LETTER OF INTENT RELATING TO A POSSIBLE ACQUISITION

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LETTER OF INTENT RELATING TO A POSSIBLE ACQUISITION Powered By Docstoc
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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.




                         (Incorporated in the Caymans Islands with limited liability)
                                             (Stock code: 1194)

               LETTER OF INTENT RELATING TO A POSSIBLE ACQUISITION

This announcement is made in compliance with the disclosure requirements under Rules 13.09, 13.13 and
13.15 of the Listing Rules.

The Board is pleased to announce that on 4 February 2010 (after trading hours), the Company, through the
Purchaser, entered into the Letter of Intent with the Vendor regarding the Possible Acquisition.

As represented by the Vendor and stated in the Letter of Intent, (a) the Mining Company (i) holds a gold and
lead mining permit in the PRC; (ii) holds an exploration permit covering another area in the PRC (the
“Exploration Area”); and (iii) has made an application to the relevant government authorities in Henan province
for obtaining the mining permit for the Exploration Area; and (b) the reserves of gold in the mines of the
Mining Company are not less than 30 tonnes.

After signing the Letter of Intent, the Company (and its agents and/or advisers) shall be entitled to assess and
review the records and affairs of the Target Group and the Vendor shall, and shall procure his officers, employees
and advisers to provide reasonable assistance in this respect.

Under the Letter of Intent, the Vendor has granted an exclusive period of six months from the date of the Letter
of Intent, during which he shall not be engaged in negotiation with any other third party for the Possible
Acquisition (the “Exclusivity”).

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the
Vendor and his associates are Independent Third Parties.

In addition, pursuant to the Letter of Intent, the Company shall pay the Earnest Money (which shall be treated
as part of the consideration paid in the event that the Formal Agreement is entered into, or otherwise be refunded
to the Company without interest) within seven days from the date of the Letter of Intent. Upon payment of the
Earnest Money, the Vendor shall execute the Share Mortgage. In the event that the Purchaser does not proceed
with the Possible Acquisition or the Formal Agreement is not entered into within six months from the date of
the Letter of Intent (or such later date as the parties to the Letter of Intent may agree), the Vendor shall refund
the Earnest Money (without interest) to the Purchaser.

The amount of the Earnest Money exceeds 8% of the assets ratio of the Company as defined under Rule 14.07
of the Listing Rules and accordingly, the payment of the Earnest Money constitutes an advance to an entity
pursuant to Rules 13.13 and 13.15 of the Listing Rules.




                                                     —1—
The parties to the Letter of Intent intend that the consideration of the Possible Acquisition in relation to the
purchase of the gold and lead mining permit currently owned by the Mining Company should not exceed
HK$1,000 million (the “Proposed Consideration”). The parties to the Letter of Intent also intend that there
will be further negotiation for the additional consideration to be paid as and when the Target Company obtains
the mining permit covering the Exploration Area.

In the event that the Formal Agreement is entered into between the Vendor and the Purchaser, the Vendor shall
guarantee to the Purchaser that the profit after tax of the Mining Company shall not be less than HK$100
million for the year ended 30 June 2011 and HK$125 million for the year ended 30 June 2012 respectively.

The parties to the Letter of Intent intend that the Proposed Consideration shall be satisfied one-third by cash,
one-third by consideration Shares issued by the Company (the “Consideration Shares”) and one-third by
convertible notes/bonds carrying the rights to convert into new Shares (the “Convertible Notes”). The issue
price of the Consideration Shares shall be fixed at 90% of the closing price of HK$2.64 per Share as at the date
of the Letter of Intent (i.e. HK$2.376), while the conversion price of the Convertible Notes shall be fixed at the
closing price of HK$2.64 per Share as at the date of the Letter of Intent. The Convertible Notes will be issued
to the Vendor in two tranches of equal amount at the interest rate of 6% per annum.

Save as and except for those terms relating to the Exclusivity, the Earnest Money, the Share Mortgage and
confidentiality, the Letter of Intent is not legally binding.

In the event that the Possible Acquisition materialises, the Possible Acquisition shall constitute a notifiable
transaction for the Company under Chapter 14 of the Listing Rules.

As the Possible Acquisition may or may not materialise, shareholders and potential investors of the
Company should exercise caution when dealing in the Shares.

DEFINITIONS

In this announcement, unless the context otherwise requires, capitalised terms used shall have the following
meanings:

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

“Board”                            the board of Directors

“Company”                          China Precious Metal Resources Holdings Co., Ltd. (Stock code: 1194), a
                                   company incorporated in the Cayman Islands with limited liability and the
                                   shares of which are listed on the Main Board of the Stock Exchange

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

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

“Earnest Money”                    HK$200,000,000 as earnest money under the Letter of Intent

“Formal Agreement”                  the formal sale and purchase agreement in relation to the Possible Acquisition

“Group”                            the Company and its subsidiaries


                                                     —2—
“HK$”                            Hong Kong dollar(s), the lawful currency of Hong Kong

“Hong Kong”                      the Hong Kong Special Administrative Region of the PRC

“Hong Kong Company”              Hong Kong T&R Mining Investment Limited (
                                   ), a limited liability company incorporated under the laws of Hong Kong
                                 and wholly-owned by the Target Company

“Independent Third Party(ies)”   third party(ies) and its/their ultimate beneficial owner(s) which are
                                 independent of the Company and its connected persons and their respective
                                 associates

“Letter of Intent”               the letter of intent dated 4 February 2010 entered into between the Purchaser
                                 and the Vendor

“Listing Rules”                  the Rules Governing the Listing of Securities on the Stock Exchange

“Mining Company”                                                 (Luanchuan Jinxing Mining Co., Ltd.*),
                                 a wholly-foreign-owned enterprise established under the laws of the PRC
                                 and wholly-owned by the Hong Kong Company

“Possible Acquisition”           the possible acquisition of the Target Company by the Group

“PRC”                            the People’s Republic of China

“Purchaser”                      China Precious Metal Resource Co., Limited, a wholly-owned subsidiary of
                                 the Company

“Shares”                         ordinary shares of HK$0.125 each in the share capital of the Company

“Share Mortgage”                 share mortgage over the entire equity interest in the Target Company in
                                 favour of the Purchaser

“Stock Exchange”                 The Stock Exchange of Hong Kong Limited

“Target Company”                 Decent Connection Overseas Limited, a company incorporated in the British
                                 Virgin Islands with limited liability and wholly-owned by the Vendor

“Target Group”                   the Target Company and its subsidiaries

“Vendor”                         Mr. King Hap Lee (               )

“%”                              per cent.


                                                                  By order of the Board
                                                    China Precious Metal Resources Holdings Co., Ltd.
                                                                      LAM Cham
                                                                   Executive Director

Hong Kong, 4 February 2010

                                                 —3—
As at the date of this announcement, the executive Directors are Mr. Lim Wa, Mr. Lam Cham, Mr. Dai Xiaobing
and Mr. Chang Yim Yang; the non-executive Director is Mr. Wang, John Peter Ben; the independent non-
executive Directors are Dr. Wong Lung Tak Patrick, J.P., Mr. Chan Kin Sang and Mr. Xiao Rong Ge.

If there is any inconsistency between the Chinese names of the PRC entitles mentioned in this announcement
and their English translations, the Chinese names shall prevail.

This announcement will remain on the “Latest Company Information” page of the website of the Stock Exchange
at http://www.hkexnews.hk and the Company’s website at http://cpm.etnet.com.hk for at least seven days from
the date of its posting.

* for identification purpose only




                                                 —4—