China Polymetallic Mining : Announcements and Notices - Discloseable Transaction in Relation to Acquisition of the Ent ...

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China Polymetallic Mining Limited

中 國 多 金 屬 礦 業 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 2133)

DISCLOSEABLE TRANSACTION IN RELATION TO

ACQUISITION OF THE ENTIRE SHARE CAPITAL OF HUA XING GLOBAL LIMITED

THE AGREEMENT

The Board hereby announces that on 8 January 2017 the Purchaser, an indirect wholly- owned subsidiary of the Company, and the Vendor, an Independent Third Party, entered into the Agreement pursuant to which the Purchaser has conditionally agreed to purchase, and the Vendor has conditionally agreed to sell, the Sale Interests, being the entire share capital of the Target Company at a total consideration of RMB101,500,000.

As at the date of this announcement, the Target Group holds (i) the Mining Licence and has the Mining Rights in the Myanmar Mine and (ii) owns an ore-processing plant.

LISTING RULES IMPLICATIONS

As more than one of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) in respect of the Acquisition are more than 5% but all the applicable percentage ratios are less than 25%, the Acquisition constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules, and is subject to the reporting and announcement requirement under Chapter 14 of the Listing Rules.

PROFIT FORECAST

The valuation report issued by Peak Vision Appraisals Limited on the market value of the Project Company is prepared by a discounted cash flow method under the income approach. As such the valuation constitutes a profit forecast under Rule 14.61 of the Listing Rules.

INTRODUCTION

The Board hereby announces that on 8 January 2017, the Purchaser, an indirect wholly- owned subsidiary of the Company, and the Vendor, entered into the Agreement pursuant to which the Purchaser has conditionally agreed to purchase, and the Vendor has conditionally agreed to sell, the Sale Interests, being the entire share capital of the Target Company at a total consideration of RMB101,500,000.

As at the date of this announcement, the Target Group (i) holds the Mining Licence and has the Mining Rights in the Myanmar Mine and (ii) owns an ore-processing plant.

THE AGREEMENT

The principal terms of the Agreement are as follows:

1. Date

   8 January 2017

2. Parties

3. the Vendor, as Vendor; and

4. Next Horizon Investments Limited, as purchaser.

   To the best knowledge, information and belief of the Directors having made all reasonable enquiries, the Vendor is an Independent Third Party.

5. Assets to be acquired

   The Sale Interests, being the entire share capital of the Target Company.

6. Consideration

   The Consideration is RMB101,500,000 in cash.

   Basis of Determination of the Consideration

   The Consideration was determined after arm's length negotiations between the Vendor and the Purchaser on normal commercial terms after taking into consideration, among others, the business prospects of the Target Group, the possible future earnings to be contributed by the Target Group to the Group, the synergetic effect on the Group's current mining business, the Myanmar Mine's estimated resources of lead metal and the

   valuation report issued by Peak Vision Appraisals Limited on the market value of the entire share capital of the Project Company as at 31 December 2016, which is RMB242,000,000 (based on the special assumption that all the exploration licences applied by the Project Company will be granted to the Project Company at nominal cost). Such valuation was assessed by Peak Vision Appraisals Limited, a firm of independent professional valuers, adopting the discounted cash flow method under the income approach. The valuation constitutes a profit forecast under Rule 14.61 of the Listing Rules, details of which are set out in the section headed ''Profit Forecast'' in this announcement below.

   The consideration of RMB101,500,000 represents a discount of approximately 16% to RMB120,951,600, being the value of the equity interest of the Project Company owned by the Target Company as mentioned in the paragraph hereinabove. The Consideration will be financed by internal resources of the Group.

   The Board considers that the Consideration is fair and reasonable and in the interests of the Company and its Shareholders as a whole.

   Payment terms

   The Consideration shall be paid in cash by the Purchaser to the Vendor within 30 days after the Completion (or any other date to be agreed between the Vendor and the Purchaser).

7. Indemnity

   Pursuant to the Agreement, the Vendor has irrevocably and unconditionally agreed to be liable for all liabilities, tax, costs, penalties and expenses incurred by the Target Group with reference to any time falling before the completion of the transfer of the management of the Target Group as mentioned in the sub-paragraph (G) below (the ''Liabilities''). The Purchaser may directly deduct from the Consideration a sum equivalent to the Liabilities as liquidated damages in the event and to the extent that such Liabilities are incurred prior to the payment of the Consideration. In addition and without prejudice to the Purchaser's right mentioned in the preceding sentence, the Purchaser shall have the right to withhold a sum equal to US$500,000 (notwithstanding, and independent of, any sum which may be deducted pursuant to the right mentioned in the preceding sentence) (the ''Withheld Amount'') from the Consideration as security for the payment of any Liabilities that may be incurred for a period of six months from the date of Completion and shall have the right to deduct directly a sum equal to the amount of any Liabilities actually incurred, but not paid by the Vendor, from the Withheld Amount as liquidated damages and the remaining balance of the Withheld Amount, if any, shall be paid to the Vendor (without interest) upon the expiry of the aforesaid six-month period. In the event that the amount of the Liabilities actually incurred but not paid by the Vendor exceeds the Withheld Amount, the Purchaser shall have the right to request the Vendor to pay such shortfall to the Purchaser within 30 days from the date on which such shortfall arises.

8. Conditions precedent

Completion is conditional upon, inter alia, the fulfillment or waiver (as the case may be) of the following conditions:

1. the Purchaser being solely and absolutely satisfied with the results of the due diligence conducted pursuant to the Agreement;

2. the operation of the Target Group and its businesses having been continued in the ordinary and usual course;

3. the Mining Licence not having been revoked; nor any indication of revocation thereof having been notified to the Target Group or the Vendor by the relevant authority;

4. all other necessary consent from third parties (including any governmental or official or regulatory authorities) and all other necessary consents, approvals, registrations and filings required pursuant to any legal or regulatory requirement in respect of the Agreement having been obtained;

5. there being no Material Adverse Change subsisting;

6. the representations, undertakings and warranties given by the Vendor as set out in the Agreement remaining true and accurate in any material respect and not misleading;

7. the Vendor having performed all of the covenants and agreements required to be performed or caused to be performed before Completion by him under the Agreement;

8. (where necessary) the approval of the Agreement and all the transactions contemplated thereunder having been obtained from the Shareholders by way of either (1) the passing of resolution(s) in general meeting (with such Shareholders abstaining from voting as required by the Listing Rules); or (2) if allowed under the Listing Rules, a written approval of the Shareholders acceptable to the Stock Exchange; and

9. the Purchaser has received a legal opinion issued by a firm of qualified lawyers to advise on Myanmar laws covering such matters and in such form as the Purchaser may require.

(collectively, the ''Conditions'')

The Purchaser may, in its absolute discretion, waive all or any of the Conditions (other than the Conditions specified in paragraphs (c), (h) and (i) above) at any time by notice in writing to the Vendor. The Conditions specified in paragraphs (c), (h) and (i) above cannot be waived in any circumstances. The Vendor shall use his best endeavours to procure the fulfillment of all the Conditions (other than the Conditions specified in paragraphs (h) and (i) above) on or before 31 May 2017 (or such other date as may be agreed by the Vendor and the Purchaser in writing) (the ''Long Stop Date'') unless