Abterra Ltd

(Extracted from Annual Report 2010)

Dear Shareholders,

On behalf of the Board of Directors, I am pleased to present to you the Annual Report of Abterra Ltd. ("Abterra", or the "Company" and together with its subsidiaries, the "Group") for the financial year ended 31 December 2010 ("FY2010"). We regret the delay in your receiving of our Annual Report (to which we would address recent concerns) and thank all shareholders for your support.

Overview of 2010

The global steel industry saw a record year with crude steel production amounting to 1,414 million metric tonnes¹ ("mmt"). China was the top steel-producing country, with approximately 626.7 mmt² produced in 2010. This drove demand for the steel commodities, namely iron ore, coking coal and coke.

While the steel commodities witnessed a recovery, our trading business was hampered by the inadequacy of suitable credit facilities held by the Group. Revenue declined 14% from S$151.9 million for the financial year ended 31 December 2009 ("FY2009") to S$130.2 million in FY2010. Revenue from the trading of metallurgical coke and coal decreased slightly from S$120.5 million in FY2009 to S$106.5 million in FY2010, while revenue from the trading of iron ore jumped 226% to S$23.8 million. To focus on our core products – iron ore and coke, the Group made a strategic decision to discontinue trading activities in other non-core products.

On 20 August 2010, the Company obtained shareholders' approval to undertake a share consolidation exercise ("Share Consolidation") to consolidate every twenty five (25) Existing Shares into one (1) consolidated share ("Consolidated Share"). The Company's Consolidated Shares were quoted and listed on 13 September 2010. We believe this will reduce the fluctuation in magnitude of the Company's share price and the percentage transaction cost for trading in each board lot of Shares. Furthermore, the Share Consolidation may make the Shares more attractive to serious investors, including institutional investors, providing a more diverse shareholder base.

In FY2010, the Group continued to push ahead with our strategy to be a vertically integrated supply chain manager of resources in the Asia Pacific region. We are confident that our continued drive to strengthen our hard commodities trading business through the development of our logistics and supply capabilities, will better position us to seize the market opportunities in the coming years.

During the year under review, we expanded our resource base into iron ore with the acquisition of an effective 22.8% stake in of Zuoquan Xinrui Metallurgy Mine Co., Ltd ("Xinrui"), which owns two iron ore mines with total reserves of 34.7 mmt and an annual production capacity of 400,000 tonnes per annum. In April 2011, we entered into a restated conditional sale and purchase agreement for the proposed acquisition of an additional 54.42% of the equity interest of Xinrui for an initial consideration of RMB870.72 million, subject to adjustments and contingent upon the valuation report to be conducted by an independent valuer. Upon completion of the proposed acquisition and subject to shareholders' approval, we will own 77.22% of the equity interest of Xinrui.

We are of the view that Xinrui will enable the Group to strengthen and secure our control over its iron ore supplies. With our plan to own a majority stake in this business, Xinrui is set to be an important link in our natural resources business chain. The payment of the consideration for the proposed acquisition will be funded by internal resources. The Company is actively exploring various options and will update shareholders when appropriate.

In February 2011, the Company also acquired a mining lease and property in relation to an iron ore mine of strategic importance in New South Wales, Australia, having made our beachhead into a crucial supply chain in the region. Alongside our investments in other assets, the Company is optimistic that the acquisition will contribute to our growth in the coming years.

1 Commodities Now, "World crude steel output increases by 15%: 2010", January 2011
2 China Mining Association, "China's crude steel output in 2010 totals 626.65 million mt", 21 January 2011

Addressing Auditors' Disclaimer of Opinion for FY2010

The Group's Auditor had issued a disclaimer of opinion on Abterra's FY2010 Financials. The Board noted that certain commercial actions taken by the Company resulted in the disclaimers of opinion and emphasis of matter by the Auditors.

Meanwhile, on 4 May 2011, the Company had appointed PricewaterhouseCoopers CM Services Pte Ltd ("PwC") as independent reporting accountant to carry out an independent review in respect of certain matters in relation to the Company's FY2010 Financial Statement. The Company has proposed to add to PwC's scope of review to cover all the other items listed in its Auditor's disclaimer of opinion on the Company's Financial Statements.

While Abterra is continuously pursuing acquisition opportunities, we are mindful of the constant need to strengthen internal controls and are currently reviewing our work processes to improve corporate governance.

Looking Ahead

Our acquisitions over the past year will form a steady stream of income going forward, as we continue to expand our core business in the trading of iron ore, coking coal and coke. These acquisitions reinforce the Group's commitment towards becoming a fully integrated supply chain manager.

Going forward, we hope to increase our stake in existing investments while actively seeking value investments.

Complementing our core trading capabilities, we had proposed on 25 March 2011 the adoption of the business of property investment, property holding and property development (the "Property Business"); and the business of owning and development of mines, including the mining, exploration, exploitation, production, sale and trading of minerals, resources and commodities (the "Minerals Business"), and all other businesses and activities related to the Property and Minerals Business, to the core business of the Company, subject to shareholders' approval.

We believe that the proposed addition of the Property Business will enable the Company to achieve long-term sustainable growth and to sustain and enhance shareholders' value. Our proposed diversification into the Minerals Business will allow the Company to achieve our long-term strategy of vertical integration and enable us to have control over the inputs in our core business. The addition of the Minerals Business would also help cushion against the volatility of our current resource trading business.

Our parent company General Nice Resources (Hong Kong) Limited has been in the minerals trading business in the People's Republic of China (the "PRC") for more than 18 years and owns property-related assets in the PRC. With its strong network in the PRC and expertise, we are confident that we will be able to leverage on their support to strengthen our foothold in China and in the region.

As a testament to our progress since General Nice Resources took over in October 2006, our net tangible asset ("NTA") has increased from S$1.3 million to S$250.0 million as at 31 December 2010.

Appreciation

On behalf of the Board of Directors, I would like to welcome on board Mr Chan Chun Tat Ray as an Independent Director on 26 July 2010. Given Ray's extensive experience in the financial industry, we will be able to tap on his vast experience in risk management and exposure.

We take this opportunity to thank our staff for their commitment and dedication, and our business partners and shareholders for their continued support and confidence in the Company's future. We look forward to your continuous support as we strive to build a strong foundation for the Company's future.

Yours sincerely,

Cai Sui Xin
Executive Chairman
Singapore, 11 August 2011