Persistence Gold Group Ltd — Proxy Solicitation & Information Statement 2005

May 3, 2005

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this document, you should consult a licensed securities dealer, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or otherwise transferred all your securities in Shanghai Merchants Holdings Limited, you should at once hand this document and the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this document, 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 document.

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SHANGHAI MERCHANTS HOLDINGS LIMITED

*

(incorporated in Bermuda with limited liability)

(Stock Code: 1104)

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES AND

RE-ELECTION OF DIRECTORS

The notice convening an annual general meeting of Shanghai Merchants Holdings Limited to be held at Chater Room I, B/3, Regal Hongkong Hotel of 88 Yee Wo Street, Causeway Bay, Hong Kong on Friday, 27 May 2005 at 10:00 a.m. is set out on pages 47 to 49 of the annual report 2004 of the Company which is enclosed to this circular. If you are not able to attend the annual general meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrars of the Company in Hong Kong, Secretaries Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the annual general meeting or any adjournment thereof. Completion and return of the form of proxy will not prevent shareholders of the Company from attending and voting in person at the annual general meeting or any adjourned meeting if they so wish.

• For identification purposes only

28 April 2005

RESPONSIBILITY STATEMENT

This document includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the issuer. The directors collectively and individually accept full responsibility for the accuracy of the information contained in this document and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

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CONTENTS

		Page
DEFINITIONS	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		2
APPENDIX I	– DETAILS OF DIRECTORS PROPOSED TO BE
	RE-ELECTED AT THE ANNUAL
	GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
APPENDIX II	– EXPLANATORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . .	8

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DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:

“AGM”	the annual general meeting of the Company to be held at
	Chater Room I, B/3, Regal Hongkong Hotel of 88 Yee Wo
	Street, Causeway Bay, Hong Kong on Friday, 27 May
	2005
“Bye-laws”	the bye-laws of the Company
“Board”	the board of Directors
“Company”	Shanghai Merchants Holdings Limited, a company
	incorporated in Bermuda with limited liability, the shares
	of which are listed on the main board of the Stock
	Exchange
“Director(s)”	the director(s) of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Latest Practicable Date”	26 April 2005, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“Repurchase Code”	Hong Kong Code on Share Repurchases
“SFO”	the Securities and Futures Ordinance, Chapter 571 of the
	Laws of Hong Kong
“Share(s)”	ordinary share(s) of HK$0.10 each in the capital of the
	Company
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	Hong Kong Code on Takeovers and Mergers
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent.

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LETTER FROM THE BOARD

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**SHANGHAI MERCHANTS HOLDINGS LIMITED ***

(incorporated in Bermuda with limited liability)

(Stock Code: 1104)

Executive Directors: Mr. Yue Jialin (Chairman) Mr. Lau Yau Cheung Brent

Independent Non-Executive Directors: Mr. Wong Wing Kuen, Albert Mr. Tsui Robert Che Kwong Mr. Wu Guo Jian

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Head office and principal place of business in Hong Kong: 67th Floor, The Center 99 Queen’s Road Central Hong Kong

28 April 2005

To the Shareholders,

Dear Sir or Madam,

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

AND RE-ELECTION OF DIRECTORS

INTRODUCTION

The purpose of this circular is to provide you with information regarding resolutions to be proposed at the AGM relating to (i) re-election of Directors and (ii) the granting to the Directors of general mandates for the issue and repurchase of the Shares up to 20% and 10% respectively of the Company’s issued share capital as at the date of the resolutions.

RE-ELECTION OF DIRECTORS

The Board currently consists of five Directors, namely Mr. Yue Jialin, Mr. Lau Yau Cheung Brent, Mr. Wong Wing Kuen, Albert, Mr. Tsui Robert Che Kwong, Mr. Wu Guo Jian.

• For identification purposes only

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LETTER FROM THE BOARD

Pursuant to Bye-law 87 of the existing Bye-laws, at each annual general meeting, one-third of the Directors for the time being, or, if their number is not three or a multiple of three, then the number nearest one-third, shall retire from office. The Directors to retire in every year shall be those who have been longest in office since their last election or appointment but as between persons who became Directors on the same day those to retire shall (unless they otherwise agree between themselves) be determined by lot. The retiring Directors shall be eligible for re-election.

Pursuant to Bye-law 87 of the existing Bye-laws, Mr. Lau Yau Cheung and Mr. Wong Wing Kuen, Albert shall retire at the Annual General Meeting and being eligible, offer themselves for re-election.

Pursuant to Rule 13.74 of the Listing Rules, a listed issuer shall disclose the details required under Rule 13.51(2) of the Listing Rules of any directors proposed to be re-elected in the circular to its shareholders of the relevant general meeting, if such re-election is subject to shareholders’ approval at that relevant general meeting. A brief biographical details of the retiring Directors are set out in Appendix I of this circular.

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

At the annual general meeting of the Company held on 22 September 2004, ordinary resolutions were passed for the granting general mandates to the Directors, inter alia, (i) to allot, issue or otherwise deal with Shares not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at that date (“Existing Issue Mandate”) and (ii) to repurchase Shares representing up to a maximum of 10% of the aggregate nominal amount of the share capital of the Company in issue at that date (“Existing Repurchase Mandate”).

The Existing Issue Mandate and the Existing Repurchase Mandate will lapse upon the conclusion of the AGM.

New general mandate to repurchase Shares up to 10% and to allot, issue or otherwise deal with Shares up to 20% of the issued share capital of the Company as at the date of the resolutions as set out in Resolution Nos. 4 and 5 respectively will be proposed at the AGM. Resolution authorising the extension of the general mandate to the Directors to issue Shares to include the aggregate nominal amount of such Shares (if any) repurchased under the mandate is to be proposed as Resolution No. 6 at the AGM.

With reference to the proposed new general mandates, the Directors, as at the date hereof, wish to state that they have no immediate plans to issue or repurchase any new Shares pursuant to the relevant mandates.

An explanatory statement containing the particulars required by the Listing Rules to enable the Shareholders to make an informed view on whether to vote for or against Resolution Nos. 4, 5 and 6 to be proposed at the AGM in relation to the proposed general mandates to issue and repurchase Shares are set out in the Appendix II to this circular.

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LETTER FROM THE BOARD

ANNUAL GENERAL MEETING

The notice convening the AGM is set out on pages 47 to 49 of the Annual Report 2004 of the Company.

A form of proxy for the AGM is enclosed. If you are not able to attend the AGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to the office of the branch share registrars of the Company in Hong Kong, Secretaries Limited, at G/F, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the AGM. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the AGM or any adjourned meeting thereof should you so desire.

Pursuant to the Bye-law 66 of the existing Bye-laws, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded (i) by the chairman of the meeting; or (ii) by at least three Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or (iii) by a Shareholder or Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or (iv) by a Shareholder or Shareholders present in person (or in the case of a Shareholder being a corporation by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

RECOMMENDATION

The Directors consider that the granting of general mandates to issue and to repurchase Shares, and to add the aggregate nominal amount of Shares that may be repurchased to the aggregate nominal amount of the share capital of the Company that may be allotted pursuant to the general mandate to issue Shares are in the best interests of the Company, and accordingly recommend all Shareholders to vote in favour of the relevant resolutions to be proposed at the AGM.

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LETTER FROM THE BOARD

GENERAL INFORMATION

Your attention is drawn to the additional information set out in the Appendices to this circular. The English text of this circular shall prevail over the Chinese text.

Yours faithfully,

For and on behalf of the Board Shanghai Merchants Holdings Limited Yue Jialin Chairman

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DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE ANNUAL GENERAL MEETING

APPENDIX I

LIST OF DIRECTORS FOR RE-ELECTION

The biographical details of the Directors eligible for re-election, at the AGM are set out below.

Executive Director

(1) Lau Yau Cheung, Brent

Experience

Mr. Lau Yau Cheung, Brent, aged 44, was appointed as an executive Director of the Company in April 2004 and a director of 16 subsidiaries of the Company. Mr. Lau is responsible for the Group’s overall management and general administrative activities. Mr. Lau graduated in 1984 from the University of Toronto in Canada with a Bachelor of Commerce degree and has served in various senior management positions with both private and publicly listed companies in Hong Kong in the past years. In the past three years, Mr. Lau has not been a director of any other listed public companies.

Length of Service

Mr. Lau has not been appointed for a specific term but shall be subject to retirement and re-election at the AGM in accordance with the Company’s Bye-laws.

Relationships

As far as the directors are aware, Mr. Lau does not have any relationships with any other Directors, senior management, substantial shareholders (as defined in the Listing Rules) or controlling shareholders (as defined in the Listing Rules) of the Company.

Director’s emoluments

Mr. Lau is not entitled to any director’s fee and there is no service contract between the Company.

Interests in shares

Mr. Lau does not have any interests in the Shares within the meaning of Part XV of the Securities and Futures Ordinance.

Other matters

There are no other matters concerning Mr. Lau that need to be brought to the attention of the Shareholders.

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APPENDIX I DETAILS OF DIRECTORS PROPOSED TO BE RE-ELECTED AT THE ANNUAL GENERAL MEETING

Independent Non-executive Director

(1) Mr. Wong Wing Kuen, Albert

Experience

Mr. Wong Wing Kuen, Albert, aged 54, was appointed as an independent non-executive director of the Company in July 2004. Mr. Wong is a fellow member of The Institute of Chartered Secretaries and Administrators, a fellow member of The Hong Kong Institute of Company Secretaries, a fellow member of The Taxation Institute of Hong Kong, a member of Hong Kong Securities Institute, an associate member of Association of International Accountants, a fellow member of Society of Registered Financial Planners, a member of Hong Kong Institute of Arbitrators, a member of The Chartered Institute of Arbitrators, a member of The Chartered Institute of Bankers in Scotland and a full member of Macau Society of Certified Practising Accountants. Mr. Wong was also a director of Minghua Group International Holdings Limited, a listed public company in the U.S.A. until 30 June 2004. Currently, Mr. Wong is the Managing Director of Charise Financial Consultants Limited, a private professional consulting firm in Hong Kong.

Length of service

Mr. Wong has not been appointed by a specific term but shall be subject to retirement and re-election at the AGM in accordance with the Company Bye-laws.

Relationships

As far as the directors are aware, Mr. Wong does not have any relationships with any other Directors, senior management, substantial shareholders (as defined in the Listing Rules) or controlling shareholders (as defined in the Listing Rules) of the Company.

Director’s emoluments

Mr. Wong is entitled to director’s fee of HK$40,000 per annum, which was determined by the Board and is subject to the approval of the Shareholders at the AGM.

Interests in shares

Mr. Wong does not have any interests in the Shares within the meaning of Part XV of the Securities and Futures Ordinance.

Other matters

There are no other matters concerning Mr. Wong that need to be brought to the attention of the Shareholders.

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EXPLANATORY STATEMENT

APPENDIX II

This Appendix contains the particulars that are required by the Listing Rules to be included in an explanatory statement to enable the Shareholders to make an informed view on whether to vote for or against the resolutions to be proposed at the AGM in relation to the proposed repurchase mandate.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company was HK$41,300,000 divided into 413,000,000 Shares.

Subject to the passing of the resolution granting the proposed mandate to repurchase its own Shares and on the basis that no further Shares are issued or repurchased before the AGM, the Company will be allowed to repurchase a maximum of 41,300,000 Shares, representing 10% of the issued capital of the Company as at the latest practicable date, during the period ending on the earlier of the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required to be held by law (or the date upon which such authority is revoked or varied by a resolution of the Shareholders in general meeting).

2. REASONS FOR THE REPURCHASE

The Directors believe that it is in the best interests of the Company and the Shareholders to seek a general authority from the Shareholders to enable the Company to repurchase its Shares on the Stock Exchange. Such repurchases may, depending on market conditions, and funding arrangements at the time, lead to an enhancement of the net asset value of the Company and/or earnings per share and will only be made when the Directors believe that such repurchases will benefit the Company and the Shareholders.

3. FUNDING OF REPURCHASE

Repurchases made pursuant to the proposed mandate to repurchase Shares would be funded out of funds legally available for the purpose in accordance with the Company’s Bye-laws and the laws of Bermuda.

The Directors have no present intention to repurchase any Shares and they would only exercise the power to repurchase in circumstances where they consider that the repurchase would be in the best interests of the Company and in circumstances where they consider that the Shares can be repurchased on terms favourable to the Company. On the basis of the consolidated financial position of the Company as at 31 December 2004, being the date to which the latest published audited accounts of the Company were made up, the Directors consider that if the general mandate to repurchase Shares were to be exercised in full at the currently prevailing market value, it could have a material adverse impact on the working capital position and gearing position of the Company.

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EXPLANATORY STATEMENT

APPENDIX II

The Directors do not propose to exercise the mandate to repurchase Shares to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company as compared with the position disclosed in the latest published audited financial statements or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

4. INTENTION OF DEALINGS

To the best of their knowledge and having made all reasonable enquiries, none of the Directors nor any of their associates currently intend to sell Shares to the Company or its subsidiaries.

No connected persons of the Company, as defined in the Listing Rules, has notified the Company that he has a present intention to sell Shares to the Company, nor has undertaken not to do so in the event that the Company is authorised to make purchases of the Shares.

5. SHARE PRICE

Since trading in Shares has been suspended from 9:30 a.m. on 2 June 2003 and remains suspended as at the Latest Practicable Date, the highest and lowest prices at which Shares have traded on the Stock Exchange during the current month and each of the previous twelve months before the printing of this document cannot be disclosed. The closing price of each Share was HK$0.26 as at 1 June 2003 (being the last trading day for Shares prior to suspension) as quoted on the Stock Exchange’s daily quotation sheet on the date.

6. SHARES REPURCHASED

In the six months preceding the Latest Practicable Date, the Company has not repurchased any Shares on the Stock Exchange or otherwise.

7. UNDERTAKING OF DIRECTORS

The Directors have undertaken to the Stock Exchange that they will exercise the proposed repurchase mandate in accordance with the Listing Rules and the laws of Bermuda.

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EXPLANATORY STATEMENT

APPENDIX II

8. EFFECTS OF THE TAKEOVERS CODE

If as a result of a repurchase of Shares, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of the Rule 32 of the Takeovers Code and Rule 6 of the Repurchase Code. Accordingly, a Shareholder, or group of Shareholders acting in concert, depending on the level of increase of the Shareholders’ interest, could obtain or consolidate control of the Company and may become obliged to make a mandatory general offer in accordance with Rule 26 of the Takeovers Code.

As at the Latest Practicable Date, Mr. Yue Jialin (“Mr. Yue”), the Chairman and executive Director of the Company, beneficially held 262,602,000 Shares, representing approximately 63.58 per cent of the existing issued share capital of the Company. To the best knowledge of the Company, no other person, together with any associates thereof, was beneficially interested in Shares representing 10 per cent or more of the entire issued share capital of the Company as at the Latest Practicable Date.

In the event that the Directors exercise in full the power to repurchase Shares which is proposed to be granted pursuant to the Repurchase Mandate then (if the present Shareholders’ interests in Shares remained the same) the attributable shareholding of Mr. Yue in the Company would be increased to approximately 70.65 per cent of the issued share capital of the Company. However, since Mr. Yue’s shareholding interests in the Company already exceeds 50 per cent, such increase will not give rise to any obligation to make a mandatory offer under Rule 26 of the Takeovers Code. In any event, the Directors have no current intention to exercise the Repurchase Mandate to such an extent as would give rise to the aforesaid scenario. Further, the Repurchase Mandate will be exercised only if the number of Shares held by the public would not, as a result, fall below 25 per cent of all Shares as may from time to time be in issue in order to comply with the minimum public float requirements of the Listing Rules.

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