Qiniu Limited — Proxy Solicitation & Information Statement 2010

Jan 18, 2010

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Siberian Mining Group Company Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee, or to the bank manager, stockbroker or other agent through whom the sale or 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 content of this circular.

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SIBERIAN MINING GROUP COMPANY LIMITED 西伯利亞礦業集團有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1142)

DISCLOSEABLE AND CONNECTED TRANSACTION – ACQUISITION OF 30% INTEREST IN THE RUSSIAN SUBSIDIARY AND CONNECTED TRANSACTION – ENTERING INTO THE DEED OF SETTLEMENT

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

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A letter from the independent board committee of the Company containing its recommendation to the independent shareholders of the Company is set out on page 22 of this circular. A letter from Wallbanck Brothers Securities (Hong Kong) Limited, the independent financial adviser, containing its advice to the independent board committee and the independent shareholders of the Company is set out on pages 23 to 44 of this circular.

A notice convening the extraordinary general meeting of Siberian Mining Group Company Limited to be held at Meeting Room 4, 7/F, Hongkong International Trade & Exhibition Centre, 1 Trademart Drive, Kowloon Bay, Kowloon, HK at 3:30 p.m. on 8 February 2010 is set out on pages 59 to 61 of this circular. Whether or not you are able to attend the extraordinary general meeting, you are advised to read the notice and to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrars in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the extraordinary general meeting. Completion and return of the form of proxy will not preclude you from attending and voting at the extraordinary general meeting or any adjourned meeting should you so wish.

19 January 2010

• For identification purpose only

CONTENTS

	Page
DEFINITIONS 1
LETTER FROM THE BOARD	7
LETTER FROM THE INDEPENDENT BOARD COMMITTEE	22
LETTER FROM WALLBANCK BROTHERS 23
APPENDIX I – VALUATION REPORT ON THE 30%
EQUITY INTEREST IN THE TARGET COMPANY 45
APPENDIX II – GENERAL INFORMATION	53
NOTICE OF EGM	59

• i -

Definitions

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

• “2008 Circular”

• the circular dated 31 December 2008 issued by the Company in relation to the Previous Acquisition

• “Acquisition” the proposed acquisition of the Sale Shares by the Purchaser from the Vendors pursuant to the Sale and Purchase Agreement

• “associate(s)” has the meaning ascribed thereto under the Listing Rules

• “Board” the board of Directors

• “Business Day(s)” a day that is not a Saturday, Sunday or any other day which is a public holiday or a bank holiday in the place where an act is to be performed or a payment is to be made

• “Call Option” an option held by the Purchaser, granting it the right to demand the Vendors to sell, in proportion to their shareholdings, to the Purchaser 10% equity interest in the issued share capital of the Target Company at an aggregate price of US$4 million (or equivalent to approximately HK$31.2 million) after the Target Company having obtained the New Lapichevskaya Licence

• “Coal Mine” the mine areas containing coal reserves and coal resources located in Petrov region in the state of Kemerovo, Russia, which comprises Lot 1, Lot 1 Extension and Lot 2 that are adjacent to each other

• “Company” Siberian Mining Group Company Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the main board of the Stock Exchange

• “Completion” fulfillment of all the actions set out in the section “Completion” in the Sale and Purchase Agreement

• “Completion Date” the date on which Completion occurs

• “connected person(s)” has the meaning ascribed thereto under the Listing Rules and the word “connected” shall be construed accordingly

• “Consideration” the consideration payable by the Purchaser in respect of the Acquisition pursuant to the Sale and Purchase Agreement, subject to adjustment

• 1 -

Definitions

• “Conversion Price” the conversion price of the Restated First Convertible Note and the Second Convertible Note (as the case may be), being HK$0.04 per Conversion Share

• “Conversion Share(s)” new Share(s) falling to be allotted and issued by the Company, credited as fully paid, upon exercise of the conversion rights attaching to the First Convertible Note, the Restated First Convertible Note and/or the Second Convertible Note (as the case may be)

• “Cordia” Cordia Global Limited, an investment holding company incorporated in the British Virgin Islands with limited liability, the entire issued share capital of which is wholly-owned by Mr. Choi as at the Latest Practicable Date

• “Deed of Settlement” a deed of settlement dated 25 November 2009 (as amended by the Supplemental Deed on 6 January 2010) entered into between Cordia, Mr. Choi, Grandvest and the Company pursuant to which, among other matters, the Company has agreed to issue to Cordia convertible bonds in the aggregate principal amount of US$32,000,000 subject to and upon the terms and conditions contained therein

• “Director(s)” the director(s) of the Company

• “EGM” the extraordinary general meeting of the Company to be convened and held for the Independent Shareholders to consider and, if thought fit, approve, among other things, the Acquisition and the transactions contemplated under the Sale and Purchase Agreement and the Deed of Settlement

• “Encumbrance” a mortgage, charge, pledge, lien, option, restriction, equity, right to acquire, right of pre-emption, third party right or interest, other encumbrance or security interest of any kind or any other type of preferential arrangement (including, without limitation, a title transfer and retention arrangement) having similar effect

• “Existing Mining Licence” the mining licence held by the Target Company, granting the right to mine at Lot 1 of the Coal Mine

• “First Contingent Consideration”

• US$32 million (or equivalent to approximately HK$249.6 million), being the first contingent consideration payable by Grandvest to Cordia for the Previous Acquisition

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Definitions

• “First Convertible Note”

the convertible note issued by the Company to Cordia to satisfy the consideration pursuant to the terms of the Previous Acquisition Agreement and the outstanding amount is US$142 million as at the Latest Practicable Date

• “Grandvest” Grandvest International Limited, a wholly-owned subsidiary of the Company

• “Group” the Company and its subsidiaries

• “Hong Kong”

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

• “Independent Board Committee”

• the independent board committee comprising all independent non-executive Directors to advise the Independent Shareholders on the Acquisition and the entering into the Deed of Settlement by the Company

• “Independent Financial Adviser” and “Wallbanck Brothers”

• Wallbanck Brothers Securities (Hong Kong) Limited, a licensed corporation to carry out type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO, the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Acquisition and the entering into the Deed of Settlement by the Company

• “Independent Shareholders”

• (i) in respect of the Acquisition, Shareholders other than the Vendors and their associates; and (ii) in respect of the Deed of Settlement, Shareholders other than Cordia, Mr. Choi and their associates

• “Latest Practicable Date”

• 15 January 2010, being the latest practicable date prior to the printing of this circular for ascertaining certain information for inclusion in this circular

• “Liability for Taxation”

• any liability of a person to make a payment of or in respect of taxation charged by the relevant government authority

• “Listing Rules”

• the Rules Governing the Listing of Securities on the Stock Exchange

• “Longstop Date”

• 5:00 p.m. on 31 December 2010 or such later date as Grandvest and Cordia may agree in writing, being the longstop date of the Deed of Settlement

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Definitions

• “Lot 1” a mining area within the boundary covered by the Existing Mining Licence which includes the Kemerovsky, Volkovsky and Vladimirovsky seams down to the level of 65 metres underground. For the avoidance of doubt, Lot 1 excludes Lot 1 Extension

• “Lot 1 Extension” a mining area within the boundary of Lot 1 and includes the Kemerovsky, Volkovsky and Vladimirovsky seams from the level of 65 metres underground to 400 metres underground

• “Lot 2” a mining area including the Petrosky area to the west and the Kemerovsky area to the south which is outside the boundary covered by the Existing Mining Licence

• “Maturity Date” the date falling six years after the date of the issue of the Second Convertible Note

• “Modification Deed” the conditional modification deed dated 14 December 2009 as modified by the supplemental deed dated 22 December 2009 entered into between the Company and Cordia to amend certain existing terms of the First Convertible Note, detail of which is set out in the circular of the Company dated 4 January 2010

• “Mr. Choi” Mr. Choi Sungmin, the sole beneficial owner of Cordia

• “Mr. Nikolaevich” Tannagashev Ilya Nikolaevich, being one of the Vendors who is interested in approximately 15.54% of the issued share capital of the Target Company

• “New Lapichevskaya Licence” the subsoil licence for exploration and production of coal on Petrovsky and adjoining lot of Kemerovsky coal mine satisfactory to the Purchaser and issued for the period determined by relevant government authority

• “Previous Acquisition” the acquisition of the 90% issued share capital and outstanding shareholder’s loan of the Purchaser from Cordia by Grandvest pursuant to the Previous Acquisition Agreement, details of which is set out in the circular of the Company dated 31 December 2008

• “Previous Acquisition Agreement” the conditional sale and purchase agreement dated 31 October 2008 entered into among Grandvest, Cordia, Mr. Choi and the Company in relation to the Previous Acquisition

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Definitions

• “Purchaser”

• Langfeld Enterprises Limited, a company incorporated in the Republic of Cyprus with limited liability and is owned as to 90% by Grandvest and 10% by Cordia as at the Latest Practicable Date

• “Restated First Convertible Note” the convertible note to be constituted by and issued pursuant to an instrument to be negotiated by the Company and Cordia based on the terms and conditions of the Modification Deed as illustrated in the Company’s circular dated 4 January 2010

• “Russia” the Russian Federation

• “Sale and Purchase Agreement” the sale and purchase agreement dated 23 November 2009 entered into among the Purchaser and the Vendors in relation to the Acquisition

• “Sale Shares” the 3,000 issued shares of RUB1 each in the issued share capital of the Target Company, representing 30% of the issued share capital of the Target Company

• “Second Contingent Consideration” the amount ranging from US$255.15 million (equivalent to approximately HK$1,990.2 million) to US$550.8 million (equivalent to approximately HK$4,296.2 million), being the second contingent consideration payable by Grandvest to Cordia for the Previous Acquisition

• “Second Convertible Note” the convertible note in the principal amount of US$32 million (or equivalent to approximately HK$249.6 million) to be issued by the Company to Cordia

• “SFC” the Securities and Futures Commission of Hong Kong

• “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Share(s)” ordinary share(s) of HK$0.01 each in the issued share capital of the Company

• “Shareholder(s)” holder(s) of the Share(s)

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

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Definitions

“Supplemental Deed”	the supplemental deed of settlement dated 6 January 2010
	entered into by Cordia, Mr. Choi, Grandvest and the Company
	to amend certain terms of the Deed of Settlement and the Second
	Convertible Note
“Takeovers Code”	the Codes on Takeovers and Mergers and Share Repurchases
“Target Company”	LLC “Shakhta Lapichevskaya”, a company incorporated in
	Russia with limited liability which is owned as to 70% by
	the Purchaser and as to 30% by the Vendors as at the Latest
	Practicable Date
“Vendors”	Tannagashev Ilya Nikolaevich, Kochkina Ludmila Dmitrievna
	and Demeshonok Konstantin Yur’evich, who are Russia citizens
	holding approximately 15.54%, 7.80% and 6.66% of the equity
	interests in the Target Company respectively as at the Latest
	Practicable Date
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RUB”	Russia ruble, the lawful currency of Russia
“US$”	US dollars, the lawful currency of the United States of
	America
“%”	per cent

For the purpose of this circular, unless otherwise indicated, exchange rates of US$1 = HK$7.8 and RUB1 = HK$0.2703 have been used. The usage of these exchange rates are for illustration only and do not constitute a representation that any amount has been, could have been or may be exchanged or converted at any of the above rates or at any other rate at all.

• 6 -

LETTER FROM THE BOARD

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SIBERIAN MINING GROUP COMPANY LIMITED 西伯利亞礦業集團有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1142)

Executive Directors: Mr. Chiu Chi Hong Mr. Li Wing Sang Mr. Lim Ho Sok Mr. Shin Min Chul

Registered office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Independent non-executive Directors:

Mr. Liew Swee Yean Mr. Tam Tak Wah Mr. Yoshinori Suzuki

Head office and principal place of business in Hong Kong: 16/F No 8 Queen’s Road Central Central Hong Kong

19 January 2010

• To the Shareholders and, for information only,

• the holders of the convertible notes and share option of the Company,

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION – ACQUISITION OF 30% INTEREST IN THE RUSSIAN SUBSIDIARY

AND

CONNECTED TRANSACTION – ENTERING INTO THE DEED OF SETTLEMENT

INTRODUCTION

On 23 November 2009 (after trading hours), the Purchaser entered into the Sale and Purchase Agreement with the Vendors in relation to the Acquisition. On 25 November 2009, the Deed of Settlement (as amended by the Supplemental Deed on 6 January 2010) was entered into between Cordia, Mr. Choi, Grandvest and the Company to acknowledge and confirm their agreement for the Company to allot and issue to Cordia the Second Convertible Note subject to and upon the terms and conditions thereof.

• For identification purpose only

• 7 -

LETTER FROM THE BOARD

The purpose of this circular is to provide you with information regarding (i) the Acquisition, (ii) the entering into the Deed of Settlement; (iii) the recommendation from the Independent Board Committee on the Acquisition and the entering into of the Deed of Settlement; (iv) the recommendation from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders on the Acquisition and the entering into the Deed of Settlement; (v) the notice of the EGM; and (vi) other information as required under the Listing Rules.

THE SALE AND PURCHASE AGREEMENT

Date

23 November 2009 (after trading hours)

Parties

• Purchaser: Langfeld Enterprises Limited, which is owned as to 90% by Grandvest and 10% by Cordia

Vendors: Tannagashev Ilya Nikolaevich, Kochkina Ludmila Dmitrievna and Demeshonok Konstantin Yur’evich, who are Russian citizens holding approximately 15.54%, 7.80% and 6.66% of the equity interests in the Target Company respectively as at the Latest Practicable Date

The Target Company is owned as to 70% by the Purchaser and the Purchaser is indirectly owned as to 90% by the Company and 10% by Cordia. Accordingly, the Target Company is an indirect nonwholly owned subsidiary of the Company. As one of the Vendors, namely Mr. Nikolaevich, who is interested in approximately 15.54% of the issued share capital of the Target Company, is a substantial shareholder of the Target Company, Mr. Nikolaevich is a connected person of the Company under the Listing Rules.

Assets to be acquired

Pursuant to the Sale and Purchase Agreement, the Vendors have agreed to sell to the Company the Sale Shares, representing 30% of the issued share capital of the Target Company. The original acquisition cost of the Sale Shares by the Vendors was RUB 3,000 (equivalent to approximately HK$811) which represents the initial paid up capital of the Target Company contributed by the Vendors in 2 November 2004 when the Target Company was incorporated.

The Purchaser shall not be obliged to complete the purchase of any of the Sale Shares unless each Vendor completes the sale of all of the Sale Shares simultaneously.

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LETTER FROM THE BOARD

Consideration

The Consideration is US$9,490,606 (equivalent to approximately HK$74,026,727) (subject to the adjustment of Liability for Taxation) and shall be satisfied in cash as follows:

• (i) within five Business Days following the date of the Sale and Purchase Agreement, the Purchaser shall pay to Vendors an amount equal to US$1,200,000 (equivalent to approximately HK$9,360,000) (the “ First Payment ”);

• (ii) upon Completion, the Purchaser shall pay to the Vendors an amount equal to US$2,895,303 (equivalent to approximately HK$22,583,363) (the “ Second Payment ”);

• (iii) within five Business Days after the Company has obtained the New Lapichevskaya Licence, the Purchaser shall pay to the Vendors an amount equal to US$4,095,303 (equivalent to approximately HK$31,943,363); and

• (iv) within five Business Days after the Target Company has confirmed with the relevant taxation authority of its Liability for Taxation up to date the Target Company has obtained the New Lapichevskaya Licence, the Purchaser shall pay to the Vendors an amount equal to US$1,300,000 (equivalent to approximately HK$10,140,000) minus the Liability for Taxation of the Target Company (if any) (the “ Final Payment ”).

The Consideration will be borne by Grandvest and Cordia in proportion to their respective shareholding in the Purchaser. The Group will finance the Purchaser by its internal resources and/or the loan facilities provided by Cordia as disclosed in the announcement of the Company dated 21 October 2009. If Completion does not occur as a result of the conditions precedent (as set out below) not having been fulfilled or waived on or before the date falling 90 days from the date of the Sale and Purchase Agreement, the First Payment together with all Purchaser’s costs incurred in the course of the due diligence and negotiating the Sale and Purchase Agreement shall be reimbursed to the Purchaser by the Vendors within three Business Days upon relevant demand from the Purchaser.

The Consideration was determined after arm’s length negotiations between the Purchaser and the Vendors. In determining the Consideration, the Board has made reference to (i) the consideration payable by Grandvest under the Previous Acquisition; (ii) the Call Option granting the Purchaser the right to demand the Vendors to sell, in proportion to their shareholdings, to the Purchaser 10% equity interest in the issued share capital of the Target Company at an aggregate price of US$4 million and (iii) the future prospects of the Target Company. Accordingly, the Directors (excluding the independent non-executive Directors) consider that the Consideration is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

Conditions

Completion of the Sale and Purchase Agreement is conditional on the following conditions being satisfied:

• (i) compliance by the Purchaser of its obligations of waiving in favor of the Vendors all its rights, title, benefits and interests in, to or under the Call Option;

• (ii) the Purchaser having made the First Payment;

• (iii) the Independent Shareholders passing at the EGM the necessary ordinary resolution to approve the Sale and Purchase Agreement and the transactions contemplated hereunder;

• (iv) the obtaining of a legal opinion from a firm of Russian legal advisers appointed by the Purchaser covering the Sale and Purchase Agreement and the transactions contemplated thereunder and such other matters as may be reasonably requested by the Purchaser;

• (v) all of the Vendors’ warranties contained in the Sale and Purchase Agreement having been true and correct in all material respects at the date of the Sale and Purchase Agreement and being true and correct when deemed repeated at Completion; and

• (vi) each Vendor having obtained the consent from his spouse (such consent to be in the form and substance reasonably satisfactory to the Purchaser).

The Vendors agree that the conditions precedent set out in (v) to (vi) are for the sole benefit of the Purchaser and that the Purchaser may at any time unilaterally waive, in whole or in part and conditionally or unconditionally, any of such conditions precedent by sending a notice in writing to the Vendors containing a written waiver by the Purchaser in respect of satisfaction of such conditions precedent indicating to what extent such conditions precedent are waived. Any waiver made by any party becomes effective on the date when such waiver is received by the respective receiving party.

If the conditions precedent are not fulfilled (or waived) on or before the date falling 90 days from the date of the Sale and Purchase Agreement, the Sale and Purchase Agreement shall cease and determine and the Vendors shall forthwith refund the First Payment and the Second Payment to the Purchaser and thereafter, neither party shall have any rights or obligations under the Sale and Purchase Agreement.

Completion

Completion of the Acquisition shall occur on the date falling five Business Days after satisfaction or waiver (as the case may be) of all of the conditions precedent to the Sale and Purchase Agreement; or such other date as the parties to the Sale and Purchase Agreement may agree in writing.

• 10 -

LETTER FROM THE BOARD

Upon Completion, the Purchaser will own the entire equity interest of the Target Company. The accounts of the Target Company have been consolidated into the accounts of the Company and will remain consolidated upon Completion.

INFORMATION ON THE TARGET COMPANY

The Target Company

The Target Company, a company incorporated in Russia with limited liability in November 2004, is owned as to 70% by the Purchaser and as to 30% by the Vendors. The Target Company is the registered holder of the Existing Mining Licence, granting it the right to mine at Lot 1 of the Coal Mine, and is principally engaged in the mining of the Coal Mine.

Set out below is the financial information of the Target Company:

	For the year ended	For the year ended
	31 December 2007	31 December 2008
	(audited)	(unaudited)
	(RUB)	(RUB)
Net profit/(loss) before taxation	(18,394,457 )	(1,879,000 )
Net profit/(loss) after taxation	(14,618,692 )	(1,879,000 )

The unaudited net liabilities of the Target Company as at 30 September 2009 was approximately RUB92,152,000. The audited financial information for the year ended 31 December 2007 is extracted from an accountant’s report of the Target Company as contained in the 2008 Circular. The unaudited financial information for the year ended 31 December 2008 and as at 30 September 2009 is extracted from the management account of the Target Company. A valuation report on the 30% equity interest in the Target Company is set out in Appendix I to this circular.

The Coal Mine

The Coal Mine are mine areas containing coal reserves and coal resources located in Petrov region in the state of Kemerovo, Russia, which comprises Lot 1, Lot 1 Extension and Lot 2 that are adjacent to each other. Details of the Coal Mine are contained in the 2008 Circular.

REASONS FOR THE ACQUISITION

The Group is principally engaged in (i) coal mining in Russia; and (ii) digital television broadcasting industry including provision of equipments and software of cable video-on-demand system, information broadcasting system, embedded television systems and value added services.

• 11 -

LETTER FROM THE BOARD

The Acquisition aligns with the Group’s business strategy in entering the coal mining industry and will further strengthen the Group’s control over its coal resources in Russia which in turn will improve the overall operation efficiency of the Group.

After taking into account, among others, the future prospects and growth potential for the coal mining industry and the bases of the Consideration, the Directors (excluding the independent non-executive Directors) consider that the terms of the Sale and Purchase Agreement were arrived at after arm’s length negotiations and are on normal commercial terms and are fair and reasonable and the entering into of the Sale and Purchase Agreement is in the interests of the Company and the Shareholders as a whole. The view of the independent non-executive Directors is set out in the letter from the Independent Board Committee in this circular.

FINANCIAL EFFECTS OF THE ACQUISITION

Upon Completion, the Purchaser will own the entire equity interest of the Target Company. The Target Company will continue to be a subsidiary of the Company, and its financial results will continue to be consolidated into the consolidated accounts of the Group. Set out below are the financial effects of the Acquisition:

(a) Effect on net assets value

According to the interim report of the Group for the period ended 30 September 2009, the unaudited consolidated net assets value of the Group (including minority interest) was approximately HK$750.05 million as at 30 September 2009.

Upon the completion of Acquisition, it is expected that the minority interest of the Target Company will be lowered and the net assets value of the Group will also be lowered.

(b) Effect on earnings

The Acquisition would not have any immediate effect on the earnings of the Group.

(c) Effect on gearing

According to the interim report of the Group as at 30 September 2009, the gearing ratio of the Group, being a ratio of total interest-bearing borrowings to total assets, was approximately 11.0%. Since the Consideration will be payable in cash and the total interestbearing borrowings will remain unchanged as a result of the Acquisition, the gearing ratio will increase to approximately 12.2%.

(d) Effect on working capital

The unaudited current assets value of the Group as at 30 September 2009 was approximately HK$170.94 million. Since the Consideration will be payable in cash, the working capital of the Group will be reduced immediately upon Completion.

• 12 -

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS OF THE ACQUISITION

The Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules. In addition, as the Target Company is an indirect non-wholly owned subsidiary of the Company and one of the Vendors, namely Mr. Nikolaevich, who is interested in approximately 15.54% of the issued share capital in the Target Company, is a substantial shareholder of the Target Company. Mr. Nikolaevich is a connected person of the Company under the Listing Rules. As such, the Acquisition also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is therefore subject to the approval by the Independent Shareholders at the EGM. The Vendors and the Shareholders who are the associates of the Vendors are required to abstain from voting on the resolution(s) to be proposed at the EGM regarding the Acquisition. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, the Vendors and their associates do not own any Shares as at the Latest Practicable Date.

THE DEED OF SETTLEMENT

Reference is made to the 2008 Circular. Completion of the Previous Acquisition took place on 25 May 2009.

It is provided in the Previous Acquisition Agreement that at or after completion of the Previous Acquisition, upon the exercise of the Call Option by the Purchaser, Grandvest shall pay to Cordia the First Contingent Consideration. The value of the First Contingent Consideration shall be US$32,000,000 (or equivalent to approximately HK$249,600,000). In the event that the Call Option is not exercised by the Purchaser, the First Contingent Consideration shall not be payable. The First Contingent Consideration shall be satisfied by the issuing and delivering the Second Convertible Note to Cordia on the third Business Day following the day on which the relevant registration procedures for the exercise of Call Option has been duly completed at the relevant authorities of the Russian government (or such other date as Grandvest and Cordia shall agree in writing in any event no later than one calendar year after signing of the Previous Acquisition Agreement).

As a condition precedent to the Sale and Purchase Agreement, the Purchaser shall waive in favour of the Vendors all its rights, titles, benefits and interests in, to or under the Call Option. The purpose of such waiver is to enable the Purchaser to purchase the Sale Shares from the Vendors free from all Encumbrances. Despite the waiver of the Call Option, the Company has agreed to allot and issue the Second Convertible Note to Cordia in consideration of the reasons as set out in the paragraph headed “Reasons for entering into the Deed of Settlement” below.

On 25 November 2009, the Deed of Settlement (as amended by the Supplemental Deed on 6 January 2010) was entered into among Cordia, Mr. Choi, Grandvest and the Company to acknowledge and confirm their agreement for the Company to allot and issue to Cordia the Second Convertible Note subject to and upon the terms and conditions thereof.

The Directors confirm that no amendments will be made on the conditions to the Second Contingent Consideration as a result of the Acquisition and/or the entering into of the Deed of Settlement.

• 13 -

LETTER FROM THE BOARD

Conditions

Completion of the Deed of Settlement shall be conditional upon fulfilment of the following conditions:

1. the passing of the relevant resolutions at the EGM for approving, among others, the Deed of Settlement, the issuance of the Second Convertible Note, the specific mandate under which the Conversion Shares are to be issued, and the transactions contemplated under the Deed of Settlement;

2. the listing of and permission to deal in the Conversion Shares on the main board of the Stock Exchange having been granted by the listing sub-committee of the Stock Exchange;

3. between the date of the Deed of Settlement and the date of fulfilment or waiver of the last in time to be fulfilled of the conditions of the Deed of Settlement (other than this Condition), trading of the Shares on the main board of the Stock Exchange shall not have been suspended and no delisting of the Shares shall be pending or threatened save for (i) temporary suspension for no more than 20 consecutive trading days in relation to the clearance and issue of announcements of the Company pursuant to the Listing Rules or other regulatory requirements in relation to the Deed of Settlement; or (ii) temporary suspension for no more than 20 consecutive trading days for other reasons;

4. all consents and acts required in relation to the transactions contemplated under the Deed of Settlement under the Listing Rules being obtained and completed or, as the case may be, the relevant waiver from compliance with any of such rules and requirements having been obtained by the Company from the Stock Exchange;

5. all other necessary consents, authorisations, licences and approvals in relation to the Deed of Settlement and the transactions contemplated thereunder having been obtained from any relevant governmental or regulatory authorities or other relevant third parties by the relevant parties to the Deed of Settlement;

6. at the date of fulfilment or waiver of the last in time to be fulfilled of the conditions of the Deed of Settlement (other than this condition):

7. (a) all Cordia’s and Mr. Choi’s warranties remain true and accurate in all material respects and not misleading in any material respect and no event or circumstance has occurred that would result in any breach of any of Cordia’s and Mr. Choi’s warranties or other provisions of the Deed of Settlement by Cordia in any material respects;

8. (b) no event or circumstance has arisen or is threatening to arise which would entitle Grandvest to terminate or rescind the Deed of Settlement in accordance with its terms;

9. 14 -

LETTER FROM THE BOARD

• (c) all Grandvest’s and the Company’s warranties remain true and accurate in all material respects and not misleading in any material respect and no event or circumstance has arisen or is threatening to arise that would result in any breach of any of Grandvest’s and the Company’s warranties or other provisions of the Deed of Settlement by Grandvest in any material respects; and

• (d) no event or circumstance has arisen or is threatening to arise which would entitle Cordia to terminate or rescind the Deed of Settlement in accordance with its terms;

• the obtaining of the legal opinion (in form and substance reasonably satisfactory for Grandvest) by a qualified Russian law firm acceptable to Grandvest covering (i) the exploration, mining and/or production licence being duly and validly issued by the relevant Russian authority; and (ii) such other matters as may be reasonably required by Grandvest;

• the obtaining of the New Lapichevskaya Licence by the Target Company from the Russian authorities; and

• the Sale and Purchase Agreement having becoming unconditional (other than the condition for the Deed of Settlement to become unconditional).

Grandvest may at its absolute discretion at any time prior to the Longstop Date waive in writing any of the conditions 6(a) to 6(d) (to the extent it is capable of being waived) and such waiver may be made subject to such terms and conditions as are determined by Grandvest.

Cordia may at its absolute discretion at any time prior to the Longstop Date waive in writing any of the conditions 3 and 6(a) to 6(d) (to the extent they are capable of being waived) and such waiver may be made subject to such terms and conditions as are determined by Cordia.

None of the conditions 1, 2, 4, 5, 7, 8 and 9 may be unilaterally waived by any of the parties to the Deed of Settlement.

If the conditions of the Deed of Settlement have not been wholly fulfilled (save as waived) by the Longstop Date, no party will be obliged to proceed to completion of the Deed of Settlement and none of the parties thereto will have any further rights or obligations under the Deed of Settlement.

Application for listing

Application will be made by the Company to the Stock Exchange for the listing of, and the permission to deal in the Conversion Shares.

• 15 -

LETTER FROM THE BOARD

Completion

Completion will take place on the second Business Day following the day on which the last of the outstanding conditions have been fulfilled or waived or a date being no later than the Longstop Date or such other date as is agreed in writing by the parties.

THE SECOND CONVERTIBLE NOTE

The principal terms of the Second Convertible Note proposed to be issued pursuant to the Deed of Settlement are as follows.

Issuer: The Company

Principal amount: US$32 million (equivalent to approximately HK$249,600,000) Maturity date: The Second Convertible Note will mature on the date falling six years after the date of issue of the convertible note instruments.

Interest: No interest shall accrue on the Second Convertible Note. Redemption: The Company shall be entitled to redeem the Second Convertible Note at a price equal to 100% of the outstanding principal amount of the Second Convertible Note on its Maturity Date.

Transferability: Any assignment or transfer of the Second Convertible Note shall be in respect of the whole or any part (in integral multiples of US$1,000,000) of the outstanding principal amount of the Second Convertible Note and should be made in accordance with any applicable requirements of the Stock Exchange, the Listing Rules, applicable laws and regulations. Save for with the consent of the Stock Exchange, the Second Convertible Note may not be transferred to a connected person. The Company shall give notice to the Stock Exchange for any transfer of the Second Convertible Note to a connected person.

Conversion:

The holder of the Second Convertible Note shall have the right at any time from the date of issue up to and including the date immediately prior to the Maturity Date, to convert in amounts in integral multiple of US$100,000, the whole (but not part) of the outstanding principal amount of the Second Convertible Note into Conversion Shares.

• 16 -

LETTER FROM THE BOARD

The holder of the Second Convertible Note shall be entitled to convert the outstanding principle amount of the Second Convertible Note, provided that: (i) the holder of the Second Convertible Note together with the parties acting in concert with it will not hold or control such level of the voting rights of the Company as may trigger a mandatory general offer under the Takeovers Code regardless of whether a waiver has been granted by the SFC on the obligation of a mandatory general offer under the Takeovers Code; and (ii) the conversion of the outstanding principal amount of the Second Convertible Note will not cause the public float of the Company unable to meet the requirement under Rule 8.08 of the Listing Rules (the “ Conversion Restrictions ”).

Conversion Price:

The Second Convertible Note shall be converted at the Conversion Price of HK$0.04 per Conversion Share (subject to adjustments), which represents:

• (i) a discount of approximately 52.4% to the closing price of HK$0.084 per Share as quoted on the Stock Exchange on 25 September 2008, being the last trading day prior to the entering into of the Previous Acquisition Agreement;

• (ii) a discount of approximately 60.4% to the closing price of HK$0.101 per Share as quoted on the Stock Exchange as at the latest practicable date prior to the printing of the 2008 Circular;

• (iii) a premium of approximately 5.3% over the average of the closing price of HK$0.038 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including 5 January 2010, being the last trading day prior to the entering of the Supplemental Deed (the “ Last Trading Day ”);

• (iv) a premium of approximately 5.3% over the average of the closing price of HK$0.038 per Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day;

• (v) a discount of approximately 7.0% to the unaudited equity attributable to equity holders of the Company per Share as at 30 September 2009 of approximately HK$0.043; and

• 17 -

LETTER FROM THE BOARD

• (vi) a premium of approximately 2.6% over the closing price of HK$0.039 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

The Conversion Price is subject to adjustments upon the occurrence of consolidation, subdivision or reclassification of Shares, capitalisation of profits or reserves, capital distributions, rights issues of Shares, options over Shares, issue of Shares or convertible securities other than Shares issued on the exercise of the conversion right at price less than 80% of the then market price per Share, modification of rights of conversion, offers to Shareholders, or any other events not mentioned above which the Company determines that a downward adjustment should be made to the conversion price and is certified by the calculation agent.

Ranking:

The Second Convertible Note will at all times rank at least pari passu with all other present and future unsecured and unsubordinated obligations of the Company, save for such obligations as may be provided by mandatory provisions of applicable law.

The Conversion Shares to be allotted and issued upon exercise of the conversion rights attaching to the Second Convertible Note shall rank pari passu in all respects with all other Shares in issue as at the date of conversion.

Listing:

The Second Convertible Note will not be listed on the Stock Exchange or any other stock exchange. An application will be made to the Listing Committee for the listing of, and permission to deal in, the Conversion Shares.

For illustration purposes only, upon full conversion of the Second Convertible Note at the Conversion Price, a total of 6,240,000,000 Conversion Shares will be allotted and issued at maximum, representing (i) approximately 60.67% of the issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 37.76% of the issued share capital of the Company as enlarged by the allotment and issue of these 6,240,000,000 Conversion Shares falling to be allotted and issued by the Company, credited as fully paid, upon exercise of the conversion rights attaching to the Second Convertible Note.

• 18 -

LETTER FROM THE BOARD

REASONS FOR ENTERING INTO THE DEED OF SETTLEMENT

As discussed above, as a condition precedent to the Sale and Purchase Agreement, the Purchaser shall waive in favour of the Vendors all its rights, titles, benefits and interests in, to or under the Call Option in order to enable the Purchaser to purchase the Sale Shares from the Vendors free from all Encumbrances. The Company has agreed to enter into the Deed of Settlement and pay the First Contingent Consideration by the issuance of the Second Convertible Note since (i) the Acquisition was procured by Cordia and (ii) the Acquisition was structured as an extension of the exercise of the Call Option (i.e. acquisition of 10% equity interest of the Target Company).

The Directors (excluding the independent non-executive Directors) consider that the terms of the Deed of Settlement were arrived at after arm’s length negotiations and are on normal commercial terms and are fair and reasonable and the entering into of the Deed of Settlement is in the interests of the Company and the Shareholders as a whole. The view of the independent non-executive Directors is set out in the letter from the Independent Board Committee in this circular.

CHANGES IN THE SHAREHOLDING STRUCTURE OF THE COMPANY

For illustrative purpose only, set out below is a summary of the shareholdings in the Company (i) as at the Latest Practicable Date; (ii) immediately after the allotment and issue of the Conversion Shares upon full conversion of the Second Convertible Note at the Conversion Price by Cordia; (iii) immediately after the allotment and issue of the Conversion Shares upon conversion of the Restated First Convertible Note and the Second Convertible Note at the Conversion Price by Cordia to the maximum extent under the Conversion Restrictions and (iv) immediately after the allotment and issue of the Conversion Shares upon full conversion of the Restated First Convertible Note and the Second Convertible Note at the Conversion Price by Cordia:

Cordia_(Note 1) Goldwyn Management Limited(Note 2) DTV China Holdings Limited(Note 3)_ Other Shareholders Total	As at the Latest Practicable Date Approximate % of issued No. of Shares Shares 15,000,000 0.15 560,000,000 5.45 320,000,000 3.11 9,389,501,200 91.29 10,284,501,200 100.00	Immediately after the allotment and issue of the Conversion Shares upon full conversion of the Second Convertible Note at the Conversion Price by Cordia (for illustration purpose only) (Note 5) Approximate % of issued No. of Shares Shares 6,255,000,000 37.85 560,000,000 3.39 320,000,000 1.94 9,389,501,200 56.82 16,524,501,200 100.00	Immediately after the allotment and issue of the Conversion Shares upon conversion of the Restated First Convertible Note and the Second Note and the Second Convertible Note at the Conversion Price by Cordia to the maximum extent under the Conversion Restrictions (Notes 1 & 4) Approximate % of issued No. of Shares Shares 4,399,119,283 29.99 560,000,000 3.82 320,000,000 2.18 9,389,501,200 64.01 14,668,620,483 100.00	Immediately after the allotment and issue of the Conversion Shares upon full conversion of the Restated First Convertible Note and the Second Convertible Note at the Conversion Price by Cordia (for illustration purpose only) (Notes 1 & 5) Approximate % of issued No. of Shares Shares 27,120,000,000 72.53 560,000,000 1.50 320,000,000 0.86 9,389,501,200 25.11 37,389,501,200 100.00	Immediately after the allotment and issue of the Conversion Shares upon full conversion of the Restated First Convertible Note and the Second Convertible Note at the Conversion Price by Cordia (for illustration purpose only) (Notes 1 & 5) Approximate % of issued No. of Shares Shares 27,120,000,000 72.53 560,000,000 1.50 320,000,000 0.86 9,389,501,200 25.11 37,389,501,200 100.00
					100.00

• 19 -

LETTER FROM THE BOARD

Notes:

1. As at the Latest Practicable Date, Cordia holds the First Convertible Note in the principal amount of US$142 million with a conversion price of HK$0.12 per Share. As disclosed in the circular of the Company dated 5 January 2010, Cordia will hold the Restated First Convertible Note in the principal amount of US$107 million which a conversion price of HK$0.04 per Share subject to the conditions as set out in the Modification Deed.

2. The entire issued share capital of Goldwyn Management Limited is legally and beneficially owned by Mr. Lim Ho Sok, the executive Director and the chairman of the Company.

3. DTV China Holdings Limited is wholly and beneficially owned by a director of a non-wholly owned subsidiary of the Company, DTVChina, Inc.

4. Conversion of the Restated First Convertible Note and the Second Convertible Note are subject to the Conversion Restrictions.

5. This scenario is for illustration purpose only and may never happen in light of the Conversion Restrictions.

LISTING RULES IMPLICATIONS OF THE DEED OF SETTLEMENT

As Cordia and Mr. Choi are substantial shareholders of the Purchaser which is a subsidiary of the Company, they are connected persons of the Company under the Listing Rules. The entering into of the Deed of Settlement by the Company constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is therefore subject to approval by the Independent Shareholders at the EGM. Shareholders who are the associates of Cordia and Mr. Choi are required to abstain from voting on the resolution(s) to be proposed at the EGM regarding the Deed of Settlement. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, Cordia and Mr. Choi and their associates own 15,000,000 Shares as at the Latest Practicable Date. Cordia also holds the First Convertible Note in the principal amount of US$142 million with a conversion price of HK$0.12 per Share as at the Latest Practicable Date. As disclosed in the circular of the Company dated 5 January 2010, Cordia will hold the Restated First Convertible Note in the principal amount of US$107 million which a conversion price of HK$0.04 per Share subject to the conditions as set out in the Modification Deed.

EGM

A notice convening the EGM is set out on pages 59 to 61 of this circular. The EGM will be convened and held for the Independent Shareholders to consider and, if thought fit, approve, among other things, the Acquisition and the transactions contemplated under the Sale and Purchase Agreement and the Deed of Settlement.

A form of proxy is enclosed for use at the EGM. Whether or not you intend to attend the EGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited at 26/F., Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the EGM. Completion and return of the form of proxy will not preclude you from attending and voting at the EGM or any adjourned meeting should you so wish.

• 20 -

LETTER FROM THE BOARD

RECOMMENDATION

The Directors (excluding the independent non-executive Directors) are of the opinion that the Acquisition and the entering into the Deed of Settlement are in the interests of the Company and the Shareholders as a whole, and are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly we recommend the Independent Shareholders to vote in favour of the relevant ordinary resolutions to be proposed at the EGM.

The Independent Board Committee comprising the all independent non-executive Directors has been formed to advise the Independent Shareholders on the Acquisition and the entering into the Deed of Settlement by the Company and Wallbanck Brothers Securities (Hong Kong) Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders on the Acquisition and the entering into the Deed of Settlement by the Company.

The Independent Board Committee, having considered the advice given by the Independent Financial Adviser and the principal factors and reasons taken into consideration by them in arriving at its advice, they are of the opinion that the Acquisition and the entering into the Deed of Settlement by the Company are in the interests of the Company and its Shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, they recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM to approve the Acquisition and the entering into the Deed of Settlement.

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

By Order of the Board Siberian Mining Group Company Limited Lim Ho Sok Chairman

• 21 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [105 x 44] intentionally omitted <==

SIBERIAN MINING GROUP COMPANY LIMITED 西伯利亞礦業集團有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1142)

19 January 2010

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION – ACQUISITION OF 30% INTEREST IN THE RUSSIAN SUBSIDIARY AND CONNECTED TRANSACTION – ENTERING INTO THE DEED OF SETTLEMENT

We have been appointed as members of the Independent Board Committee to advise you in connection with the Acquisition and the entering into the Deed of Settlement by the Company, details of which are set out in the letter from the Board in the circular dated 19 January 2010 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. The terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

Your attention is drawn to the letter from the Independent Financial Adviser concerning its advice regarding the Acquisition and the entering into the Deed of Settlement by the Company as set out on pages 23 to 44 of the Circular. Having considered the advice given by the Independent Financial Adviser and the principal factors and reasons taken into consideration by them in arriving at its advice, we are of the opinion that the Acquisition and the entering into the Deed of Settlement by the Company are in the best interests of the Company and its Shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM to approve the Acquisition and the entering into the Deed of Settlement.

Yours faithfully,

For and on behalf of the

Independent Board Committee

Liew Swee Yean Tam Tak Wah Yoshinori Suzuki Independent non-executive Directors

• For identification purpose only

• 22 -

LETTER FROM WALLBANCK BROTHERS

The following is the full text of a letter of advice from Wallbanck Brothers, the independent financial adviser to the Independent Board Committee and the Independent Shareholders regarding the Sale and Purchase Agreement, the Deed of Settlement and the respective transactions contemplated thereunder for the purpose of incorporation into this circular.

==> picture [169 x 79] intentionally omitted <==

2310, Tower 2, Lippo Centre, 89 Queensway, Central, Hong Kong

19 January 2010

• To the independent board committee and

• the independent shareholders of

• Siberian Mining Group Company Limited

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION – ACQUISITION OF 30% INTEREST IN THE RUSSIAN SUBSIDIARY AND CONNECTED TRANSACTION – ENTERING INTO THE DEED OF SETTLEMENT

INTRODUCTION

We refer to our appointment as independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Sale and Purchase Agreement, the Deed of Settlement and the respective transactions contemplated thereunder, details of which are set out in the letter from the Board (the “ Letter from the Board ”) contained in the circular to the Shareholders dated 19 January 2010 (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires the otherwise.

It was announced on 25 November 2009 that on 23 November 2009 (after trading hours), the Purchaser entered into the Sale and Purchaser Agreement with the Vendors pursuant to which the Purchaser has conditionally agreed to acquire the Sale Shares from the Vendors. The Consideration is US$9,490,606 (equivalent to approximately HK$74,026,727) which will be satisfied by the Purchaser in four stages by payment in cash.

• 23 -

LETTER FROM WALLBANCK BROTHERS

The Acquisition constitutes a discloseable transaction for the Company under the Listing Rules. In addition, as the Target Company is an indirect non-wholly owned subsidiary of the Company and one of the Vendors, namely Mr. Nikolaevich, who is interested in approximately 15.54% of the issued share capital in the Target Company, is a substantial shareholder of the Target Company, Mr. Nikolaevich is a connected person of the Company under the Listing Rules. Therefore, the Acquisition also constitutes a connected transaction of the Company under the Listing Rules and is therefore subject to approval by the Independent Shareholders at the EGM.

In addition, as a condition precedent to the Sale and Purchase Agreement, the Purchaser shall waive in favour of the Vendors all its rights, titles, benefits and interests in, to or under the Call Option. The purpose of such waiver is to enable the Purchaser to purchase the Sale Shares from the Vendors free from all Encumbrances. The Company has agreed to allot and issue the Second Convertible Note to Cordia.

On 25 November 2009, the Deed of Settlement (as amended by the Supplemental Deed on 6 January 2010) was entered into between Cordia, Mr. Choi, Grandvest and the Company to acknowledge and confirm their agreement for the Company to allot and issue to Cordia the Second Convertible Note subject to and upon the terms and conditions thereof.

As Cordia and Mr. Choi are substantial shareholders of the Purchaser which is a subsidiary of the Company, both of them are considered to be connected persons of the Company under the Listing Rules. Accordingly, the entering into of the Deed of Settlement by the Company constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is also subject to approval by the Independent Shareholders at the EGM.

The EGM will be convened at which resolution(s) will be proposed to seek the Independent Shareholders’ approval of the Sale and Purchase Agreement, the Deed of Settlement Agreement and the respective transactions contemplated thereunder. The Vendors and their associates are required to abstain from voting on the resolution(s) regarding the Acquisition. Cordia, Mr. Choi and their associates are required to abstain from voting regarding the Deed of Settlement.

An Independent Board Committee comprising Mr. Liew Swee Yean, Mr. Tam Tak Wah and Mr. Yoshinori Suzuki (all being independent non-executive Directors) has been formed to advise the Independent Shareholders on (i) whether the terms of the Sale and Purchase Agreement and the Deed of Settlement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Acquisition and the entering into the Deed of Settlement are in the interests of the Company and the Shareholders as a whole; and (iii) how the Independent Shareholders should vote in respect of the relevant resolution(s) to approve the Sale and Purchase Agreement, the Deed of Settlement and the respective transactions contemplated thereunder. We, Wallbanck Brothers, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

• 24 -

LETTER FROM WALLBANCK BROTHERS

BASIS OF OUR OPINION

In formulating our opinion and recommendations, we have relied on the accuracy of the information, opinions and representations provided to us by the Directors and management of the Company, and have assumed that all information, opinions and representations contained or referred to in the Circular were true and accurate at the time when they were made and will continue to be accurate at the Latest Practicable Date. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due enquiry. We have no reasons to doubt that any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and representations and opinions made to us untrue, inaccurate or misleading. We consider that we have received sufficient information to enable us to reach an informed view and to justify reliance on the accuracy of the information contained in this circular to provide a reasonable basis for our opinions and recommendations. Having made all reasonable enquiries, the Directors have further confirmed that, to the best of their knowledge, they believe there are no other facts or representations the omission of which would make any statement in this circular, including this letter, misleading. We have not, however, carried out any independent verification of the information provided by the Directors and management of the Company, nor have we conducted an independent investigation into the business and affairs of any member of the Group or any of its respective subsidiaries or associates.

In formulating our opinion, we have relied on the financial information provided by the Company, particularly, on the accuracy and reliability of financial statements and other financial data of the Company. We have not audited, compiled nor reviewed the said financial statements and financial data. We shall not express any opinion or any form of assurance on them. We have had no reason to doubt the truth and accuracy of the information provided to us by the Company. The Directors have also advised us that no material facts have been omitted from the information to reach an informed view, and we have no reason to suspect that any material information has been withheld. We have not carried out any feasibility study on any past, and forthcoming investment decision, opportunity or project undertaken or be undertaken by the Company. Our opinion has been formed on the assumption that any analysis, estimation, forecast, anticipation, condition and assumption provided by the Company are valid and sustainable. Our opinions shall not be constructed as to give any indication to the validity, sustainability and feasibility of any past, existing and forthcoming investment decision, opportunity or project undertaken or to be undertaken by the Company.

In formulating our opinion, we have not considered the taxation implications on the Independent Shareholders arising from the Sale and Purchase Agreement, the Deed of Settlement and the respective transactions contemplated thereunder as these are particular to the individual circumstances of each Shareholder. It is emphasized that we will not accept responsibility for any tax effect on or liability of any person resulting from his or her decision to the Sale and Purchase Agreement, the Deed of Settlement and the respective transactions contemplated thereunder. In particular, the Independent Shareholders who are overseas residents or are subject to overseas taxation or Hong Kong taxation on securities dealings should consult their own tax positions, and if in any doubt, should consult their own professional advisers.

• 25 -

LETTER FROM WALLBANCK BROTHERS

We have not performed any site inspection on the Coal Mine. Our opinions are necessarily based upon the financial, economic, market, regulatory and other conditions as they existed on, and the facts, information, representations, and opinions made available to us as of, the Latest Practicable Date. We disclaim any undertaking or obligation to advise any person of any change in any fact or matter affecting the opinion expressed herein which may come or be brought to our attention before and after the EGM.

Our opinions are formulated only and exclusively for the purpose of the Sale and Purchase Agreement, the Deed of Settlement and the respective transactions contemplated thereunder and shall not be used for any other purpose in any circumstance nor for any comparable purpose with any other opinions.

Our opinions and their validity are subject to the risk factors relating to the Acquisition as stated in this letter below.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion to the Independent Board Committee in respect of the terms of the Sale and Purchase Agreement and the Deed of Settlement, we have taken into consideration the following principal factors and reasons:

(I) The Sale and Purchase Agreement

(1) Information on the Group

As stated in the Letter from the Board, the Group is principally engaged in (i) coal mining in Russia; and (ii) digital television broadcasting industry including provision of equipments and software of cable video-on-demand system, information broadcasting system, embedded television systems and value added services.

Table 1 below summarized the financial performance of the Group for the three years ended 31 March 2009 and the six months ended 30 September 2008 and 30 September 2009.

Table 1: Financial performance of the Group

	For the six months	For the six months	For the six months
	ended	30	September	For the year ended 31		March
	2009		2008	2009	2008	2007
	(HK$’000)		(HK$’000)	(HK$’000)	(HK$’000)	(HK$’000)
		(Unaudited and
	(Unaudited)		restated)	(Audited)	(Audited)	(Audited)
Turnover	7,433		62,029	115,531	120,550	166,429
Gross profit	3,459		21,583	31,205	17,803	26,369
Gross profit margin (%)	46.54		34.80	27.01	14.77	15.84
Profit/(Loss) before taxation	(425,046 )		11,259	(523 )	(14,638 )	(31,523 )
Profit/(Loss) after taxation	(424,093 )		9,627	34	(14,498 )	(39,354 )

• 26 -

LETTER FROM WALLBANCK BROTHERS

		As at
	30	September		As at 31 March
		2009	2009	2008	2007
		(HK$’000)	(HK$’000)	(HK$’000)	(HK$’000)
		(Unaudited)	(Audited)	(Audited)	(Audited)
Cash and cash
equivalents		133,422	7,098	19,322	5,426
Net assets		750,045	146,240	48,173	35,591
Gearing ratio
(total interest-bearing
borrowings to
total assets)		11.0%	0%	13.8%	21.5%

Source: the annual reports of the Company for the year ended 31 March 2007, 2008, 2009 and the interim report of the Company for the period ended 30 September 2009.

For the year ended 31 March 2008, the Group recorded an audited consolidated turnover of approximately HK$120,550,000, representing a decrease of approximately 27.57% from HK$166,429,000 for the financial year ended 31 March 2007. Loss after taxation amounted to approximately HK$14,498,000 for the year ended 31 March 2008, as compared to a loss of approximately HK$39,354,000 for the year ended 31 March 2007.

According to the annual report of the Company for the year ended 31 March 2008, the intense competition in the garment industry has made the Group having to face a general trend of fall in the selling prices of garment products which reduced its turnover. The overall gross profit also fell by 32.5%. The operating loss was approximately HK$9.3 million (2007: HK$1.7 million). The loss was mainly attributable to (i) the fall in turnover of garment products for reasons explained below; (ii) the general falling trend in selling prices of garment products under keen competition; (iii) the increase in cost of sales as a result of the appreciation in Renminbi; (iv) the relatively low profit margin of our PRC joint venture as the production plant is facing higher cost of production in terms of raw materials, fuel and labor; and (v) the increase in Hong Kong staff costs and other administrative expenses.

The net assets of the Group as at 31 March 2008 was HK$48,173,000 (31 March 2007: HK$35,591,000), representing an increase of 35.35% as compared with those as at 31 March 2007. As at 31 March 2008, the Group’s cash and cash equivalents totaled approximately HK$19,322,000 (31 March 2007: HK$5,426,000), representing an increase of 256.10% against the balance as at 31 March 2007. The gearing ratio was 13.8% (total interest-bearing borrowings to total assets) as at 31 March 2008 (31 March 2007: 21.5%).

• 27 -

LETTER FROM WALLBANCK BROTHERS

For the year ended 31 March 2009, the Group recorded an audited consolidated turnover of approximately HK$115,531,000, representing a decrease of approximately 4.16% from HK$120,550,000 of the year ended 31 March 2008. Profit after taxation amounted to approximately HK$34,000 for the year ended 31 March 2009, as compared to a loss of approximately HK$14,498,000 for the year ended 31 March 2008.

According to the annual report of the Company for the year ended 31 March 2009, the global financial crisis caused by the sub-prime crisis in the US has made the garment and premium business facing a difficult period, and the turnover reduced approximately 25.55%. The reduction in total turnover has been narrowed by the new source of income of the Group from the digital television technology services business, which was acquired by the Group in April 2008. The new business has a higher profit margin and the overall gross profit has increased by 75.28%.

For the year ended 31 March 2009, the operating profit of the Group was approximately HK$6.7 million (2008: loss HK$9.3 million). The profit was mainly attributable to (i) the higher profit margin of the digital television technology services business (ii) the gain from the disposal of two properties of the Group during the period.

The net assets of the Group as at 31 March 2009 was HK$146,240,000 (31 March 2008: HK$48,173,000), representing an increase of 203.57% as compared with those as at 31 March 2008. As at 31 March 2009, the Group’s cash and cash equivalents totaled approximately HK$7,098,000 (31 March 2008: HK$19,322,000), representing a decrease of 63.26% against the balance as at 31 March 2008. The gearing ratio was 0% (total interestbearing borrowings to total assets) as at 31 March 2009 (31 March 2008: 13.8%).

According to the interim report of the Group for the six months ended 30 September 2009, during the six months ended 30 September 2009, the Group recorded a turnover of approximately HK$7,433,000 (2008: HK$62,029,000), representing a decrease of approximately 88.0% as compared to the corresponding period in prior year. The decrease in turnover was mainly due to the discontinued operations of the garment and premium business in August 2009 and a drop in turnover of the business of digital television technology services. The turnover of the Group for the period under review solely generated from the digital television technology service operations. Due to the global negative financial impact as a consequence of the financial tsunami, digital television services business has faced a challenging time as the growth of the industry was not as rapid as expected.

For the six months ended 30 September 2009, the Group recorded a loss from operations of approximately HK$88,283,000 (2008: profit of HK$13,954,000). The profit of the corresponding period in prior year was partly due to a gain on disposal of a property held for sale and disposal of a property. The loss in the current period was mainly due to the drop of turnover and high administrative and other expenses for the coal mining segment.

• 28 -

LETTER FROM WALLBANCK BROTHERS

The net assets of the Group as at 30 September 2009 was HK$750,045,000 (31 March 2009: HK$146,240,000), representing an increase of approximately 412.9% as compared with those as at 31 March 2009. As at 30 September 2009, the Group’s cash and cash equivalents totaled approximately HK$133,422,000 (31 March 2009: HK$7,098,000), representing an increase of approximately 18 times compared to the balance as at 31 March 2009. The gearing ratio was 11.0% (total interest-bearing borrowings to total assets) as at 30 September 2009 (31 March 2009: nil).

(2) Information on the Target Company

As stated in the Letter from the Board, the Target Company, a company incorporated in Russia with limited liability in November 2004, is owned as to 70% by the Purchaser and as to 30% by the Vendors. The Target Company is the registered holder of the Existing Mining Licence, granting it the right to mine at Lot 1 of the Coal Mine, and is principally engaged in the mining of the Coal Mine.

According to the valuation report on the Target Company as at 30 November 2009, as Appendix I to the Circular, the market value of the 30% equity interest of the Target Company can be reasonably and approximately stated as US$43,000,000, subject to certain factors as stated in the aforesaid report.

Set out below are the financial results of the Target Company for the two years ended 31 December 2008:

	For the	For the
	year ended	year ended
	31 December	31 December
	2007	2008
	(RUB)	(RUB)
	(audited)	(unaudited)
Net profit/(loss) before taxation	(18,394,457 )	(1,879,000 )
Net profit/(loss) after taxation	(14,618,692 )	(1,879,000 )

Source: management account of the Target Company from the Vendors.

The unaudited net liabilities of the Target Company as at 30 September 2009 was approximately RUB92,152,000. The Directors represent that the turnover of the Target Company is nil since the completion of Previous Acquisition due to the fact that the production of coal by the Target Company has not yet commenced.

• 29 -

LETTER FROM WALLBANCK BROTHERS

Despite of the above, the Directors expected that the Target Company is likely to have positive business prospect. The Directors consider that the Acquisition will enable the Group to further participate in the coal mining industry in Russia which has good business potential and therefore, will broaden the Group’s revenue base by diversifying to the coal mining, in particular the production of coking coal business.

(3) Reasons for the Acquisition

As stated in the Letter from the Board, the Directors consider that the Acquisition aligns with the Group’s business strategy in entering the coal mining industry and will further strengthen the Group’s control over its coal resources in Russia which in turn will improve the overall operation efficiency of the Group.

We have enquired into the Directors regarding the aforesaid reasons for the Acquisition. Having taken into account (i) the poor financial performance for the three years ended 31 March 2009; (ii) the Directors’ confidence in enhancing the Group’s business performance in the near future as a result of the Acquisition; and (iii) the expectation of the Company on coal mining business to become the core business of the Group, it is fair and reasonable to infer that the Acquisition is justifiable.

(4) Industry review on the coal mining business in Russia

According to statistics from the World Coal Institute in 2007, Russia is the sixth largest coal production country. In 2005, Russia has 22 coal basins with 114 coal deposits that are unevenly distributed across the country. The country had 241 operating coal mines, which included 104 underground mines and 137 open pits with a total production capacity of 315 Mt per year. Siberia is extraordinarily rich in minerals. It has some of the world’s largest deposits of coal. Most of these are in the cold and remote eastern part of the region.

According to valuation report on the Target Company, as Appendix I to the Circular, Russia is the third largest exporter with the annual total hard coal export volume at 92Mt, which approximate 89% is steam coal and approximate 11% is coking coal. With reference to the Brief on the Competition on the Coking Coal Market in October 2006 by the Federal Antimonopoly Service of the Russian Federation, Russian coal reserves are estimated at 278.4 billion tons. With reference to Platts International Coal Report, premium hard coking coal spot prices is reported at approximate US$350/tonne at September 2008 because of low supplies and continued strong demand. Until September 2008, the coking coal price has more than doubled against the end of 2007. It is observed that there was approximate 41% increase against the coking coal price in 2006 in Russia.

According to the valuation report prepared by BMI Appraisals Limited as Appendix I to the Circular, the U.S. Department of Energy forecasted that the global coal consumption will grow at about 2.5% per year over the next 20 years. The erstwhile Soviet Union which covered one-eighth of the entire world’s land mass had been a storehouse of global energy sources.

• 30 -

LETTER FROM WALLBANCK BROTHERS

According to the Summary of the Energy Strategy for Russia for the Period up to 2020 issued by the Ministry of Energy of the Russian Federation, Russia foresees the need for coal production to increase to between 310 and 330 Mt by 2010 and to between 375 and 430 Mt by 2020 to meet expected domestic demand. As foreseen in the country’s energy strategy program, coal production must increase by 10 to 15 Mt per year between 2005 and 2010 and by a total of 105 Mt by the year 2020.

Having taken into account the expected increase in demand of coal of Russia in the long run, it is fair and reasonable to infer that the Acquisition is not unfair and unreasonable.

• (5) Basis of the Consideration

To assess the fairness and reasonableness of the Consideration, we have compared the Consideration to (i) the consideration of US$253 million for the Previous Acquisition; and (ii) US$4 million to acquire the additional 10% issued share capital of the Target Company from the Vendors by the Purchaser by exercising the Call Option.

• (a) Comparison with the proportionate consideration of US$253 million for Previous Acquisition

As stated in the 2008 Circular, the consideration for the acquisition of 70% issued share capital of the Target Company was US$253 million. The proportionate consideration to acquire 30% of the issued share capital of the Target Company is therefore approximately US$108.429 million. The Consideration of approximately US$9.49 million represents a discount of 91% to the said proportionate consideration.

• (b) Comparison with the consideration of US$4 million to acquire the additional 10% issued share capital of the Target Company from the Vendors by the Purchaser by exercising the Call Option

The Consideration for acquiring 30% issued share capital of the Target Company is approximately US$9.49 million. Therefore, the proportionate consideration for the acquisition of 10% equity interest shall be approximately US$3.16 million, which represents a discount of approximately 21% to US$4 million for the consideration to acquire 10% issued share capital of the Target Company by exercising the Call Option in the Previous Acquisition.

According to the valuation report prepared by BMI Appraisals Limited, as Appendix I to the Circular, the market value of 30% equity interest in the Target Company, adopted by the market approach, was approximately US$43,000,000 as at 30 November 2009. According to the valuation report as stated in Appendix V of the 2008 Circular, the entire equity interest in the Target Company, adopted by the income approach, was approximately US$401,600,000 as at 30 October 2008. Therefore, the proportionate market value of 30% equity interest in the Target

• 31 -

LETTER FROM WALLBANCK BROTHERS

Company was approximately US$120,480,000 as of 30 October 2008. The market value of the 30% equity interest in the Target Company as at 30 November 2009 has fallen by approximately 64.31% as compared to the same valuation as at 30 October 2008. However, having taken into account that (i) the Consideration is at a substantial discount of 91% to the proportionate consideration to acquire 70% issued share capital of Target Company in the Previous Acquisition; and (ii) the Consideration is at a discount of 21% to the proportionate consideration to acquire additional 10% issued share capital of the Target Company when the Call Option is exercised in the Previous Acquisition, it is fair and reasonable the Acquisition is not unfair and unreasonable.

(6) Financial effects of the Acquisition

(a) Effect on net assets value

According to the interim report of the Group for the period ended 30 September 2009, the unaudited consolidated net assets value (“NAV”) of the Group (including minority interest) was approximately HK$750 million as at 30 September 2009.

With reference to the unaudited management account of the Target Company, the unaudited net liabilities value of the Target Company was approximately RUB92.152 million as at 30 September 2009.

Upon the completion of Acquisition, it is expected that the minority interest of the Target Company will be lowered and the NAV of the Group will also be lowered.

(b) Effect on earnings

The Directors expected that the Acquisition would not have any immediate effect on the earning position of the Group. However, given that (i) the Target Company is likely to have positive business prospect; and (ii) the rising coal price and the increase of demand of coal in Russia, the Directors expected that the Acquisition would likely to enhance the future earning position of the Group.

(c) Effect on gearing

According to the interim report of the Group as at 30 September 2009, the gearing ratio of the Group, being a ratio of total interest-bearing borrowings to total assets, was approximately 11.0%. Since the Consideration will be payable in cash and the total interest-bearing borrowings will remain unchanged as a result of the Acquisition, the gearing ratio will be increased.

• 32 -

LETTER FROM WALLBANCK BROTHERS

(d) Effect on working capital

The current assets value of the Group as at 30 September 2009 was approximately HK$170.941 million. Since the Acquisition will be payable in cash, the working capital of the Group may be reduced upon Completion.

As stated in the announcement dated 21 October 2009 of the Company, the fundings for the Acquisition may be financed by the new loan facilities in the maximum amount of US$72 million granted by Cordia to the Company and the new loan facilities will be repaid after 36 months from the date of first notice by the Company under the new facilities letter. The working capital of the Company will increase accordingly. As advised by the Directors, the payment schedule of the Acquisition is approximately in line with the payment schedule of the new loan facilities.

(7) Risk Factors of the Acquisition

The Shareholders shall be fully aware that the Acquisition may face similar risk factors relating to the Previous Acquisition, as stated in the announcement of the Company dated 14 November 2008:

(a) Investments in new business

The Acquisition constitutes an investment in the new business sector of coal mining. The new business, coupled with the regulatory environment, may pose significant challenges to the Group’s administrative, financial and operational resources. Since the Group does not have significant experience in the new business, it is not in a position to assure the timing and amount of any return that may be generated from the new business, nor is it in a position to control the operation risks, including the risk of obtaining and renewing the relevant mining licences, that could lead to a loss. If any exploration and mining projects, in which the Group attempts to develop does not progress as planned, the Group may not recover the funds and resources it has spent, and this may adversely affect the Group.

(b) Country Risk

The Group is entering into a new business in Russia, which the Group does not have any business therein. There is a possibility that changes in the business environment will reduce the profitability of doing business in Russia. The change of political and economic conditions in Russia may adversely affect the Group.

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LETTER FROM WALLBANCK BROTHERS

(c) Significant and continuous capital investment

The coal mining business requires significant and continuous capital investment. The investment may not be completed as planned and may exceed the original budgets, and it is not guaranteed to achieve the intended economic results or commercial viability. Actual capital expenditures for the new business may significantly exceed the Group’s budgets because of various factors beyond the Group’s control, which in turns may affect the Group’s financial condition.

(d) Cyclical nature of coal markets and fluctuations in coal prices

As the revenue of the new business will be derived from coal and coal-related operations, part of the Company’s future business and results of operations may be dependent on the international and Russia’s supply of and demand for coal. The fluctuations in supply and demand are caused by numerous factors beyond the Company’s control, which include, but not limited to:

• (i) global and domestic economic and political conditions and competition from other energy sources; and

• (ii) the rate of growth and expansion in industries with high coal demand, such as steel and power industries.

There is no assurance that the international and Russia’s demand for coal and coal-related products will continue to grow, or that the international and Russia’s demand for coal and coal-related products will not experience excess supply.

(e) Policies and regulations

The new business is subject to extensive governmental regulations, policies and controls. There can be no assurance that the relevant government authorities will not change the existing laws and regulations or impose additional or more stringent laws or regulations. Failure to comply with the relevant laws and regulations in the coal mining industry in Russia may adversely affect the Group.

(f) Environmental protection policies

The coal mining business is subject to the environmental protection law and regulations in Russia. If the Group fails to comply with existing or future environmental laws and regulations, the Group may be required to take remedial measures, which could have a material adverse effect on the business, operations, financial condition and results of operations of the Group.

Our opinions, views and their validity are subject to the above risk factors relating to the Acquisition.

• 34 -

LETTER FROM WALLBANCK BROTHERS

RECOMMENDATION

Having considered the above principal factors and reasons as discussed above and as summarized below:

• (i) the Directors consider that the Acquisition will enable the Group to participate in the coal mining industry in Russia which has good business potential and therefore, will broaden the Group’s revenue base by diversifying to the coal mining, in particular the production of coking coal business;

• (ii) the Directors advised that there is no material change in the aspects of (i) the business plan and operation plan of the Target Company; and (ii) the law and regulation in relation to coal mining in Russia;

• (iii) the rising demand of coal in Russia in the long run; and

• (iv) the Consideration is at a substantial discount of 91% to the proportionate consideration to acquire 70% issued share capital of Target Company and at a discount of 21% to the proportionate consideration to acquire additional 10% issued share capital of the Target Company when the Call Option is exercised in the Previous Acquisition.

Having considered the above principal factors and reasons and Directors’ representations, on balance, we are of the opinion that in such circumstance the terms of the Sale and Purchase Agreement, although are not on normal commercial terms, are fair and reasonable so far as the Independent Shareholders are concerned and the Sale and Purchase Agreement is in the interest of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Shareholders, and also recommend the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the resolution approving the Sale and Purchase Agreement and the transactions contemplated thereunder at the EGM.

(II) The Deed of Settlement

• (1) Background and reasons for entering into the Deed of Settlement

As stated in the Letter from the Board, it is provided in the Previous Acquisition Agreement that at or after completion of the Previous Acquisition, upon the exercise of the Call Option by the Purchaser, Grandvest shall pay to Cordia the First Contingent Consideration. The value of the First Contingent Consideration shall be US$32,000,000. In the event that the Call Option is not exercised by the Purchaser, the First Contingent Consideration shall not be payable. The First Contingent Consideration shall be satisfied by the issuing and delivering the Second Convertible Note to Cordia on the third Business Day following the day on which the relevant registration procedures for the exercise of Call Option has been duly completed at the relevant authorities of the Russian government (or such other date as Grandvest and Cordia shall agree in writing in any event no later than one calendar year after signing of the Previous Acquisition Agreement).

• 35 -

LETTER FROM WALLBANCK BROTHERS

As stated in the Letter from the Board, the reason for entering into the Deed of Settlement is due to the fact that the Purchaser shall waive in favour of the Vendors all its rights, titles, benefits and interests in, to or under the Call Option in order to enable the Purchaser to purchase the Sale Shares from the Vendors free from all Encumbrances, as a condition precedent to the Sale and Purchase Agreement.

As stated in the 2008 Circular, the Purchaser was granted the Call Option to demand the Vendors to sell 10% issued share capital of the Target Company at an aggregate price of US$4 million, subject to the condition that the Target Company having obtained the New Lapichevskaya Licence.

Given that the allotment and issue of the Second Convertible Note to Cordia is still subject to, inter alia, the obtaining of the New Lapichevskaya Licence by the Target Company from the Russian authorities, it is fair and reasonable to infer that the entering into the Deed of Settlement is not unfair and unreasonable. However, it shall be noted that the said allotment and issue of Second Convertible Note shall be subject to other conditions, including the Sale and Purchase Agreement having becoming unconditional, as stated in the section “Conditions” in the Letter from the Board.

(2) The Supplemental Deed

As disclosed in the announcements of the Company dated 14 December 2009 and 22 December 2009 in relation to a modification deed (the “ Modification Announcements ”), certain major terms of the First Convertible Note are proposed to be modified. As the terms of the Second Convertible Note which is to be issued under the Deed of Settlement shall be the same as those of the Restated First Convertible Note (saved for the principal amount), on 6 January 2010 (after trading hours), the Supplemental Deed was entered into by the Company, Cordia, Mr. Choi and Grandvest to modify the terms of the Deed of Settlement, which include the followings:

		Existing terms	Proposed terms
Conversion	price	HK$0.12 per Conversion	HK$0.04 per Conversion
		Share	Share
Maturity		the fifth anniversary from the	the date falling six years after
		issue date of the convertible	the date of the issue of the
		note instruments	convertible note instruments
Redemption		The Company shall be entitled	The Company shall be entitled
		to redeem the outstanding	to redeem the outstanding
		convertible note at a price equal	convertible note at a price equal
		to 115% of its outstanding	to 100% of its outstanding
		principal amount	principal amount

• 36 -

LETTER FROM WALLBANCK BROTHERS

As stated in the announcement dated 6 January 2010 of the Company, set out below are the reasons for entering into the Supplemental Deed with reference to the Modification Announcements:

(a) Conversion price

The Board is of the view that the new conversion price of HK$0.04 per Conversion Share, which was determined after arm’s length negotiations between the Company and Cordia and taken into account of, among others, the net assets value of the Group and the recent market price of the Shares, can increase the incentive of the holder of the Second Convertible Note to convert the Second Convertible Note into Conversion Shares before its maturity date.

Due to the financial tsunami and the relatively weak global financial performance, the trading price of the Shares on the Stock Exchange had been adversely affected over the past year. To illustrate, as disclosed in the 2008 Circular, the initial conversion price of the First Convertible Note and the Second Convertible Note of HK$0.12 per Share represents: (i) a premium of approximately 42.9% over the closing price of HK$0.084 per Share as quoted on the Stock Exchange on 25 September 2008, being the last trading day prior to the entering into of the Previous Acquisition Agreement; and (ii) a premium of approximately 18.8% over the closing price of HK$0.101 per Share as quoted on the Stock Exchange as at the latest practicable date prior to the printing of the 2008 Circular. The trading price of the Shares had slipped during the recent months. Based on the average closing price of approximately HK$0.038 (the “ Five Day Average Price ”) and HK$0.038 (the “ Ten Day Average Price ”) per Share as quoted on the Stock Exchange for the five consecutive trading days and ten consecutive trading days up to and including 5 January 2010, being the last trading day prior to the entering of the Supplemental Deed (the “ Last Trading Day ”), respectively, the initial conversion price of HK$0.12 represents a premium of approximately 215.8% over the Five Day Average Price and the Ten Day Average Price. Should the amendments on the Second Convertible Note be made, the new Conversion Price of HK$0.04 would represent a premium of approximately 5.3% over the Five Day Average Price and the Ten Day Average Price respectively.

The Directors represent that in light of the above trading statistics, and having reviewed the financial position and the performance of the Group and the market conditions, both the Company and Cordia believe that the new conversion price will be more realistic and can make it more appealing for the holder of the Second Convertible Note to convert it into Conversion Shares during the term of the Second Convertible Note.

• 37 -

LETTER FROM WALLBANCK BROTHERS

(b) Redemption price

As stated in the announcement dated 6 January 2010 of the Company, the reduction of the redemption price of the Second Convertible Note can decrease the financial costs of the Company, which is favourable to the financial position of the Group. In addition, like the adjustment of the conversion price, such reduction can also increase the incentive of the holder of the Second Convertible Note to exercise the conversion right attaching to the Second Convertible Note.

(c) Working capital requirement

The Directors consider that the extension of time for the repayment of the outstanding principal amount of the Second Convertible Note will provide further flexibility for the Group to plan its working capital requirements ahead.

(3) The Second Convertible Note

In order to assess the fairness and reasonableness of the terms of the Second Convertible Note, to the best of our knowledge, we have looked into recent issues of convertible notes/bonds by companies listed on the Main Board and GEM of the Stock Exchange which have made announcements for acquisition of assets by issuing convertible notes/bonds (the “ CB Comparables ”) from 1 September 2009 up to and 6 January 2010, being the date of the announcement of the Company in relation to the entering into the Supplemental Deed, for reference. Shareholders should note that the business, operation and prospect of the Company are not the same as the CB Comparables and we have not conducted any in-depth investigation into businesses and operations of the CB Comparables. As the terms of the CB Comparables are determined under similar market conditions and sentiments as the Second Convertible Note, we believe that the CB Comparables may reflect the recent trend of the terms of convertible bonds/notes in the market and consider the CB Comparables are fair and representative samples.

• 38 -

LETTER FROM WALLBANCK BROTHERS

					Premium/	Premium/
					(discount)	(discount)
					over/to the	over/to the
					closing	average
					price of the	closing
					shares as	price of
					at the last	the last 5
					trading day	trading days
					prior to the	prior to the
	Company				date of the	date of the
Date of	name	Principal		Interest	corresponding	corresponding
announcement	(stock code)	amount	Maturity	rate	announcement	announcement
		HK$ million	Years	%	%	%
4-Sep-09	Broad Intelligence	1179.85	5	0	(1.52 )	(7.67 )
	International
	Pharmaceutical
	Holdings Limited
	(1149)
7-Sep-09	Winbox International	984.01	5	0	(26.67 )	(24.4 )
	(Holdings) Limited	(Note 1)
	(474)
16-Sep-09	Buildmore	273	3	0	(22.94 )	(19.62 )
	International
	Limited (108)
22-Sep-09	Shanghai Allied
	Cement Limited (1060)	350	3	0	135.29	144.4
23-Sep-09	Hembly International	676.04	5	0	22.45	53.06
	Holdings Limited (3989)
23-Sep-09	Yun Sky Chemical	1855	5	0	(69.2 )	(64.8 )
	(International) Holdings
	Limited (663)
23-Sep-09	Sino-Tech International	950.4	5	0	(68.4 )	(63.7 )
	Holdings Limited (724)
27-Sep-09	Bright International	6950	3	0	(9.09 )	(3.54 )
	Group Limited (1163)
1-Oct-09	RBI Holdings Limited (566)	3814.95	4	0	1.23	0
13-Oct-09	Berjaya Holdings (HK)	2190	10	3.5	(72.97 )	(72.14 )
	Limited (288)			(Note 2)
15-Oct-09	China Digital Licensing	26.903	5	0	(27.69 )	(27.69 )
	(Group) Limited (8175)
21-Oct-09	Vision Tech International	1190	10	0	29.63	22.81
	Holdings Limited (922)
22-Oct-09	Xian Yuen Titanium	1053.76	5	0	(37 )	(37.5 )
	Resources Holdings
	Limited (353)
12-Nov-09	Honbridge Holdings	400	5	0	17.65	20.19
	Limited (8137)

• 39 -

LETTER FROM WALLBANCK BROTHERS

					Premium/	Premium/
					(discount)	(discount)
					over/to the	over/to the
					closing	average
					price of the	closing
					shares as	price of
					at the last	the last 5
					trading day	trading days
					prior to the	prior to the
	Company				date of the	date of the
Date of	name	Principal		Interest	corresponding	corresponding
announcement	(stock code)	amount	Maturity	rate	announcement	announcement
		HK$ million	Years	%	%	%
13-Nov-09	Grandtop International	909.09	10	0	2.11	2.11
	Holdings Limited (2309)	(Note 1)
18-Nov-09	Loudong General Nice	250	3	0	25	33.93
	Resources (China)
	Holdings Limited (988)
18-Nov-09	Ching Hing (Holdings)	1680	3	2	4.76	(16.03 )
	Limited (692)
20-Nov-09	Hong Kong Energy	83.06	3	0	16.28	22.55
	(Holdings) Limited (987)
23-Nov-09	Xian Yuen Titanium	140.43	10	0	(31.62 )	(31.11 )
	Resources Holdings
	Limited (353)
30-Nov-09	Solartech International	1,432	3	0	(51.43 )	(51.43 )
	Holdings Limited (1166)
30-Nov-09	Continental Holdings	325	3	1.5	(5.0 )	(11.21 )
	Limited (513)
1-Dec-09	Aptus Holdings	1,500	6	0	(36.71 )	(31.13 )
	Limited (8212)
9-Dec-09	Global Green Tech	895.19	3	0	(19.19 )	(12.09 )
	Group Limited (274)
28-Dec-09	China Outdoor Media
	Group Limited (254)	1,228.89	5	0	(38.39 )	(34.34 )
29-Dec-09	Ming Hing Waterworks	3,100	5	0	(69.86 )	(70.90 )
	Holdings Limited (402)
Average			5.08	0.28	(13.33 )	(11.21 )
Maximum			10	3.5	135.29	144.40
Minimum			3	0	(72.97 )	(72.14 )
6-Jan-10	The Company	249.6	6	0	0.00	5.26

• 40 -

LETTER FROM WALLBANCK BROTHERS

Notes:

• (1) The aggregate principal amount was converted into HK$ based on the exchange rates of US$1 = HK$7.78 and RMB1 = HK$1.13 for illustration purposes.

• (2) The convertible loan securities will bear an interest rate of 1% per annum for the first two years and 3.5% for the remaining eight years.

Source: Stock Exchange website

(a) The Conversion Price

The conversion prices of the CB Comparables (i) ranged from a discount of approximately 72.97% to a premium of approximately 135.29% over the respective closing price of their shares as at the last trading days prior to the date of the corresponding announcement; and (ii) ranged from a discount of approximately 72.14% to a premium of approximately 144.40% over the respective average closing price of their shares for the last 5 trading days prior to the date of the corresponding announcement. The Conversion Price, which is the same as the closing price of the Shares as at the Last Trading Day and represents a premium of approximately 5.26% over the average closing price of the Shares for the last 5 trading days (including the Last Trading Day), is within the said market range and at a higher premium than the average of the CB Comparables.

(b) The maturity

The maturities of the CB Comparables range from 3 to 10 years with an average of about 5.08 years. The Second Convertible Note has a maturity of 6 years, which falls within the range of the CB Comparables and is higher than the average maturity of about 5.08 years of the CB Comparables.

(c) The interest rate

As presented by the above table, the CB Comparables carried an annual interest rate of 0% to 3.5%. The Second Convertible Note, which does not bear any interest, hence fall within and are at the minimum of the said market range.

(d) Other terms of the Second Convertible Note

We have also reviewed the other terms of the Second Convertible Note and are not aware of any terms under the Acquisition are of material irregularity.

Having taken into account (a) the Conversion Price is within the market range and at a higher premium than the average of the CB Comparables; (b) the maturity of the Second Convertible Note is within the range of that of the CB Comparables; and (c) the annual interest rate of the Second Convertible Note is at the minimum

• 41 -

LETTER FROM WALLBANCK BROTHERS

of the market range of the CB Comparables, it is fair and reasonable to infer that the terms of the Second Convertible Note are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

(4) The potential dilution effect to the shareholdings of the public shareholders

The table below shows the shareholding structure of the Company (i) as at Latest Practicable Date; (ii) immediately after the allotment and issue of the Conversion Shares upon full conversion of the Second Convertible Note at the conversion price of HK$0.04 per Conversion Share by Cordia; (iii) immediately after the allotment and issue of the Conversion Shares upon full conversion of the First Convertible Note and the Second Convertible Note at the conversion price of HK$0.04 per Conversion Share by Cordia to the maximum extent under the Conversion Restrictions; and (iv) immediately after the allotment and issue of the Conversion Shares upon conversion of the First Convertible Note and the Second Convertible Note at the conversion price of HK$0.04 per Conversion Share by Cordia (for illustration purpose only):

Cordia_(Note 1) Goldwyn Management Limited(Note 2) DTV China Holdings Limited(Note 3)_ Other Shareholders Total	As at the Latest Practicable Date Approximate No. of % of issued Shares Share 15,000,000 0.15 560,000,000 5.45 320,000,000 3.11 9,389,501,200 91.29 10,284,501,200 100.00	Immediately after the allotment and issue of the Conversion Shares upon full conversion of the Second Convertible Note at the conversion price of HK$0.04 per Conversion Share by Cordia (for illustration purpose only) (Note 5) Approximate No. of % of issued Shares Share 6,255,000,000 37.85 560,000,000 3.39 320,000,000 1.94 9,389,501,200 56.82 16,524,501,200 100.00	Immediately after the allotment and issue of the Conversion Shares upon conversion of the Restated First Convertible Note and the Second Convertible Note at the new Conversion Price by Cordia to the maximum extent under the Conversion Restrictions (Notes 1 & 4) Approximate No. of % of issued Shares Share 4,399,119,283 29.99 560,000,000 3.82 320,000,000 2.18 9,389,501,200 64.01 14,668,620,483 100.00	Immediately after the allotment and issue of the Conversion Shares upon full conversion of the Restated First Convertible Note and the Second Convertible Note at the conversion price of HK$0.04 per Conversion Share by Cordia (for illustration purpose only) (Notes 1 & 5) Approximate No. of % of issued Shares Share 27,120,000,000 72.53 560,000,000 1.50 320,000,000 0.86 9,389,501,200 25.11 37,389,501,200 100.00	Immediately after the allotment and issue of the Conversion Shares upon full conversion of the Restated First Convertible Note and the Second Convertible Note at the conversion price of HK$0.04 per Conversion Share by Cordia (for illustration purpose only) (Notes 1 & 5) Approximate No. of % of issued Shares Share 27,120,000,000 72.53 560,000,000 1.50 320,000,000 0.86 9,389,501,200 25.11 37,389,501,200 100.00
					100.00

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LETTER FROM WALLBANCK BROTHERS

Notes:

1. As at the Latest Practicable Date, Cordia holds the First Convertible Note in the principal amount of US$142 million with a conversion price of HK$0.12 per Share. As disclosed in the circular of the Company dated 5 January 2010. Cordia will hold the Restated First Convertible Note in the principal amount of US$107 million which a conversion price of HK$0.04 per Share subject to the conditions as set out in the Modification Deed.

2. The entire issued share capital of Goldwyn Management Limited is legally and beneficially owned by Mr. Lim Ho Sok, the executive Director and the chairman of the Company.

3. DTV China Holdings Limited is wholly and beneficially owned by a director of a non-wholly owned subsidiary of the Company, DTVChina, Inc.

4. Conversion of the Restated First Convertible Note and the Second Convertible Note are subject to the Conversion Restrictions.

5. This scenario is for illustration purpose only and may never happen in light of the Conversion Restrictions.

From the above table, we note that the shareholding interests of the public Shareholders would be diluted from approximately 91.29% to 64.01% upon full conversion of the First Convertible Note and Second Convertible Note and in compliance with the Conversion Restrictions. After taking into account that (i) the Directors confirmed that the Acquisition is essential to enhance the business prospect of the Group and in turn the value of the Shareholders in the future; and (ii) the shareholding interests of all the Shareholders would be diluted in proportion to their respective existing shareholdings in the Company, we are of the view that the possible dilution to the shareholding interests of the public Shareholders is not unfair and unreasonable.

• (5) Financial effects of the entering into the Deed of Settlement

(a) Effect on net assets value

According to the interim report of the Group for the period ended 30 September 2009, the audited consolidated NAV of the Group (including minority interest) was approximately HK$750 million as at 30 September 2010.

Upon the completion of Acquisition and the allotment of the Second Convertible Note, it is expected that the minority interest of the Group in relation to the Target Company will be lowered and the NAV of the Group (including minority interest) will also be lowered.

(b) Effect on earnings

The Directors expected that notwithstanding that the Second Convertible Note is non-interest-bearing, effective interest rate will also be applied and the Second Convertible Note is subject to fair value adjustment, and therefore interest expense and change in fair value of the Second Convertible Note may be recorded which may affect the earnings of the Group.

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LETTER FROM WALLBANCK BROTHERS

• (c) Effect on gearing

According to the interim report of the Group for the period ended 30 September 2009, the gearing ratio of the Group, being a ratio of total interest-bearing bank borrowings to total assets, was approximately 11.0%. Since the Second Convertible Note does not bear any interest (excluding the effective interest), it is fair and reasonable to infer that the issue of the Second Convertible Note may not have impact on the gearing of the Group.

• (d) Effect on working capital

The current assets value of the Group as at 30 September 2009 was approximately HK$170.941 million. Since the Second Convertible Note will mature on the sixth anniversary from its date of issue, the issue and allotment of the Second Convertible Note would not have material impact on the working capital of the Group.

RECOMMENDATION

Having considered the above principal factors and reasons as discussed above and as summarized below:

• (i) the allotment and issue of the Second Convertible Note to Cordia is still subject to, inter alia, the obtaining of the New Lapichevskaya Licence by the Target Company from the Russian authorities;

• (ii) (a) the Conversion Price is within the market range and at a higher premium than the average of the CB Comparables; (b) the maturity of the Second Convertible Note is within the range of that of the CB Comparables; and (c) the annual interest rate of the Second Convertible Note is at the minimum of the market range of the CB Comparables; and

• (iii) the possible dilution to the shareholding interests of the public Shareholders is not unfair and unreasonable.

Having considered the above principal factors and reasons and Directors’ representations, on balance, we are of the opinion that in such circumstance the terms of the Deed of Settlement, although are not on normal commercial terms, are fair and reasonable so far as the Independent Shareholders are concerned and the Deed of Settlement is in the interest of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Shareholders, and also recommend the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the resolution approving the Deed of Settlement and the transactions contemplated thereunder at the EGM.

Yours faithfully, For and on behalf of

WALLBANCK BROTHERS Securities (Hong Kong) Limited Phil Chan

Chief Executive Officer

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VALUATION REPORT ON THE 30% EQUITY INTEREST IN THE TARGET COMPANY

APPENDIX I

The following is the text of a letter prepared for the purpose of incorporation in this circular received from BMI Appraisals Limited, an independent valuer, in connection with its valuation as at 30 November 2009 of the market value of a 30% equity interest in Shakhta Lapichevskaya LLC to be acquired by Langfeld Enterprises Limited.

==> picture [232 x 77] intentionally omitted <==

19 January 2010

The Directors

Siberian Mining Group Company Limited 16th Floor No. 8 Queen’s Road Central Central Hong Kong

Dear Sirs,

INSTRUCTIONS

We refer to the instructions from Siberian Mining Group Company Limited (referred to as the “Company”) for us to provide our opinion on the market value of a 30% equity interest in Shakhta Lapichevskaya LLC (referred to as “Lapichevskaya”) as at 30 November 2009 (referred to as the “date of valuation”).

This report includes the background of Lapichevskaya, an industry overview, the basis of valuation and assumptions. It also explains the valuation methodology utilized and presents our conclusion of the value.

BASIS OF VALUATION

We have conducted our valuation in accordance with the Business Valuation Standards published by the Hong Kong Business Valuation Forum in 2005. Our valuation has been carried out on the basis of market value. Market value is defined as “the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

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VALUATION REPORT ON THE 30% EQUITY INTEREST IN THE TARGET COMPANY

APPENDIX I

BACKGROUND OF LAPICHEVSKAYA

Lapichevskaya was incorporated in Russia with limited liability in November 2004. It is owned 70% by Langfeld Enterprises Limited and 30% by 3 Russian citizens. Lapichevskaya is principally engaged in the business of coal mining and owns a coal mine which is located at Petrov, Kemerovo, Russia and currently not in operation.

INDUSTRY OVERVIEW

U.S. Department of Energy forecasted that the global coal consumption will grow at about 2.5% per year over the next 20 years. The erstwhile Soviet Union which covered one-eighth of the entire world’s land mass had been a storehouse of global energy sources. Most of the high coal production basins of Russia had already been explored before the break-up of the country into independent entities. Thus, the coal industry fragmentation presents enough promise of exploration potential for the up-coming mining generations.

SOURCE OF INFORMATION

For the purpose of our valuation, we were furnished with the financial and operational data related to Lapichevskaya, which were given by the senior management of the Company.

The valuation required consideration of all pertinent factors affecting the economic benefits of Lapichevskaya and its abilities to generate future investment returns. Factors considered in the valuation included, but were not limited to, the following:

• The business nature of Lapichevskaya;

• The financial and operational information of Lapichevskaya;

• The specific economic environment and competition for the market in which Lapichevskaya currently operates or will operate;

• Market-derived investment return of entities engaged in similar lines of business; and

• The financial and business risks of Lapichevskaya, including the continuity of income and the projected future results.

SCOPE OF WORKS

In the course of our valuation work for Lapichevskaya, we have conducted the following steps to evaluate the reasonableness of the adopted bases and assumptions provided by the senior management of the Company:

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VALUATION REPORT ON THE 30% EQUITY INTEREST IN THE TARGET COMPANY

APPENDIX I

• Interviewed with the senior management of the Company;

• Obtained all relevant financial and operational information of Lapichevskaya;

• Performed market research and obtained statistical figures from public sources;

• Examined all relevant bases and assumptions of both financial and operational information related to Lapichevskaya, which were provided by the senior management of the Company;

• Prepared a business financial model to derive the indicated value of Lapichevskaya; and

• Presented all relevant information on the background of the Company and Lapichevskaya, the source of information, the scope of works, the valuation assumptions and methodology, comments and our conclusion of value in this report.

VALUATION ASSUMPTIONS

Given the changing environment in which Lapichevskaya is operating, a number of assumptions have to be established in order to sufficiently support our concluded value of Lapichevskaya. The major assumptions adopted in our valuation are:

• There will be no major changes in the existing political, legal, technological and economic conditions in the jurisdiction where Lapichevskaya currently operates or will operate;

• There will be no major changes in the current taxation law in the jurisdiction where Lapichevskaya currently operates or will operate, that the rates of tax payable remain unchanged and that all applicable laws and regulations will be complied with;

• The financial and operational information in respect of Lapichevskaya have been prepared on a reasonable basis, reflecting estimates that have been arrived at after due and careful considerations by the senior management of the Company;

• All licenses, permits, certificates and consents issued by any local, provincial or national government or other authorized entity or organization that will affect the continuity of Lapichevskaya have been obtained or can be obtained upon request with an immaterial cost;

• Exchange rates and interest rates will not differ materially from those presently prevailing; and

• Economic conditions will not deviate significantly from economic forecasts.

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VALUATION REPORT ON THE 30% EQUITY INTEREST IN THE TARGET COMPANY

APPENDIX I

VALUATION METHODOLOGY

Three generally accepted valuation methodologies have been considered in assessing the value of Lapichevskaya. They are the market approach , the cost approach and the income approach .

The market approach provides indications of value by comparing the assets subjected to valuation to similar businesses, business ownership interests and securities that have been sold in the market, with appropriate adjustments for the differences between the assets subjected to valuation and the comparable assets.

The cost approach provides indications of value by studying the amounts required to recreate the asset for which a value conclusion is desired. This approach seeks to measure the economic benefits of ownership by quantifying the amount of fund that would be required to replace the future service capability of the asset.

The income approach is the conversion of expected periodic benefits of ownership into an indication of value. It is based on the principle that an informed buyer would pay no more for the project than an amount equal to the present worth of anticipated future benefits from the same or a substantially similar asset with a similar risk profile.

Among the three approaches, the market approach was considered to be the most appropriate valuation approach in this valuation as it is the most direct valuation approach which reflects the value obtained as a result of a consensus of what others in the market place have judged it to be. Since enterprise value reflects the capital structure, enterprise value is often used as a measure of an asset’s market value. Enterprise value is calculated as the sum of market capitalization, debt, minority interest and preferred shares, minus cash and cash equivalents. Besides, sales is difficult to be manipulated or distorted comparing with earnings and book value, and sales-based ratio is less volatile and more reliable. Therefore, enterprise value to sales multiple was used in the valuation.

In the course of the valuation, we have selected 4 Russian listed companies with mining operation in Russia (referred to as the “Comparable Companies”) that had similar business operation with Lapichevskaya and determined their enterprise value to consensus Year 2013 sales (referred to as “EV/S”) multiples.

The selection criteria for the Comparable Companies are as follows:

• i) the sales generated from coal mining segment is greater than 80%;

• ii) the stock of the company is actively traded;

• iii) the “Broker Attributed Estimates” on the Year 2013 sales of the company are available; and

• iv) the country of domicile is Russia.

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VALUATION REPORT ON THE 30% EQUITY INTEREST IN THE TARGET COMPANY

APPENDIX I

To the best of our knowledge, we considered the Comparable Companies were exhaustive.

The consensus sales are determined based on the consensus of the “Broker Attributed Estimates” on the Year 2013 sales of the companies as extracted from Bloomberg. Broker Attributed Estimates is the average of a pool of the best estimates of major financial institutions collected by Bloomberg that makes up a consensus.

Details of the Comparable Companies are as follows:

Comparable Company 1

Name of Company Bloomberg Ticker Exchange Location Core Businesses

: Kuzbasskaya Toplivnaya Kompaniya OAO : KBTK RU : Russia : It is a Russia-based company engaged in the coal mining industry. It operates through two branches in Moscow, Russia and Karakan, Uzbekistan (formerly part of the Soviet Union). It has operating rights on six mining fields.

Comparable Company 2

Name of Company Bloomberg Ticker Exchange Location Core Businesses

: Ugol’naya Kompaniya Kuzbassrazrezugol’ OAO : KZRU RU : Russia : It is a Russia-based company principally engaged in the extraction, processing and distribution of coal and other natural resources. It operates through 11 branches on the territory of the Kemerovo, Russia.

Comparable Company 3

Name of Company : Raspadskaya OAO Bloomberg Ticker : RASP RU Exchange Location : Russia Core Businesses : It is a Russia-based company engaged in the mining and transportation of coal. It specializes in the production of coking coal under the Raspadskaya brand. Through its subsidiary, it operates on the domestic market, and sells its production to coke and chemical plants in Ukraine and metallurgical enterprises in Eastern Europe.

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VALUATION REPORT ON THE 30% EQUITY INTEREST IN THE TARGET COMPANY

APPENDIX I

Comparable Company 4

Name of Company Bloomberg Ticker Exchange Location Core Businesses

• : Ugol’naya Kompaniya Yuzhnyi Kuzbass OAO : UKUZ RU

• : Russia

• : It is a Russia-based company engaged in the coal mining and processing industry. It is involved in the production, realization and sale of the coal, coal concentrate, coking and steam coal, as well as coal from the cut.

Bloomberg Ticker	Enterprise Value	Year 2013 Sales	EV/S
	(RUB million)	(RUB million)
KBTK RU	24,088	21,420	1.12
KZRU RU	97,292	76,352	1.27
RASP RU	108,726	41,272	2.63
UKUZ RU	66,089	26,987	2.45
		Median of EV/S:	1.86

Based on the information provided by the senior management of the Company and confirmed by a technical advisor from SRK Consulting (Russia) Ltd (referred to as “SRK”), there would be no production in the first 2 years and focusing on the construction development to bring Lapichevskaya to a production stage. Thus, the third year (i.e. 2012) would be the first year to have some production. In the course of valuation, the Year 2013 sales (i.e. fourth year sales) was adopted as it was more capable to reflect the normal production capacity of Lapichevskaya. The Year 2013 sales of US$183.5 million was determined with reference to the Year 2013 saleable production provided by SRK and the relevant coal prices extracted from Bloomberg.

We then have applied the median price multiples of 1.86 to the Year 2013 sales of US$183.5 million to derive the enterprise value of Lapichevskaya. We subtracted the total debt, the preferred equity and the minority interest from the calculated enterprise value and added back the cash and cash equivalents. The result was further adjusted downward by the discount for lack of marketability of 30% and downward again by the remaining initial capital investment of US$91.5 million, which is provided by the senior management of the Company, to conclude the market value of Lapichevskaya.

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VALUATION REPORT ON THE 30% EQUITY INTEREST IN THE TARGET COMPANY

APPENDIX I

The discount for lack of marketability is a downward adjustment to the value of an investment to reflect its reduced level of marketability. The concept of marketability deals with the liquidity of an ownership interest, that is, how quickly and easily it can be converted into cash if the owner chooses to sell. The discount for lack of marketability reflects the fact that there is no ready market for shares in a closely held company. Ownership interests in closely held companies are typically not readily marketable compared to similar interests in publicly listed companies. Therefore, a share of stock in a privately held company is usually worth less than an otherwise comparable share in a publicly listed company. As Lapichevskaya is unlikely to undergo public offering and shares of Lapichevskaya is unlikely to be listed in any major stock exchange or be marketable in any over-the-counter market in the near future, a discount for lack of marketability has been adopted in determining the market value of Lapichevskaya.

REMARKS

For the purpose of this valuation and in arriving at our opinion of value, we have referred to the information provided by the senior management of the Company. We are unable to accept any responsibility and have had no reason to doubt the truth and accuracy of the information provided to us by the Company. We have also sought and received confirmation from the Company that no material facts have been omitted from the information supplied.

To the best of our knowledge, all data set forth in this report are true and accurate. Although gathered from reliable sources, no guarantee is made nor liability assumed for the accuracy of any data, opinions or estimates identified as being furnished by others, which have been used in formulating this analysis.

Unless otherwise stated, all money amounts stated herein are in United States Dollars (US$).

CONCLUSION OF VALUE

Our conclusion of value is based on accepted valuation procedures and practices in accordance with the Business Valuation Standards published by the Hong Kong Business Valuation Forum in 2005, which rely substantially on the use of numerous assumptions and the consideration of a lot of uncertainties, not all of which can be easily ascertained or quantified.

Further, whilst the assumptions and consideration of such matters are considered by us to be reasonable, they are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the control of the Company, Lapichevskaya, SRK or us.

Based on our investigation and analysis outlined in this report, it is of our opinion that the market value of a 30% equity interest in Lapichevskaya as at 30 November 2009 was US$43,000,000 (UNITED STATES DOLLARS FORTY THREE MILLION ONLY).

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VALUATION REPORT ON THE 30% EQUITY INTEREST IN THE TARGET COMPANY

APPENDIX I

We hereby certify that we have neither present nor prospective interest in the Company, Lapichevskaya, SRK or the value reported.

This report is subject to the limiting conditions attached.

Yours faithfully, For and on behalf of BMI APPRAISALS LIMITED

Dr. Tony C. H. Cheng

BSc, MUD, MBA(Finance), MSc(Eng), PhD(Econ), FCIM, FRSM, SICME, SIFM, MHKIS, MCIArb, AFA, MASCE, MIET, MIEEE, MASME, MIIE, MASHRAE, MAIC Managing Director

Dr. Herman C. M. Tso

BArch, B.Eng., MBA, PhD (Civil Engineering) MIMMM, BGS, CGS, GEO, CEng, MICE, CPEng, MIEAust, MCHE, FCMA, MCMI, MCIOB MAIB, ASEM, MHKICM, ASCE, CSCE Director

Notes:

1. Dr. Tony C. H. Cheng serves as the Chairman of Institute of Mechanical Engineers, China and is a member of the Hong Kong Institute of Surveyors (General Practice), a member of the American Society of Civil Engineers, a member of the American Society of Mechanical Engineers and a member of Institute of Industrial Engineers (U.K.). He has about 5 years’ experience in valuing similar assets or companies engaged in similar business activities as those of Lapichevskaya worldwide.

2. Dr. Herman Tso has over 22 years of extensive executive and site experience in civil, geotechnical and mining engineering working with consulting engineers & contractors including in Canada and in Hong Kong. He was the Chartered Professional member of the Institute of Materials, Minerals & Mining (UK), as a board member in the Hong Kong branch of the Institute of Materials, Minerals & Mining. He was the professional member of the Canadian Institute of Mining, Metallurgy & Petroleum, the Canadian Geotechnical Society, the British Geotechnical Society and the American Geotechnical Institute. He is also a Chartered Civil Engineer and Chartered Mining Engineer.

3. 52 -

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

As at the Latest Practicable Date, the authorised and issued share capitals of the Company were as follows:

Authorised:		HK$
100,000,000,000	ordinary share(s) of HK$0.01 each	1,000,000,000
Issued and fully paid or credited as fully paid:		HK$
10,284,501,200	ordinary share(s) of HK$0.01 each	102,845,012

3. DISCLOSURE OF INTERESTS

(a) Interests of Directors

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executives of the Company in the Shares, underlying Shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which were required 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 are taken or deemed to have under such provisions of the SFO), the Model Code for Securities Transactions by Directors of Listed Companies and which were required to be entered into the register required to be kept under section 352 of the SFO were as follows:–

• (1) Long positions in Shares

		Number of	Approximate
		Shares	percentage of
Name	Capacity	interested	shareholding
Mr. Lim Ho Sok	Interest of corporation	560,000,000	5.45%
	controlled	(Note 1)

Note:

(1) These Shares are held by Goldwyn Management Limited which is wholly-owned by Mr. Lim Ho Sok, the executive Director and chairman of the Company as at the Latest Practicable Date.

• 53 -

GENERAL INFORMATION

APPENDIX II

• (2) Long positions in underlying shares of equity derivatives of the Company

Approximate Number of Shares percentage of Name Capacity interested shareholding Mr. Li Wing Sang Beneficial owner 19,560,000 (Note 1) 0.19% Mr. Chiu Chi Hong Beneficial owner 19,560,000 (Note 1) 0.19% Mr. Yoshinori Beneficial owner 19,560,000 (Note 2) 0.19% Suzuki

Notes:

• (1) These derivatives are share options of the Company with the exercise period from 10 September 2007 to 9 September 2017 at an exercise price of HK$0.2226 per Share.

• (2) These derivatives are share options of the Company with the exercise period from 5 January 2010 to 4 January 2020 at an exercise price of HK$0.04 per Share.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executives of the Company had any interests and short positions in the Shares, underlying Shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which were required 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 are taken or deemed to have under such provisions of the SFO), the Model Code for Securities Transactions by Directors of Listed Companies and which were required to be entered into the register required to be kept under section 352 of the SFO.

(b) Interests of Shareholders

As at the Latest Practicable Date, so far as is known to the Directors and the chief executives of the Company, the following persons (other than a Director or chief executive of the Company) had an interest or short position in the Shares and underlying Shares which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who are, directly or indirectly interested in 10 per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at a general meeting of any member of the Group.

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GENERAL INFORMATION

APPENDIX II

• (1) Long positions in Shares and underlying shares of equity derivatives of the Company

			Approximate
		Number of shares	percentage of
Name	Capacity	interested	shareholding
Cordia	Beneficial owner	15,000,000	0.15%
		(Note 1)
	Beneficial owner	9,230,000,000	89.75%
		(Note 2)

Notes:

• (1) These are the Shares held by Cordia as at the Latest Practicable Date.

• (2) These are the conversion shares to be issued and allotted to Cordia upon fully exercise of the conversion right attached to the US$142 million First Convertible Note at a conversion price of HK$0.12 per Share as at the Latest Practicable Date. As disclosed in the circular of the Company dated 5 January 2010, Cordia will hold the Restated First Convertible Note in the principal amount of US$107 million which a conversion price of HK$0.04 per Share subject to the conditions as set out in the Modification Deed.

• (2) Long positions in shares and underlying shares of the subsidiaries of the Company

			Percentage of
Name of			interest in
Shareholder	Subsidiary	Nature of interest	subsidiaries
Cordia	The Purchaser	Beneficially owned	10%

Save as disclosed above, the Directors and the chief executives of the Company are not aware that there is any person (other than a Director or chief executive of the Company) who, as at the Latest Practicable Date, had an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 10 per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at a general meeting of any other member of the Group.

As at the Latest Practicable Date:–

• (i) none of the Directors, had any direct or indirect interests in any assets which have since 31 March 2009 (being the date to which the latest published audited consolidated financial statements of the Group) been acquired or disposed of by or leased to any members of the Group, or are proposed to be acquired or disposed of by or leased to any members of the Group; and

• 55 -

GENERAL INFORMATION

APPENDIX II

• (ii) none of the Directors was materially interested in any contracts or arrangements entered into by any members of the Group subsisting as at the Latest Practicable Date which is significant in relation to the business of the Group.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has entered into any service agreement with any member of the Group which is not determinable by the Group within one year without payment of compensation, other than statutory compensation.

5. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and his/her respective associates was considered to have an interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group other than those businesses to which the Directors and his/her associates were appointed to represent the interests of the Company and/or the Group.

6. MATERIAL ADVERSE CHANGE

On 15 December 2009, the Company issued a profit warning announcement to inform the Shareholders and potential investors that the unaudited results of the Group for the six months ended 30 September 2009 may incur a substantial loss as compared to a profit for the unaudited results reported for the corresponding period in 2008.

On 29 December 2009, the Company issued the 2009 interim report which showed that the Group recorded a loss attributable to equity holders of HK$411,591,000 for the six months ended 30 September 2009. As disclosed in the interim report, the substantial part of the Group’s loss was due to the accounting treatments of various items arose from the acquisition of coal mine in Russia, such as impairment loss on fair value of mining right acquired during the period of HK$1,022,337,000; amortisation of intangible assets in mining right amounted to HK$56,489,000; imputed interests on convertible notes of HK$37,541,000 and partly offset by gain from fair value adjustments on the conversion option of the Group’s convertible notes amounted to HK$770,583,000.

Save as disclosed above, the Director confirmed that there has been no other material adverse change in the financial or trading position of the Group since 31 March 2009, the date to which the latest published audited consolidated financial statements of the Group was made up.

• 56 -

GENERAL INFORMATION

APPENDIX II

7. EXPERTS AND CONSENTS

The following is the qualification of the experts who have given opinion or advice which are contained in this circular:

Name

Qualification

• Wallbanck Brothers Securities (Hong Kong) Limited, the Independent Financial Adviser

a licensed corporation to carry out type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO

BMI Appraisals Limited An independent valuer (“ BMI ”)

The Independent Financial Adviser and BMI have given and confirmed that they have not withdrawn their written consent to the issue of this circular with the inclusion of their letter and/or references to their name in the form and context in which it appears. The Independent Financial Adviser and BMI have further confirmed that as at the Latest Practicable Date, they were not interested in the share capital of any member of the Group, nor did they have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group. They are not interested in any assets which have been, since 31 March 2009 (being the date to which the Company’s latest audited financial statements were made up), 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.

8. MISCELLANEOUS

• (i) The Company secretary is Ms. Lo Suet Fan who is an associate member of the Hong Kong Institute of Certified Public Accountants and a fellow member of The Association of Chartered Certified Accountants.

• (ii) The Hong Kong branch share registrar and transfer office of the Company is Tricor Tengis Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.

• (iii) This circular has been prepared in both English and Chinese. In the case of any discrepancy, the English text shall prevail.

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GENERAL INFORMATION

APPENDIX II

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours from 9:00 a.m. to 6:00 p.m. (save for Saturdays, Sundays and public holidays) at the principal office of business of the Company at 16/F, No 8 Queen’s Road Central, Central, Hong Kong up to and including the date of the EGM:–

• (i) the Sale and Purchase Agreement;

• (ii) the Deed of Settlement and the Supplemental Deed;

• (iii) the “Letter from the Independent Board Committee”, the text of which is set out in this circular;

• (iv) the “Letter from the Independence Financial Adviser”, the text of which is set out in this circular;

• (v) the “Valuation report on the 30% equity interest in the Target Company”, the text of which is set out in Appendix I to this circular;

• (vi) the written consent referred to in the paragraph headed “Experts and Consents” in this appendix; and

• (vii) this circular.

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NOTICE OF EGM

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SIBERIAN MINING GROUP COMPANY LIMITED 西伯利亞礦業集團有限公司[*]

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1142)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of Siberian Mining Group Company Limited (the “ Company ”) will be held at Meeting Room 4, 7/F, Hongkong International Trade & Exhibition Centre, 1 Trademart Drive, Kowloon Bay, Kowloon, Hong Kong at 3:30 p.m. on Monday, 8 February 2010 for the purpose of considering and, if thought fit, passing, the following resolutions:

ORDINARY RESOLUTIONS

1. “ THAT :

   • (A) the sales and purchase agreement dated 23 November 2009 (the “ Sale and Purchase Agreement ”) entered into by Langfeld Enterprises Limited (the “ Purchaser ”) and Tannagashev Ilya Nikolaevich, Kochkina Ludmila Dmitrievna and Demeshonok Konstantin Yur’evich (the “ Vendors ”), pursuant to which the Purchaser agreed to acquire 3,000 shares of LLC “Shakhta Lapichevskaya” from the Vendors at an aggregate consideration of US$9,490,606; details of the Sale and Purchase Agreement are set out in the circular of the Company dated 19 January 2010 (the “ Circular ”) (copies of the Sale and Purchase Agreement and the Circular having been produced to the meeting marked “A” and “C” respectively and initiated for the purposes of identification by the chairman of the meeting) and the transaction contemplated thereunder be and are hereby approved, confirmed and ratified; and

   • (B) any one director of the Company be and is hereby generally and unconditionally authorized to do all such acts and things, to sign and execute all such further documents for and on behalf of the Company by hand, or in case of execution of documents under seal, to do so jointly with any of a second director, a duly authorized representative of the director or the secretary of the Company and to take such steps as he may in his absolute discretion consider necessary, appropriate, desirable or expedient to give effect to or in connection with the transaction under the Sale and Purchase Agreement.”

2. For identification purpose only

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NOTICE OF EGM

1. “ THAT :

2. (A) the deed of settlement dated 25 November 2009 (as amended by a supplemental deed of settlement on 6 January 2010) (the “ Deed of Settlement ”) entered into between Cordia Global Limited, Mr. Choi Sungmin, Grandvest International Limited and the Company, pursuant to which the parties acknowledge and confirm their agreement for the Company to allot and issue to Cordia Global Limited a convertible note amounted to US$32 million (the “Second Convertible Note”) subject to and upon the terms and conditions thereof, details of the Deed of Settlement are set out in the Circular (copies of the Deed of Settlement and the Circular having been produced to the meeting marked “B” and “C” respectively and initiated for the purposes of identification by the chairman of the meeting) and the transaction contemplated thereunder (including but not limited to (i) the issue of the Second Convertible Note and execution of relevant security document thereunder, and (ii) the allotment and issue of new shares of the Company fall to be allotted and issued upon conversion of the Second Convertible Note) be and are hereby approved, confirmed and ratified; and

3. (B) any one director of the Company be and is hereby generally and unconditionally authorized to do all such acts and things, to sign and execute all such further documents for and on behalf of the Company by hand, or in case of execution of documents under seal, to do so jointly with any of a second director, a duly authorized representative of the director or the secretary of the Company and to take such steps as he may in his absolute discretion consider necessary, appropriate, desirable or expedient to give effect to or in connection with the transaction under the Deed of Settlement.”

By Order of the Board Siberian Mining Group Company Limited Lim Ho Sok Chairman

Hong Kong, 19 January 2010

Registered office: Principal place of business Cricket Square in Hong Kong: Hutchins Drive 16/F P.O. Box 2681 No 8 Queen’s Road Central Grand Cayman KY1-1111 Central Cayman Islands Hong Kong

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NOTICE OF EGM

Notes:

• 1 Any member of the Company entitled to attend and vote at the EGM is entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a member of the Company.

• 2 A member who is the holder of two or more shares of the Company may appoint more than one proxy to represent him to attend and vote on his behalf. In case of a recognised clearing house (or its nominees(s) and in each case, being a corporation), it may authorise such persons as it thinks fit to act as its representatives of the meeting and vote in its stead.

• 3 A form of proxy for use in connection with the EGM is enclosed with this circular. To be valid, the form of proxy, and (if required by the Board) the power of attorney or other authority (if any) under which it is signed or a certified copy of that power of attorney or authority must be deposited at the branch share registrars of the Company, Tricor Tengis Limited, at 26th floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof.

• 4 In the case of joint holders of shares, any one of such holders may vote at the EGM, either personally or by proxy, in respect of such share as if he was solely entitled thereto, but if more than one of such joint holder are present at the EGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such shares shall alone be entitled to vote in respect thereof.

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