Mr. Jia Qian reports

JINHUA ANNOUNCES AGREEMENT TO ACQUIRE THE INDIGO GRAPHITE MINERAL LICENSES

Jinhua Capital Corp. has entered into a share exchange agreement to acquire 1440843 B.C. Ltd., an arm's-length private company (the vendor) which owns 100-per-cent legal and beneficial interest in the Indigo graphite mineral licences (the Indigo claims).

Property details

The Indigo property is comprised of 32 mining claims covering approximately 1,892.5 hectares in the Saint-Michel-des-Saints municipality, Quebec.

Transaction details

Pursuant to the agreement, the company will acquire 1440843 B.C., which holds a 100-per-cent right, title and interest in and to the Indigo claims, by issuing 8.5 million common shares of the company to the vendor shareholders at a deemed price of seven cents per consideration share in exchange for 100 per cent of the shares of the vendor. In addition, the company will assume the vendor's third party debts.

In addition, the company will grant a 3-per-cent net smelter royalty (NSR) in favour of Glenn Griesbach payable on the Indigo claims. One-third of the NSR or 1.0 per cent can be purchased by the company or nominee for $2.0-million.

In the event that Jinhua commissions a National Instrument 43-101 technical report to determine the size of the graphite resource, if any, on the Indigo claims, then Mr. Griesbach will be entitled to the following cash payments within 31 days of completion of the technical report:

• $2.5-million if a technical report determines there is a resource of a minimum of 5.0 million tonnes of ore, but less than 10.0 million tonnes, with an average grading greater than 4.0 per cent graphite;
• $3.75-million if a technical report determines there is a resource of minimum of 10.0 million tonnes of ore, but less than 15.0 million tonnes, with an average grading greater than 4.0 per cent graphite;
• $5-million if a technical report determines there is a resource is a minimum of 15.0 million tonnes of ore, but less than 20.0 million tonnes, with an average grading greater than 4.0 per cent graphite;
• Or $6.25-million if a technical report determines there is a resource is a greater than 20.0 million tonnes of ore with an average grading greater than 4.0 per cent graphite.

We seek Safe Harbor.