The consideration of HK$200,000,000 for the sale and purchase of the Sale Shares shall be settled by the Purchaser in the following manner:

Transcription

1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited 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. This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the shares in the Company. MAJOR TRANSACTION INVOLVING THE ISSUE OF CONSIDERATION SHARES AND CONVERTIBLE BONDS IN RELATION TO THE ACQUISITION OF 51% OF THE ISSUED SHARE CAPITAL OF VICTORY DRAGON HOLDINGS LIMITED THE AGREEMENT On 12 January 2012 (after trading hours), the Purchaser, the Vendors and the Guarantors entered into the Agreement pursuant to which the Purchaser has agreed to purchase and the Vendors have agreed to sell the Sale Shares for a total consideration of HK$200,000,000. The consideration of HK$200,000,000 for the sale and purchase of the Sale Shares shall be settled by the Purchaser in the following manner: (a) as to HK$10,000,000 of the Consideration shall be paid by the Purchaser to the First Vendor (or as it may direct) in cash as the Deposit and part payment of the Consideration on the date of the Agreement; (b) as to HK$106,840,000 of the Consideration shall be satisfied by the Purchaser procuring the Company to issue the Convertible Bonds to the First Vendor (or as it may direct) at Completion; and 1

2 (c) as to the remaining balance of HK$83,160,000 of the Consideration shall be satisfied by the Purchaser procuring the Company to allot and issue the Consideration Shares to the Vendors at Completion. THE GUARANTORS GUARANTEE In consideration of the Purchaser agreeing to enter into the Agreement, (i) the First Guarantor has agreed to guarantee the performance of the obligations of the First Vendor under the Agreement; (ii) the Second Guarantor has agreed to guarantee the performance of the obligations of the Second Vendor under the Agreement; and (iii) the Third Guarantor has agreed to guarantee the performance of the obligations of the Third Vendor under the Agreement. For the avoidance of doubt, the Second Guarantor and the Third Guarantor do not warrant the warranties given by the Vendors under the Agreement. The Proposed Acquisition constitutes a major transaction on the part of the Company under the Listing Rules. The Vendors are interested in approximately 51% of the issued share capital of Victory Dragon, the holding company of Shen Long. The Proposed Acquisition also constitutes a major transaction for the Company under Rule of the Listing Rules and is subject to the reporting, announcement and shareholders approval requirements. A circular containing, among other matters, further details of the Proposed Acquisition and a notice to convene the EGM will be despatched to the Shareholders in compliance with the Listing Rules. Reference is made to the announcement of the Company dated 12 December 2011 in respect of the possible acquisition of 51% of the issued share capital of Victory Dragon. On 12 December 2011, the Board announced that the Company entered into a memorandum of understanding with the Vendors to acquire 51% of the issued share capital of Victory Dragon. Upon further negotiation between the relevant parties, the Purchaser entered into the Agreement with, among others, the Vendors to acquire 51% of the issued share capital of Victory Dragon on 12 January Details of the Agreement have been set out in this announcement. 2

3 THE AGREEMENT Date: 12 January 2012 (after trading hours) Parties: Purchaser: Vendors: (1) Nice Tone (2) Voice Key as the First Vendor (3) Chinacorp as the Second Vendor (4) Champion as the Third Vendor Guarantors: (5) Chu Yuk Lung as the First Guarantor (6) Au Yu Siu as the Second Guarantor (7) Tan Chee Chuan as the Third Guarantor The Vendors are interested in 51% of the issued share capital of Victory Dragon, the holding company of Shen Long. The Vendors are companies incorporated in the British Virgin Islands and are principally engaged in investment holdings. Each of the Guarantors is the ultimate beneficial owner of each of the corresponding Vendors. To the best of the Directors knowledge, information and belief having made all reasonable enquiries, save for the Third Guarantor who is interested in 0.70% of the issued share capital of the Company, the Vendors, the Guarantors and their respective ultimate beneficial owner(s) are third parties independent of the Company and connected persons of the Company. Interests to be acquired Pursuant to the Agreement, the Vendors have agreed to sell and the Purchaser has agreed to acquire the Sale Shares, representing 51% of the issued share capital of Victory Dragon free from encumbrances and claims. Consideration The consideration of HK$200,000,000 for the sale and purchase of the Sale Shares shall be settled by the Purchaser in the following manner: (a) as to HK$10,000,000 of the Consideration shall be paid by the Purchaser to the First Vendor (or as it may direct) in cash as the Deposit and part payment of the Consideration on the date of the Agreement; 3

4 (b) as to HK$106,840,000 of the Consideration shall be satisfied by the Purchaser procuring the Company to issue the Convertible Bonds to the First Vendor (or as it may direct) at Completion; and (c) as to the remaining balance of HK$83,160,000 of the Consideration shall be satisfied by the Purchaser procuring the Company to allot and issue the Consideration Shares to the Vendors at Completion. The Consideration was determined with reference to the preliminary valuation of Shen Long by Norton Appraisals Limited, an independent valuer, of approximately HK$400 million. The preliminary valuation was based on discounted cash flows approach. The material assumptions used in the valuation of Shen Long includes the following: APPRAISAL ASSUMPTIONS The relevant permit(s) and licence(s) of Shen Long such as the mining permit is able to be renewed from time to time in order to achieve the production and development of the business; As part of its going concern business, Shen Long will successfully do all necessary activities for the completion and development; The proposed capital investment of Shen Long for the first year starting 2012 is HK$20 million; Shen Long has adequate working capital to implement the scheduled operations from time to time and the corporate income tax in the PRC is 25% as at the date of appraisal; There exist reliable and adequate transportation network and capacity for Shen Long products; The Company, after completion of the transaction, will retain competent management, key personnel, and technical staff of Shen Long to support the ongoing operation and development of the business; All required licences, certificates, consents, or other legislative or administrative authority from any local, provincial, or national government or private entity or organization have been or can readily be obtained or renewed by the management of Shen Long on which the valuation contained in the valuation report are based; 4

5 There will not be material changes in government policies or political, legal (including legislation or regulations or rules), fiscal (including interest rate and exchange rate), market or economic conditions, the bases or rates of taxation in the PRC, where Shen Long is situated; and The management of Shen Long has adopted reasonable and necessary security measures and has considered several contingency plans against any disruption (such as fire, change of government policy, labour dispute, implementation of stringent statutory mining safety measures, geologic formation structurally deformed, soil erosion and other types of unexpected accidents or natural disasters or catastrophes) to the scheduled mining operations. The relevant comfort letters required under Rule of the Listing Rules will be included in the circular of the Company to be despatched in respect of the Proposed Acquisition. The Consideration was arrived at after arm s length negotiations between the parties to the Agreement. The Directors consider that the terms and conditions of the Proposed Acquisition are fair and reasonable and on normal commercial terms and are in the interests of the Company and the Shareholders as a whole. Profit Guarantee The First Vendor and the First Guarantor have guaranteed to the Purchaser that the Audited Consolidated Net Profit shall in aggregate be not less than the Profit Guarantee, being not less than RMB30,000,000 for the Guaranteed Period. In the event that the Profit Guarantee is not achieved, the First Vendor and the First Guarantor agree that the Purchaser and the Company shall be entitled to deduct from the outstanding principal amount of the Convertible Bonds on a dollar for dollar basis which is equivalent to the difference between the Audited Net Profit and the Profit Guarantee. In the event the Target Group recorded a net loss after tax and any extraordinary items and exceptional items for the Guaranteed Period, the First Vendor and the First Guarantor agree that the Purchaser and the Company shall be entitled to deduct from the outstanding principal amount of the Convertible Bonds which is equivalent to an amount of the summation of the loss (expressed in positive figure) and the Profit Guarantee provided that the maximum compensation amount shall not exceed HK$50,000,000. The Vendors and the Purchaser shall procure the auditors of the Company then to prepare audited consolidated financial statements of the Target Group within four months from the expiry of the Guaranteed Period to determine whether the Profit Guarantee is achieved. The Purchaser shall be entitled to set off the amount 5

6 equivalent to an amount of the summation of the loss (expressed in positive figure) and the Profit Guarantee against the outstanding principal amount of the Convertible Bonds. After the set off and deduction, the Purchaser shall procure the Company to issue new certificates of the Convertible Bonds to the First Vendor in the event that there are still any outstanding Convertible Bonds after the set off. Further announcement will be made by the Company should the Target Group fail to achieve the Profit Guarantee or make a loss. THE CONSIDERATION SHARES 660 million new Shares will be issued at an Issue Price of HK$0.126 per Consideration Share, credited as fully paid. The Consideration Shares, when allotted and issued, shall rank pari passu in all respects with the Shares in issue on the date of allotment and issue of the Consideration Shares including the right to all dividends, distributions and other payments made or to be made, on the record date which falls on or after the date of such allotment and issue. The Consideration Shares shall be issued at the Issue Price of HK$0.126, which was determined after arm s length negotiation between the Purchaser and the Vendors with reference to the market prices of the Shares prior to entering into the Agreement. The Issue Price represents: (i) a premium of approximately 5.00% over the average closing price of approximately HK$0.12 per Share as quoted on the Stock Exchange on 12 January 2012, being the date on which the Agreement was entered into; (ii) a premium of approximately 5.70% over the average closing price of approximately HK$ per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including 12 January 2012; and (iii) a premium of approximately 4.13% over the average closing price of approximately HK$0.121 per Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including 12 January An application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares on the Stock Exchange. The Directors will seek the approval of the Shareholders for the grant of the specific mandate to authorise the Directors to allot and issue the Consideration Shares at the EGM. 6

7 Based on the closing price of HK$0.12 per Share as quoted on the Stock Exchange on 12 January 2012, the Consideration Shares have a total market value of approximately HK$79,200,000. The Consideration Shares represent approximately 18.76% of the existing issued share capital of the Company and approximately 15.80% of the issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares. The Issue Price was arrived at by the Vendor and the Purchaser after taking into consideration of the average market price of the Shares during the period from the date of MOU and the date of the Agreement and the Board considers that the Issue Price is fair and reasonable. The Guarantors guarantee In consideration of the Purchaser agreeing to enter into the Agreement, (i) the First Guarantor has agreed to guarantee the performance of the obligations of the First Vendor under the Agreement; (ii) the Second Guarantor has agreed to guarantee the performance of the obligations of the Second Vendor under the Agreement; and (iii) the Third Guarantor has agreed to guarantee the performance of the obligations of the Third Vendor under the Agreement. For the avoidance of doubt, the Second Guarantor and the Third Guarantor do not warrant the warranties given by the Vendors under the Agreement. Conditions Completion shall be conditional upon: (a) the Purchaser being reasonably satisfied with the results of the due diligence review to be conducted under the Agreement; (b) all necessary consents, licences and approvals required to be obtained on the part of the Vendors and the Target Group in respect of the Agreement and the transactions contemplated thereunder having been obtained and remain in full force and effect; (c) all necessary consents, licences and approvals required to be obtained on the part of the Purchaser and the Company in respect of the Agreement and the transactions contemplated thereunder having been obtained and remain in full force and effect; (d) the passing by the Shareholders at the EGM to be convened and held of an ordinary resolution to approve the Agreement and the transactions contemplated thereunder, including but not limited to the issue and allotment of the 7

8 (e) (f) Consideration Shares, the issue of the Convertible Bonds and the issue and allotment of the Conversion Shares upon exercise of the conversion rights attached to the Convertible Bonds in accordance with the terms therein, and all other consents and acts required under the Listing Rules having been obtained and completed or, as the case may be, the relevant waiver from compliance with any of such rules having been obtained from the Stock Exchange; the PRC legal opinion (in form and substance satisfactory to the Purchaser) to be issued by a firm of PRC legal advisers acceptable to the Purchaser covering such matters which are relevant to the Agreement and the transactions contemplated thereunder being obtained; warranties given by the Vendors remaining true and accurate in all respects; (g) the valuation report (in form and substance satisfactory to the Purchaser) from a firm of independent professional valuers appointed by the Purchaser showing the valuation of Shen Long to be not less than HK$400 million having been obtained; (h) the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Consideration Shares and the Conversion Shares; (i) (j) the despatch of the circular by the Company as required under the Listing Rules; no indication being received from the Stock Exchange that the transactions contemplated under this Agreement will be treated or, as the case may be, ruled by the Stock Exchange as a reverse takeover under the Listing Rules, or may otherwise trigger mandatory general offer obligations under Rule 26 of the Hong Kong Code on Takeovers and Mergers; and (k) the Purchaser being satisfied that there has not been any material adverse change in respect of any member of the Victory Dragon Group since the date of the Agreement. The Purchaser may waive condition (a), (e), (f), (g) and (k) above and such waiver may be made subject to such terms and conditions. Conditions (b), (c), (d), (h), (i) and (j) are incapable of being waived. If the conditions have not been fulfilled (or waived by the Purchaser or the Vendors as the case may be) on or before 30 April 2012, or such later date as the Vendors and the Purchaser may agree, the Agreement shall cease and determine, the Vendors shall within seven (7) business days upon written notification of the Purchaser fully refund the Deposit (with any interests accrued thereon) in cash to the Purchaser (or as it may direct) and neither party shall take any action to claim for damages or to enforce specific performance or any other rights and remedies. Completion Completion shall take place on the date falling on the third Business Day after the fulfilment (or waiver) of the conditions or such other date as may be agreed between the Vendors and the Purchaser. 8

9 Upon Completion, the First Vendor shall deliver and deposit the bond certificate(s) of the Convertible Bonds with principal amount of HK$50,000,000 to the Purchaser as a security for the performance under the Profit Guarantee. TERMS OF CONVERTIBLE BONDS The terms of the Convertible Bonds have been negotiated on an arm s length basis and the principal terms of which are summarised below: Issuer The Company Principal amount HK$106,840,000 Interest The Convertible Bonds will bear interest of 5% per annum. Maturity The Convertible Bonds have a fixed term of 5 years. Unless previously redeemed, converted or cancelled pursuant to the terms of the Convertible Bonds, the Company shall redeem the outstanding principal amount of the Convertible Bonds on the maturity date. Conversion Provided that (i) any conversion of the Convertible Bonds does not trigger a mandatory offer obligation under the Takeovers Code on the part of the Bondholder who exercised the conversion rights, whether or not such mandatory offer obligation is triggered off by the fact that the number of Conversion Shares to be allotted and issued upon the exercise of the conversion rights attached to the Convertible Bonds (if applicable, including any Shares acquired by the parties acting in concert with the Bondholder) represents 30% (or such other percentage as stated in the Takeovers Code in effect from time to time) or more of the then issued ordinary share capital of the Company or otherwise pursuant to other provisions of the Takeovers Code; (ii) any conversion of the Convertible Bonds will not result in change of the single largest shareholder of the Company; and (iii) the public float of the Shares shall not be less than 25% (or any given percentage as required by the Listing Rules) of the 9

10 issued Shares of the Company at any one time in compliance with the Listing Rules, the Bondholder may convert the whole or part (in multiples of HK$1,000,000) of the principal amount of the Convertible Bonds into Conversion Shares at the Conversion Price from the date of issue of the Convertible Bonds up to the Maturity Date. Conversion Price The Conversion Price is HK$0.126 per Conversion Share subject to adjustment. The events for the adjustments of the Conversion Price are summarised as follows: (a) an alteration of the nominal amount of the Shares by reason of any consolidation or subdivision; (b) an issue (other than in lieu of a cash dividend) by Shares credited as fully paid by way of capitalisation of profits or reserves (including any share premium account, contributed surplus account or capital redemption reserve fund); (c) a capital distribution being made by the Company, whether on a reduction of capital or otherwise, to Shareholders in their capacity as such; (d) an offer or grant being made by the Company to Shareholders by way of rights or options or warrants to subscribe for new Shares at a price which is less than 80% of the market price; (e) (f) an issue wholly for cash being made by the Company of securities convertible into or exchangeable for or carrying rights of subscription for new Shares, if in any case the total effective consideration per Share initially receivable for such securities is less than 80% of the market price, or the terms of any such rights of conversion or exchange or subscription attached to any such securities being modified so that the said total effective consideration per Share initially receivable for such securities is less than 80% of the market price; and an issue being made by the Company wholly for cash of Shares at a price per Share less than 80% of the market price. The Conversion Price represents (i) a premium of approximately 5.00% over the closing price of HK$0.12 per Share as quoted on the Stock Exchange on 12 January 2012, being the date of the Agreement; (ii) a premium of approximately 5.70% over the average of the closing prices of approximately HK$ per Share as quoted on the Stock Exchange for the last five trading days up to and including 12 January 2012, being the date of the Agreement; and (iii) a premium of approximately 4.13% over the average of the closing prices of approximately HK$0.121 per Share as quoted on the Stock Exchange for the last ten trading days up to and including 12 January 2012, being the date of the Agreement. 10

11 The Conversion Price was determined by the Vendors and the Purchaser on an arm s length basis with reference to the current market price of the Shares as shown above. The Board considers that the Conversion Price is fair and reasonable. Conversion Shares Assuming there is an immediate exercise in full of the conversion rights attached to the Convertible Bonds in the aggregate principal amount of HK$106,840,000 at the Conversion Price by the Bondholders, the Company will issue an aggregate of 847,936,507 new Shares, representing (i) approximately 24.10% of the existing issued share capital of the Company; and (ii) approximately 16.87% of the issued share capital of the Company as enlarged by the allotment and issue of the Conversion Shares and the Consideration Shares. The Conversion Shares will be allotted and issued pursuant to the specific mandate to be sought at the EGM. Early redemption The Company may at any time before the Maturity Date early redeem the Convertible Bonds (in whole or in part). Ranking The Conversion Shares, when allotted and issued, will rank pari passu in all respects with the then existing issued Shares. Status of the Convertible Bonds The Convertible Bonds constitute a direct, unconditional, unsubordinated and unsecured obligations of the Company and rank pari passu and rateably without preference (with the exception of obligations in respect of taxes) equally with all other present and/or future unsecured and unsubordinated obligations of the Company. Transferability With the prior consent of the Company, the Convertible Bonds may be transferred or assigned by the Bondholder(s) to any party other than a connected person of the Company unless with the prior consent of the Company and the Stock Exchange. 11

12 Voting rights The Convertible Bonds do not confer any voting rights at any meetings of the Company. Application for listing No application will be made by the Company for the listing of the Convertible Bonds. Application will be made by the Company to the Listing Committee for the listing of, and permission to deal in, the Conversion Shares. No restriction applies to any subsequent sale of the Consideration Shares and Conversion Shares. INFORMATION OF THE COMPANY AND VICTORY DRAGON GROUP The Company The Company is an investment holding company and the Group is principally engaged in the mining of dolomite and manufacturing magnesium ingots in the State of Perak, Malaysia and exploration of mining resources. Victory Dragon Group Victory Dragon is principally engaged in investment holding. Victory Dragon is the sole beneficial owner of the entire registered and paid up capital of Shen Long. Shen Long is principally engaged in the business of manufacturing and distributing bottled natural mineral water in the PRC. Shen Long has well established its factory for manufacturing bottled natural mineral water in the PRC and is holding relevant valid mining licence / approval for natural mineral water. Furthermore, Shen Long has established relevant sales distribution channels in the PRC. Set below is the financial information of Victory Dragon based on its unaudited financial statements: For the period from 15 July 2011 (date of incorporation) to 30 September 2011 (Unaudited) HK$ Loss before taxation 9,360 Loss after taxation 9,360 Net asset value as at 30 September

13 Victory Dragon records no turnover for the period from 15 July 2011 to 30 September Set below is the financial information of Shen Long based on its unaudited financial statements: For the Year ended 31 December 2008 (Unaudited) RMB 000 For the Year ended 31 December 2009 (Unaudited) RMB 000 For the Year ended 31 December 2010 (Unaudited) RMB 000 For the nine months ended 30 September 2011 (Unaudited) RMB 000 Revenue Loss before taxation Loss after taxation Net asset value 7,787 7,230 6,579 6,022 After completion of the Proposed Acquisition, Victory Dragon and Shen Long shall be treated as subsidiaries of the Group and their results will be consolidated into the consolidated financial statements of the Group. Group structure The following charts show the group structure of Victory Dragon Group as at the date of this announcement before and after the Completion: As at the date of this announcement 13

14 Immediately after Completion Note: Victory Captain Group Limited is a company incorporated in the British Virgin Islands and is wholly owned by the First Guarantor. REASONS FOR THE PROPOSED ACQUISITION The Company is an investment holding company and the Group is principally engaged in the mining of dolomite and manufacturing magnesium ingots in the State of Perak, Malaysia and exploration of mining resources. The Directors have been identifying further investment opportunities in order to diversify its existing business and maximise the return to the Shareholders. The Directors consider that the Proposed Acquisition represents a good opportunity for the Group to tap into the growing PRC business of manufacturing and distributing bottled natural mineral water and also allow it to diversify its existing businesses. Based on the above, the Board is of the view that the terms of the Proposed Acquisition are fair and reasonable and the Proposed Acquisition is in the interests of the Company and the Shareholders as a whole. 14

15 EFFECTS OF THE PROPOSED ACQUISITION ON SHAREHOLDING STRUCTURE Set out below is a summary of the shareholding structure of the Company (i) as at the date of this announcement; (ii) immediately after Completion and allotment and issue of the Consideration Shares; and (iii) immediately after Completion and allotment and issue of the Consideration Shares and issue of the Convertible Bonds upon exercise of the Conversion Rights in full. Shareholders should take note that the analysis under scenario (iii) is shown for illustration purpose only. As at the date of this Announcement Number of Approximate Shares percentage Immediately after Completion and allotment and issue of Consideration Shares Number of Shares Approximate percentage Immediately after completion of allotment and issue of Consideration Shares and issue of the Convertible Bonds upon exercise of the Conversion Rights in full (Note 1) Number of Shares Approximate percentage Shareholders Ho Wah Genting Berhad 744,150, ,150, ,150, Silver Rhythm Sdn. Bhd. 525,047, ,047, ,047, Leung Wai Kwan (Note 2) 16,198, ,198, ,198, First Vendor and its associates 193,174, ,041,111, Second Vendor and its associates 155,555, ,555, Third Vendor and its associates 24,620, ,889, ,889, Other Shareholders 2,207,665, ,207,665, ,207,665, Total 3,517,680, % 4,177,680, % 5,025,617, % Note: 1. The numbers are for illustration purpose only. Pursuant to the Agreement, the First Vendor will only convert the Convertible Bonds in a manner that will (i) not upset the public float of Shares on the Stock Exchange; (ii) not result in change of the single largest shareholder of the Company upon any conversion of the Convertible Bonds; (iii) not trigger any general offer obligation under Rule 26 of the Takeovers Code. 2. Mr. Leung Wai Kwan, being an executive Director of the Company, has a direct shareholding of 2,900,000 Shares and is also deemed to be interested in 13,298,000 Shares held by his spouse. 15

16 LISTING RULES IMPLICATIONS The Proposed Acquisition constitutes a major transaction on the part of the Company under the Listing Rules. The Proposed Acquisition also constitutes a major transaction for the Company under Rule of the Listing Rules and is subject to the reporting, announcement and shareholders approval requirements. A circular containing, among other matters, further details of the Proposed Acquisition and a notice to convene the EGM will be despatched to the Shareholders in compliance with the Listing Rules on or before 6 February The Proposed Acquisition is subject to, among others, the approval by the Independent Shareholders at the EGM. Each of the Vendors and their respective associates are required to abstain from voting at the EGM to approve the Proposed Acquisition. As at the date of this announcement, save for the Third Guarantor who is interested in 0.70% of the issued share capital of the Company, neither the Vendors nor its respective associates are interested in the Shares. DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions shall have the following meanings when used herein: Agreement associates Audited Consolidated Net Profit Board Bondholder(s) Champion or Third Vendor the agreement dated 12 January 2012 and entered into among the Vendors, the Guarantor and the Purchaser in relation to the sale and purchase of the Sale Shares has the meaning ascribed to it in the Listing Rules the audited consolidated net profit after tax and any extraordinary items and exceptional items of the Target Group to be determined under Hong Kong Financial Reporting Standards and the related interpretation of those standards the board of Directors the holder(s) of the Convertible Bonds Champion Tone Development Limited, a company incorporated in the British Virgin Islands with limited liability and being one of the Vendors in the Proposed Acquisition; and is the beneficial owner of 10% of the issued share capital of Victory Dragon as at the date of this announcement 16

17 Chinacorp or Second Vendor Company Completion Completion Date Consideration Consideration Shares Chinacorp International Consultants Limited, a company incorporated in the British Virgin Islands with limited liability and being one of the Vendors in the Proposed Acquisition; and is the beneficial owner of 5% of the issued share capital of Victory Dragon as at the date of this announcement CVM Minerals Limited, a company incorporated in Hong Kong with limited liability, the issued shares of which are listed on Main Board completion of the sale and purchase of the Sale Shares in accordance with the terms and conditions of the Agreement the date of Completion pursuant to the Agreement the consideration to be satisfied by the Purchaser to the Vendors for the sale and purchase of the Sale Shares 660,000,000 new shares to be allotted and issued by the Company to the Vendors in part satisfaction of the Consideration Convertible Bonds the convertible bonds in the principal amount of HK$106,840,000, to be issued by the Company in favour of the Vendors in accordance with the terms and conditions of the Agreement Conversion Price Conversion Shares the initial conversion price of HK$0.126 per Conversion Share, subject to adjustments, pursuant to the terms of the Convertible Bonds 847,936,507 new shares to be allotted and issued by the Company upon the exercise of the conversion rights in respect of the Convertible Bonds Deposit the refundable deposit and part payment of the Consideration in the sum of HK$10,000,000 payable by the Purchaser to the First Vendor (or as it may direct) on the date of the Agreement Director(s) the director(s) of the Company 17

18 EGM First Guarantor Group Guaranteed Period Guarantors Hong Kong Issue Price Listing Rules Main Board Maturity Date Nice Tone PRC Profit Guarantee the extraordinary general meeting of the Company to be held and convened for the purpose of considering and, if thought fit, approving the Agreement and the transactions contemplated thereunder Chu Yuk Lung, the ultimate beneficial owner of the First Vendor the Company and its subsidiaries the period of twelve months commencing from the date of Completion collectively, the First Guarantor, the Second Guarantor and the Third Guarantor the Hong Kong Special Administrative Region of the People s Republic of China HK$0.126 per Consideration Share the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong the main board of the Stock Exchange the date of maturity of the Convertible Bonds, being the date falling on the fifth anniversary of the date of issue of the Convertible Bonds Nice Tone Enterprises Ltd., a company incorporated in the British Virgin Islands with limited liability, a wholly owned subsidiary of the Company and the purchaser of the Sale Shares People s Republic of China The profit guarantee given by the First Vendor and the First Guarantor under the Agreement that consolidated net profit after tax and any extraordinary items and exceptional items of the Target Group to be determined under Hong Kong Financial Reporting Standards and the related interpretation of those standards for the Guaranteed Period shall not be less than RMB30,000,000 18

19 Proposed Acquisition Purchaser Sale Shares Second Guarantor Shareholders Shares the proposed acquisition of the Sale Shares by the Purchaser subject to and upon the terms and conditions of the Agreement Nice Tone 3,060,000 shares of HK$1.00 each in the share capital of Victory Dragon, which are legally and beneficially owned by the Vendors Au Yu Siu, the ultimate beneficial owner of the Second Vendor holders of the Shares ordinary shares of HK$0.025 each in the capital of the Company Shen Long (Long Chuan Shen Long Mineral Water Co. Ltd.) #, a company established in the PRC Stock Exchange Takeovers Code Third Guarantor Vendors The Stock Exchange of Hong Kong Limited the Hong Kong Code on Takeovers and Mergers Tan Chee Chuan, the ultimate beneficial owner of the Third Vendor Champion, Chinacorp and Voice Key Victory Dragon Victory Dragon Holdings Limited, a company incorporated in Hong Kong with limited liability and is the sole beneficial owner of the entire registered and paid up capital of Shen Long Victory Dragon Group or Target Group Voice Key or First Vendor Victory Dragon and its subsidiary, Shen Long Voice Key Group Limited, a company incorporated in the British Virgin Islands with limited liability and being one of the Vendors in the Proposed Acquisition; and is the beneficial owner of 36% of the issued share capital of Victory Dragon as at the date of this announcement 19

20 HK$ RMB Hong Kong dollars, the lawful currency of Hong Kong Renminbi, the lawful currency of the PRC # The English translation of Chinese names or words in this announcement, where indicated, are included for information purpose only, and should not be regarded as the official English translation of such Chinese names or words. Hong Kong, 12 January 2012 By order of the Board CVM Minerals Limited GOH SIN HUAT Executive Chairman As at the date of this announcement, the Executive Directors of the Company are Mr. Goh Sin Huat, Mr. Lim Ooi Hong and Mr. Leung Wai Kwan and the Independent Non-executive Directors of the Company are Ms. Wong Choi Kay, Mr. Chong Lee Chang and Mr. Tony Tan. This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and is not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading. 20