Jilin Jingcheng Law Firm

Legal  Opinion of Jilin Jingcheng Law Firm With Respect to  Jilin Horoc Nonferrous Metal GroupCo., Ltd.

First Phase of Short-term Financing Bond of 2011

[2011] Jijing legal opinion No. 014

To : Jilin Horoc Nonferrous Metal Group Company Limited

Jilin Jingcheng Law Firm (hereinafter referred to as “Jingcheng”), Horoc Nonferrous Metal Group Co., Ltd. (hereinafter referred to as “issuer” or the “company”), with respect to the first phase of short-term financing bond of 2011 (hereinafter referred to as the “short-term financing bond” or “current short-term financing bond”) to be issued by the issuer, Jingcheng has signed “Retainer of  special Legal Consulting Contract” with the issuer. Jingcheng has accepted it as the retainer and has appointed Jia Guofa, Nian Xiuhui  (hereinafter referred to as “Jingcheng attorney “) as the  special legal counsel to participate the issuance work of the short-term financing bond of the company.

According to ” Corporation Law of People’s Republic of China ” (hereinafter referred to as the “corporation law”), “Administrative Method of Non-financial Enterprises Debt Financing Instruments In  Inter-banking’s Bond Financing Market” ( Bank of China Decree [2008] No. 1, hereinafter referred to as the “Administrative Method”) and “ Registration Regulation of Issuance of Non-financial Enterprises Debt Financing Instruments In Inter-banking’s Bond Financing Market” issued by China Inter-Banking Market Trade Association,  “Operation Guideline of Non-financial Enterprises Short-term Financing in Inter-banking Bond Market” (hereinafter referred to as the “guideline”), “Raising Funds Instruction Guideline of Non-financial Enterprises Debt Financing in Inter-banking Bond Market”, ” Agency Services  Regulation of Non-financial Enterprises Debt Financing Instruments in Inter-banking Bond Market” etc. laws, regulations and the relevant provisions of other regulatory documents, Jingcheng  expresses its legal opinion with respect to the matter of issuance of short-term financing bonds

For the Legal opinions stated herein, Jingcheng declares it as follows:

1. Legal opinions stated are based on the issuer’s occurred or existing facts prior to the date of this document and are in accordance with the laws, regulations and “Administrative Method” and its supporting provisions.

2. Jingcheng strictly performs its  statutory duties, abides diligent and honest  principle, has conducted the full due diligence on the issuer with respect to the  legality, validity, authenticity of the short-term  financing bond to ensure no false records, misleading statements or major omissions in the opinions stated herein.

3. Jingcheng attorneys agree to consider its legal opinions as a necessary legal document to the issuer‘s application of the issuance of the short-term financing bond, along with other materials to be submitted, Jingcheng is willing to undertake the corresponding legal responsibility.

4. The legal opinions are only limited to the opinions on relevant legal concerns of  the current short-term bond financing, make no representation and comments on relevant accounting, auditing, credit rating and the issuer’s debt-paying ability.  How accounting, auditing, credit ratings referenced in the legal opinions are strictly based on the relevant  agencies’  reports, Jingcheng makes no representation or implied warranties on the authenticity and accuracy of the aforesaid contents.

5. The legal opinions can not be used for any other purposes other than to be used for the purpose of issuance of the current short-term financing bond of the issuer. In accordance with the law society’s recognized business standard, ethic and to be diligent and responsible, Jingcheng attorneys have reviewed and verified the relevant documents and facts with respect to the issuance of short term bond financing, and therefore states its legal opinions as follows.

(I)  Issuer’s Main Qualifications of the Issuance Short-term Financing Bond

1. Historical Evolution

The issuer was founded in 1960, was named as Jilin Province Panshi Hongqiling Mine. In 2001 July, approved by the Jilin Provincial Economic and Trade Commission and Jilin Provincial Department of Finance, changed its name to Jilin Nickel Industry Group Co., Ltd., registered in Jilin Province Administration of Industry and Commerce Bureau, registration number 2200001008250, the nature of business was state-owned company, registered capital was 300,000,000 RMB.

On January 25, 2006, through acquisitions and the introduction of strategic investors etc., Jilin Nickel Industry Group Co. Ltd restructured itself as Jilin Haroc Nonferrous Metal Group Co., Ltd., registered  in Jilin Province Administration of Industry and Commerce Bureau, registered capital was 320,000,000 RMB, shareholders and contributions are: Government of Jilin Province, the State-owned Assets Supervision and Administration Commission of the Government of Jilin Province (hereinafter referred to as the “Jilin SASAC”)  contributed 105,600,000  RMB, accounted for 33% of total registered capital, as the first major shareholder; CHEMICAL VAPOUR METAL REFINING INC. (CVMR Canada) funded 64,000,000 RMB, held 20% of registered capital; Foshan Huachuang Chemical Industry Co., Ltd.  contributed 64,000,000  RMB, took up 20% of registered capital; Xu Guangping and other individuals altogether 13 people contributed 86,400,000RMB, placed 27% of registered capital. Foshan Huachuang Chemical Industry Co., Ltd now has been renamed as Guangdong Huachuang Chemical Industry Co., Ltd.

 The company now holds 220000400003981 business license number as enterprise legal entity , registered address is 54 Hongqi Da Jie , Hongqi Ling Town, Panshi City, Jinlin province. Registered capital is 320,000,000RMB, the legal representative is Xu Guangping, corporation type: limited liability company (joint venture) (the proportion of foreign investment is less than 25%), expiry date of the operation is  January 24, 2026, operation scope: nickel, copper smelting and a by-product processing; export of the company produced products and related technologies; import of raw and auxiliary materials, mechanical equipment, instrumentation, spare parts and related technology required by the company’s production and Research and Development; operation of the company processing with imported materials and the “three to make up one” business formula, nickel mining (operated by  branches with  permits).

2. Controlling Shareholders and Actual Controllers

According to the articles of the company, the Board of Directors is the highest authority of the company, it decides all material matters of the company; the Board of Directors has seven directors, Jilin SASAC appointed three directors, three other shareholders appointed four directors; chairman was appointed by Jinlin SASAC. According to “Corporation Law”, “Law of State-owned Assets Supervision and Administration of People’s Republic of China”, and “ Provisionary Byelaw of State-owned Assets Supervision and Administration”,  in accordance with the constitution of the board of directors’ authority, meeting procedures and voting right provision, three directors appointed by Jilin SASAC  shall be in accordance with the Jilin provincial SASAC ‘s instruction to  propose resolution, express opinion, exercise voting right and report to SASAC  timely of its performance status and results on fulfilling duties. Therefore, Jilin SASAC is sufficient to have a significant effect on the Board of Directors according to its share contribution and subsequently owned voting rights, it is able to control the company’s activity, is the company’s controlling shareholders and the actual controller.

Verified by our Jingcheng attorney of the issuer’s enterprise legal representative and the relevant documents, the issuer has passed 2010 “Jilin Province Industrial and Commercial Bureau Foreign Capital Annual Examination”.

 Jingcheng attorneys deem that the issuer is established in accordance with the law, a non financial enterprises with legal entity, is qualified to be the issuer required by the laws and regulations.

(II) Issuance Procedures of the Short-term Financing Bond

1. On May 30, 2011, the Board of Directors discussed and passed a resolution of assurance short-term financing bonds. According to the state-owned assets supervision and management laws, regulations, the current short-term financing bonds is not the required proceedings to be approved by the state-owned assets supervision and administration departments. In accordance with the issuer’s company articles, the Board of Directors is the issuer’s highest authority, decides all major matters, therefore it has the authority to decide the issuance.

Jingcheng attorneys deem that the issuer’s current short-term financing bond meets the requirements of the “Corporation Law”, the articles of association of the company and other laws, regulations and regulatory documents.

The short-term financing bonds should be required the registration in China Inter-banking Market Trade Association (hereinafter referred to as trade association) prior to proceeding.

(III) Other Conditions of the Issuer Regarding Issuance of Short-term Financing Bonds

1. Based on Jingcheng attonrneys’ verification, the issuer is a legally established and has effective existence non financial limited liability company (joint venture) in theterritoryofChina. (the proportion of foreign investment is less than 25%), owns an independent legal entity, in conformance with the  second provisions of “Administrative Method” with respect to the issuer is a legal entity  of non-financial enterprises provisions.

2. According to “Jilin Horoc Nonferrous Metal Group Co., Ltd 2011 the First Phase of Raising Short-term  Financing Bond Prospectus” (hereinafter referred to as the “prospectus”) provided by the issuer , the short-term financing bonds is for a period of three years, interest will be paid annually,  interest and principle will be paid out at maturity. Jingcheng attorneys deem the issuance of short-term financing bonds is in accordance with the second provision of “Administrative Method” and “Operation Guideline”.

3. The issuer undertakes, prior to the issuance and during the existence of the short-term financing bonds period, it will disclose including but not limited to the issuance plan, “prospectus”, full credit rating report and tracking rating arrangement, legal opinions, audited recent three years’ financial statements, quarterly financial statements, major matters such as documents and information in Shanghai Clearing Bureau network, China Currency network, it conforms to the seventh provision of ” Administrative Method ” and the eighth provision of ” Operation Guideline ” .

4. The issuer employed Da Gong International Credit Evaluation Co., Ltd (hereinafter referred to as “Da Gong”) as a credit rating agency. Verified by our attorneys, Da Gong was established on March 10, 1994,  holding registration number 110000001519899 and the business license as enterprise legal entity, the legal representative is Guan Jianzhong, the registered capital is 50,000,000 RMB, address is  PengRun Da Sha Bldg A -2901, 26 Xiaoyun Road Chaoyang District, Beijing, operation expires on March 9, 2016, operating scope: permit of operating project: enterprise credit and securities rating; evaluation of domestic and overseas loan application and guarantor credit evaluation; evaluation and preparation of  feasibility studies; stock market credit rating. General operation: shareholding restructuring program design, corporate financial advisory services; credit management consulting services; economic management consulting services and personnel training.

Verified by our attorneys, on February 24, 1994,  Bank of China issued ” With Respect to the Establishment of Da Gong International Credit Evaluation Co., Ltd” (banking [1994]86), approved to set up Da Gong International Credit Evaluation Co., Ltd.. On October 17, 1997, Bank of China issued “Notice of Engagement In Enterprise Security Credit Rating Qualification of China Cheng Xin Securities Evaluation Co.,Ltd. And Other Institutions” (banking [1997]547), approved Da Gong’s qualification. On February 26, 2008, Da Gong obtained “securities market credit rating” business permit” issued by  Chinese Securities Regulatory Commission (No: ZPJ004), and obtained the “securities market credit rating” operation licence.

Jingcheng deems Da Gong is registered inChina, has the qualification of evaluating enterprise bond creditbility and has passed 2010 annual examination, is in line with the “Administrative Methods” the ninth provision.

5. The issuer has retained Lixin Dahua Accounting Firm (hereinafter “Lixin Dahua”) as annual auditing firm for 2009. Verified by Jingcheng, Lixin Dahua now holds 110000001730554 licenses issued by Beijing Administration Bureau for Industry and Commerce Haidian branch on September 26, 2010. Lixin Dahua was founded on October 27, 2000, is a limited liability company (natural individual’s investment or share holders), operation expires on October 26, 2020, address: 1101-11 Bldg No 7, No 16 West Fourth Ring Road, Haidian District, Beijing, legal representative is Liangchun, registered capital 49,992,000 RMB, paid-up capital  12,000,000 RMB (next capital update is on October 31, 2011), operation scope: auditing, capital verification, consulting, financial personnel training; implementation of certified public accountant business advisory, review and advisory on infrastructure budget, consulting, advisory business; evaluation of state-owned and non-state-owned assets, it has passed annual examination of  Haidian branch  of Beijing Municipal Administration for Industry and Commerce for 2010.

Lixin Dahua holds accounting firms practice permit issued by Beijing Municipal Bureau of Finance on November 17, 2009, was approved its establishment date is June 22, 2000, approval document number Finance Association (2000) No. 2, accounting firm number 11000161, office is located at Bldg 3 Dong Changan Street, Dongcheng District , Beijing.

Jingcheng deems Lixin Dahua has established in accordance to the law, has the legitimate qualification to audit the issuer’s financial statements.

6. According to the audit report issued by “Lixin Dahua”, issuer’s net assets was 4,541,749,200 RMB on December 31, 2010. Verified by Jingcheng, during the period of direct debt financing the balance of the issuer’s funds raised is 1,100,000,000RMB, as of the interim-term note of 2011 (11 Haroc MTN01). Issuer’s registered 1,000,000,000RMB short-term financing bond issued on March 26, 2009 (Registration No.: 2009CP26), was due on March 26, 2011. There is no unissued registered amount of debt financing within the valid period. The Amount of the issuer’s short-term financing bond this time is  390,000,000RMB. After the issuance, the issuer’s debt financing outstanding balance is 1,490,000,000, less than 40% its net assets, complies with the 4th provisions “Operation Guideline”.

7. According to the issuer’s “prospectus”, raised funds is to be mainly used: company operating capital and repayment of bank loans. The issuer undertakes to disclose in advance of any changes in using the funds raised during the short-term bond financing period. Jingcheng deems the arrangement of fund use and disclosure information complies with the 5th provisions of “Operation Guideline “.

8. According to Dagong Lixin’s comprehensive analysis and evaluation, the current short-term financing’sl credit rating is A-1, the issuer credit rating is AA-. At the same time the issuer confirms the credit rating report will be disclosed to the national inter-banking bond market through Chinese currency network and Shanghai Clearing Bureau network. Jingcheng deems, the enterprise’s credit rating, the short-term financing’s debt rating and the disclosure of related information are in accordance to the 11^th provision of “Operation Guidelines”.

9. According to the issuer’s written undertaking and Jingcheng’s verification, the issuer has no material violation of the law and regulation in recent three years.

In conclusion, Jingcheng deems, the issuer has met the requirements of enterprise’s application of issuing short-term financing bonds stated in the “Administrative methods”.

(IV)  With Respect to the Underwriting of Short-term Financing Bond

The current short-term financing bond is to be distributed though underwriting group. The issuer has retained Xing Ye Bank Co., Ltd. as the principal underwriter, Shanghai Pudong Development Bank Co. Ltd.  as associate underwriter.

Verified by Jingcheng, Xing Ye Bank Co., Ltd was founded on August 22, 1988, holds Registration No. 350000100009440 operation permit issued by Fujian Provincial Administration of Industry and Commerce Bureau. Legal representative:Gao Jianping, address: No. 154 , Lake Road, Fuzhou, registered capital 5,992,450,630 RMB, operation expires on August 21, 2038, business scope: issuing short-term, medium-term and long-term loans,  domestic and international settlement; handling acceptance and discount of negotiable cheques; issuance financial bonds,  underwriting government bonds; buy and sell government bonds, financial bonds; proxy of issuance negotiable securities other than stocks; trading, trading agents of negotiable securities other than stocks; fund trusteeship,interbank borrowing trading,  foreign exchange; agent; settlement, bank card , provide credit services and guarantee; agent of receiving and paying funds and insurance, provide safety deposit box;  financial advisory, credit investigation, consultation, business witness, other business approved by China banking regulatory institution. Xing Ye has passed 2010 annual examination by Fujian Province Industrial and Commercial Bureau. Shanghai Pudong Development Bank Co., Ltd. was founded on October 19, 1992, holds 310000000013047  business license issued by Shanghai Administration of Industry and Commerce Bureau, legal representative Ji Xiaojun, address: 16^th Floor, 689 Beijing Dong Road, Shanghai, registered capital 8,830,405,610RMB, operation scope: issuance of short-term;, medium-term and long-term loans; settlement; discount notes; issuing financial bonds; issuing agent, acting agent of payment, underwriting government bonds; sales of government bonds; interbank lending; credit card service and guarantee; collection and payment agent and insurance;  safety deposit box services, foreign exchange loans, foreign exchange remittances and foreign exchange settlement; foreign currency exchange; international settlement; foreign exchange lending; exchange acceptance and discount notes; foreign exchange loans; guarantee; settlement, credit investigation, consulting, business witness; offshore banking business; other business approved by Bank of China. Shanghai Pudong Development Bank Co., Ltd. has passed 2010 annual examination by Shanghai Administration of Industry and Commerce Bureau.

Therefore, Jingcheng deems Shanghai Pudong Development Bank Co., Ltd. Is a financial institution, has passed 2010 annual examination, is qualified as the underwriter for the issuance of short-term financing bond, complies with the 8^th provision of “Administrative Methods”.

(V)  Regarding Short-term Financing Bond “Prospectus”

The short-term financing bond “prospectus” is compiled by the issuer. Jingcheng has verified its statement and deems its statement has no false records, misleading statements or major omissions.

(VI)  With Regard to Issuer’s Ongoing Engineering and Projects

The issuer’s major ongoing projects:

1. Canadian Royalties Mining (Canadian Royalties Inc) project. The project has obtained “Approval of Acquisition of Canadian Royalties Inc By Jilin Jien Nickel Industry Co., Ltd. From National Development Reformation Commission”(DDRC) ( [2009]2810 ), “ Approval of Investment And Construction ofCanadaNadanuna Copper Nickel Project  By Jilin Jien Nickel Industry Co., Ltd. From National Development Reformation Commission”([2011]393), the National Development and Reformation Commission has agreed  Jilin Jien Nickel to acquire Canadian Royalties Inc. and to Investment and construct Canada Nunavik  Copper Nickel project.

2.LibertyMining Project. The project has obtained approval from the National Development and Reformation of Commission as to “Approval of Acquisition of Canadian Liberty Mining Company’s Equity by Jilin Jien Nickle Industry Co. Ltd” ([2009]1271), has agreed Jien to purchase Canada Liberty Mineral Company’s (hereinafter referred to as “Liberty” ) partial equity.

3. Northern Quebec Canada Raglan mine has 891,000 acres (approximately 3605.8km2), it’s an exploration project. The project has obtained approval from National Development and Reformation of Commission “Approval of Joint Exploration of Raglan Nickle Project By Jilin Jien Nickel Industry Co., Ltd And Canadian Goldbrook Inc. “ [2009]1268 date), NDRC has agreed joint venture of exploration of  Raglan  nickel mine, the project is to be carried out by the establishment of joint venture company by Jien and Goodbrook.

 4. Development of Papua New Guine’s Ramu nickel laterite project (hereinafter referred to as the “Ramu project”).The project has obtained the agreement from  NDRC “ Approval of Development Change of Papua New Guinea Ramu Nickel Cobalt Project By Jilin Jien” ([2008]1561).

5. Jien Nickel Battery and Energy Storage Material’s Construction project. The project has obtained approval from DRC of Jilin province “Notice on Filing of Jien Yarong Technology Co., Ltd’s Battery Material & Battery R & D and Production Base Construction Project ” ( [2011]370,issed on April 29, 2011), the project has been filed. Jingcheng understand the project has not yet chosen the specific location, no construction has yet commenced.

6. Jien Tonghua Jindou Copper Nickel Ore Mining & Cnstruction project. The project is mainly to construct the unfinished shaft. Originally Tonghua Tangren Development Co., Ltd had the mining rights on Jindou Nickle Mine, the project obtained approval from Jilin DRC on October 17, 2008”Notice of Tonghua Tangren Mineral Development Co., Ltd. Jindou Nickel Mining Project’s Approval”( [2007]559), NDRC agreed the project. On May 11, 2011, in Tonghua Tangren Mineral Development Co., Ltd. Transferred its mining rights transfer to the issuer’s subsidiary – Tonghua Jien Nickel Co., Ltd., and disclosed the trading information to the public on relevant websites.

7.Indonesialaterite ore smelting (low grade nickel sulfur) project. The project is to construct the smelting production base of low grade nickel sulfur inIndonesia,Indonesiais the main importer of laterite nickel ore toChina. It’s projecting to invest 6,956,200,000 RMB. The project has been preliminarily approved byJilinprovincial Development and Reformation Committee, has been submitted to NDRC for approval.

Jingcheng deems the issuer’s Indonesia project has been submitted to NDRC for approval, projects in Canada and Papua New Guinea have approved by NDRC, projects conform with relevant regulations of oversea investment; the issuer’s domestic project also has obtained the filing record and approval from relevant authorities and departments, it’s in line with the provisions of relevant laws and regulations of engineering construction.

(VII) Major Rights of Credit and Debts of the Issuer

1. Based on Jingcheng’s verification and the issuer’s undertaking, major contracts signed by the issuer are legitimate and valid, contracts construct no material substantial adverse effect on the issuance of current short-term financing bond.

2. Based on Jingcheng’s verification and the issuer’s undertaking, the issuer has no major contracts that have been fulfilled yet have potential disputes and constitute significant adverse effect to the issuance of short-term financing bonds.

(VIII) Litigation, Arbitration or Administrative Penalty of the Issuer

1. According to the issuer’s explanation and Jingcheng’s verification, the issuer and its holding subsidiary company in mainlandChinahave no unsettled or predictable major litigation, arbitration and administrative penalty case that affect the issuer’s continuation of operation.

2. According to the explanation provided by attorney Huang Lei of Gowlings Canada retained by Jien International Investment Co., Ltd (hereinafter referred to as “Jilin jien international”) and Jien Canada Mining Company (hereinafter referred to as “Jien Mining”) wholly-owned subsidiaries of Jilin Jien Nickle Industry Co., Ltd which is the holding subsidiary of the issuer, Jien International, Libety and Jien Mining have the following existing unsettled lawsuits and arbitration cases:

(1).Libertyproject’s contractor KVA made a claim of $150,000CAN engineering fee in arrears againstLibertyin Ontario Supreme Court. In addition, KVA also claimed $100,000CAN as compensation.Libertymade counterclaim of $791,000CAN against KVA for its project delay, cost overrun and equipment issue. As to date, the case has not been concluded.

Huang Lei deems the plaintiff of the case is lack of the fact and legal base, the possibility ofLibertylosing the case is small.

(2). Liberty’s former employee named Trevisiol made a claim of $40,000CAN as financial compensation for inappropriate layoff in Ontario Supreme Court, requirement company according to the employment period gave $400000 of economic compensation. At present,Libertyhas submitted the relevant document/evidence. After in receipt ofLiberty’d defense, Neither has Trevisiol taken positive action, nor has he submitted evidence/document. The case has not been concluded.

 Huang Lei deems the plaintiff has no follow-up on the case, it means he gives up on the litigation.

(3). Kenwill Carriers made a claim againstLibertyin the Ontario Supreme Court, this litigation is involving a verbal agreement of transporting McWatter Refinery’ ore to the Redstone ore processing location. The plaintiff claimed thatLibertyverbally contracted them to transport the majority ore but did not fulfill the contract, claimed $10,000,000 loss againstLibertyfor breach of the contract. The two parties had exchanged the writs, verbal and written evidence have been completed. First trial had been completed on March 18, 2011. Next trial is scheduled in September 2011.

Huang Lei deems the plaintiff submitted a loss between 130-160 millions, a court judgment or settlement amount shall be less than the aforesaid amount.

(4).In October 2010, Landdrill International Inc. made a claim of $114,119.59 CAN againstLibertyin Ontario Supreme Court Liberty, claimed the plaintiff did not pay the balance of diamond drilling services fee. The company’s management officials believe it has paid a fair price for the services provided by them, therefore there is no outstanding fee owed to the plaintiff. The case is currently pending.

Huang Lei deems the plaintiff has not submitted any supporting documents and evidence, therefore legal liability cannot be judged and the possibility of losing the case.

(5). Goldbrook made an appeal against Jien International and Jien Mining to the British Columbia International Arbitration Tribunal for Jien mining’s diluted share issue, Goldbrook believes its 25% of total shares should be remained. .Goldbrook declared the act of its 25% of voting common stock being diluted to 5% act is invalid, it still holds 25% Jien Mining. Goldbrook required a judgment of fixed 25% equity holding in Jien Mining, or prior to a written consent between Goodbrook and Jien Mining, Jien Mining can not issue or withdraw any voting common share rights which will affect the voting right ratio held by Jien International and Goldbrook in Jien Mining. Goldbrook also claimed an undetermined  amount of compensation from Jien Mining for its violation of shareholders’ agreement and deliberately interference in its economic benefits. The arbitration has not achieved any results.

Huang Lei deems if the issuer loses the litigation, in addition to the proportion of share equity must be changed back to 25%, monetary compensation will be limited to Goldbrook’s reasonable litigation expenses.

(6). On December 17, 2002, Gogama Gold Inc. (hereafter referred as “Gohama”) made a claim against Royal Ming, a subsidiary of Jien Nickle Co., Ltd in Quebec supreme Court, attempted to regain 1% of loyalties on Expo-Ungava smelting operation, this property was sold to Royal Mining by Gogama company in 2001, Royal Mining made a counterclaim, required a $100,000 from Gogama to compensate   legal fees in the case.

(7). On December 11, 2006, along with the above six cases’  transactions, 582556 Alberta Inc. also made a claim against Royal Mining in Quebec Supreme Court for the 1% loyalties on selling Expo-Ungava Smelting operations to Royal Mining, attempted to regain 1% loyalties.

Case (6) and (7) are in evidence discovery phase, it’s pending on Quebec Supreme Court’s hearing.  Huang Lei deems Royal Mining has a small chance to lose in these two cases.

(8). On July 15, 2010, Czamanske appealed  to Ontario Supreme Court for Royal Mining’s shareholders and Main Management official from 2007 to 2008, SNC-lavalin (who was responsible for feasibility study), P&E (who was responsible for3 technical reports), and Jien Mining, required Jien Mining to pay all compensations claimed  on behalf of Royal Mining. The plaintiff deems Royal Mining Nunavik project’s historical data has misled investors, alleged Royal Mining omitted key information in the prospectus during twice public offerings on July 19, 2007 and March 12, 2008 (including the very substantial information is that Royal Mining can not use Donaldson airport in the mining area) therefore it has constituted false statement under the framework of the Security Law. The plaintiff also presented the potential group lawsuit claim that investors purchased Royal Mining stock from July 19 2007 to  August 5, 2008 and becoming investors on August 5, 2008 who held the corresponding securities all possibly become a group of plaintiffs, and seeking a total of $500,000,000 of general compensation, and $20,000,000 of punitive damages. The court appointed a judge for the motion, the plaintiff was given extra time to investigate, but has not submitted any motion related materials. The court has yet not announced any relevant dates, did not hold a case conference, did not confirm this case as a group action case.  Jien Mining are conducting evaluation on the strategic issues and legal basis, preparing to make a decision on motion.

Huang Lei deems the plaintiff has a small chance to win.

According to attorney Huang Lei provided litigation judgment opinion, Jingcheng deems the litigation or arbitration cases have no effect on the issuer’s normal operation or continuation of operation, have no effect on the issuance of short-term financing bonds.

(IX) Taxation of the Issuer

1. According to Jingcheng attoney’s verification and the issuer’s undertaking, the issuer ‘s current implementation of main tax category and tax rate are conforming with prevailing laws, regulations and regulatory documents’ requirements.
2. According to Jingcheng’s verification and the issuer’s undertaking, the issuer has been seriously implementing the national and local relevant tax laws and regulations in recent three years, paying taxes in accordance with the law, no penalty from tax departments.

(X)  Conclusion

In conclusion, Jingcheng deems the issuer is a legitimate existing  limited liability company (joint venture),has the qualification as an issuer of short-term financing bonds required by the “Administrative Methods” and the laws, regulations and regulatory documents; conforms with the conditions required by “Administrative Methods” and the laws, regulations and regulatory documents for short-term financing bonds; the current short-term financing bond “prospectus” is compiled  by the issuer, including major issues disclosure required by laws, regulations and regulatory documents.

The current short-term financing bonds require registration from the Trading Association prior to the issuance according to the procedure.

This legal opinion has three original copies, a number of copies, all have same legal effect after sealed and signed.

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The Chinese PDF version you can view here.