WH Group Limited — Capital/Financing Update 2021

Sep 23, 2021

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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China Baoli Technologies Holdings Limited 中國寶力科技控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 164)

VOLUNTARY ANNOUNCEMENT

BUSINESS DEVELOPMENT UPDATE

This announcement is issued by China Baoli Technologies Holdings Limited (the “ Company ”, together with its subsidiaries, the “ Group ”) on a voluntary basis.

The board (the “ Board ”) of directors (the “ Director(s) ”) of the Company is pleased to announce that on 23 September 2021 after trading hours, the Company entered into a subscription and shareholders agreement (the “ Agreement ”) with Hong Kong HuaYing Mining Technology Limited 香港華盈礦山技術有限公司 (“ HuaYing Mining ”), Top Skill Global Limited (“ Top Skill ”) (collectively, the “ Relevant Parties ”), and State Expert Group Limited (the “ Cooperation Company ”, together its subsidiaries, the “ Cooperation Group ”) in relation to, among other things, (i) the establishment of, and investment in, the Cooperation Company (the “ Cooperation Company Formation ”) and (ii) the licensing of certain intellectual property rights by HuaYing Mining to the Cooperation Group.

HuaYing Mining possesses extensive skill and expertise in magnetite ore mining technologies in the People’s Republic of China (the “ PRC ”). Top Skill possesses extensive networks and relationships with the mining players in the PRC. The Company and Relevent Parties will collaborate to integrate the Company’s gamma ray technologies and knowhow into HuaYing Mining’s dry grinding and dry separation (乾磨乾選) technologies (the “ DGDS Technologies ”). Through this collaboration, the enhanced technology will be the cornerstone for a major breakthrough for iron ore mine planning and design. In particular, it provides real-time assessment in the exploration, beneficiation, grinding and production of metallic iron ore (the “ New Application ”) which will greatly improve the total iron content in concentrates and pallets while also meeting the geological, economical and environmental parameters.

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SUBSCRIPTION PRICE AND SHAREHOLDING IN THE COOPERATION COMPANY

Pursuant to the Agreement, each of the Company, HuaYing Mining and Top Skill agrees to subscribe for shares in the Cooperation Company at the subscription price of par value per share respectively. Upon completion of the subscription (the “ Completion ”), the Cooperation Company will be owned as to 51% by the Company, 30% by Huaying Mining and 19% by Top Skill. Accordingly, upon Completion, the Cooperation Company and its subsidiaries will become non-wholly owned subsidiaries of the Company and their financial results will be consolidated in the financial statements of the Group.

BUSINESS OF THE COOPERATION GROUP

The Cooperation Company will principally be engaged in provision of the New Application services to the mining enterprises so as to enhance the efficiency and productivity of the mining and beneficiation process.

Pursuant to the Agreement, HuaYing Mining agrees to grant, or causes to be granted to the Cooperation Company a non-exclusive perpetual and royalty-free license to use certain patent, know-how and technology on the DGDS Technologies (the “ Licensor Technology ”).

INFORMATION ON THE DGDS TECHNOLOGIES AND THE NEW APPLICATION

HuaYing Mining possesses the skills, know-how and technical information of the DGDS Technologies which can be applied to water-deficient areas in processing ultra-lean magnetite ore arena.

In the entire beneficiation process of the DGDS Technologies, water will not be consumed as a medium in mining process, and hence, this resolved the problem of water pollution as a result of the release of toxic substances when using the traditional wet separation mining technology. In addition, the DGDS Technologies will not involve any concentration, pressure filtration and dehydration process which can significantly reduce investment and operational costs. Less equipment and plant were required as benefited from the less complicated processes, and less cost will be incurred for tailings storage. The DGDS Technologies will also diminish the need for tailing dams. In fact, the global mining communities and countries are applying much stricter rules and scrutinies on the tailings dams after the recent tailings dam accidents in Brazil and Canada. As the concentrate and tailings are in form of dry powder, the transportation costs will be largely reduced.

The Company will conduct the aforementioned business cooperation through its subsidiary, Gamma Ray Technologies Services Limited (“ Gamma Ray Company ”). Gamma Ray Company will deploy its gamma ray activation analysis and expertise to test, modify and improve the DGDS Technologies in real-time assessment in beneficiation and production of metallic iron ore.

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REASONS FOR ENTERING INTO THE BUSINESS COLLABORATION

The PRC has tightened the production control on iron ores mining since July 2021. Recently, the Ministry of Ecology and Environment issued a draft guideline that it planned to involve steel mills which located in 64 regions in the PRC to cut production based on the emission levels from October 2021 until March 2022. Steel production curbs across the PRC have weighed on the iron ore price to sink below US$100. The price of iron ore has sunk more than 40% since its peak. The magnitude of iron ore’s correction will likely bring forward its forecast price declines to 2022. The sharp fall of the iron ore price raises the interests of the iron ore market players to focus on cost cutting and quality improvement. Based on seaborne iron ore price index, the economic benefit for improving iron ore quality is enormous where currently there is a 40% price difference between 58% Fe iron ore and 65% Fe iron ore. Through the business collaboration between the Company and the Relevant Parties, the enhanced technology of the New Application can greatly improve the total iron content in concentrates while also help the market players to meet the environmental parameters set by the PRC to curb pollution.

The Company is of the view that the establishment of the Cooperation Company will leverage on the strength, technology, resources and expertise of HuaYing Mining and Top Skill, which will enable the Cooperation Group to increase their market presence in the iron ore industry. Pursuant to the Agreement, the Cooperation Group will also be able to enjoy the perpetual and royalty-free licence to use the Licensor Technology in its business. The entering into the business collaboration is in line with the Company’s longterm strategies to exploit potential strategic investment and cooperation opportunities to achieve prominent growth.

In addition, through the business cooperation and the utilization of the New Application, it is expected that the Group’s gamma ray business will be broadened. The cooperation could generate additional revenue to the Group and improve the Group’s profitability to deliver long-term benefits to the shareholders of the Company.

The Board considers that the Agreement is on normal commercial terms, and that the terms of the Agreement is fair and reasonable and is in the interests of the Company and its shareholders as a whole.

LISTING RULES IMPLICATIONS

As all the applicable percentage ratios set out in the Rules Governing the Listing of Securities on the Stock Exchange (the “ Listing Rules ”) in respect of the Cooperation Company Formation are less than 5%, the entering into of the Agreement and the formation of the Cooperation Company contemplated thereunder do not constitute a notifiable transaction for the Company pursuant to Chapter 14 of the Listing Rules.

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To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, each of HuaYing Mining and Top Skill and their ultimate beneficial owners are not connected persons of the Group as at the date of this announcement.

By order of the Board China Baoli Technologies Holdings Limited Zhang Yi Chairman

Hong Kong, 23 September 2021

As at the date of this announcement, the executive Directors are Mr. Zhang Yi (Chairman), Ms. Chu Wei Ning (Chief Executive Officer) and Ms. Lam Sze Man; and the independent non-executive Directors are Mr. Chan Fong Kong, Francis, Mr. Chan Kee Huen, Michael and Mr. Feng Man.

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