Persistence Gold Group Ltd — Interim / Quarterly Report 2010

Sep 7, 2010

(Incorporated in Bermuda with limited liability)

Stock Code: 1104

• For identification purpose only

Contents

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Corporate Information	2
About APAC Resources	3
CEO Message	5
2010 Highlights	6
Condensed Consolidated Income Statement	7
Condensed Consolidated Statement of Comprehensive Income	8
Condensed Consolidated Statement of Financial Position	9
Condensed Consolidated Statement of Changes in Equity	10
Condensed Consolidated Statement of Cash Flows	11
Notes to the Condensed Financial Statements	12
Independent Review Report	30
Management Discussion and Analysis	32
Other Information	36

1

Interim Report 2010 APAC Resources Limited

Corporate Informati on

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BOARD OF DIRECTORS

Executive Directors:

Ms. Chong Sok Un (Chairman) Mr. Andrew Charles Ferguson (Chief Executive Offi cer) Mr. Peter Anthony Curry (Chief Financial Offi cer) Mr. Yue Jialin Mr. Kong Muk Yin

Non-Executive Directors:

Mr. Lee Seng Hui Mr. So Kwok Hoo Mr. Liu Yongshun

Independent Non-Executive Directors:

Mr. Wong Wing Kuen, Albert Mr. Chang Chu Fai, Johnson Francis Mr. Robert Moyse Willcocks

AUDIT COMMITTEE

Mr. Wong Wing Kuen, Albert (Chairman) Mr. Chang Chu Fai, Johnson Francis Mr. Robert Moyse Willcocks Mr. Lee Seng Hui

REMUNERATION COMMITTEE

Ms. Chong Sok Un (Chairman) Mr. Lee Seng Hui Mr. Wong Wing Kuen, Albert Mr. Chang Chu Fai, Johnson Francis Mr. Robert Moyse Willcocks

COMPANY SECRETARY

Ms. Fung Sam Ming

AUDITORS

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

Butterfi eld 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

Graham H.Y. Chan & Co

STOCK CODE

LEGAL ADVISERS

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

1104

2

Interim Report 2010 APAC Resources Limited

About APAC Resources

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APAC Resources Limited (“ APAC ”) listed on The Stock Exchange of Hong Kong Limited (stock code: 1104). APAC and its subsidiaries are principally engaged in (i) trading in base metals and commodities; and (ii) trading and investment in listed securities with a portfolio primarily focused on natural resources and related sector and industries. APAC’s investment business is run from Hong Kong, with the commodity trading division operating from Hong Kong and Shanghai.

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Minor investments Major investments

Global Investments

APAC’s portfolio comprises Mount Gibson Iron and Metals X as primary investments. Other signifi cant investments include Kalahari Minerals and Modena Resources, as well as a spread of smaller positions for geographic, development stage and commodity diversifi cation.

Major Investments

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Company Code % Held Focus
Metals X Limited MLX.AX 29.08 Tin/Nickel
Mount Gibson Iron Limited MGX.AX 26.22 Iron ore
Modena Resources Limited MDA.AX 18.94 Natural Gas
Kalahari Minerals Plc KAH.L 9.99 Uranium
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3

Interim Report 2010 APAC Resources Limited

About APAC Resources

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Commodity Trading

APAC’s commodity trading team, based in Shanghai, is highly experienced in iron ore and coal trading. Combining strong established relationships with end users and traders in China, real-time market intelligence and input from the investment team in Hong Kong, we are well positioned to grow.

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Revenue – Commodity Trading
400
APAC’s iron
350
ore off-take
300
with Mount
Gibson 250
has been a 200
signifi cant 150
contributor to
100
growth in the
half. 50
0
2008 H1 2008 H2 2009 H1 2009 H2 2010 H1
HKD millions
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“Our mission is to be the pre-eminent resource investment house in Hong Kong and to provide long-term growth to our shareholders by pursuing high quality investments globally.”

Shareholder structure (as at 30 June 2010)

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CCB Interna�onal Asset Management Limited
5.06%
14.25%
COL Capital Limited
Fushan Interna�onal Energy Group Limited
13.81% Lin Xu Ming
59.66%
Others
7.22%
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4

Interim Report 2010 APAC Resources Limited

CEO Message

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Dear Investor,

Thank you for your interest in APAC Resources (“ APAC ”).

I started with APAC in January 2010 so this will be my fi rst communication to many of you. Accordingly, I would like to take this opportunity to outline my strategic vision for the company and the opportunities that I see ahead of us.

Our mission has not changed. We still aim to become the pre-eminent natural resource investment house in Hong Kong and I believe we are in an optimal position to achieve this goal. In any business, especially an investment business, success depends on the quality of people behind the scenes. APAC is no different. Over the past six months, we have made a number of signifi cant appointments to enhance the APAC management and investment team. This includes our Chief Financial Offi cer, Peter Curry, who has over 35 years of legal and corporate advisory experience, as well as Portfolio Manager, John Ellis, who brings a successful investment track record of resource companies investments. This provides us with solid foundation to source and assess new investment opportunities globally.

In terms of our core investments, we remain excited about the future potential. Our two primary investments, Mount Gibson Iron and Metals X, performed well during the past half. A combination of higher production, sales and iron ore prices underpinned Mount Gibson Iron reporting a 211% increase in 2010 fi nancial year net profi ts to A$132 million, while the new Extension Hill mine remains on track for fi rst production in late 2011. Metals X has made good progress at its Renison tin mine and reported strong (unaudited) EBITDA of A$22m during the half. Further improvements in operational performance are expected as mining transitions entirely to higher grade Renison underground ore. Our investment in Kalahari Minerals was recently bolstered by a 37% increase in the Rossing South resource to 367 million pounds, which now makes it a top 6 uranium deposit globally. In addition, we have a portfolio of smaller positions across various commodities and stages in the development cycle where we aim to boost shareholder returns over a shorter time frame.

Our commodities team in Shanghai has made an excellent contribution over the fi rst half period, in terms of profi t and information fl ow. This is an area of business where we would like to grow and we continue to look for opportunities for off-take arrangements where APAC can add a recurring income stream to fund future growth.

The past half has continued to be volatile, with equity markets fi nishing the half lower as investors worried about a Chinese slowdown and European sovereign debt issues. Looking ahead, volatility is likely to continue but this provides opportunities for longer term investors like APAC to invest at sensible prices, as fundamentally, we believe in the structural commodity story. We believe demand should continue to be supported by the multi-decade industrialisation and urbanisation of China and other emerging economies, while the supply side remains constrained by higher costs, lower grades and increasing “resource nationalism” risks.

Last but not least, I would like to extend my gratitude to our shareholders and the team for their continued support.

Best wishes,

Andrew Ferguson Chief Executive Offi cer

5

Interim Report 2010 APAC Resources Limited

2010 Highlights

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Jun:

Base metal trading revenues are HK$378 million

Jun:

Half year profits are HK$143 million

Jun:

APAC increases its interest in Kalahari Minerals to 9.99%

May:

APAC increases its interest in Modena Resources to 18.94%

Apr:

APAC completes placement of 1,100,000,000 shares raising HK$550 million (gross proceeds)

Mar:

Mr. Peter Curry joins APAC as Chief Financial Officer

Jan:

Mr. Andrew Ferguson joins APAC as Chief Executive Officer

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6

Interim Report 2010 APAC Resources Limited

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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 2010, 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 2010

Note	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)
Revenue 3 Revenue from sales of goods Net gain from sales of trading securities Change in fair value of trading securities Change in fair value of other f nancial assets Impairment loss on available-for-sale investments Interest income Other operating income 4 Purchases and direct freight charge Equity-settled share option expenses Salaries and allowances Operating lease rental on buildings Share of prof t less losses of associates Exchange difference Other operating expenses Finance costs 5 Prof t before taxation 6 Income tax expenses 7 Prof t for the period Attributable to: Owners of the Company Earnings per share 9 – Basic (HK cents per share) – Diluted (HK cents per share)	378,219 378,219 379 (97,873) (3,326) (20,630) 2,940 41,426 (301,570) – (6,143) (1,444) 247,560 (6,048) (11,220) (656) 221,614 (78,232) 143,382 143,382 2.31 2.30	– – 19,467 115,892 – – 1,132 33,839 – (12,373) (7,636) (1,544) 67,346 1,138 (7,614) (13,412) 196,235 (32,864) 163,371 163,371 3.45 3.41

Details of dividend payable to owners of the Company are set out in note 8.

7

Interim Report 2010 APAC Resources Limited

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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2010

	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)
Prof t for the period Other comprehensive income, net of tax Exchange differences arising on translation of foreign operations Share of other comprehensive income of associates Exchange difference from sharing of interest in associates Fair value change of available-for-sale investments Reclassif cation adjustment for the cumulative other comprehensive income to prof t or loss upon disposal of partial interest in an associate Total comprehensive income for the period Total comprehensive income attributable to: Owners of the Company	143,382 (183) (16,907) (88,449) (31,120) (6,259) (142,918) 464 464	163,371 1,183 105,710 159,035 33,154 – 299,082 462,453 462,453

8

Interim Report 2010 APAC Resources Limited

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 30 June 2010

Note	Group 30 June 31 December 2010 2009 HK$’000 HK$’000 (Unaudited) (Audited)	Group 30 June 31 December 2010 2009 HK$’000 HK$’000 (Unaudited) (Audited)
Assets Non-current assets Property, plant and equipment 10 Available-for-sale investments 11 Interest in associates 12 Total non-current assets Current assets Trade and other receivables 13 Trading securities 14 Available-for-sale investments 11 Pledged bank deposits 15 Cash and cash equivalents 15 Total current assets Total assets Equity and Liabilities Capital and reserves Share capital 16 Reserves Accumulated losses Equity attributable to owners of the Company and total equity Current liabilities Trade and other payables Other f nancial liabilities Tax payable Total liabilities Total equity and liabilities	1,916 44,626 2,386,711 2,433,253 86,952 525,325 3,889 89,375 556,942 1,262,483 3,695,736 692,213 3,069,260 (223,310) 3,538,163 127,955 3,326 26,292 157,573 3,695,736	992 96,376 2,357,583 2,454,951 59,415 71,899 – 89,324 318,203 538,841 2,993,792 569,034 2,885,162 (492,182) 2,962,014 10,020 – 21,758 31,778 2,993,792

9

Interim Report 2010 APAC Resources Limited

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2010

				Attributable	to owners of th	e company
	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/(losses) reserve HK$’000	Retained prof ts/ (accumulated losses) HK$’000	Total HK$’000
At 1 January 2009 (audited) Prof t for the period Other comprehensive income for the period Total comprehensive income for the period Issue of shares upon placement, net of expenses Issue of shares upon exercise of warrants Equity-settled share option expenses At 30 June 2009 (unaudited) At 1 January 2010 (audited) Prof t for the period Other comprehensive income for the period Total comprehensive income for the period Issue of shares upon exercise of warrants Issue of shares upon placement, net of expenses Lapse of equity-settled share option At 30 June 2010 (unaudited)	472,866 – – – 90,000 16 – 562,882	1,988,220 – – – 350,960 32 – 2,339,212	(14,980) – – – – – – (14,980)	(41,594) – 33,154 33,154 – – – (8,440)	(64,586) – 160,218 160,218 – – – 95,632	262,627 – – – – – 12,373 275,000	(15,331) – 105,710 105,710 – – – 90,379	(1,315,961) 163,371 – 163,371 – – – (1,152,590)	1,271,261 163,371 299,082 462,453 440,960 48 12,373 2.187,095
	569,034	2,351,486	(14,980)	(7,253)	232,630	193,918	129,361	(492,182)	2,962,014
	–	–	–	–	–	–	–	143,382	143,382
	–	–	–	(30,384)	(93,516)	–	(19,018)	–	(142,918)
	–	–	–	(30,384)	(93,516)	–	(19,018)	143,382	464
	13,179	26,357	–	–	–	–	–	–	39,536
	110,000	426,149	–	–	–	–	–	–	536,149
	–	–	–	–	–	(125,490)	–	125,490	–
	692,213	2,803,992	(14,980)	(37,637)	139,114	68,428	110,343	(223,310)	3,538,163

10

Interim Report 2010 APAC Resources Limited

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2010

	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)
Net Cash From Operating Activities Net Cash Used In Investing Activities Net Cash From Financing Activities Net Increase 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	146,404 (482,511) 575,029 238,922 318,203 (183) 556,942	334,844 (469,793) 230,618 95,669 131,019 1,183 227,871

11

Interim Report 2010 APAC Resources Limited

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2010

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 offi ce is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda and the address of its principal offi ce 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 in base metals and commodities; and (ii) trading and investment in listed securities with a portfolio primarily focused on natural resources and related sector and industries.

These unaudited condensed consolidated fi nancial statements (“ Interim Financial Statements ”) are presented in Hong Kong dollars (“ HK$ ”), which is the Company’s functional and presentation currency.

2. Basis of Preparation and Accounting Policies

These 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 Certifi ed Public Accountants (the “ HKICPA ”).

These Interim Financial Statements should be read in conjunction with the 2009 annual report.

These Interim Financial Statements contain condensed consolidated fi nancial statements and selected explanatory notes. The notes include an explanation of events and transactions that are signifi cant to an understanding of the changes in fi nancial position and performance of the Group since the 2009 annual report. The Interim Financial Statements and notes thereon do not include all of the information required for full set of fi nancial statements prepared in accordance with Hong Kong Financial Reporting Standards (“ HKFRSs ”, which term collectively includes HKASs and Interpretations).

In the current period, the Group has applied, for the fi rst 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.

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Interim Report 2010 APAC Resources Limited

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2. Basis of Preparation and Accounting Policies (Continued)

HKAS 1 (Amendment)	Presentation of f nancial statements
HKAS 27 (Revised)	Consolidated and separate f nancial statements
HKAS 38 (Amendment)	Intangible assets
HKAS 39 (Amendment)	Eligible hedged items
HKFRSs (Amendments)	Improvements to HKFRSs 2009
HKFRSs (Amendments)	Amendment to HKFRS 5 as part of improvements to
	HKFRSs 2008
HKFRS 1 (Revised)	First-time adoption of Hong Kong Financial Reporting
	Standards
HKFRS 1 (Amendments)	Additional exemptions for f rst-time adopters
HKFRS 2 (Amendments)	Group cash-settled share-based payment transactions
HKFRS 3 (Revised)	Business combinations
HK (IFRIC) – INT 17	Distribution of non-cash assets to owners

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

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

HKFRSs (Amendments)	Improvements to HKFRSs 2010_2_
HKAS 24 (Revised)	Related party disclosures_4_
HKAS 32 (Amendment)	Classif cation of rights issues_1_
HKFRS 1 (Amendment)	Limited exemption from comparative HKFRS 7
	disclosure for f rst-time adopters_3_
HKFRS 9	Financial instruments (relating to the classif cation and
	measurement of f nancial assets)5
HK(IFRIC) – INT 14	Prepayments of a minimum funding requirement_4_
(Amendment)
HK(IFRIC) – INT 19	Extinguishing f nancial liabilities with equity
	instruments_3_

• 1 Effective for annual periods beginning on or after 1 February 2010

• 2 Effective for annual periods beginning on or after 1 July 2010 and 1 January 2011,as appropriate

• 3 Effective for annual periods beginning on or after 1 July 2010

• 4 Effective for annual periods beginning on or after 1 January 2011

• 5 Effective for annual periods beginning on or after 1 January 2013

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Interim Report 2010 APAC Resources Limited

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3. Segment Information

The Group’s reportable segments under HKFRS 8 are as follows:

• (i) trading in base metals ; and

• (ii) trading and investment in listed securities.

Segment revenue and result

The following is an analysis of the Group’s revenue and results by reportable segment.

Six months ended 30 June 2010

	Trading in base metals	Trading and investment in listed securities	Group Total
	HK$’000	HK$’000	HK$’000
Revenue Gross sales proceeds from trading and investment in listed securities Segment result Share of prof ts less losses of associates Impairment loss on available-for-sale investments Change in fair value of other f nancial assets Unallocated corporate incomes Unallocated corporate expenses Finance costs Prof t before taxation Income tax expense Prof t for the period
	378,219	–	378,219
	–	7,209	7,209
	75,837	(106,334)	(30,497)
			247,560
		(20,630)	(20,630)
		(3,326)	(3,326)
			42,725
			(13,562)
		(1)	(656)
			221,614
	(4,200)	(335)	(78,232)
			143,382

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Interim Report 2010 APAC Resources Limited

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3. Segment Information (Continued)

Segment revenue and result (Continued)

Six months ended 30 June 2009

	Trading in base metals HK$’000	Trading and investment in listed securities HK$’000	Group Total HK$’000
Revenue Gross sales proceeds from trading and investment in listed securities Segment result Share of prof t of associates Unallocated corporate incomes Unallocated corporate expenses Finance costs Prof t before taxation Income tax expense Prof t for the period	– – (932) (7) (423)	– 56,850 133,162 (1,977) (12,600)	– 56,850 132,230 67,346 34,622 (24,551) (13,412) 196,235 (32,864) 163,371

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Interim Report 2010 APAC Resources Limited

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3. Segment Information (Continued)

Segment revenue and result (Continued)

Other segment items included in consolidated income statement for the six months ended 30 June 2010 are as follows:

Trading in base metals HK$’000	Trading in base metals HK$’000	Trading and investment in listed securities Unallocated	Trading and investment in listed securities Unallocated	Group Total
	HK$’000	HK$’000	HK$’000	HK$’000
Depreciation Interest income Change in fair value of trading securities
	(2)	–	(419)	(421)
	1,526	–	1,414	2,940
	–	(97,873)	–	(97,873)

Other segment items included in consolidated income statement for the six months ended 30 June 2009 are as follows:

		Trading
		and
		investment
	Trading in	in listed		Group
	base metals	securities	Unallocated	Total
	HK$’000	HK$’000	HK$’000	HK$’000
Depreciation	(2)	–	(327)	(329)
Interest income	284	–	848	1,132
Change in fair value of
trading securities	–	115,892	–	115,892

16

Interim Report 2010 APAC Resources Limited

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3. Segment Information (Continued)

Segment assets

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

	Group 30 June 2010 31 December 2009 HK$’000 HK$’000 (Unaudited) (Audited)	Group 30 June 2010 31 December 2009 HK$’000 HK$’000 (Unaudited) (Audited)
Trading in base metals Trading and investment in listed securities Interest in associates Unallocated assets Consolidated assets	581,546 639,774 1,221,320 2,386,711 87,705 3,695,736	424,729 168,631 593,360 2,357,583 42,849 2,993,792

4. Other Operating Income

	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)
Dividend income Commission income Excess of the Group’s interest in the net fair value of an associate’s identif able assets, liabilities and contingent liabilities over cost of investment Underwriting fee recovered Gain on disposal of partial interest in an associate Sundry income	473 – – – 40,606 347 41,426	17 2,251 21,244 8,641 – 1,686 33,839

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Interim Report 2010 APAC Resources Limited

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5. Finance Costs

6.		Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)
	Interest on margin f nancing Interest on short-term loan Interest on bank borrowings Prof t Before Taxation	656 8,211 – 5,194 – 7 656 13,412 Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)
	Prof t before taxation has been arrived at after charging/(crediting) the following : Depreciation Exchange loss/(gain), net Legal and professional fees Consultancy fee Staff costs, including directors’ emoluments – salaries and allowances – equity-settled share option expenses – directors’ quarters – retirement benef ts scheme contributions, net of nil forfeited contributions Total staff costs	421 6,048 1,909 1,072 6,143 – 643 248 7,034	329 (1,138) (1,778) 927 7,636 12,373 119 266 20,394

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Interim Report 2010 APAC Resources Limited

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7. Income Tax Expense

	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)
Income tax expense for the p eriod Hong Kong prof ts tax The PRC enterprise income tax Overseas tax provided Total income tax expense	4,535 – 4,535 73,697 78,232	12,769 254 13,023 19,841 32,864

Hong Kong profi ts tax has been provided for at the rate of 16.5% on the Group estimated assessable profi t for the six months period ended 30 June 2010 and 2009.

The PRC subsidiaries are subject to the PRC enterprise income tax at 25%.

The Group’s share of associates’ tax charge for the six months period ended 30 June 2010 is included in the overseas tax provided for the period above.

The Group has no signifi cant unprovided deferred taxation at the reporting date.

8. Dividend

No dividends had been paid or declared by the Company during the period (2009: nil).

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Interim Report 2010 APAC Resources Limited

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9. Earnings Per Share

The calculation of the basic and diluted earnings per share attributable to owners of the Company is based on the following data:

	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)
Prof t for the purpose of basic and diluted earnings per share Weighted average number of ordinary shares used in the calculation of basic earnings per share Effect of dilutive potential ordinary shares in respect of : – warrants – share options Weighted average number of ordinary shares for the purpose of diluted earnings per share	143,382 163,371 Number of shares 6,210,273,123 4,738,626,348 11,055,727 50,130,434 – – 6,221,328,850 4,788,756,782

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.

10. Property, Plant and Equipment

During the period, the Group incurred approximately HK$1,344,000 (six months ended 30 June 2009: HK$8,000) on acquisition of property, plant and equipment.

20

Interim Report 2010 APAC Resources Limited

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11. Available-for-sale Investments

12.		Group 30 June 2010 31 December 2009 HK$’000 HK$’000 (Unaudited) (Audited)	Group 30 June 2010 31 December 2009 HK$’000 HK$’000 (Unaudited) (Audited)
	Non-current Listed equity securities, Hong Kong, at fair value Listed equity securities, overseas, at fair value Current Unlisted equity securities, overseas, at cost Interest in Associates	15,533 23,816 29,093 72,560 44,626 96,376 3,889 – Group 30 June 31 December 2010 2009 HK$’000 HK$’000 (Unaudited) (Audited)
	Cost of investment in associates Listed in overseas Unlisted in the PRC Share of post-acquisition prof ts and other comprehensive income, net of dividends received Less: impairment loss Fair value of listed investments	2,114,898 22,848 552,989 (304,024) 2,386,711 3,167,491	2,141,216 22,848 497,543 (304,024) 2,357,583 3,573,413

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Interim Report 2010 APAC Resources Limited

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12. Interest in Associates (Continued)

At 31 December 2009, the Group held 26.75% interest in Mount Gibson Iron Limited (“ MGX ”). At 30 June 2010, the Group’s interest in MGX was reduced to 26.22%.

At 30 June 2010 and 31 December 2009, the Group held 29.08% and 40% interest in Metals X Limited (“ MLX ”) and 平港（上海）貿易有限公司 , respectively.

According to the Listing Rules of the Australian Stock Exchange, the annual report of the Australian listed company should be published within three months from the end of the reporting date. The year end date of MLX was 30 June 2010. No fi nancial information of MLX as at 30 June 2010 had been published. Therefore, the Group was unable to recognise its share of profi t or loss and other comprehensive income of MLX.

13. Trade and Other Receivables

	Group 30 June 2010 31 December 2009 HK$’000 HK$’000 (Unaudited) (Audited)	Group 30 June 2010 31 December 2009 HK$’000 HK$’000 (Unaudited) (Audited)
Trade receivables Interest receivables Other receivables Other deposits and prepayments	79,346 – – 7,606 86,952	48,660 5,685 1 5,069 59,415

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

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

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14. Trading Securities

15.		Group 30 June 2010 31 December 2009 HK$’000 HK$’000 (Unaudited) (Audited)	Group 30 June 2010 31 December 2009 HK$’000 HK$’000 (Unaudited) (Audited)
	Trading securities, at fair value Listed equity securities, in Hong Kong Listed equity securities, in overseas Cash and Cash Equivalents	23,163 7,839 502,162 64,060 525,325 71,899 Group 30 June 2010 31 December 2009 HK$’000 HK$’000 (Unaudited) (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	89,375 493,381 63,561 646,317 (89,375) 556,942	89,324 318,036 167 407,527 (89,324) 318,203

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16. Share Capital

	Number of shares	Amount HK$’000
Ordinary shares of HK$0.10 each Authorised: At 1 January 2010 Increase during the period At 30 June 2010 Issued and fully paid: At 1 January 2010 Issue of shares upon exercise of warrants Issue of shares under placement At 30 June 2010	8,000,000,000 12,000,000,000 20,000,000,000 5,690,343,455 131,784,535 1,100,000,000 6,922,127,990	800,000 1,200,000 2,000,000 569,034 13,179 110,000 692,213

Details of the major changes in the Company’s share capital during the period ended 30 June 2010 are as follows :

• (a) Pursuant to an ordinary resolution passed on 29 June 2010, the authorised share capital of the Company was increased to HK$2,000 million by the creation of 12,000 million shares of HK$0.1 each.

• (b) On 23 April 2010, the Company completed a placing of 1,100 million new shares at the price of HK$0.5 per share, which raised gross proceeds of HK$550 million.

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 defi ned 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 months period ended 30 June 2010, 184,000,000 share options (year ended 31 December 2009 (audited): 166,000,000 share options) were lapsed or expired. As at 30 June 2010, there were 717,000,000 (as at 31 December 2009 (audited): 334,000,000) share options outstanding.

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17. Share Option Scheme (Continued)

Pursuant to the announcement of the Company dated 4 May 2010, 567,000,000 share options were proposed to be granted to grantees to subscribe for a total of 567,000,000 shares at the exercise prices. The grant of directors’ share options under the Scheme to two executive directors were conditional upon approval of independent shareholders at the annual general meeting on 29 June 2010, which was obtained accordingly. Details of the share options outstanding as at 30 June 2010 under the Scheme are as follows:

					No. of share
					options	No. of share
				Outstanding	lapsed or	options	Outstanding	Closing price
			Exercise	as at	expired	granted	as at	immediately
		Exercisable	price	1 January	during the	during	30 June	before
Grantee	Date of grant	period	per share	2010	period	the period	2010	date of grant
						(note a
			HK$			and note c)		HK$
Directors
Mr. Andrew Charles	29 June 2010	7 July 2010	1.00	–	–	250,000,000	250,000,000	0.55
Ferguson	(note b)	to 6 July 2013
Ms. Chong Sok Un	15 August 2007	15 August 2007	1.50	110,000,000	–	–	110,000,000	1.02
		to 5 July 2010
	29 June 2010	7 July 2010	1.00	–	–	150,000,000	150,000,000	0.55
	(note b)	to 6 July 2013
Mr. Peter	4 May 2010	7 July 2010	1.00	–	–	60,000,000	60,000,000	0.71
Anthony Curry		to 6 July 2013
Mr. Kong Muk Yin	4 May 2010	7 July 2010	1.00	–	–	20,000,000	20,000,000	0.71
		to 6 July 2013
Mr. Yue Jialin	4 May 2010	7 July 2010	1.00	–	–	2,000,000	2,000,000	0.71
		to 6 July 2013
Mr. So Kowk Hoo	4 May 2010	7 July 2010	1.00	–	–	2,000,000	2,000,000	0.71
		to 6 July 2013
Mr. Liu	27 July 2007	27 July 2007	1.20	150,000,000	150,000,000	–	–	1.45
Yongshun		to 28 May 2010
	4 May 2010	7 July 2010	1.00	–	–	2,000,000	2,000,000	0.71
		to 6 July 2013

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17. Share Option Scheme (Continued)

Grantee Date of grant Exercisable period Exercise price per share HK$	Outstanding as at 1 January 2010	No. of share options lapsed or expired during the period	No. of share options granted during the period (note a and note c)	Outstanding as at 30 June 2010 Closing price immediately before date of grant HK$
Directors(Continued) Mr. Wong Wing Kuen, Albert 6 July 2007 6 July 2007 to 5 July 2010 1.50 4 May 2010 7 July 2010 to 6 July 2013 1.00 Mr. Chang Chu Fai, Johnson Francis 6 July 2007 6 July 2007 to 5 July 2010 1.50 4 May 2010 7 July 2010 to 6 July 2013 1.00 Mr. Robert Moyse Willcocks 4 May 2010 7 July 2010 to 6 July 2013 1.00 Others Employees 29 May 2007 29 May 2007 to 28 May 2010 1.20 6 July 2007 6 July 2007 to 5 July 2010 1.50 4 May 2010 7 July 2010 to 6 July 2013 1.00 Consultants 6 July 2007 6 July 2007 to 5 July 2010 1.50 3 October 2007 3 October 2007 to 2 October 2010 1.40 4 May 2010 7 July 2010 to 6 July 2013 1.00	3,000,000 – 2,000,000 – – 33,000,000 1,000,000 – 10,000,000 25,000,000 – 334,000,000	– – – – – 33,000,000 1,000,000 – – – – 184,000,000	– 2,000,000 – 2,000,000 2,000,000 – – 15,000,000 – – 60,000,000 567,000,000	3,000,000 1.47 2,000,000 0.71 2,000,000 1.47 2,000,000 0.71 2,000,000 0.71 – 1.09 – 1.47 15,000,000 0.71 10,000,000 1.47 25,000,000 1.22 60,000,000 0.71 717,000,000

Notes:

• (a) The relevant share options are exercisable subject to the vesting conditions as detailed in the announcement dated 4 May 2010.

• (b) The share options were granted on 4 May 2010 conditional upon approval at annual general meeting which were eventually obtained on 29 June 2010.

• (c) The share options are measured using the Black-Scholes Model.

The Group recognised nil expense for the six months ended 30 June 2010 (six months ended 30 June 2009: HK$12,373,000) in relation to share options granted by the Company.

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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).

As at 31 December 2009, 132,094,050 Warrants outstanding. During the six months period ended 30 June 2010, 131,784,535 Warrants were exercised for 131,784,535 ordinary shares (year ended 31 December 2009 (audited): 61,684,400 Warrants were exercised for 61,684,400 ordinary shares) at a price of HK$0.30 each. The rights attaching to the outstanding 309,515 Warrants expired on 4 February 2010.

19. Operating Lease Commitments

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

	Group 30 June 31 December 2010 2009 HK$’000 HK$’000 (Unaudited) (Audited)	Group 30 June 31 December 2010 2009 HK$’000 HK$’000 (Unaudited) (Audited)
Within one year After one year but within f ve years	3,748 2,381 6,129	1,885 1,006 2,891

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

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20. Pledge of Assets

	Group 30 June 31 December 2010 2009 HK$’000 HK$’000 (Unaudited) (Audited)	Group 30 June 31 December 2010 2009 HK$’000 HK$’000 (Unaudited) (Audited)
(a) Margin loan facilities secured by some of the investment in listed associates, available-for-sale investments and trading securities (b) Trade f nance facilities of HK$10 million and US$60 million (2009: HK$10 million and US$60 million) granted by banks and secured by bank deposits of the Group	1,872,543 89,375 1,961,918	1,929,666 89,324 2,018,990

21. Related Party Transactions

• (a) During the six months period, the Group entered into the following material related party transactions.

	Group 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)	Group 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)
Purchase from Mount Gibson Mining Limited and Koolan Island Ore Pty Limited_(note 1) Corporate service fee to Star Telecom Holding Limited(note 4) Corporate consultancy service income from Fushan International Energy Group Limited(note 2) Sales co-ordination service income from 首長鋼鐵國際貿易有限公司(note 3)_	218,490 172 – –	– – 470 2,251

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21. Related Party Transactions (Continued)

• (a) Notes:

• (1) Both companies are subsidiaries of MGX, an associate of the Group.

• (2) The company is a substantial shareholder of the Company.

• (3) The company was a related company of the Group as Mr. Cao Zhong was the common director of both companies, during the six months period ended 30 June 2009.

• (4) The company is a related company of the Company as Ms. Chong Sok Un and Mr. Kong Muk Yin are common directors of both companies.

• (b) Compensation of key management personnel

	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)	Group Six months ended 30 June 2010 2009 HK$’000 HK$’000 (Unaudited) (Unaudited)
Short-term employee benef ts Post-employment benef ts Share-based payment	3,491 18 – 3,509	4,339 23 12,373 16,735

22. Events After the Reporting Period

There are no signifi cant events subsequent to 30 June 2010 which would materially affect the Group’s operating and fi nancial position as of the date of this report.

23. Approval of Interim Financial Statements

The interim fi nancial statements were approved by the board of directors on 25 August 2010.

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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 fi nancial information set out on pages 7 to 29, which comprises the condensed consolidated statement of fi nancial position of APAC Resources Limited (the “ Company ”) and its subsidiaries (together the “ Group ”) as of 30 June 2010 and the related condensed consolidated income statement and condensed consolidated statements of comprehensive income, changes in equity and cash fl ows for the sixmonth period then ended, and a summary of signifi cant 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 fi nancial 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 Certifi ed Public Accountants. The directors of the Company are responsible for the preparation and presentation of this interim fi nancial information in accordance with HKAS 34. Our responsibility is to express a conclusion on this interim fi nancial 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

Except as explained in the following paragraph, 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 Certifi ed Public Accountants. A review of interim fi nancial information consists of making inquiries, primarily of persons responsible for fi nancial 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 signifi cant matters that might be identifi ed in an audit. Accordingly, we do not express an audit opinion.

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As detailed in note 12 to the fi nancial statements, the Group has an overseas listed associate with carrying amount of HK$253,289,693. The Group was unable to recognise its share of profi t or loss and other comprehensive income of the overseas listed associate as the results of the associate had not been published. Had we been able to complete our review of the associate, matters might have come to our attention indicating that adjustments might be necessary to the interim fi nancial statements.

Except for the adjustments to the interim fi nancial statements that we might have become aware of had it not been for the situation described above, based on our review, nothing has come to our attention that causes us to believe that the interim fi nancial information is not prepared, in all material respects, in accordance with HKAS 34.

Graham H. Y. Chan & Co.

Certifi ed Public Accountants (Practising)

Hong Kong, 25 August 2010

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INTERIM DIVIDEND

The Board has resolved not to declare the payment of an interim dividend for the six months ended 30 June 2010 (2009: nil).

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Results

For the six months ended 30 June 2010, the Group derived HK$378,219,000 (2009: nil) turnover in relation to its commodity trading business during a signifi cantly improved iron ore market environment in particular. However, the improved commodity trading markets were offset to a large extent by uncertain equity market conditions resulting in write downs of the Group’s equity portfolio. Notwithstanding, the Group achieved a net profi t attributable to shareholders of HK$143,382,000 (2009: HK$163,371,000) for the period.

Earnings per share (basic) for the six months ended 30 June 2010 was 2.31 HK cents (2009: 3.45 HK cents) and the net asset value per share as at 30 June 2010 was HK$0.51 (2009: HK$0.39).

Business Review

Trading and investment of listed securities

For the period under review, the global economic environment remained fragile and as a consequence equity markets were diffi cult particularly during the last quarter. For the businesses of trading of and investment in listed securities, the Group recorded gross sales proceeds of HK$7,209,000 (2009: HK$56,850,000) and a loss of HK$106,334,000 (2009: profi t of HK$133,162,000). The loss was mainly due to an unrealised loss in relation to the write down of trading securities amounting to HK$97,873,000 (2009: unrealised gain of HK$115,892,000).

As at 30 June 2010, the Group maintained a long term investment portfolio of availablefor-sale investments of HK$44,626,000 (2009: HK$117,741,000) and a short term portfolio of trading securities of HK$525,325,000 (2009: HK$334,908,000).

Trading in base metals

Commodity prices were signifi cantly improved during the period. This was particularly the case for iron ore and accordingly the Group enjoyed buoyant trading conditions on the sales side of it’s operations. Gross turnover for the period was HK$378,219,000 (2009: nil) and a profi t of HK$75,837,000 (2009: loss of HK$932,000).

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Under the Group’s long term iron ore purchase agreements with Mount Gibson Iron Limited (“ MGX ”), the price is re-set annually based upon the Hamersely Benchmark price on 1 April. As at 1 April this year the Hamersely Benchmark price had not been set which remains the case as at the date of this report. Indications are that the Benchmark pricing system has ceased to exist and the parties to the contracts are currently re-negotiating the pricing formula pursuant to the terms of the contract. Interim pricing arrangements have been agreed which signifi cantly increase the Group’s iron ore purchase price in accordance with prevailing market prices.

PRINCIPAL ASSOCIATED COMPANY

The Group has two principal associated companies: MGX and Metals X Limited (“ MLX ”). As at the date of this report MGX has released its results for the year ended 30 June 2010. MLX has not yet released its results and accordingly only the results of MGX have been included in this report.

The share of profi t of associates (excluding MLX) (after tax) of the Group for the six months ended 30 June 2010 was HK$173,863,000 (2009: HK$47,505,000). As at 30 June 2010, the Group’s interest in associates amounted to HK$2,386,711,000 (2009: HK$1,291,805,000).

MGX

MGX had a successful half year period which included record sales numbers from its Koolan Island and Tallering Peak mines, as well as the start of construction at its Extension Hill project, where the Group also has a life of mine offtake agreement. Combined with strong iron ore prices, MGX has moved into a very strong fi nancial position and reported cash on hand and term deposits of A$347,404,000 as at 30 June 2010.

According to MGX’s preliminary fi nal report for the year ended 30 June 2010, MGX recorded total revenue of A$555,278,000 (equivalent to approximately HK$3,689,128,000) (2009: A$431,730,000, equivalent to approximately HK$2,694,535,000) and a net profi t of A$132,395,000 (equivalent to approximately HK$879,599,000) (2009: A$42,618,000 equivalent to approximately HK$265,990,000) for the year ended 30 June 2010.

The excellent results of MGX for the year underline the Group’s original investment strategy.

MLX

During the half year period, MLX settled the previously announced 50/50 Bluestone Mines Tasmanian Joint Venture with Yunnan Tin – Parksong Group for a cash payment of A$51,200,000. Part of the funds were reinvested into a 19.99% stake in West Australian zinc and copper miner, Jabiru Metals. Operationally, production improved at Renison and a 61% increase in underground reserves was reported. After period-end, MLX announced a landmark mining agreement with the Traditional Owners which is a signifi cant step in the development of the Wingellina nickel project.

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Financial Review

Liquidity, Financial Resources and Capital Structure

As at 30 June 2010, the Group’s non-current assets amounted to HK$2,433,253,000 (2009: HK$1,410,870,000) and net current assets amounted to HK$1,104,910,000 (2009: HK$776,225,000) with a current ratio of 8.01 times (2009: 50.9 times) calculated on the basis of the Group’s current assets over current liabilities.

As at 30 June 2010, the Group had no borrowings (2009: nil) and has unused margin loan facilities available to it amounting to HK$483,000,000 in total secured some of the investment in listed associates, available-for-sale investments and trading securities.

During the period under review, the Group placed a further 1,100,000,000 shares at HK$0.50 per share to new investors raising an additional gross proceeds of HK$550,000,000. Thereby increasing its working capital base to enable it to take advantage of market opportunities as they arise.

As a result of this placement and the exercise of warrants, the issued share capital of the Group was increased from 5,690,343,455 (as at 31 December 2009) to 6,922,127,990. The rights attaching to the outstanding warrants expired on 4 February 2010.

Foreign Exchange Exposure

For the period under review, the Group’s assets were mainly denominated in Australian dollars and Hong Kong dollars while the liabilities were mainly denominated in Hong Kong dollars. As a substantial portion of the assets is held as long-term investments, there would be no material immediate effect on the cash fl ow of the Group from adverse movements in foreign exchange. 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 2010, the Group’s some of the investment in listed associates, available-forsale investments and trading securities of HK$1,872,543,000 (2009: HK$1,200,192,000) were pledged to a stock-broking fi rm to secure unused margin loan facilities available to the Group. The Group’s bank deposits of HK$89,375,000 (2009: HK$89,308,000) were pledged to banks to secure various trade banking facilities granted to the Group.

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.

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PROSPECTS

The Group’s two principal associates, MGX and MLX are well positioned to take advantage of the future demand for iron ore and tin respectively. The Group is also encouraged by the prospects for MLX’s other portfolio of assets.

Whilst the Group’s portfolio of assets held for sale and trading securities is subject to the current weakness in the equity markets, management remain confi dent of the portfolio’s longer term prospects.

As far as the Group’s commodity trading business is concerned it seems apparent that it will face some challenges arising from tighter margins over the second half of the year.

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OTHER INFORMATION

DIRECTORS’ INTERESTS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at 30 June 2010, 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 notifi ed 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 2010 Interests in shares Interests under equity derivatives Total interests (Note 1)
Ms. Chong Sok Un Benef cial owner and interest of controlled corporation (Note 3) Mr. Andrew Charles Ferguson Benef cial owner Mr. Peter Anthony Curry Benef cial owner Mr. Kong Muk Yin Benef cial owner Mr. Yue Jialin Benef cial owner and interest of controlled corporation (Note 5)	986,480,000 260,000,000 (Note 2) 1,246,480,000 (Note 4) 18.01% 25,000,000 250,000,000 (Note 2) 275,000,000 3.97% — 60,000,000 (Note 2) 60,000,000 0.87% — 20,000,000 (Note 2) 20,000,000 0.29% 135,519,562 2,000,000 (Note 2) 137,519,562 1.99%

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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 2010 Interests in shares Interests under equity derivatives Total interests (Note 1)
Mr. Lee Seng Hui Interest of controlled corporation (Note 7) Mr. So Kwok Hoo Benef cial owner Mr. Liu Yongshun Benef cial owner Mr. Wong Wing Kuen, Albert Benef cial owner Mr. Chang Chu Fai, Johnson Francis Benef cial owner Mr. Robert Moyse Willcocks Benef cial owner	1,098,532,893 — 1,098,532,893 (Note 6) 15.87% — 2,000,000 (Note 2) 2,000,000 0.03% — 2,000,000 (Note 2) 2,000,000 0.03% — 5,000,000 (Note 2) 5,000,000 (Note 8) 0.07% — 4,000,000 (Note 2) 4,000,000 (Note 9) 0.06% — 2,000,000 (Note 2) 2,000,000 0.03%

Notes:

1. The percentage of shareholding is calculated on the basis of the Company’s issued share capital of 6,922,127,990 shares as at 30 June 2010.

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 fi nancial statements.

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DIRECTORS’ INTERESTS IN SHARES, UNDERLYING SHARES AND DEBENTURES (Continued)

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

Notes: (Continued)

1. 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 2010, COL was 70.11% 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% benefi cial interest. COL is therefore deemed to have interests in the shares in which Sparkling Summer and Rise Cheer are interested. Ms. Chong Sok Un is therefore deemed to have interests in the shares through her 100% interest in China Spirit.

2. This represents the interests held by: (i) Sparkling Summer as to 348,520,000 shares, (ii) Rise Cheer as to 637,960,000 shares, and (iii) 260,000,000 share options granted to Ms. Chong Sok Un in which 110,000,000 share options lapsed on 6 July 2010.

3. These shares are registered in the name of and benefi cially owned by Profi t Harbour Investments Limited, the entire issued share capital of which is owned by Mr. Yue Jialin.

4. This represents security interests held by: (i) Itso Limited as to 11,060,000 shares, (ii) Sun Hung Kai Strategic Capital Limited as to 587,472,893 shares, and (iii) Sun Hung Kai Structured Finance Limited as to 500,000,000 shares, all of which are indirect wholly-owned subsidiaries of Sun Hung Kai & Co. Limited (“ SHK ”).

5. SHK is an indirect non wholly-owned subsidiary of Allied Properties (H.K.) Limited (“ APL ”) which in turn is a non wholly-owned subsidiary of Allied Group Limited (“ AGL ”). Accordingly, AGL is deemed to have the same long position as APL which in turn is deemed to have the same long position as SHK under the SFO. Lee and Lee Trust, a discretionary trust of which Mr. Lee Seng Hui is one of the trustees, owned approximately 52.40% interest in the issued share capital of AGL as at 30 June 2010. Accordingly, Lee and Lee Trust is deemed to have the same long position as AGL under the SFO and Mr. Lee Seng Hui, being a trustee of Lee and Lee Trust, is therefore deemed to have interests in the shares in which Lee and Lee Trust is interested.

6. 5,000,000 share options granted to Mr. Wong Wing Kuen, Albert in which 3,000,000 share options lapsed on 6 July 2010.

7. 4,000,000 share options granted to Mr. Chang Chu Fai, Johnson Francis in which 2,000,000 share options lapsed on 6 July 2010.

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DIRECTORS’ INTERESTS IN SHARES, UNDERLYING SHARES AND DEBENTURES (Continued)

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

Save as disclosed above, as at 30 June 2010, 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 notifi ed 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 2010.

SHARE OPTION SCHEME

Further disclosure relating to the Company’s share option scheme is set out in Note 17 to the condensed fi nancial 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 fi nancial 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 benefi ts by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

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SUBSTANTIAL SHAREHOLDERS

As at 30 June 2010, 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 2010 Interests in shares Interests under equity derivatives Total interests (Note 1)

Fushan International Energy Group Limited Interest of controlled corporation Rise Cheer Investments Limited Benef cial owner COL Capital Limited Interest of controlled corporation (Note 3) Sun Hung Kai & Co. Limited Interest of controlled corporation (Notes 6 & 9) Allied Properties (H.K.) Limited Interest of controlled corporation (Notes 6 & 9) Allied Group Limited Interest of controlled corporation (Notes 7 & 9) Lee and Lee Trust Interest of controlled corporation (Notes 8 & 9) Lin Xu Ming Interest of controlled corporation (Note 10)

956,000,000 — 956,000,000 (Note 2) 13.81% 637,960,000 — 637,960,000 9.22% 986,480,000 — 986,480,000 (Note 4) 14.25% 1,098,532,893 — 1,098,532,893 (Note 5) 15.87% 1,098,532,893 — 1,098,532,893 15.87% 1,098,532,893 — 1,098,532,893 15.87% 1,098,532,893 — 1,098,532,893 15.87% 500,000,000 — 500,000,000 7.22%

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Interim Report 2010 APAC Resources Limited

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SUBSTANTIAL SHAREHOLDERS (Continued)

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

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 2010 Interests in shares Interests under equity derivatives Total interests (Note 1)

CCB International Asset Management Limited Investment manager & benef cial owner (Note 11) CCB International Assets Management (Cayman) Limited Interest held by a controlled corporation (Note 11) CCB International (Holdings) Limited Benef cial owner & interest held by a controlled corporation (Note 11) CCB Financial Holdings Limited Interest held by a controlled corporation (Note 11) CCB International Group Holdings Limited Interest held by a controlled corporation (Note 11) China Construction Bank Corporation Interest held by a controlled corporation (Note 11) Central Huijin Investment Limited Interest held by a controlled corporation (Note 11)

350,000,000 — 350,000,000 5.06% 350,000,000 — 350,000,000 5.06% 350,000,000 — 350,000,000 5.06% 350,000,000 — 350,000,000 5.06% 350,000,000 — 350,000,000 5.06% 350,000,000 — 350,000,000 5.06% 350,000,000 — 350,000,000 5.06%

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Interim Report 2010 APAC Resources Limited

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SUBSTANTIAL SHAREHOLDERS (Continued)

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

Notes:

1. The percentage of shareholding was calculated on the basis of the Company’s issued share capital of 6,922,127,990 shares as at 30 June 2010.

2. These shares are held by Benefi t Rich Limited (“ Benefi t Rich ”), a wholly-owned subsidiary of Fushan International Energy Group Limited (“ Fushan ”). Accordingly, Fushan is deemed to have the same long position as Benefi t Rich under the SFO.

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 2010, COL was 70.11% owned by Vigor Online Offshore Limited which in turn is a wholly-owned subsidiary of China Spirit Limited in which Ms. Chong Sok Un maintains 100% benefi cial interest. COL is therefore deemed to have interests in the shares in which Sparkling Summer and Rise Cheer are interested.

4. This represents the interests held by: (i) Sparkling Summer as to 348,520,000 shares, and (ii) Rise Cheer as to 637,960,000 shares.

5. This represents security interests held by: (i) Itso Limited (“ Itso ”) as to 11,060,000 shares, (ii) Sun Hung Kai Strategic Capital Limited (“ SHKSC ”) as to 587,472,893 shares, and (iii) Sun Hung Kai Structured Finance Limited (“ SHKSF ”) as to 500,000,000 shares, all 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, SHKSC and SHKSF under the SFO.

6. 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.

7. 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.

8. 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 52.40% interest in the issued share capital of AGL as at 30 June 2010. Accordingly, Lee and Lee Trust is deemed to have the same long position as AGL under the SFO.

9. 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.

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Interim Report 2010 APAC Resources Limited

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SUBSTANTIAL SHAREHOLDERS (Continued)

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

Notes: (Continued)

1. (Continued)

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.

By the announcement dated 28 January 2010 jointly made by APL and AGL, it was announced, inter alia, that on 27 January 2010, SHKSF (as lender) entered into a loan agreement (the “ Loan Agreement ”) with a borrower pursuant to which SHKSF agreed to make available to the borrower a loan which was secured by a debenture (the “ Debenture ”) and a share mortgage as securities created by the borrower in favour of SHKSF.

Pursuant to the Loan Agreement and the Debenture, SHKSF is deemed to be interested in 500,000,000 shares (the “ Pledged Shares ”) of the Company by virtue of the Debenture. SHK, APL, AGL and the Trustees are therefore deemed to be interested in the Pledged Shares in which SHKSF is interested. Upon repayment of the loan by the borrower to SHKSF and the release of the Debenture, SHK, APL, AGL and the Trustees will cease to have any interest in the Pledged Shares.

1. These shares are held by Katong Assets Limited (“ Katong ”), the entire issued share capital is owned by Mr. Lin Xu Ming. Mr. Lin is therefore deemed to have the same long position as Katong under the SFO.

2. Among these shares, 175,000,000 shares are benefi cially owned by CCB International Asset Management Limited (“ CCBIAM ”) and 175,000,000 shares are held by CCBIAM in the capacity of an investment manager for the benefi cial owner, CCB International (Holdings) Limited. CCBIAM is a wholly-owned subsidiary of CCB International Assets Management (Cayman) Limited which in turn is a wholly-owned subsidiary of CCB International (Holdings) Limited. CCB International (Holdings) Limited is a wholly-owned subsidiary of CCB Financial Holdings Limited which in turn is wholly-owned by CCB International Group Holdings Limited. CCB International Group Holdings Limited is a wholly-owned subsidiary of China Construction Bank Corporation which in turn 57.09% of its interest is owned by Central Huijin Investment Limited. Accordingly, CCB International Assets Management (Cayman) Limited, CCB Financial Holdings Limited, CCB International Group Holdings Limited, China Construction Bank Corporation and Central Huijin Investment Limited are deemed to be interested in 350,000,000 ordinary shares in the Company by virtue of the provisions of the SFO.

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 2010.

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

Save as disclosed in note 16 to the condensed fi nancial statements, during the six months ended 30 June 2010, 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 2010, 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 specifi c term of non-executive Directors’ appointment under 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 fi nancial reporting matters including a general review of the unaudited interim fi nancial report for the six months ended 30 June 2010. 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 as the code for dealing in securities of the Company by the Directors and supervisors. Having made specifi c enquiry, the Company confi rmed 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 2010.

By order of the Board Chong Sok Un Chairman

Hong Kong, 25 August 2010

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Interim Report 2010 APAC Resources Limited