Huili Resources : (I) FULFILMENT OF ALL RESUMPTION CONDITIONS; (II) RESUMPTION OF TRADING; AND (III) CLOSURE OF REGISTER OF MEMBERS

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.

Huili Resources (Group) Limited 䁩ɢ༟๕€ණྠϞࠢʮ̡

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1303)

(I) FULFILMENT OF ALL RESUMPTION CONDITIONS;

(II) RESUMPTION OF TRADING; AND

(III) CLOSURE OF REGISTER OF MEMBERS

FULFILMENT OF ALL RESUMPTION CONDITIONS

Reference is made to the announcement of the Company dated 8 June 2018 in relation to the Resumption Conditions imposed by the Stock Exchange on the Company. As at the date of this announcement, the Company has fulfilled all the Resumption Conditions to the satisfaction of the Stock Exchange.

RESUMPTION OF TRADING

Trading in the Shares has been suspended on the Stock Exchange from 9:00 a.m. on 28 March 2018. Since all the Resumption Conditions have been fulfilled, the Company has made an application to the Stock Exchange for the resumption of trading in the Shares on the Stock Exchange with effect from 9:00 a.m. on Friday, 11 January 2019.

(I) BACKGROUND

At the request of Huili Resources (Group) Limited (the "Company", together with its subsidiaries, the "Group"), trading in the shares of the Company (the "Shares") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") was suspended from 9:00 a.m. on 28 March 2018.

Reference is made to the announcement of the Company dated 8 June 2018 (the "Resumption Conditions Announcement") in relation to the conditions imposed by the Stock Exchange on the Company in respect of the resumption of trading in the Shares on the Stock Exchange (the "Resumption Conditions") and the announcements of the Company dated 27 March 2018, 30 April 2018, 31 May 2018, 15 June 2018, 17 July 2018, 14 August 2018, 17 August 2018, 14 September 2018, 19 October 2018, 6 November 2018, 19 November 2018 (collectively, the "Announcements"). Unless otherwise stated, capitalised terms used in this announcement shall have the same meaning as those defined in the Announcements.

As stated in the Resumption Conditions Announcement, the Stock Exchange has imposed the following resumption conditions:

• (i) complete an appropriate independent investigation to address the audit issues identified by the Auditors (the "First Resumption Condition");

• (ii) publish the outstanding financial results under the Listing Rules and address any audit qualifications (the "Second Resumption Condition"); and

• (iii) inform the market of all material information for shareholders and investors to appraise the Company's position, including the implications of the audit issues identified by the Auditors to the Group's assets, financial and operational position (the "Third Resumption Condition").

(II) FULFILMENT OF ALL RESUMPTION CONDITIONS

The Company is pleased to announce that as at the date of this announcement, the Company has fulfilled all the Resumption Conditions to the satisfaction of the Stock Exchange.

A. The First Resumption Condition - Completion of the Independent Investigation

Reference is made to the announcement of the Company dated 17 August 2018 (the "Update Announcement") in relation to, among other things, the summary of key findings of the Independent Investigation and update on fulfilment of Resumption Conditions.

As mentioned in the Update Announcement, the Independent Investigation Firm has completed all the procedures for the Independent Investigation, and the Board and the Special Investigation Committee have reviewed the key findings of the Independent Investigation and provided their views in respect of such key findings. Following completion of the Independent Investigation, the first Resumption Condition has been fulfilled.

Internal Control Review and Follow-up Actions by the Company

Separately, the Company has engaged APAC Compliance Consultancy and Internal Control Services Limited (the "Internal Control Adviser") to conduct an internal control review covering bank payment and receipts process and acceptance bills management process of the Group for the period from 1 January 2018 to 31 August 2018 (the "Review Period") in connection with the Group's operation in both Hong Kong and China (the "Internal Control Review").

As at the date of this announcement, the Internal Control Adviser has already completed its evaluation on the existing policies for the Group's bank receipts and payment processes, identified certain gaps on design effectiveness and proposed recommendations for improvement on gaps identified.

Upon completion of the Internal Control Review, a Board meeting was held on 27 September 2018 (the "September Board Meeting") to discuss the findings by, and recommendations of, the Internal Control Adviser. It was noted that, despite certain gaps and exceptions identified by the Internal Control Adviser which the Company has promptly enhanced by fine-tuning its practices, the findings of the Internal Control Review did not reveal any material internal control deficiencies or any material irregularities over the payment procedures (including the approval process).

At the September Board Meeting, the Board approved (1) all recommendations proposed by the Internal Control Adviser; and (2) the amendments to the financial management system manual of the Group (collectively, the "New Measures"), both with immediate effect from the date of the September Board Meeting. Details of the major gaps identified in the Internal Control Review and the relevant New Measures are summarized below:-

Area

Major gaps identified

Relevant New Measures

Policy

Policy and procedures do not coverand procedures areas of custody and record of receipts, payment approval and acceptance bills management in sufficient detail.

The financial management system manual of the Group has been amended to cover the areas identified in the Internal Control Review.

Bills management

• (i) Certain paper bills received were not taken to the issuers to verify authenticity.

• (ii) Documentation for checking the appropriateness and authenticity of bills are not available.

• (iii) Bills register is not maintained.

• (iv) Certain bills were not presented on the maturity date.

• (i) All papers bills received will be taken to the issuers to verify authenticity.

• (ii) Documentation for checking the appropriateness and authenticity of bills will be filed for record.

• (iii) Bills register is maintained by the cashier and reviewed by finance manager.

• (iv) Bills will be presented for settlement on the maturity date and evidence of communication with the bank will be filed for record.

  Payment Execution

  Payment approvers did not sign with date on all payment request forms for certain payments. Some approvals were obtained after execution of the payment.

• (i) Approver will sign with date on the payment request form.

• (ii) Prior to all payments, all original advice/vouchers will be obtained, duly signed or stamped by the person-in-charge and verification personnel, and approved by relevant approvers.

• (iii) All approvals for payments will be formally recorded in writing.

Area

Major gaps identified

Relevant New Measures

Accounting Vouchers

• (i) Certain accounting vouchers are prepared and reviewed by the same finance manager.

• (ii) The nature and reasons for the transaction are not always stated.

• (iii) As accounting journal date of some receipts and payments did not match with the fundflow date, certain receipts and payments may not be recorded in a timely manner.

• (i) Preparation and approval of accounting vouchers will be done by separate individuals for segregation of duties.

• (ii) Clear description of transaction nature and reason has to be stated in the accounting voucher.

• (iii) Accounting journal date should match with the fundflow date, to ensure that receipts and payments are recorded in a timely manner.

Bank Reconciliation

The finance manager will conduct monthly checks to ensure each bank ledger balance matchs with the bank statement balance, but documentation of the review is not available.

Finance manager will sign on the monthly bank statement as evidence of the review.

Going forward, the Company will conduct a progress review of the operation of the New Measures six months from the effective date of the New Measures (the "Progress Review") to evaluate whether such measures have been properly implemented and whether any further refinements should be made. The Company also intends to continue to engage the Internal Control Adviser to conduct (i) the Progress Review in respect of the bank payment and receipts process and acceptance bills management process of the Group; and (ii) an annual internal control review on the Group's overall risk management and internal control systems.

B.

The Second Resumption Condition - Publication of Outstanding Financial Results and Addressing Audit Qualifications

References are made to the Company's announcements dated 10 December 2018 in relation to the annual results of the Group for the year ended 31 December 2017 (the "2017 Annual Results Announcement") and the interim results of the Group for the six months ended 30 June 2018 (the "2018 Interim Results Announcement") respectively.

The 2017 Annual Results and the 2018 Interim Results were published by the Company on 10 December 2018.