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<SEC-DOCUMENT>0001116502-05-002656.txt : 20051122
<SEC-HEADER>0001116502-05-002656.hdr.sgml : 20051122
<ACCEPTANCE-DATETIME>20051122105249
ACCESSION NUMBER:		0001116502-05-002656
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20051122
FILED AS OF DATE:		20051122
DATE AS OF CHANGE:		20051122

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CHINA NATURAL RESOURCES INC
		CENTRAL INDEX KEY:			0000793628
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-ADVERTISING [7310]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-26046
		FILM NUMBER:		051220163

	BUSINESS ADDRESS:	
		STREET 1:		ROOM 2105 WEST TOWER SHUN TAK CENTRE
		STREET 2:		200 CONNAUGHT ROAD C
		CITY:			SHEUNG WAN
		STATE:			K3
		ZIP:			-
		BUSINESS PHONE:		01185228107205

	MAIL ADDRESS:	
		STREET 1:		ROOM 2105 WEST TOWER SHUN TAK CENTRE
		STREET 2:		200 CONNAUGHT ROAD C
		CITY:			SHEUNG WAN HONG KONG
		STATE:			K3
		ZIP:			-

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CHINA RESOURCES DEVELOPMENT INC
		DATE OF NAME CHANGE:	19950104

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MAGENTA CORP
		DATE OF NAME CHANGE:	19940217
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>chinanatural-6k.txt
<DESCRIPTION>FORM 6K
<TEXT>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 6-K

       REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
                   UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2005.

Commission File Number 0-26046

                          China Natural Resources, Inc.
                          -----------------------------
                 (Translation of registrant's name into English)

                     Room 2105, West Tower, Shun Tak Centre,
                  200 Connaught Road C., Sheung Wan, Hong Kong
                  --------------------------------------------
                    (Address of principal executive offices)

Indicate by check mark whether the registrant files of will file annual reports
under cover of Form 20-F or Form 40-F. Form 20-F [X] Form 40-F [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): [ ]

Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12b3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X].

If "Yes" is marked, indicated below the file number assigned to the registrant
in connection with Rule 12b3-2(b):
82-_________.


<PAGE>


         On or about November 22, 2005 China Natural Resources, Inc. first
disseminated a proxy statement to its members in connection with its 2005 annual
meeting of members. A copy of the proxy statement is furnished as an exhibit to
this report.

Exhibits

No.                     Description
- ---                     -----------

99.1      Proxy Statement for 2005 Annual Meeting of Members.



<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunder duly authorized.


                                           CHINA NATURAL RESOURCES, INC.


Date:  November 22, 2005                   By: /s/Ching Lung Po
                                               ------------------------
                                               Ching Lung Po, CEO


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>exh99-1.txt
<DESCRIPTION>PROXY STATEMENT
<TEXT>
                          CHINA NATURAL RESOURCES, INC.
                                 [COMPANY LOGO]


                       NOTICE OF ANNUAL MEETING OF MEMBERS
                         TO BE HELD ON DECEMBER 20, 2005

To the Members of China Natural Resources, Inc.:

         NOTICE IS HEREBY GIVEN that an Annual Meeting of Members (the "Annual
Meeting") of China Natural Resources, Inc., a British Virgin Islands
corporation, will be held at 2:00 p.m., Hong Kong time, on Tuesday, December 20,
2005 at Room 2105, West Tower, Shun Tak Centre, 200 Connaught Road C., Sheung
Wan, Hong Kong, for the following purposes:

         1.       To elect two Class I Directors, each to hold office until the
                  annual meeting of members at which their successors are duly
                  elected and qualified as hereinafter described;

         2.       To ratify the appointment of GHP Horwath, P.C. as our
                  independent registered public accountants for the fiscal year
                  ending December 31, 2005; and

         3.       To transact such other business as may properly come before
                  the Annual Meeting and any adjournments or postponements
                  thereof.

         All members are cordially invited to attend; however, only members of
record at the close of business on November 17, 2005 are entitled to notice of
and to vote at the Annual Meeting or any adjournments thereof.

         THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE BOARD'S
NOMINEES TO SERVE AS CLASS I DIRECTORS, AND FOR PROPOSAL 2.

                                             By Order of the Board of Directors


                                             /s/ Wong Wah On
                                             -----------------------------------
                                             Corporate Secretary

Hong Kong
November 21, 2005

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. MEMBERS WHO
EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND
VOTE THEIR SHARES IN PERSON.


<PAGE>

                          CHINA NATURAL RESOURCES, INC.
                                    ROOM 2105
                           WEST TOWER, SHUN TAK CENTRE
                              200 CONNAUGHT ROAD C.
                              SHEUNG WAN, HONG KONG

                      ____________________________________

                                 PROXY STATEMENT

                                       FOR

                            ANNUAL MEETING OF MEMBERS

                         TO BE HELD ON DECEMBER 20, 2005
                      ____________________________________

         This proxy statement is being furnished to you by the Board of
Directors of China Natural Resources, Inc. in connection with a solicitation of
proxies for use at our Annual Meeting of Members ("Annual Meeting") which will
be held at 2:00 p.m., Hong Kong time, on Tuesday, December 20, 2005 at Room
2105, West Tower, Shun Tak Centre, 200 Connaught Road C., Sheung Wan, Hong Kong.
We will bear the cost of this solicitation. The date of mailing of this proxy
statement and form of proxy is approximately November 21, 2005.

         A copy of our Annual Report on Form 20-F (without exhibits), including
audited consolidated financial statements for each of the three years ended
December 31, 2004, accompanies this proxy statement.

                       OUTSTANDING STOCK AND VOTING RIGHTS

RECORD DATE

         The Board of Directors has fixed the close of business on November 17,
2005 as the record date for determining those members entitled to notice of, and
to vote at, the Annual Meeting. Only members of record on that date will be
entitled to vote at the Annual Meeting. A list of members entitled to vote at
the Annual Meeting will be available for examination by any member for a proper
purpose during normal business hours at our offices for a period of at least 10
days preceding the Annual Meeting.

SHARES OUTSTANDING

         As of the November 17, 2005 record date, 1,247,823 shares of our common
stock, no par value, and 320,000 shares of our Series B preferred stock, no par
value, were outstanding. Each share of common stock and each share of Series B
preferred stock outstanding entitle the holder to one vote on each proposal
submitted to members for consideration at the 2005 Annual Meeting.

REVOCATION OF PROXIES

         If you submit your proxy card, you have the power to revoke it by
notice of revocation directed to the proxy holder at any time before it is
voted. Unless you withhold authority in writing,


<PAGE>

proxies that are properly executed, will be voted "FOR" each of the proposals.
Even if you submit a proxy card, you may nevertheless attend the meeting, revoke
your proxy and vote in person.

QUORUM

         A quorum of members is necessary to take action at the Annual Meeting.
A majority of the outstanding shares of our common stock and Series B preferred
stock, counted together, represented in person or by proxy, will constitute a
quorum. Abstentions and broker non-votes are counted for purposes of determining
the presence or absence of a quorum at the Annual Meeting.

VOTE REQUIRED FOR APPROVAL

         The nominees for Class I Director who receive the greatest number of
votes cast in person or by proxy at the Annual Meeting shall be elected Class I
Directors. The vote required for ratification of our independent registered
public accounting firm and for adoption of any other proposals that properly
come before the Annual Meeting is the affirmative vote of a majority of the
shares of common stock and preferred stock, counted together, present in person
or represented by proxy at the Annual Meeting and entitled to vote on the
matter.

ABSTENTIONS

         Abstentions are considered shares present at the Annual Meeting in
person or by proxy, and will be counted for purposes of determining whether a
quorum is present. Abstentions will have no effect on the outcome of Proposal 1,
but will have the effect of a vote "AGAINST" Proposal 2.

BROKER NON-VOTES

         Broker non-votes refer to shares held in street name by a brokerage
firm or nominee (such as Cede & Co.) under circumstances where the beneficial
owner has not instructed the broker or nominee as to how the shares should be
voted. Broker non-votes are considered present by proxy for purposes of
determining whether a quorum is present at the meeting. If your shares are held
in street name, the broker or nominee in whose name your shares are held is
permitted to vote your shares on the matters to be voted upon at the Annual
Meeting, even if you have not provided specific direction on how your shares
should be voted.

                                   CONVENTIONS

         Unless otherwise specified, all references in this proxy statement to
"U.S. Dollars," "Dollars," "US$," or "$" are to United States dollars; all
references to "Hong Kong Dollars" or "HK$" are to Hong Kong dollars; and all
references to "Renminbi" or "RMB" or "Yuan" are to Renminbi Yuan, which is the
lawful currency of the People's Republic of China ("China" or "PRC"). We
maintain our accounts in U.S. Dollars and Hong Kong Dollars, respectively. The
accounts of our subsidiaries are maintained in either Hong Kong Dollars or
Renminbi. Our consolidated financial statements are prepared in Renminbi.
Translations of amounts from Renminbi to U.S. Dollars and from Hong Kong Dollars
to U.S. Dollars are for the convenience of the reader. Unless otherwise
indicated, any translations from Renminbi to U.S. Dollars or from U.S. Dollars
to Renminbi have been made at the single rate of exchange as quoted by the
People's Bank of China (the "PBOC Rate") on December 31, 2004, which was
approximately U.S.$1.00 = Rmb 8.28. Translations from Hong Kong Dollars to U.S.
Dollars have been made at the single rate of exchange as quoted by the Hong Kong
and Shanghai Banking Corporation Limited on December 31, 2004, which was
approximately US$1.00 = HK$7.80. The Renminbi is not freely convertible into
foreign currencies and the quotation of

                                       2

<PAGE>

exchange rates does not imply convertibility of Renminbi into U.S. Dollars or
other currencies. All foreign exchange transactions take place either through
the Bank of China or other banks authorized to buy and sell foreign currencies
at the exchange rates quoted by the People's Bank of China. No representation is
made that the Renminbi or U.S. Dollar amounts referred to herein could have been
or could be converted into U.S. Dollars or Renminbi, as the case may be, at the
PBOC Rate or at all.

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information known to us
concerning the beneficial ownership of shares of our common stock and Series B
preferred stock as of November 17, 2005 by:

          o    each person known by us to be the owner of more than 5% of our
               outstanding shares of common stock and preferred stock combined;
          o    each of our directors and director nominees;
          o    each of our executive officers; and
          o    all executive officers and directors as a group.

         A person is deemed to be the beneficial owner of securities that can be
acquired by such a person within 60 days from the record date upon exercise of
options, warrants or convertible securities. Each beneficial owner's percentage
of ownership is determined by assuming that options, warrants and convertible
securities that are held by such a person (but not those held by any other
person) and are exercisable within 60 days from the date hereof have been
exercised. Unless otherwise indicated, each person has sole investment and
voting power with respect to all shares shown as beneficially owned. Unless
otherwise indicated the address of each beneficial owner is Room 2105, West
Tower, Shun Tak Centre, 200 Connaught Road C., Sheung Wan, Hong Kong.

<TABLE>
<CAPTION>
                            Amount and Nature of Beneficial Ownership(4)
Name and Address of         Common Stock               Preferred Stock         Percent
                     -------------------------   -----------------------         of
Beneficial Owner     # of Shares    % of Class   # of Shares   % of Class       Vote
- ----------------------------------------------------------------------------------------
<S>                  <C>              <C>        <C>              <C>          <C>
Ching Lung Po        40,000           3.2%       320,000(1)       100%         23.0%

Tam Cheuk Ho        224,897(2)       18.0%            --           --          14.3%

Wong Wah On         224,897(3)       18.0%            --           --          14.3%

Lam Kwan Sing            --          --               --           --          --

Ng Kin Sing              --          --               --           --          --

Lo Kin Cheung            --          --               --           --          --
</TABLE>

- ------------
(1)      Shares registered to Winsland Capital Limited, a company beneficially
         owned by Mr. Ching.
(2)      Includes 144,897 shares registered to Anka Capital Limited, a company
         owned 50% by Mr. Tam. Mr. Tam disclaims beneficial ownership of the
         shares owned by Anka Capital Limited, except to the extent of his
         pecuniary interest in the shares.
(3)      Includes 144,897 shares registered to Anka Capital Limited, a company
         owned 50% by Mr. Wong. Mr. Wong disclaims beneficial ownership of the
         shares owned by Anka Capital Limited, except to the extent of his
         pecuniary interest in the shares.
(4)      The inclusion of any shares as deemed beneficially owned does not
         constitute an admission of beneficial ownership by the named member.

                                       3

<PAGE>

                      OUR DIRECTORS AND EXECUTIVE OFFICERS

BOARD MEMBERS

         Our Board of Directors is responsible for the overall management of our
company. The Board of Directors is divided into three classes, designated Class
I, Class II and Class III. The Board of Directors currently includes two Class I
Directors, two Class II Directors, and two Class III Directors. The term of our
Class I Directors expires immediately following our annual meeting of members in
2005, the term of our Class II Directors expires immediately following our
annual meeting of members in 2006 and the term of our Class III Directors
expires immediately following our annual meeting of members in 2007. The name,
age and business experience of each of our directors is as follows:

CLASS I DIRECTORS

CHING LUNG PO (age 59)
Chairman of the Board of Directors, President and Chief Executive Officer

         Mr. Ching Lung Po has served as a director of our company since June 2,
1999 and as its Chairman of the Board, President and Chief Executive Officer
since November 22, 2004. He served as a director of China Resources Development,
Inc., a Nevada corporation and our predecessor ("China Development") from
February 4, 1998 until completion of its merger with our company in December
2004 (the "Redomicile Merger"). He was appointed Chairman of the Board of
Directors of China Development on January 25, 1999, and as its Chief Executive
Officer and President on February 1, 1999 and June 1, 1999, respectively. Mr.
Ching has also been the Chairman of the Board of Directors and President of OVM
International Holding Corp. (Pink Sheets: OVMI.pk) since September 1996. Mr.
Ching has been involved for more than 20 years in the management of production
and technology for industrial enterprises in PRC. He worked in Heilongjiang
Suihua Electronic Factory as an engineer from 1969 to 1976 and was the Head of
the Heilongjiang Suihua Industrial Science & Technology Research Institute from
1975 to 1976. Mr. Ching joined the Heilongjiang Qingan Factory in 1976 and has
been the General Manager since 1976. In 1988, Mr. Ching started his own business
and established the Shenzhen Hongda Science & Technology Company Limited in
Shenzhen, which manufactures electronic products. Mr. Ching graduated from the
Harbin Military and Engineering Institute and holds the title of Senior
Engineer.

NG KIN SING (age 43)
Director

         Mr. Ng Kin Sing has been a director and a member of our company's Audit
Committee since November 22, 2004. He served as a director of China Development
from February 1, 1999 until completion of the Redomicile Merger, and as a member
of its audit committee. From April 1998 to the present, Mr. Ng has been the
managing director of Action Plan Limited, a securities investment company. From
November 1995 until March 1998, Mr. Ng was sales and dealing director for
NatWest Markets (Asia) Limited; and from May 1985 until October 1996, he was the
dealing director of BZW Asia Limited, an international securities brokerage
house. Mr. Ng holds a Bachelor's degree in Business Administration from the
Chinese University of Hong Kong.

                                       4

<PAGE>

CLASS II DIRECTORS

LAM KWAN SING (age 36)
Director

         Mr. Lam Kwan Sing has been a director and a member of our company's
Audit Committee since November 22, 2004. He served as a director of China
Development from March 20, 2003 until completion of the Redomicile Merger, and
as a member of its audit committee. From 2002 to present, Mr. Lam has been the
executive director of Pacific Challenge Holdings Limited, a Hong Kong listed
company, where he is responsible for the overall corporate finance and
accounting operations. From 2000 to 2002, Mr. Lam was the business development
manager of China Development Corporation Limited, a Hong Kong listed company.
From 1997 to 2000, he was the business development manager of Chung Hwa
Development Holdings Limited, a Hong Kong listed company. From 1995 to 1997, Mr.
Lam was the assistant manager (Intermediaries supervision) of Hong Kong
Securities and Futures Commission. Mr. Lam holds a Bachelor's degree in
Accountancy from the City University of Hong Kong.

LO KIN CHEUNG (age 41)
Director

         Mr. Lo Kin Cheung has been a director and a member of our company's
Audit Committee since November 22, 2004. He also served as a director of China
Development from May 30, 2000 until completion of the Redomicile Merger, and as
a member of its audit committee. From September 2001 to present, Mr. Lo has been
the chief financial officer of Lee Fung - Asco Printers Holdings Limited, a Hong
Kong listed company, where he is responsible for the overall corporate financial
operations. From March 1998 to August 2001, Mr. Lo was the executive director of
Wiltec Holdings Limited, a Hong Kong listed company, where he was responsible
for corporate development and day-to-day operations. From July 1986 until March
1998, Mr. Lo was the principal at Ernst & Young, Hong Kong. He is a fellow of
both the Hong Kong Institute of Certified Public Accountants (formerly known as
the Hong Kong Society of Accountants) and the Chartered Association of Certified
Accountants. He holds a Bachelor's degree of Science from the University of Hong
Kong.

CLASS III DIRECTORS

TAM CHEUK HO (age 43)
Director and Chief Financial Officer

         Mr. Tam Cheuk Ho has served as a director of our company since December
23, 1993, and as its Chief Financial Officer since November 22, 2004. He served
as the Chief Financial Officer and a director of China Development from December
2, 1994 until completion of the Redomicile Merger. From July 1984 through
January 1992, he worked as Audit Manager at Ernst & Young, Hong Kong, and from
February 1992 through September 1992, as Financial Controller at Tack Hsin
Holdings Limited, a listed company in Hong Kong, where he was responsible for
accounting and financial functions. From October 1992, through December 1994,
Mr. Tam was Finance Director of Hong Wah (Holdings) Limited. He is a fellow of
both the Hong Kong Institute of Certified Public Accountants (formerly known as
the Hong Kong Society of Accountants) and the Chartered Association of Certified
Accountants. He is also a certified public accountant (practicing) in Hong Kong.
He holds a Bachelor's degree in Business Administration from the Chinese
University of Hong Kong. Mr. Tam is also a director of Anka Capital Limited, a
privately held corporation, through which he is one of our principal members.


                                       5

<PAGE>

WONG WAH ON (age 42)
Director, Secretary and Financial Controller

         Mr. Wong Wah On has been a director of our company since January 25,
1999, as its Secretary since February 1, 1999 and as Financial Controller since
November 22, 2004. He served as Financial Secretary, Financial Controller and a
director of China Development from December 30, 1997 until completion of the
Redomicile Merger. He is responsible for assisting our Chief Financial Officer
with our treasury, accounting and secretarial functions. From October 1992
through December 1994, Mr. Wong was the Deputy Finance Director of Hong Wah
(Holdings) Limited. From July 1988 through October 1992, he was an audit
supervisor at Ernst & Young, Hong Kong. Mr. Wong is also a director of Anka
Capital Limited, a privately held corporation, through which he is one of our
principal members. He received a professional diploma in Company Secretaryship
and Administration from the Hong Kong Polytechnic University. He is a fellow of
both the Chartered Association of Certified Accountants and the Hong Kong
Institute of Certified Public Accountants (formerly known as the Hong Kong
Society of Accountants), and an associate of the Institute of Chartered
Secretaries and Administrators. He is also a certified public accountant
(practicing) in Hong Kong.

         Our officers are elected annually at the Board of Directors meeting
following each annual meeting of members, and hold office until their respective
successors are duly elected and qualified, subject to their earlier death,
resignation or removal.

MEETINGS OF THE BOARD OF DIRECTORS

         During the year ended December 31, 2004, our Board of Directors held
four meetings. Each member of the board participated in each meeting of the
board. In addition, the Board of Directors took action by unanimous written
consent in lieu of meeting on two occasions.

FEES TO MEMBERS OF THE BOARD OF DIRECTORS

         We do not pay fees to directors for their attendance at meetings of the
Board of Directors or of committees; however, we may adopt a policy of making
such payments in the future. We will reimburse out-of-pocket expenses incurred
by directors in attending board and committee meetings.

                          CORPORATE GOVERNANCE MATTERS

COMMITTEES OF THE BOARD OF DIRECTORS

         The Board of Directors has established an Audit Committee and a
Nominating and Corporate Governance Committee.

         AUDIT COMMITTEE

         Our Audit Committee, whose members currently consist of Lo Kin Cheung,
Lam Kwan Sing and Ng Kin Sing, reviews the professional services provided by our
independent auditors, the independence of our auditors from our management, our
annual financial statements and our system of internal accounting controls. The
Audit Committee also reviews other matters with respect to our accounting,
auditing and financial reporting practices and procedures as it may find
appropriate or may be brought to its attention. Our Audit Committee has
succeeded to, assumed and adopted the written audit committee charter of China
Development, a copy of which was appended to our proxy statement for the 2003
annual meeting of stockholders.

                                       6

<PAGE>

         Each member of the Audit Committee is an "independent" director, as
such term is used in (a) Item 7(d)(3)(iv) of Schedule 14A under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), (b) Section 10A-3(m)(3) of
the Exchange Act, and (c) Nasdaq Marketplace Rule 4200-1.

         Our Audit Committee held a total of four meetings during fiscal 2004,
which were attended by all of its then current members.

         AUDIT COMMITTEE FINANCIAL EXPERT

         In general, an "audit committee financial expert" within the meaning of
Item 401(e) of Regulation S-B of the Securities Act of 1933, as amended (the
"Securities Act"), is an individual member of the Audit Committee who:

         o        understands generally accepted accounting principles and
                  financial statements,
         o        is able to assess the general application of such principles
                  in connection with accounting for estimates, accruals and
                  reserves,
         o        has experience preparing, auditing, analyzing or evaluating
                  financial statements comparable to the breadth and complexity
                  to our financial statements,
         o        understands internal controls over financial reporting, and
         o        understands audit committee functions.

         An "audit committee financial expert" may acquire the foregoing
attributes through:

         o        education and experience as a principal financial officer,
                  principal accounting officer, controller, public accountant,
                  auditor or person serving similar functions;
         o        experience actively supervising a principal financial officer,
                  principal accounting officer, controller, public accountant,
                  auditor or person serving similar functions; experience
                  overseeing or assessing the performance of companies or public
                  accountants with respect to the preparation, auditing or
                  evaluation of financial statements; or,
         o        other relevant experience.

         Our Board of Directors has determined that Mr. Lo Kin Cheung and Mr.
Lam Kwan Sing are each an "audit committee financial expert" within the meaning
of Item 401(e) of Regulation S-B. Each of our "audit committee financial
experts" are "independent" as that term is used in Item 7(d)(3)(iv) of Schedule
14A under the Exchange Act

         AUDIT COMMITTEE REPORT

         The following statement made by our Audit Committee shall not be deemed
incorporated by reference into any filing under the Securities Act or the
Exchange Act, and shall not otherwise be deemed filed under either of those
acts.

         The Audit Committee reviews our financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the system of internal
controls.

         Management represented to the Audit Committee that our consolidated
financial statements were prepared in accordance with generally accepted
accounting principles, and the committee has reviewed and discussed the
consolidated financial statements with management and the


                                       7

<PAGE>

independent auditors. The Audit Committee also discussed with the independent
auditors matters required to be discussed by auditing standards generally
accepted in the United States.

         In addition, the Audit Committee has discussed with the independent
auditors the auditor's independence from our company and its management, and has
received the written disclosures and letter required by the Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees).
The Audit Committee has also discussed with the independent auditors the matters
required to be discussed by SAS 61.

         The Audit Committee also discussed with our independent auditors the
overall scope and plans for their respective audit. The Audit Committee meets
with the independent auditors with and without management present, to discuss
the results of their examinations, the evaluations of our internal controls, and
the overall quality of our financial reporting.

         In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that our audited consolidated financial statements be included in our Annual
Report on Form 20-F for the year ended December 31, 2004 for filing with the
Securities and Exchange Commission.

                                            Submitted by the Audit Committee of
the Board of Directors:

                                            /s/ Ng Kin Sing
                                            /s/ Lam Kwan Sing
                                            /s/ Lo Kin Cheung

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE; SHAREHOLDER NOMINEES FOR DIRECTOR

         Our Board of Directors has established a Nominating and Corporate
Governance Committee that operates pursuant to a written charter. The current
members of the Nominating and Corporate Governance Committee are Ng Kin Sing,
Lam Kwan Sing and Lo Kin Cheung. Each member of the Nominating and Corporate
Governance Committee is an "independent" director, as such term is used in
Section 10A-3(m)(3) of the Exchange Act and Nasdaq Marketplace Rule 4200-1.

         The Nominating and Corporate Governance Committee is responsible for
providing oversight on a broad range of issues surrounding the composition and
operation of our Board of Directors. In particular, the responsibilities of the
Nominating and Corporate Governance Committee include:

         o        identifying individuals qualified to become members of the
                  Board of Directors;
         o        determining the slate of nominees to be recommended for
                  election to the Board of Directors;
         o        reviewing corporate governance principles applicable to us,
                  including recommending corporate governance principles to the
                  Board of Directors and administering our Code of Ethics;
         o        assuring that at least one Audit Committee member is an "audit
                  committee financial expert" within the meaning of regulatory
                  requirements; and
         o        carrying out such other duties and responsibilities as may be
                  determined by the Board of Directors.

         The Nominating and Corporate Governance Committee is required to meet
at least once annually, and more frequently if the committee deems it to be
appropriate. The committee may

                                       8

<PAGE>

delegate authority to one or more members of the committee; provided that any
decisions made pursuant to such delegated authority are presented to the full
committee at its next scheduled meeting. Discussions pertaining to the
nomination of directors are required to be held in executive session.

         The Nominating and Corporate Governance Committee will consider
candidates for directors proposed by security holders, although no formal
procedures for submitting the names of candidates for inclusion on management's
slate of director nominees have been adopted. Until otherwise determined by the
Nominating and Corporate Governance Committee, a member who wishes to submit the
name of a candidate to be considered for inclusion on management's slate of
nominees at the next annual meeting of members must notify our Corporate
Secretary, in writing, no later than June 30 of the year in question of its
desire to submit the name of a director nominee for consideration. The written
notice must include information about each proposed nominee, including name,
age, business address, principal occupation, telephone number, shares
beneficially owned and a statement describing why inclusion of the candidate
would be in our best interests. The notice must also include the proposing
member's name and address, as well as the number of shares beneficially owned. A
statement from the candidate must also be furnished, indicating the candidate's
desire and ability to serve as a director. Adherence to these procedures is a
prerequisite to the board's consideration of the member's candidate. Once a
candidate has been identified the Nominating and Corporate Governance Committee
reviews the individual's experience and background, and may discuss the proposed
nominee with the source of the recommendation. If the Nominating and Corporate
Governance Committee believes it to be appropriate, committee members may meet
with the proposed nominee before making a final determination whether to include
the proposed nominee as a member of management's slate of director nominees to
be submitted for election to the board.

         There were no security holder recommendations for nomination to the
Board of Directors in connection with the Annual Meeting. There are two Class I
Director nominees for the Annual Meeting, each of whom is an incumbent director
standing for reelection.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         We do not have a formal compensation committee. The Board of Directors,
acting as a compensation committee, periodically meets to discuss and deliberate
on issues surrounding the terms and conditions of executive officer
compensation, including base salaries, bonuses, awards of stock options and
reimbursement of certain business related costs and expenses. Three of the
members of our Board of Directors are officers and employees of our company, and
those board members participate in decisions of the board concerning
compensation arrangements with our executive officers.

SECURITY HOLDER COMMUNICATIONS WITH OUR BOARD OF DIRECTORS

         We have established an informal process for security holders to send
communications to members of our Board of Directors. Security holders who wish
to contact the Board of Directors or any of its members may do so by writing to
them, c/o China Natural Resources, Inc., Room 2105, West Tower, Shun Tak Centre,
200 Connaught Road C., Sheung Wan, Hong Kong. Correspondence directed to an
individual board member is referred, unopened, to that board member.
Correspondence not directed to a particular board member is referred, unopened,
to the Chairman of the board, for reviewing and forwarding to the appropriate
person.


                                       9

<PAGE>

ATTENDANCE AT ANNUAL MEETING OF MEMBERS

         We have not adopted a formal policy on Board members' attendance at our
annual meeting of members, although all Board members are encouraged to attend.
Ching Lung Po, Tam Cheuk Ho and Wong Wah On attended our last annual meeting of
members held on December 31, 2004.

NASDAQ REQUIREMENTS

         Our common shares are currently listed on the Nasdaq SmallCap Market
and, for so long as our securities continue to be listed, we will remain subject
to the rules and regulations established by The Nasdaq Stock Market as being
applicable to listed companies. Nasdaq recently adopted amendments to its
Marketplace Rule 4350 to impose various corporate governance requirements on
listed securities. Section (a)(1) of Marketplace Rule 4350 provides that foreign
private issuers such as our company are required to comply with certain specific
requirements of Marketplace Rule 4350, but, as to the balance of Marketplace
Rule 4350, foreign private issuers are not required to comply if the laws of
their home jurisdiction do not otherwise require compliance.

         We currently comply with the specifically mandated provisions of
Marketplace Rule 4350. In addition, we have elected to voluntarily comply with
certain other requirements of Marketplace Rule 4350, notwithstanding that our
home jurisdiction does not mandate compliance; although we may in the future
determine to cease voluntary compliance with those provisions of Marketplace
Rule 4350. However, we have determined not to comply with the following
provisions of Marketplace Rule 4350 since the laws of the British Virgin Islands
do not require compliance:

         o        a majority of our Directors are not independent within the
                  meaning of Nasdaq rules;
         o        our independent directors do not hold regularly scheduled
                  meetings in executive session;
         o        the compensation of our executive officers is not determined
                  by an independent committee of the Board or by the independent
                  members of the Board of Directors, and our CEO may be present
                  in the deliberations concerning his compensation;
         o        related party transactions are not required to be reviewed or
                  we are not required to solicit member approval of stock plans,
                  including those in which our officers or directors may
                  participate; stock issuances that will result in a change in
                  control; the issuance of our stock in related party
                  acquisitions or other acquisitions in which we may issue 20%
                  or more of our outstanding shares; or, below market issuances
                  of 20% or more of our outstanding shares to any person; and
         o        we are not required to participate in an electronic link with
                  a specified registered depository in connection with any
                  direct registration program that we may establish in the
                  future.

         We may in the future determine to voluntarily comply with one or more
of the foregoing provisions of Marketplace Rule 4350.

CODE OF ETHICS

         A Code of Ethics is a written standard designed to deter wrongdoing and
to promote:

         o        honest and ethical conduct,
         o        full, fair, accurate, timely and understandable disclosure in
                  regulatory filings and public statements,
         o        compliance with applicable laws, rules and regulations,

                                       10

<PAGE>

         o        the prompt reporting violation of the code, and
         o        accountability for adherence to the Code of Ethics.

         We have adopted the Code of Ethics of China Development. The Code of
Ethics is applicable to all of our employees, and also contains provisions that
apply only to our Chief Executive Officer, principal financial and accounting
officers and persons performing similar functions. A copy of our Code of Ethics
may be obtained, without charge, upon written request addressed to the attention
of our Secretary, Room 2105, West Tower, Shun Tak Centre, 200 Connaught Road C.,
Sheung Wan, Hong Kong.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Based solely upon a review of Forms 3, 4, and 5, and amendments
thereto, and reports, furnished to us for the fiscal year ended December 31,
2004, none of our directors, officers, or members beneficially owning more than
10% of any class of our equity securities failed to timely file any forms
required by Section 16(a) of the Exchange Act during the most recent fiscal
year.

                             EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

         The following table shows, for each of the three years ended December
31, 2004, the cash and other compensation paid by us to our President and Chief
Executive Officer, and each other executive officer whose annual compensation
was $100,000 or more.


<TABLE>
<CAPTION>
                                                                                -----------------
                                                   Annual Compensation              Long Term
                                                                                  Compensation
                                          ------------------------------------- -----------------
                                                                                -----------------


                                                                     Other         Securities          All Other
                                           Salary     Bonus      Compensation      Underlying       Compensation
Name and Principal Position       Year      (US$)     (US$)          (US$)           Options            (US$)
- -------------------------------------------------------------------------------------------------------------------
                                                                                -----------------
<S>                               <C>     <C>          <C>           <C>             <C>                <C>
Ching Lung Po, President and      2004     30,769      -0-           -0-              -0-               -0-
Chief Executive Officer

                                  2003     30,769      -0-           -0-              -0-               -0-

                                  2002    133,333      -0-           -0-              -0-               -0-


Tam Cheuk Ho, Director and        2004    230,769      -0-           -0-             40,000             -0-
Chief Financial Officer

                                  2003    230,769      -0-           -0-              -0-               -0-

                                  2002    230,769      -0-           -0-              -0-               -0-


Wong Wah On, Director,            2004    153,846      -0-           -0-             40,000             -0-
Secretary and Financial
Controller

                                  2003    153,846      -0-           -0-              -0-               -0-

                                  2002    153,846      -0-           -0-              -0-               -0-
==================================================================================================================
</TABLE>

         On February 1, 1999, we entered into a Service Agreement with Ching
Lung Po. In accordance with the terms of the Service Agreement, Mr. Ching is
employed by us as our Chief Executive Officer and to perform such duties as the
Board of Directors from time to time determines. Mr. Ching receives a base
salary of HK$2,160,000 (US$276,923) annually. The Employment


                                       11

<PAGE>

Agreement is for a term of two years and is automatically renewed unless earlier
terminated as provided therein. On June 1, 2002, we entered into a Supplemental
Service Agreement with Ching Lung Po, reducing his base salary to HK$240,000
(US$30,769) per annum with all other terms of the Service Agreement remaining in
full force and effect.

         On February 1, 1999, we entered into an Employment Agreement with Tam
Cheuk Ho. In accordance with the terms of the Employment Agreement, Mr. Tam is
employed by us as our Chief Financial Officer and to perform such duties as the
Board of Directors from time to time determines. Mr. Tam receives a base salary
of HK$1,800,000 (US$230,769) annually, which base salary is adjusted on each
anniversary of the Employment Agreement to reflect a change in the applicable
consumer price index or such greater amount as our Board of Directors may
determine. The initial two-year term of Employment Agreement has expired, and
the term of the agreement continues to automatically renew each year, until
terminated as provided therein.

         On February 1, 1999, we entered into an Employment Agreement with Wong
Wah On. In accordance with the terms of the Employment Agreement, Mr. Wong is
employed by us as our Financial Controller and Corporate Secretary, to perform
such duties as the Board of Directors from time to time determines. Mr. Wong
receives a base salary of HK$1,200,000 (US$153,846) annually, which base salary
is adjusted on each anniversary of the Employment Agreement to reflect a change
in the applicable consumer price index or such greater amount as our Board of
Directors may determine. The initial two-year term of the Employment Agreement
has expired, and the agreement continues to automatically renew each year, until
terminated as provided therein.

         In connection with the Redomicile Merger, we succeeded to the rights
and obligations of China Development under its service and employment agreements
with our officers, each of whom have continued in our employ following the
Redomicile Merger.

         We have no other employment contracts with any of our officers or
directors and maintains no retirement, fringe benefit or similar plans for the
benefit of its officers or directors. We may, however, enter into employment
contracts with our officers and key employees, adopt various benefit plans and
begin paying compensation to our officers and directors as we deem appropriate
to attract and retain the services of such persons.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

         The following table sets forth information relating to our outstanding
stock option plans as of December 31, 2004:

<TABLE>
<CAPTION>
                                                                                                 Number of Securities
                                    Number of Securities to                                      Remaining Available for
                                    Be Issued Upon               Weighted-average                Future Issuance Under
                                    Exercise Of Outstanding      Exercise Price of               Equity Compensation
                                    Options, Warrants and        Outstanding Options,            Plan (excluding securities
                                          Rights                 Warrants and Rights             reflected in column a)
                                           (a)                         (b)                                  (c)
- --------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                       <C>                                 <C>
Equity Compensation
Plans Approved by
Security Holders

   1995 Stock Option Plan                  0                          n/a                                  81,955
   2003 Equity Compensation Plan           0                          n/a                                 231,955

Equity Compensation
Plans Not Approved by
Security Holders                           0                          n/a                                       0
- --------------------------------------------------------------------------------------------------------------------------------
Total                                      0                                                              313,910

</TABLE>

                                       12

<PAGE>

STOCK OPTION PLANS

         We have adopted two equity incentive plans. The purposes of the plans
are to:

         o        Encourage ownership of our common stock by our officers,
                  directors, employees and advisors;

         o        Provide additional inventive for them to promote our success
                  and our business; and

         o        Encourage them to remain in our employ by providing them with
                  the opportunity to benefit from any appreciation of our common
                  stock.

         A brief description of each plan is as follows:

         1995 Plan: We adopted a Stock Option Plan (the "1995 Plan") as of March
31, 1995. The 1995 Plan allows the Board of Directors, or a committee thereof at
the Board's discretion, to grant stock options to our officers, directors, key
employees, consultants and affiliates. The number of shares that may be granted
on exercise of options granted under the 1995 Plan may not exceed 20% of our
outstanding shares determined at the time of grant.

         The Board of Directors, or a committee appointed by the Board, is
vested with authority to:

         o        select persons to participate in the 1995 Plan;

         o        determine the form and substance of grants made under the 1995
                  Plan to each participant, and the conditions and restrictions,
                  if any, subject to which grants will be made;

         o        interpret the 1995 Plan; and

         o        adopt, amend, or rescind such rules and regulations for
                  carrying out the 1995 Plan as it may deem appropriate.

         Options granted under the 1995 may be either incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, or non-qualified options. The exercise price of incentive stock options
may not be less than 100% of the fair market value of the underlying shares as
of the date of grant. The exercise price of non-qualified options may not be
less than 80% of the fair market value of the underlying shares as of the date
of grant.

         As of December 31, 2004, options to purchase 233,000 shares of common
stock had been granted under the 1995 Plan, of which options to purchase 230,000
shares of common stock were exercised and options to purchase 3,000 shares of
common stock lapsed. Options to purchase 81,955 shares were available for grant
as of December 31, 2004. The 1995 Plan terminated on March 31, 2005; however,
outstanding options on the date of termination remain subject to the provisions
of the 1995 Plan until they are exercised or expire. In connection with the
Redomicile Merger, we succeeded to and assumed the obligations of China
Resources under the 1995 Plan.

         2003 Plan. On December 18, 2003, our members approved and adopted the
2003 Equity Compensation Plan (the "2003 Plan"). The 2003 Plan allows the Board
to grant various incentive equity awards not limited to stock options. We have
reserved a number of shares of common stock equal to 20% of the issued and
outstanding shares of our common stock, from time-to-time, for issuance pursuant
to options granted or for restricted stock awarded under the 2003 Plan. Stock
appreciation rights may be granted as a means of allowing participants to pay
the exercise price of


                                       13


<PAGE>

plan options. Stock grants may be made upon such terms and conditions as the
Board or a committee designated by the Board determines. Stock grants may
include deferred stock awards under which receipt of stock grants is deferred,
with vesting to occur upon such terms and conditions as the Board or committee
determines.

         The 2003 Plan is administered by the Board of Directors or a committee
designated by the Board. The Board or committee determines, from time to time,
those of our officers, directors, employees and consultants to whom stock grants
and plan options will be granted, the terms and provisions of the respective
stock grants and plan options, the dates such plan options will become
exercisable, the number of shares subject to each plan option, the purchase
price of such shares and the form of payment of such purchase price. Plan
options and stock grants will be awarded based upon the fair market value of our
common stock at the time of the award. All questions relating to the
administration of the 2003 Plan, and the interpretation of the provisions
thereof are to be resolved at the sole discretion of the Board or committee.

         Options granted under the 2003 Plan may be either incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended, or non-qualified options. The exercise price of incentive stock
options may not be less than 100% of the fair market value of the underlying
shares as of the date of grant. The exercise price of non-qualified options ay
not be less than 85% of the fair market value of the underlying shares as of the
date of grant. During the year ended December 31, 2004, options to purchase
80,000 shares of common stock were granted under the 2003 Plan and were
exercised. A total of 231,955 shares were available for grant as of December 31,
2004. The 2003 Plan terminates on December 18, 2013. In connection with the
Redomicile Merger, we succeeded to and assumed the obligations of China
Resources under the 2003 Plan.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On September 1, 2000, we entered to an office sharing agreement with
Anka Consultants Limited, a private Hong Kong company that is owned by certain
directors of our company, based upon which our head office in Hong Kong is
shared on an equal basis between the two parties. The office sharing agreement
also provides that our company and Anka Consultants Limited share certain costs
and expenses in connection with its use of the office. For the years ended
December 31, 2002, 2003 and 2004, we paid rental expenses to Anka Consultants
Limited which amounted to RMB285,000 (US$34,000), RMB249,000 (US$30,000) an
RMB232,000 (US$28,000), respectively.

         At December 31, 2003, we owed RMB1,603 (US$194) to an officer for
unpaid salary. This was paid in full during 2004.

         At December 31, 2003 and 2004, we owed RMB296 (US$36) to related
companies. These amounts are unsecured, interest-free and are repayable on
demand.

         At December 31, 2003 and 2004, we owed RMB333,000 (US$40,000) and
RMB205,000 (US$25,000), respectively, to a director of iSense, our wholly owned
subsidiary for advances received. These advances are unsecured, interest-free
and are repayable on demand.


                                       14

<PAGE>

                 MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING


                                   PROPOSAL 1
                          ELECTION OF CLASS I DIRECTORS

         Members of each class of our Board of Directors are elected to serve
for a three-year term. The three-year terms of the members of each class are
staggered, so that each year the members of a different class are due to be
elected at the annual meeting. Each director is to hold office for a three-year
term expiring immediately following the annual meeting of members held three
years following the annual meeting at which he or she was elected. However, at
our first annual meeting of members on December 31, 2004 following the
Redomicile Merger, the Class I Directors elected at that meeting held office for
a one-year term and the Class II Directors hold office for a two-year term. The
Class I Director are currently serving a term that is due to expire immediately
following the Annual Meeting. The Class II Directors are currently serving a
term that is due to expire immediately following our next annual meeting, and
the Class III Directors are serving a term that is due to expire immediately
following the next annual meeting thereafter.

NOMINEES

         At the Annual Meeting two Class I Directors are to be elected to serve
until the next annual meeting of members held to elect Class I Directors and
until his successor is elected and qualified or until his death, resignation or
removal. The Board of Directors proposes the election of the nominees named
below, who are currently Class I Directors having been elected at the 2004
annual meeting of our members. Unless authorization to do so is withheld,
proxies received will be voted "for" the nominees named below. If one or both of
the nominees should become unavailable for election before the Annual Meeting,
the proxies will be voted for the election of such substitute nominee(s) as the
present Board of Directors may propose. The person nominated for election has
agreed to serve if elected, and the Board of Directors has no reason to believe
that the nominees will be unable to serve.

         Our Board of Directors proposes the election of the following nominees
as a Class I Directors:
                                  Ching Lung Po
                                   Ng Kin Sing

         Class I Directors will be elected by a plurality of votes cast at the
Annual Meeting in person or by proxy and entitled to vote on the matter.

             THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION
                        OF THE CLASS I DIRECTOR NOMINEES.




                                       15

<PAGE>

                                   PROPOSAL 2

      RATIFICATION OF THE APPOINTMENT OF GHP HORWATH, P.C. AS INDEPENDENT
                        REGISTERED PUBLIC ACCOUNTING FIRM

         Our independent registered public accounting firm for the fiscal year
ended December 31, 2004 was GHP Horwath, P.C. The Audit Committee of the Board
of Directors has selected and approved GHP Horwath, P.C. to serve as our
independent registered public accounting firm for the fiscal year ending
December 31, 2005. Representatives of GHP Horwath, P.C. have been invited to
attend the Annual Meeting but are not expected to do so.

FEES TO HORWATH GHP HORWATH, P.C.

         The following table shows the fees that we paid or expect to pay for
the audit and other services provided by GHP Horwath, P.C. for the fiscal years
2003 and 2004.

                                       Fiscal 2004                Fiscal 2003

Audit Fees                             $  64,300                  $  50,000
Audit-Related Fees                            --                         --
Tax Fees                                      --                         --
All Other Fees                                --                         --
                                       ---------                  ---------

         Total                         $  64,300                  $  50,000

         Audit Fees -- This category includes the audit of our annual financial
statements and services that are normally provided by the independent auditors
in connection with engagements for those fiscal years. This category also
includes advice on audit and accounting matters that arose during, or as a
result of, the audit or the review of interim financial statements.

         Audit-Related Fees -- This category consists of assurance and related
services by the independent auditors that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported above under "Audit Fees" The services for the fees disclosed under this
category include consultation regarding our correspondence with the SEC and
other accounting consulting.

         Tax Fees -- This category consists of professional services rendered by
GHP Horwath, P.C. for tax compliance and tax advice. The services for the fees
disclosed under this category include tax return preparation and technical tax
advice.

         All Other Fees -- This category consists of fees for other
miscellaneous items.

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

         The Audit Committee has adopted a procedure for pre-approval of all
fees charged by GHP Horwath, P.C, our independent registered public accounting
firm. Under the procedure, the Audit Committee approves the engagement letter
with respect to audit, tax and review services. Other fees are subject to
pre-approval by the entire Audit Committee, or, in the period between meetings,
by a designated member of the Audit Committee. Any such approval by the
designated member is disclosed to the entire Audit Committee at the next
meeting. The audit fees paid to GHP Horwath, P.C. with respect to fiscal year
2004 were pre-approved by the Audit Committee.

                                       16

<PAGE>

         The ratification of GHP Horwath, P.C. as our independent registered
public accounting firm for the fiscal year ended December 31, 2005 requires the
affirmative vote of a majority of votes cast at the Annual Meeting in person or
by proxy and entitled to vote on the matter. Ratification by our members of the
selection of GHP Horwath, P.C. as our independent registered public accounting
firm is not required by applicable law. However, as a matter of policy and sound
corporate practice, we are submitting the selection to our members for
ratification at the Annual Meeting. If the members fail to ratify the selection
of GHP Horwath, P.C., the Board of Directors will reconsider the matter. Even if
the selection is ratified by our members, the Board of Directors may select a
different firm to serve as our independent registered public accounting firm at
any time during the fiscal year if it believes a change would be in the best
interests of our company and its members.

       THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF GHP
       HORWATH, P.C. AS INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR THE
                      FISCAL YEAR ENDING DECEMBER 31, 2005.
















                                       17

<PAGE>

                                MEMBER PROPOSALS

         Proposals of members that are intended to be presented by such members
at the annual meeting of members to be held in 2006 must be received by us no
later than June 30, 2006, in order to have them included in the proxy statement
and form of proxy relating to that meeting. We are not obligated to include a
member proposal in our proxy statement except to the extent required by
applicable law.

                                  OTHER MATTERS

         Management is not aware of any other matters to be presented for action
at the Annual Meeting. However, if any other matter is properly presented, it is
the intention of the persons named in the enclosed form of proxy to vote in
accordance with their best judgment on such matters.

                    HOUSEHOLDING OF ANNUAL MEETING MATERIALS

         Some banks, brokers and other nominee record holders may be
participating in the practice of "householding" proxy statements and annual
reports. This means that only one copy of our proxy statement may have been sent
to multiple members in your household. We will promptly deliver a separate copy
of either document to you if you write us c/o Corporate Secretary, Room 2105,
West Tower, Shun Tak Centre, 200 Connaught Road C., Sheung Wan, Hong Kong. If
you want to receive separate copies of the proxy statement in the future, or if
you are receiving multiple copies and would like to receive only one copy for
your household, you should contact your bank, broker, or other nominee record
holder, or you may contact us at the above address.

                           ANNUAL REPORT ON FORM 20-F

         A copy of our Annual Report on Form 20-F (without exhibits), including
audited consolidated financial statements for each of the three years ended
December 31, 2004, accompanies this proxy statement.









                                       18
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
