FFWD.L Regulatory News (FFWD)

20 October 2014

 China Growth Opportunities Limited

(the "Company")

Posting of Circular and Notice of Annual General Meeting

The Company is pleased to announce that it is today posting a circular to shareholders containing a notice convening the 2014 Annual General Meeting of the Company to be held at 11 a.m. on 6 November 2014, at the offices of Elysium Fund Management Limited, 1st Floor, Royal Chambers, St Julian's Avenue, St Peter Port, Guernsey, GY1 3JX.

In addition to the ordinary business of the Company at the 2014 Annual General Meeting, Resolutions are being tabled asking Shareholders to vote on recapitalisation proposals, highlighted as follows:

- Subscription to raise £668,000;

- Waiver of Rule 9 of the Takeover Code;

- Board changes;

- Share sub-division and consolidation;

- Adoption of new Investing Policy;

- Amendment to the Company's Articles; and

- Change of name to Kuala Limited.

Peterhouse Corporate Finance Limited ("Peterhouse") has conditionally raised £668,000 before expenses by way of a Subscription for 201,204,820 Ordinary Shares at a price of 0.332p per share.

On completion of the Proposals, Peterhouse shall be appointed as Joint Broker to the Company.

In addition, it is proposed that, conditional on the ordinary resolutions being approved, RFC Ambrian Limited will also be appointed as the Company's Nominated Adviser and Joint Broker.

The Company was suspended from trading on AIM on 13 October 2014 following the resignation of the previous Nominated Adviser and will be restored following the appointment of a new Nominated Adviser. Accordingly, subject to passing the Resolutions, restoration of trading in the ordinary shares will be expected on 7 November 2014.

A copy of the circular is available at: www.chinagrowthopportunities.com.

Further information on the Proposals and all information relating to the Proposed Directors, under paragraph (g) of Schedule 2 of the AIM rules to be disclosed, are set out in the letter to Shareholders contained in the circular and which is set out below.

The definitions used in this announcement have the same meaning as they have in the circular.

For further information please contact:

Elysium Fund Management Limited Tel: +44 1481 810 100

Scarborough Group  Tel: +44 (0) 20 7127 9195

Simon Marshall

Peterhouse Corporate Finance Limited Tel: +44 (0) 20 7469 0930

Guy Miller/Lucy Williams

To all Shareholders

Notice of Annual General Meeting

Proposals for:

Share Sub-Division

Share Consolidation

Amendments to the Memorandum and Articles of Incorporation

Waiver of Rule 9 of the Takeover Code

Subscription for 201,204,820 Ordinary Shares

Issue of Warrants

Change of name to Kuala Limited

Approval of New Investing Policy

1 Introduction

1.1 I am writing to invite you to the Annual General Meeting of the Company to be held at the offices of Elysium Fund Management Limited, 1st Floor, Royal Chambers, St Julian's Avenue, St Peter Port, Guernsey, GY1 3JX, on 6 November 2014 at 11 a.m. The notice of the Annual General Meeting is set out at Appendix I of this document.

1.2 In addition to the ordinary business to be conducted at the Annual General Meeting, the Company announced today a series of proposals, namely, the Share Sub-Division, Subscription, Share Consolidation, the Code Waiver under Rule 9 of the Takeover Code, the resignation of the Existing Directors and appointment of the Proposed Board, adoption of a New Investing Policy, and certain other related matters to be proposed at the Annual General Meeting. The purpose of this letter is to provide you with the background to and to explain why the Independent Director considers these proposals to be in the best interests of the Company and Shareholders as a whole and why they recommend that Shareholders should vote in favour of the Resolutions to be proposed at the Annual General Meeting.

2 Background to the Proposals

2.1 On 28 May 2012, the Company announced that Shareholders approved the resolutions proposed at its extraordinary general meeting of the same date. The Company's objective was to provide Shareholders with capital growth and income from investing in a portfolio of companies with business operations based in China. As part of the process, Kevin McCabe was appointed to the Board as an Executive Director, whilst Brett Miller and Weiming Zhang retired as directors. Further, Scarborough Holding Company Limited, of which Kevin McCabe is a founding director, subscribed for 20,000,000 new Ordinary Shares at a price of 1 pence per share, with warrants attached on a one for one basis with an exercise price of 5p per Ordinary Share. 

2.2 Further to the above, the Company intended to implement corporate and strategic changes as announced in the half-yearly results published on 25 November 2013. The Company envisaged changing its name to Scarborough Oriental Ventures Limited. These changes were to be implemented to provide the platform for a further fundraising programme to enable the Company to pursue an active investing strategy in its chosen markets. In line with these intended strategic changes, the Company announced in March 2014 that Nicholas Brooke was appointed as Non-Executive Director of the Company, replacing Rhys Davies who stepped down from the Board.

2.3 Whilst the Existing Directors have worked tirelessly to implement the Company's existing investing policy, they have now decided that it is in the best interests of Shareholders to adopt a new investment policy and to recapitalise the Company.

2.4 Accordingly, in addition to the ordinary business of the Company, at the 2014 Annual General Meeting Resolutions are being tabled asking Shareholders to vote on the Proposals. The Proposals comprise:

(a) the Share Sub-Division;

(b) the Share Consolidation;

(c) amendments to the Company's memorandum and articles of incorporation as set out in the New Articles;

(d) the Waiver of the obligations on the Concert Party under Rule 9 of the Takeover Code;

(e) granting authority to the Directors to allot Ordinary Shares;

(f) a change of the Company's name;

(g) adoption of the New Investing Policy; and

(h) other matters to be considered at the Annual General Meeting.

2.5 Further, subject to the Proposals being approved, the Company will re-pay an outstanding loan to Scarborough Holding Company Limited of approximately £70,000. From the loan agreement announced on 1 July 2014, £70,000 has been drawn down to assist with the funding of the Company's working capital requirements.

3 Share Sub-Division, Share Consolidation and Subscription

3.1 The Board believes that with the Company's current share capital structure (under which the Company has one class of ordinary shares of £0.01 each) it is not possible to raise additional equity finance as the net asset value of the Company (and as a result the implied value of the ordinary shares on AIM), is less than the par value of the ordinary shares. Under Guernsey law, the Company is prohibited from issuing Ordinary Shares at a discount to their nominal value.

3.2 Accordingly, it will be necessary to reorganise the share capital of the Company, by means of a Share Sub-Division. Resolution 3, which is an ordinary resolution of Shareholders (i.e. approved by a majority of Shareholders present in person or by proxy and voting at the Annual General Meeting) to be considered at the Annual General Meeting proposes that each Existing Ordinary Share be "split", or "sub-divided", into one Ordinary Share of £0.001 and one Deferred Share of £0.009. A Shareholder holding one Existing Ordinary Share as at the date of this document, would, following the Share Sub-Division, therefore hold one Sub-Ordinary Share and one Deferred Share.

3.3 Concurrent with the Sub-Division it is proposed that the authorised share capital limit of the Company be increased from £2,000,000 to £20,000,000.

3.4 Following completion of the Share Sub-Division and the approval of an increased share capital limit of the Company (as referred to in paragraph 3.3 above), it is proposed that the Subscription be completed at the Subscription Price.

3.5 Following the Share Sub-Division, the Sub-Ordinary Shares of £0.001 each, so created, will continue to carry the same rights as attached to the Existing Ordinary Shares. The Deferred Shares will be transferable only with the consent of the Company and will not be admitted to trading on AIM (or any other investment exchange). The holders of the Deferred Shares shall not, by virtue or in respect of their holdings of Deferred Shares, have the right to receive notice of any general meeting of the Company nor the right to attend, speak or vote at any such general meeting. Save as required by law, the Company need not issue share certificates to the holders of the Deferred Shares in respect of their holding thereof. In aggregate, the holders of Deferred Shares shall be entitled to receive up to £1.00 only as a preferred dividend or distribution. The Company shall have the right under the New Articles to transfer the Deferred Shares to such persons as it wishes, without the consent of the holders of the Deferred Shares, and to cancel Deferred Shares with the consent of such transferee. The Deferred Shares will have zero economic value. To enable the creation and existence of the Deferred Shares the Company will be required to approve the amendments set out in the New Articles. Save for changes to permit the Share Sub-Division and the Share Consolidation, there are no changes proposed in the New Articles that affect the rights of Shareholders, or attaching to the Company's Ordinary Shares. A summary of the changes to the Existing Articles is set out below:

(a) the New Articles set out the rights and restrictions of Deferred Shares;

(b) the New Articles record the increase in the Company's authorised share capital from £2,000,000 to £20,000,000;

(c) the New Articles expand the Company's objects to reflect the New Investing Policy; and

(d) the maximum remuneration for any single director has been removed.

3.6 A full copy of the proposed New Articles are available to be viewed at the Company's website at www.chinagrowthopportunities.com.

3.7 The Deferred Shares will have zero economic value

3.8 Peterhouse has conditionally raised £668,000 before expenses by way of a Subscription by the members of the Concert Party for 201,204,820 Sub-Ordinary Shares at a price of £0.003320 per share. The Concert Party Subscribers have also conditionally been issued with 158,400,000 warrants with an exercise price of £0.05 per share. The Subscription and Warrant Instrument are conditional on Admission of the Concert Party Subscription Shares to trading on AIM, and on approval of all of the Resolutions, excepting for Resolution 10 to change the name of the Company, at the Annual General Meeting. The Concert Party Subscription Shares will rank pari passu in all respects with the Ordinary Shares currently in issue, including the right to receive all dividends and other distributions declared following Admission. Further details on the Warrant Instrument can be found in paragraph 5 of this Part I of the circular.

3.9 This funding will be made available to the Company to provide it with general working capital and to enable the Company to take initial steps to implement its New Investing Policy.

3.10 Further to the above and following the issue of the Subscription Shares as part of the Subscription, the Sub-Ordinary Shares with a nominal value of £0.001 will be consolidated into New Ordinary Shares with a nominal value of £0.01 each on the basis of 1 New Ordinary Share for every 10 Sub-Ordinary Shares. On passing of all Resolutions, excepting for Resolution 10 to change the name of the Company, the Sub-Ordinary Shares will cease to exist and there will be 27,120,552 Ordinary Shares in issue of £0.01 each, before the exercise of any warrants. The Subscription Warrant Exercise Price will be unaffected by the Share Consolidation.

3.11 Where the Share Consolidation results in any Shareholder being entitled to a fraction of a New Ordinary Share, such fraction shall be aggregated and the Directors intend to sell (or appoint another person to sell) such aggregated fractions in the market and retain the net proceeds for the benefit of all and any such members formally being entitled to such fractions in proportion to their respective entitlements (subject to retention by the Company of sums not exceeding £100.00, the cost of distribution of which would be disproportionate to the amounts involved, in accordance with the articles of incorporation of the Company).

3.12 The New Ordinary Shares of £0.01 each, so created, will continue to carry the same rights as attach to the Existing Ordinary Shares.

3.13 One consequence of the Share Consolidation is that Shareholders holding less than 10 Existing Ordinary Shares will receive no New Ordinary Shares or Deferred Shares. This consequence is illustrated in the table below:

3.14 Following completion of the Share Sub-Division and Share Consolidation, the authorised capital limit of the Company shall be £20,000,000 divided into 2,000,000,000 shares each of £0.01.

4 Appointment of Peterhouse, proposed Nominated Adviser and Joint Broker

4.1 On completion of the Proposals Peterhouse shall be appointed as Joint Broker to the Company.

4.2 In addition, it is proposed that, conditional on the ordinary resolutions being approved, RFC Ambrian Limited will also be appointed as the Company's Nominated Adviser and Joint Broker.

4.3 The Company was suspended from trading on AIM on 13 October 2014 following the resignation of the previous Nominated Adviser and will be restored following the appointment of a new Nominated Adviser. Consequently, subject to passing the Resolutions, restoration of trading in the Ordinary Shares will be expected on 7 November 2014.

4.4 Investors should note that if for any reason a new Nominated Adviser is not appointed by 13 November 2014, trading in the Company's Ordinary Shares on AIM will be cancelled in accordance with AIM Rule 1.

5 Warrants

5.1 In connection with the Subscription, it is proposed that the Company enter into a Warrant Instrument pursuant to which the Company will issue 158,400,000 Subscription Anti-Dilution Warrants to the Subscribers pro rata to their participation in the Subscription and the Share Purchase. Entry into the Warrant Instrument is conditional on Admission of the Subscription Shares, and on approval of all of the Resolutions, excepting for Resolution 10 to change the name of the Company.

5.2 Subject to approval of the Proposals, the Subscription Anti-Dilution Warrants held by a Subscriber may be exercised by that Shareholder:

(a) at any time until the close of business on 28 May 2015;

(b) only to the extent the Existing Warrants are exercised (so if 10 per cent. of Existing Warrants are exercised prior to 28 May 2015, a Subscriber shall be entitled to exercise 10 per cent. of their respective Subscription Anti-Dilution Warrants), and

(c) shall entitle the Subscribers, who comprise the members of the Concert Party, to be issued with a total of one New Ordinary Share for each warrant exercised, subject to payment of £0.05 for each warrant exercised. The Subscription Anti-Dilution Warrants will not be admitted to trading on AIM. The Warrant Instrument is to be issued as an anti-dilutive measure as there are 44,999,283 Existing Warrants in issue (please see paragraph below for further details of the Existing Warrants).

5.3 The reason why the Company is proposing the grant the Subscription Anti-Dilution Warrants as part of the terms of the investment by the Concert Party (subject to approval of the Proposals) is to provide the Concert Party with protection from dilution should any Existing Warrants be exercised.

5.4 On 28 May 2012 the Company granted the following Existing Warrants:

(a) A warrant over 20,000,000 Ordinary Shares to Scarborough Holding Company Limited, each warrant with an exercise price of £0.05, and a term expiring on 28 May 2015; and

(b) 24,999,992 "bonus warrants" to shareholders of the Company on the register as at 28 May 2012, each warrant with an exercise price of £0.05, and a term expiring on 28 May 2015.

5.5 At the time of issue of the Existing Warrants, inadequate provisions were included in the documentation to adjust the exercise price of the Existing Warrants following changes to the share capital structure of the Company. As a result, following the Share Sub-Division, the Existing Warrants will divide into a right to subscribe for 10 Sub-Division Shares for each one Existing Warrant held by a warrant holder (not one Sub-Division Share and one Deferred Share as should have been the case), at a price of £0.005 per share (10 per cent. of the original exercise price of £0.05 per share). Following the Share Consolidation, Existing Warrants (which will have an exercise price of £0.05) will give holders the right to subscribe for up to 165.93 per cent. of the issued New Ordinary Shares of the Company. Clearly this has a potentially enormous dilutive impact on the Concert Party, and they would not invest in the Company (and no party would invest in the Company) unless protection from such dilution was offered as part of the transaction. As such, whilst the Subscription Anti-Dilution Warrants provide the Concert Party with rights to subscribe for a large number of New Ordinary Shares, the intention, and the impact of the grant of the Subscription Anti-Dilution Warrants, is that the Subscribers will be able to maintain their interest in the Company pro rata by payment of £0.05 per New Ordinary Share, on exercise of a Subscription Anti-Dilution Warrant. This is the same price as that of the Existing Warrants.

5.6 Following completion of the Share Sub-Division, Subscription and the Share Consolidation, both the Existing Warrants and the Subscription Anti-Dilution Warrants have an exercise price of £0.05, which price represents an approximate 51 per cent. premium to the implied Subscription Price following the Share Consolidation.

5.7 The right to subscribe for New Ordinary Shares under the Existing Warrants and the Subscription Anti-Dilution Warrants lapse on 28 May 2015.

5.8 Additionally, conditional on the Proposals being approved by Shareholders at the Annual General Meeting, the Company has agreed to issue Peterhouse Broker Warrants to subscribe for New Ordinary Shares equal to up to 3% of the Enlarged Share Capital of the Company, upon approval of the Resolutions, exercisable at £0.003320 for up to two years. The number of warrants granted to Peterhouse shall be calculated based on the issued share capital of the Company as at completion of the Subscription (and shall subsequently be subject to the Share Consolidation but shall be adjusted to also take account of any Existing Warrants or Subscription Anti-Dilution Warrants that are exercised prior to 28 May 2015. On the basis no Existing Warrants or Subscription Anti-Dilution Warrants are exercised this equates to 8,136,165 Broker Warrants (pre Share Consolidation).

6 Sale of Ordinary Shares through Peterhouse

6.1 In addition, subject to the Proposals being approved, Regent Mercantile, a member of the Concert Party, will also buy 5,000,000 Ordinary Shares, after the Annual General Meeting, from each of Scarborough Holding Company Limited (for which, Kevin McCabe is a founding director and shareholder) and Nicholas Brooke (which equates to 30.07 per cent. of their respective shareholding) for a total consideration of £33,200, equating to the Subscription Price, being £0.003320 per Ordinary Share.

6.2 Should any Shareholder wish to divest itself of its Ordinary Shares in the Company, it may do so by notifying Peterhouse within 14 working days from the date the Annual General Meeting. Peterhouse has agreed to arrange the execution of a sale of any Ordinary Shares held by any existing Shareholder wishing to sell the same to its clients at the Subscription Price (£0.003320) per Ordinary Share. The offer will be limited to 30.07 per cent. of any Shareholders holding of Ordinary Shares, representing the same proportion of shares that the Directors will sell to Regent Mercantile, a member of the Concert Party, following the Annual General Meeting. This sale facility effectively values the whole of the remainder 30.07 per cent. Ordinary Shares, of the existing Shareholders, available for sale, prior to the Subscription, at approximately £36,687.

6.3 Alternatively, Shareholders are free to retain their Ordinary Shares or sell them in the market as they see fit.

6.4 Any Shareholder wishing to take advantage of the above sale facility should contact Peterhouse directly on 020 7469 0933 or 020 7469 0936.

7 Waiver of Rule 9 of the Takeover Code

7.1 The Takeover Code, which is issued and administered by the Panel applies.

7.2 At the Annual General Meeting, the Independent Shareholders will be asked to approve a Rule 9 Waiver Resolution. Resolution 7, to be proposed as an ordinary resolution, will be taken by a poll.

7.3 Under Rule 9 of the Takeover Code, any person who acquires an interest (as defined in the Takeover Code), whether by a series of transactions over a period of time or not, in shares which, taken together with shares in which he is already interested and in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, is normally required to make a general offer to all of the remaining shareholders in that company to acquire their shares. 

7.4 Similarly, where any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of a company, but does not hold shares carrying more than 50 per cent. of the voting rights of the company, a general offer will normally be required if any further interest in shares carrying voting rights is acquired by any such person.

7.5 Following completion of the Subscription, prior to the Share Consolidation, the Concert Party will hold 201,204,820 Ordinary Shares representing approximately 74.19 per cent. of the Enlarged Share Capital. Assuming that members of the Concert Party exercise all of their Subscription Anti-Dilution Warrants prior to the Share Consolidation (which would require exercise of all Existing Warrants), the Concert Party will own in aggregate 359,604,820 Ordinary Shares representing approximately 75.77 per cent. of the Enlarged Share Capital of the Company, assuming no other shares are issued.

7.6 The members of the Concert Party do not currently hold any Ordinary Shares in the Company. The Subscription and exercise of the Subscription Anti-Dilution Warrants would therefore trigger an obligation of the Concert Party to make an offer for the Company in accordance with Rule 9 of the Takeover Code. The Panel has agreed, however, to waive the obligation for the Concert Party to make a general offer that would otherwise arise as a result of the Subscription and the exercise of Subscriber Warrants by any member of the Concert Party, subject to the approval of Independent Shareholders, all of whom are independent of the Concert Party. Accordingly, Resolution 7 is being proposed at the Annual General Meeting and will be taken on a poll.

7.7 For so long as the Concert Party hold more than 50 per cent. of the Company's voting share capital and its members are deemed to be acting in concert by the Panel, they may increase their aggregate interests in the Ordinary Shares in the Company without incurring any obligation under Rule 9 to make a general offer for the remaining shares, although individual members of the Concert Party would not be able to increase their percentage interest in the Ordinary Shares of the Company through, or between, a Rule 9 threshold without the consent of the Panel.

7.8 Details of the Concert Party and its interests in Ordinary Shares on approval of all Resolutions, excepting for Resolution 10 to change the name of the Company, at the Annual General Meeting are set out in paragraph 8 of this Part I of this document.

8 Information about the Concert Party

* Based on all Existing Warrants being exercised.

** Regent Mercantile is owned by a trust under which Stephen Dattels is a discretionary beneficiary.

*** Adam Horne is the Life Tenant of a Trust of which First Island Trustees (Guernsey) Limited are the trustees.

**** The Giuseppe Ciardi Retirement Benefits Scheme is a pension scheme of which Giuseppe Ciardi is the sole beneficiary.

***** Galloway limited is owned by a trust of which Mr James Mellon is a life tenant.

Angstrom Capital Ltd.

8.1 Angstrom Capital Ltd. is a private company established in the British Virgin Islands whose sole beneficial owner is Michael Beck. Michael Beck is the owner and managing director of Regent Advisors LLC, a corporate finance business based in the USA. Regent Advisors LLP has been a shareholder in public companies of which Stephen Dattels and Ian Burns have been major shareholders and directors such as Polo Resources Limited. Michael Beck was an adviser to Uramin Inc, a company in which Stephen Dattels was a shareholder and director.

Modulus Capital Ltd.

8.2 Modulus Capital Ltd. is a private company established in the British Virgin Islands whose sole beneficial owner is Stephen Beck. Stephen Beck is a corporate finance advisor and works for Regent Advisors LLC.

Iso Capital Ltd.

8.3 Iso Capital Ltd. is a private company established in the British Virgin Islands whose sole beneficial owner is The Beck Family 2001 Trust, an irrevocable trust registered in the United States. The sole beneficiaries to the trust are the children of Michael Beck. 

Michael Beck and Stephen Beck

8.4 Stephen Beck is the brother of Michael Beck and is also a trustee of The Beck Family 2001 Trust. 

Analogue Capital Ltd

8.5 Analogue Capital Ltd, is a private company established in the British Virgin Islands whose sole beneficial owner is Jeanne Usonis. Jeanne Usonis is a corporate finance advisor and works for Regent Advisors LLC.

Bryan Smith

8.6 Mr. Bryan Smith was a director of Polo Resources Limited, together with Stephen Dattels, Ian Burns, Guy Elliott and Jim Mellon and until as recently as 2013 they were all on the board of directors of this company together. Mr Smith is a retired investment professional. His last position was with Burgundy Asset Management providing discretionary investment management for private clients, foundations, endowments, pensions and family offices.

The Giuseppe Ciardi Retirement Benefits Scheme

8.7 The Giuseppe Ciardi Retirement Benefits Scheme is a pension scheme of which Giuseppe Ciardi is the sole beneficiary. Giuseppe Ciardi is a professional investor based in London. Mr Ciardi works for Caledon Partners LLP based in London. Mr Ciardi a high net worth individual and is investing in his personal capacity. Mr. Ciardi is a founder of Park Place Capital. Before founding Park Place Capital, he was a partner at BNP's Investment Group and Lazard Brother's Capital Markets Group. Mr. Ciardi invests alongside the other members of the Concert Party in other business ventures.

Smoke Rise Holdings Limited, Regent Mercantile Holdings Limited, Stephen Dattels and Ian Burns

8.8 Ian Burns is the sole owner and director of Smoke Rise Holdings Limited. Regent Mercantile is owned by a trust under which Stephen Dattels is a discretionary beneficiary. Ian Burns is a director of Regent Mercantile. Stephen Dattels is a mining executive and a high net worth individual.

First Island Trustees (Guernsey) Limited

8.9 Adam Horne is the Life Tenant of a Trust of which First Island Trustees (Guernsey) Limited are the trustees. Mr Horne works for Caledon Partners LLP based in London. Mr Horne is investing in his personal capacity and is a high net worth investor based in London, UK.

Guy Elliott

8.10 Mr Guy Elliott is a high net worth investor based in Singapore. Guy Elliott was a director of Polo Resources Limited together with Stephen Dattels and Ian Burns.

Michael Reynolds

8.11 Michael Reynolds is President of Aries Asset Advisors based in Switzerland. Aries Asset Advisors provide advice to Funds, Pension Funds, Family Offices and High Net Worth Investors. Mr Reynolds is investing in a personal capacity and is a high net worth individual. Prior to founding Aries, Mr Reynolds was involved extensively in investment banking, corporate finance and institutional sales with Canaccord Capital Inc. Mr. Reynolds has invested alongside Stephen Dattels and Ian Burns in other business related ventures.

James Taylor

8.12 Mr. James Taylor is a high net worth investor based in Sydney, Australia. James Taylor is an entrepreneur specialising in the entertainment and e commerce industries. Mr. Taylor and Stephen Dattels are co-investors in a number of projects. 

Galloway Limited

8.13 Galloway Limited is owned by a trust of which Mr. James Mellon is a life tenant. Mr James Mellon is a high net worth investor based in the Isle of Man. James Mellon is a fellow director with Stephen Dattels of regent Pacific Group Limited and has founded companies together with Stephen Dattels. Mr. Mellon was a director of Polo Resources limited.

8.14 The Concert Party intends to maintain the Company's listing on AIM. Excepting for the Directors, there are no employees and therefore no employment rights implications. The Concert Party intents to implement its Investing Policy as outlined in paragraph 11.2 of this Part I of the circular.

9 Change of Name

9.1 Subject to Shareholders' approval by way of special resolution (requiring 75 per cent. approval of shareholders voting at the Annual General Meeting), it is proposed that the name of the Company be changed to Kuala Limited. Resolution 10 is proposed for the purposes of obtaining Shareholders' approval for the proposed name change.

9.2 If the special resolution to approve the change of name of the Company is passed at the Annual General Meeting, the Company's website address will be changed following the Annual General Meeting to www.kualalimited.com.

9.3 Subject to the name of the Company being changed, the new ISIN address of the Company will be GG00BRK9BQ81 and the new SEDOL of the Company will be BRK9BQ8.

9.4 If the Proposals are approved, the New Ordinary Shares will trade under the new name of the Company, and under the new ISIN and SEDOL, with effect from 8.00 a.m. on 7 November 2014.

9.5 No new share certificates will be issued to Shareholders holding share certificates as a result of the Company's name change.

10 Proposed Board

10.1 Immediately following completion of the Proposals, and subject to all the Resolutions being passed, excepting for Resolution 10 to change the name of the Company, Kevin McCabe and Nicholas Brooke will resign from the Board of the Directors and waive all claims (if any) they may have against the Company. Simultaneously, Stephen Dattels and Ian Burns will be appointed to the Board of Directors as Executive Chairman and Non-Executive Director respectively.

10.2 The Company will make an announcement to the market accordingly.

Stephen Roland Dattels (Executive Chairman - aged 67)

Stephen R. Dattels founded UraMin Inc. which sold in 2007 for US$2.5 billion to Areva. He was a key executive at Barrick Gold during its formative years prior to leaving in 1987. He has completed several financings in the natural resources sector, either directly or through his merchant bank, Regent Mercantile Bancorp Inc. He is a non-executive director of Regent Pacific Group Limited. He was the former Chairman and founder of Caledon Resources plc, co-founder and Managing Director of Oriel Resources plc and a director of Extract Resources Limited, Chief Executive Officer and Executive Co-Chairman of West African Minerals Corporation, Executive Co-Chairman of Polo Resources Limited, and non-executive Co-Chairman and a non-executive director of GCM Resources plc.

Stephen has a Bachelor of Arts degree from McGill University, a law degree (cum laude) from the University of Western Ontario and has completed the Program for Management Development at Harvard University. Further information on him can be obtained at stephendattels.com

Stephen Dattels holds or has held the following directorships or has been a partner in the following partnerships within the five years prior to the date of this document:

Stephen Dattels resigned as a director of Werner Dahnz Company Limited in November 1988. Werner Dahnz Company Limited was placed into liquidation by a creditor in August 1989 as a result of an arrangement made by Werner Dahnz Limited after Stephen Dattels resignation. Mr. Dattels resigned as a director of Java Gold Corporation in April 1998 and Java Gold Corporation ceased trading on 17 August 1999. Mr. Dattels resigned as a director of Currency Network PLC on 15 November 2001. Currency Network PLC was dissolved on 23 July 2002. On 26 November 2001, a wholly owned subsidiary of Currency Network PLC, Currency Network (UK) Limited, of which Mr. Dattels had never been a director, was placed in creditors' voluntary liquidation.

Concurrently with his appointment, Mr. Dattels will be interested in 35,512,290 Ordinary Shares in the Company representing 13.09 per cent. of the Enlarged Share Capital. Mr. Dattels will also be interested in 34,133,439 Subscription Anti-Dilution Warrants, which together with his Subscription Shares, will represent 14.67 per cent. of the Diluted Share Capital. Immediately following the Share Purchase Mr. Dattels will be interested in 45,512,290 Ordinary Shares in the Company representing 16.78 per cent. of the Enlarged Share Capital.

There are no other matters under paragraph (g) of Schedule 2 of the AIM rules to be disclosed.

Ian Michael Burns (Non-Executive Director- aged 55)

Ian Burns is the founder and Senior Executive Director of Via Executive Limited, a management consulting company, and the Managing Director of Regent Mercantile Holdings Limited, a privately owned investment company. He is a former Finance Director of Polo Resources Limited, a London AIM-listed natural resources investment company, and a non-executive director of Phaunos Timber Fund Limited, a $600 million company listed on the LSE. He is also non-executive director of several investment funds and fund management companies. He is a fellow of both the Institute of Chartered Accountants in England & Wales and the Chartered Institute Securities and Investment.

Ian Burns holds or has held the following directorships or has been a partner in the following partnerships within the five years prior to the date of this document:

Concurrently with his appointment, Mr. Burns will be interested in 12,508,311 Ordinary Shares in the Company representing 4.61 per cent. of the Enlarged Share Capital. Mr. Burns will also be interested in 9,381,019 Subscription Anti-Dilution Warrants, which together with his Subscription Shares, will represent 4.61 per cent. of the Diluted Share Capital.

There are no other matters under paragraph (g) of Schedule 2 of the AIM rules to be disclosed.

11 New Investing Policy

11.1 Resolution 9 to be proposed at the Annual General Meeting proposes the adoption of the New Investing Policy by the Company.

11.2 The proposed New Investing Policy is set out below:

The Company's proposed new Investing Policy is to invest in and/or acquire companies and/or projects within the natural resources and/or energy sector with potential for growth. It is anticipated that the geographical focus will primarily be Africa, however, investments may also be considered in other regions to the extent that the Proposed Board considers that valuable opportunities exist and returns can be achieved.

In selecting investment opportunities, the Proposed Board will focus on businesses, assets and/or projects that are available at attractive valuations and hold opportunities to unlock embedded value.

Where appropriate, the Proposed Board may seek to invest in businesses where it may influencethe business at a board level, add their expertise to the management of the business, and utilise their significant industry relationships and access to finance; as such investments are likely to be actively managed.

The Company's interests in a proposed investment and/or acquisition may range from a minority position to full ownership and may comprise one investment or multiple investments. The proposed investments may be in either quoted or unquoted companies; be made by direct acquisitions or farm-ins; and may be in companies, partnerships, earn-in joint ventures, debt or other loan structures, joint ventures or direct or indirect interests in assets or projects. The Proposed Board may focus on investments where intrinsic value can be achieved from the restructuringof investments or merger of complementary businesses.

The Proposed Board expects that investments will typically be held for the medium to long term, althoughshort term disposal of assets cannot be ruled out if there is an opportunity to generate an attractive return for Shareholders. The Proposed Board will place no minimum or maximum limit on the length of time that any investment may be held.

There is no limit on the number of projects into which the Company may invest, and the Company's financial resources may be invested in a number of propositions or in just one investment, which may be deemed to be a reverse takeover under the AIM Rules. The Directors intend to mitigate risk by appropriate due diligence and transaction analysis. Any transaction constituting a reverse takeover under the AIM Rules will also require Shareholder approval. The Proposed Board considers that as investments are made, and new promising investment opportunities arise, further funding of the Company may also be required.

Where the Company builds a portfolio of related assets it is possible that there may be cross holdings between such assets. The Company does not currently intend to fund any investments with debt or other borrowings but may do so if appropriate. Investments in early stage assets are expected to be mainly in the form of equity, with debt potentially being raised later to fund the development of such assets. Investments in later stage assets are more likely to include an element of debt to equity gearing. The Proposed Board may also offer new Ordinary Shares by way of consideration as well as cash, thereby helping to preserve the Company's cash for working capital and as a reserve against unforeseen contingencies including, for example, delays in collecting accounts receivable, unexpected changes in the economic environment and operational problems.

The Proposed Board will conduct initial due diligence appraisals of potential business or projects and, where they believe further investigation is warranted, intend to appoint appropriately qualified persons to assist. The Proposed Board believes it has a broad range of contacts through which they are aware of various opportunities which may prove suitable, although at this point only preliminary due diligence has been undertaken. The Proposed Board believes its expertise will enable it to determine quickly which opportunities could be viable and so progress quickly to formal due diligence. The Company will not have a separate investment manager. The Company proposes to carry out a comprehensive and thorough project review process in which all material aspects of a potential project or business will be subject to rigorous due diligence, as appropriate. Due to the nature of the sector in which the Company is focused it is unlikely that cash returns will be made in the short to medium term; rather the Company expects a focus on capital returns over the medium to long term.

11.3 As an Investing Company, the Company's investing policy is subject to annual renewal by Shareholders to the extent it has not been fully implemented.

12 Certificates

12.1 No new share certificates will be issued to Shareholders holding share certificates as a result of the Company's name change. New share certificates will be issued in the name of Kuala Limited.

13 Annual General Meeting

13.1 The Notice convening the Annual General Meeting at which the Resolutions will be proposed is set out at Appendix I of this document. A summary of the Resolutions is set out below. Please note that unless all of the Resolutions are passed, excepting for Resolution 10 to change the name of the Company, the Proposals outlined in this document will not proceed.

Resolutions numbered 1 - 9 - Ordinary Resolutions

Resolution 1 - Receiving and Considering the Accounts

This is an ordinary resolution to receive and consider the financial statements of the Company for the period ended 31 March 2014 together with the report of the Directors and the report of the auditors thereon.

Resolution 2 - Reappointment of Auditors

This Resolution seeks to authorise the re-appointment of PricewaterhouseCoopers CI LLP as auditors of the Company and to authorise the Directors to determine their remuneration.

Resolution 3 - Share Sub-Division

This Resolution proposes that each of the 70,000,709 Existing Ordinary Shares of £0.01 each in the capital of the Company be sub-divided into 70,000,709 Sub-Ordinary Shares of £0.001 each and 70,000,709 Deferred Shares of £0.09 each in the capital of the Company.

Resolution 4 - Increase in Authorised Share Capital

This Resolution proposed that the authorised share capital limit of the Company be increased from £2,000,000 to £20,000,000.

Resolution 5 - Amendments to the Memorandum and Articles of Incorporation

Following the creation of the Deferred Shares, and changes to the capital structure of the Company following the Share Sub-Division and the Share Consolidation, the Company is required to amend its memorandum and articles of incorporation. Save for changes required by law, there are no other changes to the Company's Existing Articles that affect the rights of Shareholders.

Resolution 6 - Directors' Authority to Allot Shares

This Resolution proposes that, in substitution for any existing authority, the Directors be generally and unconditionally authorised to exercise all the powers of the Company to allot relevant securities and subject to the terms the Directors may determine up to a maximum aggregate nominal amount of £5,000,000 (representing 5,000,000,000 Sub-Ordinary Shares of £0.001 each, or 500,000,000 New Ordinary Shares of £0.01 each). Authority under this resolution will expire on the date falling five years after the date of the Annual General Meeting. The Guernsey Companies Law does not limit the power of directors to issue shares or impose any pre-emption rights on the issue of new shares. Accordingly, the Directors are generally and unconditionally authorised to allot securities in the Company up to the authorised but unissued share capital of the Company, any such power not to be limited in duration.

Resolution 7 - Waiver of Obligation to Make Mandatory Offer under Takeover Code

Subject to approval of this Resolution 7 the Panel has agreed to waive any obligation under Rule 9 of the Takeover Code on any or all of the Concert Party (as defined in this document) to make a general offer to Shareholders which obligation might otherwise have arisen as a result of the issue to the members of the Concert Party of, in aggregate, 201,204,820 Ordinary Shares of £0.001 each pursuant to the Subscription, and 158,400,000 Ordinary Shares pursuant to the exercise of the warrants, as a result of which the Concert Party will own in aggregate up to 75.77 per cent. of the Enlarged Share Capital assuming exercise of all of the Subscription Anti-Dilution Warrants and the Existing Warrants.

Resolution 8 - Share Consolidation

Subject to all other Resolutions being approved, excepting for Resolution 10 to change the name of the Company, and the Subscription being completed, the Company proposes that every 10 Sub-Ordinary Shares of £0.001 each in the capital of the Company in issue immediately after the Share Sub-Division and completion of the Subscription be consolidated into one New Ordinary Share of £0.01 each, such New Ordinary Share having the same rights and being subject to the same restrictions (save as to par value) as the Existing Ordinary Shares as set out in the Company's articles of incorporation for the time being, provided that all fractional entitlements arising out of the Share Consolidation (including, without limitation, those arising by reason of there being fewer than 10 Sub-Ordinary Shares in any holding to consolidate) shall be aggregated together and the number of Ordinary Shares so arising (including any remaining fractions of an Ordinary Share) shall be sold in accordance with the Company's articles of incorporation.

Resolution 9 - Approval of New Investing Policy

This Resolution proposes that the Company adopt the New Investing Policy, on the terms set out at paragraph 11.2 of this Part I of this document. The Proposed Board, in addition to the investors forming the Concert party, have significant experience in the natural resources sector, and believe they can achieve capital growth for Shareholders by successfully implementing the proposed New Investing Policy.

Resolution 10 - Special Resolution

Resolution 10 - Approval of Change of Name

This Resolution requests Shareholders approve the change of the Company's name to Kuala Limited.

14 Action to be taken

14.1 Shareholders will find a Form of Proxy enclosed for use at the Annual General Meeting. The Form of Proxy should be completed and signed in accordance with the instructions thereon and returned to the Company's Secretary, Elysium Fund Management Limited, 1st Floor, Royal Chambers, St Julian's Avenue, St Peter Port, Guernsey GY1 3JX by not later than 11 a.m. on 4 November 2014. The completion and return of a Form of Proxy will not preclude Shareholders from attending the Annual General Meeting and voting in person should they so wish.

15 Recommendation

15.1 The Independent Director, Nicholas Brooke, together with Duncan Hall and Photo Distribution Limited, who are the beneficial owners of, in aggregate, 27,117,716 Ordinary Shares representing 54.23% of the Existing Ordinary Shares held by the Independent Shareholders in the Company, have signed irrevocable agreements to instruct the record owner of such Ordinary Shares to vote in favour of the Resolutions to be proposed at the Annual General Meeting of the Company.

15.2 The Independent Director, who has been so advised by Peterhouse, believe that the Proposals are fair and reasonable and in the best interests of the Company and its Independent Shareholders. Accordingly, the Independent Director recommends that Shareholders vote in favour of all Resolutions to be proposed at the Annual General Meeting, as he intends to do so in respect of his own holdings of Ordinary Shares which amount, in aggregate, to 13,251,920 Ordinary Shares representing 26.50 per cent. of the Existing Ordinary Shares of the Independent Shareholders. In providing advice to the Independent Director, Peterhouse has taken into account the Independent Director's commercial assessments.

15.3 Kevin McCabe is not deemed to be an Independent Director as he is a founding director and major shareholder of Scarborough Holding Company Limited, that has provided a £70,000 loan to the Company, as referred to in Paragraph 2.5 of this Part I of the circular

Yours faithfully,

Kevin McCabe

Executive Director