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Wanguo International Mining Group Limited

萬國國際礦業集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 3939) MAJOR TRANSACTION IN RELATION TO ACQUISITION OF THE MAJORITY SHAREHOLDING IN AXF GOLD RIDGE PTY LTD WHICH INDIRECTLY OWNS A GOLD MINE IN SOLOMON ISLANDS

The Board is pleased to announce that on 16 July 2017(Execution Date), the Company entered into the S&P Agreement with AXF Resources pursuant to which the Company has conditionally agreed to acquire, and AXF Resources has conditionally agreed to dispose of, 611 shares out of 1,000 shares in AXF Gold Ridge (representing 61.1% equity interest of AXF Gold Ridge) in consideration of AUD58.35 million. Pursuant to the terms of the S&P Agreement, the Company has agreed an estimated maximum commitment of AUD50 million for the Reconstruction Works and the AM Costs. Hence, the total amount of commitment by the Company for the Acquisition as well as the Reconstruction Works and the AM Costs is AUD108.35 million.

Upon Completion, the Group will own 61.1% equity interest of AXF Gold Ridge. Since 90% of equity interest in ASG is owned by AXF Gold Ridge and the remaining 10% is owned by GCIL, the Group will own approximately 55% attributable interests in ASG as from Completion. AXF Gold Ridge and ASG together with its subsidiaries will then become non-wholly owned subsidiaries of the Company.

As at the date of this announcement, AXF Gold Ridge owns 90% equity interest of ASG which through its subsidiaries (i) holds the mining license and the exploration license in respect of the Gold Ridge Project on Guadalcanal in the Solomon Islands and (ii) owns an ore-processing plant. Detailed information on the ASG Group is set out in the paragraph headed "Information on the ASG Group" of this announcement.

Completion is subject to fulfilment of the condition precedent as set out below.

IMPLICATIONS UNDER THE LISTING RULES

As one or more of the applicable percentage ratios in respect of the Acquisition are more than 25% but less than 100%, the Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules, and is subject to the reporting, announcement and shareholders' approval requirements under Chapter 14 of the Listing Rules.

THE EGM

The EGM will be convened to consider and, if thought fit, approve, among other matters, the S&P Agreement and the transactions contemplated thereunder. To the best of information, knowledge and belief of the Directors, as at the date of this announcement, none of the Shareholders is required to abstain from voting in respect of any resolution for the approval of the S&P Agreement and the transactions contemplated thereunder at the EGM.

A circular containing, among other things, (i) details of the S&P Agreement and the transactions contemplated thereunder; (ii) other information as required to be disclosed under the Listing Rules; and (iii) notice to convene the EGM, will be despatched to the Shareholders on or before 8 September 2017 to give sufficient time to prepare such circular.

INTRODUCTION

The Board is pleased to announce that on 16 July 2017(Execution Date), the Company entered into the S&P Agreement with AXF Resources pursuant to which the Company has conditionally agreed to acquire, and AXF Resources has conditionally agreed to dispose of, 611 shares out of 1,000 shares in AXF Gold Ridge (representing 61.1% equity interest of AXF Gold Ridge) in consideration of AUD58.35 million. Pursuant to the terms of the S&P Agreement, the Company has agreed an estimated maximum commitment of AUD50 million for the Reconstruction Works and the AM Costs. Hence, the total amount of commitment by the Company for the Acquisition as well as the Reconstruction Works and the AM Costs is AUD108.35 million.

Upon Completion, the Group will own 61.1% equity interest of AXF Gold Ridge. Since 90% of equity interest in ASG is owned by AXF Gold Ridge and the remaining 10% is owned by GCIL, the Group will own approximately 55% attributable interests in ASG as from Completion. AXF Gold Ridge and ASG together with its subsidiaries will then become non-wholly owned subsidiaries of the Company.

As at the date of this announcement, AXF Gold Ridge owns 90% equity interest of ASG which through its subsidiaries (i) holds the mining license and the exploration license in respect of the Gold Ridge Project on Guadalcanal in the Solomon Islands and (ii) owns an ore-processing plant. Detailed information on the ASG Group is set out in the paragraph headed "Information on the ASG Group" of this announcement.

Particulars of the S&P Agreement are described as follows.

Date:

16 July 2017 (Execution Date)

Partes:

Vendor: AXF Resources

Purchaser: the Company

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, the Vendor and its ultimate beneficial owners are Independent Third Parties.

Asset to be acquired

611 shares out of 1,000 shares in AXF Gold Ridge (representing 61.1% equity interest of AXF Gold Ridge)

AXF Gold Ridge is an investment holding company which owns 90% equity interest of ASG. The ASG Group is principally engaged in the exploration, mining, processing, and sale of gold and related products. As at the date of this announcement, the ASG Group, through its subsidiaries, holds (i) the mining license and the exploration license in respect of the Gold Ridge Project and (ii) owns an ore-processing plant. Detailed information on the ASG Group is set out in the paragraph headed "Information on the ASG Group" of this announcement.

Consideration

The consideration for the Acquisition is AUD58.35 million in cash, payable as follows:

  1. AUD1.80 million on 21 July 2017 (with the deposit of AUD800,000 previously paid to AXF Resources by the Group being deducted from such amount);

  2. AUD1.00 million on 28 July 2017;

  3. AUD2.00 million within two months of the Execution Date;

  4. AUD13.00 million within 120 days of the Execution Date;

  5. AUD13.50 million within 4 months of the due date for payments under (d);

  6. AUD13.50 million within 10 months of the due date for payments under (d); and

  7. AUD13.55 million within 16 months of the due date for payments under (d).

Reconstruction Works and AM Costs

The estimated maximum commitment for the Reconstruction Works and the AM Costs by the Group shall not exceed AUD50 million. Once the cost of the Reconstruction Works and AM Costs exceeds AUD50 million, the Company and AXF Resources shall pay such costs in proportion to their shareholding in AXF Gold Ridge.

Security

On Completion Date, the Group will grant AXF Resources a share mortgage over the 611 shares in ASX Gold Ridge acquired to secure its obligations under the transaction. The Group is permitted to grant a mortgage over the shares to financiers who will provide funding for the payments as set out in the paragraph headed "Consideration". AXF Resources agrees that the financier mortgage will rank first provided that the amount financed is solely for the purchase of shares and is directly paid to AXF Resources in accordance with the payment schedule set out in the paragraph headed "Consideration". The share mortgage in favour of AXF Resources shall be released upon the Group completing its obligations under the transaction.

Mr. Gao agrees to, by a separate deed, unconditionally and irrevocably guarantee to AXF Resources the due and punctual performance and observance by the Company of all obligations contained in the S&P Agreement, and to indemnify AXF Resources against all losses, damages, costs and expenses suffered, by AXF as result of any breach or non-observance of the S&P Agreement by the Company.

Basis of the total amount of commitment

The total amount of commitment of AUD108.35 million was determined after arm's length negotiation between the Company and AXF Resources after taking into account of the anticipated level of mineral resources, life of the Gold Ridge Project and current and expected gold prices.

The Board is of the view that the total amount of commitment is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The total amount of commitment will be funded by internal resources and/or bank borrowings of the Group, and/or issuance of convertible bonds or placement of Listed Shares by the Company as the Board may determine to be appropriate.

Condition precedent to Completion

Completion is conditional upon approvals in respect of the Acquisition from the relevant regulatory bodies (including the Stock Exchange) and the Company's shareholders' approval having been obtained. If the Company fails to obtain the required approvals within 6 months of the Execution Date and this is due to the negligence of the Company during the approval process, AXF Resources may claim damages against the Company for losses that have been reasonably incurred as a result of the failure of the Company to obtain approval from the relevant regulatory bodies or the Company's shareholders.

Conditions precedent to the commencement of the Reconstruction Works

Commencement of the Reconstruction Works is subject to the following conditions precedent being satisfied (or waived in accordance with the S&P Agreement):

1. The Company being satisfied with the results of the due diligence review, including but not limited to the geology report, valuation report audit report, sample testing report and other relevant reports in respect of the Project.

Wanguo International Mining Group Ltd. published this content on 18 July 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 18 July 2017 00:17:13 UTC.

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