008: nil).

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Results

For the six-months ended 30 June 2009, although the Group recorded no turnover in relation to its base metal trading business amid a highly turbulent and uncertain market environment (2008: HK$170,215,000), the Group managed to achieve a net profit attributable to shareholders of HK$163,731,000 (2008: HK$258,502,000).

Earning per share (basic) for the six-months ended 30 June 2009 was 3.45 HK cents (2008: 5.47 HK cents) and the net asset value as at 30 June 2009 was HK$0.39 (2008: HK$1.13).

Business Review

Trading and investment of listed securities

For the period under review, the economic environments and the financial market remained mostly volatile attributed to the global financial crisis though signs of recovery have emerged since the second quarter of 2009. For the businesses of securities trading and investment, the Group recorded a gross sales proceeds of HK$56,850,000 (2008: HK$231,444,000) and a profit of HK$133,162,000 (2008: HK$322,443,000) mainly due to the realised net gain from sales of trading securities of HK$19,467,000 (2008: HK$35,079,000) and the mark-to-market unrealised change in fair value of trading securities of HK$115,892,000 (2008: HK$258,773,000).

As at 30 June 2009, the Group maintained a long term investment portfolio of available-for-sale investments of HK$117,741,000 (2008: HK$3,250,341,000) and a short term portfolio of trading securities of HK$334,908,000 (2008: HK$1,437,784,000).

Trading in base metals

As a result of the uncertainty in the economic outlook and market demand for base metal, the Group did not actively in sourcing the supply of base metals for trading which resulted in no turnover was recorded for the period under review (2008: HK$170,215,000) and a loss of HK$932,000 (2008: profit of HK$4,594,000) was recorded for the period under review.

26 Interim Report 2009

APAC Resources Limited

Principal associated company

The share of profit of associates (after tax) of the Group for the six-months ended 30 June 2009 was HK$47,505,000 (2008: nil). As at 30 June 2009, the Group’s interest in associates amounted to HK$1,291,805,000 (2008: nil).

Mount Gibson Iron Limited (“MGX”) – 26.03% owned by the Group

Following the completion of a 1 for 5 renounceable rights issue at A$0.6 each of MGX, the Group’s equity interest in MGX increased to 26.03%. MGX is a pure iron ore exploration and mining company, which owns iron ore deposits and holds mining rights in Western Australia. The Group considers such increase in investment in MGX as a step to preserve the Group’s interest in MGX from being diluted and as a way in which to strengthen and support its existing investment. Further, the Group considers that the long term offtake agreements, entered into between the Group and MGX in November 2008, will give the Group an opportunity to secure long term supply of hematite iron ore products for and to expand its base metal trading activities.

According to MGX’s preliminary final report for the year ended 30 June 2009, MGX recorded a total revenue of A$431,730,000 (2008: A$435,174,000) and a net profit of A$42,618,000 (2008: A$113,344,000) for the year ended 30 June 2009.

MGX pointed out that the impact of some of its customers defaulting on the MGX’s near term cash flows, together with the desire of the MGX to recommence priority development at Koolan Island and Extension Hill in Western Australia required the raising of additional equity finance. The rights issue and placement of MGX, completed in December 2008 and January 2009 respectively, together raised gross proceeds of A$162,523,697, which together with existing cash reserves, will better place MGX to recommence priority development activities and mitigate the impact on the MGX of any near term volatility in the iron ore and financial markets.

Financial Review

Liquidity, Financial Resources and Capital Structure

As at 30 June 2009, the Group’s non-current assets amounted to HK$1,410,870,000 (2008: HK$3,252,318,000) and net current assets amounted to HK$776,225,000 (2008: HK$2,077,287,000) with a current ratio of 50.9 times (2008: 201.5 times) calculated on the basis of the Group’s current assets over current liabilities.

Interim Report 2009 27

APAC Resources Limited

Financial Review (Continued)

Liquidity, Financial Resources and Capital Structure (Continued)

The flexibility of the financial resources available to the Group was enhanced by both short term credit facilities granted by a stock-broking firm and banking facilities granted to the Group. The short term credit facilities were secured by part of the investment in a listed associate, part of the available-for-sale investments and part of the trading securities while the banking facilities were secured by bank deposits. All the Group’s borrowings are arranged on a short-term basis in Hong Kong. As at 30 June 2009, the Group had no borrowings (2008: nil) and a gearing ratio of 0% (2008: 0%), calculated on the basis of the Group’s net borrowings (after cash and cash equivalents) over shareholders’ fund.

In order to strengthen its capital base, the Group conducted a placing of 900,000,000 shares at HK$0.5 each to raise approximately HK$440.9 million for reduction of borrowings and for general working capital of the Group and/or for investment when opportunities arise which placing was completed in June 2009 (the “ Placing ”).

During the period under review, the issued share capital of the Group was increased to HK$562,882,000 from HK$472,866,000 as a result of the Placing and the issue of 160,000 new shares following the exercise of warrants for consideration of HK$16,000.

Foreign Exchange Exposure

For the period under review, the Group’s assets were mainly denominated in Australian Dollar and Hong Kong Dollar while the liabilities were mainly denominated in Hong Kong Dollar. As a substantial portion of the assets was held as long-term investments, there would be no material immediate effect on the cash flow of the Group. In light of this, the Group did not actively hedge for the risk arising from the Australian Dollar denominated assets.

Pledge of Assets

As at 30 June 2009, part of the Group’s investment in a listed associate, available-for-sale investments and trading securities of HK$1,200,192,000 (2008: HK$4,167,978,000) were pledged to a stock-broking firm to secure short term credit facilities granted to the Group and the Group’s bank deposits of HK$89,308,000 (2008: HK$88,979,000) were pledged to banks to secure banking facilities granted to the Group.

28 Interim Report 2009

APAC Resources Limited

EMPLOYEES AND REMUNERATION POLICY

The Group ensured that its employees are remunerated according to the prevailing manpower market conditions and individual performance with its remuneration policies reviewed on a regular basis.

PROSPECT

With the commencement of supply of long term offtake of hematite iron ore products from MGX to the Group from July 2009 onward and the stabilisation of base metal market, barred for unforeseen circumstance, the Group believes its business in base metal trading will be improved in the second half of year 2009.

Given the recent sign of recovery from the global financial turmoil and economic recession, the Group believes that there will be ample supply of grossly undervalued investment and business opportunities and will continue to identify, evaluate and acquire strategic interests in quality natural resources assets in order to maximise returns for shareholders.

Interim Report 2009 29

APAC Resources Limited

OTHER INFORMATION

Directors’ Interests in Shares, Underlying Shares and Debentures

As at 30 June 2009, the interests and short positions held by each director and chief executive of the Company and their associates in the shares, underlying shares or debentures of the Company or any of its associated corporations, if any, (within the meaning of Part XV of the Securities and Futures Ordinance (“ SFO ”)), as recorded in the register required to be kept by the Company under section 352 of the SFO or otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (“ Model Code ”) contained in the Rules Governing the Listing of Securities on the Stock Exchange (the “ Listing Rules ”) were as follows:

Long positions in shares and underlying shares of the Company

Name of Directors Capacity in which interests are held	Number of shares/underlying shares held in the Company Total interests as to % to the issued share capital of the Company as at 30 June 2009 Interests in shares Interests under equity derivatives Total Interests (Note 1)
Mr. Cao Zhong Beneficial owner Mr. Liu Yongshun Beneficial owner Ms. Chong Sok Un Beneficial owner and interest of controlled corporation (Note 3) Mr. Zhou Luyong Beneficial owner Mr. Chen Zhaoqiang Beneficial owner	– 133,000,000 (Note 2) 133,000,000 2.36% – 150,000,000 (Note 2) 150,000,000 2.66% 638,680,000 115,000,000 (Notes 2 & 4) 753,680,000 (Note 5) 13.39% – 33,000,000 (Note 2) 33,000,000 0.59% – 33,000,000 (Note 2) 33,000,000 0.59%

30 Interim Report 2009

APAC Resources Limited

Directors’ Interests in Shares, Underlying Shares and Debentures (Continued)

Long positions in shares and underlying shares of the Company (Continued)

Name of Directors Capacity in which interests are held	Number of shares/underlying shares held in the Company Total interests as to % to the issued share capital of the Company as at 30 June 2009 Interests in shares Interests under equity derivatives Total Interests (Note 1)
Mr. Yue Jialin Interest of controlled corporation (Note 6) Mr. Wong Wing Kuen, Albert Beneficial owner Mr. Chang Chu Fai, Johnson Francis Beneficial owner Notes:	16,179,602 119,339,960 135,519,562 (Note 7) 2.41% – 3,000,000 (Note 2) 3,000,000 0.05% – 2,000,000 (Note 2) 2,000,000 0.04%

1. The percentage of shareholding is calculated on the basis of the Company’s issued share capital of 5,628,819,055 shares as at 30 June 2009.

2. The relevant interests are share options granted pursuant to the Company’s share option scheme adopted on 22 September 2004 (the “ Scheme ”). Upon exercise of the share options in accordance with the Scheme, ordinary shares of HK$0.10 each in the share capital of the Company are issuable. The share options are personal to the respective Directors and the holders thereof are entitled to subscribe for shares of the Company. Further details of the share options are set out in Note 17 to the condensed financial statements.

3. These shares are held by Sparkling Summer Limited (“ Sparkling Summer ”) and Rise Cheer Investments Limited (“ Rise Cheer ”), both of which are wholly-owned subsidiaries of COL Capital Limited (“ COL ”). As at 30 June 2009, COL was 62.33% owned by Vigor Online Offshore Limited which in turn is a wholly-owned subsidiary of China Spirit Limited (“ China Spirit ”) in which Ms. Chong Sok Un maintains 100% beneficial Interest. COL is therefore deemed to have interests in the shares and underlying shares in which Sparkling Summer and Rise Cheer are interested. Ms. Chong Sok Un is therefore deemed to have interests in the shares and underlying shares through her 100% interest in China Spirit.

4. This represents 110,000,000 share options granted to Ms. Chong Sok Un and an interest in 5,000,000 units of warrants giving rise to an interest in 5,000,000 underlying shares held by Sparkling Summer. The warrants entitle the holders to subscribe at any time during the period from 5 February 2007 to 4 February 2010 (both days inclusive) for fully paid shares at an initial subscription price of HK$0.30 per share (subject to adjustment).

Interim Report 2009 31

APAC Resources Limited

Directors’ Interests in Shares, Underlying Shares and Debentures (Continued)

Long positions in shares and underlying shares of the Company (Continued)

1. This represents the interests held by: (i) Sparkling Summer as to 40,560,000 shares and 5,000,000 units of warrants giving rise to an interest in 5,000,000 underlying shares, (ii) Rise Cheer as to 598,120,000 shares, and (iii) 110,000,000 share options granted to Ms. Chong Sok Un.

2. These shares are registered/will be registered (as the case may be) in the name of and beneficially owned by Profit Harbour Investments Limited, the entire issued share capital of which is owned by Mr. Yue Jialin.

3. This represents an interest in 16,179,602 shares and an interest in 119,339,960 units of warrants giving rise to an interest in 119,339,960 underlying shares. The warrants entitle the holders to subscribe at any time during the period from 5 February 2007 to 4 February 2010 (both days inclusive) for fully paid shares at an initial subscription price of HK$0.30 per share (subject to adjustments).

Save as disclosed above, as at 30 June 2009, none of the Company’s directors, chief executive or their respective associates had any other personal, family, corporate and other interests or short positions in shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code contained in the Listing Rules.

Other than those disclosed in this section, no right to subscribe for equity or debt securities of the Company has been granted by the Company to, nor have any such rights been exercised by, any Directors or chief executive (including their respective spouse or children under 18 years of age) during the six months ended 30 June 2009.

Share Option Scheme

Further disclosure relating to the Company’s share option scheme is set out in Note 17 to the condensed financial statements.

Arrangements to Purchase Shares or Debentures

Save as disclosed under the section headed “DIRECTORS’ INTERESTS IN SHARES, UNDERLYING SHARES AND DEBENTURES” and Note 17 to the condensed financial statements, at no time during the period under review was the Company or any of its subsidiaries a party to any arrangements to enable the directors of the Company, their respective spouse or children under 18 years of age to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

32 Interim Report 2009

APAC Resources Limited

Substantial Shareholders

As at 30 June 2009, the following persons, other than a director or chief executive of the Company or any of its subsidiaries, were interested or had short positions in more than 5% of the shares and underlying shares of the Company or its subsidiaries according to the register required to be kept under section 336 of the SFO in the respective amounts as follows:

Long positions in shares and underlying shares of the Company

Name of Shareholders Capacity in which interests are held

Number of shares/underlying shares held in the Company Total interests as to % to the issued share capital of the Company as at 30 June 2009 Interests in shares Interests under equity derivatives Total interests (Note 1)

Benefit Rich Limited Beneficial owner Shougang Holding (Hong Kong) Limited Interest of controlled corporation (Note 4) Rise Cheer Investments Limited Beneficial owner COL Capital Limited Interest of controlled corporation (Note 5) Sun Hung Kai & Co. Limited Security interest in shares (Notes 9 & 12) Allied Properties (H.K.) Limited Interest of controlled corporation (Notes 9 & 12) Allied Group Limited Interest of controlled corporation (Notes 10 & 12) Lee and Lee Trust Interest of controlled corporation (Notes 11 & 12) Katong Assets Limited Beneficial owner (Note 13) Lin Xu Ming Interest of controlled corporation (Note 13)

600,000,000 60,000,000 660,000,000 (Note 2) 11.73% 896,000,000 60,000,000 956,000,000 (Note 3) 16.98% 598,120,000 – 598,120,000 10.63% 638,680,000 5,000,000 (Note 6) 643,680,000 (Note 7) 11.44% 598,532,893 – 598,532,893 (Note 8) 10.63% 598,532,893 – 598,532,893 10.63% 598,532,893 – 598,532,893 10.63% 598,532,893 – 598,532,893 10.63% 516,500,000 1,000,000 (Note 14) 517,500,000 9.19% 516,500,000 1,000,000 (Note 14) 517,500,000 9.19%

Interim Report 2009 33

APAC Resources Limited

Substantial Shareholders (Continued)

Long positions in shares and underlying shares of the Company (Continued)

Notes:

1. The percentage of shareholding is calculated on the basis of the Company’s issued share capital of 5,628,819,055 shares as at 30 June 2009.

2. This represents an interest in 600,000,000 shares and an interest in 60,000,000 units of warrants giving rise to an interest in 60,000,000 underlying shares. The warrants entitle the holders to subscribe at any time during the period from 5 February 2007 to 4 February 2010 (both days inclusive) for fully paid shares at an initial subscription price of HK$0.30 per share (subject to adjustments).

3. This represents the interests held by: (i) Benefit Rich Limited (“ Benefit Rich ”) as to 600,000,000 shares and 60,000,000 units of warrants giving rise to an interest in 60,000,000 underlying shares, (ii) Easymade Investments Limited (“ Easymade ”) as to 100,000,000 shares, and (iii) Prime Success Investments Limited (“ Prime Success ”) as to 196,000,000 shares, all of which are wholly-owned subsidiaries of Shougang Holding (Hong Kong) Limited (“ Shougang ”) as at 30 June 2009.

4. Benefit Rich, Easymade and Prime Success are wholly-owned subsidiaries of Shougang as at 30 June 2009. Accordingly, Shougang is deemed to have the same long position as Benefit Rich, Easymade and Prime Success under the SFO.

5. These shares are held by Sparkling Summer Limited (“ Sparkling Summer ”) and Rise Cheer Investments Limited (“ Rise Cheer ”), both of which are wholly-owned subsidiaries of COL Capital Limited (“ COL ”). As at 30 June 2009, COL is 62.33% owned by Vigor Online Offshore Limited which in turn is a wholly-owned subsidiary of China Spirit Limited (“ China Spirit ”) in which Ms. Chong Sok Un maintains 100% beneficial interest. COL is therefore deemed to have interests in the shares and underlying shares in which Sparkling Summer and Rise Cheer are interested.

6. This represents an interest in 5,000,000 units of warrants giving rise to an interest in 5,000,000 underlying shares held by Sparkling Summer. The warrants entitle the holders to subscribe at any time during the period from 5 February 2007 to 4 February 2010 (both days inclusive) for fully paid shares at an initial subscription price of HK$0.30 per share (subject to adjustments).

7. This represents the interests held by: (i) Sparkling Summer as to 40,560,000 shares and 5,000,000 units of warrants giving rise to an interest in 5,000,000 underlying shares, and (ii) Rise Cheer as to 598,120,000 shares.

8. This represents security interests held by: (i) Itso Limited (“ Itso ”) as to 11,060,000 shares, and (ii) Sun Hung Kai Strategic Capital Limited (“ SHKSC ”) as to 587,472,893 shares, both of which are indirect wholly-owned subsidiaries of Sun Hung Kai & Co. Limited (“ SHK ”). Accordingly, SHK is deemed to have the same long position as Itso and SHKSC under the SFO.

9. SHK is a non wholly-owned subsidiary of AP Emerald Limited (“ APE ”). APE is a wholly-owned subsidiary of AP Jade Limited (“ APJ ”) which in turn is a wholly-owned subsidiary of Allied Properties (H.K.) Limited (“ APL ”). Accordingly, APL, APJ and APE are deemed to have the same long position as SHK under the SFO.

34 Interim Report 2009

APAC Resources Limited

Substantial Shareholders (Continued)

Long positions in shares and underlying shares of the Company (Continued)

1. APL is a non wholly-owned subsidiary of Allied Group Limited (“ AGL ”). Accordingly, AGL is deemed to have the same long position as APL under the SFO.

2. Mr. Lee Seng Hui, Ms. Lee Su Hwei and Mr. Lee Seng Huang are the trustees (“ Trustees ”) of Lee and Lee Trust, being a discretionary trust. They together owned approximately 44.54% interest in the issued share capital of AGL as at 30 June 2009. Accordingly, Lee and Lee Trust is deemed to have the same long position as AGL under the SFO.

3. By the announcement dated 31 December 2008 jointly made by SHK, APL and AGL, it was announced that on 24 December 2008, SHKSC and/or Itso (as vendors) entered into three separate sale and purchase agreements (“ SP Agreements ”) with three respective purchasers for the sale and purchase of an aggregate of 598,532,893 shares (“ Sale Shares ”) of the Company. Pursuant to the SP Agreements, payment obligations of each of the purchasers were secured by a share charge (“ Share Charge(s) ”) executed in favour of the relevant vendors.

Pursuant to the SP Agreements and the Share Charges, SHK, APL, AGL and the Trustees are deemed to be interested in the Sale Shares by virtue of the Share Charges. Upon payment of all outstanding payment of the purchase price by the purchasers to the relevant vendors and the release of the Share Charges, SHK, APL, AGL and the Trustees will cease to have any interest in the Sale Shares.

Pursuant to one of the SP Agreements, SHKSC (as vendor) has sold and Kindstart Limited (as purchaser, the entire issued share capital of which is owned by Mr. Guo Qingming) has purchased 300,000,000 shares of the Company, representing approximately 5.33% of the issued share capital of the Company as at 30 June 2009, and payment obligation of Kindstart Limited was secured by a Share Charge executed in favour of SHKSC. Upon satisfaction of the payment obligation of Kindstart Limited under the related Share Charge, Kindstart Limited will become a substantial shareholder of the Company.

1. The entire issued share capital of Katong Assets Limited (“ Katong ”) is owned by Mr. Lin Xu Ming. Mr. Lin is therefore deemed to have interests in the shares and underlying shares of the Company through his 100% interests in Katong.

2. This represents an interest in 1,000,000 units of warrants giving rise to an interest in 1,000,000 underlying shares. The warrants entitle the holders to subscribe at any time during the period from 5 February 2007 to 4 February 2010 (both days inclusive) for fully paid shares at an initial subscription price of HK$0.30 per share (subject to adjustments).

Save as disclosed above, no other person had interest or short position in the shares and underlying shares of the Company or its subsidiaries, which are recorded in the register required to be kept by the Company pursuant to section 336 of the SFO as at 30 June 2009.

Interim Report 2009 35

APAC Resources Limited

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

During the six months ended 30 June 2009, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE PRACTICES

For the six months ended 30 June 2009, the Company has complied with the code provisions of The Code on Corporate Governance Practices (“ CG Code ”) as set out in Appendix 14 of the Listing Rules, except for the deviation in respect of the specific term of non-executive directors’ appointment under the code provision A.4.1 of the CG Code.

AUDIT COMMITTEE REVIEW

The Audit Committee has reviewed with the management the accounting policies and practices adopted by the Group and discussed internal controls and financial reporting matters including a general review of the unaudited interim financial report for the six months ended 30 June 2009. In carrying out this review, the Audit Committee has relied on a review conducted by the Group’s external auditors in accordance with the Hong Kong Standard on Review Engagements 2410 issued by the HKICPA as well as obtaining reports from management. The Audit Committee has not undertaken independent audit checks.

COMPLIANCE WITH THE MODEL CODE

The Company has adopted the Model Code as set out in Appendix 10 of the Listing Rules for dealing in securities of the Company by the directors and supervisors. Having made specific enquiry, the Company confirmed that all directors and supervisors had complied with the required standard as set out in the Model Code for the six months ended 30 June 2009.

By order of the Board Cao Zhong Chairman

Hong Kong, 21 September 2009

36 Interim Report 2009