Nan Nan Resources : Profit warning

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.

南南資源實業有限公司

(Incorporated in Bermuda with limited liability)

This announcement is made pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

The board (the "Board") of directors (the "Directors") of Nan Nan Resources Enterprise Limited (the "Company", together with its subsidiaries, the "Group") wishes to inform the shareholders of the Company and potential investors that based on the information currently available to the Board, since more sales effort has been put by the senior management of the Xinjiang office of the Group, it is expected that the Group's total revenue for the six months ended 30 September 2017 may record a substantial increase of approximately 180% to approximately HK$72.8 million, as compared to the total revenue of the Group for the six months ended 30 September 2016 of approximately HK$25.8 million. However, as there was a decrease in gross profit margin, the gross profit of the Group for the six months ended 30 September 2017 is expected to increase by approximately 118% to approximately HK$18.5 million.

Despite the aforesaid substantial increase in the total revenue and gross profit, the Group expects to record a decrease in the net profit for the six months ended 30 September 2017 as compared to the net profit of approximately HK$25.9 million for the six months ended 30 September 2016, which is primarily attributable to (i) the decrease in profit arising from the change in fair value of the convertible bond of the Company for the six months ended 30 September 2017; and (ii) the significant impairment loss expected to be recognized in respect of the mining rights and related fixed assets of Kaiyuan Open Pit Coal Mine of the Group (the "Coal Mine Assets") for the six months ended 30 September 2017 due to the expected capital expenditures for the environmental protection remedial works which result in the expected decrease in the appraised value of the Coal Mine Assets.

According to the draft valuation reports of the convertible bond of the Company and the Coal Mine Assets, as well as the draft condensed consolidated statement of profit or loss and other comprehensive income of the Group, the profit arising from the change in fair value of the Company's convertible bond for the six months ended 30 September 2017 is expected to be approximately HK$27.9 million (the final figure is subject to any adjustment to be made under applicable accounting principles), as compared to the profit of approximately HK$34.2 million arising from the change in fair value of the Company's convertible bond for the six months ended 30 September 2016. Regarding the Coal Mine Assets, an impairment loss of approximately HK$16 million (the final figure is subject to any adjustment to be made under the applicable accounting principles) is expected to be made for the six months ended 30 September 2017.

The Company wishes to emphasize that this announcement is published only based on the Company's preliminary review of the draft valuation reports of the convertible bond of the Company and the Coal Mine Assets, as well as the draft condensed consolidated statement of profit or loss and other comprehensive income of the Group, which are subject to finalization by the valuers and auditors of the Company (as the case may be). Taking into consideration that (i) the Company is in the process of finalizing the unaudited interim results of the Group for the six months ended 30 September 2017, which is expected to be published on 21 November 2017, and (ii) adjustment to be made to the items of the said unaudited interim results of the Group may or may not be significant, in order to avoid any potential misleading impression the public may have regarding the Group's operation and unaudited interim results for the six month ended 30 September 2017, the Board decided to take a more prudent attitude and not to disclose the preliminary figures regarding the Group's unaudited interim results for the six months ended 30 September 2017 at the moment.

Shareholders and potential investors of the Company are advised to read the unaudited interim results announcement of the Group when it is published.

Made by the order of the Board, save for Ms. LO Fong Hung who could not be contacted as at the date of this announcement.

By Order of the Board

Chairman and Managing Director

Hong Kong, 14 November 2017

As at the date of this announcement, the Board comprises three executive Directors, namely Mr. Kwan Man Fai, Ms. Lo Fong Hung and Mr. Wang Xiangfei; three independent non- executive Directors, namely Mr. Wong Man Hin, Raymond, Mr. Chan Yiu Fai, Youdey and Mr. Pak Wai Keung Martin; and one alternate Director, Mr. Wong Sze Wai (alternate to Mr. Wang Xiangfei).