RA SILK ROAD (00274) received a letter from relevant shareholders stating that the company has lost control over Xiwu, Hunan.

RA SILK ROAD (00274) announced that on January 12, 2025, the company received a letter from Mr. Cai Shuo, Mr. Cai Pu, Mr. Wu Qingchao, and Hunan Jujijoint Consulting Center (Limited Partnership) (Hunan Jujijoint) (collectively referred to as "related shareholders") claiming to collectively hold approximately 68.7% equity of Hunan West Australian Mining Co., Ltd. (Hunan West Australian). Although the company holds only 31.3% equity of Hunan West Australian through one of its wholly-owned subsidiaries, Westralian Resources Pty Ltd. (Westralian Resources), according to a voting proxy agreement entered into between several related shareholders and Westralian Resources, the company still controls over 50% of the voting rights of Hunan West Australian, thus making Hunan West Australian considered a non-wholly owned subsidiary of the company. According to the letter, the company has lost control of Hunan West Australian and Hunan West Australian is no longer a subsidiary of the company due to the following reasons: (i) the voting proxy agreement was revoked due to the non-payment of outstanding debts (including) by Mr. Cai Pu and Mr. Wu Qingchao (two of the related shareholders, who also stated in the letter that they may take potential legal actions to recover the debt); (ii) two directors nominated by Westralian Resources resigned from the board of directors of Hunan West Australian on January 1, 2025, and the related shareholders have taken over control of the operations and finance departments of Hunan West Australian; (iii) the loan provided by Mr. Cai Shuo (one of the related shareholders) to the company (secured by the 100% equity of Westralian Resources held by the company) has matured; and (iv) potential disputes related to the gold mine located in Jilin Province. In addition to being one of the related shareholders of Hunan West Australian, Mr. Cai Shuo is also a creditor of the company. According to a writ issued on July 12, 2024, Mr. Cai Shuo has claimed repayment of approximately RMB 36.3 million, including principal of approximately RMB 22.2 million and interest of up to RMB 14.1 million as of June 30, 2024. The letter also claims that based on the guarantee provided for the loan, the company has transferred all its equity in Westralian Resources to Mr. Cai Shuo. Apart from the above, Mr. Cai Pu and Mr. Wu Qingchao claimed in the letter that the company owes them approximately RMB 21.6 million. The company notes that it has not received any claims regarding the repayment of the alleged debt. After the resignation of the two directors nominated by Westralian Resources to the board of Hunan West Australian, as of the date of this announcement, Hunan West Australian has only one director, and the letter states that the group no longer "controls" Hunan West Australian. Furthermore, the letter claims that the related shareholders have taken over control of the operations and finance departments of Hunan West Australian. Based on preliminary legal and accounting advice, the directors of the company believe that Mr. Cai Shuo has no right to be the assignee of the company's equity in Westralian Resources unless a court order is obtained. As far as the directors are aware, there is no court order regarding the transfer of the company's equity in Westralian Resources. Additionally, the company has been informed that for accounting purposes, "control" is not solely determined by whether the directors nominated by Westralian Resources are still directors of Hunan West Australian or have been replaced, but more (but not solely) depends on the rights of the directors nominated by Westralian Resources and the contractual parties under the voting proxy agreement. Therefore, the directors believe that the group has not lost control of Hunan West Australian. The company will take all necessary steps to protect its rights and control over Hunan West Australian, including legal actions. The company will further discuss this matter with its advisors, and shareholders will be informed of any developments that constitute insider information. The letter further mentions that the company has not fully paid for the purchase of 51% equity of a gold mine in Huadian City, Jilin Province from the seller and may face claims. According to the directors' knowledge, the alleged signatories of the letter have no ownership rights in the gold mine, and the matter is unrelated to them. The company intends to maintain ownership and control over the gold mine.