Persistence Gold Group Ltd — Proxy Solicitation & Information Statement 2010

May 27, 2010

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 stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser immediately.

If you have sold or transferred all your securities in APAC Resources Limited, you should at once hand this circular, together with the accompanying form of proxy, to the purchaser or other transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation to its accuracy or completeness and expressly disclaim 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 亞太資源有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1104)

PROPOSALS FOR

(1) RE-ELECTION OF DIRECTORS

(2) GENERAL MANDATES TO ISSUE SECURITIES AND TO REPURCHASE SHARES

(3) RENEWAL OF SCHEME MANDATE LIMIT

(4) GRANT OF DIRECTORS’ OPTIONS UNDER SPECIFIC MANDATE

AND

(5) INCREASE IN AUTHORISED SHARE CAPITAL

Independent Financial Adviser to Independent Board Committee and Independent Shareholders

A letter from the Independent Board Committee, containing its recommendation to the Independent Shareholders regarding the grant of the Directors’ Options and Specific Mandate is set out on pages 16 to 17 of this circular. A letter of advice from Optima Capital Limited, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 18 to 28 of this circular.

A letter from the board of Directors of APAC Resources Limited is set out on pages 4 to 15 of this circular. The notice convening the AGM to be held at Falcon Room II, Basement of Luk Kwok Hotel, 72 Gloucester Road, Wanchai, Hong Kong on Tuesday, 29 June 2010 at 2:30 p.m. is set out on pages 41 to 46 of this circular. Whether or not you are able to attend the said meeting, you are requested to complete the accompanying form of proxy in accordance with the instructions thereon and return the same to the branch share registrar of the Company, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, 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 meeting or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the meeting or any adjourned meeting should you so desire.

27 May 2010

• For identification purpose only

CONTENTS

	Pages
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Re-election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
General Mandates to issue securities and to repurchase Shares . . . . . . . . . . . . . . .	6
Renewal of Scheme Mandate Limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Grant of Directors’ Options under Specific Mandate. . . . . . . . . . . . . . . . . . . . . . .	10
Increase in authorised share capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Recommendation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Expert and Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Responsibility Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Letter from Optima Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Appendix I – Details of Retiring Directors proposed to be re-elected. . . . . . . . . .	29
Appendix II – Explanatory Statement as to Repurchase Mandate. . . . . . . . . . . . .	37
Appendix III – Notice of Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . .	41

– i –

DEFINITIONS

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

“AGM”	the annual general meeting of the Company to be held at
	Falcon Room II, Basement of Luk Kwok Hotel, 72 Gloucester
	Road, Wanchai, Hong Kong on Tuesday, 29 June 2010 at
	2:30 p.m.;
“AGM Notice”	the notice convening the AGM as set out in Appendix III to this
	circular;
“Board”	the board of Directors;
“Bye-laws”	the bye-laws of the Company;
“Company”	APAC Resources Limited, a company incorporated in Bermuda
	with limited liability, the Shares of which are listed on the
	main board of the Stock Exchange (Stock code: 1104);
“Director(s)”	the director(s) of the Company;
“Directors’ Options”	the options proposed to be granted under the Share Option
	Scheme to Ms. Chong and Mr. Ferguson to subscribe for
	150,000,000 and 250,000,000 Shares, respectively, at the
	Exercise Price;
“Exercise Price”	the exercise price of the Directors’ Options, being HK$1.00 per
	Share;
“Grantees”	eligible participants under the Share Option Scheme;
“Group”	the Company and its subsidiaries;
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC;
“Independent Board	the committee comprising Mr. Wong Wing Kuen, Albert,
Committee”	Mr. Chang Chu Fai, Johnson Francis and Mr. Robert Moyse
	Willcocks, all being the independent non-executive Directors,
	appointed by the Board to make recommendation to the
	Independent Shareholders in respect of the grant of the
	Directors’ Options under the Specific Mandate;

– 1 –

DEFINITIONS

“Independent Financial Optima Capital Limited, a licensed corporation to carry out Adviser” or type 1 (dealing in securities), type 4 (advising on securities) “Optima Capital” and type 6 (advising on corporate finance) regulated activities under the SFO which has been appointed as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the grant of the Directors’ Options under the Specific Mandate; “Independent Shareholders other than Ms. Chong and Mr. Ferguson together Shareholders” with their respective associates; “Issuance Mandate” as defined in paragraph 3(a) of the Letter from the Board in this circular; “Latest Practicable Date” 20 May 2010, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information included herein; “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange; “Mr. Ferguson” Mr. Andrew Charles Ferguson, an Executive Director and Chief Executive Officer; “Ms. Chong” Ms. Chong Sok Un, an Executive Director, Chairman and substantial Shareholder; “PRC” the People’s Republic of China; “Repurchase Mandate” as defined in paragraph 3(b) of the Letter from the Board in this circular; “Scheme Mandate Limit” the maximum number of Shares which may be issued upon exercise of all options granted and 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; “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

– 2 –

DEFINITIONS

“Share(s)” ordinary share(s) of HK$0.10 each in the share capital of the Company; “Share Option Scheme” the share option scheme adopted by the Company on 22 September 2004 for an option period of ten years from the date of adoption; “Shareholder(s)” registered holder(s) of Shares; “Specific Mandate” the specific mandate to be granted to the Directors to allot and issue Shares which fall to be allotted and issued upon exercise of Directors’ Options; “Stock Exchange” The Stock Exchange of Hong Kong Limited; “Takeovers Code” Hong Kong Code on Takeovers and Mergers; and “%” per cent.

– 3 –

LETTER FROM THE BOARD

APAC RESOURCES LIMITED 亞太資源有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1104)

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

Non-executive Directors: Mr. Lee Seng Hui Mr. So Kwok Hoo Mr. Liu Yongshun

Independent Non-executive Directors: Mr. Wong Wing Kuen, Albert Mr. Chang Chu Fai, Johnson Francis Mr. Robert Moyse Willcocks

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

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

27 May 2010

To the Shareholders

Dear Sir or Madam,

PROPOSALS FOR

(1) RE-ELECTION OF DIRECTORS

(2) GENERAL MANDATES TO ISSUE SECURITIES AND TO REPURCHASE SHARES

(3) RENEWAL OF SCHEME MANDATE LIMIT

(4) GRANT OF DIRECTORS’ OPTIONS UNDER SPECIFIC MANDATE

AND

(5) INCREASE IN AUTHORISED SHARE CAPITAL

1. INTRODUCTION

The purpose of this circular is to provide you with the information regarding resolutions to be proposed at the AGM relating to (i) re-election of Directors, (ii) the granting to the Directors of the Issuance Mandate and Repurchase Mandate, (iii) the renewal of the Scheme Mandate Limit, (iv) the grant of the Directors’ Options under the Specific Mandate; (v)

• For identification purpose only

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LETTER FROM THE BOARD

increase in authorised share capital, and (vi) a notice to convene the AGM to approve, among other things, the re-election of Directors, the proposal for grant of the Issuance Mandate and Repurchase Mandate, the renewal of the Scheme Mandate Limit, the grant of the Directors’ Options under the Specific Mandate and increase in authorised share capital.

2. RE-ELECTION OF DIRECTORS

Pursuant to Bye-laws 87(1) and (2) of the Bye-laws, at each annual general meeting, one-third of the Directors for the time being (or, if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation. A retiring Director shall be eligible for re-election. The Directors to retire by rotation shall include (so far as necessary to ascertain the number of directors to retire by rotation) any Director who wishes to retire and not to offer himself for re-election. Any further Directors so to retire shall be those of the other Directors subject to retirement by rotation who have been longest in office since their last re-election or appointment and so that as between persons who became or were last re-elected Directors on the same day those to retire shall (unless they otherwise agree between themselves) be determined by lot.

Pursuant to Bye-law 86(2) of the Bye-laws, the Directors shall have power from time to time and at any time to appoint any person as a Director either to fill a causal vacancy on the Board or, subject to authorisation by the Shareholders in general meeting, as an addition to the existing Board but so that the number of Directors so appointed shall not exceed any maximum number determined from time to time by the Shareholders in general meeting. Any Director so appointed by the Board shall hold office only until the next following general meeting (in the case of filing a casual vacancy) or until the next following annual general meeting of the Company (in the case of an addition to the Board) and shall then be eligible for re-election at that meeting. Pursuant to Bye-law 87(2) of the Bye-laws, any Director appointed pursuant to Bye-law 86(2) shall not be taken into account in determining which particular Directors or the number of Directors who are to retire by rotation.

In accordance with Bye-laws 86 and 87 of the Bye-laws, Ms. Chong Sok Un, Mr. Andrew Charles Ferguson, Mr. Peter Anthony Curry, Mr. Kong Muk Yin, Mr. Yue Jialin, Mr. Lee Seng Hui, Mr. So Kwok Hoo, Mr. Chang Chu Fai, Johnson Francis and Mr. Robert Moyse Willcocks will retire at the forthcoming AGM 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 or proposed new director in the notice or accompanying circular to its shareholders of the relevant general meeting, if such re-election or appointment is subject to shareholders’ approval at that relevant general meeting. A brief biographical details of the retiring Directors are set out in Appendix I to this circular.

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LETTER FROM THE BOARD

3. GENERAL MANDATE TO ISSUE SECURITIES AND TO REPURCHASE SHARES

At the annual general meeting of the Company held on 5 June 2009, ordinary resolutions were passed for the granting of general mandate 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 (the “ Existing Issuance Mandate ”); and

• (ii) to repurchase Shares representing up to a maximum of 10% of the aggregate nominal amount of the issued share capital of the Company as at that date (the “ Existing Repurchase Mandate ”).

The Existing Issuance Mandate and the Existing Repurchase Mandate will lapse upon the conclusion of the AGM. The Directors consider that the Existing Issuance Mandate and the Existing Repurchase Mandate increase the flexibility in the Company’s affairs and are in the interests of the Shareholders, and that the same should continue to be adopted by the Company.

It will therefore be proposed at the forthcoming AGM to approve the granting of new general mandates to the Directors to exercise the power of the Company:

• (a) to allot, issue and deal with new Shares and to make or grant offers, agreements and options, including warrants to subscribe for Shares and other rights of subscription for or conversion into Shares, of an aggregate nominal amount not exceeding 20% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of such resolution (“ Issuance Mandate ”); and

• (b) to repurchase Shares on the Stock Exchange of an aggregate nominal amount not exceeding 10% of the aggregate nominal amount of the issued share capital of the Company as at the date of passing of such resolution (“ Repurchase Mandate ”).

Assuming that there is no further issuance, allotment of and dealing in new Shares of the Company from the Latest Practicable Date to the date of AGM, a maximum of 1,384,425,598 new Shares, representing 20% of the aggregate nominal amount of the issued share capital of the Company, shall be allotted, issued and dealt with under the Issuance Mandate.

The Issuance Mandate and Repurchase Mandate will continue in force until the conclusion of the next annual general meeting of the Company held after the AGM or any earlier date as referred to in ordinary resolutions 4 and 5 set out in the AGM Notice. Resolutions authorising the extension of the Issuance Mandate to include the aggregate nominal amount of Shares repurchased (if any) under the Repurchase Mandate will be proposed as ordinary resolution 6 set out in the AGM Notice. With reference to the Issuance Mandate and Repurchase Mandate, the Directors wish to state that they have no immediate plan to issue any Shares or repurchase any Shares pursuant thereto.

– 6 –

LETTER FROM THE BOARD

An explanatory statement containing the particulars required by the Listing Rules to enable the Shareholders to make an informed decision on whether to vote for or against the resolution to approve the granting of the Repurchase Mandate is set out in Appendix II to this circular.

4. RENEWAL OF SCHEME MANDATE LIMIT

Background

The Share Option Scheme was adopted by the Shareholders at the annual general meeting of the Company held on 22 September 2004.

Under the Share Option Scheme, among other things:

• (i) the total number of Shares available for issue under options which may be granted under the Share Option Scheme and any other share option scheme of the Group (excluding options lapsed in accordance with the terms of the Share Option Scheme) must not in aggregate exceed 10% of the Shares in issue as at the date of adoption of the Share Option Scheme (the “ Scheme Mandate Limit ”); and

• (ii) the overall limit on the number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the Share Option Scheme and any other share option scheme of the Group must not in aggregate exceed 30% of the share capital of the Company issue from time to time.

The Company may renew the Scheme Mandate Limit at any time subject to approval of the Shareholders of the Company in a general meeting. However, the Scheme Mandate Limit as renewed must not exceed 10% of the Shares in issue as at the date of approval of the limit. Options previously granted under the Share Option Scheme and any other share option scheme of the Group (including those outstanding, cancelled, lapsed or exercised in accordance with the Share Option Scheme) will not be counted for the purpose of calculating the Scheme Mandate Limit.

The existing Scheme Mandate Limit is 472,657,105 Shares, being 10% of the Shares in issue as at the date of the annual general meeting of the Company held on 6 June 2008. As at the Latest Practicable Date, there were 500,000,000 options granted under the Share Option Scheme which remained outstanding.

– 7 –

LETTER FROM THE BOARD

Details of outstanding options are set out as follows:–

Share Option Scheme

Date Scheme Mandate Limit 22 September 2004 Scheme adoption date 41,300,000 25 May 2007 Annual general meeting 332,570,916 29 May 2007 Options granted(Note 1) 6 July 2007 Options granted(Note 2) 15 August 2007 Special general meeting 403,130,116 3 October 2007 Options granted 31 January 2008 Options lapsed 16 May 2008 Options lapsed 6 June 2008 Annual general meeting 472,657,105 20 October 2008 Options lapsed 20 December 2009 Options lapsed 31 January 2010 Options lapsed 4 May 2010 Options granted Total outstanding(Note 3)

Number of options 216,000,000 270,000,000 25,000,000 (3,000,000) (3,000,000) (5,000,000) (166,000,000) (1,000,000) 167,000,000 500,000,000

• Note 1: 150,000,000 options were granted conditional upon approval at the special general meeting which was eventually obtained on 27 July 2007.

• Note 2: 210,000,000 options were granted under specific mandate conditional upon approval at the special general meeting which was eventually obtained on 15 August 2007.

• Note 3: The number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised is 500,000,000 and the proposed Scheme Mandate Limit is 692,212,799, which does not exceed 2,076,638,397, being 30% of the Shares in issue as at the Latest Practicable Date.

– 8 –

LETTER FROM THE BOARD

The Directors consider that it is in the interests of the Group to renew the Scheme Mandate Limit to maintain the flexibility of the Group to provide incentives or reward to qualified participants under the Share Option Scheme for their contributions to the Group. On the basis of 6,922,127,990 Shares in issue as at the Latest Practicable Date, the Scheme Mandate Limit shall be renewed to 692,212,799 Shares, representing 10% of the Shares in issue as at the date of the AGM approving the renewed Scheme Mandate Limit.

Conditions

As required by the Share Option Scheme and the Listing Rules, an ordinary resolution, as special business, will be proposed to the Shareholders at the AGM to approve the renewal of the Scheme Mandate Limit in the terms as set out in resolution 7 of the AGM Notice.

The adoption of the renewed Scheme Mandate Limit of the Share Option Scheme is conditional upon:

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

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

Application for Listing

Application will be 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 any options granted under the Share Option Scheme under the renewed Scheme Mandate Limit.

– 9 –

LETTER FROM THE BOARD

5. GRANT OF DIRECTORS’ OPTIONS UNDER SPECIFIC MANDATE

On 4 May 2010, the Board announced that Company proposed to grant, pursuant to the Share Option Scheme, the Directors’ Options as follows:

• No. of Share Exercisable

• Name of Grantee Capacity Options Period Exercise Criteria Ms. Chong Executive Director, 52,500,000 7 July 2010 to 1. Exercisable only if the closing price of Chairman and 6 July 2013 the Shares has reached HK$1.20 or substantial (both dates above per Share during the period Shareholder inclusive) from 7 July 2010 to 6 July 2011 (both dates inclusive) and will lapse if the Share price does not hit HK$1.20 or above during such period.

• 52,500,000 7 July 2011 to 2. Exercisable only if the closing price of 6 July 2013 the Shares has reached HK$1.60 or (both dates above per Share during the period inclusive) from 7 July 2011 to 6 July 2012 (both dates inclusive) and will lapse if the Share price does not hit HK$1.60 or above during such period.

• 45,000,000 7 July 2012 to 3. Exercisable only if the closing price of 6 July 2013 the Shares has reached HK$2.00 or (both dates above per Share during the period inclusive) from 7 July 2012 to 6 July 2013 (both dates inclusive) and will lapse if the Share price does not hit HK$2.00 or above during such period.

• Subtotal 150,000,000

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LETTER FROM THE BOARD

• No. of Share Exercisable

• Name of Grantee Capacity Options Period Exercise Criteria Mr. Ferguson Executive Director 87,500,000 7 July 2010 to 1. Exercisable only if the closing price of and Chief 6 July 2013 the Shares has reached HK$1.20 or Executive (both dates above per Share during the period Officer inclusive) from 7 July 2010 to 6 July 2011 (both dates inclusive) and will lapse if the Share price does not hit HK$1.20 or above during such period.

• 87,500,000 7 July 2011 to 2. Exercisable only if the closing price of 6 July 2013 the Shares has reached HK$1.60 or (both dates above per Share during the period inclusive) from 7 July 2011 to 6 July 2012 (both dates inclusive) and will lapse if the Share price does not hit HK$1.60 or above during such period.

• 75,000,000 7 July 2012 to 3. Exercisable only if the closing price of 6 July 2013 the Shares has reached HK$2.00 or (both dates above per Share during the period inclusive) from 7 July 2012 to 6 July 2013 (both dates inclusive) and will lapse if the Share price does not hit HK$2.00 or above during such period.

• Subtotal 250,000,000 Total 400,000,000

The Exercise Price of HK$1.00 represents a price not less than (i) the closing price of the Shares of HK$0.69 as stated in the daily quotation sheet of the Stock Exchange on 4 May 2010 (i.e. the date of grant); (ii) a price of HK$0.68, being the average closing prices of the Shares in the daily quotations sheets of the Stock Exchange for the 5 trading days immediately preceding 4 May 2010; and (iii) the closing price of the Shares of HK$0.50 as stated in the daily quotation sheet of the Stock Exchange as at the Latest Practicable Date.

Pursuant to Rule 17.04(1) of the Listing Rules, the grant of the Directors’ Options has been approved by the independent non-executive Directors.

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LETTER FROM THE BOARD

The grant of the Directors’ Options to subscribe for 150,000,000 and 250,000,000 Shares to Ms. Chong, Executive Director, Chairman and substantial Shareholder, and Mr. Ferguson, Executive Director and Chief Executive Officer, respectively, which, if exercised, would represent approximately 5.78% of the issued share capital of the Company as at the Latest Practicable Date and approximately 5.46% of the issued share capital of the Company as enlarged by the exercise of the Directors’ Options.

As at the Latest Practicable Date, Ms. Chong was deemed to be interested in: (a) 967,200,000 Shares, representing approximately 13.97% of the existing issued share capital of the Company, and (b) 110,000,000 options previously granted under the Share Option Scheme. Mr. Ferguson was interested in 25,000,000 Shares, representing approximately 0.36% of the existing issued share capital of the Company, and no option has been granted to him under the Share Option Scheme.

Reasons for the grant of Directors’ Options

Ms. Chong is an Executive Director, Chairman and substantial Shareholder and has contributed in developing the business of the Group and her ongoing contribution will be an important factor to the future development of the Group. The terms of the Directors’ Options to be granted to her, especially the exercisable period over each of the 3 years and the exercise criteria linked to the Share price, will serve as a target and an incentive for her continuing commitment and long-term contribution to the Group in the future.

Mr. Ferguson is an Executive Director and Chief Executive Officer who is primarily responsible for overall management activities of the Company including business strategy planning and business development. The terms of the Directors’ Options to be granted to him, especially the exercisable period over each of the 3 years and the exercise criteria linked to the Share price, will serve as a target and an incentive for his continuing commitment and longterm contribution to the Group in the future.

Pursuant to the Share Option Scheme, the Company had in total granted 500,000,000 options, which has yet to be exercised as at the Latest Practicable Date. Such options, if exercised, represent approximately 7.22% of the issued share capital of the Company as at the Latest Practicable Date. The Company has not adopted any other share options schemes other than the Share Option Scheme and none of the outstanding 500,000,000 options granted under the Share Option Scheme have lapsed or have been cancelled as at the Latest Practicable Date. The total number of outstanding options when aggregated with the Directors’ Options would represent a total of 900,000,000 Shares, representing approximately 13% 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.

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LETTER FROM THE BOARD

Grant of Specific Mandate

The grant of the Directors’ Options will exceed the number of options that can be granted under the existing Scheme Mandate Limit. As such, the Directors consider that it is in the interest of the Company to seek the Specific Mandate from the Shareholders to grant the Directors’ Options so as to allow the Company to maintain sufficient options under the renewed Scheme Mandate Limit in the event that the Company wishes to provide incentives or rewards to qualified participants under the Share Option Scheme or to recruit and retain high-caliber employees and attract talents who are valuable to the Group. An ordinary resolution set out as resolution 8 in the AGM Notice will therefore be proposed to the Independent Shareholders at the AGM to grant the Specific Mandate so as to allow the Directors to grant the Directors’ Options entitling Ms. Chong and Mr. Ferguson to subscribe for, in aggregate up to 400,000,000 Shares, representing approximately 5.78% of the issued share capital of the Company as at the date of passing of the relevant resolution at the AGM.

If the Specific Mandate is granted, based on 6,922,127,990 Shares in issue as at the Latest Practicable Date and assuming no further issue or repurchase of Shares prior to the AGM, upon approval of the Specific Mandate by Independent Shareholders at the AGM, the Company will grant the Directors’ Options entitling Ms. Chong and Mr. Ferguson to subscribe for up to a maximum of 400,000,000 Shares, representing approximately 5.78% of the Shares in issue as at the date of the AGM.

Listing Rules Implications

Pursuant to Rules 17.03(4) 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 requires Shareholders’ approval in general meeting with such participant and his associates abstaining from voting. Pursuant to Rule 17.04(1) of the Listing Rules, any grant of options to, inter alia, substantial Shareholders or any of its 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. The grant of the Directors’ Options and the Specific Mandate are therefore subject to the approval of the Independent Shareholders at the AGM.

Pursuant to the Listing Rules, Ms. Chong and Mr. Ferguson together with their respective associates will abstain from voting in favour of the resolutions to approve the grant of the Directors’ Options and the Specific Mandate at the AGM.

An Independent Board Committee has been established to make a recommendation to the Independent Shareholders in respect of the grant of the Directors’ Options under the Specific Mandate. Mr. Wong Wing Kuen, Albert, Mr. Chang Chu Fai, Johnson Francis and Mr. Robert Moyse Willcocks, all being independent non-executive Directors, have been appointed by the Board to serve as members of the Independent Board Committee.

Optima Capital has been appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the grant of the Directors’ Options under the Specific Mandate.

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LETTER FROM THE BOARD

Application will be 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 Directors’ Options to be granted under the Specific Mandate.

6. INCREASE IN AUTHORISED SHARE CAPITAL

An ordinary resolution set out as resolution 9 in the AGM Notice will be proposed at the AGM to increase the Company’s authorised share capital from HK$800,000,000 to HK$2,000,000,000 by the creation of an additional 12,000,000,000 Shares for facilitating the issue of new Shares in future.

7. ANNUAL GENERAL MEETING

The AGM Notice is set out in Appendix III to this circular. At the AGM, ordinary resolutions will be proposed to approve, inter alia, the re-election of Directors, the granting of the Issuance Mandate and the Repurchase Mandate, the extension of the Issuance Mandate, the renewal of Scheme Mandate Limit, the grant of the Directors’ Options under the Specific Mandate and increase in authorised share capital.

A form of proxy is enclosed with this circular for use at the AGM. Whether or not you are able to attend this meeting, you are requested to complete and return the enclosed form of proxy to the branch share registrar of the Company, Tricor Secretaries Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time appointed for the holding of the meeting. Completion and return of a form of proxy will not preclude you from attending and voting at the meeting in person if you so wish.

8. RECOMMENDATION

The Directors consider that the proposed ordinary resolutions for approval of the reelection of Directors, the grant of Issuance Mandate and Repurchase Mandate, the extension of the Issuance Mandate, the renewal of Scheme Mandate Limit and increase in authorised share capital are each in the best interests of the Company and Shareholders as a whole. The Directors (excluding Ms. Chong and Mr. Ferguson) consider that the grant of the Directors’ Options under the Specific Mandate is in the best interests of the Company and Shareholders as a whole. Accordingly, the Directors recommend that the Shareholders vote in favour of the relevant ordinary resolutions to be proposed at the AGM.

9. EXPERT AND CONSENT

Optima Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter of advice to the Independent Board Committee and the Independent Shareholders and references to its name in the form and context in which they appear.

– 14 –

LETTER FROM THE BOARD

10. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular 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.

11. GENERAL INFORMATION

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

Yours faithfully, By Order of the Board APAC Resources Limited Chong Sok Un Chairman

– 15 –

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 grant of the Directors’ Options under the Specific Mandate for inclusion in this circular.

APAC RESOURCES LIMITED 亞太資源有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1104)

27 May 2010

To the Independent Shareholders

Dear Sir or Madam,

GRANT OF DIRECTORS’ OPTIONS UNDER SPECIFIC MANDATE

We have been appointed as the Independent Board Committee to consider and advise you on the proposed grant of the Directors’ Options under the Specific Mandate, details of which are set out in the circular issued by the Company to the Shareholders dated 27 May 2010 (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 Optima Capital set out on pages 4 to 15 and pages 18 and 28 of the Circular respectively.

Having considered the terms of the grant of the Directors’ Options under the Specific Mandate as set out in the Circular, we are of the view that the terms of the grant of the Director’s Options under the Specific Mandate are fair and reasonable so far as the Independent Shareholders are concerned.

Further, having taken into account the principal factors and reasons considered by Optima Capital, its conclusion and advice, we concur with the view of Optima Capital and consider that the terms of the Directors’ Options to be granted under the Specific Mandate, as set out in the Circular are fair and reasonable so far as the Independent Shareholders are concerned.

• For identification purpose only

– 16 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Accordingly, we recommend you to vote in favour of the ordinary resolution to be proposed at the AGM to approve the grant of the Directors’ Options under the Specific Mandate and the transactions contemplated thereunder.

Yours faithfully, The Independent Board Committee

Wong Wing Kuen, Albert Independent Non-Executive Director

Chang Chu Fai, Johnson Francis Independent Non-Executive Director

Robert Moyse Willcocks

Independent Non-Executive Director

– 17 –

LETTER FROM OPTIMA CAPITAL

The following is the letter of advice from Optima Capital to the Independent Board Committee and the Independent Shareholders in relation to the grant of the Directors’ Options under the Specific Mandate which has been prepared for the purpose of inclusion in this circular.

Suite 1501, 15th Floor Jardine House 1 Connaught Place Central, Hong Kong

27 May 2010

To: the Independent Board Committee and the Independent Shareholders

Dear Sir or Madam,

GRANT OF DIRECTORS’ OPTIONS UNDER SPECIFIC MANDATE

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the grant of the Directors’ Options under the Specific Mandate, details of which are set out in the letter from the Board (the “ Letter ”) contained in the circular of the Company dated 27 May 2010 (the “ Circular ”) of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless defined otherwise in this letter.

On 4 May 2010, the Company proposed to grant, under the Share Option Scheme, the Directors’ Options to Ms. Chong and Mr. Ferguson which will entitle Ms. Chong and Mr. Ferguson to subscribe for 150,000,000 and 250,000,000 new Shares at the subscription price of HK$1.00 per Share over a period of 3 years respectively. Ms. Chong is the Chairman and an Executive Director, and as at the Latest Practicable Date, Ms. Chong was beneficially interested in approximately 70.11% of the issued share capital of COL Capital Limited, which held 967,200,000 Shares (representing approximately 13.97% of the issued share capital of the Company). Mr. Ferguson is an Executive Director and the Chief Executive Officer of the Company. The Shares issuable under the Directors’ Options represent approximately 5.78% of the issued share capital of the Company as at the Latest Practicable Date and approximately 5.46% of the issued share capital of the Company as enlarged by the issue of the 400,000,000 new Shares upon the exercise of the Directors’ Options in full.

– 18 –

LETTER FROM OPTIMA CAPITAL

Pursuant to Rule 17.03(4) of the Listing Rules, if any grant of options, or any further grant of options, to a participant in any 12-month period would result in the securities issued and to be issued in aggregate upon exercise of all options granted and to be granted to such person exceeding 1% of the issued share capital of a listed issuer, such grant or further grant (as the case may be) requires shareholders’ approval in general meeting with such participant and his associates abstaining from voting. Pursuant to Rule 17.04(1) of the Listing Rules, any grant of options by a listed issuer to its directors, chief executive or substantial shareholders under a scheme of such listed issuer must be approved by the independent non-executive directors of the listed issuer. Where the grant of options by a listed issuer to a substantial shareholder or his associates would result in the securities issued and to be issued upon exercise of all options already granted and to be granted to such person in any 12-month period exceeding 0.1% of the relevant class of securities in issue and having an aggregate value in excess of HK$5 million also requires shareholders’ approval in general meeting. The proposed grant of the Directors’ Options to Ms. Chong and Mr. Ferguson falls within the independent non-executive directors’ approval and independent shareholders’ approval requirements stipulated under Rules 17.03(4) and 17.04(1) as described above. Accordingly, the Company proposes to seek a Specific Mandate from the Independent Shareholders for the Directors’ Options at the AGM.

Ms. Chong and Mr. Ferguson, and their respective associates, are required to abstain from voting in favour of the resolution in relation to the approval of the grant of the Directors’ Options at the AGM. The grant of the Directors’ Options has been approved by the independent non-executive Directors in accordance with the requirements of Rule 17.04(1) of the Listing Rules.

The Independent Board Committee comprising all independent non-executive Directors, namely Mr. Wong Wing Kuen, Albert, Mr. Chang Chu Fai, Johnson Francis and Mr. Robert Moyse Willcocks, has been formed to advise the Independent Shareholders on the proposed grant of the Directors’ Options under the Specific Mandate. In our capacity as the independent financial adviser of the Independent Board Committee and the Independent Shareholders, we are engaged to provide an independent opinion to the Independent Board Committee and the Independent Shareholders as to whether the grant of the Directors’ Options under the Specific Mandate would be in the interests of the Company and the Shareholders as a whole and whether the terms of the Directors’ Options would be fair and reasonable so far as the Independent Shareholders are concerned.

In formulating our opinion, we have relied on the information and facts supplied, and the opinions expressed, by the management of the Company and have assumed that the information and facts provided and opinions expressed to us are true, accurate and complete in all material aspects at the time they were made and up to the date of the AGM. We have also sought and received confirmation from the management of the Company that no material facts have been omitted from the information supplied and opinions expressed to us. We have relied on such information and consider that the information we have received is sufficient for us to reach an informed view and have no reason to believe that any material information have been withheld from, nor doubt the truth or accuracy of, the information provided. We have not, however, conducted any independent investigation into the business and affairs of the Group or carried out any independent verification of the information supplied.

– 19 –

LETTER FROM OPTIMA CAPITAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion regarding the grant of the Directors’ Options under the Specific Mandate, we have taken into account the principal factors and reasons set out below:

1. Background and reasons for the grant of the Directors’ Options

Business of the Group

The Group is principally engaged in (i) trading in base metals and commodities; and (ii) trading and investment in listed securities with a portfolio primarily focused on natural resources and related sector and industries.

As stated in the annual report of the Company for the year ended 31 December 2009 (“ 2009 Annual Report ”), the Group recorded a revenue of approximately HK$301.4 million and the profit attributable to the owners of the Company for the year from continuing operations was approximately HK$372.6 million. Total comprehensive income attributable to Shareholders for the year amounted to approximately HK$1,216.5 million as compared to a loss of approximately HK$3,521.4 million for the year ended 31 December 2008. The turnaround of the operating results of the Group for the year was attributable to the gains (realised and unrealised) on the Group’s investment portfolio, an improvement in the base metal trading conditions during the year and a reversal of a previous impairment loss in the interest in an associate of approximately HK$466.6 million.

As stated in the 2009 Annual Report, the Group intends to establish itself as a premier natural resources investment company in Hong Kong and will continue to identify, evaluate and acquire both trading and strategic resources assets. The Group will continue to build a vertically integrated natural resources investment company, leveraging on the strong industry expertise of its management in the investment and trading businesses.

Information on Ms. Chong and Mr. Ferguson

Ms. Chong was first appointed as an Executive Director on 6 July 2007 and subsequently re-designated as the Chairman of the Company on 20 October 2009. We note from the biography of Ms. Chong set out in Appendix I to the Circular that Ms. Chong has extensive experience in securities broking and investment related business. Ms. Chong has in the past and at present held directorship in several companies listed either in Hong Kong or in the PRC. The Directors state in the Letter that Ms. Chong has contributed to the development of the business of the Group and her ongoing contribution will be an important factor to the future development of the Group. In light of the experience and background of Ms. Chong in the business sector, and the managerial and executive roles of her in various listed companies establishments in the past, we concur with the view of the Directors that Ms. Chong would be a valuable asset of the Group in its future development.

– 20 –

LETTER FROM OPTIMA CAPITAL

Mr. Ferguson was appointed as an Executive Director and Chief Executive Officer of the Company on 12 January 2010. As shown in the biography of Mr. Ferguson set out in Appendix I to the Circular, Mr. Ferguson has worked in the finance industry with more than 12 years of experience specialising in global natural resources. He has been in the past involved as fund manager and senior portfolio manager for financial institutions in London and Hong Kong. Mr. Ferguson’s experience in the finance industry spans from day to day management of portfolios, risk management, business development, relationship management and working with independent boards, custodians and auditors to ensure that all shareholders’ funds were managed properly, to front line investment for various investment funds in Hong Kong and London. As an Executive Director and Chief Executive Officer of the Company, Mr. Ferguson is delegated with the responsibility of overseeing the overall management activities of the Company including business strategy planning and business development. In light of the above, we are of the view that Mr. Ferguson is placed in a key position in the future development of the Group, and that Mr. Ferguson possesses the requisite experience and industry background to fulfill such role. Further details of the biographies of Ms. Chong and Mr. Ferguson can be referred to in appendix I to the Circular.

Nature of the Directors’ Options

As more particularly explained in paragraph 2 below, the Directors’ Options are exercisable, in tranches, over a period of three years, subject to the fulfilment of certain performance targets linked to the Share prices of the Company during the exercisable period. We take note from the Letter that the Directors’ Options are intended to serve as an achievement target and incentive for the continuing commitment and long-term contribution of Ms. Chong and Mr. Ferguson to the Group’s continuous development in the future. In this light and having considered (i) the future development objectives of the Group as stated in the 2009 Annual Report as discussed above; and (ii) the background and past experiences of Ms. Chong and Mr. Ferguson, we consider that the grant of the Directors’ Options would align the interests of Ms. Chong and Mr. Ferguson with those of the Group and motivate them to endeavor to achieve the business objectives of the Group set for the future. On this basis, we are of the view that the grant of the Directors’ Options is in the interests of the Company and the Shareholders as a whole.

– 21 –

LETTER FROM OPTIMA CAPITAL

2. Terms of the Directors’ Options

Details of the Directors’ Options granted, pursuant to the Share Option Scheme, to Ms. Chong and Mr. Ferguson are set out below:

• Name of No. of Share Exercisable Grantee Capacity Options period Exercise criteria Ms. Chong Executive Director, 52,500,000 7 July 2010 to Exercisable only if the closing Chairman and 6 July 2013 (both price of the Shares has substantial dates inclusive) reached HK$1.20 or above Shareholder per Share during the period from 7 July 2010 to 6 July 2011 (both dates inclusive) and will lapse if the Share price does not hit HK$1.20 or above during such period.

• 52,500,000 7 July 2011 to Exercisable only if the closing 6 July 2013 (both price of the Shares has dates inclusive) reached HK$1.60 or above per Share during the period from 7 July 2011 to 6 July 2012 (both dates inclusive) and will lapse if the Share price does not hit HK$1.60 or above during such period.

• 45,000,000 7 July 2012 to Exercisable only if the closing 6 July 2013 (both price of the Shares has dates inclusive) reached HK$2.00 or above per Share during the period from 7 July 2012 to 6 July 2013 (both dates inclusive) and will lapse if the Share price does not hit HK$2.00 or above during such period.

• Subtotal 150,000,000

– 22 –

LETTER FROM OPTIMA CAPITAL

Name of Grantee Capacity Mr. Ferguson Executive Director and Chief Executive Officer Subtotal Total

No. of Share Options Exercisable period Exercise criteria 87,500,000 7 July 2010 to 6 July 2013 (both dates inclusive) Exercisable only if the closing price of the Shares has reached HK$1.20 or above per Share during the period from 7 July 2010 to 6 July 2011 (both dates inclusive) and will lapse if the Share price does not hit HK$1.20 or above during such period. 87,500,000 7 July 2011 to 6 July 2013 (both dates inclusive) Exercisable only if the closing price of the Shares has reached HK$1.60 or above per Share during the period from 7 July 2011 to 6 July 2012 (both dates inclusive) and will lapse if the Share price does not hit HK$1.60 or above during such period. 75,000,000 7 July 2012 to 6 July 2013 (both dates inclusive) Exercisable only if the closing price of the Shares has reached HK$2.00 or above per Share during the period from 7 July 2012 to 6 July 2013 (both dates inclusive) and will lapse if the Share price does not hit HK$2.00 or above during such period. 250,000,000 400,000,000

Exercise Price

In order to assess the fairness and reasonableness of the Exercise Price, we have compared the Exercise Price with reference to the (i) historical price performance of the Shares; and (ii) net asset value per Share as at 31 December 2009, being the period end date for the latest published financial statements of the Company.

– 23 –

LETTER FROM OPTIMA CAPITAL

The chart below shows the daily closing prices of the Shares for the three years preceding 4 May 2010 (the “ Grant Date ”) (from 4 May 2007 to 4 May 2010) (the “ Review Period ”) as quoted on the Stock Exchange.

==> picture [418 x 254] intentionally omitted <==

----- Start of picture text -----

HK$
1,000,000,000 2.5
�����������
������
800,000,000 2
600,000,000 1.5
Exercise Price: HK$1.0
400,000,000 1
200,000,000 0.5
0 0
May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10
Volume
Closing price
----- End of picture text -----

During the Review Period, the trading of Shares was relatively thin and the closing prices of the Shares ranged from the lowest of HK$0.167 to the highest of HK$1.97. From the beginning of the Review Period to the end of 2008, the closing prices of the Shares fluctuated at the early stage and peaked out at HK$1.97 on 30 October 2007. Since mid August 2008, the closing prices of the Shares had declined to the lowest level during the Review Period at HK$0.167 on 27 October 2008, before picking up gradually for the rest of the Review Period. As shown in the chart above, the closing prices of the Shares have been trading at less than HK$1.00 since mid August 2008. When compared to the recent closing prices of the Shares as quoted on the Stock Exchange, the Exercise Price represents:

• (i) a premium of 100% over the closing price of HK$0.50 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (ii) a premium of approximately 44.9% over the closing price of HK$0.69 per Share as quoted on the Stock Exchange on the Grant Date;

– 24 –

LETTER FROM OPTIMA CAPITAL

• (iii) a premium of approximately 47.1% over the average closing price of approximately HK$0.68 per Share as quoted on the Stock Exchange for the five trading days immediately preceding 4 May 2010; and

• (iv) a premium of approximately 66.7% over the average closing price of approximately HK$0.60 per Share as quoted on the Stock Exchange for the thirty trading days immediately preceding 4 May 2010.

The Exercise Price represents a premium over the closing prices of the Shares since August 2008 until the end of the Review Period.

As far as the net asset per Share is concerned, the Exercise Price also represents a substantial premium of approximately 92.3% over the audited consolidated net assets value attributable to equity holders of the Company as at 31 December 2009 of approximately HK$0.52 per Share.

Exercise period

As set out in the table above, the Directors’ Options are exercisable, subject to the exercise criteria, as to 140,000,000 options in three years (from 7 July 2010 to 6 July 2013 (both days inclusive)), as to 140,000,000 options in two years (from 7 July 2011 to 6 July 2013 (both days inclusive)) and 120,000,000 options in one year (from 7 July 2012 to 6 July 2013 (both days inclusive)).

We note that the Company has granted options to Mr. Liu Yongshun, a nonexecutive Director, to subscribe for 150,000,000 new Shares and Ms. Chong to subscribe for 110,000,000 new Shares respectively in 2007. The options granted to Mr. Liu Yongshun in 2007 are exercisable in three equal tranches in respect of 150,000,000 Shares as to one-third in three years (from the date of grant up to and including 28 May 2010), as to one-third in two years (from the first anniversary of the date of grant up to and including 28 May 2010) and the remaining one-third in one year (from the second anniversary of the date of grant up to and including 28 May 2010) at the subscription price of HK$1.2 per Share. Those options are exercisable if the specified price levels of the Shares as pre-determined at the time of the grant of such options are reached within the specified period of time. The options granted to Ms. Chong in 2007 are also exercisable in three years (from the date of grant up to and including 5 July 2010) at the subscription price of HK$1.5 per Share. Save for this, there is no other exercise criteria attaching to the options granted to Ms. Chong in 2007.

In light of the terms of the previous options granted to Mr. Liu Yongshun and Ms. Chong in 2007, we consider that the Directors’ Options, with the specified exercise criteria and exercisable period, are on terms consistent with those adopted by the Company in granting the options in 2007.

– 25 –

LETTER FROM OPTIMA CAPITAL

Further, the exercise period of the Directors’ Options is at the maximum of three years, subject to the fulfillment of the relevant exercise criteria linked to the price performance of the Shares. Despite the length of the exercise period, based on the terms of the Share Option Scheme, the Directors’ Options granted to Ms. Chong and Mr. Ferguson will lapse if Ms. Chong and Mr. Ferguson (as the case may be) ceases her/his directorship in the Company. In this respect, we consider that the Directors’ Options, being an incentive scheme to reward the management appropriately for their dedication and commitment to the development of the Group, is of an appropriate length of exercise period in that the development of the Group under the leadership of the two most senior management of the Company, namely Ms. Chong as the Chairman and Mr. Ferguson as the Chief Executive Officer, could be fairly reflected in the market price of the Shares over the exercise period of the Directors’ Options.

Based on the above analysis, we are of the view that the terms of the Directors’ Options including the exercise price, the exercise period and the exercise criteria as a whole are fair and reasonable so far as the Independent Shareholders are concerned.

3. Financial effect of the grant of the Directors Options

As advised by the management of the Company, in accordance with the accounting policy of the Company, the fair value of the Directors’ Options as at the Grant Date will be charged as expenses of the Company over the vesting period with a corresponding increase in the share option reserve. Taking into account the volatility of the Share prices in the past, the vesting period over the Directors’ Options and the exercise price for the Directors’ Options, the management estimates that the Group will recognise a share-based payment in an aggregate amount of up to approximately HK$77.8 million over the two years ending 31 December 2011 with corresponding increase in the share option reserve for the relevant year. Accordingly, the results of the Group for the vesting period of the Directors’ Options will be reduced by the relevant share-based payment. We are further advised by the management of the Company that in the event that the share options are lapsed in accordance with its terms, the share-based payment relating to the lapsed options will be reversed from share option reserve to the retained earnings/accumulated losses (as the case may be) account of the Group.

However, we wish to draw the attention of the Shareholders to the fact that the aforesaid share-based payments are non-cash items and will not have any adverse effects on the cashflow, or working capital, of the Group by reason of the grant of the Directors’ Options only. On the contrary, if the Directors’ Options have become capable of being exercised because the relevant performance targets on the prices of the Shares have been reached during the relevant vesting period, and are eventually exercised, in whole or in part, during the exercisable period, it will benefit the Company with additional new capital of up to HK$400 million for future development of the Group. This will be, in our view, beneficial to the Company and the Shareholders as a whole.

– 26 –

LETTER FROM OPTIMA CAPITAL

In the situation that the price targets set for the Directors’ Options are reached such that the Directors’ Options have became capable of being exercise, the market value of the Company as a whole should have been improved correspondingly. On the other hand, as discussed above, the relevant share-based payment will be reversed back to the retained earnings/accumulated losses (as the case may be) account of the Group if any of the Directors’ Options are lapsed. In view of the above, we consider that the nature of the share-based payment to be incurred over the option period to be fair and reasonable.

As the exercise price of the Directors’ Options is at a premium of 92.3% over the underlying net asset value per Share as at 31 December 2009 of HK$0.52. The exercise of any of the Directors’ Options will have a positive effect on the net asset value of the Company as a whole, and on a per Share basis as well.

4. Potential dilution effect on the existing shareholdings

The new Shares subject to the Directors’ Options of 400,000,000 Shares in total (which entitle Ms. Chong and Mr. Ferguson to subscribe for 150,000,000 and 250,000,000 Shares respectively) represents (i) approximately 5.78% of the issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 5.46% of the issued share capital of the Company as enlarged by the new Shares issuable on the exercise of the Directors Options in full.

As mentioned in the paragraph headed “Introduction” above, as at the Latest Practicable Date, an associates of Ms. Chong was interested in 967,200,000 Shares (representing approximately 13.97% of the issued share capital of the Company as at the Latest Practicable Date). Ms. Chong is also personally interested in 110,000,000 options previously granted to her under the Share Option Scheme. As at the Latest Practicable Date, Mr. Ferguson was interested in 25,000,000 Shares (representing approximately 0.36% of the issued share capital of the Company as at the Latest Practicable Date). Save as disclosed above, to the best knowledge and information of the Directors, none of Ms. Chong, Mr. Ferguson and their respective associates was interested in any Shares or securities convertible into Shares.

For illustrative purpose only, assuming the Directors’ Options are exercised in full and no other Shares are issued or repurchased by the Company, the issued share capital of the Company as at the Latest Practicable Date would be increased from 6,922,127,990 Shares to 7,322,127,990 Shares, and the shareholdings of (i) Ms. Chong’s associate would be increased from approximately 13.97% to approximately 15.26%; and (ii) Mr. Ferguson would be increased from approximately 0.36% to approximately 3.76%, while the aggregate shareholdings of the Independent Shareholders would be decreased from approximately 85.67% to approximately 80.98%.

– 27 –

LETTER FROM OPTIMA CAPITAL

We consider that the potential dilution effect on the existing shareholding of the Independent Shareholders that may be result from the exercise of the Directors’ Options is immaterial and acceptable given the reasons and benefits of the grant of the Directors’ Options as analysed under the paragraph headed “Background and reasons for the grant of Directors’ Options” above.

5. Compliances with the Share Option Scheme and the Listing Rules

We have reviewed the Share Option Scheme adopted by the Company on 22 September 2004. The proposed grant of the Directors’ Options is made in accordance with the terms under the Share Option Scheme and as governed by the relevant requirements of the Listing Rules, in particular, the proposed grant of the Directors’ Options to Ms. Chong and Mr. Ferguson falls within the independent non-executive directors’ approval and independent shareholders’ approval requirements stipulated under Rules 17.03(4) and 17.04(1) as described above. Accordingly, the Company proposes to seek a Specific Mandate from the Independent Shareholders for the Directors’ Options at the AGM.

The Exercise Price determined for the Directors’ Options is in compliance with the requirements under Rule 17.03(9) of the Listing Rules, which stipulates that the exercise price must be at least the higher of (i) the closing price of the securities as stated in the Stock Exchange’s daily quotations sheet on the date of grant, which must be a business day; and (ii) the average closing price of the securities as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of grant. To this end, we note that the Exercise Price of the Directors’ Options of HK$1.00 per Share is not less than (i) the closing price of the Shares of HK$0.69 as stated in the daily quotation sheet of the Stock Exchange on the Grant Date; or (ii) the average closing prices of the Shares of HK$0.68 as stated in the daily quotation sheets of the Stock Exchange for the five trading days immediately preceding the Grant Date.

RECOMMENDATION

Having taken into account the above principal factors and reasons, we consider that (i) the terms of the Directors Options are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the grant of the Directors’ Options under the Specific Mandate is in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution numbered 8 in respect of the grant of the Directors Options under the Specific Mandate to be proposed at the AGM.

Yours faithfully, for and on behalf of

OPTIMA CAPITAL LIMITED Mei H. Leung Chairman

– 28 –

APPENDIX I

DETAILS OF RETIRING DIRECTORS PROPOSED TO BE RE-ELECTED

The details of the retiring Directors proposed to be re-elected at the AGM are set out below:

Ms. Chong Sok Un , aged 55, was appointed as an Executive Director of the Company on 6 July 2007 and has been re-designated as Chairman of the Company since 20 October 2009. Ms. Chong holds a Master Degree in Business Administration. Ms. Chong is currently an executive director and chairman of COL Capital Limited (stock code: 383), a substantial shareholder of the Company, the shares of which are listed on the main board of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”). She has been the chairman of Long Island Golf & Country Club, Dongguan, China since September 1998. She is also the chairman of the 31st Term Board of Directors of Yan Oi Tong. During 1992 to 2000, she was a director and chief executive officer of Shenyin Wanguo (H.K.) Limited. During September 2001 to October 2006, she was an independent director of Fujian Minnan (Zhangzhou) Economy Development Co., Ltd（福建閩南（漳州）經濟發展股份有限公司）, a company with shares listed on the Shenzhen Stock Exchange. During June 2002 to May 2007, she was a non-executive director of RIMCapital Limited, a company with shares listed on the Australian Stock Exchange. She was a non-executive director of Shanghai Allied Cement Limited (now known as ChinaVision Media Group Limited) (stock code: 1060) from 25 June 2007 to 23 April 2009.

Save as disclosed herein, Ms. Chong did not hold any directorship in other listed public companies in the last three years and does not have any relationship with any Directors, senior management, substantial or controlling Shareholders of the Company.

There is no service contract between the Company and Ms. Chong. Ms. Chong received a remuneration of HK$1,220,000 for the year ended 31 December 2009 which was determined with reference to her duties and responsibilities within the Group and the prevailing market conditions. Ms. Chong has not been appointed for a specific term but shall be subject to retirement by rotation and re-election at least once every three years at the annual general meeting of the Company in accordance with the relevant provisions of the Bye-laws.

As at the Latest Practicable Date, the Company has granted options to Ms. Chong to subscribe for 110,000,000 Shares exercisable at HK$1.50 per Share, and options to subscribe for 150,000,000 Shares exercisable at HK$1.00 per Share is proposed to be granted to Ms. Chong subject to the approval of the Independent Shareholders at the AGM. Ms. Chong is also deemed to be interested in 967,200,000 Shares held by: (i) Sparkling Summer Limited as to 348,520,000 Shares, and (ii) Rise Cheer Investments Limited as to 618,680,000 Shares, both of which are wholly-owned subsidiaries of COL Capital Limited (“ COL ”). COL is 70.11% owned by Vigor Online Offshore Limited which in turn is a wholly-owned subsidiary of China Spirit Limited in which Ms. Chong maintains 100% beneficial interest. Except as disclosed herein, Ms. Chong does not have any interest in the securities of the Company within the meaning of Part XV of the SFO.

In addition, Ms. Chong is not aware of any matters that are required to be disclosed pursuant to Rules 13.51(2)(h) to 13.51(2)(v) of the Listing Rules or any other matters that need to be brought to the attention of the Shareholders.

– 29 –

APPENDIX I

DETAILS OF RETIRING DIRECTORS PROPOSED TO BE RE-ELECTED

Mr. Andrew Charles Ferguson , aged 37, has been appointed as an Executive Director and the Chief Executive Officer of the Company since 12 January 2010. Mr. Ferguson holds a Bachelor of Science Degree in Natural Resource Development. He has worked in the finance industry with more than 12 years experience specialising in global natural resources and was licenced to advise on Securities (Type 4 licence) and carry on asset management (Type 9 Licence) under the Securities and Futures Ordinance (Cap. 571). Being a Fund Manager and Senior Portfolio Manager for financial institutions in London and Hong Kong previously, he was responsible for day to day management of portfolios, risk management, business development, relationship management and working with independent boards, custodians and auditors to ensure that all shareholders’ funds were managed properly. He also has a proven track record in fund management and was the former co-fund manager of City Natural Resources High Yield Trust, which was awarded best UK Investment Trust in 2006. He also worked for CQS LLP (“ CQS ”) in Hong Kong as the Chief Investment Officer for New City Investment Managers CQS and a Senior Portfolio Manager for CQS, both of which are reputable financial institutions providing investment management services to a variety of investors. Due to the nature of this job, he acquired knowledge of Hong Kong financial market and has developed good relations with other working partners (such as banks, financial institutions and accounting firms) in Hong Kong.

Save as disclosed herein, Mr. Ferguson did not hold any directorship in other listed public companies in the last three years and does not have any relationship with any Directors, senior management, substantial or controlling Shareholders of the Company.

Under the service contract between the Company and Mr. Ferguson, he is entitled to receive an annual remuneration of HK$3,180,000 including accommodation which was determined with reference to his duties and responsibilities within the Group and the prevailing market conditions. Mr. Ferguson has not been appointed for a specific term but shall be subject to retirement by rotation and re-election at least once every three years at the annual general meeting of the Company in accordance with the relevant provisions of the Bye-laws.

As at the Latest Practicable Date, Mr. Ferguson is interested in 25,000,000 Shares, representing approximately 0.36% of the issued share capital of the Company, and options to subscribe for 250,000,000 Shares exercisable at HK$1.00 per Share is proposed to be granted to Mr. Ferguson subject to the approval of the Independent Shareholders at the AGM. Except as disclosed herein, Mr. Ferguson does not have any interest in the securities of the Company within the meaning of Part XV of the SFO.

In addition, Mr. Ferguson is not aware of any matters that are required to be disclosed pursuant to Rules 13.51(2)(h) to 13.51(2)(v) of the Listing Rules or any other matters that need to be brought to the attention of the Shareholders.

– 30 –

APPENDIX I

DETAILS OF RETIRING DIRECTORS PROPOSED TO BE RE-ELECTED

Mr. Peter Anthony Curry , aged 57, has been appointed as an Executive Director and the Chief Financial Officer of the Company since 1 March 2010. Mr. Curry was graduated from the University of New South Wales with a Bachelor Degree of Commerce in 1974 and a Bachelor Degree of Laws in 1976. He became a chartered accountant and a barrister (nonpractising) in Australia in 1978. He was elected as a Fellow of The Institute of Directors in Australia in 1989. In 2002, he completed the PS 146 Compliance Program organised by Securities Institute in Australia. Mr. Curry has over 35 years of business experience. He joined Peat Marwick Mitchell (now known as “KPMG”) in Australia in 1974 upon graduation and worked as Tax Partner in 1983. Since that time he has worked in different listed and unlisted companies in Australia as Executive Director/Managing Director specialising in natural resources, corporate finance, financial services investments, mergers and acquisitions etc. Since 1995 Mr. Curry has been a director and shareholder in a corporate advisory firm which holds an Australian Financial Services licence. He has been involved in a range of public and private capital raisings, initial public offering related services and providing corporate and financial advisory services in relation to a range of business transactions including a wide range of mining projects. From 2004 until recently Mr. Curry was an executive director of Golden Tiger Mining NL (stock code: GTX). He remains a non-executive director of Golden Tiger Mining NL and also Forrest Enterprises Australia Limited (stock code: FEA), both of which are listed on the Australian Stock Exchange.

Save as disclosed herein, Mr. Curry did not hold any directorship in other listed public companies in the last three years and does not have any relationship with any Directors, senior management, substantial or controlling Shareholders of the Company.

Under the service contract between the Company and Mr. Curry, he is entitled to receive an annual remuneration of HK$1,800,000 plus accommodation which was determined with reference to his duties and responsibilities within the Group and the prevailing market conditions. Mr. Curry has not been appointed for a specific term but shall be subject to retirement by rotation and re-election at least once every three years at the annual general meeting of the Company in accordance with the relevant provisions of the Bye-laws.

As at the Latest Practicable Date, the Company has granted options to Mr. Curry to subscribe for 60,000,000 Shares exercisable at HK$1.00 per Share. Except as disclosed herein, Mr. Curry does not have any interest in the securities of the Company within the meaning of Part XV of the SFO.

In addition, Mr. Curry is not aware of any matters that are required to be disclosed pursuant to Rules 13.51(2)(h) to 13.51(2)(v) of the Listing Rules or any other matters that need to be brought to the attention of the Shareholders.

– 31 –

APPENDIX I

DETAILS OF RETIRING DIRECTORS PROPOSED TO BE RE-ELECTED

Mr. Kong Muk Yin , aged 44, has been appointed as an Executive Director of the company since 4 November 2009. Mr. Kong was graduated from City University of Hong Kong with a bachelor’s degree in business studies. He is a fellow member of The Association of Chartered Certified Accountants, a member of the Hong Kong Institute of Certified Public Accountants and a Chartered Financial Analyst and he has extensive experience in corporate finance, financial management, accounting and auditing. Mr. Kong is currently the executive director of COL Capital Limited (stock code: 383), a substantial shareholder of the Company and ChinaVision Media Group Limited (stock code: 1060), both of which are companies listed on main board of the Stock Exchange. He was an executive director of Greenfield Chemical Holdings Limited (stock code: 582) from 13 October 2009 to 21 January 2010.

Save as disclosed herein, Mr. Kong did not hold any directorship in other listed public companies in the last three years and does not have any relationship with any Directors, senior management, substantial or controlling Shareholders of the Company.

There is no service contract between the Company and Mr. Kong. Mr. Kong is entitled to receive an annual remuneration of HK$240,000 which was determined with reference to his duties and responsibilities within the Group and the prevailing market conditions. Mr. Kong has not been appointed for a specific term but shall be subject to retirement by rotation and re-election at least once every three years at the annual general meeting of the Company in accordance with the relevant provisions of the Bye-laws.

As at the Latest Practicable Date, the Company has granted options to Mr. Kong to subscribe for 20,000,000 Shares exercisable at HK$1.00 per Share. Except as disclosed herein, Mr. Kong does not have any interest in the securities of the Company within the meaning of Part XV of the SFO.

In addition, Mr. Kong is not aware of any matters that are required to be disclosed pursuant to Rules 13.51(2)(h) to 13.51(2)(v) of the Listing Rules or any other matters that need to be brought to the attention of the Shareholders.

Mr. Yue Jialin , aged 42, was appointed as Chairman and Executive Director of the Company on 26 April 2004 and has been re-designated as an Executive Director of the Company since 3 May 2007. Mr. Yue has established in-depth knowledge of the PRC economic development and policies through his previous role as a judge in the Economic Court of People’s Court in Luowu District, Shenzhen, the PRC during 1989 to 1992. Mr. Yue also sits on the school of business administration of Changchun Industrial University as visiting professor. Mr. Yue has engaged in legal consultation in respect of the acquisition of state owned assets and foreign investments in the PRC.

Save as disclosed herein, Mr. Yue did not hold any directorship in other listed public companies in the last three years and does not have any relationship with any Directors, senior management, substantial or controlling Shareholders of the Company.

– 32 –

APPENDIX I

DETAILS OF RETIRING DIRECTORS PROPOSED TO BE RE-ELECTED

Under the service contract between the Company and Mr. Yue, he is entitled to receive an annual remuneration of HK$130,000 which was determined with reference to his duties and responsibilities within the Group and the prevailing market conditions, but Mr. Yue has waived to receive his remuneration for the year ended 31 December 2009. Mr. Yue has been appointed for a specific term until 31 December 2011 but subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with the relevant provision of the Bye-laws.

As at the Latest Practicable Date, the Company has granted options to Mr. Yue to subscribe for 2,000,000 Shares exercisable at HK$1.00 per Share. Mr. Yue (through Profit Harbour Investments Limited, the entire issued share capital of which is owned by Mr. Yue) is interested in 135,519,562 Shares, representing approximately 1.96% of the issued share capital of the Company. Except as disclosed herein, Mr. Yue does not have any interest in the securities of the Company within the meaning of Part XV of the SFO.

In addition, Mr. Yue is not aware of any matters that are required to be disclosed pursuant to Rules 13.51(2)(h) to 13.51(2)(v) of the Listing Rules or any other matters that need to be brought to the attention of the Shareholders.

Mr. Lee Seng Hui , aged 41, has been appointed as a Non-Executive Director of the Company since 2 October 2009. Mr. Lee is the chief executive of Allied Group Limited (stock code: 373) (“ AGL ”) since January 1998. He was appointed a non-executive director of AGL in July 1992 and became an executive director of AGL in December 1993. Mr. Lee graduated from the Law School of the University of Sydney with Honours. Previously, he worked with Baker & McKenzie and N M Rothschild & Sons (Hong Kong) Limited. He is also the chairman and a non-executive director of Tian An China Investments Company Limited (stock code: 28), the shares of which are listed on the main board of the Stock Exchange. He is a nonexecutive director of Tanami Gold NL (stock code: TAM) and also Mount Gibson Iron Limited (stock code: MGX), an associated company of the Company, both of which are listed on the Australian Stock Exchange. Mr. Lee was previously the chairman and an executive director of Yu Ming Investments Limited (now known as SHK Hong Kong Industries Limited) (stock code: 666), the shares of which are listed on the main board of the Stock Exchange.

Save as disclosed herein, Mr. Lee did not hold any directorship in other listed public companies in the last three years and does not have any relationship with any Directors, senior management, substantial or controlling Shareholders of the Company.

There is no service contract between the Company and Mr. Lee. Mr. Lee is entitled to receive an annual remuneration of HK$170,000 which was determined with reference to his duties and responsibilities within the Group and the prevailing market conditions. Mr. Lee has not been appointed for a specific term but shall be subject to retirement by rotation and re-election at least once every three years at the annual general meeting of the Company in accordance with the relevant provisions of the Bye-laws.

– 33 –

APPENDIX I

DETAILS OF RETIRING DIRECTORS PROPOSED TO BE RE-ELECTED

In addition, Mr. Lee is not aware of any matters that are required to be disclosed pursuant to Rules 13.51(2)(h) to 13.51(2)(v) of the Listing Rules or any other matters that need to be brought to the attention of the Shareholders.

Mr. So Kwok Hoo , aged 56, has been appointed as a Non-Executive Director of the Company since 20 October 2009. Mr. So has over 20 years of experience in marketing of electrochemical and industrial products sales in Asia Pacific Region together with property investment experience in Hong Kong as well. Mr. So holds Bachelor degrees in both Applied Science with major in Chemical Engineering and Business Administration obtained in Canada. He is an executive director of Fushan International Energy Group Limited (stock code: 639), a substantial shareholder of the Company.

Save as disclosed herein, Mr. So did not hold any directorship in other listed public companies in the last three years and does not have any relationship with any Directors, senior management, substantial or controlling Shareholders of the Company.

There is no service contract between the Company and Mr. So. Mr. So has not been appointed for a specific term but shall be subject to retirement by rotation and re-election at least once every three years at the annual general meeting of the Company in accordance with the relevant provisions of the Bye-laws.

As at the Latest Practicable Date, the Company has granted options to Mr. So to subscribe for 2,000,000 Shares exercisable at HK$1.00 per Share. Except as disclosed herein, Mr. So does not have any interest in the securities of the Company within the meaning of Part XV of the SFO.

In addition, Mr. So is not aware of any matters that are required to be disclosed pursuant to Rules 13.51(2)(h) to 13.51(2)(v) of the Listing Rules or any other matters that need to be brought to the attention of the Shareholders.

Mr. Chang Chu Fai, Johnson Francis , aged 55, was appointed as an Independent NonExecutive Director of the Company since 6 July 2007. Mr. Chang holds a Bachelor’s Degree in Commerce from Concordia University in Montreal, Canada since 1976 and a Master’s Degree in Business Administration from York University in Toronto, Canada since 1977. He has over 32 years of experience in banking, corporate finance, investment and management and has held various executive positions at financial institutions and directorships of listed companies. Mr. Chang is currently the Managing Director of Ceres Consultancy Limited and a registered person under the Securities and Futures Ordinance. He is also the deputy chairman and an independent non-executive director of Quality HealthCare Asia Limited (stock code: 593); and an independent non-executive director of Tian An China Investments Company Limited (stock code: 28) and Royale Furniture Holdings Limited (stock code: 1198), all of which are companies with shares listed on the Stock Exchange. Mr. Chang was previously the chairman and an executive director of Trasy Gold Ex Limited, an executive director of China Financial Leasing Group Limited and the managing director of Ceres Capital Limited.

– 34 –

APPENDIX I

DETAILS OF RETIRING DIRECTORS PROPOSED TO BE RE-ELECTED

Save as disclosed herein, Mr. Chang did not hold any directorship in other listed public companies in the last three years and does not have any relationship with any Directors, senior management, substantial or controlling Shareholders of the Company.

There is no service contract between the Company and Mr. Chang. Mr. Chang received a remuneration of HK$170,000 for the year ended 31 December 2009 which was determined with reference to his duties and responsibilities with the Company and the prevailing market conditions. Mr. Chang has not been appointed for a specific term but shall be subject to retirement by rotation and re-election at least once every three years at the annual general meeting of the Company in accordance with the relevant provisions of the Bye-laws.

As at the Latest Practicable Date, the Company has granted options to Mr. Chang to subscribe for 2,000,000 Shares at the exercise price of HK$1.50 per Share and 2,000,000 Shares exercisable at HK$1.00 per Share. Except as disclosed herein, Mr. Chang does not have any interest in the securities of the Company within the meaning of Part XV of the SFO.

In addition, Mr. Chang is not aware of any matters that are required to be disclosed pursuant to Rules 13.51(2)(h) to 13.51(2)(v) of the Listing Rules or any other matters that need to be brought to the attention of the Shareholders.

Mr. Robert Moyse Willcocks , aged 61, has been appointed as an Independent NonExecutive Director of the Company since 27 July 2007. Mr. Willcocks holds a Bachelor’s Degree in Arts and a Bachelor’s Degree of Laws from Australian National University in Australia and a Master’s Degree in Law from the University of Sydney in Sydney, Australia. He has been an advisor to companies in the mining and resources industry for more than 27 years. He has been a partner of Mallesons Stephen Jaques, an Australian law firm, director of Ban-Pu Australia Pty Ltd, Oakbridge Pty Ltd, Energy World Corporation Limited, eStar Online Trading Limited, Bond University Limited and Member of the Australian International Legal Advisory Committee. Mr. Willcocks held and holds directorships in various resources companies which are listed on the Australian Stock Exchange including being a director of Emperor Mines Limited from February 1999 to June 2006, a former chairman of RIMCapital Limited. He is currently a non-executive director of CBH Resources Limited (stock code: CBH), a member of its audit committee, remuneration committee, succession and governance committee and safety, health and environment committee, and a non-executive director of ARC Exploration Limited (stock code: ARX). Mr. Willcocks is also an alternate director to Mr. Lee Seng Hui of Mount Gibson Iron Limited (stock code: MGX), an associated company of the Company. He is chairman of Trilogy Funds Management Limited, a responsible entity under Australian Law (since October 2009) and non-executive Chairman of Orion Petroleum Limited (stock code: OIP).

Save as disclosed herein, Mr. Willcocks did not hold any directorship in other listed public companies in the last three years and does not have any relationship with any Directors, senior management, substantial or controlling Shareholders of the Company.

– 35 –

APPENDIX I

DETAILS OF RETIRING DIRECTORS PROPOSED TO BE RE-ELECTED

There is no service contract between the Company and Mr. Willcocks. Mr. Willcocks received a remuneration of HK$170,000 for the year ended 31 December 2009 which was determined with reference to his duties and responsibilities with the Company and the prevailing market conditions. Mr. Willcocks has not been appointed for a specific term but shall be subject to retirement by rotation and re-election at least once every three years at the annual general meeting of the Company in accordance with the relevant provisions of the Byelaws.

As at the Latest Practicable Date, the Company has granted options to Mr. Willcocks to subscribe for 2,000,000 Shares exercisable at HK$1.00 per Share. Except as disclosed herein, Mr. Willcocks does not have any interest in the securities of the Company within the meaning of Part XV of the SFO.

In addition, Mr. Willcocks is not aware of any matters that are required to be disclosed pursuant to Rules 13.51(2)(h) to 13.51(2)(v) of the Listing Rules or any other matters that need to be brought to the attention of the Shareholders.

– 36 –

APPENDIX II EXPLANATORY STATEMENT AS TO REPURCHASE MANDATE

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 decision on whether to vote for or against the resolution to be proposed at the AGM in relation to the Repurchase Mandate.

LISTING RULES FOR REPURCHASE OF SECURITIES

The Listing Rules permit companies whose primary listings are on the Stock Exchange to repurchase their securities (which shall include, where the context permits, shares of all classes and securities which carry a right to subscribe or purchase shares) on the Stock Exchange subject to certain restrictions amongst which the Listing Rules provided that the shares proposed to be repurchased by a company must be fully-paid up and all repurchases of shares by a company with a primary listing on the Stock Exchange must be approved in advance by an ordinary resolution of shareholders either by way of general mandate to the Directors to make such repurchases or by specific approval of a particular transaction.

SHARE CAPITAL

As at the Latest Practicable Date, there were in issue an aggregate of 6,922,127,990 Shares. Subject to the passing of the proposed resolution in respect of the granting of the Repurchase Mandate and on the basis that no further Shares are issued and repurchased prior to the AGM, the Company would be permitted under the Repurchase Mandate to repurchase a maximum of 692,212,799 Shares, representing 10% of the Shares in issue as at the date of granting of the Repurchase Mandate.

REASONS FOR REPURCHASES

The Directors believe that an authority to repurchase Shares is in the best interests of the Company and the Shareholders.

Repurchases may, depending on the market conditions and funding arrangement of the Company at the time, result in an increase in earnings per share. The Directors are seeking the Repurchase Mandate so as to give the Company additional flexibility to do so if and when appropriate. The number of Shares to be purchased on occasion and the price and other terms upon which the same are repurchased will be decided by the Directors at the relevant time having regard to the circumstances then pertaining.

While it is not possible to anticipate any specific circumstances in which the Directors might think it appropriate to repurchase Shares, Shareholders can be assured that the Directors would only make repurchases in circumstances where they consider it to be in the best interests of the Company.

– 37 –

APPENDIX II EXPLANATORY STATEMENT AS TO REPURCHASE MANDATE

FUNDING OF REPURCHASES

In repurchasing Shares, the Company must fund the repurchase entirely from the Company’s available cash flow or working capital facilities legally available for such purpose in accordance with its memorandum of association and Bye-laws, the Listing Rules and the laws of Bermuda.

The Companies Act 1981 of Bermuda (as amended) provides that the amount of capital paid in connection with a share repurchase may only be paid out of the capital paid up on the relevant shares, or out of funds of the Company which would otherwise be available for dividend or distribution or out of the proceeds of a fresh issue of shares made for the purpose of the share repurchase. The Companies Act 1981 of Bermuda (as amended) further provides that the amount of premium (if any) payable on repurchase may only be paid out of either the funds that would otherwise be available for distribution or dividend or out of the share premium account of the Company. The shares repurchased will be treated as cancelled and the amount of the Company’s issued share capital will be diminished by the nominal value of such shares, but the aggregate amount of the Company’s authorised share capital will not be thereby reduced.

On the basis of the consolidated financial position of the Company for the year ended 31 December 2009 (being the date to which the latest published audited financial statements of the Company have been made up) and in particular the working capital position of the Group at that time and the number of Shares in issue as at the Latest Practicable Date, the Directors consider that there would not be a material adverse impact on the working capital position but that there would not be any impact on the gearing position of the Group in the event that repurchases of all the Shares were to be carried out in full during the proposed mandate period. However, no repurchase would be made in circumstances that would have a material adverse impact on the working capital of the Group (as compared with the financial position disclosed in its latest published audited financial statements) unless the Directors consider that such repurchases are in the best interest of the Company.

DIRECTORS’ UNDERTAKING

The Directors have undertaken to the Stock Exchange to exercise the power of the Company to make repurchases pursuant to the proposed resolution in accordance with the Listing Rules and all applicable laws of Bermuda and in accordance with the regulations set out in the memorandum of association and the Bye-laws of the Company.

DIRECTORS AND CONNECTED PERSONS

None of the Directors nor (to the best of the knowledge and belief of the Directors and having made all reasonable enquiries) any associates (as defined in the Listing Rules) of the Directors who have any present intention, in the event that the grant to the Directors of the Repurchase Mandate is approved by the Shareholders, of selling Shares to the Company.

– 38 –

APPENDIX II EXPLANATORY STATEMENT AS TO REPURCHASE MANDATE

No persons who are connected persons of the Company have notified the Company that they have a present intention to sell Shares to the Company, nor have they undertaken not to sell any of Shares held by them to the Company in the event that the Company is authorised to make repurchases of Shares.

HONG KONG CODE ON TAKEOVERS AND MERGERS

If, on the exercise of the power to repurchase the Shares pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting capital of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code and, if such increase results in a change of control, may in certain circumstances give rise to an obligation to make a mandatory offer for the securities of the Company under Rule 26 of the Takeovers Code.

As at the Latest Practicable Date, according to the register kept by the Company pursuant to Section 336(1) of the SFO, to the best of the knowledge and belief of the Directors:

• (i) Fushan International Energy Group Limited (“ Fushan ”), a substantial Shareholder together with its concert parties, held 956,000,000 Shares, representing approximately 13.81% of the issued share capital of the Company.

• (ii) COL Capital Limited (“ COL ”), a substantial Shareholder together with its concert parties, held 967,200,000 Shares, representing approximately 13.97% of the issued share capital of the Company. COL is 70.11% indirectly owned by Ms. Chong Sok Un and therefore Ms. Chong is deemed to have interests in the Shares in which COL is interested.

• (iii) Sun Hung Kai & Co. Limited (“ SHK ”), a substantial Shareholder together with its concerted parties, held 1,098,532,893 Shares, representing approximately 15.87% of the issued share capital of the Company. SHK is an indirect non whollyowned subsidiary of Allied Properties (H.K.) Limited (“ APL ”) which in turn is an indirect non wholly-owned subsidiary of Allied Group Limited (“ AGL ”), the issued share capital of which is owned as to 52.40% by Lee and Lee Trust (“ LL Trust ”), a discretionary trust the trustees of which are Mr. Lee Seng Hui, Ms. Lee Su Hwei and Mr. Lee Seng Huang. Therefore, APL, AGL and LL Trust are deemed to have interests in the Shares in which SHK are interested.

On the basis of 6,922,127,990 Shares in issue as at the Latest Practicable Date and assuming no further issue or repurchase of Shares prior to the date of the AGM, if the Repurchase Mandate were exercised in full, the shareholding percentage (if the present shareholding remains the same) of Fushan, COL and SHK, together with all their respective concerted parties would increase to approximately 15.35%, 15.53% and 17.63% respectively. Such increase will not give rise to an obligation on the part of Fushan, COL and SHK to make a general offer to Shareholders under Rules 26 and 32 of the Takeovers Code.

– 39 –

APPENDIX II EXPLANATORY STATEMENT AS TO REPURCHASE MANDATE

Save as aforesaid, the Directors are not aware of any consequences which will arise under the Takeovers Code as a result of the exercise of the power in full under the Repurchase Mandate.

The Directors have no intention to exercise the Repurchase Mandate to an extent that the aggregate amount of the share capital of the Company in public hands would be reduced to less than 25% of the issued share capital of the Company.

SHARE AND WARRANTS PRICES AND REPURCHASE RECORDS

During each of the 12 months preceding the Latest Practicable Date, the highest and lowest traded prices for Shares and Warrants (hereinafter defined) on the Stock Exchange were as follows:

	Share	Price	Warrant	Price
	Highest	Lowest	Highest	Lowest
	(HK$)	(HK$)	(HK$)	(HK$)
2009
May	0.580	0.355	0.230	0.230
June	0.750	0.490	0.350	0.250
July	0.920	0.660	0.560	0.420
August	0.880	0.590	0.400	0.300
September	0.680	0.530	*	*
October	0.650	0.485	*	*
November	0.630	0.510	*	*
December	0.590	0.405	0.250	0.190
2010
January	0.510	0.435	0.155	0.110
February	0.550	0.455	0.145	0.120
March	0.600	0.500	N/A	N/A
April	0.730	0.550	N/A	N/A
May (up to Latest Practicable Date)	0.740	0.490	N/A	N/A

• no transaction

The warrants of the Company (the “ Warrants ”) entitled holders thereof to subscribe at any time during the period from 5 February 2007 to 4 February 2010 (both days inclusive) for fully paid Shares at an initial subscription price of HK$0.30 per Share (subject to adjustments). The subscription rights attaching to the Warrants expired on 4 February 2010.

During each of the six months preceding the Latest Practicable Date, no Shares or Warrants were repurchased by the Company.

– 40 –

NOTICE OF ANNUAL GENERAL MEETING

APPENDIX III

APAC RESOURCES LIMITED 亞太資源有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1104)

NOTICE IS HEREBY GIVEN that the annual general meeting of APAC Resources Limited (the “ Company ”) will be held at Falcon Room II, Basement of Luk Kwok Hotel, 72 Gloucester Road, Wanchai, Hong Kong on Tuesday, 29 June 2010 at 2:30 p.m. for the following purposes:

ORDINARY BUSINESS

1. To receive and adopt the audited consolidated financial statements and the reports of the directors (“ Directors ”) and auditors of the Company for the year ended 31 December 2009.

2. (a) To re-elect the following persons:

3. i. Ms. Chong Sok Un as Executive Director

4. ii. Mr. Andrew Charles Ferguson as Executive Director

5. iii. Mr. Peter Anthony Curry as Executive Director

6. iv. Mr. Kong Muk Yin as Executive Director

7. v. Mr. Yue Jialin as Executive Director

8. vi. Mr. Lee Seng Hui as Non-executive Director

9. vii. Mr. So Kwok Hoo as Non-executive Director

10. viii. Mr. Chang Chu Fai, Johnson Francis as Independent Non-executive Director

11. ix. Mr. Robert Moyse Willcocks as Independent Non-executive Director

• For identification purpose only

– 41 –

NOTICE OF ANNUAL GENERAL MEETING

APPENDIX III

• (b) To authorise the board of Directors (“ Board ”) of the Company to fix the Directors’ remuneration.

• To re-appoint Graham H.Y. Chan & Co. as auditors of the Company and to authorise the Board to fix their remuneration.

SPECIAL BUSINESS

ORDINARY RESOLUTIONS

The following resolutions 4 to 9 will be proposed to be considered and, if thought fit, passing with or without amendments, as ordinary resolutions of the Company:

1. “ THAT :

2. (a) subject to the provisions of paragraphs (b) and (c) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company (“ New Shares ”) 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;

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

4. (c) the aggregate nominal amount of the share capital allotted and issued or agreed conditionally or unconditionally to be allotted, issued (whether pursuant to an option or otherwise) and dealt with by the Directors pursuant to the approval in paragraph (a) of this resolution, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined); (ii) an issue of New Shares upon the exercise of rights of subscription or conversion under the terms of warrants of the Company or any securities which are convertible into shares; (iii) an issue of New Shares as scrip dividends or similar arrangement providing for the allotment of New Shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Bye-laws of the Company from time to time; (iv) an issue of New Shares under any share option scheme or similar arrangement of the Company and/or any of its subsidiaries; or (v) a specific mandate granted by the shareholders of the Company in general meeting, shall not exceed 20% of the aggregate nominal amount of the issued share capital of the Company at the date of passing of this resolution, and the said approval shall be limited accordingly; and

– 42 –

NOTICE OF ANNUAL GENERAL MEETING

APPENDIX III

• (d) for the purpose 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;

• (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, the Companies Act 1981 of Bermuda (as amended from time to time) (“ Companies Act ”) or any applicable law to be held; or

• (iii) the date on which the authority set out in this resolution is revoked or varied by an ordinary resolution in general meeting.

“ Rights Issue ” means the allotment, issue or grant of New Shares pursuant to an offer of New Shares open for a period fixed by the Directors to holders of issued shares of the Company (“ Shares ”) whose names on the register of members of the Company on a fixed record date in proportion to their then holdings of such Shares (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restriction or obligations under the laws of, or the requirements of, any recognised regulatory body or any stock exchange in any territory applicable to the Company).”

1. “ THAT :

2. (a) subject to the provisions of paragraphs (b) and (c) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to repurchase the Shares on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) or any stock exchange on which the Shares may be listed and recognised for this purpose by the Securities and Futures Commission of Hong Kong and the Stock Exchange under the Hong Kong Code on Share Repurchases, subject to and in accordance with all applicable laws and requirements of the Rules Governing the Listing of Securities on the Stock Exchange (the “ Listing Rules ”) or listing rules of any other stock exchange as amended from time to time and the Bye-laws of the Company, be and is hereby generally and unconditionally approved;

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• (b) the aggregate nominal amount of Shares hereby authorised to be repurchased by the Company pursuant to the approval in paragraph (a) above shall not exceed 10% of the issued share capital of the Company as at the date of the passing of this resolution, and the said approval shall be limited accordingly;

• (c) for the purpose 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;

  • (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, the Companies Act or any applicable law to be held; or

  • (iii) the date on which the authority set out in this resolution is revoked or varied by an ordinary resolution in general meeting.”

• “ THAT conditional on the passing of resolutions 4 and 5 in the notice convening this meeting, the general mandate granted to the Directors and for the time being in force to exercise all the powers of the Company pursuant to paragraph (a) of resolution 4 above be and is hereby extended by the addition thereto an amount representing the aggregate nominal amount of the Shares repurchased by the Company under the authority granted pursuant to paragraph (a) of resolution 5 above, provided that such extended amount shall not exceed 10% of the issued share capital of the Company as at the date of the passing of this resolution.”

• “ THAT :

• (a) the renewal of the limit in respect of the granting of share options of the Company (the “ Share Options ”) under the share option scheme of the Company (the “ Share Option Scheme ”) adopted on 22 September 2004 or any other schemes of the Company or its subsidiaries, as the case may be, (the “ Renewed Scheme Mandate Limit ”) be and is hereby approved and confirmed and the total number of New Shares which may be issued upon exercise of Share Options to be granted under the Share Option Scheme as renewed shall not exceed 10% of the issued Shares as at the date of 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 maybe) shall not be counted for the purpose of calculating the Renewed Scheme Mandate Limit;

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• (b) the Directors of the Company be and are hereby authorised, subject to compliance with the Listing Rules, to grant Share Options under the Share Option Scheme up to the Renewed Scheme Mandate Limit and to exercise all the powers of the Company to allot, issue and deal with the Shares pursuant to the exercise of such Share Options; and

• (c) any Director of the Company be and is hereby authorised to do all such acts and execute all such documents to effect the Renewed Scheme Mandate Limit.”

• “ THAT :

• (a) the grant of options to Ms. Chong Sok Un and Mr. Andrew Charles Ferguson to subscribe for 150,000,000 and 250,000,000 Shares of the Company (“ Directors’ Options ”) respectively at the exercise price of HK$1.00 per Share, pursuant to the share option scheme of the Company adopted on 22 September 2004, be and are hereby approved and subject to the passing of resolution (b) below, 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; and

• (b) 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 150,000,000 and 250,000,000 Shares (the “ Options Shares ”) of par value of HK$0.10 each in the share capital of the Company to Ms. Chong Sok Un and Mr. Andrew Charles Ferguson respectively in accordance with the terms and conditions of the Directors Options and the Directors be and are hereby authorised 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.”

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1. “ THAT the authorised share capital of the Company be and is hereby increased from HK$800,000,000 to HK$2,000,000,000 by the creation of an additional 12,000,000,000 new shares of HK$0.1 each in the capital of the Company (the “ Capital Increase ”) and the Directors be and are hereby authorised for and on behalf of the Company to execute all such documents and to do all such acts and things as they consider necessary or expedient in connection with and to give effect to the Capital Increase.”

By Order of the Board APAC Resources Limited Chong Sok Un Chairman

Hong Kong, 27 May 2010

Notes:

1. Any member entitled to attend and vote at the Meeting is entitled to appoint a proxy or, if such member is a holder of two or more shares, proxies to attend and vote in his stead. A proxy need not be a member of the Company but must attend the Meeting in person to represent the appointing member.

2. To be valid, the form of proxy must be deposited with the branch share registrar of the Company, Tricor Secretaries Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for the Meeting or any adjournment thereof.

3. Where there are joint holders of any share, any one of such joint holder may vote, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at the Meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register in respect of the joint holding.

As at the date of this notice, the Directors of the Company are:

Executive Directors:

Ms. Chong Sok Un (Chairman)

Mr. Andrew Charles Ferguson (Chief Executive Officer) Mr. Peter Anthony Curry (Chief Financial Officer)

Mr. Yue Jialin Mr. Kong Muk Yin

Non-Executive Directors:

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

Independent Non-Executive Directors:

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

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