4. RATIONALE AND USE OF PROCEEDS

4.1 Rationale. On 18 May 2013, the Company announced its entry into the term sheet for the

proposed acquisition of 20% shareholding in Dragon Cement Co., Ltd. (?Dragon Cement

Acquisition?) for an aggregate consideration of US$20 million.

On 12 September 2013, for the purpose of funding the Dragon Cement Acquisition, the

Company entered into share placement agreements with certain investors for the issue and

allotment of an aggregate 204,050,000 new Shares (?Placement Shares?) at an issue price

of S$0.04302 per new Shares for an aggregate amount of S$8,778,231, together with a grant

of options to such investors to subscribe for an aggregate 204,050,000 additional Shares

(?Option Shares?) at the issue price of S$0.047322 per Option Share (?Option Price?), for an

aggregate amount of S$9,656,054.10 (?Options?). It was anticipated that on the issue of the

Placement Shares and the full exercise of the Option, the Company will raise approximately

S$17.66 million net proceeds to fund the Dragon Cement Acquisition.

The Placement was completed on 2 October 2013, while the Options were not exercised by

any of the investors and expired on 8 December 2013.

 

 

 

The Company is now proposing to carry out the Rights cum Warrants Issue towards (i)

partially funding the Dragon Cement Acquisition (ii) funding the expansion of the Group?s coal



business and (iii) funding the Group?s general working capital requirements.

 

 

 

The Company intends to use the Net Proceeds in the following proportions:

(a) up to S$15 million to partially fund the Dragon Cement Acquisition

(b) up to S$10 million to fund the expansion of the Group?s coal business and



(c) the balance, if any, towards the Group?s working capital requirements.