Persistence Gold Group Ltd — M&A Activity 2003

Oct 7, 2003

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

==> picture [59 x 58] intentionally omitted <==

SHANGHAI MERCHANTS HOLDINGS LIMITED 上海商貿控股有限公司[*]

(Receivers and Managers Appointed)

(Incorporated in Bermuda with limited liability)

Financial Adviser

Henco & Associates

Henco Capital Limited

MANDATORY UNCONDITIONAL CASH OFFERS FOR THE SHARES AND OPTIONS OF SHANGHAI MERCHANTS HOLDINGS LIMITED (RECEIVERS AND MANAGERS APPOINTED) APPOINTMENT OF FINANCIAL ADVISERS AND

DESPATCH OF OFFEREE CIRCULAR

As announced by the Offeror on 3 September 2003 and 23 September 2003, the Offeror became interested in 260,986,000 Shares, representing approximately 63.19% of the total issued share capital of the Company, following the completion of the Sale and Purchase Agreement. As required under Rule 26 of the Takeovers Code, the Offeror is obligated to make the Offers to acquire all the issued Shares other than the Sale Shares at the Offer Price of HK$0.0441 each and the Options at an offer price of HK$0.0001 each. The terms and conditions of the Offers were separately published by the Offeror in the Offer Announcement and the Offer Document.

The Receivers have appointed Henco Capital Limited as the financial adviser to the Company in relation to the Offers and First Shanghai as the independent financial adviser to the Independent Shareholders in relation to the Offers.

The Company wishes to announce that copies of the Offeree Circular containing, among other things, a letter from the Receivers and the letter of advice from First Shanghai setting out its recommendations in respect of the Offers, have been despatched to the Shareholders and Optionholders on 7 October 2003.

• 1 -

In the meantime, Shareholders, Optionholders and other investors should exercise extreme caution when dealing in the Shares.

Trading in the Shares has been suspended at the request of the Company with effect from 9:30 a.m. on 2 June 2003 and will remain suspended until further notice.

Reference is made to the announcement of Shanghai Merchants Holdings Limited (Receivers and Managers Appointed) (the “Company”) dated 17 June 2003 (the “Appointment Announcement”). As referred to in the Appointment Announcement, pursuant to an order of the High Court of the Hong Kong SAR on 17 June 2003 (the “17 June Order”), Mr. Alan Chung Wah Tang and Ms. Alison Wong Lee Fung Ying were appointed jointly and severally as the receivers and managers of the Company (the “Receivers”) until further order.

THE OFFERS

As announced by Profit Harbour Investments Limited (the “Offeror”) on 3 September 2003 and 23 September 2003, the Offeror became interested in 260,986,000 shares of the Company (the “Sale Shares”), representing approximately 63.19% of the total issued share capital of the Company, following the completion of the sale and purchase agreement entered into between the Offeror and Angel Field Limited on 26 August 2003 (the “Sale and Purchase Agreement”). As required under Rule 26 of the Hong Kong Code on Takeovers and Mergers (the “Takeovers Code”), the Offeror is obligated to make the mandatory unconditional cash offers (the “Offers”) to acquire all the issued shares of HK$0.10 each of the Company (each a “Share”) other than the Sale Shares at an offer price of HK$0.0441 each (the “Share Offer”) and the outstanding options to subscribe for Shares (the “Options”) at an offer price of HK$0.0001 for each of the Options (the “Option Offer”, and together with the Share Offer, the “Offers”).

As at the date of this announcement, the Company has an aggregate of 413,000,000 Shares in issue. Based on the Offer Price, the entire issued share capital of the Company is valued at approximately HK$18.2 million. As disclosed in the 2002 annual report of the Company and as at 31 December 2002, there are 9,840,000 Options which are exercisable from 2 July 2002 to 1 July 2007 and entitle the optionholders of the Company (the “Optionholders”) thereof to subscribe for 24,000,000 Shares at an exercise price of HK$0.556 per Share. Based on the offer price of HK$0.0001 for each of the Options, the Option Offer values the Options at approximately HK$984. Save as disclosed above, the Receivers are not aware of there being any no other warrants or securities convertible into Shares as at 31 December 2002.

• 2 -

Shareholders of the Company (the “Shareholders”) and the Optionholders are referred to the Offeror’s announcement dated 3 September 2003 (the “Offer Announcement”) and its offer document dated 23 September 2003 (the “Offer Document”) which set out, among other things, information on the Offeror, reasons for the Offers and the Offeror’s intention regarding the Company and the terms and conditions of the Offers.

APPOINTMENT OF FINANCIAL ADVISERS

Following the appointment of the Receivers, except for Ms Mo Yuk Ping and Ms Gong Bei Ying, all executive and independent non-executive directors of the Company (the “Directors”) resigned. Although Ms Mo Yuk Ping and Ms Gong Bei Ying remain on record as Directors, the 17 June Order provides that the powers of all Directors shall cease forthwith. Therefore, the Directors are not in a position to advise the independent shareholders of the Company (the “Independent Shareholders”) in relation to the Offers. In the circumstances, no independent board committee of the Company can be formed to advise the Independent Shareholders in respect of the Offers.

The Receivers have appointed Henco Capital Limited as the financial adviser to the Company in relation to the Offers and First Shanghai Capital Limited (“First Shanghai”) as the independent financial adviser to the Independent Shareholders in relation to the Offers.

DESPATCH OF OFFEREE CIRCULAR

The Company wishes to announce that copies of the Offeree Circular (the “Offeree Circular”) containing, among other things, a letter from the Receivers and the letter of advice from First Shanghai setting out its recommendations in respect of the Offers, have been despatched to the Shareholders and Optionholders on 7 October 2003. Shareholders and Optionholders should read the Offeree Circular, in particular the advice from First Shanghai, before taking any action in relation to the Offers.

• 3 -

GENERAL

In the meantime, Shareholders, Optionholders and other investors should exercise extreme caution when dealing in the Shares.

Trading in the Shares has been suspended at the request of the Company with effect from 9:30 a.m. on 2 June 2003 and will remain suspended until further notice.

For and on behalf of

Shanghai Merchants Holdings Limited

(Receivers and Managers Appointed)

Alan Chung Wah Tang and Alison Wong Lee Fung Ying Joint and Several Receivers and Managers

Hong Kong SAR, 7 October 2003

* for identification purposes

The Receivers have caused the issue of this announcement on behalf of the Company and accept full responsibility for the accuracy of the information contained in this announcement (other than information relating to the Offers and the Offeror) on the basis of the information available to the Receivers as at the date of this announcement. Taking into account the powers, duties and responsibilities of the Receivers, the length of their appointment and the Receivers’ concerns on the truthfulness, accuracy or completeness of the information on the Group to which the Receivers had access, on the basis of the information available to the Receivers as at the date of this announcement, the Receivers confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement have been arrived at after careful consideration and there are no other material facts not contained in this announcement the omission of which would make any statement in this announcement misleading.

Shareholders and other investors should be aware that the Receivers are not satisfied, on the basis of their enquiries into the affairs of the Group, which are ongoing and are not complete, that information in relation to the Group which has been made available to the Receivers and which has been ascertained by the Receivers is in all respects true, complete or accurate.

Shareholders and other investors are drawn to the information on the Group set out in the sections headed “Appointment of the Receivers”, “Role of the Receivers”, “Validity of the sale of the Sale Shares by Angel Field”, “Actions taken by the Receivers”, “Material findings of the Receivers” and “Legal proceedings brought by the Company” in the Offeree Circular.

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

• 4 -