Major Shareholder:

• Mr. Yang Xin Min ¡V 71.25% interest

Company Subsidiaries:

• Yixing Xinxing Zirconium co. Ltd (100%): Research, development, production and sale of zirconium chemicals
• Century Dragon Investment Ltd (100%): Leasing of the Group's office premises in Hong Kong

The Group is principally engaged in the manufacture and sale of wide range of zirconium chemicals which include zirconium oxychloride, zirconium carbonate and zirconium oxides under the brandname ¡§Long Jing¡¨. Zirconium is metallic clement which is highly resistant to heat and corrosion. Such zirconium chemicals are used for the manufacture of mobile phone components, piezoelectric ceramics, artificial jewellery, cosmetic products, optical glass, optical fibres, ceramic pigmented, fireproof materialism, nuclear-related materials and grinding and cutting materials as well as for the further production of other zirconium chemicals. The Group is also engaged in the trading of zircon sand which is the principal raw materials used for the manufacture of zirconium chemicals.

With a management team made up of experienced members, some of whom have more than 20 years experience in the manufacture of zirconium chemicals, the Directors believe that the Group may capitalize on its experience and expertise to expand its product range and to explore new business opportunities so as to satisfy the increasing demand from the international market for high quality zirconium chemicals.

According to a statement from the Nonferrous Metals Society of China made in March 2001, the Group is the largest zirconium chemical manufacturer and exporter in the PRC. The Group's research and development in nanometic zirconium oxides, amongst other high-tech research and development projects, was included in the ¡§2002 China Touch Program¡¨.

The Group's production facilities are located in Yixing, Jiangsu Province, PRC. As at 30^th April, 2002, the Group had an annual aggregate production capacity of approximately 27,600 tonnes of zirconium oxychloride, 4800 tonnes of zirconium carbonate, 1,800 tones of zirconium oxides and 2300 tonnes of other zirconium compounds.

The Directors believe that the Group has the following competitive advantages:

• the Group being the largest zirconium chemical manufacturer in the PRC as ranked by the Nonferrous Metals Society of China and having an established track record;
• the Group's ability to product a wide range of zirconium chemicals to meet the needs of different customer;
• the Group's commitment to quality control, quality assurance and environmental protections;
• the Group's dedication in research and development for improving its existing zirconium chemical production technologies and developing new products; and
• the strength of the Group's management team, with its in depth knowledge of the manufacture and sale of zirconium chemicals.

• Reliance on major suppliers;
• Reliance on major customers;
• Reliance on sales to major countries;
• Price fluctuations of finished products and reliance on sales of zirconium oxycholoride;
• Sustainability of gross profit margin and net profit margin;

The Group intends to upgrade its current production facilities by constructing additional factory buildings and purchasing new machinery to increase production capacity. Upon completion of this expansion, it is expected that the Group's annual production capacity for zirconium oxychloride and zirconium carbonate will increase from the current levels of approximately 27,600 tonnes and 4800 tonnes, respectively to approximately 35,000 tonnes and 6,000 tonnes respectively.

The Directors plan to expand and upgrade the Group's research facilities to strengthen the Group's ability to produce new product lines such as micrometric and nanometric zirconium oxides of different specifications for application in various industries and to satisfy the growing demand for high quality zirconium chemicals.

Capitalizing on its proven track record and quality products, the Group has established a strong customer base in Japan and the US over the past few years. To further expand its customer base and maintain its leading market position, the Group will continue to expand its sales and marketing team to capture business opportunities in other parties of the world. The primary focus will be on the European Union, followed by South America, the Middle East and Southeast Asia.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$6800 million (based on the offer price HK$0.8 per share). The Group at present intends to apply the net proceeds as follows: