Persistence Gold Group Ltd - Proxy Solicitation & Information Statement 2021

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 your 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 shares in APAC Resources Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or the transfer was effected for transmission to the purchaser or the 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 as 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)

RENEWAL OF DISCLOSEABLE TRANSACTION AND CONTINUING CONNECTED TRANSACTION AND NOTICE OF SPECIAL GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 6 to 15 of this circular. A letter of recommendation from the Independent Board Committee to the Independent Shareholders is set out on pages 16 to 17 of this circular. A letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 18 to 29 of this circular.

A notice convening a special general meeting (“ SGM ”) of APAC Resources Limited to be held at Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Friday, 9 July 2021 at 10:00 a.m. is set out on pages II-1 to II-3 of this circular. A form of proxy for use at the SGM is enclosed with this circular.

Whether or not you are able to attend the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar of the Company in Hong Kong, Tricor Secretaries Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the SGM or any adjournment thereof if you so wish.

PRECAUTIONARY MEASURES FOR THE SGM

Please see page 1 of this circular for measures being taken to try to prevent and control the spread of the Novel Coronavirus (“ COVID-19 ”) at the SGM, including: • compulsory body temperature checks • compulsory wearing of surgical face masks for each attendee Any person who does not comply with the precautionary measures or is subject to any Hong Kong Government prescribed quarantine may be denied entry into the SGM venue. The Company also encourages its shareholders to consider appointing the Chairman of the SGM as his/her proxy to vote on the relevant resolution at the SGM as an alternative to attending the SGM in person.

For identification purpose only

9 June 2021

CONTENTS

	Page
Precautionary Measures for the Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . .	1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Appendix I — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II — Notice of Special General Meeting . . . . . . . . . . . . . . . . . . . . . . .	II-1

– i –

PRECAUTIONARY MEASURES FOR THE SPECIAL GENERAL MEETING

In view of the ongoing COVID-19 epidemic and recent requirements for prevention and control of its spread, the Company will implement the following preventive measures at the SGM:

(i) Compulsory body temperature checks will be conducted on every Shareholder, proxy and other attendees at the entrance of the SGM venue. Any person with a body temperature of over 37.4 degrees Celsius may be denied entry into the SGM venue and be asked to leave the SGM venue.
(ii) All Shareholders, proxies and other attendees that (a) have travelled, and have been in close contact with any person who has travelled from the mainland China and Macao at any time in the preceding 14 days, or from Taiwan and overseas at any time in the preceding 21 days (in accordance with and subject to the latest guidelines issued by the Hong Kong Government at www.chp.gov.hk from time to time); (b) are, and have been, in close contact with any person who is, subject to any Hong Kong Government prescribed compulsory quarantine (including home quarantine); (c) are, and have been, in close contact with anyone who has contracted COVID-19, has been tested preliminarily positive of COVID-19 or is suspected of contracting COVID-19; or (d) have any flu-like symptoms, may be denied entry into the SGM venue and be asked to leave the SGM venue.
(iii) All Shareholders, proxies and other attendees are required to wear surgical face masks inside the SGM venue at all times. Any person who does not comply with this requirement may be denied entry into the SGM venue and be asked to leave the SGM venue. A safe distance between seats are also recommended.

To the extent permitted under the laws of Hong Kong, the Company reserves the right to deny entry into the SGM venue or require any person to leave the SGM venue in order to ensure the safety of the attendees at the SGM.

In the interest of all stakeholders’ health and safety and to be consistent with recent COVID-19 guidelines for prevention and control, the Company reminds all Shareholders that physical attendance in person at the SGM is not necessary for the purpose of exercising voting rights. As an alternative to attending the SGM in person, Shareholders are encouraged to consider appointing the Chairman of the SGM as their proxy to vote on the relevant resolution at the SGM by submitting form of proxy with voting instructions inserted.

The form of proxy for the SGM is enclosed with this circular. Alternatively, the form of proxy can be downloaded from the Company’s website at www.apacresources.com and the website of The Stock Exchange of Hong Kong Limited at www.hkexnews.hk. If you are not a registered Shareholder (if your shares are held via banks, brokers, custodians or the Hong Kong Securities Clearing Company Limited), you should consult directly with your banks or brokers or custodians (as the case may be) to assist you in the appointment of proxy.

– 1 –

DEFINITIONS

In this circular (other than in the notice of SGM), unless the context otherwise requires, the following expressions shall have the following meanings:

“AGL” Allied Group Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Stock Exchange (Stock Code: 373) and is a substantial shareholder of the Company;
“Allied Properties Investments” Allied Properties Investments (1) Company Limited, a controlling shareholder which holds 486,457,630 ordinary shares of the Company, representing approximately 39.90% of the total issued share capital of the Company as at the Latest Practicable Date and is indirectly wholly-owned by AGL;
“Annual Cap(s)” annual aggregate maximum amounts for the principal loan outstanding and the interest due under the Supplemental Loan Agreement as set out in the section headed “The proposed Annual Caps and basis for determination of the proposed Annual Caps” of this circular;
“Board” the board of Directors;
“Borrower”
Best Advantage Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Guarantor, being the borrower under the Loan Agreement and the Supplemental Loan Agreement;
“China Elite Holdings Limited” China Elite Holdings Limited, a controlling shareholder who holds 733,269,096 ordinary shares of the Guarantor, representing approximately 48.86% of the total number of issued shares of the Guarantor as at the date of the Supplemental Loan Agreement and is indirectly wholly-owned by AGL;

“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;
“Group”

the Company and its subsidiaries;

– 2 –

DEFINITIONS

“Guarantor”
“HK$”
“Hong Kong”
“Independent Board Committee”
“Independent Financial Adviser”
“Independent Shareholder(s)”
“Interest Period”
“Interest Rate”
“Latest Practicable Date”

Tian An China Investments Company Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Stock Exchange (Stock Code: 28), and is the holding company of the Borrower, being the guarantor under the Loan Agreement and the Supplemental Loan Agreement;

Hong Kong dollars, the lawful currency of Hong Kong;
the Hong Kong Special Administrative Region of the PRC;
the independent committee of the Board, comprising all of the independent non-executive Directors excluding Mr. Chang Chu Fai, Johnson Francis (who is also an independent non-executive director of the Guarantor), formed to advise the Independent Shareholders with respect to the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps;
Pelican Financial Limited, a corporation licensed to carry out type 6 (advising on corporate finance) regulated activity as defined under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders on the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps;
Shareholder(s) other than AGL and its associates (including Allied Properties Investments) which are required to abstain from voting at the SGM;
one (1) month;
5.5% per annum;
2 June 2021, being the latest practicable date prior to printing of this circular for ascertaining certain information contained herein;

– 3 –

DEFINITIONS

“Lender”
“Listing Rules”
“Loan Agreement”
“Loan Facility”
“PRC”
“Previous Announcement”
“RMB”
“SFO”
Ultra Effort Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company, being the lender under the Loan Agreement and the Supplemental Loan Agreement;
the Rules Governing the Listing of Securities on the Stock Exchange;
the loan agreement entered into among the Lender as the lender, the Borrower as the borrower and the Guarantor as the guarantor dated 23 May 2019 relating to the original two-year revolving loan facility of up to HK$235,000,000 (or an amount equivalent to HK$235,000,000 in such alternative currency as acceptable to and agreed by the Lender);
a revolving loan in the amount not exceeding HK$260,000,000 (or an amount equivalent to HK$260,000,000 in such alternative currency as acceptable to and agreed by the Lender) made or to be made available by the Lender to the Borrower on the terms and subject to the conditions set out in the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement;
the People’s Republic of China, for the purpose of this circular only, excludes Taiwan, Hong Kong and Macau Special Administrative Region of the People’s Republic of China;
the announcement dated 23 May 2019 of the Company;
Renminbi, the lawful currency of PRC;
Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

– 4 –

DEFINITIONS

“SGM” the special general meeting of the Company to be held at Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Friday, 9 July 2021 at 10:00 a.m., or any adjournment thereof for the Independent Shareholders to consider and, if thought fit, approve the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps;
“Share(s)” ordinary share(s) of HK$1.00 each in the share capital of the Company;
“Shareholder(s)” holder(s) of the Share(s);
“Stock Exchange” The Stock Exchange of Hong Kong Limited;
“Supplemental Loan Agreement”
the supplemental loan agreement in respect of the Loan Agreement entered into among the Lender as the lender, the Borrower as the borrower and the Guarantor as the guarantor dated 10 May 2021 in relation to the Loan Facility;
“Transaction” the transaction contemplated under the Supplemental Loan Agreement; and
“%” per cent.

In this circular, the terms “associate(s)”, “connected person(s)”, “controlling shareholder(s)”, “percentage ratio(s)” and “substantial shareholder(s)” have the meanings given to such terms in the Listing Rules, unless the context otherwise requires.

For the purpose of this circular, unless otherwise indicated, conversion of RMB into HK$ is calculated at the approximate exchange rate of RMB1.00 to HK$1.209. This exchange rate is for illustration propose only and does not constitute a representation that any amounts have been, could have been, or may be exchanged at this or any other rate at all.

– 5 –

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: Mr. Brett Robert Smith (Deputy Chairman) Mr. Andrew Ferguson (Chief Executive Officer)

Non-Executive Directors: Mr. Arthur George Dew (Chairman) (Mr. Wong Tai Chun, Mark as his alternate) Mr. Lee Seng Hui Ms. Lam Lin Chu

Independent Non-Executive Directors: Dr. Wong Wing Kuen, Albert Mr. Chang Chu Fai, Johnson Francis Mr. Wang Hongqian

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Head office and

principal place of business: Room 2304, 23rd Floor Allied Kajima Building 138 Gloucester Road Wanchai, Hong Kong

9 June 2021

To the Shareholders

Dear Sir or Madam,

RENEWAL OF DISCLOSEABLE TRANSACTION AND CONTINUING CONNECTED TRANSACTION AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the Previous Announcement in relation to a loan transaction among the Lender (a wholly-owned subsidiary of the Company) as the lender, the Borrower as the borrower and the Guarantor as the guarantor.

On 10 May 2021, the Lender as the lender entered into the Supplemental Loan Agreement with the Borrower as the borrower and the Guarantor as the guarantor, pursuant to which, the Lender agreed to, among other things, increase the limit of the Loan Facility from

For identification purpose only

– 6 –

LETTER FROM THE BOARD

HK$235,000,000 (or an amount equivalent to HK$235,000,000 in such alternative currency as acceptable to and agreed by the Lender) to HK$260,000,000 (or an amount equivalent to HK$260,000,000 in such alternative currency as acceptable to and agreed by the Lender) and extend the repayment date of the Loan Facility from 12 July 2021 to 12 July 2024 on the terms and subject to the conditions therein. Immediately before entering into the Supplemental Loan Agreement, HK$217,620,000 (equivalent to RMB180,000,000 as at the date of the Supplemental Loan Agreement) of the Loan Facility has been drawn and remained outstanding.

The Company will convene a SGM to seek approval from the Independent Shareholders in respect of the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps.

The purpose of this circular is to provide you with, among other things, (i) further information regarding the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and (iv) a notice of the SGM.

THE SUPPLEMENTAL LOAN AGREEMENT

Date: 10 May 2021 Parties: (1) the Lender as the lender under the Supplemental Loan Agreement; (2) the Borrower as the borrower under the Supplemental Loan Agreement; and (3) the Guarantor as the guarantor under the Supplemental Loan Agreement.

PRINCIPAL TERMS OF THE SUPPLEMENTAL LOAN AGREEMENT

Pursuant to the Supplemental Loan Agreement, the Loan Agreement has now been amended and/or supplemented, inter alia, as follows:

Loan Facility amount: HK$260,000,000 (or an amount equivalent to HK$260,000,000 in such alternative currency as acceptable to and agreed by the Lender) Repayment date: 12 July 2024

Save for the amendments made to the Loan Agreement by the Supplemental Loan Agreement, the provisions of the Loan Agreement and the rights and obligations thereunder shall remain in full force and effect.

The amendments made to the Loan Agreement by the Supplemental Loan Agreement are conditional upon among others, the approval by the Independent Shareholders of the Supplemental Loan Agreement and the Transaction and all other consents and acts required under the Listing Rules being obtained and completed.

– 7 –

LETTER FROM THE BOARD

Pursuant to the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement, (i) any payment or repayment by the Borrower or the Guarantor shall be made in the same currency or currencies as any part of the Loan Facility was denominated and drawn by the Borrower save as otherwise agreed by the Lender in writing; and (ii) the Lender may assign all or any part of its rights or benefits or transfer all or any part of its obligations under the Loan Agreement, the Supplemental Loan Agreement or other documents in relation to the Loan Facility to any person.

HISTORICAL AND THE PROPOSED ANNUAL CAPS

Historical Annual Cap Amounts under the Loan Agreement

The following table sets out the historical maximum principal loan outstanding, maximum interest amount and annual caps under the Loan Agreement for each of the following periods:

	Financial year ended	Financial year ending	Financial year ending
	30 June 2020	30 June 2021	30 June 2022
Maximum principal amount	HK$235,000,000	HK$235,000,000	HK$235,000,000
outstanding
Maximum interest amount	HK$14,900,000	HK$14,900,000	HK$1,300,000
	(Note 1)	(Note 2)	(Note 3)
Annual cap amounts	HK$249,900,000	HK$249,900,000	HK$236,300,000

Note 1: The Borrower made the first drawdown of the original loan facility on 10 July 2019 under the Loan Agreement and the interest amount received from the Borrower for the period between 10 July 2019 and 30 June 2020 was approximately HK$10,692,000.
Note 2: Assuming that HK$217,620,000 of the original loan facility under the Loan Agreement remains outstanding as at 30 June 2021, the interest amount to be received from the Borrower for the period between 1 July 2020 and 30 June 2021 is approximately HK$11,969,000.
Note 3: Assuming that HK$217,620,000 of the original loan facility under the Loan Agreement remains outstanding as at 12 July 2021, being the original repayment date under the Loan Agreement, the interest amount to be received from the Borrower for the period between 1 July 2021 and 11 July 2021 (inclusive) is approximately HK$361,000.

The proposed Annual Caps and basis for determination of the proposed Annual Caps

The proposed Annual Caps for the maximum principal amount outstanding under the Supplemental Loan Agreement and the maximum interest amount of the Loan Facility are as follows:

	From	Financial year	Financial year	From
	12 July 2021 to	ending	ending	1 July 2024 to
	30 June 2022	30 June 2023	30 June 2024	11 July 2024
Maximum principal	HK$260,000,000	HK$260,000,000	HK$260,000,000	HK$260,000,000
amount outstanding
Maximum interest amount	HK$13,869,000	HK$14,300,000	HK$14,300,000	HK$431,000
Proposed Annual Cap	HK$273,869,000	HK$274,300,000	HK$274,300,000	HK$260,431,000

– 8 –

LETTER FROM THE BOARD

The above proposed Annual Caps are determined with reference to, among others, the maximum principal amount outstanding under the Loan Facility to be granted by the Lender, the maximum interest amount payable from 12 July 2021 to 11 July 2024 (inclusive) under the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement, based on the assumption that the Borrower will continue to borrow the maximum principal in the amount of HK$260,000,000 under the Loan Facility for each of the above periods respectively.

Pursuant to the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement, it is agreed that the Borrower shall pay interest on the aggregate principal amount outstanding under the Loan Facility from time to time at the Interest Rate and such interest shall be paid to the Lender on the last date of each Interest Period.

INTERNAL CONTROL MEASURES GOVERNING THE SUPPLEMENTAL LOAN AGREEMENT

The major risk associated with the Loan Facility is the potential default of payment of the Borrower. To deal with such risk, the Group has adopted or will adopt the following internal control measures (the “ Internal Control Measures ”) to safeguard the interests of the Company and the Shareholders:

(i) Reviewing the backgrounds and financial positions of the Borrower and the Guarantor in accordance with the credit policy of the Group;
(ii) The designated staff of the accounting department of the Company will, on a weekly basis and before allowing drawdown by the Borrower each time, monitor and report the liquidity status of the Group to the financial controller of the Company. The financial controller of the Company will then assess the cash position of the Group before approving any drawdown under the Loan Facility and ensure that the Group has sufficient cash flow for its business operations after drawdown by the Borrower each time;
(iii) The designated staff of accounting department of the Company will closely monitor the outstanding loan balances and report the latest status to the financial controller of the Company on a monthly basis to ensure that it does not exceed the stipulated Annual Caps (stated in the relevant circular of the Company);
(iv) The financial controller of the Company will report to the senior management on a monthly basis and Directors (including the independent non-executive Directors) on half year basis in relation to the status of the Transaction, including outstanding loan balances, interests and any event of default;
(v) The senior management of the Company will discuss with the independent non-executive Directors if there is any potential compliance issue during the performance of the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement and where necessary, seek advice from professional parties such as legal advisers and/or auditors;

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LETTER FROM THE BOARD

(vi) The independent non-executive Directors will perform annual review pursuant to Rule 14A.55 of the Listing Rules on whether the transactions under the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement are conducted (a) in the ordinary and usual course of business of the Group; (b) on normal commercial terms or better; and (c) according to the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement governing them on terms that are fair and reasonable and in the interests of the Shareholders as a whole; and
(vii) The Company’s auditor will confirm pursuant to Rule 14A.56 of the Listing Rules, among others, whether (a) the transactions under the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement have been approved by the Board; (b) the transactions were entered into, in all material respects, in accordance with the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement governing the transactions; and (c) the proposed Annual Caps have not been exceeded.

ASSESSMENT OF CREDIT RISKS IN ASSOCIATION WITH THE SUPPLEMENTAL LOAN AGREEMENT

In evaluating the risks associated with the Supplemental Loan Agreement, the Directors have considered the following factors:

(i) the net assets value of the Borrower after taking into account its principal investment, being a joint venture in the PRC, covers the Loan Facility;
(ii) as at the Latest Practicable Date, the Borrower did not have any historical defaults in the repayment of outstanding amounts and/or accrued interests under the Loan Agreement or any other loan agreements with the Group (if any) when they fell due; and
(iii) the Guarantor, the shares of which are listed on the main board of the Stock Exchange, has market capitalisation of approximately HK$6.8 billion as at 10 May 2021, being the date of the Supplemental Loan Agreement. As disclosed in its 2020 annual report, the Guarantor recorded profit attributable to owners of the Guarantor of over HK$618 million for the year ended 31 December 2020. As at 31 December 2020, it had total assets in excess of HK$42.6 billion and equity attributable to owners of the Guarantor of approximately HK$25.7 billion. Its net current asset and cash and cash equivalents at 31 December 2020 amounted to approximately HK$7.4 billion and HK$4.0 billion respectively.

As such, the Directors are of the view that (i) the Borrower and/or the Guarantor will have adequate source of funds for the repayment of the Loan Facility; and (ii) the financial strength and performance of the Guarantor should be sufficient to cover potential default risk of the Borrower and securities are not required.

– 10 –

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE TRANSACTION

The Transaction, which forms part of the Group’s financial services activities, allows the Group to apply its funds in an effective manner with a view to obtain a higher return to the Group. It is expected that the current global low interest rate environment will likely to be maintained for at least the next couple of years in order to stimulate the economic growth and prevent deflation. The Directors are of the view that under the low interest rate environment, maintaining the Interest Rate at 5.5% per annum upon the extension of the term for three years shall provide the Group with a stable, long term and higher return on some of its surplus funds. In addition, it is at the Lender’s sole discretion to advance any part of the Loan Facility upon receipt of the drawdown request from the Borrower under the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement. The entering of the Supplemental Loan Agreement shall provide both the Lender and the Borrower flexibility to utilise the Group’s surplus funds and repay the outstanding principal of the Loan Facility respectively. The terms of the Supplemental Loan Agreement, including the interest rate applicable, and the proposed Annual Caps, were arrived at after arm’s length negotiations between the Lender and the Borrower having taken into account of the current market norm in relation to similar transactions.

The entering into of the Supplemental Loan Agreement was upon the Borrower’s demand and as advised and confirmed by the Borrower, the Borrower does not foresee any financial difficulties in the repayment of the outstanding amounts and interests accrued by the original repayment date of 12 July 2021 under the Loan Agreement.

In view of the above and the Internal Control Measures, the Directors (excluding Mr. Lee Seng Hui (“ Mr. Lee ”) and Mr. Chang Chu Fai, Johnson Francis (“ Mr. Chang ”) who have abstained from voting at the relevant Board meeting, and the members of the Independent Board Committee whose opinion is set out in the “Letter from the Independent Board Committee” in this circular) are of the view that:

(i) the Group has established adequate and appropriate internal control procedures to review the continuing connected transaction, and such procedures can effectively ensure that the continuing connected transaction under the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement will be conducted on normal commercial terms, fair and reasonable, and in the interest of the Company and the Shareholders as a whole; and
(ii) the terms of the Supplemental Loan Agreement are on normal commercial terms and the terms of the Transaction (including the proposed Annual Caps) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

INFORMATION OF THE COMPANY, THE GROUP, THE LENDER, THE BORROWER AND THE GUARANTOR

The Company and the Group

The Company is a company incorporated in Bermuda with limited liability, the shares of which are listed on the main board of the Stock Exchange.

– 11 –

LETTER FROM THE BOARD

The Group is an established investment fund and commodity trading house which owns strategic interests in natural resource companies with the main business lines comprising of primary strategic investment, resource investment, and commodity trading business, focused primarily on metals, mining and energy and investment in financial assets.

The Lender

The Lender is a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company. The principal business activity of the Lender is principal investments and financial services.

The Borrower

As advised and confirmed by the Borrower, the Borrower is a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Guarantor. The principal business activity of the Borrower is investment holding.

The Guarantor

As advised and confirmed by the Borrower, the Guarantor is a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Stock Exchange. The principal business activity of the Guarantor is investment holding. The Guarantor and its subsidiaries are principally engaged in the development of apartments, villas, office buildings and commercial properties, property investment and property management on the mainland in the PRC, as well as property investment and property management in Hong Kong. As at the date of the Supplemental Loan Agreement, the Guarantor is owned as to approximately 48.86% by China Elite Holdings Limited, being an indirect wholly-owned subsidiary of AGL.

LISTING RULES IMPLICATIONS

As the Lender is a wholly-owned subsidiary of the Company, the Transaction entered into by the Lender shall be a deemed transaction of the Company under the Listing Rules as the definition of “listed issuer” under Chapter 14 of the Listing Rules shall include the listed issuer’s subsidiaries. The Transaction constitutes a discloseable transaction for the Company on the basis that the relevant percentage ratio(s) of the Company exceeds 5% but is below 25%.

As at the date of the Supplemental Loan Agreement, the Company is indirectly held as to approximately 39.86% by AGL, a controlling shareholder of the Company and hence a connected person of the Company. AGL also indirectly holds approximately 48.86% of the total number of issued shares of the Guarantor and the Borrower is a wholly-owned subsidiary of the Guarantor. Hence, the Borrower and the Guarantor are associates of AGL under Rule 14A.13(3) of the Listing Rules and connected persons of the Company. As a result, the Transaction constitutes a continuing connected transaction of the Company under Chapter 14A of the Listing Rules, and accordingly, is subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

AGL and its associates (including Allied Properties Investments) have a material interest in the Transaction and accordingly they shall abstain from voting at the SGM on the resolution to approve the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps.

– 12 –

LETTER FROM THE BOARD

DIRECTORS’ INTERESTS IN THE TRANSACTION

As at the date of the Supplemental Loan Agreement, Mr. Lee, being a non-executive Director, is also the chief executive and an executive director of AGL, and the chairman and a non-executive director of the Guarantor. Mr. Lee is one of the trustees of Lee and Lee Trust, being a discretionary trust which together with Mr. Lee’s personal interest, controls approximately 74.96% interest in the total number of issued shares of AGL. AGL is indirectly interested in approximately 39.86% of the total issued share capital of the Company and approximately 48.86% of the total number of issued shares of the Guarantor and the Borrower is a wholly-owned subsidiary of the Guarantor. Accordingly, Mr. Lee is deemed to be interested in the Transaction and therefore has abstained from voting at the relevant Board meeting for approving, among others, the Transaction.

Mr. Chang, being an independent non-executive Director, is also an independent non-executive director of the Guarantor, has abstained from voting at the relevant Board meeting for approving, among others, the Transaction to avoid any potential conflicts of interest.

Save as disclosed above, none of the Directors has abstained (or is required to abstain) from voting on the Board resolution for considering and approving the Supplemental Loan Agreement, the Annual Caps and the Transaction.

SGM

The Directors have resolved to convene the SGM to consider and, if thought fit, to approve the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps.

As at the Latest Practicable Date, AGL indirectly held 486,457,630 Shares, representing approximately 39.90% of the total issued share capital of the Company. Accordingly, AGL and its associates (including Allied Properties Investments, an indirect wholly-owned subsidiary of AGL) will abstain from voting on the resolution to be proposed at the SGM. To the best of the knowledge and belief of the Directors having made all reasonable enquiries, save as and except for AGL and its associates (including Allied Properties Investments), no other Shareholder has a material interest in the Transaction such that he or she or it shall abstain from voting at the SGM on the resolution to approve the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps.

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, there was (i) no voting trust or other agreement or arrangement or understanding entered into or binding upon any Shareholders; and (ii) no obligation or entitlement of any Shareholder as at the Latest Practicable Date, whereby it has or may have temporarily or permanently passed control over the exercise of the voting right in respect of its Shares to a third party, either generally or on a case-by-case basis.

– 13 –

LETTER FROM THE BOARD

The notice of SGM is set out on pages II-1 to II-3 of this circular. A proxy form for use at the SGM is enclosed herewith. Whether or not you are able to attend the SGM, you are requested to complete the accompanying form or proxy in accordance with the instructions printed thereon and return the same to the branch share registrar of the Company in Hong Kong, Tricor Secretaries Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the SGM or any adjournment thereof if you so wish.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of shareholders at a general meeting must be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. Accordingly, the resolution to be proposed at the SGM as set out in notice of SGM shall be voted by poll.

RECOMMENDATIONS

The Independent Board Committee has been established to advise the Independent Shareholders as to whether the terms of the Supplemental Loan Agreement and the Transaction, including the proposed Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and the Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in this respect.

The letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 18 to 29 of this circular and the letter from the Independent Board Committee to the Independent Shareholders is set out on pages 16 to 17 of this circular.

The Independent Board Committee, having taken into account of the advice and recommendation of the Independent Financial Adviser, is of the opinion that (i) the terms of the Supplemental Loan Agreement and the Transaction, including the proposed Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Transaction is on normal commercial terms, in the ordinary and usual course of business of the Group and in the interest of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps.

The Board (excluding Mr. Lee and Mr. Chang who have abstained from voting at the relevant Board meeting, and the members of the Independent Board Committee whose opinion is set out in the “Letter from the Independent Board Committee” in this circular) considers that the terms of the Supplemental Loan Agreement and the Transaction (including the proposed Annual Caps) are on normal commercial terms and fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps.

– 14 –

LETTER FROM THE BOARD

FURTHER INFORMATION

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

Yours faithfully, By Order of the Board APAC Resources Limited Andrew Ferguson Executive Director

– 15 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of a letter from the Independent Board Committee setting out its recommendation to the Independent Shareholders in relation to the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps:

**APAC RESOURCES LIMITED 亞太資源有限公司[*]**

(Incorporated in Bermuda with limited liability)

(Stock Code: 1104)

9 June 2021

To the Independent Shareholders

Dear Sir or Madam,

RENEWAL OF DISCLOSEABLE TRANSACTION AND CONTINUING CONNECTED TRANSACTION

We refer to the circular dated 9 June 2021 issued by the Company (the “ Circular ”), of which this letter forms part. Terms used in this letter shall bear the same meanings as given to them in the Circular unless the context otherwise requires.

We have been appointed as members of the Independent Board Committee to consider the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps and to advise the Independent Shareholders as to the fairness and reasonableness of the aforesaid matters, and to recommend how the Independent Shareholders should vote at the SGM. Pelican Financial Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

We wish to draw your attention to the letter from the Board, as set out on pages 6 to 15 of the Circular, and the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders which contains its advice to us in respect of the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps, as set out on pages 18 to 29 of the Circular.

For identification purpose only

– 16 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account of the advice and recommendation of the Independent Financial Adviser, we consider that (i) the terms of the Supplemental Loan Agreement and the Transaction, including the proposed Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Transaction is on normal commercial terms, in the ordinary and usual course of business of the Group and in the interest of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps.

Yours faithfully, For and on behalf of Independent Board Committee of APAC Resources Limited

Wong Wing Kuen, Albert Wang Hongqian Independent Non-Executive Directors

– 17 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the text of a letter received from Pelican Financial Limited, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps for the purpose of inclusion in this circular.

PELICAN FINANCIAL LIMITED

21/F, Lee Garden Three, 1 Sunning Road, Causeway Bay, Hong Kong

9 June 2021

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

Dear Sirs/Madams,

DISCLOSEABLE TRANSACTION AND CONTINUING CONNECTED TRANSACTION LOAN TRANSACTION

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular of the Company dated 9 June 2021 (the “Circular” ), of which this letter forms a part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires otherwise.

On 10 May 2021, the Lender (a wholly-owned subsidiary of the Company) as lender entered into the Supplemental Loan Agreement with the Borrower as the borrower and the Guarantor as the guarantor, pursuant to which, the Lender agreed to, among other things, increase the limit of the Loan Facility from HK$235,000,000 (or an amount equivalent to HK$235,000,000 in such alternative currency as acceptable to and agreed by the Lender) to HK$260,000,000 (or an amount equivalent to HK$260,000,000 in such alternative currency as acceptable to and agreed by the Lender) and extend the repayment date of the Loan Facility from 12 July 2021 to 12 July 2024 on the terms and subject to the conditions therein. Immediately before entering into the Supplemental Loan Agreement, HK$217,620,000 (equivalent to RMB180,000,000 as at the date of the Supplemental Loan Agreement) of the Loan Facility has been drawn and remained outstanding.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Board currently comprises two executive Directors, three non-executive Directors and three independent non-executive Directors. The Independent Board Committee, comprising all the independent non-executive Directors excluding Mr. Chang Chu Fai, Johnson Francis (who is also an independent non-executive director of the Guarantor), namely Dr. Wong Wing Kuen, Albert, and Mr. Wang Hongqian, has been formed to advise the Independent Shareholders regarding the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps. We have been appointed by the Company as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect and such appointment has been approved by the Independent Board Committee.

Pelican Financial Limited is not connected with the Directors, chief executive or substantial shareholders of the Company or any of their respective associates and therefore is considered suitable to give independent advice to the Independent Board Committee and the Independent Shareholders. In the last two years, we had not been engaged by the Company for the provision of other services that would affect our independence. Apart from normal professional fees payable to us in connection with this appointment of us as Independent Financial Adviser, no arrangement exists whereby Pelican Financial Limited will receive any fees or benefits from the Company or the Directors, chief executive or substantial shareholders of the Company or any of their respective associates.

Our role is to provide you with our independent opinion and recommendation as to (i) whether the Supplemental Loan Agreement was entered into in the ordinary and usual course of business of the Group; (ii) whether the terms of the Supplemental Loan Agreement are on normal commercial terms or better; (iii) whether the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole; and (iv) how the Independent Shareholders should vote in respect of the relevant resolution(s) to approve the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps at the SGM.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have performed relevant procedures and those steps which we deemed necessary in forming our opinions which include, among other things, review of relevant agreements, documents as well as information provided by the Company and verified them, to an extent, to the relevant public information, statistics and market data, the relevant industry guidelines and rules and regulations as well as information, facts and representations provided,

– 19 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

and the opinions expressed, by the Company and/or the Directors and/or the management of the Group. The documents reviewed include, but are not limited to, the Supplemental Loan Agreement, the computation of the proposed Annual Caps, the relevant announcement of the Company dated 10 May 2021, the interim report of the Company for the six months ended 31 December 2020 (the “ Interim Report ”), the annual report of the Company for the financial year ended 30 June 2020 (the “ Annual Report ”), and the Circular. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its management and/or the Directors, which have been provided to us.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent verification of the information included in the Circular and provided to us by the Directors and the management of the Group nor have we conducted any form of in-depth investigation into the business and affairs or the future prospects of the Group.

PRINCIPAL FACTORS TAKEN INTO CONSIDERATION

In formulating our opinion in respect of the terms of the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps, we have considered the following principal factors and reasons:

1. Background information of the Group, the Lender, the Borrower, the Guarantor and the reasons for and benefits of entering into the Transaction

(a) Background information of the Group

The Company is incorporated in Bermuda with limited liability and the shares of which are listed on the main board of the Stock Exchange.

– 20 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is a summary of the financial information of the Group for the two years ended 30 June 2019 and 2020, and the six months ended 31 December 2019 and 2020, as extracted from the 2020 Annual Report and 2020 Interim Report, respectively.

For the six months ended 31 December 2020 2019 HK$’000 HK$’000 (Unaudited) (Unaudited) Revenue – Trading of commodities 283,184 268,152 – Interest income from loan receivables 23,324 44,637 – Interest income from convertible notes – – – Interest income from loan notes 90 363 Total 306,598 313,152 Cost of sales 253,177 280,311 Gross Profit 53,421 32,841 Profit (Loss) for the Period/Year 1,177,467 46,939	For the year ended 30 June 2020 2019 HK$’000 HK$’000 (Audited) (Audited) 367,690 51,099 68,385 56,011 – 1,206 452 911 436,527 109,227 386,639 51,818 49,888 57,409 (429,401) 608,432	For the year ended 30 June 2020 2019 HK$’000 HK$’000 (Audited) (Audited) 367,690 51,099 68,385 56,011 – 1,206 452 911 436,527 109,227 386,639 51,818 49,888 57,409 (429,401) 608,432
		109,227

		51,818 57,409 608,432

Source: Stock Exchange

According to the Annual Report, the revenue of the Group increased from approximately HK$109.2 million for the year ended 30 June 2019 to approximately HK$436.5 million for the year ended 30 June 2020, representing an increase of approximately 299.7%. The growth of the Group’s revenue was mainly attributable to the increase in the revenue from trading of commodities and interest income from loan receivables. On the other hand, the Group reported a net loss attributable to Shareholders of the Company of approximately HK$429.4 million for the year ended 30 June 2020, compared with a net profit attributable to Shareholders of the Company of approximately HK$608.4 million for the year ended 30 June 2019, as the Group recorded a non-cash impairment loss on its interest in Mount Gibson Iron Limited (“ Mount Gibson ”) of approximately HK$580 million driven by the weaker Mount Gibson share price. The non-cash impairment loss of approximately HK$580 million was subsequently fully reversed as reported in the Interim Report due to the share price of Mount Gibson increased as compared to the financial year ended date of the Annual Report.

– 21 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) Background Information of the Lender, the Borrower and the Guarantor

The Lender

The Borrower

The Borrower is a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Guarantor. The principal business activity of the Borrower is investment holding.

The Guarantor

The Guarantor is a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Stock Exchange. The principal business activity of the Guarantor is investment holding. The Guarantor and its subsidiaries are principally engaged in the development of apartments, villas, office buildings and commercial properties, property investment and property management on the mainland in the PRC, as well as property investment and property management in Hong Kong. As at the date of the Supplemental Loan Agreement, the Guarantor is owned as to approximately 48.86% by China Elite Holdings Limited, being an indirect wholly-owned subsidiary of AGL.

(c) Assessment of credit risks in association with the Supplemental Loan Agreement

In evaluating the risks associated with the Supplemental Loan Agreement, the Directors have considered the following factors:

(i) the net assets value of the Borrower after taking into account its principal investment, being a joint venture in the PRC, covers the Loan Facility;
(ii) as at the Latest Practicable Date, the Borrower did not have any historical defaults in the repayment of outstanding amounts and/or accrued interests under the Loan Agreement or any other loan agreements with the Group (if any) when they fell due; and
(iii) the Guarantor, the shares of which are listed on the main board of the Stock Exchange, has market capitalization of approximately HK$6.8 billion as at 10 May 2021, being the date of the Supplemental Loan Agreement. As disclosed in its 2020 annual report, the Guarantor recorded a profit attributable to owners of the Guarantor of over HK$618 million for the year ended 31 December 2020. As at 31 December 2020, it had total assets in excess of HK$42.6 billion and equity attributable to owners of the Guarantor of approximately HK$25.7 billion. Its net current asset and cash and cash equivalents at 31 December 2020 amounted to approximately HK$7.4 billion and HK$4.0 billion respectively.

– 22 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In relation to the above, we have reviewed the Guarantor’s latest annual report for the year ended 31 December 2020 and checked the market capitalization of the Guarantor as at 10 May 2021, and noted that the factors considered by the Directors are consistent with the information in our review. In addition, we noted that the revenue generated by the Guarantor in the past 5 years were in general increasing, and that the profit attributable to owners of the Guarantor amounted to more than HK$600 million each year, reflecting that the Guarantor has been financially sound. Also, we noted that the Guarantor has a strong assets position over its liabilities, in particular in view of its HK$4.0 billion cash position and consecutive net profits for the past 5 years. In light of the above, we concur with the Directors that (i) the Borrower and/or the Guarantor will have an adequate source of funds for the repayment of the Loan Facility; and (ii) the financial strength and performance of the Guarantor should be sufficient to cover potential default risk of the Borrower and securities are not required.

(d) Reasons for and benefits of entering into the Transaction

With reference to the Board Letter, the Transaction, which forms part of the Group’s financial services activities, allows the Group to apply its funds in an effective manner with a view to obtain a higher return for the Group. It is expected that the current global low interest rate environment will likely to be maintained for at least the next couple of years in order to stimulate the economic growth and prevent deflation. The Directors are therefore of the view that under such low interest rate environment, maintaining the Interest Rate at 5.5% per annum upon the extension of the term for three years shall provide the Group with a stable, long term and higher return on some of its surplus funds. The Directors are also of the view that, as advised by the Borrower, the Borrower does not foresee any financial difficulties in the repayment of the outstanding amounts and interests accrued by the original repayment date of 12 July 2021 under the Loan Agreement, and hence the entering of the Supplemental Loan Agreement shall provide both the Lender a secured way to utilise the Group’s surplus funds and earn additional interest income.

The terms of the Supplemental Loan Agreement, including the applicable Interest Rate and the proposed Annual Caps, were arrived at after arm’s length negotiations between the Lender and the Borrower having taken into account the current market norm in relation to similar transactions (Please refer to the section titled “3. Assessment of the terms of the Supplemental Loan Agreement” below for details).

As discussed with the management, the Directors expects that the Group will continue to provide loans to the Borrower going forward as the revenue generated from the Supplemental Loan Agreement can provide an additional and stable source of income for the Group. The Directors also believes that the demand for the Loan Facility from the Borrower represents an opportunity for the Group to expand its financial services business and achieve better economies of scale. The Supplemental Loan Agreement can provide an extended framework to regulate the provision of Loan Facility by the Group to the Borrower from 12 July 2021 to 12 July 2024 in compliance with Rules 14A.34 and 14A.51 of the Listing Rules.

– 23 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered the above, we are of the view that the Group’s entering into of the Supplemental Loan Agreement is in the ordinary and usual course of business of the Group and in the interests of the Company and its Shareholders as a whole.

2. Principal terms of the Supplemental Loan Agreement

Pursuant to the Supplemental Loan Agreement, the Loan Agreement has now been amended and/or supplemented, inter alia, as follows:

Loan Facility amount: HK$260,000,000 (or an amount equivalent to HK$260,000,000 in such alternative currency as acceptable to and agreed by the Lender) Repayment date: 12 July 2024

3. Assessment of the terms of the Supplemental Loan Agreement

Market Comparables

In assessing the fairness and reasonableness of the terms of the Supplemental Loan Agreement, in view that the Loan Facility is provided by the Group to its connected person, we have reviewed similar transactions involving the provision of loan to a connected person, which were conducted through a new agreement or a supplemental agreement entered into to renew an existing loan (the “ Market Comparables ”), during the past twelve months immediately up to and including the date of the Supplemental Loan Agreement. We consider a twelve-month review period as fair and reasonable as we consider such review period would provide a reasonable reference to the recent market trends on similar loan transactions conducted by other issuers listed on the Stock Exchange. In addition, since the Company is neither a bank nor a financial institution, the Market Comparables do not include banks or financial institutions. To the best of our knowledge, we found eleven transactions which meet the said criteria and such list is exhaustive as far as we are aware. We are of the view that despite the businesses, operations and prospects of the Group may not be the same as those of the companies which conducted the Market Comparables, the loan agreements of the Market

– 24 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Comparables were determined under similar factors, including but not limited to market conditions and sentiment, bank lending rates available on the market, and general default risk of borrowers. From our review, we also noted that irrespective of whether a loan agreement was a new or a renewed agreement, the terms therein were determined independently. Accordingly, we consider that the Market Comparables reflect the latest and general market trend of the provision of loan to a connected person in the open market, and are fair and representative samples for our assessment of the fairness and reasonableness of the terms of the Loan Facility.

				New/			Interest
Date of	Stock		Cap amounts	Renewal of	Collateral/		rate per
Announcement	Code	Company Name	of the facilities	agreements	Guarantee	Term	annum
					(Y/N)	(years)
10-May-21	2006	Shanghai Jin Jiang Capital	RMB375,000,000	Renewal	N	3	4.65
		Company Limited
26-Apr-21	230	Minmetals Land Limited	RMB969,000,000	New	N	3	3.85
			plus
			RMB931,000,000
26-Apr-21	230	Minmetals Land Limited	RMB637,500,000	New	N	3	3.85
			plus
			RMB612,500,000
26-Apr-21	230	Minmetals Land Limited	RMB2,142,000,000	New	N	2	3.85
			plus
			RMB2,058,000,000
9-Mar-21	2006	Shanghai Jin Jiang Capital	RMB87,500,000	Renewal	N	1	3.915
		Company Limited
19-Feb-21	305	Wuling Motors Holdings	RMB250,000,000	New	N	1	2.5
		Limited
23-Feb-21	1848	China Aircraft Leasing	HK$1,500,000,000	Renewal	Y	3	8
		Group Holdings Limited
14-Jan-21	817	China Jinmao Holdings	RMB375,000,000	New	N	1	3.85
		Group Limited
9-Aug-20	2868	Beijing Capital Land Ltd.	RMB203,900,000	New	N	3	4.75
21-Jul-20	380	Softpower International	US$10,000,000	Renewal	Y	3	5.5
		Limited
22-Jun-20	817	China Jimao Holdings Group	RMB1,000,000,000	Renewal	N	3	3.85
		Limited
					Maximum	3.0	8.0
					Minimum	1.0	2.5
					Median	3.0	3.9
					Average	2.4	4.4
Supplemental Loan Agreement			HK$260,000,000	Renewal	Y	3	5.5
Source: Stock Exchange

– 25 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Interest Rate

As illustrated by the above table, the interest rate of the Market Comparables ranges from 2.5% to 8.0%, with an average of approximately 4.4% and a median of approximately 3.9%. The comparison shows that the Interest Rate of 5.5% falls within the range of interest rate of the Market Comparables and is higher than the average interest rate and the median interest rate thereof. As the Supplemental Loan Agreement was denominated in Hong Kong dollar, we have referenced to Hong Kong dollar best lending rate offered by The Hongkong and Shanghai Banking Corporation of 5% as at the Latest Practicable Date. We consider the higher Interest Rate of 5.5% to be favourable to the Company, as it is higher than the interest rates charged by the Hong Kong dollar best lending rate and more than half of the interest rates of Market Comparables. This suggests that the Interest Rate is in line with or better than normal commercial terms. Accordingly, we consider the Interest Rate of the Supplemental Loan Agreement is fair and reasonable so far as Independent Shareholders are concerned.

Term to maturity

As illustrated by the above table, the terms to maturity of the Market Comparables ranges from approximately one year to three years with an average of approximately 2.4 years. The duration of the Supplemental Loan Agreement of three years is therefore in line with the aforesaid range and average of the Market Comparables. Accordingly, we consider the term to maturity of the Supplemental Loan Agreement is fair and reasonable so far as Independent Shareholders are concerned.

Collateral/guarantee

As illustrated in the table above, two out of the eleven Market Comparables were secured by a collateral or guarantee. As such, it is not uncommon in the market that a loan agreement between connected persons is secured by a collateral or guarantee similar to the Supplemental Loan Agreement, which reduces the default risk. The comparison also shows that the Supplemental Loan Agreement, which is secured by the Guarantor, is more secured than most of the Market Comparables.

The Loan Facility to Borrower is secured by the Guarantor under the Supplemental Loan Agreement. With reference to the Board Letter, the Lender is a wholly-owned subsidiary of the Company, while the Company is indirectly owned as to approximately 39.86% by AGL, a controlling shareholder of the Company and hence a connected person of the Company. Meanwhile, AGL also indirectly holds approximately 48.86% of the total number of issued shares of the Guarantor and the Borrower is a wholly-owned subsidiary of the Guarantor. As such, AGL has an indirect interest in the Company, the Lender, the Borrower and the Guarantor. With AGL, the Company and the Guarantor all being listed companies on the main board of the Stock Exchange, we are of the view that the respective managements of these companies would actively monitor the usage of the proposed Annual Caps and minimize the default risk.

– 26 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Taking into consideration that, (i) the Interest Rate, term to maturity and collateral and/or guarantee arrangement of the Loan Facility are in line with those of the Market Comparables; (ii) the Interest Rate is higher than the average and median interest rate of the Market Comparables and the Hong Kong dollar best lending rate offered in the market; (iii) the Loan Facility is secured by the Guarantor, which is a more favorable arrangement compared to most of the Market Comparables, and (iv) AGL, the Company and the Guarantor are expected to actively monitor the usage of the proposed Annual Caps and minimize the default risk, we are of view that the terms of the Supplemental Loan Agreement are on normal commercial terms, are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole, and the Transaction is in the ordinary and usual course of business of the Group.

4. Assessment of the terms of the Proposed Annual Caps

The proposed Annual Caps amounts for the maximum principal amount outstanding under the Loan Facility and the maximum interest amount thereof are as follows:

	From	Financial	Financial	From
	12 July 2021 to	year ending	year ending	1 July 2024 to
	30 June 2022	30 June 2023	30 June 2024	11 July 2024
Maximum principal amount	HK$260,000,000	HK$260,000,000	HK$260,000,000	HK$260,000,000
outstanding
Maximum interest amount	HK$13,869,000	HK$14,300,000	HK$14,300,000	HK$431,000
Proposed Annual Caps	HK$273,869,000	HK$274,300,000	HK$274,300,000	HK$260,431,000

To further assess the fairness and reasonableness of the proposed Annual Caps of Supplemental Loan Agreement, we have also taken into consideration the following aspects:

(i) the total cash and bank balances (including time deposits, cash and cash equivalents) of the Group of approximately HK$564 million as at 30 June 2020 and HK$429.5 million as at 31 December 2020, respectively;
(ii) there is no obligation or commitment for the Borrower to utilise the proposed Annual Caps in full if lower interest rate is offered by independent financial institutions. As such, the proposed Annual Caps are set to provide additional flexibility to the parties involved to meet their capital needs;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(iii) there is no additional external financing cost incurred to the Group in relation to the Loan Facility and no charge to the Borrower whatsoever in relation to the proposed Annual Caps; and
(iv) the assumption that the status of the Borrower and the Guarantor will remain unchanged during the term of the agreement (i.e. the Borrower will remain a wholly-owned subsidiary of the Guarantor and AGL has an indirect interest in the Borrower).

In view of the above and taking into account the Group’s future development and its relatively large balance of cash and cash equivalents, we concur with the Directors’ view that the proposed Annual Caps during the term of the Supplemental Loan Agreement are fair and reasonable so far as the Independent Shareholders are concerned and are in the interest of the Company and Shareholders as a whole.

5. Internal Control Measure

Before entering into any Transaction, the following will be adopted by the Company to ensure that (i) the Transaction will be conducted in accordance with the terms under the Supplemental Loan Agreement and in compliance with the Listing Rules; and (ii) the default risk is minimised:

(i) Reviewing the backgrounds and financial positions of the Borrower and the Guarantor in accordance with the credit policy of the Group;
(ii) The designated staff of the accounting department of the Company will, on a weekly basis and before allowing drawdown by the Borrower each time, monitor and report the liquidity status of the Group to the financial controller of the Company. The financial controller of the Company will then assess the cash position of the Group before approving any drawdown under the Loan Facility and ensure that the Group has sufficient cash flow for its business operations after drawdown by the Borrower each time;
(iii) The designated staff of accounting department of the Company will closely monitor the outstanding loan balances and report the latest status to the financial controller of the Company on a monthly basis to ensure that it does not exceed the stipulated Annual Caps (stated in the relevant circular of the Company);
(iv) The financial controller of the Company will report to the senior management on a monthly basis and Directors (including the independent non-executive Directors) on half year basis in relation to the status of the Transaction, including outstanding loan balances, interests and any event of default;
(v) The senior management of the Company will discuss with the independent non-executive Directors if there is any potential compliance issue during the performance of the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement and where necessary, seek advice from professional parties such as legal advisers and/or auditors;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(vi) The independent non-executive Directors will perform annual review pursuant to Rule 14A.55 of the Listing Rules on whether the transactions under the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement are conducted (a) in the ordinary and usual course of business of the Group; (b) on normal commercial terms or better; and (c) according to the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement governing them on terms that are fair and reasonable and in the interests of the Shareholders as a whole; and
(vii) The Company’s auditor will confirm pursuant to Rule 14A.56 of the Listing Rules, among others, whether (a) the transactions under the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement have been approved by the Board; (b) the transactions were entered into, in all material respects, in accordance with the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement governing the transactions; and (c) the proposed Annual Caps have not been exceeded.

We have discussed with the Company on the implementation of the aforesaid internal control procedures and consider them to be effective in helping to ensure (i) the terms offered by the Lender to the Borrower will be on market and normal commercial terms or better and will be fair and reasonable to the Company and in the interest of its Shareholders as a whole; (ii) the Transaction will be conducted within the proposed Annual Caps during the terms of the Supplemental Loan Agreement pursuant to the requirements under Listing Rules and in compliance with the Listing Rules; and (iii) the default risk is minimized.

RECOMMENDATION

Having considered the principal factors and reasons referred to above, we are of the opinion that the Supplemental Loan Agreement was entered into in the ordinary and usual course of business of the Group and that the terms of the Supplemental Loan Agreement are on normal commercial terms or better. We are also of the view that the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and its Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favor of the resolution(s) to be proposed at the SGM to approve the Supplemental Loan Agreement, the Transaction and the proposed Annual Caps.

Yours faithfully, For and on behalf of Pelican Financial Limited Charles Li* Director

* Charles Li is a responsible person registered under the SFO to carry out Type 6 (advising on corporate finance) regulated activity for Pelican Financial Limited and has over 30 years of experience in the accounting and financial services industry.

– 29 –

APPENDIX I

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

As at the Latest Practicable Date, the interests of the Directors and the chief executive of the Company in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) contained in the Listing Rules, were as follows:

Long positions in the Shares and underlying Shares

Name of Directors Capacity in which interests are held Ms. Lam Lin Chu Beneficial owner Mr. Lee Seng Hui Other interests	Number of Shares/ underlying Shares held Interests in Shares Total interests Approximate percentage of shareholding 75,000 75,000 0.00% 486,457,630 (Note) 486,457,630 39.90%

Note: Mr. Lee Seng Hui together with Ms. Lee Su Hwei and Mr. Lee Seng Huang are the trustees of Lee and Lee Trust, being a discretionary trust. The Lee and Lee Trust controls approximately 74.96% of the total number of issued shares of AGL (inclusive of Mr. Lee Seng Hui’s personal interests) and is therefore deemed to be interested in 486,457,630 Shares in which AGL is deemed to be interested through Allied Properties Investments, its indirect wholly-owned subsidiary.

– I-1 –

APPENDIX I

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and the chief executive of the Company and their respective associates had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) to be notified to the Company and the Stock Exchange pursuant to the Model Code.

As at the Latest Practicable Date, the following Directors were directors or employees of companies which had an interest in the Shares and underlying Shares which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO:

(a) Messrs. Arthur George Dew and Lee Seng Hui are directors of AGL. Mr. Wong Tai Chun, Mark, alternate director to Mr. Arthur George Dew, is the director of investment of AGL. AGL, through its wholly-owned subsidiary, is deemed to be interested in, for the purpose of the SFO, approximately 39.90% of the total issued share capital of the Company.
(b) Ms. Lam Lin Chu is the chief financial officer of Shougang Fushan Resources Group Limited which, through its wholly-owned subsidiary, is deemed to be interested in, for the purpose of the SFO, approximately 17.64% of the total issued share capital of the Company.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or proposed directors of the Company (if any) was a director or employee of a company which had any interest or short position in the Shares and underlying Shares which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has entered or proposed to enter into a service contract with any member of the Group which does not expire or is not determinable by the employer within one year without payment of compensation (other than statutory compensation).

4. DIRECTOR’S INTERESTS IN ASSETS AND CONTRACTS

(i) Director’s interests in assets

APAC Resources Management Limited (“ ARML ”, a wholly-owned subsidiary of the Company) as the sub-tenant entered into a sub-tenancy agreement dated 31 March 2021 with AGL as the landlord in respect of the tenancy of portion of 23rd Floor of Allied Kajima Building, No. 138 Gloucester Road, Wanchai, Hong Kong (“ Premises ”) (which was leased to AGL as the tenant by Art View Properties Limited, a joint venture of AGL, as the landlord under a head tenancy agreement dated 24 March 2021) for a term of two years commencing on 1 April 2021 and expiring on 31 March 2023 (both days inclusive) at the rent of HK$120,100 per calendar month.

– I-2 –

APPENDIX I

GENERAL INFORMATION

Since Mr. Lee Seng Hui, a non-executive Director, is the chief executive and an executive director of AGL, and also one of the trustees of Lee and Lee Trust, being a discretionary trust which, together with his personal interests, controls approximately 74.96% interests in the total number of issued shares of AGL as at the Latest Practicable Date, Mr. Lee is deemed to have an interest in the Premises leased to ARML.

As at the Latest Practicable Date, saved as disclosed above and the Sale and Purchase Agreement described below, none of the Directors had any interest, direct or indirect, in any assets which have since 30 June 2020, being the date to which the latest published audited financial statements of the Group were made up, been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

(ii) Director’s interests in contracts

As disclosed in the announcement of the Company dated 1 September 2017, on 1 September 2017, APAC Resources Treasury Management Limited, a wholly-owned subsidiary of the Company, subscribed for US$2.5 million of the five-year guaranteed 4.65% note due 8 September 2022 (the “ SHK Loan Note ”) issued by Sun Hung Kai & Co. (BVI) Limited (“ SHK BVI ”) and guaranteed by Sun Hung Kai & Co. Limited (“ SHK ”). SHK BVI is a wholly-owned subsidiary of SHK. As at the Latest Practicable Date, 80% of the SHK Loan Note was early redeemed by SHK BVI.

As disclosed in the Previous Announcement, and announcements of the Company dated 14 June 2019 and 9 July 2019, on 23 May 2019, the Lender as the lender entered into the Loan Agreement with the Borrower as the borrower and the Guarantor as the guarantor, pursuant to which, the Lender agreed to, among other things, make available to the Borrower a revolving loan in the amount not exceeding HK$235,000,000 (or an amount equivalent to HK$235,000,000 in such alternative currency as acceptable to and agreed by the Lender) during the availability period commencing on the date of the Loan Agreement and ending on the date falling 1 month prior to the repayment date, at an interest rate of 5.5% per annum, secured by a guarantee and indemnity provided by the Guarantor and repayable on 24 months from the date of first drawdown.

The Supplemental Loan Agreement in respect of the Loan Agreement was entered into among the parties, which is subject to the approval by the Independent Shareholders, details are set out in the announcement of the Company dated 10 May 2021 and this circular.

As disclosed in the announcement of the Company dated 14 May 2021, on 14 May 2021, Genuine Legend Limited (“ Genuine Legend ”, a wholly-owned subsidiary of the Company) entered into the sale and purchase agreement (the “ Sale and Purchase Agreement ”) with Allied Properties Overseas Limited (“ APOL ”, a wholly-owned subsidiary of AGL), pursuant to which and subject to the fulfillment of the conditions, (i) Genuine Legend shall acquire and APOL shall sell the entire issued capital of Allied Properties Resources Limited (“ Target Company ”, being a wholly-owned subsidiary of APOL); and (ii) the shareholder’s loan in the principal amount of HK$412,260,336 due to APOL by the Target Company (subject to adjustment provided that it shall not exceed

– I-3 –

APPENDIX I

GENERAL INFORMATION

HK$412,260,336 at completion) shall be assigned by APOL to Genuine Legend, at a consideration of HK$102,581,817.50. As at the date of the Sale and Purchase Agreement, the principal asset of the Target Company is its 41,032,727 shares in Dragon Mining Limited (“ Dragon Mining ”), which represents approximately 25.83% of the issued share capital of Dragon Mining. As at the Latest Practicable Date, the transaction contemplated under the Sale and Purchase Agreement is yet to be completed and is subject to a number of conditions precedent as set out in the Sale and Purchase Agreement.

Mr. Arthur George Dew, the Chairman and a non-executive Director, is the chairman and a non-executive director of each of AGL and Dragon Mining, and holds approximately 0.14% of the issued share capital of Dragon Mining as at the Latest Practicable Date, is therefore deemed to be interested in the transaction contemplated under the Sale and Purchase Agreement.

Mr. Brett Robert Smith, the Deputy Chairman and an executive Director, is the chief executive officer and an executive director of Dragon Mining, and holds approximately 0.07% of the issued share capital of Dragon Mining as at the Latest Practicable Date, is therefore deemed to be interested in the transaction contemplated under the Sale and Purchase Agreement.

As at the Latest Practicable Date, Mr. Lee Seng Hui, a non-executive Director, is the chief executive and an executive director of AGL, the chairman and a non-executive director of the Guarantor, and also one of the trustees of Lee and Lee Trust, being a discretionary trust which, together with his personal interests, controls approximately 74.96% interests in the total number of issued shares of AGL, which in turn indirectly owns approximately 39.90% of the total number of issued shares of the Company. Since AGL indirectly owns approximately 72.74% and 48.86% interests in the total number of issued shares of SHK and the Guarantor respectively, and APOL is a wholly-owned subsidiary of AGL, Mr. Lee is deemed to be interested in (i) the subscription of the SHK Loan Note; (ii) the transaction contemplated under the Loan Agreement; (iii) the transaction contemplated under the Supplemental Loan Agreement; and (iv) the transaction contemplated under the Sale and Purchase Agreement.

Mr. Chang Chu Fai, Johnson Francis, an independent non-executive Director, is also an independent non-executive director of the Guarantor and is therefore interested in (i) the transaction contemplated under the Loan Agreement; and (ii) the transaction contemplated under the Supplemental Loan Agreement.

As at the Latest Practicable Date, save as disclosed above, none of the Directors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date and which is significant in relation to the business of the Group.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 30 June 2020, being the date to which the latest published audited financial statements of the Group were made up.

– I-4 –

APPENDIX I

GENERAL INFORMATION

6. EXPERT’S QUALIFICATION AND CONSENT

The following is the qualification of the expert who has given an opinion or advice contained in this circular:

Name

Qualification

Pelican Financial Limited

a corporation licensed under the SFO to carry out type 6 (advising on corporate finance) regulated activity

As at the Latest Practicable Date, the expert had no shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for shares in any member of the Group.

The expert has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter or statements and references to its name in the form and context in which they appear.

As at the Latest Practicable Date, the expert had no interest, direct or indirect, in any assets which have since 30 June 2020, being the date to which the latest published audited financial statements of the Group were made up, been acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

7. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

As at the Latest Practicable Date, so far as the Directors were aware, the following Directors were considered to have interests in the businesses listed below which compete or are likely to compete with the businesses of the Group pursuant to the Listing Rules as set out below:

(i) Mr. Arthur George Dew is a director of AGL. Mr. Wong Tai Chun, Mark, alternate director to Mr. Arthur George Dew, is a director of certain subsidiaries of AGL. AGL, through its subsidiaries, is partly engaged in the businesses of (a) money lending; (b) investment and trading in securities in the resources and related industries and financial instruments; and (c) trading in listed securities and investment in bonds;

– I-5 –

APPENDIX I

GENERAL INFORMATION

(ii) Mr. Lee Seng Hui is a director of each of AGL, the Guarantor and a non wholly-owned subsidiary of SHK, and also one of the trustees of Lee and Lee Trust which is a deemed substantial shareholder of each of AGL, SHK, the Guarantor, Asiasec Properties Limited (“ Asiasec ”), Dragon Mining and Tanami Gold NL (“ Tanami Gold ”) which, through their subsidiaries, are partly engaged in the businesses as follows:
AGL, through its subsidiaries, is partly engaged in the businesses of (a) money lending; (b) investment and trading in securities in the resources and related industries and financial instruments; and (c) trading in listed securities and investment in bonds;
SHK, through certain of its subsidiaries, is partly engaged in the business of money lending;
the Guarantor and Asiasec, through certain of their subsidiaries, are partly engaged in the business of money lending; and
Dragon Mining and Tanami Gold, through certain of their subsidiaries, are involved in the exploration for, and mining and processing gold ores and are partly involved in the investment and trading in listed securities in the resources and related industries;
(iii) Mr. Lee Seng Hui is a director of Mount Gibson Iron Limited (“ Mount Gibson ”) and Mr. Andrew Ferguson is an alternate director to Mr. Lee Seng Hui in Mount Gibson which, through certain of its subsidiaries, is partly involved in the investment and trading in listed securities in the resources and related industries; and
(iv) Mr. Arthur George Dew and Mr. Brett Robert Smith are both directors of each of Dragon Mining and Tanami Gold. Mr. Wong Tai Chun, Mark is an alternate director to Mr. Arthur George Dew in each of Dragon Mining and Tanami Gold. Dragon Mining and Tanami Gold, through certain of their subsidiaries, are involved in the exploration for, and mining and processing gold ores and are partly involved in the investment and trading in listed securities in the resources and related industries.

Although the above-mentioned Directors have competing interests in other companies by virtue of their respective common directorship (other than an independent non-executive director) or shareholding, they will fulfil their fiduciary duties in order to ensure that they will act in the best interests of the Shareholders and the Company as a whole at all times. Hence, the Group is capable of carrying on its businesses independently of, and at arm’s length from, the businesses of such companies.

Save as disclosed above, none of the Directors or their respective close associates were interested in any business apart from the Group’s businesses, which competes or was likely to compete, whether directly or indirectly, with the businesses of the Group as at the Latest Practicable Date.

– I-6 –

APPENDIX I

GENERAL INFORMATION

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours on any weekday (except public holidays) at the Company’s principal place of business in Hong Kong from the date of this circular up to and including the date of the SGM (which will be not less than 14 days):

(i) this circular;
(ii) the Supplemental Loan Agreement;
(iii) the Loan Agreement;
(iv) the SHK Loan Note;
(v) the sub-tenancy agreement dated 31 March 2021 (which includes the head tenancy agreement dated 24 March 2021 as annexure);
(vi) the Sale and Purchase Agreement;
(vii) the letter from the Independent Board Committee as set out in this circular;
(viii) the letter from the Independent Financial Adviser as set out in this circular; and
(ix) the written consent of the Independent Financial Adviser referred to under “Expert’s Qualification and Consent” in this appendix.

9. MISCELLANEOUS

The English text of this circular and the accompanying form of proxy shall prevail over their respective Chinese texts in case of inconsistency.

– I-7 –

APPENDIX II

NOTICE OF SPECIAL GENERAL MEETING

**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 special general meeting (the “ SGM ”) of APAC Resources Limited (the “ Company ”) will be held at Lower Lobby, Novotel Century Hong Kong, 238 Jaffe Road, Wanchai, Hong Kong on Friday, 9 July 2021 at 10:00 a.m. for the purpose of considering and, if thought fit, passing with or without modifications, the following resolution as the ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT:

(a) the supplemental loan agreement dated 10 May 2021 (the “ Supplemental Loan Agreement ”) entered into among Ultra Effort Limited (the “ Lender ”), a wholly-owned subsidiary of the Company, as lender, Best Advantage Limited (the “ Borrower ”) as borrower, and Tian An China Investments Company Limited as guarantor, pursuant to which, the Lender agreed to, among other things, increase the limit of the loan facility from HK$235,000,000 (or an amount equivalent to HK$235,000,000 in such alternative currency as acceptable to and agreed by the Lender) to HK$260,000,000 (or an amount equivalent to HK$260,000,000 in such alternative currency as acceptable to and agreed by the Lender) and extend the repayment date of the loan facility from 12 July 2021 to 12 July 2024 on the terms and subject to the conditions therein constituting a continuing connected transaction (the “ Continuing Connected Transaction ”) for the Company under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (details of the Supplemental Loan Agreement are set out in the Company’s circular dated 9 June 2021 (the “ Circular ”) and a copy of the Supplemental Loan Agreement marked “A” has been produced to the SGM and initialled by the chairman of the SGM for the purpose of identification) and the Continuing Connected Transaction be and are hereby approved, confirmed and ratified;
For identification purpose only

– II-1 –

APPENDIX II

NOTICE OF SPECIAL GENERAL MEETING

(b) the proposed Annual Caps (as defined and more particularly described in the Circular) in respect of the Continuing Connected Transaction be and are hereby approved and confirmed; and
(c) any one of the directors of the Company be and is hereby authorised to do such acts and execute such other documents as they may consider necessary, desirable or expedient to carry out or give effect to or otherwise in connection with or in relation to the Supplemental Loan Agreement, the proposed Annual Caps and the Continuing Connected Transaction.”

By Order of the Board APAC Resources Limited Andrew Ferguson Executive Director

Hong Kong, 9 June 2021

Notes:

Any member entitled to attend and vote at the meeting will be entitled to appoint a proxy or, if such member is a holder of two or more shares, proxies to attend and vote in such member’s stead. A proxy need not be a member of the Company but must attend the meeting in person to represent the appointing member.
To be valid, the form of proxy, together with any power of attorney or other authority (if any) under which it is signed or a certified copy of such power or authority, must be deposited at the branch share registrar of the Company in Hong Kong, Tricor Secretaries Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.
Completion and return of the form of proxy will not preclude a shareholder of the Company from attending and voting in person at the meeting convened or any adjournment thereof (as the case may be) and in such event the instrument appointing the proxy shall be deemed to be revoked.
Where there are joint holders of any share, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he/she/it 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 of members of the Company in respect of the joint holding.
To ascertain shareholders’ eligibility to attend and vote at the meeting, the register of members of the Company will be closed from Tuesday, 6 July 2021 to Friday, 9 July 2021, both days inclusive, during which period no transfer of shares of the Company will be effected. In order to qualify to attend and vote at the meeting, all transfers of share ownership, accompanied by the relevant share certificates, must be lodged with the branch share registrar of the Company in Hong Kong, Tricor Secretaries Limited, at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong not later than 4:30 p.m. on Monday, 5 July 2021.
In order to facilitate the prevention and control of the spread of the Novel Coronavirus epidemic and to safeguard the health and safety of the shareholders of the Company, the Company encourages its shareholders to consider appointing the chairman of the SGM as his/her proxy to vote on the relevant resolution at the SGM as an alternative to attending the SGM in person.

– II-2 –

APPENDIX II

NOTICE OF SPECIAL GENERAL MEETING

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

Executive Directors:

Mr. Brett Robert Smith (Deputy Chairman)

Mr. Andrew Ferguson (Chief Executive Officer)

Non-Executive Directors:

Mr. Arthur George Dew (Chairman)

(Mr. Wong Tai Chun, Mark as his alternate)

Mr. Lee Seng Hui

Ms. Lam Lin Chu

Independent Non-Executive Directors:

Dr. Wong Wing Kuen, Albert

Mr. Chang Chu Fai, Johnson Francis

Mr. Wang Hongqian

– II-3 –

AI assistant

Persistence Gold Group Ltd — Proxy Solicitation & Information Statement 2021

50623_rns_2021-06-08_562139c7-97a5-4bc3-a39a-725f60b5cde0.pdf

APAC RESOURCES LIMITED 亞太資源有限公司[*]

RENEWAL OF DISCLOSEABLE TRANSACTION AND CONTINUING CONNECTED TRANSACTION AND NOTICE OF SPECIAL GENERAL MEETING

PRECAUTIONARY MEASURES FOR THE SGM

DEFINITIONS

DEFINITIONS

APAC RESOURCES LIMITED 亞太資源有限公司[*]

RENEWAL OF DISCLOSEABLE TRANSACTION AND CONTINUING CONNECTED TRANSACTION AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

THE SUPPLEMENTAL LOAN AGREEMENT

PRINCIPAL TERMS OF THE SUPPLEMENTAL LOAN AGREEMENT

HISTORICAL AND THE PROPOSED ANNUAL CAPS

Historical Annual Cap Amounts under the Loan Agreement

The proposed Annual Caps and basis for determination of the proposed Annual Caps

INTERNAL CONTROL MEASURES GOVERNING THE SUPPLEMENTAL LOAN AGREEMENT

ASSESSMENT OF CREDIT RISKS IN ASSOCIATION WITH THE SUPPLEMENTAL LOAN AGREEMENT

REASONS FOR AND BENEFITS OF THE TRANSACTION

INFORMATION OF THE COMPANY, THE GROUP, THE LENDER, THE BORROWER AND THE GUARANTOR

The Company and the Group

The Lender

The Borrower

The Guarantor

LISTING RULES IMPLICATIONS

DIRECTORS’ INTERESTS IN THE TRANSACTION

SGM

RECOMMENDATIONS

FURTHER INFORMATION

APAC RESOURCES LIMITED 亞太資源有限公司[*]

RENEWAL OF DISCLOSEABLE TRANSACTION AND CONTINUING CONNECTED TRANSACTION

Yours faithfully, For and on behalf of Independent Board Committee of APAC Resources Limited

PELICAN FINANCIAL LIMITED

DISCLOSEABLE TRANSACTION AND CONTINUING CONNECTED TRANSACTION LOAN TRANSACTION

INTRODUCTION

BASIS OF OUR OPINION

PRINCIPAL FACTORS TAKEN INTO CONSIDERATION

(b) Background Information of the Lender, the Borrower and the Guarantor

The Lender

The Borrower

The Guarantor

(c) Assessment of credit risks in association with the Supplemental Loan Agreement

(d) Reasons for and benefits of entering into the Transaction

2. Principal terms of the Supplemental Loan Agreement

3. Assessment of the terms of the Supplemental Loan Agreement

Market Comparables

Interest Rate

Term to maturity

Collateral/guarantee

4. Assessment of the terms of the Proposed Annual Caps

5. Internal Control Measure

RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

Long positions in the Shares and underlying Shares

3. SERVICE CONTRACTS

4. DIRECTOR’S INTERESTS IN ASSETS AND CONTRACTS

(ii) Director’s interests in contracts

5. MATERIAL ADVERSE CHANGE

6. EXPERT’S QUALIFICATION AND CONSENT

Qualification

7. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

8. DOCUMENTS AVAILABLE FOR INSPECTION

9. MISCELLANEOUS

APAC RESOURCES LIMITED 亞太資源有限公司[*]

ORDINARY RESOLUTION

“ THAT:

By Order of the Board APAC Resources Limited Andrew Ferguson Executive Director

Hong Kong, 9 June 2021

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