LETTER OF INTENT IN RELATION TO POTENTIAL ACQUISITION

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    LETTER OF INTENT IN RELATION TO POTENTIAL ACQUISITION

This announcement is made pursuant to Rule 13.09 of the the Rules Governing the Listing of
Securities on the Stock Exchange (the “Listing Rules”).


Letter of Intent in relation to the Potential Acquisition

The board of directors (the “Board”) of Sino Dragon New Energy Holdings Limited (the
“Company”) announces that on 8 December 2009 (after trading hours), the Company and Jiangsu
Dragon Crystal Environmental Protection Co., Ltd. (“Jiangsu Dragon Crystal”) entered into a
non-binding letter of intent (the “Letter of Intent”) with two shareholders (“Eurofo Shareholders”)
of Shanxi Eurofo Green Energy Co., Ltd. (“Shanxi Eurofo”). Pursuant to the Letter of Intent, the
Company and Jiangsu Dragon Crystal intend to acquire from Eurofo Shareholders the entire equity
interest of Shanxi Eurofo which is owned as to 100% by Eurofo Shareholders (the “Potential
Acquisition”). Jiangsu Dragon Crystal is a company beneficially owned by Mr. Fang Guo Hong,
a director of the Company, Mr. Yang Xin Min, the controlling shareholder (as defined in the
Listing Rules) and a director of the Company, Mr. Yang Zhen, the son of Mr. Yang Xin Min, and
an independent third party (as defined in the Listing Rules).




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Pursuant also to the Letter of Intent, the total consideration of the Potential Acquisition (the
“Consideration”) shall be settled either entirely by cash or by a combination of the issue of new
shares of the Company (the “Consideration Shares”) and cash.          The parties thereto agreed that
the total value of the Consideration Shares, if any, shall not exceed 40% of the Consideration. In
addition, a deposit of RMB5,000,000 shall be paid by Jiangsu Dragon Crystal to Shanxi Eurofo
within 10 days upon signing of the Letter of Intent and no deposit shall be payable by the
Company.


The parties to the Letter of Intent also agreed to enter into a formal agreement relating to the
Potential Acquisition within 45 days from the date of the Letter of Intent. In the event that no
formal agreement is entered into in relation to the Potential Acquisition within 45 days from the
date of the Letter of Intent, Eurofo Shareholders shall have the right to elect either partially or fully
refunding the aforesaid deposit to Jiangsu Dragon Crystal without interest or not making any refund
at all.

Shanxi Eurofo is primarily engaged in green energy business and is developing the first project in
the People’s Republic of China (the “PRC”) which uses the waste gas emitted from coke plants to
generate electric power (the “Project”). It has also received approval from the United Nations on
selling its Certified Emission Reductions credits (or “CDM Credits”) that will be generated by the
Project. In view of the rapid development and the market potential of the green energy business in
the PRC, the directors of the Company consider that the Potential Acquisition is favorable to and
aligns with the Company’s business development strategies of diversification into new
energy-related business.

The Potential Acquisition, if materializes, may constitute a notifiable transaction and a connected
transaction for the Company under the Listing Rules. Further announcement will be made by the
Company as and when required under the Listing Rules.


General

The Company is also involved in preliminary discussions in connection with other potential
acquisitions but save for the entering into of the Letter of Intent, there are no other negotiations or
agreements relating to intended acquisitions or realizations which are discloseable under Rule
13.23 of the Listing Rules, and neither is the Board aware of any matter discloseable under the
general obligation imposed by Rule 13.09 of the Listing Rules, which is or may be of
price-sensitive nature.




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Shareholders of the Company and potential investors should note that the Potential
Acquisition may or may not materialize, and that no legally binding document has been
executed. Accordingly, shareholders of the Company and potential investors are advised to
exercise caution when dealing in the Company’s shares.

                                                            By Order of the Board
                                                               Yang Xin Min
                                                                 Chairman

Hong Kong, 9 December 2009


As at the date of this announcement, the executive directors of the Company are Mr. Yang Xin
Min, Ms. Huang Yue Qin, Mr. Zhou Quan, Mr. Li Fu Ping and Mr. Fang Guo Hong , and the
independent non-executive directors are Mr. Cheng Faat Ting Gary, Mr. Carl F. Steiss and Mr.
Victor Tong.


*   For identification purposes only




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