Major First Step to Tap Alternative Energy Business in China

J.I.C. Technology Company Ltd to be renamed as Hong Kong Energy Holdings Limited, a wholly-owned subsidiary of HKC (Holdings) Limited, has initiated to invest in three alternative energy projects at the Lunaobao Wind Farm in Hebei, the Siziwang Qi Wind Farm in Inner Mongolia, and a pilot cellulosic ethanol project.

On behalf of HKC (HOLDINGS), the single largest shareholder of JIC, Mr. Eric Oei, Chairman of the Steering Committee said, "As the principal vehicle of the Group's alternative energy businesses, the new projects signify an important first step for the Company. The PRC Government has been actively encouraging investment in renewable energy. The Renewal Energy Law of the country requires state-owned power grids to give priority and pay premium rates for power generated by privately-owned companies using 'clean' generating methods.

"Given such a favourable market environment, we see strong potential in the three projects and are confident that they will give JIC a strong foundation for tapping the growing alternative energy market in the PRC in years to come."

Lunaobao Wind Farm

The framework agreement to invest and develop a 100 MW wind power project at the Lunaobao in Zhangbei County, Hebei Province was signed between JIC, through a wholly-owned subsidiary, HKE (Da He) Holdings Limited with China Energy Conservation Investment Corporation ("CECIC") on 18 April 2008. The planned total investment for the project is approximately RMB950,780,000 (about HK$1,052,900,000) and JIC and CECIC will contribute 30% and 70% of the registered capital respectively. Preliminary approval from the Development and Reform Commission ("DRC") of Hebei Province was already secured by the project parties to invest and develop sixty-seven 1,500-kilowatt wind turbines totaling 100.5 MW. The windfarm, to be built under this project, is strategically located on Bashang plateau of Zhangjiakou City with abundant wind resources available. Construction of the wind turbines will commence in the second half of 2008 and the project is expected to be fully operational in 2010.

Wind Power Project at Siziwang Qi Region, Inner Mongolia

JIC, through a wholly-owned subsidiary has applied to the Siziwang Qi DRC for the rights to build and operate a 50 MW wind power project in the region. It intends to invest a total of approximately RMB480,550,000 (about HK$532,100,000) to build 33 1,500-kilowatt wind turbines with an aggregate generation capacity of approximately 49.5 MW. JIC targets to begin construction in the second half of 2008 and achieve full operation of the wind farm by the end of 2009.

Cellulosic Ethanol Project

On 17 April 2008, the Group through its wholly-owned subsidiary HKE (Biomass) Holdings Limited signed a technology transfer and co-operation agreement in respect to investment in a pilot cellulosic ethanol project using the Cellulosic Ethanol Technology ("the Technology") developed by GeneHarbor (Hong Kong) Technologies Limited ("GeneHarbor").

The Company will first acquire from GeneHarbor a 55% interest in the Technology utilizing HK$17,325,000 as its capital contribution. A new joint venture between the Company and GeneHarbor will be established and a pilot cellulosic ethanol plant will be built to demonstrate the feasibility of the technology and of the production process.

If successful, JIC will seek to commercialize the Technology throughout Asia. Another technology service company ("TechServices Co") 90%-owned by JIC and 10% by GeneHarbor will be set up. TechServices Co will be the sole and exclusive agent to use and commercially exploit the Technology and to sell and distribute related enzymes used in the production of cellulosic ethanol in the Greater China region and Southeast Asia.

GeneHarbor, founded in 2000, is a private biotechnology company in Hong Kong. The company focuses on the development of innovative biotech products, enzymes in particular, and medical products. GeneHarbor's technology platform, which integrates the current knowledge and techniques in genetic engineering, protein engineering, biochemistry, genetics, industrial fermentation, bio- informatics, organic chemistry, computer design, high-throughput-screening and industrial enzymology, is highly effective in generating novel products tailored for industrial, agricultural, pharmaceutical and environmental application. The company has conducted research on bioethanol since 2001.

Currently, there is a limit as to how much ethanol can be produced from sources such as corn and sugar. Given demand for these feedstocks are placing tremendous pressure on food prices, it is important that non-food feedstock be used. Cellulosic ethanol is a biofuel made from lignocellulosic biomass materials, such as wood residues and grass. Because cellulosic plant materials are so common, cellulosic ethanol has the potential to become a major non-food feedstock. It makes use of related cellulose-digesting enzymes sourced from GeneHarbor or its production factory. The Technology entails advanced technology and processes developed by GeneHarbor to produce ethanol at reasonable cost using cellulosic biomass.

HKC (HOLDINGS) has been working toward tapping the growing alternative energy sector over the past few years, with the latest move being the acquisition of a majority stake in an ethanol plant in Chongqing in March 2008. In addition to the ethanol plant and the three latest JIC projects, the Group has been investing in several other alternative energy projects, including investing in two 30MW wind power stations in Heilongjiang, which have already begun generating electricity and are contributing revenues; obtaining the preferential right to develop wind power project with generation capacity of approximately 49.5 MW in the Siziwang Qi area in Inner Mongolia with target operation date set in 2008; investing in a joint venture with CECIC to operate a 200MW wind power plant in Hebei Province; investing in a wind power plant in Gansu Province by establishing a joint venture with CECIC with generation capacity of 200MW and investing in a joint venture waste-to-energy plant with a 25 MW output capacity in Shandong which commenced operation in September 2007.

"As the Chinese economy continues to thrive and the Chinese government steps up effort to encourage clean energy consumption, demand for alternative energy is going to rise. Apart from strong potential demand for biofuel, the sector has high entry barriers which puts us in a prime position to capture the rising opportunities. The market trend and nature of the industry both work in favour of the Group's alternative energy business. We are confident of becoming a major alternative energy enterprise in Mainland China," Mr. Oei concluded.

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