Persistence Gold Group Ltd — Proxy Solicitation & Information Statement 2007

Jul 29, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your securities in APAC Resources Limited, you should at once hand this circular with 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 circular, 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 circular.

APAC RESOURCES LIMITED

(Incorporated in Bermuda with limited liability)

(Stock code: 1104)

(1) GRANT OF OPTIONS TO DIRECTORS UNDER THE SHARE OPTION SCHEME

(2) GRANT OF SPECIFIC MANDATE ON GRANT OF OPTIONS UNDER THE SHARE OPTION SCHEME

(3) REFRESHMENT OF 10% GENERAL LIMIT ON GRANT OF OPTIONS UNDER THE SHARE OPTION SCHEME

AND

(4) REFRESHMENT OF GENERAL MANDATES TO ISSUE SECURITIES

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

==> picture [115 x 45] intentionally omitted <==

A letter from the Independent Board Committee, containing its recommendation to the Independent Shareholders regarding the grant of the Proposed Options is set out on pages 12 to 13 of this circular. A letter of advice from Ample Capital Limited, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 14 to 23 of this circular.

A letter from the board of Directors of APAC Resources Limited is set out on pages 4 to 11 of this circular. A notice convening the SGM to be held at 7th Floor, Board Room, The Dynasty Club, South West Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong on 15th August, 2007 at 10:30 a.m. or any adjourned meeting is set out on pages 27 to 30 of this circular. If you are not able to attend the SGM, you are requested to complete the form of proxy in accordance with the instructions printed on it and return it to the Hong Kong Branch Share Registrar of the Company, Secretaries Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM or any adjourned meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting should you so desire.

* For identification purpose only

27th July, 2007

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Letter from the IFA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Appendix I — Particulars of the Grant of the Proposed Options
under the Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
Appendix II — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Notice of the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27

— i —

DEFINITIONS

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

• “associates”

having the meaning ascribed to it in the Listing Rules

• “Board”

• board of Directors

• “Bye-laws”

the bye-laws of the Company

• “Chairman Option”

the option proposed to be granted to Mr. Cao to subscribe for 100,000,000 Shares at an exercise price of HK$1.50 per Share

• “Company”

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

• “connected persons”

having the meaning ascribed to it in the Listing Rules

• “Date of Grant”

• 6th July, 2007, being the date of the meeting of the Board at which the Proposed Options were proposed to be granted subject to the Independent Shareholders’ approval

• “Directors”

the directors of the Company

• “Director Option”

• the option proposed to be granted to Ms. Chong to subscribe for 110,000,000 Shares at an exercise price of HK$1.50 per Share

“Existing General Mandate” the general mandate granted to the Directors at the annual general meeting of the Company held on 25th May, 2007 inter alia, 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 the date of such general meeting

• “Group” the Company and its subsidiaries

• “HK$”

Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong”

Hong Kong Special Administrative Region of the People’s Republic of China

— 1 —

DEFINITIONS

• “Independent Board Committee”

• “Independent Financial Adviser” or “IFA”

• “Independent Shareholders”

• “Latest Practicable Date”

• “Listing Rules”

• “Mr. Cao”

• “Mr. Liu”

• “Ms. Chong”

• “Profit Harbour”

• “Proposed Options”

• the committee comprising Mr. Wong Wing Kuen, Albert, Mr. Tsui Robert Che Kwong, Mr. Chang Chu Fai, Johnson Francis, and Mr. Yang Weiming, being all the independent nonexecutive Directors, appointed by the Board under the Listing Rules to make recommendation to the Independent Shareholders on the ordinary resolutions regarding the Proposed Options and the proposal for grant of the Specific Mandate

• Ample Capital Limited, a licensed corporation for types 4, 6 and 9 (advising on securities, advising on corporate finance and asset management respectively) of the regulated activities under the SFO, and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the proposed refreshment of the Existing General Mandate

• Shareholders other than the connected persons of the Company, including Profit Harbour, Shougang, Mr. Cao, Ms. Chong and their respective associates

• 27th July, 2007, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular

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

• Mr. Cao Zhong, an executive Director and Chairman

• Mr. Liu Yongshun, an executive Director

• Ms. Chong Sok Un, an executive Director, which at the Latest Practicable Date, was interested in 691,840,000 Shares, representing approximately 17.17% of the existing issued share capital of the Company, and is a substantial shareholder of the Company

• Profit Harbour Investments Limited, a company incorporated in the British Virgin Islands with limited liability and wholly-owned by Mr. Yue Jialin, an executive Director, which, as at the Latest Practicable Date, was interested in 493,399,602 Shares, representing approximately 12.24% of the existing issued share capital of the Company

Chairman Option and Director Option

— 2 —

DEFINITIONS

“Scheme Mandate Limit”	the maximum number of Shares which may be issued upon
	exercise of all options to be granted under the Share Option
	Scheme and any other share option schemes of the Company,
	which shall not in aggregate exceed 10% of the Shares in
	issue as at the date of approval of the Share Option Scheme
	or of the renewal of such limit
“Specific Mandate”	the Shares which fall to be issued upon exercise of the
	Chairman Option and Director Option, which shall not in
	aggregate exceed 10% of the Shares in issue as at the date of
	approval of the Share Option Scheme or of the grant of such
	mandate
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“SGM”	a special general meeting of the Company to be convened at
	7th Floor, Board Room, The Dynasty Club, South West Tower,
	Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong on
	15th August, 2007, at 10:30 a.m.
“Shareholders”	holders of the Shares
“Shares”	ordinary shares of HK$0.10 each in the issued share capital of
	the Company
“Share Option Scheme”	the share option scheme adopted by the Company on 22nd
	September, 2004 for an option period of ten years from its
	date of adoption
“Shougang”	Shougang Holding (Hong Kong) Limited, a company
	incorporated in Hong Kong with limited liability, which, as at
	the Latest Practicable Date, was interested in 800,000,000
	Shares, representing approximately 19.85% of the existing
	issued share capital of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“substantial shareholder”	having the meaning ascribed to it in the Listing Rules
“Warrantholders”	holders of the warrants
“Warrants”	warrants of the Company entitle the holders thereof to
	subscribe at any time during the period from 5th February,
	2007 to 4th February, 2010 (both days inclusive) for fully
	paid Shares at an initial subscription price of HK$0.30 per
	Share (subject to adjustments)
“%”	per cent.

— 3 —

LETTER FROM THE BOARD

APAC RESOURCES LIMITED

(Incorporated in Bermuda with limited liability)

(Stock code: 1104)

Executive Directors: Mr. Cao Zhong (Chairman) Mr. Liu Yongshun (Chief Executive Officer) Mr. Zhou Luyong (Deputy Chief Executive Officer) Ms. Chong Sok Un Mr. Lau Yau Cheung Mr. Yue Jialin

Non-Executive Director: Mr. Chen Zhaoqiang

Independent Non-Executive Directors: Mr. Wong Wing Kuen, Albert Mr. Tsui Robert Che Kwong Mr. Chang Chu Fai, Johnson Francis Mr. Alan Stephen Jones Mr. Robert Moyse Willcocks Mr. Yang Weiming (resigned on 27th July, 2007)

Registered Office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Head office and principal place of business in Hong Kong: 32/F., China Online Centre 333 Lockhart Road Wanchai Hong Kong

27th July, 2007

To the Shareholders and, for information only, the Warrantholders

Dear Sir or Madam,

(1) GRANT OF OPTIONS TO DIRECTORS UNDER THE SHARE OPTION SCHEME

(2) GRANT OF SPECIFIC MANDATE ON GRANT OF OPTIONS UNDER THE SHARE OPTION SCHEME

(3) REFRESHMENT OF 10% GENERAL LIMIT ON GRANT OF OPTIONS UNDER THE SHARE OPTION SCHEME

AND

(4) REFRESHMENT OF GENERAL MANDATES TO ISSUE SECURITIES

• For identification purpose only

— 4 —

LETTER FROM THE BOARD

INTRODUCTION

The purpose of this circular is to provide you with information regarding resolutions to be proposed at the SGM relating to (i) the proposal for the grant of the Proposed Options under the Share Option Scheme; (ii) the proposal for the grant of the Specific Mandate; (iii) the refreshment of the Scheme Mandate Limit; (iv) the refreshment of the Existing General Mandate; and (v) a notice to convene the SGM to approve, among other things, the Proposed Options, the proposal for grant of the Specific Mandate, the refreshment of the Scheme Mandate Limit, the refreshment of the Existing General Mandate and other information in accordance with the requirements of the Listing Rules. This circular also contains the recommendation of the Independent Board Committee in respect of the proposal for the grant of the Proposed Options under the Share Option Scheme and the refreshment of the Existing General Mandate as at the date of the passing of the resolutions and the advice of the Independent Financial Adviser, in respect of the refreshment of the Existing General Mandate as at the date of the passing of the resolution.

GRANT OF OPTIONS TO DIRECTORS UNDER THE SHARE OPTION SCHEME

On 6th July, 2007, the Company proposed to grant, pursuant to the Share Option Scheme, the Proposed Options to Mr. Cao and Ms. Chong, which, if exercised, would represent approximately 5.21% of the issued share capital of the Company as at the Latest Practicable Date and approximately 4.95% of the issued share capital of the Company as enlarged by the grant of the Proposed Options. The grant of the Proposed Options to Mr. Cao and Ms. Chong was approved by the Independent Board Committee on 6th July, 2007.

Pursuant to rules 17.03(4) and 17.04(1) of the Listing Rules, if the proposal to grant the Proposed Options is approved by the Shareholders, the total numbers of Shares issued and to be issued upon exercise of the Proposed Options (including exercised, cancelled and outstanding options) by each of Mr. Cao and Ms. Chong in any 12-month period will exceed 1% of the issued share capital of the Company and having an aggregate value in excess of HK$5 million. The exercise price for the Proposed Options is HK$1.50 per Share, which was determined on the Date of Grant. The Proposed Options will be granted under the Specific Mandate to be approved at the SGM, which will be 210,000,000 Shares.

As at the Latest Practicable Date, 33,000,000 options were already previously granted to Mr. Cao on 29th May, 2007.

As at the Latest Practicable Date, Ms. Chong did not hold any option under the Share Option Scheme and no option has been granted to Ms. Chong within 12 months from the Date of Grant.

Further details regarding the proposed grant of the Proposed Options are set out in Appendix I to this circular.

— 5 —

LETTER FROM THE BOARD

REASONS FOR THE GRANT OF THE PROPOSED OPTIONS

Mr. Cao is an executive Director and Chairman who is primarily responsible for overall management activities of the Company including business strategy planning and business development. The Chairman Option proposed to be granted to him will serve as an incentive for his continuing commitment and contribution to the Group in the future.

Ms. Chong is an executive Director and has contributed in developing the business of the Group and her ongoing contribution will be important to the future development of the Group. The Director Option proposed to be granted to her will serve as an incentive for her continuing commitment and contribution to the Group in the future.

Pursuant to the Share Option Scheme, the Company had in total granted 126,000,000 options, which has yet to be exercised as at the Latest Practicable Date. Such options, if exercised, represent approximately 3.13% of the issued share capital of the Company as at Latest Practicable Date. Details of the options granted by the Company are set out in Appendix II to this circular. The Company has not adopted any other share options schemes other than the Share Option Scheme and none of the options granted under the Share Option Scheme has lapsed or cancelled as at the Latest Practicable Date. The grant of option to Mr. Liu to subscribe for 150,000,000 Shares at an exercise price of HK$1.20 per Share was approved by the independent shareholders of the Company at the special general meeting of the Company held on 27th July, 2007, details of which is disclosed in the circular of the Company dated 9th July, 2007. The total number of outstanding options when aggregated with the Proposed Options would represent a total of 486,000,000 Shares, representing approximately 12.06% of the issued share capital of the Company as at the Latest Practicable Date, which is within the 30% limit as required under Note (2) to Rule 17.03(3) of the Listing Rules.

LISTING RULES IMPLICATIONS

Pursuant to Rules 17.03(4) and 17.04(1) of the Listing Rules, any grant of options to each participant in any 12-month period which exceed 1% of the issued share capital of the Company, or to a substantial shareholder or independent non-executive directors or any of their respective associates exceeding 0.1% of the total number of Shares in issue and having an aggregate value in excess of HK$5 million, requires shareholders’ approval in general meeting.

Pursuant to the Listing Rules, Profit Harbour, Shougang, Mr. Cao, Ms. Chong and their respective associates and all connected persons of the Company will abstain from voting in favour of the resolutions to approve the grant of the Proposed Options at the SGM. Any vote taken at the SGM to approve the grant of the Proposed Options will be taken on a poll.

An Independent Board Committee has been constituted to make recommendation to the Independent Shareholders regarding the grant of the Proposed Options to Mr. Cao and Ms. Chong and the refreshment of the Existing General Mandate . Mr. Wong Wing Kuen, Albert, Mr. Tsui Robert Che Kwong, Mr. Chang Chu Fai, Johnson Francis and Mr. Yang Weiming have been appointed by the Board to serve as members of the Independent Board Committee.

— 6 —

LETTER FROM THE BOARD

The IFA has been appointed to advise the Independent Board Committee and the Independent Shareholders on the refreshment of the Existing General Mandate.

GRANT OF SPECIFIC MANDATE

Under the Share Option Scheme and the applicable Listing Rules, the Board has the right to grant to the eligible participants options to subscribe for up to a maximum of 41,300,000 Shares, being 10% of the Shares in issue as at the date of adoption of the Share Option Scheme by Shareholders at the annual general meeting of the Company on 22nd September, 2004 and representing approximately 1.02% of the issued share capital of the Company as at the Latest Practicable Date.

At the annual general meeting of the Company held on 25th May, 2007, the Scheme Mandate Limit was refreshed to allow the Company to grant options under the Share Option Scheme and other share option schemes of the Company entitling holders to subscribe for up to a maximum of 332,570,916 Shares, representing approximately 10% of the issued share capital of the Company as at the date of the said annual general meeting.

As at the Latest Practicable Date, options carrying right to subscribe for up to a total of 126,000,000 Shares have been granted under the Share Option Scheme and none has been exercised, lapsed or cancelled. The number of Shares which may be issued upon exercise of all outstanding options is 126,000,000 Shares, representing approximately 3.13% of the Shares in issue as at the Latest Practicable Date.

If the Specific Mandate is granted, based on 4,030,341,163 Shares in issue as at the Latest Practicable Date and assuming no further issue or repurchase of Shares prior to the SGM, upon approval of the Specific Mandate by Shareholders at the SGM, the Company will grant the Proposed Options entitling holders to subscribe for up to a maximum of 210,000,000 Shares, representing approximately 5.21% of the Shares in issue as at the SGM.

The Directors may consider to grant further options under the Share Option Scheme to qualified participants thereunder to provide more incentives to, and recognise the contributions of, the employees of the Company and of its subsidiaries, the Directors consider that the Company should grant Specific Mandate in accordance with the Share Option Scheme so that the Company has greater flexibility in so doing.

On the basis of 4,030,341,163 Shares in issue as at the Latest Practicable Date and assuming that no Shares are issued or repurchased by the Company prior to the date of the SGM, the Company will be entitled to grant options under the Share Option Scheme and other share option schemes of the Company carrying rights to subscribe for up to 403,034,116 Shares.

An ordinary resolution will therefore be proposed to the Shareholders at the SGM to grant the Specific Mandate so as to allow the Directors to grant the Proposed Options entitling Mr. Cao and Ms. Chong to subscribe for, in aggregate up to 210,000,000 Shares, representing approximately 5.21% of the issued share capital of the Company as at the date of passing of the relevant resolution at the SGM.

— 7 —

LETTER FROM THE BOARD

Application has been made to the Listing Committee of the Stock Exchange for the approval of the listing of, and permission to deal in, the Shares, which may be issued upon the exercise of the options to be granted under the aforesaid Specific Mandate of the Share Option Scheme.

REFRESHMENT OF THE SCHEME MANDATE LIMIT

Under the rules of the Share Option Scheme, the proposed refreshment of the Scheme Mandate Limit will be conditional upon:

• (a) the approval of the Shareholders at the SGM ; and

• (b) the Stock Exchange granting the listing of, and the permission to deal in, such number of Shares representing 10% of the Shares in issue as at the date of passing of the relevant resolution at the SGM, which may fall to be allotted and issued pursuant to the exercise of options granted under the renewed Scheme Mandate Limit.

On the basis of 4,030,341,163 Shares in issue as at the Latest Practicable Date and assuming that no Shares are issued or repurchased by the Company prior to the date of the SGM, the Company will be entitled to grant options under the Share Option Scheme and other share option schemes of the Company carrying rights to subscribe for up to 403,034,116 Shares. The Directors believe that the Share Option Scheme is a cost effective way to reward persons who have made contributions to the Group. The refreshment of the Scheme Mandate Limit will allow the Directors more flexibility in employing the Share Option Scheme in the future should they need to grant share options that are over the current limit to recognise contributions made to the Group.

An ordinary resolution will therefore be proposed to the Shareholders at the SGM to refresh the Scheme Mandate Limit so as to allow the Directors to grant share options entitling holders thereof to subscribe for up to 10% of the issued share capital of the Company as at the date of passing of the relevant resolution at the SGM.

The number of Shares to be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and other share option schemes of the Company must not, in aggregate, exceed 30% of the issued share capital of the Company from time to time. The Directors consider that the refreshment of the Scheme Mandate Limit is in the interests of the Company and the Shareholders as a whole.

Application has been made to the Listing Committee of the Stock Exchange for the approval of the listing of, and permission to deal in, the Shares to be issued pursuant to the exercise of the options to be granted pursuant to the Share Option Scheme with the Scheme Mandate Limit as refreshed.

— 8 —

LETTER FROM THE BOARD

REFRESHMENT OF GENERAL MANDATES TO ISSUE SECURITIES

As disclosed in the announcement of the Company dated 6th July, 2007, a placing agreement in relation to a placing was entered into between the Company and Sun Hung Kai International Limited and 3V Capital Limited as joint placing agents, pursuant to which the Company had agreed to issue a total of 665,000,000 Shares under the Existing General Mandate. Immediately after completion of such placing, the substantial portion of the Existing General Mandate has been utilised.

The Company has not refreshed the Existing General Mandate since the last annual general meeting held on 25th May, 2007. The Company, therefore, wish to seek approval of Independent Shareholders at the SGM to refresh the Existing General Mandate to increase the flexibility for raising capital as the Directors consider appropriate and maintaining the financial flexibility if necessary for the Group’s future business development. Although the Company currently has sufficient cash resources to meet its present requirements, there is still no certainty that such cash level will be adequate for any appropriate investment that may be identified by the Company in the future. The Directors believe that, under the current market conditions, it is prudent and reasonable for the Group to maintain a strong capital base such that the Group is able to secure any potential business and investment opportunities as they may arise from time to time. The terms of the new general mandate are fair and reasonable and are in the interests of the Shareholders, and that the same should continue to be adopted by the Company.

New general mandates to allot, issue or otherwise deal with securities of the Company up to 20% of the issued share capital of the Company as set out in Resolution No. 4 of the notice of the SGM will be proposed at the SGM. Any vote taken at the SGM to approve the refreshment of the Existing General Mandate will be taken on a poll.

The Directors will seek approval from the Independent Shareholders at the SGM for the refreshment of the Existing General Mandate to issue Shares. Profit Harbour, Shougang and Ms. Chong and their respective associates and all connected persons of the Company will abstain from voting in favour of the resolution to approve the refreshment of the Existing General Mandate.

SGM

A notice convening the SGM is set out on pages 27 to 30 of this circular. Ordinary resolutions in respect of the Proposed Options, the proposal for granting of the Specific Mandate, the refreshment of the Scheme Mandate Limit and the proposal for refreshment of the Existing General Mandate will be proposed at the SGM accordingly.

A form of proxy for the SGM is enclosed with this circular. If you are not able to attend the SGM, you are requested to complete the form of proxy in accordance with the instructions printed on it and return it to the Hong Kong Branch Share Registrar of the Company, Secretaries Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM or any adjourned meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjourned meeting should you so wish.

— 9 —

LETTER FROM THE BOARD

PROCEDURES FOR DEMANDING A POLL

Pursuant to Bye-law 66 of the Bye-laws, at any general meeting a resolution put to the vote of a meeting will 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:

• (a) by the chairman of such meeting; or

• (b) 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

• (c) 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

• (d) 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.

Under the Listing Rules, the ordinary resolution to be proposed at the SGM to approve the Proposed Option is subject to the approval of the Independent Shareholders on a vote taken by way of poll at the SGM and at which Profit Harbour, Shougang, Ms. Chong, Mr. Cao, all other Directors and their respective associates, all being connected persons of the Company, will abstain from voting.

RECOMMENDATION

The Directors consider that the terms of the proposal for the grant of the Proposed Options under the Share Option Scheme, the proposal for the grant of the Specific Mandate, the refreshment of the Scheme Mandate Limit and the refreshment of the Existing General Mandate are in the interests of the Company and the Shareholders as a whole and the terms are fair and reasonable so far as the Shareholders are concerned. Accordingly, the Directors recommend all the Shareholders to vote in favour of the ordinary resolutions set out in the notice of the SGM.

— 10 —

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the Appendices to this circular.

Yours faithfully, On behalf of the Board APAC RESOURCES LIMITED Cao Zhong Chairman

— 11 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter from the Independent Board Committee to the Independent Shareholders in connection with the Proposed Options and the proposal for the refreshment of the Existing General Mandate for inclusion in this circular.

APAC RESOURCES LIMITED

(Incorporated in Bermuda with limited liability)

(Stock code: 1104)

27th July, 2007

To the Independent Shareholders

Dear Sir or Madam,

GRANT OF OPTIONS TO DIRECTORS UNDER THE SHARE OPTION SCHEME AND REFRESHMENT OF EXISTING GENERAL MANDATE

We have been appointed as the Independent Board Committee to consider and advise you on in connection with the grant of the Proposed Options and the refreshment of the Existing General Mandate, details of which are set out in the circular issued by the Company to the Shareholders dated 27th July, 2007, (the “Circular”), of which this letter forms part. Terms defined in the Circular will have the same meanings when used herein unless the context otherwise requires.

We wish to draw your attention to the letter from the Board and the letter of advice from the IFA set out on pages 4 to 11 and pages 14 to 23 of the Circular accordingly.

Having considered the terms of the grant of the Proposed Option as set out in the Circular, we are of the view that the terms of the grant of the Proposed Option to Mr. Cao and Ms. Chong, are fair and reasonable so far as the Independent Shareholders are concerned.

Further, having taken into account the principal factors and reasons considered by the IFA, its conclusion and advice, we concur with the view of the IFA and consider that the terms of the refreshment of the Existing General Mandate, as set out in the Circular are fair and reasonable so far as the Independent Shareholders are concerned.

* For identification purposes only

— 12 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Accordingly, we recommend you to vote in favour of the ordinary resolutions to be proposed at the SGM to approve the terms of the Proposed Options and the refreshment of the Existing General Mandate and the transactions contemplated under them.

Yours faithfully,

For and on behalf of the Independent Board Committee

Wong Wing Kuen, Albert Tsui Robert Che Kwong, Independent Non-Executive Director Independent Non-Executive Director

Chang Chu Fai, Johnson Francis Independent Non-Executive Director

Yang Weiming Independent Non-Executive Director

— 13 —

LETTER FROM THE IFA

The following is the full text of the letter of advice from the IFA in connection with the refreshment of the Existing General Mandate for inclusion in this circular.

==> picture [115 x 45] intentionally omitted <==

Ample Capital Limited

Unit A, 14th Floor Two Chinachem Plaza 135 Des Voeux Road Central Hong Kong

27 July 2007

To the Independent Board Committee and the Independent Shareholders of APAC Resources Limited

Dear Sirs,

REFRESHMENT OF GENERAL MANDATE TO ISSUE AND ALLOT SHARES

INTRODUCTION

We refer to our engagement by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the refreshment of the general and unconditional mandate proposed to grant the Company the right to authorize the Directors to issue and allot up to 20% of the issued share capital of the Company (the “New General Mandate”) as at the date of the SGM (the “Refreshment”), the particulars of which have been set out in a circular to the Shareholders dated 27 July 2007 (the “Circular”) and in which this letter is reproduced. Unless the context requires otherwise, terms used in this letter shall have the same meanings as given to them under the definitions section of the Circular.

We have been appointed as the independent financial adviser to the Independent Board Committee and the Independent Shareholders to give our recommendation as to whether the Refreshment is fair and reasonable so far as the Independent Shareholders are concerned. Details of the Refreshment are set out in the section headed “Letter from the Board” in the Circular (the “Board Letter”).

As at the Latest Practicable Date, Ms. Chong Sok Un, an executive Director, and her associates in aggregate own 691,840,000 Shares, representing approximately 17.17% of the Company’s issued share capital. Mr. Yue Jailin, an executive Director, and his associates in aggregate own 493,399,602 Shares, representing approximately 12.24% of the Company’s issued share capital and Shougang

— 14 —

LETTER FROM THE IFA

Holding (Hong Kong) Limited and its associates in aggregate own 800,000,000 Shares, representing approximately 19.85%. As stated in the Board Letter, Ms. Chong Sok Un and her associates and Mr. Yue Jialin and his associates and Shougang Holding (Hong Kong) Limited and its associates shall abstain from voting in favour of the relevant resolutions at the SGM.

The Independent Board Committee comprised of Mr. Wong Wing Kuen, Albert, Mr. Tsui Robert Che Kwong, Mr. Chang Chu Fai, Johnson Francis, and Mr. Yang Weiming , all being independent non-executive Directors, has been established to advise the Independent Shareholders on whether the proposed Refreshment is fair and reasonable so far as the Independent Shareholders are concerned and whether it is in the interests of the Company and the Shareholders as a whole.

BASIS OF OPINION

In formulating our opinion, we have relied on the accuracy of the information and representations provided to us by the Directors and management of the Group and have assumed that all information and representations made by the Group and the Directors were true, accurate and complete at the time they were made and continue to be so as at the date of the Circular. We consider that we have obtained from the Company all of the necessary information on which to form a reasonable basis for our opinion. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due enquiry. We have no reason to suspect that any material facts have been omitted or withheld from the information contained or opinions expressed in the Circular nor to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. We have not, however, conducted an independent in-depth investigation into the business and affairs of the Group nor have we carried out any independent verification of the information supplied.

PRINCIPAL FACTORS CONSIDERED

In arriving at our opinion in relation to the Refreshment, we have taken into consideration the following factors:

1. Background information

The Company is a company incorporated in Bermuda with limited liability. The principal activities of its subsidiaries are principally engaged in (i) trading in base metals and commodities trading portfolio primarily focused on natural resources and related sectors; and (ii) trading in fabric products and other merchandises with investment in the resources and related industries and listed securities as trading portfolio. Upon a review of the Company’s annual report for the year ended 31 December 2006 (the “Annual Report”), we note that the Group recorded an audited consolidated turnover of approximately HK$22,773,000 for the year ended 31 December 2006, representing an approximately 66.7% decrease when compared with the audited consolidated turnover of approximately HK$68,393,000 recorded during the year ended 31 December 2005. Furthermore, the Group recorded an audited consolidated profit attributable to equity holders of approximately HK$24,982,000 for the year ended 31 December 2006, representing an approximately 284.3% increase

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LETTER FROM THE IFA

when compared with the audited consolidated profit attributable to equity holders of approximately HK$6,501,000 recorded during the year ended 31 December 2005. As at 31 December 2006, the Company had audited consolidated total assets, total liabilities and total equity of approximately HK$279,373,000, HK$149,397,000 and HK$129,976,000 respectively.

As informed by the Company’s management, the Shareholders approved an ordinary resolution to grant to the Directors the Existing General Mandate to issue and allot up to 665,141,832 Shares, representing 20% of the Shares in issue as at the date of the AGM on 25 May 2007. As advised by the Company, the Directors consider that the Refreshment increases the flexibility in the Company’s affairs and are in the interests of the Shareholders. Given that the substantial portion of the Existing General Mandate has been utilized, the Company wishes to finance any business expansion and development plans or investment opportunities in the resources industry through an issuance of new Shares and a specific mandate has to be sought in this respect. The Directors propose to refresh the New General Mandate to issue and allot new Shares not exceeding 20% of the issued share capital of the Company at the date of the SGM.

2. History of fund raising exercises

During the past 12 months prior to the publication of this Circular, the Company has conducted the following fund raising activities.

					Net proceeds not
					yet used as at the
Date of	Fund raising	Net proceeds	Proposed use of	Actual use of net	date of this
announcement	event	raised	net proceeds	proceeds	Circular
9 November 2006	Rights issue	Approximately	Approximately	Approximately
		HK$375,526,000	HK$224,475,000	HK$224,475,000
			will be used to	has been used to
			pay for the	pay for the
			balance of	balance of
			consideration of	consideration of
			acquiring	acquiring
			48,373,197 MG	48,373,197 MG
			Shares	Shares

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LETTER FROM THE IFA

					Net proceeds not
					yet used as at the
Date of	Fund raising	Net proceeds	Proposed use of	Actual use of net	date of this
announcement	event	raised	net proceeds	proceeds	Circular
			HK$20,000,000	HK$2,000,000 has	HK$18,000,000
			will be returned to	been used for the	has been reserved
			the Company’s	operational	as base metal
			account,	expenses of the	trading deposited
			previously used as	Company	in the bank
			the deposit paid in
			respect of
			acquiring
			48,373,197 MG
			Shares, to recover
			the same amount
			of money which
			has been
			previously
			reserved for base
			metal trading in
			the rights issue of
			the Company
			announced on 11
			May 2006
			Approximately	Approximately
			HK$1,526,000	HK$781,000 has
			will be spent for	been used to pay
			the professional	professional fee
			fees and expenses	and expenses in
			in relation to the	relation to the
			rights issue	rights issue

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LETTER FROM THE IFA

					Net proceeds not
					yet used as at the
Date of	Fund raising	Net proceeds	Proposed use of	Actual use of net	date of this
announcement	event	raised	net proceeds	proceeds	Circular
			Approximately	Approximately
			HK$129,525,000	HK$40,971,000
			will be used by	has been used to
			the Company to	pay deposit for
			acquire further	the acquisition
			investment	(the
			interests in the	“Acquisition”) of
			resources industry	the 19,754,646
				MG Shares and
				approximately
				HK$89,299,000
				was used to
				reduce margin
				financing of the
				Company in
				acquiring MG
				Shares
9 November 2006	Previous placing	Approximately	Approximately	Approximately
	of new Shares	HK$230,400,000	HK$900,000 will	HK$592,000 has
			be used to pay	been used to pay
			professional fees	the professional
			and expenses in	fee and expenses
			relation to the	in relation to the
			previous placing	previous placing
			of new Shares	of new Shares
			Approximately	Approximately
			HK$229,500,000	HK$61,457,000
			will be applied by	has been used to
			the Group to fund	pay the balance of
			new investments	the Acquisition
			and acquisitions	and
			in the future as	HK$168,351,000
			and when	has been used to
			opportunities arise	acquire shares in
			and for general	Australasian
			working capital	Resources Limited
			purposes	as long term
				investment

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LETTER FROM THE IFA

					Net proceeds not
					yet used as at the
Date of	Fund raising	Net proceeds	Proposed use of	Actual use of net	date of this
announcement	event	raised	net proceeds	proceeds	Circular
6 July 2007	Placing of new	Approximately	Approximately	Approximately	HK$748,400,000
	Shares (the	HK$831,250,000	HK$781,250,000	HK$82,850,000	has been reserved
	“Placing”)		for further	was temporarily	for future
			investments in the	used to reduce	investments and
			resources industry	margin financing	deposited in the
			and acquisition in	of the Company	bank.
			shares in listed
			companies
			Approximately
			HK$50,000,000
			for general
			working capital of
			the Group

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LETTER FROM THE IFA

Save for the aforementioned transactions (excluding the fund raising from the exercise of share options), the Directors confirm that there were no other fund raising exercise conducted by the Company or other activities which involved the issue of new Shares during the 12 months immediately prior to the Latest Practicable Date. We note that the Company has conducted several fund raising activities during the past 12 months. The total net proceeds and the net proceeds not yet used as at the date of the Circular amounted to approximately HK$1,437,176,000 and HK$766,400,000 respectively. We have discussed with the management of the Company and were advised that the Group has sufficient cash resources to meet its present requirements. Nevertheless, the Directors believe that the granting of the New General Mandate will provide the Company with flexibility for possible future fund raising and / or acquisition as there is still no certainty that such cash level will be adequate for any appropriate investment that may be identified by the Company in the future. As stated in the section headed “Reasons for the Refreshment” of this letter, the Group is actively seeking opportunities to expand and invest and in particular, in the resources industry. Although the Group currently holds a considerable cash reserve, we consider that it is in the interest of the Group to have the Existing General Mandate refreshed for the potential acquisition of businesses or assets where the vendor prefers to receive Shares instead of cash as the consideration. We believe that satisfying the consideration of an acquisition by way of issuing consideration shares is a common practice for listed companies in Hong Kong. The Company would be in a position to capture any such opportunity in a timely manner if the New General Mandate is indeed granted by the Shareholders. Accordingly, we consider that it is prudent and reasonable for the Group to maintain a strong capital base such that the Group is able to secure any potential business acquisition and/or investment opportunities as they may arise time to time. In light of the above, we are of the view that the granting of New General Mandate is in the interests of the Company and the Shareholders as a whole.

3. Reasons for the Refreshment

3.1 Liquidity position of the Group

As per the Company’s annual report for the year ended 31 December 2006 (the “Annual Report”), the Group had audited cash and cash equivalents of approximately HK$12,282,000 (not taking into account of the net proceeds of approximately HK$831.25 million raised in the placing of new Shares announced on 6 July 2007) as at 31 December 2006. With audited current assets and audited current liabilities of approximately HK$259,373,000 and HK$149,397,000 respectively as at 31 December 2006, the Group’s current ratio (current assets/current liabilities) was approximately 1.74.

At a current ratio of approximately 1.74, we consider the Group’s liquidity position to be healthy as a current ratio which is larger than 1 indicates that the Group’s current assets outweigh the Group’s current liabilities.

As informed by the Company’s management, the Group is actively seeking opportunities to expand and invest and in particular, in the resources industry as previous announced by the Company. In view of the foregoing, we consider that it is prudent and reasonable for the Group to maintain a strong capital base for the purpose of funding any potential business development as well as capturing other investment opportunities as they arise in the future.

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LETTER FROM THE IFA

3.2 Financial flexibility

As mentioned in the Annual Report, the Board has demonstrated its positive view on the Group’s prospects by stating that the Group expects that favourable climate for global commodity prices, outlook and equity prices for global resource companies, in general, will continue for the foreseeable future with the sustained demand for commodities globally with a particular emphasis on the demand stemming from China and India. As advised by the Company’s management, having regard to the dynamic market conditions, it is to the advantage of the Group to have the flexibility in raising additional funds and to have an additional option of financing to facilitate future investments and acquisitions. As mentioned earlier, substantial portion of the Existing General Mandate has been utilized following the completion of the placing disclosed in the announcement of the Company dated 6 July 2007. The Directors believe that a refreshment of the Existing General Mandate will provide the Group with maximum flexibility as allowed under the Listing Rules to allot and issue securities for cash or as consideration in acquisitions as and when the Directors think appropriate.

Following discussions with the Company’s management, we learnt that the Board is of the view that it is highly important that the Company is able to capture every investment opportunity and fully capitalize on the changing market condition. The Directors have expressed their interest in making further investment in the resources industry. We concur with the Directors’ view that it is important to have sufficient means to immediately capture any investment and market opportunities that may arise.

As informed by the management of the Company, substantial portion of the Existing General Mandate has been utilized. If there is no refreshment of the Existing General Mandate between now and the next annual general meeting of the Company, the Company may have to wait till May 2008 (the annual general meeting for the year ended 31 December 2006 was held on 25 May 2007) which is around ten months from the date of this letter before a new general mandate may be granted to the Directors by the Shareholders. The New General Mandate provides the Group with maximum flexibility as allowed under the Listing Rules to allot and issue new Shares for cash or as consideration to acquire suitable asset(s)/business(es) as and when such opportunities arise.

Based on the above, we are of the view that the Refreshment is in the interests of the Company and the Shareholders as a whole.

3.3 Other fund raising alternatives

As mentioned by the management of the Company during our discussion, in appropriate circumstances, the Group will also consider other financing methods such as debt financing or internal cash resources to fund its future business development. As equity financing is interest and security free by nature, the Directors consider that equity financing such as issuance of new Shares for cash or equity swaps may be an appropriate means to fund such investments and/or acquisitions and provide additional working capital for the future development and expansion of the Group, given the Group’s financial position, capital structure, cost of funding and the then financial market condition.

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LETTER FROM THE IFA

4. Effect on the shareholding of the Independent Shareholders

For your information, we set out below the potential dilution to the shareholding of the existing Independent Shareholders upon full utilization of the refreshed New General Mandate (assuming that Company’s issued share capital of 4,030,341,163 Shares as at the Latest Practicable Date will remain unchanged on the date of the SGM).

Profit Harbour Investments Limited (“Profit Harbour”) (Note 1) Ms. Chong Sok Un (Note 2) Shougang Holding (Hong Kong) Limited (“Shougang”) (Note 3) Placees Shares to be issued under the New General Mandate Independent Shareholders Total	As at the Latest Practicable Date Upon the full utilization of the New General Mandate Shares % Shares % 493,399,602 12.24 493,399,602 10.20 691,840,000 17.17 691,840,000 14.30 800,000,000 19.85 800,000,000 16.54	As at the Latest Practicable Date Upon the full utilization of the New General Mandate Shares % Shares % 493,399,602 12.24 493,399,602 10.20 691,840,000 17.17 691,840,000 14.30 800,000,000 19.85 800,000,000 16.54	As at the Latest Practicable Date Upon the full utilization of the New General Mandate Shares % Shares % 493,399,602 12.24 493,399,602 10.20 691,840,000 17.17 691,840,000 14.30 800,000,000 19.85 800,000,000 16.54	As at the Latest Practicable Date Upon the full utilization of the New General Mandate Shares % Shares % 493,399,602 12.24 493,399,602 10.20 691,840,000 17.17 691,840,000 14.30 800,000,000 19.85 800,000,000 16.54
	1,985,239,602 665,000,000 — 1,380,101,561	49.26 16.50 — 34.24	1,985,239,602 665,000,000 806,068,232 1,380,101,561	41.04 13.75 16.67 28.54
	4,030,341,163	100.00	4,836,409,395	100.00

Notes:

1. The entired issued share capital of Profit Harbour is owned by Mr. Yue Jialin, an executive Director

2. Ms. Chong Sok Un, an executive Director, is beneficially interested in the shares

3. This represented an interest in 600,000,000 and 200,000,000 Shares held by Benefit Rich Limited and Easymade Investments Limited respectively, both of which are wholly-owned subsidiaries of Shougang

As demonstrated above, 806,068,232 Shares, representing 20% of the issued share capital of the Company as at the Latest Practicable Date (assuming no issue/repurchase of the Shares between now and the date of the SGM), would be issued upon the full utilization of the New General Mandate. If the New General Mandate is fully utilized, the shareholding of the existing Independent Shareholders will decrease from approximately 34.24% to 28.54%, representing a potential dilution of up to approximately 16.65%.

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LETTER FROM THE IFA

Having taken into account of the added financial flexibility offered by the renewal of the New General Mandate as discussed previously, we consider the potential dilution of the shareholding of the existing Independent Shareholders to be fair and reasonable so far as the Independent Shareholders are concerned.

CONCLUSION

Having considered (i) the liquidity position of the Group, (ii) the financial flexibility, (iii) the other fund raising alternatives, (iv) historical fund raising exercise conducted by the Company and (v) the potential dilution effect upon full utilization of the New General Mandate, we are of the opinion that the refreshment of the New General Mandate is in the interests of the Group and the Shareholders so far as the Independent Shareholders as a whole are concerned and the terms of the Refreshment are fair and reasonable. Accordingly, we would recommend (1) the Independent Board Committee to advise the Independent Shareholders and (2) the Independent Shareholders, to vote in favour of the ordinary resolution to approve the Refreshment at the SGM.

Yours faithfully, For and on behalf of Ample Capital Limited Andrew Cheng Director

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APPENDIX I PARTICULARS OF THE GRANT OF THE PROPOSED OPTIONS UNDER THE SHARE OPTION SCHEME

This Appendix provides information as required by the Listing Rules to be provided to the Shareholders for their consideration as to whether to vote for or against the resolution to be proposed at the SGM in relation to the grant of the Proposed Options to Mr. Cao and Ms. Chong, which exceeds 0.1% of the issued share capital of the Company and has an aggregate value of over HK$5 million.

PARTICIPANT AND PRINCIPAL TERMS OF THE PROPOSED OPTIONS TO BE GRANTED

The principal terms of the Proposed Options are as follows:

			Percentage of
			Proposed
Name of			Option	Exercise	Exercise
Grantee	Capacity	No. of Shares	exercisable	period	Price
				(Note)	(Note)
Mr. Cao	Executive	100,000,000	100%	At any time on	HK$1.50
	Director and	Shares		or after the Date
	Chairman			of Grant up to
				and including
				5th July, 2010
Ms. Chong	Executive	110,000,000	100%	At any time on	HK$1.50
	Director	Shares		or after the Date
				of Grant up to
				and including
				5th July, 2010

Note: Pursuant to Rule 17.03(4) of the Listing Rules, 6th July, 2007, the date of the meeting of the Board approving the Proposed Options, shall be taken as the Date of Grant for the purpose of calculating the exercise price under the Proposed Options. The proposed exercise price of the Proposed Options of HK$1.50 represents a price higher than (i) the closing price of the Shares as stated in the daily quotation sheet of the Stock Exchange on the last trading day preceding 6th July, 2007 (i.e. HK$1.47) and (ii) a price being the average of the closing prices of the Shares in the daily quotations sheets of the Stock Exchange for the 5 trading days immediately preceding 6th July, 2007 (i.e. HK$1.35).

The Proposed Options must be taken within 28 days from the Date of Grant. Mr. Cao and Ms. Chong shall each remit HK$1.00 in favour of the Company upon acceptance of the grant of the Proposed Options.

— 24 —

APPENDIX I PARTICULARS OF THE GRANT OF THE PROPOSED OPTIONS UNDER THE SHARE OPTION SCHEME

Upon the passing of the resolutions approving the grant of the Proposed Options and the proposal for the grant of the Specific Mandate as set out in the notice of the SGM, the total number of Shares to be issued upon the exercise of the Proposed Options, which exceeds 1% of the issued share capital of the Company, and the percentage of total issued share capital of the Company, calculated based on the number of Shares in issue as at the Latest Practicable Date, is as follows:

		Number of Shares
		to be issued upon	**Percentage of **	total
		exercise of the	number of Shares
Name of Grantee	Capacity	Proposed Option	in issue
Mr. Cao	Executive Director and	133,000,000		3.30%
	Chairman	(Note)
Ms. Chong	Executive Director	110,000,000		2.73%

Note: As at the Latest Practicable Date, 33,000,000 options were already previously granted to Mr. Cao on 29th May, 2007.

As at the Latest Practicable Date, Ms. Chong did not hold any option under the Share Option Scheme and no option has been granted to Ms. Chong within 12 months from the Date of Grant.

The Shares to be allotted and issued upon the exercise of the Proposed Options will rank pari passu with the fully paid Shares in issue at the relevant date of allotment except in respect of any dividend or other distribution previously declared or recommended or resolved to be paid or made if the record date therefore is before the relevant date of allotment.

— 25 —

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group.

The Directors collectively and individually accept the responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their information, knowledge and belief, there are no other facts not contained in this circular, the omission of which would make any statement herein misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date were as follows:

Authorised		HK$
8,000,000,000	Shares as at the Latest Practicable Date	800,000,000
Issued and fully paid or credited as fully paid
4,030,341,163	Shares as at the Latest Practicable Date	403,034,116

3. PARTICIPANTS AND NUMBER OF OPTIONS GRANTED

Pursuant to the annual general meeting of the Company held on 25th May, 2007, the Scheme Mandate Limit was refreshed to 332,570,916 Shares. As at the Latest Practicable Date, an aggregate of 126,000,000 share options have been granted to the eligible participants since refreshment of the Scheme Mandate Limit and the grant of option to Mr. Liu to subscribe for 150,000,000 Shares at an exercise price of HK$1.20 per Share was approved by the independent shareholders of the Company at the special general meeting of the Company held on 27th July, 2007.

4. GENERAL

• (a) The company secretary and the qualified accountant of the Company appointed pursuant to Rule 3.24 of the Listing Rules is Mr. To Yung Kan. Mr. To is a qualified accountant and member of the Hong Kong Institute of Certificate Public Accountants.

• (b) The English text of this circular shall prevail over the Chinese text in the event of inconsistency.

— 26 —

NOTICE OF THE SGM

APAC RESOURCES LIMITED

(Incorporated in Bermuda with limited liability) (Stock code: 1104)

NOTICE IS HEREBY GIVEN that a special general meeting (the “Meeting”) of APAC Resources Limited (the “Company”) will be held at 7th Floor, Board Room, The Dynasty Club, South West Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong on 15th August, 2007 at 10:30 a.m. for the purpose of considering and if thought fit, passing with or without amendments, the following ordinary resolutions of the Company to be taken by way of poll:

ORDINARY RESOLUTIONS

1. “ THAT the grant of options to Mr. Cao Zhong and Ms. Chong Sok Un to subscribe for 100,000,000 and 110,000,000 ordinary shares (the “Shares”) of the Company (“Proposed Options”) respectively at an exercise price of HK$1.50 per Share, pursuant to the share option scheme of the Company adopted on 22nd September, 2004, be and are hereby approved and subject to the passing of resolution No. 2 below, the directors of the Company (the “Directors”) be and are hereby authorised to issue and allot Shares to each of them pursuant to the exercise of such options and to do all such acts and things, to sign and execute all such further documents and to take such steps as the Directors may in their discretion consider necessary, appropriate, desirable or expedient to give effect to or in connection with such grant of options.”

2. “ THAT subject to the Listing Committee of The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, the Options Shares (as defined below) either unconditionally or subject to such condition as may be reasonably acceptable to the Company, the Directors be and are hereby authorised to allot and issue up to a maximum of not more than 100,000,000 and 110,000,000 shares (the “Options Shares”) of par value of HK$0.10 each in the share capital of the Company, to Mr. Cao Zhong and Ms. Chong Sok Un respectively in accordance with the terms and conditions of the Proposed Options and the Directors be and are hereby authorised to do all such acts and things, to do all such acts and things, to sign and execute all such further documents and to take such steps as the Directors may in their discretion consider necessary, appropriate, desirable or expedient to give effect to or in connection with the allotment and issue of the Options Shares.”

— 27 —

NOTICE OF THE SGM

1. “ THAT the refreshment of the total number of Shares that may be issued upon exercise of all the options (the “Share Options”) to subscribe for Shares and other options to be granted under the share option scheme (the “Share Option Scheme”) of the Company adopted on 22nd September, 2004 or any other schemes of the Company or its subsidiaries, as the case may be, (the “Scheme Mandate Limit”) be and is hereby approved and confirmed and the Scheme Mandate Limit as refreshed shall represent a maximum of 10% of the issue share capital of the Company as at the date of the passing of this resolution, Share Options and other options previously granted under the Share Option Scheme or any other schemes of the Company or its subsidiaries, as the case may be (including options outstanding, cancelled, exercised or lapsed in accordance with the terms of the Share Option Scheme or any other schemes of the Company or its subsidiaries, as the case may be) shall not be counted for the purposes of calculating the Scheme Mandate Limit.”

2. “THAT:

3. (a) subject to paragraph (b) below, the exercise by the Directors during the Relevant Period (as defined below) of all the powers of the Company to allot, issue and deal with authorised and unissued shares in the capital of the Company and to make or grant offers, agreements and options which might require the exercise of such powers be and is hereby generally and unconditionally approved;

4. (b) the approval in paragraph (a) above shall authorise the Directors to make or grant offers, agreements and options during the Relevant Period which would or might require the exercise of such powers after the end of the Relevant Period;

5. (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted by the Directors pursuant to the approval in paragraph (a) above, otherwise than pursuant to:

   • (i) a Rights Issue (as defined below);

   • (ii) the exercise of options under a share option scheme of the Company; and

   • (iii) any scrip dividend scheme or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the articles of association of the Company,

shall not exceed 20% of the aggregate nominal amount of the issued share capital of the Company on the date of the passing of this resolution and this approval shall be limited accordingly; and

• (d) for the purposes of this resolution:

“Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:

• (i) the conclusion of the next annual general meeting of the Company;

— 28 —

NOTICE OF THE SGM

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws of the Company or any applicable law to be held; and

• (iii) the date upon which the authority set out in this resolution is revoked or varied by way of ordinary resolution in general meetings.”;

“Rights Issue” means an offer of shares open for a period fixed by the Directors to holders of shares of the Company or any class thereof on the register on a fixed record date in proportion to their then holdings of such shares or class thereof (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlement or having regard to any restrictions or obligations under the laws of any relevant jurisdiction or the requirements of any recognised regulatory body or any stock exchange).”

By Order of the Board of APAC Resources Limited Cao Zhong Chairman

Hong Kong, 27th July, 2007

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Head office and principal place of business in Hong Kong: 32/F., China Online Centre 333 Lockhart Road Wanchai Hong Kong

* For identification purpose only

Notes:

1. Any member of the Company entitled to attend and vote at the Meeting is entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a member of the Company. A member who is the holder of two or more shares of the Company may appoint more than one proxy to represent him to attend and vote on his behalf.

2. A form of proxy for use in connection with the Meeting is enclosed with this circular. To be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is signed or a certified copy of that power of attorney or authority must be returned to the Hong Kong Branch Share Registrar of the Company, Secretaries Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the Meeting or any adjourned meeting.

— 29 —

NOTICE OF THE SGM

As at the date of this notice, the Directors are as follows:

Executive Directors:

• Mr. Cao Zhong (Chairman)

• Mr. Liu Yongshun (Chief Executive Officer)

• Mr. Zhou Luyong (Deputy Chief Executive Officer)

• Ms. Chong Sok Un

• Mr. Lau Yau Cheung

• Mr. Yue Jialin

Non-Executive Director:

Mr. Chen Zhaoqiang

Independent Non-Executive Directors:

• Mr. Wong Wing Kuen, Albert

• Mr. Tsui Robert Che Kwong

• Mr. Chang Chu Fai, Johnson Francis

• Mr. Alan Stephen Jones

• Mr. Robert Moyse Willcocks

• Mr. Yang Weiming (resigned on 27th July, 2007)

— 30 —