Ann: Becoming a substantial holder, page-84

Does the below seems more fair and reasonable to MIN shareholders or AGO shareholders.....


AGO CONTRIBUTING 40% OF EQUITY OF CONSOLIDATED ENTITY BUT SHAREHOLDERS ONLY BEING OFFERED 8.2% OF THE CONSOLIDATED ENTITY

Some comparisons between AGO and AWE (MIN's previous target):

- AWE net assets as at 31/12/17 were $232M. Deferred tax assets of $103M were actually recorded on the balance sheet of AWE also.
Therefore, book value less DTA were $129M;



- AGO net assets as at 31/12/17 were $301M. Deferred tax assets were not recorded on the balance sheet as the company and/or external auditors deemed in accordance with accounting principles that they would unlikely be used.

- Therefore, if we were to include the DTA in the balance sheet similarly to AWE, equity would be $801M in the AGO Balance Sheet as at 31/12/17 compared to AWE $232M. This is a $569M difference (A bidding company who is profitable and in the same industry as the target company may be able to utilise DTAs in full) - AWE made a FY17 loss of $227M, AGO had made a FY profit of $48M; and - the synergistic benefits between MIN and AWE had not been claimed by MIN to the same extent of the $180M per year in savings a takeover of AGO would provide the consolidated entity.

- MIN bid $526M for AWE and about $280M for AGO. - If MIN takes over AGO at the current valuation, there would be a substantial increase to the equity figure in the consolidated balance sheet; potentially $500m+ more than the $280m circa it has offered for AGO. This is mainly due to the deferred tax assets being shown in the MIN consolidated balance sheet that are currently not appearing in the AGO balance sheet.


- Although AGO is only being offered 8.2% of MIN, MIN's equity in its balance sheet would increase from $1.23B (as per HY report 31/12/17) to about $2.03N. 40% of the $2.03B (approximately $800M) would be the equity AGO is contributing to the consolidated entity yet AGO shareholders are being provided just over 1/5^th of the 40% it should be receiving.


Another point of interest:

Also port assets which were an intangible prior to 2015 contributed as much as $75M to AGO's equity. In 2015, they were written off completely to the tune of $68M.

This could be another asset written back by MIN once the takeover occurs given this is one of the key reasons why MIN would like to takeover AGO.

Therefore, one could say that well over 40% of the consolidated entity would be contributed by AGO if the write back of the port assets were to be included in the consolidated equity.