The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, 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 announcement.
FAR EAST GOLDEN RESOURCES GROUP LIMITED 遠東金源集團有限公司 (incorporated in Bermuda with limited liability) (Stock code: 1188)
ANNOUNCEMENT ACQUISITION OF THE ENTIRE EQUITY INTEREST IN A PRC COMPANY
This announcement is made pursuant to Rule 13.09 of the Listing Rules.
Proposed Acquisition
On 23 May 2008, Compass Pacific (a wholly-owned subsidiary of the Company) as Transferee and Helong Long Xiang and Che Xianghong (both are Independent Third Parties) as Transferors entered into the Share Transfer Agreement pursuant to which the Transferee has agreed to acquire from the Transferors the entire equity interest in Jilin Shengshi at the consideration of RMB$4,000,000 (equivalent to HK$4,540,000), subject to the conditions and upon the terms contained in the Share Transfer Agreement.
The Directors consider the terms of the Acquisition are on normal commercial terms, fair and reasonable and the Acquisition is in the interests of the Company and the Shareholders as a whole.
The Acquisition does not constitute a notifiable transaction for the Company under Chapter 14 of the Listing Rules.
This announcement is made pursuant to Rule 13.09 of the Listing Rules.
The Board is pleased to announce that, after the close of trading hours on 23 May 2008, Compass Pacific (a wholly-owned subsidiary of the Company) entered into the Share Transfer Agreement, which is legally binding, with the Transferors for the acquisition of the entire equity interest in Jilin Shengshi.
- - PRINCIPAL TERMS OF THE SHARE TRANSFER AGREEMENT
Date
23 May 2008
Parties
Transferors : (a) Helong Long Xiang
(b) Che Xianghong (車香紅)
To the best of the Directors’ knowledge, information and belief after having made all reasonable enquiries, each Transferor and, if applicable, the existing ultimate beneficial owner(s) of such Transferor are Independent Third Parties.
Transferee : Compass Pacific, a company incorporated in Hong Kong with limited liability and a wholly owned subsidiary of the Company.
Interest to be transferred
Pursuant to the Share Transfer Agreement, the Transferors agreed to transfer to the Transferee the entire equity interest in the Target Company (namely, Jilin Shengshi), which is beneficially held as to 98% by Helong Long Xiang and 2% by Che Xianghong.
Acquisition Consideration
The Acquisition Consideration is RMB4,000,000 (equivalent to HK$4,540,000), which will be allocated between the Transferors in proportion to their respective percentage of shareholdings in the Target Company.
The Acquisition Consideration, which is to be funded by the Company from its internal resources, is to be paid in cash in full upon the Acquisition Completion.
Basis of the Acquisition Consideration
The Acquisition Consideration was arrived at after arm’s length negotiations between the parties to the Share Transfer Agreement and determined with reference to the registered capital which has been paid-up in the amount of RMB4,000,000 (equivalent to HK$4,540,000) of the Target Company.
- - Conditions Precedent to the Acquisition
The Acquisition Completion shall be conditional upon, among others, the fulfilment to the satisfaction of the Transferee in its absolute discretion or, as the case may be, waiver of the following Conditions Precedent:
(i) all requisite authorisations, approvals, registrations and permits required for effectuating the transfer contemplated under the Share Transfer Agreement having been obtained;
(ii) the renewal of the exploration licences granted to the Target Subsidiary of Exploration Right I and Exploration Right II;
(iii) the delivery of a legal opinion to the Transferee (in form and substance satisfactory to the Transferee) by a firm of lawyers qualified to practise in PRC law confirming, among other things, (a) the due establishment of each member of the Target Group; (b) that the Acquisition shall not cause any of the current contracts, co-operation arrangements, ownership arrangements or other entitlements relating to any member of the Target Group or in relation to the Target Group’s operation in the PRC (if any) to be cancelled, terminated, amended in any material manner nor render the Target Group’s operations in the PRC (if any) to become illegal or otherwise adversely affect the authority or ability of the Target Group to carry on its operation in PRC (if any) as it is being carried on;
(iv) the carrying out of due diligence review by the Transferee in relation to the assets, liabilities, operations and affairs of the Target Group which the Transferee deems necessary, desirable or appropriate and confirmation by the Transferee that the results of such due diligence review are satisfactory in all respects;
(v) (if applicable) the obtaining by the Company of all necessary consents, authorisations or other approvals (or as the case may be, waiver) of any kind in connection with the entering into and performance of the terms of the Share Transfer Agreement by the Transferee which may be required under the Listing Rules, from the Stock Exchange or any governmental or regulatory authorities;
(vi) none of the warranties given by the Transferors as contained in the Share Transfer Agreement having been breached in any material respect (or, if capable of being remedied, has not been remedied), or is misleading or untrue in any material respect.
The Transferee may waive any of the above conditions stated in (iii), (iv) and (vi) above. None of the Conditions Precedents can be waived by the Transferors.
- - If any of the Conditions Precedent have not been fulfilled or waived by the Transferee by the Longstop Date (or such other date as the Transferors and the Transferee may agree), the provisions of the Share Transfer Agreement (other than certain clauses as specified in the Share Transfer Agreement) shall from such date have no effect and no party to the Share Transfer Agreement shall have any claim against the others save for claim (if any) in respect of such continuing provisions or any antecedent breach of the Share Transfer Agreement.
Acquisition Completion
The Acquisition Completion shall take place on the fifth Business Day next following the day on which the last unfulfilled Condition Precedent is satisfied or (as the case may be) waived.
Effect of the Acquisition
If the Acquisition Completion materialises, the Target Company will become an indirect wholly-owned subsidiary of the Company upon the Acquisition Completion and the results of the Target Group will be consolidated in the Company’s accounts.
Further information on the Target Group (comprising the Target Company and the Target Subsidiary) is set out in the paragraph headed “Information on the Target Group” below.
INFORMATION ON THE TARGET GROUP
Target Company – Jilin Shengshi
The Target Company was established on 11 July 2007 as a limited liability company in the PRC, and its scope of operation includes metal materials, gold-mining products, crude iron, coking coal, processing and sales of iron concentrate powder. Knitwear and textile, agricultural by-products, electronic products, general machinery, hardware, electronics, arts and crafts, daily necessities, retail of building materials and import and export of goods and technologies (save for state-restricted merchandise and technologies for import/export purposes) (subject to specific approvals before commencement of operation).
As at the date of this announcement, the registered capital of the Target Company which has been paid up was RMB4,000,000 (equivalent to HK$4,540,000). Currently, its sole and principal asset is the holding of the entire registered capital of the Target Subsidiary, namely Yanbian Jida. The Target Company is still in its initial development stage and has not commenced any commercial operations. Accordingly, it has not generated any revenue, and thus net profit, since its incorporation.
On 16 May 2008, the Target Company entered into the Co-operation Agreement with 吉林省第六地質調 查所 (The Sixth Geological Survey of Jilin Province)* to perform geological survey and exploration of the Zhongping Mine in Jilin, the PRC, which is to be undertaken by the Mining Company (to be named as 汪精晟世礦業有限公司(Wangqing Shengshi Mining Limited)* to be jointly established by the Target Company and the Sixth Geological Survey pursuant to the terms of the Co-operation Agreement.
- - The Co-operation Agreement is for a term of 30 years commencing from 16 May 2008 to 15 May 2038. Pursuant to the Co-operation Agreement, the Target Company agreed to invest a sum of RMB5,000,000 (equivalent to HK$5,675,000) as capital contribution for the Mining Company and the Sixth Geological Survey agreed to inject its project (namely, 吉林省汪清縣仲坪銅礦普查項目Project for General Exploration of Copper Mines at Zhongping, Wangqing County, Jilin Province *) in respect of the exploration of the Zhongping Mine with an exploration area of approximately 7.50 km2. covered by the exploration licence (valid from 10 October 2006 to 10 October 2008) possessed by it into the Mining Company as its part of the contribution. Subject to the necessary PRC governmental approval and completion of the procedures for the registration, capital injection and formation of the Mining Company, the Target Company and the Sixth Geological Survey will respectively hold 70% and 30% of the equity interest in the Mining Company.
It is expected that the formation of the Mining Company will enable the Target Company to establish a solid co-operation relationship with the Sixth Geological Survey and to leverage on the latter’s advanced exploration techniques for the exploration of cooper mines in the North Eastern China region.
Target Subsidiary – Yanbian Jida
The Target Subsidiary was established on 20 June 2005 as a limited liability company in the PRC and is a wholly-owned subsidiary of the Target Company. The registered and paid-up capital of the Target Subsidiary is RMB1,000,000 (equivalent to HK$1,135,000). Its scope of operation includes construction and decoration materials, machinery and equipment, hardware and electronics, steel, iron powder.
The Target Subsidiary is the holder of the exploration licences in respect of Exploration Right I and Exploration Right II.
Exploration Right I is granted by Jilin Provincial Department of Land and Resources (吉林省國土資源 廳) for the period from 10 October 2006 to 31 December 2007. Exploration Right I enables its holder to conduct exploration in the Daxing Mine, with an exploration area of approximately 23.60 km2.
Exploration Right II is also granted by Jinlin Provincial Department of Land and Resources (吉林省國 土資源廳) for the period from 23 November 2006 to 31 December 2007. Exploration Right II enables its holder to conduct exploration in the Da’an Mine, with an exploration area of approximately 12.36 km2.
As disclosed in the paragraph headed “Conditions Precedent to the Acquisition” above, the Acquisition Completion is subject to (among others) the renewal of the exploration licences in respect of Exploration Right I and Exploration Right II.
As confirmed by the Transferors, no operation of exploration in the areas covered by the Two Exploration Rights has yet been commenced and no capital commitment has been made by the Transferors in respect of the Two Exploration Rights and the total costs to be incurred on the exploration of those sites cannot be ascertained.
- - INFORMATION ON THE GROUP
The Company is an investment holding company. The principal business of the Group include indoor family entertainment game centres, manufacturing and selling automobile axles and dealership of motor vehicles and spare parts, operating auto malls, car repairs services and properties development in the PRC.
REASONS FOR THE ACQUISITION
To enhance the overall performance of the Group, the Board considers it desirable to explore and capture a wider source and broader range of investment and/or business opportunities of high growth and yield with a view to diversifying the businesses of, and optimizing the returns to, the Company and the Shareholders as a whole.
Given the scarcity of, and the increasing demand for, natural mineral resources globally, the Board is optimistic about the prospects of the natural mineral resources businesses. The Directors believe that the Acquisition, if materialised, will create a platform for the Company to diversify the Group’s business and presents opportunities for the Group to benefit from and capitalize on the potential upside of the natural mineral resources business.
The Directors consider the terms of the Acquisition are on normal commercial terms, fair and reasonable and the Acquisition in the interests of the Company and the Shareholders as a whole.
IMPLICATION UNDER THE LISTING RULES
As the applicable Percentage Ratios under the Listing Rules of the Acquisition is less than 5%, the proposed Acquisition does not constitute a notifiable transaction for the Company under Chapter 14 of the Listing Rules.
If, following the materialisation of the Acquisition, there are any co-operation(s), arrangement(s) or transaction(s) which constitute notifiable transactions or connected transaction for the Company under the Listing Rules, the Company will comply with the requirements under the applicable Listing Rules as and when appropriate.
Completion of the Share Transfer Agreement is subject to Conditions Precedent being fulfilled (including the carrying out of due diligence review on the Target Group to the satisfaction of the Transferee to enable the Company to fully appraise, among others, the position of the Target Group and the viability and development prospects of the proposed investment by the Company). Accordingly, consummation of the transactions contemplated under the Share Transfer Agreement may or may not take place. Shareholders and potential investors should exercise caution when dealing in the shares in the Company.
- - DEFINITIONS
In this announcement, the following expressions shall, unless the context requires otherwise, have the following meanings:
“Acquisition” the proposed acquisition of the entire equity interest in the Target Company by the Transferee from the Transferors pursuant to the terms and conditions of the Share Transfer Agreement
“Acquisition Completion” completion of the Acquisition in accordance with the terms and conditions of the Share Transfer Agreement
“Acquisition Consideration” RMB4,000,000 (equivalent to HK$4,540,000) payable by the Transferee to the Transferors in accordance with the terms of the Share Transfer Agreement
“Board” the board of Directors
“Business Day” a day (excluding Saturday) on which banks in Hong Kong are open for business
“Company” Far East Golden Resources Group Limited (遠東金源集團有限公 司), an exempted company incorporated in Bermuda with limited liability, the Shares of which are listed on the main board of the Stock Exchange
“Connected Person” has the same meaning ascribed to it under the Listing Rules
“Conditions Precedent” the conditions precedent to the Acquisition Completion as set out in the Share Transfer Agreement and summarized in the paragraph headed “Conditions Precedent to the Acquisition ” in this announcement
“Co-operation Agreement” 《<吉林省汪清縣仲坪銅礦普查>項目聯合地質勘查與礦產開發合 同書》(transliteration into English as “Contract of Joint Geological Survey and Mining Exploration for the project of ‘General Exploration of Copper Mines at Zhongping, Wangqing County, Jilin Province) entered into between the Target Company and the Sixth Geological Survey on 16 May 2008
“Da’an Mine” the cooper mines located at 吉林省汪清縣東大安(Dongda’an, Wangqing County, Jilin Province East), the PRC
- - “Daxing Mine” the cooper, aluminium and zinc mines located at 吉林省汪清縣大興 (Daxing, Wangqing County, Jilin Province), the PRC
“Director(s)” the director(s) of the Company
“Exploration Right I” exploration right in respect of the Daxing Mine
“Exploration Right II” exploration right in respect of Da’an Mine
“Group” collectively, the Company and its subsidiaries from time to time
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Independent Third Party” a party and, if applicable, the ultimate beneficial owner(s) of the party who is independent of and is/are not connected with the Company, its subsidiaries and their respective Connected Persons.
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Longstop Date” being 30 September 2008, or such other date as the parties to the Share Transfer Agreement may agree in writing
“Mining Company 汪清晟世礦業有限公司(transliteration into English as Wangqing (礦業公司)” Shengshi Mining Limited)*, a limited liability company to be jointly established by the Target Company and the Sixth Geological Survey pursuant to the terms of the Co-operation Agreement
“PRC” the People’s Republic of China which, for the purposes of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
“Percentage Ratio” the applicable percentage ratio, other than the equity capital ratio under Rule 14.07 of the Listing Rules
“RMB” Renminbi Yuan, the lawful currency of the PRC
“Shares” ordinary shares of nominal value of HK$0.10 each in the capital of the Company
- - “Shareholders” holders of Shares
“Share Transfer Agreement” the conditional share transfer agreement dated 23 May 2008 entered into between the Transferors and the Transferee in respect of the Acquisition
“Sixth Geological Survey” 林省第六地質調查所(The Sixth Geological Survey of Jilin Province) *
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Target Company” or 吉林晟世礦業有限公司(transliteration into English as Jilin Shengshi “Jilin Shengshi” Mining Limited)*, a limited liability company established in the PRC
“Target Group” the Target Company and the Target Subsidiary
“Target Subsidiary” or 延邊吉達建材經銷有限公司(transliteration into English as Yanbian “Yanbian Jida” Jida Construction Materials Trading Limited)*, a limited liability company established in the PRC and a wholly-owned subsidiary of the Target Company
“Transferor-1” or 和龍市龍翔實業有限公司(transliteration into English as Helong Shi “Helong Long Xiang” Long Xiang Corporation)*, a limited liability company established in the PRC, one of the Transferors under the Share Transfer Agreement
“Transferor-2” 車香紅(Che Xianghong)*, one of the Transferors under the Share Transfer Agreement
“Transferors” Transferor-1 and Transferor-2, both are to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Independent Third Parties
“Transferee” or Compass Pacific Investment Limited (圓通投資有限公司), a company “Compass Pacific” incorporated in Hong Kong with limited liability and a wholly owned subsidiary of the Company
“Two Exploration Rights” Exploration Right I and Right Exploration II
“Zhongping Mine” the cooper mines located at Yanbian Korean Autonomous Prefecture, Wangqing County, Jilin Province (吉林省延邊朝鮮族自治州汪清 縣), the PRC
- - “km2” square kilometer(s)
“%” per cent.
By order of the Board Far East Golden Resources Group Limited Yeung Yung Chairman Hong Kong, 23 May 2008
* For identification only
As at the date of this announcement, the Board comprises six executive Directors, namely Mr Yeung Yung (Chairman), Mr Liu Quan (Deputy Chairman), Mr Wang Xiaolin (Chief Executive Officer), Mr Hui Wing Sang, Wilson, Mr Yury Royba and Mr Chen Peiquan and three independent non-executive Directors, namely Mr He Bangjie, Mr Li Zheng, Jack and Mr Ting Kwok Kit, Johnny.
In this announcement, for the purpose of illustration only, amounts quoted in RMB have been converted into HK$ at the rate of RMB1.135 to HK$1.00, and vice versa. Such exchange rate has been used, where applicable, for the purposes of illustration only and do not constitute a representation that any amounts were or may have been exchanged at such rate or any other rates or at all.
- 10 -