APAC Resources : Renewal of Discloseable Transaction and Continuing Connected Transaction

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.

APAC RESOURCES LIMITED

亞 太 資 源 有 限 公 司 *

(Incorporated in Bermuda with limited liability)

(Stock Code: 1104)

RENEWAL OF DISCLOSEABLE TRANSACTION

AND CONTINUING CONNECTED TRANSACTION

Reference is made to the Previous Announcement in relation to a loan transaction among the Lender (a wholly-owned subsidiary of the Company) as the lender, the Borrower as the borrower and the Guarantor as the guarantor.

On 10 May 2021, the Lender as the lender entered into the Supplemental Loan Agreement with the Borrower as the borrower and the Guarantor as the guarantor, pursuant to which, the Lender agreed to, among other things, increase the limit of the Loan Facility from HK$235,000,000 (or an amount equivalent to HK$235,000,000 in such alternative currency as acceptable to and agreed by the Lender) to HK$260,000,000 (or an amount equivalent to HK$260,000,000 in such alternative currency as acceptable to and agreed by the Lender) and extend the repayment date of the Loan Facility from 12 July 2021 to 12 July 2024 on the terms and subject to the conditions therein. Immediately before entering into the Supplemental Loan Agreement, HK$217,620,000 (equivalent to RMB180,000,000 as at the date of this announcement) of the Loan Facility has been drawn and remained outstanding.

LISTING RULES IMPLICATIONS

As the Lender is a wholly-owned subsidiary of the Company, the Transaction entered into by the Lender shall be a deemed transaction of the Company under the Listing Rules as the definition of "listed issuer" under Chapter 14 of the Listing Rules shall include the listed issuer's subsidiaries. The Transaction constitutes a discloseable transaction for the Company on the basis that the relevant percentage ratio(s) of the Company exceeds 5% but is below 25%.

- 1 -

As at the date of this announcement, the Company is indirectly held as to approximately 39.86% by AGL, a controlling shareholder of the Company and hence a connected person of the Company. AGL also indirectly holds approximately 48.86% of the total number of issued shares of the Guarantor and the Borrower is a wholly-owned subsidiary of the Guarantor. Hence, the Borrower and the Guarantor are associates of AGL under Rule 14A.13(3) of the Listing Rules and connected persons of the Company. As a result, the Transaction constitutes a continuing connected transaction of the Company under Chapter 14A of the Listing Rules, and accordingly, is subject to the reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

INTRODUCTION

Reference is made to the Previous Announcement in relation to a loan transaction among the Lender (a wholly-owned subsidiary of the Company) as the lender, the Borrower as the borrower and the Guarantor as the guarantor.

On 10 May 2021, the Lender as the lender entered into the Supplemental Loan Agreement with the Borrower as the borrower and the Guarantor as the guarantor, pursuant to which, the Lender agreed to, among other things, increase the limit of the Loan Facility from HK$235,000,000 (or an amount equivalent to HK$235,000,000 in such alternative currency as acceptable to and agreed by the Lender) to HK$260,000,000 (or an amount equivalent to HK$260,000,000 in such alternative currency as acceptable to and agreed by the Lender) and extend the repayment date of the Loan Facility from 12 July 2021 to 12 July 2024 on the terms and subject to the conditions therein. Immediately before entering into the Supplemental Loan Agreement, HK$217,620,000 (equivalent to RMB180,000,000 as at the date of this announcement) of the Loan Facility has been drawn and remained outstanding.

The Supplemental Loan Agreement

Date:	10 May 2021
Parties:	(1)	the Lender as the lender for the Supplemental Loan
		Agreement;
	(2)	the Borrower as the borrower for the Supplemental Loan
		Agreement; and
	(3)	the Guarantor as the guarantor for the Supplemental Loan
		Agreement.

- 2 -

Principal Terms of the Supplemental Loan Agreement

Pursuant to the Supplemental Loan Agreement, the Loan Agreement has now been amended and/or supplemented, inter alia, as follows:

Loan Facility amount:	HK$260,000,000 (or an amount equivalent to HK$260,000,000
	in such alternative currency as acceptable to and agreed by the
	Lender)
Repayment date:	12 July 2024

Save for the amendments made to the Loan Agreement by the Supplemental Loan Agreement, the provisions of the Loan Agreement and the rights and obligations thereunder shall remain in full force and effect.

The amendments made to the Loan Agreement by the Supplemental Loan Agreement are conditional upon among others, the approval by the Independent Shareholders of the Supplemental Loan Agreement and the Transaction and all other consents and acts required under the Listing Rules being obtained and completed.

Pursuant to the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement, the Lender may assign all or any part of its rights or benefits or transfer all or any part of its obligations under the Loan Agreement, the Supplemental Loan Agreement or other documents in relation to the Loan Facility to any person.

HISTORICAL AND THE PROPOSED ANNUAL CAPS

Historical Annual Cap Amounts under the Loan Agreement

The following table sets out the historical maximum principal loan outstanding, maximum interest amount and annual caps under the Loan Agreement for each of the following periods:

	Financial	Financial	Financial
	year ended	year ending	year ending
	30 June 2020	30 June 2021	30 June 2022
Maximum principal amount
outstanding	HK$235,000,000	HK$235,000,000	HK$235,000,000
Maximum interest amount	HK$14,900,000	HK$14,900,000	HK$1,300,000
	(Note 1)	(Note 2)	(Note 3)
Annual cap amounts	HK$249,900,000	HK$249,900,000	HK$236,300,000

Note 1: The Borrower made the first drawdown of the original loan facility on 10 July 2019 under the Loan Agreement and the interest amount received from the Borrower for the period between 10 July 2019 and 30 June 2020 was approximately HK$10,692,000.

- 3 -

Note 2: Assuming that HK$217,620,000 of the original loan facility under the Loan Agreement remains outstanding as at 30 June 2021, the interest amount to be received from the Borrower for the period between 1 July 2020 and 30 June 2021 is approximately HK$11,969,000.

Note 3: Assuming that HK$217,620,000 of the original loan facility under the Loan Agreement remains outstanding as at 12 July 2021, being the original repayment date under the Loan Agreement, the interest amount to be received from the Borrower for the period between 1 July 2021 and 11 July 2021 (inclusive) is approximately HK$361,000.

Proposed Annual Cap Amounts under the Supplemental Loan Agreement

The proposed annual cap amounts for the maximum principal amount outstanding under the Supplemental Loan Agreement and the maximum interest amount of the Loan Facility are as follows:

	From	Financial	Financial	From
	12 July 2021 to	year ending	year ending	1 July 2024 to
	30 June 2022	30 June 2023	30 June 2024	11 July 2024
Maximum principal amount
outstanding	HK$260,000,000	HK$260,000,000 HK$260,000,000	HK$260,000,000
Maximum interest amount	HK$13,869,000	HK$14,300,000	HK$14,300,000	HK$431,000
Proposed annual cap amounts	HK$273,869,000	HK$274,300,000	HK$274,300,000	HK$260,431,000

The above proposed annual cap amounts are determined with reference to, among others, the maximum principal amount outstanding under the Loan Facility to be granted by the Lender, the maximum interest amount payable from 12 July 2021 to 11 July 2024 (inclusive) under the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement, based on the assumption that the Borrower will continue to borrow the maximum principal in the amount of HK$260,000,000 for each of the above periods respectively.

Pursuant to the Loan Agreement as amended and/or supplemented by the Supplemental Loan Agreement, it is agreed that the Borrower shall pay interest on the aggregate principal amount outstanding under the Loan Facility from time to time at the Interest Rate and such interest shall be paid to the Lender on the last date of each Interest Period.

REASONS FOR AND BENEFITS OF THE TRANSACTION

The Transaction, which forms part of the Group's financial services activities, allows the Group to apply its funds in an effective manner with a view to obtain a higher return to the Group. The terms of the Supplemental Loan Agreement, including the interest rate applicable, and the proposed annual cap amounts, were arrived at after arm's length negotiations between the Lender and the Borrower having taken into account of the current market norm in relation to similar transactions.

- 4 -

In view of the above, the Directors (excluding Mr. Lee Seng Hui ("Mr. Lee") and Mr. Chang Chu Fai, Johnson Francis ("Mr. Chang") who have abstained from voting at the relevant Board meeting, and the members of the Independent Board Committee who shall form their view after considering the advice of the independent financial adviser) are of the view that the terms of the Supplemental Loan Agreement are on normal commercial terms and the terms of the Transaction (including the proposed annual cap amounts) are fair and reasonable and in the interests of the Company and its shareholders as a whole.

Mr. Lee, being a non-executive Director, is also the chief executive and an executive director of AGL, and the chairman and a non-executive director of the Guarantor. Mr. Lee is one of the trustees of Lee and Lee Trust, being a discretionary trust which together with Mr. Lee's personal interest, controls approximately 74.96% interest in the total number of issued shares of AGL. AGL is indirectly interested in approximately 39.86% of the total issued share capital of the Company and approximately 48.86% of the total number of issued shares of the Guarantor and the Borrower is a wholly-owned subsidiary of the Guarantor. Accordingly, Mr. Lee is deemed to be interested in the Transaction and therefore has abstained from voting at the relevant Board meeting for approving, among others, the Transaction.

Mr. Chang, being an independent non-executive Director, is also an independent non-executive director of the Guarantor, has abstained from voting at the relevant Board meeting for approving, among others, the Transaction to avoid any potential conflicts of interest.

Save as disclosed above, none of the Directors has abstained (or is required to abstain) from voting on the Board resolution for considering and approving the Supplemental Loan Agreement, the proposed annual cap amounts and the Transaction.

INFORMATION ABOUT THE COMPANY, THE GROUP, THE LENDER, THE BORROWER AND THE GUARANTOR

The Company and the Group

The Company is a company incorporated in Bermuda with limited liability, the shares of which are listed on the main board of the Stock Exchange.

The Group is an established investment fund and commodity trading house which owns strategic interests in natural resource companies with the main business lines comprising of primary strategic investment, resource investment, and commodity trading business, focused primarily on metals, mining and energy and investment in financial assets.

The Lender

The Lender is a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company. The principal business activity of the Lender is principal investments and financial services.

- 5 -