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Dr. Herman Tso, Chief Geologist Mining Company & Project Valuation HASS Natural Resources Limited HASS group Inc Address: Unit A, 7/F, Pico Tower, 66 Gloucester.

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Presentation on theme: "Dr. Herman Tso, Chief Geologist Mining Company & Project Valuation HASS Natural Resources Limited HASS group Inc Address: Unit A, 7/F, Pico Tower, 66 Gloucester."— Presentation transcript:

1 Dr. Herman Tso, Chief Geologist Mining Company & Project Valuation HASS Natural Resources Limited HASS group Inc Address: Unit A, 7/F, Pico Tower, 66 Gloucester Rd., Wanchai, Hong Kong Website:

2 Business & Intangible Assets Valuation Natural Resources Valuation Purchase Price Allocation Financial Instruments Valuation Industrial Valuation Corporate Advisory Project Feasibility StudyProject Feasibility Study Resources EstimationResources Estimation EvaluationEvaluation Due DiligentDue Diligent Project FundingProject Funding Technical ReportTechnical Report CONNECTING YOUR BUSINESS TO THE RESOURCES YOU NEED

3 Argentina Australia Brazil China Indonesia Kazakhstan Malaysia Mongolia Philippines Russia South Africa USA

4 Coal Copper Gold Nickel Lead Zinc Molybdenum Iron Manganese Oilfield Salt Lake Silver Tin

5 Petroleum Resources Classification System Illustrations of Resources Project Experienc e

6 Classification and Differences Between Mineral Resources and Reserves Resources Inferred Indicated Measured Reserves Possible Probable Proved Differences Between Mineral Resources and Reserves (con’t) Project Experienc e

7 Technical Report Prepared by Competent Person -Minimum of 5 years of experience -Professionally qualified -Take overall responsibility -Independent of the issuer Reporting Standards for Technical Report Mineral Resources JORC Code 1.Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC Code”) ; NI National Instrument (“NI ”); or SAMREC Code 3.South African Code for Reporting of Mineral Resources and Mineral Reserves (“SAMREC Code”) Petroleum Resources PRMS 1.Petroleum Resources Management System (“PRMS”) Project Experienc e

8 JORC Code (Mineral Resources) Originally issued by the Australasian Jointed Ore Reserves Committee in 1989 Purposes: –Establish the Minimum Standards for Public Reporting of Mineral Resources and Ore Reserve –Set out a System for the Classification of Tonnage and Grade Estimates –Specify the Qualification and Experience required for Competent Person Project Experienc e

9 NI (Mineral Resources) A mineral resource classification scheme used for the information disclosure relating in Canada Purposes: –Ensure that misleading, erroneous or fraudulent information is not published –Stipulate prescribed disclosure within the national instrument (such as technical information, terminology, compliant report) Comparison to JORC Code –Require substantially more technical disclosure Project Experienc e

10 SAMREC Code (Mineral Resources) A required minimum standard for public reporting on exploration results mineral resources or mineral reserves in South Africa Purposes: –Inform investors or potential investors and their advisers –Satisfy regulatory requirements Project Experienc e

11 PRMS (Petroleum Reserves) Approved by the Society of Petroleum Engineers (SPE) Board of Directors Purposes: –Provide a consistent approach to estimating petroleum quantities –Evaluate development projects –Present results within a comprehensive classification framework Project Experienc e

12 Russian Code & Chinese Code Conversion Guidelines Russian Resource/ Reserve Reporting Standard Level of Knowledge –P3:Regional Reconnaissance –P2:Target Identification –P1:Initial Trenching and Drilling –C2:Scoping / Pre-feasibility –C1:Feasibility Study –B:Blocking out Ore Panels –A:Production Project Experienc e

13 Russian Code to JORC Code Conversion Guidelines Project Experienc e

14 Definition of the New Chinese Resource Category Scheme Chinese Code to JORC Code Conversion Guidelines Project Experienc e

15 Part 1 Chapter Introduction to the Mining Industry 1.2Key Changes and New Requirements of HKEx Listing Rule on Mineral Companies - Chapter 18/18A 1.3Important Issues - Listing Requirements - Disclosure Requirements - Preparation of Reports 1.4Recent Technical Advisory and Valuation Projects of ROMA AGENDA Part 2 Valuation 2.1Reporting Standards for Valuation 2.2Determination of the Value of Mineral/Petroleum Assets Project Experienc e

16 Part 1- Chapter 18 Mining Industies - Definte Life - Limited resouces Other Industries - Going comcern - Terminal value(DCF) Key Changes and New Requirements of Chapter 18/18A Purpose of Rule Change: –Increase shareholders and investors’ confidence in junior mining companies listed in the HKEx Project Experienc e

17 Chapter 18/18A New Rules - Effective on 3 June Exclude early stage exploration companies from listing 2.Industry experience requirement of Competent Person has been increased from 3 to 5 years 3.Disclose specific risks and general risks Chapter 18/18A (con’t) 4.Allow mineral and exploration companies to list without needing the financial track record of Listing Rule Mineral resources and mineral reserves must be reported separately Project Experienc e

18 Chapter 18/18A (con’t) Allow companies to list only if they have a minimum of the following resources: Petroleum Companies - At Least a meaningful portfolio of Contingent Resources Minernal Companies - At least meaniful portfolio of Indicated Resource Project Experienc e

19 All Mineral Companies -Companies that only have Inferred or Prospective Resources will not be eligible for an IPO listing under the new Chapter 18 rule -Demonstrate working capital for 125% of budgeted needs for at least the next 12 months (  13 months) Disclosure Requirements Interim and Annual Reports have to include: Details of its exploration, development and mining production activities A summary of expenditure incurred on these activities during the period under review Listing Requirements Project Experienc e

20 Preparation of Reports Important Issues – Preparation of Reports Project Experienc e

21 Important Issues Early Stage Exploration Companies –Must outline their plans to proceed to production, supported by an independent Scoping Study –Mineral companies which do not satisfy Rule 8.05(1) (Profit Test), but are applying to list under Listing Rule must demonstrate a clear path to commercial production – Pre-feasibility studies are required All Mineral Companies -Must demonstrate that they have adequate rights to participate actively in the exploration or exploration and extraction of resources, either by:  Having controlling interests in a majority (by value) of the assets in which they have invested; or  Through other rights, which give them significant influence in decisions over the extraction of those resources Project Experienc e

22 Insights from Our Recent Project Experiences In order to smoothen the listing and transaction transaction process, we suggest: Make sure that both the technical and valuation reports are prepared in accordance with the reporting standards accepted by the HKEx Have sufficient due diligence conducted Show that you have conducted sufficient researches on the involved market and mineral resources Have sufficient disclosure of information required by the HKEx in the circular (Do not try to hide anything) Project Experienc e

23 1. CIMVAL - Set out in Canada - Outline the sections to be included in the Valuation Report 2. SAMVAL - Set out in South Africa - Relatively less restrictive compared to the VALMIN Code and the CIMVAL Code - Necessary to carry out a site visit by a Competent Valuator or by a Competent Person or an expert Project Experienc e

24 Technical Stock Code Report Nature Mine TypeRemarks Internal Reference Purpose Issued Report Date & Purpose March-11Yorkshire Capital Limited- Technical Due Diligence Report PetroleumROMA March-11EPI (Holdings) Limited689 Resources Estimation Report PetroleumROMA March-11Bao Yuan Holdings Limited692 Resources Review Report Iron & Titanium dioxide ROMA Recent Technical Advisory – Natural Resources Industry

25 Technical Stock Code Report NatureMine TypeRemarks Public Documentation Purpose Issued Report Date & Purpose March-10 Bao Yuan Holdings Limited (formerly known as Ching Hing (Holdings) Limited) 692Technical Report Iron & Titanium dioxide BMI Technical Consulting April-10 Solartech International Holdings Limited 1166Technical Report Copper, Gold & Silver BMI Technical Consulting May-10 Mongolia Investment Group Limited (formerly known as Ming Hing Waterworks Holdings Limited) 402Technical ReportCoal BMI Technical Consulting August-10 China Properties Investment Holdings Limited 736 Competent Person’s Report, Feasibility Study Copper & Molybden um ROMA June-11eForce Holdings Limited943 Competent Person’s Report, Feasibility Study CoalROMA

26 Valuation Stock Code Report NatureMine TypeRemarks Public Documentation Purpose Issued Report Date & Purpose July-10 China Precious Metal Resources Holdings Co., Ltd Natural Resources Valuation Gold & Nickel ROMA August-10 China Properties Investment Holdings Limited 736 Natural Resources Valuation Copper & Molybden um ROMA October-10 China Precious Metal Resources Holdings Co., Ltd Natural Resources Valuation GoldROMA November-10Honbridge Holdings Limited8137 Natural Resources Valuation IronROMA February-11King Stone Energy Group Limited663 Natural Resources Valuation CoalROMA June-11eForce Holdings Limited943 Natural Resources Valuation CoalROMA June-11 China Precious Metal Resources Holdings Co., Ltd Natural Resources Valuation GoldROMA

27 Valuation Stock Code Report NatureMine TypeRemarks Accounting Reference Purpose Issued Report Date & Purpose October-10G-Resources Group Limited1051 Intangible Assets Valuation Gold & Silver Greater China (Roma as Consultant) January-11Ming Fung Jewellery Group Limited860 Intangible Assets Valuation GoldROMA January-11Ming Fung Jewellery Group Limited860 Intangible Assets Valuation GoldROMA March-11China Mining Resources Group Limited340 Intangible Assets/Business Valuation Molybdenu m Greater China (Roma as Consultant) March-11North Mining Shares Co. Ltd.433 Intangible Assets Valuation Gold & Iron Ascent Partners (Roma as Consultant) March-11North Mining Shares Co. Ltd.433 Intangible Assets Valuation Molybdenu m Ascent Partners (Roma as Consultant) March-11North Mining Shares Co. Ltd.433 Intangible Assets Valuation Iron Ascent Partners (Roma as Consultant) March-11North Mining Shares Co. Ltd.433 Intangible Assets Valuation Molybdenu m Ascent Partners (Roma as Consultant) March-11 China Precious Metal Resources Holdings Co., Ltd Intangible Assets Valuation Gold & Nickel ROMA March-11 China Precious Metal Resources Holdings Co., Ltd Intangible Assets Valuation GoldROMA March-11 China Precious Metal Resources Holdings Co., Ltd Intangible Assets Valuation GoldROMA March-11 China Precious Metal Resources Holdings Co., Ltd Intangible Assets Valuation GoldROMA March-11 China Precious Metal Resources Holdings Co., Ltd Intangible Assets Valuation GoldROMA June-11G-Resources Group Limited1051 Intangible Assets Valuation Gold & Silver Greater China (Roma as Consultant)

28 Part 2 Valuation Reporting Standards for Valuation CIMVAL 1.Standards and Guidelines for Valuation of Mineral Properties (“CIMVAL” code); SAMVAL 2.South African Code for the Reporting of Mineral Asset Valuation (“SAMVAL” code); or VALMIN 3.Code for the Technical Assessment and Valuation Mineral and Petroleum Assets and Securities for Independent Expert Reports (“VALMIN” code)

29 Determination of the Value of Mineral/Petroleum Assets Market-Based Approach - Comparing prices of business entities in a similar nature - e.g. Using price-to-sales ratio (P/S ratio) - Estimate the price using information of similar transactions

30 Income-Based Approach - Economic benefits due to the income producing capability -Estimation of value depends on cost structure of companies -Adopt discount cash flow (DCF) method Cost-Based Approach - Aggregating the costs of developing the asset to its current condition, or replacing that asset

31 Determination of the Value of Mineral/Petroleum Assets


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