China Billion Resources : SETTLEMENT AGREEMENT AND PROPOSED ISSUE OF NEW SHARES UNDER GENERAL MANDATE

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CHINA BILLION RESOURCES LIMITED

中富資源有限公司

(incorporated in the Cayman Islands with limited liability)

(stock code: 274)

SETTLEMENT AGREEMENT AND

PROPOSED ISSUE OF NEW SHARES UNDER GENERAL MANDATE

On 23 October 2019, the Company entered into the Settlement Agreement with Mr. Li, the holder of the Relevant Bonds, for the settlement of principal payments overdue and interest accrued and unpaid under the Relevant Bonds being, as of the Partial Repayment Date, the aggregate of (i) the First Interest Portion of approximately HK$1.32 million; and (ii) the Reference Principal of approximately HK$41.85 million on which interest accrued at the Agreed Interest Rate from the Partial Repayment Date until repayment or (in respect of amounts settled by the issue of the Settlement Shares credited as fully paid as described further below) the date of the Settlement Agreement.

Apart from an amount of HK$28 million which Mr. Li has agreed under the Settlement Agreement that may be settled by the issue and allotment of 1,403,508,771 Settlement Shares at HK$0.01995 per Share, subject to the fulfilment of conditions precedent described below, all other amounts referred to above are required to be settled in cash on or before 31 December 2019.

The 1,403,508,771 Settlement Shares will be issued under general mandate granted to the Directors by the Shareholders at the Company's annual general meeting held on 6 June 2019 and represent approximately 8.00% of the total number of Shares in issue as at the date of this announcement and approximately 7.41% of the total number of Shares in issue as enlarged by the issue of the Settlement Shares.

INTRODUCTION

On 23 October 2019, the Company entered into the Settlement Agreement with Mr. Li, the holder of the Relevant Bonds, for the settlement of principal payments overdue and interest accrued and unpaid under the Relevant Bonds being, as of the Partial Repayment Date, the aggregate of (i) approximately HK$1.32 million ("First Interest Portion"), being interest accrued at the Agreed Interest Rate on the Maturity Overdue Amount from (and including) the Maturity Date to (and excluding) the Partial Repayment Date); and (ii) approximately HK$41.85 million ("Reference Principal"), being the Maturity Overdue Amount less RMB7,000,000 (equivalent to HK$7,777,777.78) paid by the Company to Mr. Li on the Partial Repayment Date.

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The Relevant Bonds were originally issued as part of a series of convertible bonds that were the subject of the circular of the Company dated 29 January 2016 that matured on 23 May 2019. As stated in the Company's announcements dated 4 June 2019 and 23 August 2019 and the 2019 interim results announcement dated 30 August 2019, the Company has been engaging in settlement discussions with the holders of those bonds. As of the date of this announcement, the Company has not yet reached any settlement agreement with the holder of the remaining approximately HK$13.97 million of bonds.

PRINCIPAL TERMS OF THE SETTLEMENT AGREEMENT

Under the Settlement Agreement,

1. subject to the fulfilment of condition precedents described below, HK$28 million (which includes the First Interest Portion) is to be settled by the issue and allotment credited as fully paid by the Company to Mr. Li of 1,403,508,771 Settlement Shares at HK$0.01995 per Share; and
2. on or before 31 December 2019, the Company is to settle in cash the aggregate of (i) approximately HK$15.17 million, being the Reference Principal less approximately HK$26.68 million ("Share Settled Principal"); and (ii) interest accrued on the Reference Principal from (and including) the Partial Repayment Date to (and excluding) the date of repayment. However, upon the issue of the Settlement Shares, no interest will accrue or become payable from the date of the Settlement Agreement in respect of the Share Settled Principal.

Mr. Li has the right to require the Company to settle all payment obligations earlier if (i) the issue and allotment of Settlement Shares does not take place by 31 December 2019; (ii) the Company fails to make cash payment on or before 31 December 2019 in the manner set out in paragraph (b) above or fails to provide certain corporate information to Mr. Li as a creditor of the Company; or (iii) the Company refinances and repays other creditors before Mr. Li is repaid in full.

Settlement Shares

The 1,403,508,771 Settlement Shares represents approximately 8.00% of the total number of Share in issue as at the date of this announcement and approximately 7.41% of the total number of Share in issue as enlarged by the issue of Settlement Shares.

The issue price of HK$0.01995 per Settlement Share is determined by the parties on arm's length negotiation by reference to a 5% discount to the average closing price per Share for the five trading days immediately preceding the date of the Settlement Agreement. The issue price represents:

1. a discount of approximately 9.32% over the closing price of HK$0.022 per Share as quoted on the Stock Exchange on the date of the Settlement Agreement; and
2. a discount of 5% over the average closing price of HK$0.021 per Share as quoted on the Stock Exchange for the five trading days immediately preceding the date of the Settlement Agreement.

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Conditions Precedent

The issue and allotment of Settlement Shares are conditional upon:

1. the Listing Committee of the Stock Exchange granting the listing of and permission to deal in the Settlement Shares; and
2. the Company having obtained all necessary approval with respect to the transactions contemplated under the Settlement Agreement (including the issue of Settlement Shares).

Completion

Completion of the issue and allotment of Settlement Shares is to take place within 10 business days after satisfaction of all conditions precedent above.

IMPACT ON THE SHAREHOLDING OF THE COMPANY

The shareholding of the Company as at the date of this announcement and immediately upon issue of the 1,403,508,771 Settlement Shares is as follows (assuming there is no other change to the share capital of the Company other than the issue of Settlement Shares):

note:

Chunda International Technology Development Co., Limited is a company wholly-owned by Ms. Fan Rong.

GENERAL MANDATE

The Settlement Shares will be issued pursuant to the general mandate to allot, issue and deal with Shares granted to the directors of the Company by resolution of its shareholders passed at the Company's annual general meeting held on 6 June 2019. The general mandate has not been utilized prior to entering into the Settlement Agreement.

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GENERAL INFORMATION

Directors consider the terms of the Settlement Agreement to be fair and reasonable and in the interests of the Company and the shareholders of the Company as a whole.

DEFINITIONS

The following defined terms are used in this announcement:

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