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February 8, 2008 |
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ZINIFEX: Allegiance Says AUS$1/Share Bid is Inadequate Allegiance Mining NL has repeated its advice to shareholders to reject the takeover offer by Zinifex Ltd, stating that the implied premium offered by Zinifex is significantly less than for recent transactions in the mining sector. "Allegiance Directors have not accepted the AUS$1.00 a share offer, nor has our major shareholder, Jinchuan Group Limited," Allegiance Chairman Tony Howland-Rose said in a statement. "It remains unsolicited, opportunistic and inadequate." Allegiance said that analysis of other recent transactions in the mining sector showed that the Zinifex offer did not stack up. Allegiance found that the average premia in recent pending and completed Australian mid-sized base metal mining transactions is 78% to the closing price of the target company on the day prior to announcement of the takeover offer, significantly in excess of the implied premium of 41% Zinifex is offering. Further, Allegiance has undertaken a benchmarking exercise based on Xstrata's offer for Jubilee Mines. Allegiance believes that applying the enterprise value/resources multiples implicit in this benchmarking comparison to the Allegiance resource base gives an implied range per Allegiance share of AUS$1.29 to AUS$1.65 per share, which is substantially in excess of the Zinifex offer. This benchmarking data has been provided to shareholders to assist them in further understanding the Board's deliberations and recommendation. Mr. Howland-Rose also noted that: * Allegiance shares continue to trade above the Zinifex offer price. * In the four weeks since Zinifex's offer has been open it has only received acceptances of 0.03% (which equates to approximately 207,500 shares out of a total undiluted share register of approximately 774.9 million shares), showing the offer had not been well received by shareholders. * Recent exciting drilling results vindicate directors' optimism regarding likely continued growth in the Avebury resource base. * Allegiance has received approaches from a number of third parties and discussions are continuing. No proposal has yet been reached that is capable of being put forward to shareholders. "We believe we have an excellent year ahead," Mr. Howland-Rose said. "Allegiance is now well positioned to deliver long term benefits in terms of revenue and further discovery in the Nickel Province. We believe our shareholders will hold tight." For Further Information Contact: Media: Andrew Stokes, Third Person, +61 416 967 038 Shareholders: Information line on 1300 135 871 (foreign holders please dial +61 3 9415 4395) The Troubled Company Reporter-Asia Pacific reported on Jan. 21 that Allegiance is trading above Zinifex's offer price. Reuters notes that Allegiance's board has already rejected the bid, saying it undervalued the company's growth prospects. Zinifex, as widely reported by the media, wants control of Allegiance's Avebury nickel mine in Tasmania, which has a AU$3-billion supply agreement with China's Jinchuan Group Ltd. About Allegiance Mining Allegiance Mining is an Australian nickel mining company that is about to commission its first nickel project located in Tasmania. Its Avebury nickel project is due to start production in 1Q-08 and the company has an on-going exploration effort targeting nickel sulphide deposits. About Zinifex Ltd. Zinifex Limited, one of the world's largest integrated zinc and lead companies -- http://www.zinifex.com/ -- is headquartered in Melbourne, Australia. The company owns and operates two mines and four smelters. The mines and two of the smelters are located in Australia and supply the growing industrial markets of the Asian-Pacific region, including China. The company also has a zinc smelter in the Netherlands and the United States. The company sells a range of zinc metal, lead metal, and associated alloys in 20 countries. More than 80% of the company's products are distributed outside Australia, particularly in Asia, which is experiencing significant growth in construction activity and vehicle production. Zinc is used for steel galvanizing and die-casting and lead for lead acid batteries used mainly in cars and other vehicles. * * * The Troubled Company Reporter-Asia Pacific reported on Dec. 18, 2007, that Fitch Ratings affirmed Zinifex Limited's 'BB+' Long-term foreign currency Issuer Default Rating (IDR), following the announcement of an all cash offer for Allegiance Mining NL (Allegiance). Fitch said the outlook is stable. |
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