letter to shareholders

3 April 2008
Dear Shareholders,
I am writing to you today to clarify the situation in relation to Solamind’s shareholding in
Solagran, which as you know, is in dispute with the ANZ Banking Group as a result of the
situation that has arisen with Opes Prime Stockbroking.
As many of you know, Solamind was the foundation for Solagran and remains very important
to Solagran. It is a company with 16 shareholders, 11 of whom are from Russia. They
include most of the key scientists responsible for what Solagran has today, and upon whom
Solagran relies on for its ongoing technological development, production and creation of
intellectual property.
For nearly 4 years after it listed, Solamind held its shares in escrow to signal that it had no
intention of ever selling its shares. They were released from voluntary escrow in early 2007.
At that time, Solamind made clear its intention to increase the size of its holding “in the best
interest of Solagran” (ASX Announcement dated 7 March 2007). Over the subsequent 9
months, it purchased a further stake of approximately 4 million shares. These purchases
were funded with a debt facility secured by Solamind’s existing holding.
I can assure you, both as the Chairman of Solagran and as a Director of Solamind, that in my
opinion, Solamind has done nothing wrong. It was never subject to a margin call. It is simply
one of the many victims of the collapse of Opes Prime.
There is a large number of shares involved, and our legal advice is that the claim to title of
Solamind’s holding of Solagran shares by the ANZ Banking Group Limited is open to dispute.
Both Solagran and Solamind are taking the best possible legal advice in this matter and
believe we have a number of alternative courses of action available to us to resolve it in a
manner that will protect the interests of all shareholders. We are already taking very specific
action on a number of fronts.
I would like to personally assure you that any action taken by either Solagran or Solamind in
this matter will be done with the interests of all shareholders in mind – be they big or small.
In the meantime, the company is progressing very well in a number of areas. The last
quarter’s sales of Bioeffective® A are up 83 percent on the December quarter, and as you
already know, our first commercial production facility is completed in Tomsk and is now in the
process of making the first commercial quantity of Bioeffective® R.
At the same time, I am delighted to welcome Dr Victoria Gorbacheva to the Solagran team.
She is a most impressive individual who will add great value to the company and is in a
position to very quickly assemble an effective Russian sales and marketing team.
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In conclusion I want to repeat my assurance to all shareholders that the Board is working
very actively and strongly to protect the interests of all Solagran stakeholders. We believe
we have the resources to deal with the current situation.
Yours faithfully,
Vagif Soultanov PhD, DSc (Hon)
Executive Chairman