China Zirconium Limited
TSX : CZL

China Zirconium Limited

October 13, 2009 10:14 ET

China Zirconium Limited: Proposed Increase in Authorised Share Capital and Proposed Share Subdivision

TORONTO, ONTARIO--(Marketwire - Oct. 13, 2009) - China Zirconium Limited (the "Company") (TSX:CZL)(HKEX:0395) -

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.



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PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

The Board proposes to increase the authorised share capital of the
Company from HK$100,000,000 divided into 100,000,000 Shares to
HK$200,000,000 divided into 200,000,000 Shares by the creation of an
additional 100,000,000 unissued Shares.

PROPOSED SHARE SUBDIVISION

The Board also proposes that each of the existing issued and unissued
Shares of HK$1.00 each in the share capital of the Company be subdivided
into twenty Subdivided Shares of HK$0.05 each.

Upon the Share Subdivision becoming effective, the board lot size of the
Subdivided Shares for trading will be changed from 400 Shares to 8,000
Subdivided Shares.

The proposed increase in authorised share capital and the Share
Subdivision is conditional upon the passing of ordinary resolutions by
Shareholders at the EGM. No Shareholders are required to abstain from
voting on these resolutions. The ordinary resolutions relating to the
increase in authorised share capital and the Share Subdivision are not
inter-conditional.

A circular containing, among other things, the details of the proposed
increase in authorised share capital, the Share Subdivision and the notice
of the EGM will be despatched to the Shareholders as soon as practicable.

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PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

As at the date of this announcement, the authorised share capital of the Company was HK$100,000,000 divided into 100,000,000 Shares of HK$1.00 each, of which 80,926,994 Shares have been issued and are fully paid. To cater for any future fund raising exercises and possible issue of Shares in the future, the Board proposes to increase the authorised share capital of the Company from HK$100,000,000 divided into 100,000,000 Shares to HK$200,000,000 divided into 200,000,000 Shares by the creation of an additional 100,000,000 shares ranking pari passu with the existing Shares of the Company. This proposed increase in authorised share capital is conditional upon the passing of an ordinary resolution by Shareholders at the EGM. No Shareholders are required to abstain from voting on this resolution.

PROPOSED SHARE SUBDIVISION

The Board also proposes that each of the existing issued and unissued Shares of HK$1.00 each in the share capital of the Company be subdivided into twenty Subdivided Shares of HK$0.05 each. The Share Subdivision will become effective upon the fulfillment of the conditions set out below.

CONDITIONS

The Share Subdivision is conditional upon:

(a) the passing of an ordinary resolution by Shareholders at the EGM; and

(b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Subdivided Shares and any new Subdivided Shares which may fall to be issued pursuant to the exercise of the Options granted or to be granted under the Share Option Scheme.

EFFECTS OF THE SHARE SUBDIVISION

As at the date of this announcement, the authorised share capital of the Company is HK$100,000,000 divided into 100,000,000 Shares of HK$1.00 each, of which 80,926,994 Shares are in issue and fully paid.

The following sets out the effects of the Share Subdivision (assuming that no further Shares will be issued after the date of this announcement and before the effective date of the Share Subdivision):



Prior to the After the Share
Share Subdivision Subdivision has
becoming effective become effective

Par value of each Share HK$1.00 HK$0.05
Number of authorised Shares 100,000,000 2,000,000,000
Number of authorised Shares (Note) 200,000,000 4,000,000,000
Authorised share capital HK$100,000,000 HK$100,000,000
Authorised share capital (Note) HK$200,000,000 HK$200,000,000
Number of issued Shares 80,926,994 1,618,539,880
Issued share capital HK$80,926,994 HK$80,926,994
Number of unissued Shares 19,073,006 381,460,120
Number of unissued Shares (Note) 119,073,006 2,381,460,120

Note: Assuming the ordinary resolution of the Shareholders to increase the
authorised share capital of the Company is approved.


Upon the Share Subdivision becoming effective, the Subdivided Shares will rank the same in all respects with each other and the Share Subdivision will not result in any change in the rights of the Shareholders.

Other than the expenses incurred in relation to the Share Subdivision, implementation of the Share Subdivision will not alter the underlying assets, business operations, management or financial position of the Company or the rights and interests of the Shareholders. The Directors anticipate that the Share Subdivision will not have any adverse effect on the financial position of the Company and its subsidiaries.

CHANGE IN BOARD LOT SIZE

As at the date of this announcement, Shares are traded on the Stock Exchange in board lots of 400 Shares. Upon the Share Subdivision becoming effective, the Board proposes that the Subdivided Shares will be traded in board lots of 8,000 Subdivided Shares. The change in board lot size is required to maintain the board lot value of the Shares upon the Share Subdivision becoming effective.

The change in the board lot size will not result in any change in the rights of the Shareholders. The Directors consider that the change in board lot size together with the Share Subdivision is in the interests of the Company and Shareholders as a whole.

ARRANGEMENT ON ODD LOT TRADING

In order to facilitate the trading of odd lots (if any) of the Subdivided Shares, the Company will appoint a security trading house to provide matching service, on best effort basis, to those Shareholders who wish to acquire odd lots of Subdivided Shares to make up a full board lot, or to dispose of their holdings of odd lots of Subdivided Shares. Details of the security trading house and odd lot arrangement will be disclosed in the circular.

Holders of odd lots of the Subdivided Shares should note that the match up of the sale and purchase of odd lots of the Subdivided Shares is not guaranteed.

REASONS FOR THE SHARE SUBDIVISION

The proposed Share Subdivision will decrease the nominal value and increase the total number of Shares currently in issue. The proposed Share Subdivision will bring about a corresponding downward adjustment to the trading price of the Shares of the Company on the Stock Exchange and enhance their liquidity, thereby enabling the Company to attract more investors and broaden its shareholder base. The Board is of the view that the Share Subdivision is in the interests of the Company and Shareholders as a whole.

APPLICATION FOR LISTING AND DEALING

An application will be made to the Listing Committee of the Stock Exchange for the listing of and permission to deal in the Subdivided Shares and any new Subdivided Shares which may fall to be issued pursuant to the exercise of the Options.

SHARE OPTIONS

As at the date of this announcement, 310,000 Options granted under the Share Option Scheme are outstanding. Save for the foregoing, there are no other outstanding share options, warrants or securities which are convertible or exchangeable into Shares that are subject to the Share Subdivision.

The Directors expect that, upon the Share Subdivision becoming effective, adjustments will be made to the exercise price of Options pursuant to the terms thereof where necessary.

EXPECTED TIMETABLE

Subject to the approval of the Share Subdivision by the Shareholders at the EGM, it is currently expected that the Share Subdivision will become effective at 9:30 a.m. on Monday, 9 November 2009.

The expected timetable for the implementation of the Share Subdivision and the associated trading arrangements is set out as follows:



Record date for entitlement to attend and Friday, 16 October 2009
vote at the EGM

Despatch of circular and notice of EGM in relation As soon as practicable
to, amongst others, the proposed increase in
authorised share capital and the Share
Subdivision

Latest time for lodging the form of proxy 3:00 p.m., Wednesday,
for the EGM 4 November 2009

EGM to approve the increase in authorised share 3:00 p.m., Friday,
capital and the Share Subdivision 6 November 2009

Announcement of poll results of the EGM Friday, 6 November 2009


The following events are conditional on the fulfillment of the conditions
for the implementation of the Share Subdivision:

Effective time and date of the Share Subdivision 9:30 a.m., Monday,
9 November 2009

Dealings in Subdivided Shares commence 9:30 a.m., Monday,
9 November 2009

Original counter for trading in existing Shares in 9:30 a.m., Monday,
board lots of 400 Shares temporarily closes 9 November 2009

Temporary counter for trading in Subdivided Shares 9:30 a.m., Monday,
in board lots of 8,000 Subdivided Shares (in the 9 November 2009
form of existing share certificates) opens

First day for free exchange of certificates for existing Monday,
Shares for new certificates for Subdivided Shares 9 November 2009

Original counter for trading in Subdivided Shares in 9:30 a.m., Monday,
board lots of 8,000 Subdivided Shares (in the form 23 November 2009
of new certificates for Subdivided Shares) re-opens

Parallel trading in Subdivided Shares (in the form of 9:30 a.m., Monday,
new certificates for Subdivided Shares and 23 November 2009
certificates for existing Shares) commences

First day of odd lot facility Monday,
23 November 2009

Temporary counter for trading in Subdivided Shares 4:00 p.m., Friday,
in board lots of 8,000 Subdivided Shares (in the 11 December 2009
form of existing share certificates) closes

Parallel trading in Subdivided Shares (in the form of 4:00 p.m., Friday,
new certificates for Subdivided Shares and 11 December 2009
certificates for existing Shares) ends

Last day of odd lot facility Friday,
11 December 2009

Last day for free exchange of certificates for existing Friday,
Shares for new certificates for Subdivided Shares 18 December 2009


Certificates for existing Shares will only be valid for delivery and settlement purposes for the period up to 4:00 p.m. on Friday, 18 December 2009 and thereafter will not be accepted for settlement purposes. However, the certificates for existing Shares will continue to be good evidence of legal title to the Subdivided Shares on the basis of one existing Share for twenty Subdivided Shares.

Subject to the Share Subdivision becoming effective, Shareholders may, during business hours from Monday, 9 November 2009 to 4:00 p.m. on Friday, 18 December 2009 (both dates inclusive), submit their existing certificates for the Shares to either (i) the Company's branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong; or (ii) the Company's branch share registrar in Canada, Computershare Investor Services Inc., 100 University Ave., 9th Floor, Toronto, Ontario, M5J 2Y1, Canada, in exchange for new certificates for the Subdivided Shares (on the basis of every one Share for twenty Subdivided Shares) free of charge. Thereafter, share certificates for the Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such amount as may from time to time be specified by the Stock Exchange) for each new certificate issued for the Subdivided Shares or each old share certificate submitted, whichever number of share certificate involved is higher.

It is expected that new certificates for the Subdivided Shares will be available for collection on or after the tenth business day from the date of submission of the existing certificates for the Shares to the Company's share registrars. In order to distinguish between the existing and the new certificates, certificates for the Subdivided Shares will be light yellow in colour, which is different from the existing certificates for the Shares, which are purple in colour.

GENERAL

The proposed increase in authorised share capital and the Share Subdivision is conditional upon the passing of ordinary resolutions by Shareholders at the EGM. No Shareholders are required to abstain from voting on these resolutions. The ordinary resolutions relating to the increase in authorised share capital and the Share Subdivision are not inter-conditional.

A circular containing, among other things, the details of the proposed increase in authorised share capital, the Share Subdivision and the notice convening the EGM will be despatched to the Shareholders as soon as practicable.



DEFINITIONS

"Board" the board of directors of the Company

"CCASS" the Central Clearing and Settlement System
established and operated by HKSCC

"Company" China Zirconium Limited, a company incorporated in
the Cayman Islands with limited liability, the
securities of which are listed on the Stock
Exchange (Stock code: 0395)

"Directors" the directors of the Company

"EGM" the extraordinary general meeting of the Company to
be held on Friday, 6 November 2009 to consider and,
if appropriate, approve the resolutions contained
in the notice of the extraordinary general meeting

"Hong Kong" the Hong Kong Special Administrative Region of the
People's Republic of China

"HKSCC" Hong Kong Securities Clearing Company Limited

"Listing Committee" the listing committee of the Stock Exchange

"Option(s)" the right(s) granted under the Share Option Scheme
to subscribe for shares of the Company in
accordance with the Share Option Scheme

"Share(s)" ordinary share(s) of HK$1.00 in the share capital
of the Company

"Share Option Scheme" the share option scheme of the Company adopted on
24 September 2002

"Share Subdivision" the proposed subdivision of every one Share of
HK$1.00 each in the issued and unissued share
capital of the Company into twenty Subdivided
Shares of HK$0.05 each

"Shareholder(s)" holder(s) of Share(s)

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"Subdivided Share(s)" ordinary share(s) of HK$0.05 each in the share of
capital the Company upon the Share Subdivision
becoming effective

"HK$" Hong Kong dollars, the lawful currency of Hong Kong

By order of the Board
China Zirconium Limited
Yang Xin Min, Chairman

Hong Kong, 13 October 2009


As at the date of this announcement, the Board comprises Mr. Yang Xin Min, Ms. Huang Yue Qin, Mr. Zhou Quan, Mr. Li Fu Ping as executive directors, and Mr. Cheng Faat Ting Gary, Mr. Carl F. Steiss and Mr. Victor Tong as independent non-executive directors.

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