Shandong Gold Mining Co., Ltd. — Proxy Solicitation & Information Statement 2007

Mar 26, 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your securities in Lee & Man Holding Limited, you should at once hand this circular to the purchaser or the transferee or to the bank manager, the licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

LEE & MAN HOLDING LIMITED

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 746)

DISCLOSEABLE TRANSACTION ACQUISITION OF ASSETS

* for identification purposes only

26 March 2007

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
The Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Reasons for the Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Information on the Group and the Vendor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Appendix – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7

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DEFINITIONS

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

• “Acquisition”

the acquisition of the Assets pursuant to the Agreement

“Agreement” the agreement dated 10 March 2007, entered into between the Vendor and the Purchaser relating to the Acquisition “Announcement” the announcement dated 16 November 2005 made by the Company “Assets” equipment and materials, spare parts, usage of rights of patents, know-how, design, technical documents and technical service to increase the caustic soda production capacity at the Plant, to be purchased by the Purchaser pursuant to the Agreement

“associates” has the meaning ascribed thereto the Listing Rules “Board” the board of Directors “Company” Lee & Man Holding Limited “connected person” the meaning ascribed to it under the Listing Rules “Directors” the directors of the Company “Group” the Company and its subsidiaries “HK$” Hong Kong dollars, the lawful currency of Hong Kong

“Independent Third Party” a party which, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, is a third party independent of the Company and connected persons of the Company

• “Latest Practicable Date” 22 March 2007

“Lee & Man Jiangsu” or Lee & Man (Jiangsu) Investment Limited, a “Purchaser” wholly-owned subsidiary of the Company

• “Listing Rules”

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

“MT”

metric tonnes

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DEFINITIONS

“Plant”	the Group’s chemical production plant	located	in
	Changshu City, Jiangsu, the PRC
“PRC”	the People’s Republic of China
“SFO”	Securities and Future Ordinance (Chapter	571 of	the
	Laws of Hong Kong)
“Share(s)”	ordinary share(s) of HK$0.10 each in the capital of		the
	Company
“Shareholders”	holders of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Vendor”	Chlorine Engineers Corp., Ltd.
“¥”	Yen, the lawful currency of Japan

For the purpose of this circular, unless otherwise specified, the conversion of ¥ into HK$ is based on the exchange rate of ¥1 = HK$0.06623.

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LETTER FROM THE BOARD

LEE & MAN HOLDING LIMITED

(incorporated in the Cayman Islands with limited liability) (Stock Code: 746)

Executive Directors: Ms. Wai Siu Kee (Chairman) Ms. Lee Marina Man Wai Ms. Poon Lai Ming Mr. Lee Man Yan

Independent Non-executive Directors: Mr. Heng Kwoo Seng Mr. Wan Chi Keung, Aaron JP Mr. Wong Kai Tung, Tony

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

Principal Place of Business in Hong Kong: 8th Floor, Liven House 61-63 King Yip Street Kwun Tong Kowloon Hong Kong

26 March 2007

To the shareholders of the Company

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION ACQUISITION OF ASSETS

INTRODUCTION

The Directors refer to the Company’s announcement dated 13 March 2007 in relation to the Agreement entered into on 10 March 2007 between its wholly owned subsidiary, Lee & Man Jiangsu and the Vendor, an Independent Third Party, to purchase the Assets to be installed at the Plant to increase its caustic soda production capacity. The consideration of the Assets is ¥1,330,000,000 (representing approximately HK$88,089,958).

As the percentage ratio in respect of the consideration to be paid by Lee & Man Jiangsu under the Agreement exceeds 5% but is less than 25% of the applicable five tests under Chapter 14 of the Listing Rules, the transaction under the Agreement constitutes a discloseable transaction of the Company under the Listing Rules.

* for identification purposes only

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LETTER FROM THE BOARD

THE AGREEMENT

Date:

Parties:

10 March 2007

Vendor: Chlorine Engineers Corp., Ltd., an Independent Third Party. To the best of the Directors knowledge and belief, the beneficial owners in the Vendor are Independent Third Parties and are not connected persons (as defined in the Listing Rules) of the Company.

Purchaser: Lee & Man Jiangsu, a wholly-owned subsidiary of the Company

Assets to be purchased:

Consideration:

• Equipment and materials, spare parts, usage of rights of patents, know-how, design, technical documents and technical service for a 120,000 MT ion exchange membrane plant to be installed at the Plant in Jiangsu to increase its caustic soda production capacity. The equipment and materials would be delivered on or before 10 December 2007 in accordance with the construction schedule of the Plant.

The consideration of ¥1,330,000,000 (approximately HK$88,089,958) was agreed after arm’s length negotiations between the Vendor and the Purchaser by reference to the current market value (based on the quotation for similar assets) and having regard to the Vendor’s reputation in the market, and would be payable by way of instalments as follows:–

• (i) 10% of the total consideration (¥133,000,000 (representing approximately HK$8,808,996)) as down payment to be paid within 15 days after the signing of the Agreement by telegraphic transfer against submission of an irrevocably letter of Guarantee to be issued by the Vendor’s bank as the down payment security;

• (ii) 80% of the total consideration (¥1,064,000,000 (representing approximately HK$70,471,966)) to be paid on a pro rata basis upon completion of each shipment of equipment and materials and against submission of the shipment documentation;

• (iii) 5% of the total consideration (¥66,500,000 (representing approximately HK$4,404,498)) to be paid after the acceptance of the contractual plant and against submission of relevant acceptance certification; and

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LETTER FROM THE BOARD

• (iv) 5% of the total consideration (¥66,500,000 (representing approximately HK$4,404,498)) to be paid 6 months after the acceptance of the contractual plant and against submission of relevant certification that the Vendor has performed its obligations under the Agreement.

Payment of instalment (ii) and instalments (iii) and (iv) shall be by way of documentary credit to be issued by the Purchaser’s bank.

There are no other transactions between the Group and the Vendor and/or its associates in the past 12 months which are required to be aggregated with the transaction contemplated under the Agreement.

REASONS FOR THE ACQUISITION

As announced in Announcement, the Company decided to diversify its business and invest into the chemical sector. The Acquisition will enable the Plant to increase its caustic soda production capacity. Caustic soda is used in many industries such as: pulp and paper (as de-inking of waste paper, bleaching of pulp), dying of textiles, soaps and detergents, bleach manufacturing etc.

The production of chloromethane products and caustic soda at the Plant is expected to commence in about the 4th quarter in 2007. The Directors entered into the Acquisition to increase its caustic soda production capacity in anticipation for a change in import duty policy (expected to take effect next year) which will increase the Assets’ costs. It is anticipated that the Assets will commence production of caustic soda in about the 4th quarter in 2008.

The Directors are of the view that the terms of the Acquisition are fair and reasonable and the Acquisition is made in the best interest of the Company and the Shareholders as a whole.

The Group expects to fund the Acquisition through a combination of internal resources and bank financing, the respective percentage of which is still under consideration.

As referred to above, it is anticipated that production will commence in about the 4th quarter of 2008 and, until then, the acquisition of the Assets will not have any material effect on the Company’s earnings. The Company’s liabilities will increase insofar as bank financing will be used to fund the Acquisition, but such liabilities will be matched by a corresponding increase in the assets. Accordingly, the Acquisition is not expected to have any material adverse effect on the earnings and assets and liabilities of the Group.

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LETTER FROM THE BOARD

INFORMATION ON THE GROUP AND THE VENDOR

The Group is principally engaged in the manufacture and sale of handbags and luggage. The investment in the Assets marks a further step in the diversification of the business of the Group into chemical production sector.

Based on the information provided by the Vendor, the Vendor is a company incorporated in Japan and is one of the major electrolyzer suppliers in the world. The Vendor has provided electrolyzer equipment for over 20 years.

LISTING RULES

As the percentage ratio in respect of the consideration to be paid by Lee & Man Jiangsu under the Agreement exceeds 5% but is less than 25% of the applicable five tests under Chapter 14 of the Listing Rules, the transaction under the Agreement constitutes a discloseable transaction of the Company under the Listing Rules.

Yours faithfully, For and on behalf of LEE & MAN HOLDING LIMITED Wai Siu Kee Chairman

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GENERAL INFORMATION

APPENDIX

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 concerning the Group the omission of which would make any statement herein misleading.

1. DISCLOSURE OF INTERESTS

Interests and short positions of Directors and chief executive in the share capital of the Company and its associated corporation

Save as disclosed below, as at the Latest Practicable Date, none of the Directors and chief executive had any interest or short position in the Shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would be required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including the interests and short positions which they would be deemed to be taken to have under Sections 344 and 345 of the SFO) or which would be required to be disclosed pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the register referred therein pursuant to Section 352 of the SFO.

Directors’ interests in the Shares

	Number of		Approximate
	Shares interested		percentage
Name of Director	(Long Position)	Capacity	of Shares
Wai Siu Kee	618,750,000	Discretionary object	75%
	(Note)
Lee Man Yan	618,750,000	Discretionary object	75%
	(Note)
Lee Marina Man Wai	618,750,000	Discretionary object	75%
	(Note)

Note: These shares are held by Fortune Star Tradings Ltd, a company wholly-owned by Trustcorp Limited as trustee for The Fortune Star 1992 Trust, a discretionary trust the discretionary objects of which include Ms. Wai Siu Kee, Mr. Lee Man Yan and Ms. Lee Marina Man Wai, certain of their family members and other charitable objects. Ms Wai Siu Kee is a director of Fortune Star Tradings Ltd..

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GENERAL INFORMATION

APPENDIX

Directors’ interests in associated corporations of the Company

				Percentage of
				the issued
		Name of	Number	shares of the
		associated	of shares	associated
Name of Director	Capacity	company	interested	company
Wai Siu Kee	Discretionary	Fortune Star	100	100%
	object	Tradings Ltd.	(Note)
Lee Man Yan	Discretionary	Fortune Star	100	100%
	object	Tradings Ltd.	(Note)
Lee Marina Man Wai	Discretionary	Fortune Star	100	100%
	object	Tradings Ltd.	(Note)

Note: As Fortune Star Tradings Ltd. owns more than 50% of the Company, Fortune Star Tradings Ltd. is an associated corporation of the Company under the SFO. The entire issued share capital of Fortune Star Tradings Ltd. is owned by Trustcorp Limited as trustee for The Fortune Star 1992 Trust, a discretionary trust the discretionary objects of which include Ms. Wai Siu Kee, Mr. Lee Man Yan and Ms. Lee Marina Man Wai, certain of their family members and other charitable objects. Ms Wai Siu Kei is a director of Fortune Star Tradings Ltd..

2. SUBSTANTIAL SHAREHOLDERS

Notifiable interests and short positions in Shares of persons under the provision of Divisions 2 and 3 of Part XV of the SFO and persons who are “substantial shareholders” in the Company for the purposes of the Listing Rules

Save as disclosed below, as at the Latest Practicable Date, none of the Directors or chief executive are aware of any other person who had an interest or short position in the Shares or the underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO or, who is, directly or indirectly, interested in ten per cent. or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

Notifiable interests in Shares

Number of

	Number of
	Shares on which
	interested (Long		% of issued
Name	Position)	Capacity	share capital
Fortune Star Tradings Ltd.	618,750,000	Beneficial Owner	75%
Value Partners Limited	42,514,000	Investment Manager	5.15%

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GENERAL INFORMATION

APPENDIX

3. LITIGATION

Neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration of material importance and, so far as the Directors are aware, no litigation or arbitration of material importance is pending or threatened against the Group.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading positions of the Company since 31 December 2005, the date to which the latest published audited consolidated financial statements of the Group were made up.

5. SERVICE CONTRACTS

None of the Directors has a service contract with the Company on any of its subsidiaries which is not determinable by the Group within one (1) year without the payment of compensation other than statutory compensation.

6. COMPETING INTERESTS

None of the Directors and their respective associates (as defined in the Listing Rules) have any interest in a business, which competes or may compete with the business of the Group.

7. MISCELLANEOUS

• (a) The registered office of the Company is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The principle place of business of the Company in Hong Kong is located at 8th Floor, Liven House, 61-63 King Yip Street, Kwun Tong, Kowloon, Hong Kong.

• (b) The company secretary and the qualified accountant of the Group is Ms. Wong Yuet Ming who is a fellow member of the Association of Chartered Certified Accountants and an associate member of the Hong Kong Institute of Certified Public Accountants.

• (c) In the event of inconsistency, the English language text of this circular shall prevail over the Chinese language text.

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