09:52 SINO PROSPER<00766> - Announcement (3) the Joint Venture Company. Save as the initial investment amount of US$5,000,000 for the Joint Venture Company, the Group, Mr. Sayono and Mr. Hariono Moeliawan do not have any capital commitment to the Joint Venture Company. Conditions The Joint Venture Agreement is conditional upon the obtaining of all necessary approvals and consents to the execution of the Joint Venture Agreement and the performance of the transactions thereby contemplated. Composition of board of commissioners of the Joint Venture Company Upon its establishment, the Joint Venture Company is required under the laws of Indonesia to form a board of commissioners which shall be responsible for determining the overall policy of the Joint Venture Company and supervising its board of directors in managing the Joint Venture Company. Such board of commissioners will comprise three members, of which two will be appointed by SP Resources and one will be appointed by Mr. Sayono and Mr. Hariono Moeliawan collectively. Composition of board of directors of the Joint Venture Company The board of directors of the Joint Venture Company will comprise four directors, of which three will be appointed by SP Resources and one will be appointed by Mr. Sayono and Mr. Hariono Moeliawan collectively. REASONS FOR FORMATION OF THE JOINT VENTURE COMPANY The Group is principally engaged in property development and management in the PRC and investment in coal gas production and power generation in the northern PRC. The Group has been reviewing various opportunities with an aim to diversify the variety of its business. With the rapid development of the PRC economy, the Directors are of the view that the demand for energy sources in the PRC is immense. Marine Fuel oil and bitumen produced by the Joint Venture Company are principal materials for generation and construction of highways in the PRC. An enormous amount of marine fuel oil and bitumen is required to import from overseas to feed demand in the PRC. Mr. Sayono is an independent third party who is the patent holder of the bitumen extraction process (Patent No ID 0004877). Mr. Hariono Moeliawan is an independent third party who is a businessman engaged in business related to the oil, petroleum and resources sector. Given the Patent Technology owned by Mr. Sayono which can be effectively applied in the exploration and mining of the Buton Bitumen Mine in a cost efficient manner, forming the Joint Venture Company ensures the Group with the secured utilisation with Patent Technology and strengths the cooperation with CMEC. According to the announcement of the Company dated 22 March 2005, SP Resources entered into an agreement with CMEC pursuant to which CMEC will act as the project consultant to perform the feasibility study and due diligence of the bitumen extraction project (including the set up of the Joint Venture Company); CMEC is also interested to be appointed as the engineering procurement construction contractor for the project. In addition, CMEC shall provide financing arrangement for the phase 1 project for the production of 200,000 metric tons marine fuel oil and 250,000 metric tons asphalt modifier including seller's credit. CMEC shall assist to procure potential purchasers in the PRC for all the marine fuel oil and metric tons asphalt modifier produced or extracted from the project at a price not higher than the international oil market price. Given the marine fuel oil and pure bitumen (asphalt modifier) may be consumed in different areas including power generation, construction and maintenance of high grading roads, the Directors consider that the establishment of Joint Venture Company and the cooperation with CMEC is a good investment opportunity which allows the Group to enhance its spectrum of products in the area of power generation, construction and maintenance of roads and brings along the opportunity for further expansion in natural exploration (energy) business in Indonesia. The Directors are of the view that the establishment of Joint Venture Company and the cooperation with CMEC will be beneficial to the business of the Group. The Directors are also of the view that the extensive experience in technical support and construction management and the solid marketing network of CMEC in the areas of preliminary project investigation, construction, operation of the plant and distribution of products (marine fuel oil and asphalt modifier in the PRC, will assist SP Resources to monitor the bitumen exploration project in Indonesia and explore the energy distribution market (including marine fuel oil) in the PRC. GENERAL Pursuant to the Listing Rules, as the largest of the applicable Percentage Ratios is over 5% but less than 25%, the entering into of the Joint Venture Agreement constitutes a discloseable transaction of the Company under the Listing Rules. A circular containing further details