MIDAS HOLDINGS LIMITED (Company Registration No.: W) DALIAN HUICHENG IRREGULARITIES The board of directors (the Board ) of Midas Holdings Ltd

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1 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. (Singapore Registration No.: W) (Incorporated in Singapore with limited liability) (Hong Kong Stock Code: 1021) (Singapore Stock Code: 5EN) OVERSEAS REGULATORY ANNOUNCEMENT INSIDE INFORMATION This announcement is issued pursuant to Part XIVA of the Securities and Futures Ordinance and Rules and 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. Please refer to the attached announcement on the next page which has been published by Midas Holdings Limited (the Company ) on the website of the Singapore Exchange Securities Trading Limited on 20 June On behalf of the Midas Holdings Limited Tong Din Eu Executive Director Hong Kong, 20 June 2018 As at the date of this announcement, the executive directors of the Company are Mr. Tong Din Eu and Dr. Xu Wei Dong; and the independent non-executive director of the Company is Mr. Chan Soo Sen. 1

2 MIDAS HOLDINGS LIMITED (Company Registration No.: W) DALIAN HUICHENG IRREGULARITIES The board of directors (the Board ) of Midas Holdings Ltd (the Company ) visited Dalian Huicheng Aluminium Co., Ltd (the DLHC ) from 29 May 2018 till 7 June 2018 and discovered the following irregularities: a) Undisclosed RMB 300m Citic Loan ( Citic Loan) The Citic Loan of RMB300 million was entered on 9 April 2015 for two years with the stated purpose of 回购太平洋 - 长空 1 号项下的资管计划收益权 by the following parties: No. Company/Party Legal Representative Relationship 1 China Citi Bank 李耀东 Lender 2 DLHC 杨晓光 Borrower 3 吉林和和房地产开发有限责任公司于殿林 Pledgor The Citic Loan and the asset ( 太平洋 - 长空 1 号项下的资管计划收益权 ) of which the loan was intended for were not recorded in DLHC financial records. Subsequently, this Citic Loan was refinanced with 中国东方资产管理股份有限公司吉林省分公司 under a debt restructuring agreement (Paragraph (b) below). The Citic Loan agreement mentioned two guarantee agreements, the directors have no access to these guarantee agreements thus the directors are not able to ascertain who are the parties providing the guarantee. Mr. Yang Xiao Guang, the former legal representative at the relevant times, did not report the Citic Loan to the Board, thus the financial statements of the Group since the completion of acquisition of Huicheng Capital Limited (the HCL ) on 27 July 2016 omitted the loan. As the Citic Loan was not reported, the various financial information relating to DLHC for the nine months ended 30 September 2015 in the Circular dated 30 March 2016 (the Circular ) is materially wrong. b) Undisclosed RMB 256m loan due to 中国东方资产管理股份有限公司吉林省分公司 We noted an undisclosed and unrecorded loan of RMB256 million entered by the following parties: No. Company/Party Legal Representative Relationship 1 中国东方资产管理股份有限公司吉林省李春菊 Lender 分公司 2 DLHC 杨晓光 Borrower 3 吉林和和房地产开发有限责任公司于殿林 Common debtor 4 重庆汇程铝业有限公司 ( CQHC ) 周永波 Guarantor 5 吉林麦达斯铝业有限公司马铭章 Guarantor 6 陈维平 Guarantor This loan, in the form of debt restructuring agreement was entered on 22 September 2017 for a period of 36 months and at an annual interest rate of 8%. As the parties involved (Mr. Yang Xiao Guang, Mr. Ma Ming Zhang and Mr. Chen Wei Ping) did not report to the Board about this loan, the financial statements of the Group for the third quarter of 2017 omitted the loan. 2

3 According to the agreement, the stated purpose of the loan is for restructure the Citic Loan owing to China Citic Bank (Paragraph (a) above). c) Undisclosed RMB 50m guarantee for the benefit of Chongqing Huicheng Aluminium Co., Ltd ( CQHC ) DLHC had entered a guarantee agreement with China Citic Bank, Chongqing Branch, for a RMB50 million loan to CQHC on 15 December Mr. Yang Xiao Guang (the legal representative then) and DLHC seals were sighted in the guarantee agreement. Mr. Yang Xiao Guang, the former legal representative at the relevant times, did not report the guarantee for CQHC to the Board, thus the financial statements of the Group since the completion of acquisition of HCL on 27 July 2016 omitted the guarantee. As the guarantee was not reported, the information provided by the vendors of HCL to Midas relating to the Circular is materially wrong. The directors are unable to ascertain the status of the loan (whether it had been fully or partially repaid) and thus unable to know the extent of this contingent liability. d) Transactions in bank statements omitted in general ledger and undisclosed bank account During our check, the directors noted that for the month of December 2016, the following transactions were recorded in the bank statements of 中国银行大连金马路支行 ( 一般户 ), but were omitted in general ledger. Inflow 12/12/2016 转款招商银行股份有限公司长春分行营 8,500, /12/2016 转款招商银行股份有限公司长春分行营 1,600, Outflow 14/12/2016 贷款还款大连汇程铝业有限公司 10,562, /12/2016 转款招商银行股份有限公司长春分行营 150, /12/2016 转款吉林世杰铝业有限公司 / 吉林九台农村商业银行股份有限公 16,500, /12/2016 转款吉林世杰铝业有限公司 / 吉林九台农村商业银行股份有限公 18,500, /12/2016 转款吉林世杰铝业有限公司 / 吉林九台农村商业银行股份有限公 15,000, /12/2016 贷款还款大连汇程铝业有限公司 50,185, /12/2016 传帐支出蒙古霍煤恒信有限公司 1,600, /12/2016 往来款吉林世杰铝业有限公司 / 吉林九台农村商业银行股份有限公 15,000, /12/2016 往来款吉林世杰铝业有限公司 / 吉林九台农村商业银行股份有限公 19,000, /12/2016 往来款吉林世杰铝业有限公司 / 吉林九台农村商业银行股份有限公 16,000, /12/2016 贷款还款大连汇程铝业有限公司 50,018, /12/2016 蒙古霍煤恒信有限公司 1,600, /12/2016 吉林世杰铝业有限公司 / 吉林九台农村商业银行股份有限公 22,000, /12/2016 吉林世杰铝业有限公司 / 吉林九台农村商业银行股份有限公 18,000, /12/2016 贷款还款大连汇程铝业有限公司 40,000, /12/2016 转款大连汇程铝业有限公司 / 招商银行股份有限公司长春分行营 517, ,367, ,367, The directors noted that there is an undisclosed bank account 招商银行股份有限公司长春分行营业部 that remitted funds into the account at 中国银行大连金马路支行. This undisclosed bank account was opened by DLHC s former Financial Controller, Ms. 马中梅. The account was opened on 7 February 2013 and closed on 28 November Ms. 马中梅 opted to retire in February Dr Xu will approach the bank for detail bank statement this week. 3

4 e) Undisclosed RMB 150m Bank of China ( BOC ) loan From the bank statements under item (d), the directors noted that there were some repayments of bank loan that were not recorded in the general ledger. A check with 中国银行股份有限公司大连金普新区分行 showed that DLHC entered into a RMB150 million loan agreement (2016 年借字 022 号 ) with BOC on 10 March 2016 for a period of 8 months. The stated purpose of the loan is for the repayment of two previous loans (2015 年借字 015 号 & 2015 年借字 017 号 ) totalling RMB150 million. The bank staff said that the bank record is only up to 2016 and he is not able to retrieve the 2015 loan agreements. Mr. Yang Xiao Guang and DLHC seals were sighted in the BOC loan agreement (2016 年借字 022 号 ). This loan was not reported to the Board, thus the financial statements of the Group for third quarter 2016 omitted the loan. The Company does not have the loan agreements for 2015 年借字 015 号 & 2015 年借字 017 号 but in view of the above, the directors believe that these two loans were omitted as well in the Circular. f) Condition of RMB229.50m Cash Consideration Condition under the Sales & Purchase Agreement relating to the acquisition of HCL required the Group receiving, in full, the payment of the consideration of RMB229.50m, from Lesen Capital Limited (the Lesen Capital ) (now known as Lakeforest Capital) in relation to the sale of the equity interest of CQHC by Dalian Huicheng Aluminium Co., Ltd. to Lesen Capital Limited; Lesen Capital is owned by Mr Chen Chen, nephew of Mr Chen Wei Ping. DLHQ receives the following amounts from Lesen Capital and CQHC. Sales proceeds received at Ping An Bank, Shanghai from disposal of CQHC: ,480 RMB'000 Received from Note: ,400 Lesen Capital ,000 CQHC ,000 CQHC ,100 CQHC ,520 CQHC Agreed to S&P 229,500 汇投资控股有限公司 52,400 汇投资控股有限公司 44,000 汇投资控股有限公司 40,000 汇投资控股有限公司 39,100 汇投资控股有限公司 35,520 Agreement dated 16 March 2016 for RMB211,000, ,020 The legal representative and largest shareholder (99%) of 上海麦捷祁汇投资控股有限公司 is Mr Ma Jin Sheng, 马锦升. It s former legal representative and largest shareholder was Mr. Ma Ming Zhang 马铭章, the executive that was together with the former Chairman Mr. Chen Wei Ping, specifically censured in the Notice of Compliance issued by SGX-ST on 2 April

5 On 30 September 2016, RMB150m of the balance owed by 上海麦捷祁汇投资控股有限公司 was assigned to 内蒙古霍煤恒信铝业有限公司. The remaining RMB61m at 上海麦捷祁汇投资控股有限公司 was assigned on 30 September 2016 to 吉林众诚铝业有限公司, a company incorporated on 25 March 2016 and the former legal representative is 于殿林 (legal representative of guarantor in Paragraph (a) and legal representative of common debtor in item (b)). Both 内蒙古霍煤恒信铝业有限公司 and 吉林众诚铝业有限公司 had 吉林世杰铝业有限公司 as a shareholder. As RMB211m of the amount supposedly received were reassigned subsequently, the Group received only RMB18.48m of the RMB 229.5m cash consideration. The reassignment to 内蒙古霍煤恒信铝业有限公司 is described under Paragraph (g). g) Other receivables - 内蒙古霍煤恒信铝业有限公司 Mr Yang Xiao Guang entered into a series of supply contracts with 内蒙古霍煤恒信铝业有限公司. As a condition for supply of aluminium at discounted prices, advance payments are required. Such advance payments are recorded as Other receivables in the ledger of DLHC. 内蒙古霍煤恒信铝业有限公司 was incorporated in 27 September DLHC started to make the first advance payment to 内蒙古霍煤恒信铝业有限公司 3 days later. The various payments are described in the table below. Transfer to 内蒙古霍煤恒信铝业有限公司 (company incorporated 27 Sep 2016) RMB 000 Assigned from 上海麦捷祁汇投资控股有 Tranche 1 150,000 限公司 Tranche 2 50,000 Bank of China Loan Tranche 3 50,000 Bank of China Loan Tranche 4 40,000 Bank of China Loan Tranche 5 48,000 Bank of China Loan 338,000 The directors noted DLHC did not receive any supply of aluminium from 内蒙古霍煤恒信铝业有限公司 since 30 September The managing director of 内蒙古霍煤恒信铝业有限公司 is Mr Ma Jin Sheng, 马锦升, the legal representative of 上海麦捷祁汇投资控股有限公司. 81% share of 内蒙古霍煤恒信铝业有限公司 is held by 吉林世杰铝业有限公司. Tranche 1 did not involve any fund transfer but reassigned the Rmb 150m receivable due from 上海麦捷祁汇投资控股有限公司 to 内蒙古霍煤恒信铝业有限公司. Tranche 1 is payment made under the first supply contract dated 30 September 2016 worth Rmb 150m. We note that the representative from 内蒙古霍煤恒信铝业有限公司 entering the contract is Mr. Zhou Yong Bo, 周永波. Mr. Zhou is also the legal representative of CQHC, whose owner is Lesen Capital mentioned in Paragraph (f). 5

6 Tranche 1 30 Sep 2016 上海麦捷祁汇投资控股有限公司内蒙古霍煤恒信铝业有限公司 150,000,000 We noted the following entries in the statement retrieved from the Bank of China: Date Source of Funds Recipient Bank Name RMB Tranche 2 15 Dec 2016 DLHC borrowings 内蒙古霍煤恒信铝业有限公司 50,000, Dec 2016 吉林世杰铝业有限公司 DLHC 16,500, Dec 2016 吉林世杰铝业有限公司 DLHC 18,500, Dec 2016 吉林世杰铝业有限公司 DLHC 15,000, Dec 2016 DLHC DLHC borrowings 51,185,509 Tranche 3 15 Dec 2016 DLHC borrowings 内蒙古霍煤恒信铝业有限公司 50,000, Dec 2016 DLHC 内蒙古霍煤恒信铝业有限公司 1,600, Dec 2016 吉林世杰铝业有限公司 DLHC 15,000, Dec 2016 吉林世杰铝业有限公司 DLHC 19,000, Dec 2016 吉林世杰铝业有限公司 DLHC 16,000, Dec 2016 DLHC DLHC borrowings 50,018,759 Tranche 4 16 Dec 2016 DLHC borrowings 内蒙古霍煤恒信铝业有限公司 40,000, Dec 2016 吉林世杰铝业有限公司 DLHC 22,000, Dec 2016 吉林世杰铝业有限公司 DLHC 18,000, Dec 2016 DLHC DLHC borrowings 40,000,000 Tranche 5 8 Feb 2017 DLHC borrowings 内蒙古霍煤恒信铝业有限公司 48,000,000 8 Feb 2017 重庆汉维金属材料有限公司 DLHC 2,950,000 8 Feb 2017 重庆汉维金属材料有限公司 DLHC 2,800,000 8 Feb 2017 重庆汉维金属材料有限公司 DLHC 3,000,000 8 Feb 2017 吉林众诚铝业有限公司 DLHC 36,020,000 8 Feb 2017 重庆汉维金属材料有限公司 DLHC 3,230,000 8 Feb 2017 DLHC DLHC borrowings 48,000,000 Tranche 2, 3 and 4 showed that 内蒙古霍煤恒信铝业有限公司 probably did not keep any of money drawn from the loan from Bank of China. Its 81% shareholder, 吉林世杰铝业有限公司 returned the money to DLHC in the same day. We suspect the RMB 140m borrowed by DLHC from Bank of China and advanced to 内蒙古霍煤恒信铝业有限公司, was returned the same day to repay undisclosed BOC loan 2016 年借字 022 mentioned in item (e). The result is that DLHC borrowed fresh loans and repaid earlier undisclosed loans. As such, the earlier undisclosed loans owed previously becomes non-interest bearing other receivables on DLHC books. Studying the transactions above, it is unlikely that the RMB 338m due from 内蒙古霍煤恒信铝业有限公司 will be recoverable since Tranche 1 did not involve fund transferred and Tranche 2,3 and 4 showed the money being returned the same day to repay an earlier undisclosed loan. 6

7 Tranche 5 cannot be explained as like tranche 2, 3, 4 since we could not find any background information relating to 重庆汉维金属材料有限公司. But the coincidence that RMB 48m is remitted to 内蒙古霍煤恒信铝业有限公司 and RMB48m being returned the same day is uncanny. h) Newport Metals, Inc ( Newport ) For the purpose of the acquisition of HCL, a financial due diligence report on DLHC was prepared by Mazars LLP on 2 November That report stated Newport Metals, Inc was one of the top customers by revenue for FY13, FY14 and YTD15, making up 30.4%, 65.3% and 52.7% of the revenue respectively. However, during the trip the directors, uncovered that Mr. Chen Chen (nephew of Mr. Chen Wei Ping), who was one of the vendors (Page 6, Circular on proposed acquisition of HCL (holding company of DLHC) dated 30 March 2016) is also the sole director of Newport Metals, Inc (2017 filing with Secretary of State, State of California, Statement of Information). This information is not disclosed to Midas Holdings Limited during the proposed acquisition then. Mr. Yang Xiao Guang, the legal representative before and after the acquisition, is also one of the vendors. The CEO of Newport is Mr Stephen Lee, a former employee of DLHC who left on 3 June As the CFO, 孙秀娟 of DLHC was uncooperative, the directors could not investigate if FY2013 to YTD2015 sales to Newport had influenced the valuation in the acquisition of HLC when the Circular was prepared. However, the current board is disturbed by the deliberate non-disclosure of a material fact by the 3 vendors, Mr Chen Wei Ping, Mr Chen Chen and Mr Yang Xiao Guang. The current board has taken steps to demote 孙秀娟 from her appointment as CFO of DLHC. On 24 April 2018, the directors had announced on SGXnet that Newport had failed to repay 13 overdue sales transactions to CRRC (Hong Kong) Co., Limited ( CRRC ) under a financing agency agreement. The outstanding amount and liquidated damages is approximately USD 6.9m. i) Sale and Purchase Agreement relating to HCL ( S&P Agreement ) The irregularities mentioned in paragraph (a), (b), (c), (e) and (f) may have breached the warranties provided under the S&P Agreement. The financial impact of the irregularities of paragraph (a), (b), (c), (e) and (f) are: Rmb million Undisclosed Loans 450 Undisclosed Guarantee 50 Diversion of cash consideration from sale of CQHC Letter of Demand arising from Newport failure to pay CRRC (US$6.9m) 44 Total Part of the RMB 229.5mil cash consideration had ended up as other receivables due from 内蒙古霍煤恒信铝业有限公司 and 吉林众诚铝业有限公司. As explained earlier, such other receivables are unlikely to be recovered. The financial impact may widen as the directors await additional bank statements, loan statements and loan documents mentioned earlier. The directors will consult our legal counsel for appropriate actions. The Board will issue further announcements as appropriate, as and when there are any material developments in the matter. 7

8 At the meantime, the Board is taking steps to replace the board at DLHC with representatives from Midas Holdings Ltd. BY ORDER OF THE BOARD Midas Holdings Limited Tong Din Eu Executive Director Date: 20 June

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