Connected Transaction: Proposed extension of the maturity date of HK$200,000,000 Zero Coupon convertible bond due 2017

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.

NAN NAN RESOURCES ENTERPRISE LIMITED

南南資源實業有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 1229) CONNECTED TRANSACTION PROPOSED EXTENSION OF THE MATURITY DATE OF HK$200,000,000 ZERO COUPON CONVERTIBLE BOND DUE 2017 EXTENSION OF THE TERM OF THE CONVERTIBLE BOND

On 25 January 2017, the Company and the Subscriber entered into the 3rd Deed of Amendment to further extend the Maturity Date of the Convertible Bond for 36 months and the Conversion Period will accordingly be further extended for 36 months to 13 March 2020. Save for the Maturity Date and the Conversion Period, all terms of the Convertible Bond remain unchanged.

LISTING RULES IMPLICATIONS

Pursuant to Rule 28.05 of the Listing Rules, any alterations in the terms of convertible debt securities after issue must be approved by the Stock Exchange, except where the alterations take effect automatically under the existing terms of such convertible debt securities. The Company will apply to the Stock Exchange for its approval of the proposed amendments contemplated by the 3rd Deed of Amendment pursuant to Rule 28.05 of the Listing Rules.

As the Subscriber is a Controlling Shareholder of the Company, thereby a connected person of the Company under the Listing Rules. Accordingly, the 3rd Extension to be effected by the 3rd Deed of Amendment between the Company and the Subscriber constitutes a connected transaction of the Company under the Listing Rules, therefore, the 3rd Extension is subject to the requirements for reporting, announcement and Independent Shareholders' approval at the SGM by way of poll.

GENERAL

An Independent Board Committee (comprising all independent non-executive Directors) has been formed to advise the Independent Shareholders and the Independent Financial Adviser will be appointed to advise the Independent Board Committee and the Independent Shareholders regarding the 3rd Extension.

A circular containing, among other matters, (i) further information on the 3rd Deed of Amendment and the 3rd Extension; (ii) the recommendation of the Independent Board Committee to the Independent Shareholders; (iii) a letter from the Independent Financial Adviser containing their advice to the Independent Board Committee and the Independent Shareholders; and (iv) a notice of the SGM, will be despatched to the Shareholders on or before 17 February 2017 in accordance with the Listing Rules.

Shareholders and potential investors of the Company should note that the 3rd Extension is conditional upon fulfillment of all conditions precedent in the 3rd Deed of Amendment, the transactions contemplated thereunder may or may not materialise. Shareholders and potential investors are advised to exercise caution when dealing in the Shares of the Company. BACKGROUND INFORMATION

References are made to the announcement of the Company dated 28 January 2008 in relation to the subscription of the Convertible Bond, the Subscription Circular, the announcement of the Company dated 11 February 2011 in relation to the 1st Extension and the 1st Extension Circular, the announcement of the Company dated 21 January 2014, the clarification announcement of the Company dated 28 January 2014 in relation to the 2nd Extension and the 2nd Extension Circular.

The Company entered into a conditional subscription agreement on 15 January 2008 with the Subscriber, pursuant to which the Company issued the Convertible Bond to the Subscriber in an aggregate principal amount of HK$200,000,000. The Convertible Bond bears no interest and is convertible into Shares. All outstanding Convertible Bond should have matured on 13 March 2011 pursuant to the original terms and conditions of the Convertible Bond.

On 11 February 2011, the Company and the Subscriber entered into the Deed of Amendment to extend the Maturity Date and the Conversion Period of the Convertible Bond for 36 months to 13 March 2014. Accordingly, the Maturity Date of the Convertible Bond was extended to 13 March 2014.

On 21 January 2014, the Company and the Subscriber entered into the 2nd Deed of Amendment, as amended and supplemented by the Supplemental Deed dated 28 January 2014, to further extend the Maturity Date and the Conversion Period of the Convertible Bond for 36 months to 13 March 2017. Accordingly, all outstanding Convertible Bond is going to mature on 13 March 2017.

As at the date of this announcement, the Convertible Bond with an aggregate amount of HK$200,000,000 held by the Subscriber is still outstanding.

Please refer to the Subscription Circular, the 1st Extension Circular and the 2nd Extension Circular for the details of the Convertible Bond, the 1st Extension and the 2nd Extension.

3RD DEED OF AMENDMENT

On 25 January 2017, the Company and the Subscriber entered into the 3rd Deed of Amendment, pursuant to which the Maturity Date of the Convertible Bond will be extended for 36 months from the 2nd Extension and the Conversion Period will accordingly be extended for 36 months to 13 March 2020. Save for the Maturity Date and the Conversion Period, all terms of the Convertible Bond remain unchanged.

The 3rd Deed of Amendment is subject to the fulfillment of the following conditions:

1. the passing by the Independent Shareholders at the SGM of the necessary resolutions to ratify and approve the 3rd Deed of Amendment and the 3rd Extension;

2. the Stock Exchange having approved the 3rd Extension in accordance with Rule 28.05 of the Listing Rules; and

3. all necessary consents and approvals required to be obtained on the part of the Company and the Subscriber in respect of the 3rd Extension having been obtained.

None of the above conditions precedent could be waived by the parties to the 3rd Deed of Amendment. The 3rd Deed of Amendment shall have no effect unless and until all the conditions precedent set out above are fulfilled. The effective date of the 3rd Deed of Amendment shall be on the date when all its conditions precedent are fulfilled.

As at the date of this announcement, none of the above conditions precedent have been fulfilled.

TERMS OF THE CONVERTIBLE BOND

The principal terms of the Convertible Bond (as amended by the Deed of Amendment, the 2nd Deed of Amendment and the 3rd Deed of Amendment) will be as follows:

Principal amount HK$200,000,000.

Coupon Zero (0)% interest rate

Maturity Date the Company shall repay the principal amount of the outstanding Convertible Bond to the then holder of the Convertible Bond in full on the maturity date, being the date falling 144 months from the date of issue of the Convertible Bond certificate, unless previously converted,

i.e. 13 March 2020

Conversion The holders of the Convertible Bond may convert the whole or part of the principal amount of the Convertible Bond (in multiples of HK$1,000,000) into such number of Shares determined by dividing the principal amount of the Convertible Bond being converted by the Conversion Price then in effect on any business day during the Conversion Period.

Conversion Price HK$0.20 per Conversion Share, subject to adjustment provisions which are normal for convertible debt securities of this type and, in summary, an adjustment may be made in the event of:

1. any consolidation or sub-division of the Shares;

2. any issue of Shares (other than in lieu of a cash dividend) by way of capitalization of profits or reserves;

3. any capital distribution to holders of the Shares or grant to such holders rights to acquire assets of the Group for cash;

4. any offer to holders of the Shares for subscription by way of rights or grant to holders of the Shares any options or warrants to subscribe for new Shares at a price which is less than 90% of the market price as at the date of the related announcement;

5. the issue by the Company wholly for cash of any securities which are convertible into or exchangeable for or carry rights of subscription for new Shares, and the total effective consideration per Share initially receivable for such securities is less than 90% of the market price as at the date of the related announcement;

6. the rights of conversion or exchange or subscription attached to such securities mentioned in (v) above are modified so that the total effective consideration per Share initially received for such securities shall be less than 90% of the market price at the date of the related announcement; or

7. any issue of Shares wholly for cash at a price per Share which is less than 90% of the market price at the date of the related announcement.

Conversion Period The Conversion Period is a period commencing from the date of issue of the Convertible Bond certificate and ending on the Maturity Date.

Redemption Neither the Company nor the holder of Convertible Bond shall at any time redeem (all or part of) the principal amount of the Convertible Bond outstanding prior to the Maturity Date.