China CBM Group (HKG:0578) has agreed to sell the entire issued share capital of, and a loan owing by, Popular Sky International Limited, to Dragon Rich Resources Limited at a consideration of HK$71.2 million, including HK$10 million in cash and HK$61.2 million in promissory note. China CBM Group expects HK$3.032 million gain from the disposal.

China CBM Group directly holds the entire interest of CFT Henan (HK) Limited, which is a company incorporated in Hong Kong and is responsible for investment and providing fund sources for Henan Huanglong New Energy Development Company Limited. Henan Huanglong is principally engaged in the integrated management and utilization of coalbed gas, provision of technical consultation and project management services in relation to the integrated management and utilization of coalbed gas.

The operating subsidiary of the CFT Henan (HK) group, i.e. Henan Huanglong, recorded an unaudited loss after tax of approximately HK$10.41 million for the year ended 31 December 2011.

Dragon Rich Resources is held as to 60% by Wu Jiahong and as to 40% by Xu Lidi. Wu is an executive director of China CBM Group and a director of companies within the CFT Henan (HK) group. Xu is a director of companies within the CFT Henan (HK) group and has resigned as a co-chairman and an executive director of China CBM Group on 7 December 2011.