Nan Nan Resources Enterprise Limited announced on 29 August 2018, Kaiyuan Company received a notice dated 28 August 2018 issued by the Safety Bureau of the Zhundong Development Zone confirming that the Kaiyuan Company could resume normal production at the Kaiyuan Mine. According to the Notice, the Kaiyuan Company is required to, among other things, strictly observe and comply with the applicable laws and regulations on mining safety, strengthen on-site management on safety, ensure mining and production safety and undertake to resume production. As stated in the announcement of the Company dated 3 July 2018, after the Kaiyuan Company has successfully renewed the Mining Rights on 28 May 2018 and the Work Safety Permit on 25 June 2018 respectively, the Company has immediately applied to the Safety Bureau of the Zhundong Development Zone for the necessary approval and acceptance procedures to resume production at the Kaiyuan Mine. On 1 August 2018, upon receipt of the Kaiyuan Company's application for resumption of production, officers of the Safety Bureau of the Zhundong Development Zone inspected the Kaiyuan Mine and identified eighteen safety issues. Based on the eighteen safety issues, Kaiyuan Company formulated and implemented a remedial plan to rectify the said issues. On 22 August 2018, officers of the Safety Bureau of the Zhundong Development Zone conducted a second inspection at the Kaiyuan Mine and confirmed that all of the safety issues have been completely rectified, except for three issues which would have to be remedied after production has resumed. According to the PRC legal opinion obtained by the Company, since the suspension of production at the Kaiyuan Mine on 11 April 2018, Kaiyuan Company has carried out plenty of effective remedial work, leading to the receipt of the Notice by Kaiyuan Company approving the resumption of production. So far as the Company is aware, Kaiyuan Company has not received any claims arising from non-supply of coal during the production suspension period, which was approximately four months. While the production at the Kaiyuan Mine was suspended, the Kaiyuan Company commenced construction of a coal sifting machine at the Kaiyuan Mine as required by the Ministry of Ecology and Environment. The Construction is expected to complete towards the end of November 2018 and will impact upon the normal production at the Kaiyuan Mine once production has resumed.

The Group expects to record a net loss for the six months ending 30 September 2018 as compared to a net profit recorded by the Group for the six months ended 30 September 2017. The Board considers that the anticipated net loss is mainly attributable to the suspension of production at the Kaiyuan Mine from 11 April 2018 to 29 August 2018; and the Construction. The Board wishes to emphasize that the assessment is only based on the Group's operation, without having regard to other factors that may impact upon the final figures, such as the fair value of the convertible bond of the Company and the impairment loss in respect of the mining rights and related fixed assets of the Kaiyuan Mine.