NAR issues US$33 million convertible bonds

Estimated HK$243mln proceeds to be used for acquiring iron concession in Mongolia and facilitate future acquisitions.

North Asia Resources Holdings Limited announced that it has entered into a subscription agreement with Business Ally Investments Limited, to issue up to US$33 million aggregate principal amount of convertible bonds due three years from the date of issue of the Convertible Bonds. The Subscriber is a wholly-owned subsidiary of CCB International Asset Management Limited which is in turn wholly-owned by CCB International (Holdings) Limited. CCBI is the investment banking flagship established in Hong Kong and wholly-owned by China Construction Bank Corporation.

Under the Subscription Agreement, the Convertible Bonds will be issued in two tranches. The first tranche, US$30 million principal amount of convertible bonds, will be issued on or before 20 September 2010, subject to the fulfillment of the conditions stipulated in the Subscription Agreement. The Subscriber shall have the right to elect (a) to subscribe all or part of the second tranche of issuance or (b) not to subscribe the second tranche of issuance by serving a notice to the Company at or before 1:00 p.m. on 21 September 2010. If the Subscriber elects to subscribe all or part of the second tranche, up to US$3 million principal amount of convertible bonds will be issued on or before 30 September 2010, subject to the fulfillment of the conditions stipulated in the Subscription Agreement.

The Convertible Bonds are convertible into shares at an initial conversion price of HK$1.70 per conversion share, representing a premium of approximately 18.88% to the closing price of HK$1.43 per share as quoted on The Stock Exchange of Hong Kong Limited on 8 September 2010.

Assuming the Convertible Bonds are fully subscribed and converted, a total of 150,441,175 conversion shares (the “Conversion Shares”) will be issued by the Company, representing (i) approximately 19.35% of the Company’s existing issued share capital of 777,527,325 shares; and (ii) approximately 16.21% of the Company’s issued share capital as enlarged by the issue of the Conversion Shares upon full conversion of the Convertible Bonds. No immediate dilution effect on the shareholding of the existing shareholders is expected. The interest rate is 8.0% per annum on the outstanding aggregate principal amount of the Convertible Bonds.

The estimated net proceeds from the issue of the Convertible Bonds of approximately HK$243 million will be used for acquisition and general working capital of the Group.

Mr. Joseph King, Chairman of NAR, said, “We are very pleased to be able to attract new capital and a quality strategic investor like CCBI and hope to leverage on their group’s vast resources and network in China to enhance NAR’s competitiveness. The issue of the Convertible Bonds will strengthen our capital base immediately by providing extra funding in enabling the Group to seize the opportunities ahead. Other than keeping a close eye on other possible acquisitions in the future, we also plan to use these funds to facilitate present working capital of the Group, acquisition of iron concession in Mongolia, thereby bringing maximum returns to our shareholders.”