New China policies favor commodity business of APAC Resources Limited

Several news which may indicate potential upside to APAC Resources (1104 HK) (‘APAC’):

1) Speed up of China’s infrastructure projects approval

The National and Development Reform Commission (NDRC) has been speeding up the approval of China's infrastructure projects since mid March and has approved an estimated $23 billion of steel projects (accounting for 65% of the approved infrastructure projects) to maintain the economic growth. More upcoming approvals of infrastructure projects are expected. This may lend support to the prices of iron ore, nickel and coking coal as China is the largest importer of these commodities. Market forecasts iron ore will climb to $152 per metric ton and coking coal may gain 7% to about $220 per metric ton in 2H 2012, according to the average of five analyst estimates compiled by Bloomberg. This will benefit APAC which holds iron ore and nickel positions along with iron ore and coal trading.

2) Ramp up of China nuclear energy development

The approval of China's Five-Year Plan on nuclear safety last week and the plan of China National Nuclear Power Co. to have IPO in Shanghai to finance its 5 nuclear power projects signaling the relaunch and ramp up of China nuclear energy development. China has been aggressively acquiring uranium assets from overseas to secure uranium sources. Japan has approved the first restart of two nuclear reactors in mid June which ends the total shutdown of nuclear power after the Fukushima Incident. It implies the demand and reliance on nuclear energy by the Asia Pacific Region. This will benefit APAC which holds uranium positions.

3) Looking at turning into mining operation driven company

APAC disposed of its investment in Kalahari Minerals (LSE: KAH) - a UK listed company which holds the world's 4th largest uranium deposit in Feb 2012. The disposal returned HKD1 billion to the Company, representing a rate of return of approx. 29% in 2 years' time. The current market cap is HKD1.9 billion. APAC is currently looking for acquisition opportunities to turn itself into a mining operation driven company with direct and sustainable cash flows.