LETTER OF INTENT – PURCHASE OF GOLD

Date: 29/04/2018

To Seller

LETTER OF INTENT – PURCHASE OF GOLD

Dear Sir,

We hereby confirm our intention to purchase Gold as per terms and procedure below.

1. COMMODITY: Aurum Utalium (AU) Metal.

2. BAR SIZE: 1 kilogram (kg) and 12.5kg bar.

3. PURITY: 999.5/ 24K fineness or better

4. DOCUMENTS
The Seller shall authenticate, provide and guarantee all documents and each tranche/lift shall be accompanied by the following documents.
4.1 Certificate of Origin and Resource confirmation issued by the Government of Exportation
Country.
4.2 Certificate of Purity/Assay Report.
4.3 Certificate of Weight List showing serial no, raw, fine and total weight of each bar.
4.4 Commercial Invoice addressed to the Buyer in four copies.
4.5 The Warrant/Certificate of Products with of Clean, Clear, Non-criminal, origin and
free from any liens and encumbrances. Origin issued by the Seller’s Bank or Export Permit
country.
4.6 Certificate of Customs and Tax Clearance for Duty Payment.
4.7 Safe keeping Receipt issued (SKR) by an international accepted Bonded Warehouse in
Hong Kong.
4.8 Certificate of Insurance.

5. LOCATION AND DELIVERY

From Seller’s security warehouse in Hong Kong to Buyer designated refinery (WING FUNG PRECIOUS METALS LIMITED) in Hong Kong. Delivery and insurance charges on account of Buyer.

6. QUANTITY & PHYSICAL DELIVERY CONTRACT

Total quantity Two Hundred (200) MT with R/E.
6.1 Trial Shipments: Begin with ten (10) trial shipments with one shipment on each banking day for ten (10) banking days. Buyer agrees to receive 400kg of AU METAL from Seller each banking day during the ten (10) day trial period. After the melting & refining process and having received a satisfactory assay report to confirm the aforesaid Purity from the Buyer’s refinery, Buyer will pay Seller the full amount of the Gold Price base on London second (2nd) Fixing, which the London second (2nd) Fixing base on the delivery time to the Buyer designated refinery (WING FUNG PRECIOUS METALS LIMITED) from the Seller appointed Carriage Company. When the AU METAL arrives to Buyer designated refinery (WING FUNG PRECIOUS METALS LIMITED) before 9:30 am, the Final Assay Report will be issued in the early afternoon and Buyer will settle the transaction before 5 pm of the same day. If there is any unforeseen issue with receiving Assay Report or any bank issue, Buyer will settle the transaction within a maximum of forty eight (48) hours after final assay report is agreed with both parties. Buyer will make payment by the way of TT the full amount (after deducting the discount and commission) to the Seller’s bank account as stated in this agreement.

6.2 Regular Shipments: After the successful completion of the beginning ten trial shipments, Buyer agrees to receive 800MT of AU METAL from Seller each banking day on long term contract. Buyer agrees to receive a minimum of 200 MT of AU METAL from Seller per year. Buyer is ready to sign a long-term contract. After the melting & refining process and having received a satisfactory report to confirm the aforesaid Purity from the Buyer designated refinery (WING FUNG PRECIOUS METALS LIMITED), Buyer will then make payment by way of TT the full amount of the Gold Price base on London pm fixing (after deducting the discount and commission) to the Seller’s bank account as stated in the Agreement. When the AU METAL arrives to Buyer’s refinery before 9:30 am, the Final Assay Report will be issued in the early afternoon and Buyer will settle the transaction before 5 pm of the same day. If there is any unforeseen issue with receiving Assay Report or any bank issue, Buyer will settle the transaction within a maximum of forty eight (48) hours after final assay report is agreed with both parties.

6.3 Whereas the AU METAL is in Seller’s security warehouse in Hong Kong, every tranche/lot of the AU METAL of 800 MT per Hong Kong banking day will be delivered at Seller’s security warehouse and transported to the Buyer designated refinery (WING FUNG PRECIOUS METALS LIMITED) in Hong Kong. Seller’s Carriage Company will pick up the AU METAL from Seller’s security warehouse and transport to the Buyer designated refinery (WING FUNG PRECIOUS METALS LIMITED). Buyer agrees to pay full amount of the delivery fee as well as the insurance service fee. Whereas Seller is holding the AU METAL in another country, Seller will bring it to Hong Kong and all fees incurred are for Seller’s account.

7. TRANCHE
Delivery of each tranche shall be made by the Seller to the Buyer on a best effort basis, as expeditiously as possible but in no case, the first tranche exceeding 3 (three) Banking Days after confirmation the Bank Draft/Bank Cashier Cheque of the Buyer in USD or HKD and blocked, whereupon risk will pass to the Seller.

8. PURCHASE PRICE The agreed purchase price is the Quoted Price in USD or HKD and based on the Day of Transaction as set by the “London Gold Market Fixing Ltd” Second Fixing Price (pm.) for Gold Bullion (AU), as quoted on the London Bullion Market Association (LBMA) in USD or HKD per troy ounce on the day of delivery and transfer of ownership less the agreed discount. In the event that the LBMA is not operating on that scheduled day, the price calculation shall be used based on the second LBMA fixing of the next Market opening day.

9. DISCOUNT
The discount based on the LBMA second fixing price for AU Metal, will be nine percent (9%) Gross; six percent (6%) net to the buyer and three percent (3%) to all consultants.

One Point Five Percent (1.5%) be paid to Seller’s Mandate and Consultants by the Seller.

One Point Five Percent (1.5%) to be paid to Buyer’s Mandate and Consultants by the Buyer.

10. TRANSACTION PROCEDURES

10.1 Before signing, the parties make a PRE TTM in the bank to check Buyer’s necessary documents (Bank Draft/Bank Cashier Cheque) and Seller’s POP (such as SKR and other necessary documents or check cargoes in the warehouse) to proof their respective capabilities.

10.2 Seller sends to Buyer a ‘draft’ Sales and Purchase Agreement. Buyer initials back the SPA confirms his acceptance on terms and conditions.

10.3 Both Parties (The Buyer and the Seller) agreed to use ICBC (Hong Kong) and/ or xxxxxx Hong Kong Bank and this final purchase contract shall (if requested by the Buyer and/or the Seller) be prepared and signed by the Seller and Buyer or their authorized representatives in Hong Kong.

10.4 Seller and Buyer representatives shall work out the date and time for TTM between Seller and Buyer to sign the SPA in Hong Kong.

10.5 During the TTM, Buyer shall bring all necessary documents (Bank Draft/Bank Cashier Cheque), whereas Seller shall bring a full set of POP (such as SKR and other necessary documents or check cargoes in the warehouse) to proof their respective capabilities.

10.6 After satisfactory, Seller and Buyer shall sign this final Sales and Purchase Agreement (“SPA”) and if necessary deliver copies to their respective Bank Officers in Hong Kong.

10.7 After the SPA duly signed by both parties, Seller and Buyer shall also determine the Date, Time and Place to visit the designated Refinery of the Buyer to confirm the conditions and equipment of the refinery to conduct this AU transaction. If necessary, Buyer can assist Seller to open an account in the refinery to receive the AU initially under this account, once payment settled to Seller, the Refinery will automatically transfer the ownership of the paid AU to Buyer’s account.

10.8 Seller shall inform Buyer one day prior to the delivery of AU, and simultaneously Seller shall call to the refinery to make sure that the smelting time is reserved. Except for the first ten (10) trial deliveries of 400 KG per banking day, future quantity per delivery is 800 MT per banking day. Seller is responsible for the CIF cost to Hong Kong. And AU bars from Seller’s security warehouse in Hong Kong to Buyer designated refinery (WING FUNG PRECIOUS METALS LIMITED) in Hong Kong cost shall charge to Buyer.

10.9 Upon received delivery notice from Seller, Buyer shall prepare a Bank Draft/Bank Cashier Cheque in USD or HKD, amount equivalent to the value of every lot quantity of AU bullion bars with regards to the agreed pricing in the SPA (minus the net discount to the Buyer), in favor of the Seller as beneficiary.

10.10 In the early morning on the date of delivery, representatives of Buyer and Seller shall meet at the designated Refinery to execute the transaction as follows:
a) Seller’s representative shall verify the Bank Draft/Cashier Cheque, and then shall immediately call the security warehouse to give green light to the delivery of the AU Bars.

b) The manager or officer of the Refinery shall also make a call to AU transportation party (Brinks) to confirm the delivery, verify the AU POP document (SKR and Insurance Policy) accompanying the AU delivery.

c) When the AU arrived outside the Refinery, officers of the Refinery are allowed to board onto the vehicle to carry out a preliminary and swift checking of the AU bars. Satisfactory, all AU bars will be moved into the Refinery and to the AU account of the Seller initially. The Refinery shall then issue a Temporary Receipt to the Seller.

d) The Buyer shall then hand the Bank Draft/ Bank Cashier Cheque to the Manager of the Refinery for safekeeping as payment security.

e) Both representatives of Seller and Buyer can leave and expect to meet for the payment.

10.11 When the AU METAL is delivered to Buyer’s refinery before 9:30 am, Final Assay Report will be issued in the early afternoon and Buyer will make payment and settle the transaction before 5 pm of the same day. During that period, the Refinery is to be responsible for the safety of the AU and its insurance. Payment to the Seller from the Buyer via bank-to-bank transfer in USD or HKD. Simultaneously Consultancy Fees for Buyer’s and Seller’s Mandates and Paymaster of all the Intermediates shall be settled at the same time by the Buyer with regards to the IMFPA. After all payments settled, the Bank Draft/Cashier Cheque will return to the Buyer to utilize for the next tranche of delivery of AU. If there is any unforeseen delay in receiving the Final Assay report or any bank issue, the Buyer agrees to delay the next shipment until the current one is cleared.

10.12 Upon settling of payment to Seller, the title of the AU (ownership) will be transferred to the Buyer and all necessary documents will be assigned to the Buyer as well.

10.13 The Buyer must have to settle immediately the full payment with regards to the Assay Report issued by the designated Refinery with regards to the 48 hour time frame. If Buyer fails to comply, the Seller is entitled to cash in the Bank Draft/Bank Cashier Cheque with Buyer’s bank or request Buyer’s bank to pay it.

Yours faithfully,

On behalf of the Buyer,
Prudent Investment Limited Company Stamp

………………………………..
Buyer Company: Prudent Investment Limited
Buyer’s Presentative Name: CHENG, SHENG-SHENG
Passport: K01344449
Country: REPUBLIC OF CHINA
Date: 29/04/2018

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