CHINA HANKING (03788): Watkins Gold intends to acquire 6.63% stake in Cygnet Gold.

China Hanking (03788) announced that the Board of Directors is pleased to announce that it has approved the acquisition, capital increase, and redemption of Cygnet. On October 27, 2025, the Company's subsidiary Watkins Gold entered into a share purchase agreement with Qiu Family and Golden Resource (the sellers, both controlled by Dr. Qiu), whereby Watkins Gold agreed to acquire, and the sellers agreed to sell, a total of 2.75% of the share capital of Cygnet Gold for a consideration of AUD 6.9 million. On the same day, Watkins Gold entered into another share purchase agreement with the other existing minority shareholders of Cygnet Gold (all independent third parties) (Cygnet Gold minority shareholders), whereby Watkins Gold agreed to acquire, and the Cygnet Gold minority shareholders agreed to sell, a total of 3.88% of the share capital of Cygnet Gold for a consideration of AUD 9.7 million. The total consideration for the acquisition of 6.63% of the share capital of Cygnet Gold is AUD 16.6 million. Taking into account previous investment and acquisition transactions, China Hanking will hold 100% equity in Cygnet Gold (which owns and operates a gold mine project with approximately 2.06 million ounces of gold resources) for a total consideration of approximately AUD 60.31 million. As of the date of this announcement, Watkins Gold holds approximately 93.37% of the share capital of Cygnet Gold. Upon completion of the acquisition of Cygnet by Dr. Qiu and the Cygnet Gold minority shareholders, Watkins Gold will hold 100% equity in Cygnet Gold. Cygnet Gold will become a wholly-owned subsidiary of China Hanking and will continue to be a subsidiary of the Company, with the financial performance of Cygnet Gold being consolidated into the Company's financial statements. The Company believes that the acquisition of Cygnet will not have any significant financial impact on the Group. Based on confidence in the Cygnet gold mine project and the future development of China Hanking, Dr. Qiu and the Cygnet Gold minority shareholders intend to subscribe for new shares issued by China Hanking. On October 27, 2025, China Hanking's subsidiary Watkins Gold entered into a subscription agreement with Qiu Family and Golden Resource (both controlled by Dr. Qiu), whereby Watkins Gold agreed to issue and offer, and Qiu Family and Golden Resource agreed to subscribe for 8.7 million shares of China Hanking at a subscription price of HKD 2.62 per share (Dr. Qiu's subscription for capital increase), which is the same subscription price as announced in the subscription agreements entered into with six subscribers on September 30, 2025. On the same day, China Hanking's Watkins Gold entered into a subscription agreement with the minority shareholders of Cygnet Gold, whereby Watkins Gold agreed to issue and offer, and the minority shareholders of Cygnet Gold agreed to subscribe for a total of 12.2 million shares of China Hanking at a subscription price of HKD 2.62 per share. After the completion of the capital increase, the total number of shares issued by China Hanking will increase from 2.522 billion shares to 2.543 billion shares (capital increase), and the Group's equity interest in China Hanking will be diluted from 91.19% to 90.44%. China Hanking will continue to be a subsidiary of China Hanking, and the financial performance of China Hanking will be consolidated into the Company's financial statements. As of the date of this announcement, under the China Hanking Australia Stock Option Plan, 11.25 million stock options have been granted and are all unexercised. The exercise of any stock options under the China Hanking Australia Stock Option Plan will result in changes to the existing share structure of China Hanking. In order to promote the proposed demerger and simplify the share structure of China Hanking, the Board of Directors has approved the redemption of all unexercised stock options under the China Hanking Australia Stock Option Plan. China Hanking Australia has issued a notice to redeem all unexercised stock options on October 27, 2025 (redemption), with Dr. Qiu exercising 4.2 million stock options (Dr. Qiu's stock option redemption), and 7.05 million stock options held by employees of China Hanking Australia and its subsidiaries (independent third parties) to be redeemed and cancelled by China Hanking Australia. Upon completion of the redemption and cancellation of the stock options, there will be no unexercised stock options, and the Company will not grant any further stock options under the China Hanking Australia Stock Option Plan.