Gulf against takeover ?

Takeover battle?

Gulf does not want to let them take over.

I do not know what's behind it. Are the want a higher percentage share on the new company or fears the current Gulf management to loss their jobs?

Also unfair to compare their 5 mt/y project with the Metro's pre-szenario 1.95 mt/y

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3 December 2015

Dear Shareholder,

I refer to yesterday’s announcement by Metro Mining Limited (ASX: MMI) (“Metro”) foreshadowing a takeover bid to acquire all shares in Gulf Alumina Ltd (“Gulf”) having entered a pre-bid acceptance arrangement with a major shareholder.

As you are aware, Gulf’s Skardon River Bauxite Project is at an advanced stage of development that, subject to approval of the recently lodged EIS, will secure the last remaining permitting necessary to commence mine construction in 2016 ahead of production and first export planned for April 2017.

Your Directors, in consultation with major shareholders of Gulf, believe the Offer proposed by Metro materially undervalues our project as well as the prospective value of Gulf’s other bauxite rich tenements expected to be developed and funded by the robust cash flows from our maiden Skardon River Bauxite Project.

Although there is merit in combining the mining and production operations of Metro and Gulf in the Skardon River region, the share script offer does not consider the following merits we expect to exploit as a stand-alone project and the key advantages over Metro’s project proposal:

 Gulf’s project is of significantly larger scale at 5mtpa than Metro’s 1.95mtpa production plan;

 Gulf’s project is well advanced with substantial existing infrastructure already in place (airstrip, haul roads, camp, various buildings and port) while Metro is a greenfield operation with no equivalent infrastructure;

 Gulf’s tenements are strategically linked together with good port access while the Metro tenements are dispersed in the region, land locked with no common road access unless Gulf grants such access over its mining leases;

 Gulf has existing haul roads adequately serving its project needs over the life of the mine while Metro propose new haul roads to be built in an environmental sensitive zone in close proximity to Skardon River with significant presence of mangroves. The approval prospect of this plan by the environmental authority is extremely limited in our view;

 Gulf has an established and declared port at Skardon River while Metro is seeking to gain river access via a new port to be established in an environmentally sensitive zone and disadvantageously, further upstream;

 Gulf’s project is expected to commence construction and production well in advance of the Metro project that has

o yet to complete traditional owner negotiations,

o yet to have a mining lease,

o yet to produce a definitive feasibility study (DFS) on a revised project plan,

o still to secure an off-take agreement and

o still to commence the lengthy EIS process recently requested by the
regulators to gain approval to conduct its planned activities.

Gulf has completed all these. We have a traditional owner’s agreement and granted
mining leases, we have a near final DFS with substantially larger NPV (c.$500m)
than Metro’s, and we have an EIS that is in the last week of public notification before
regulators’ final assessment and approval is due in March/April2016;

 Gulf has the backing of a first tier offtake investor committed to a majority of our
bauxite exports and project funding which mitigates the development risk;

 Gulf has completed tendering processes and is in advanced discussions with a
number of parties in respect of the mine construction and operation contract, one of
them also offers funding solution. This packaged approach, once adopted, will
significantly minimise the execution and funding risks in bringing the project into
production.

I am confident that Gulf’s Board and management team can deliver this project that it has
carefully nurtured over the years to finally realise the superior returns the shareholders
deserve for their investment.

To bring the project to fruition, Gulf has been focused on a number of funding strategies
which, amongst others, includes a public listing of Gulf on a suitable Stock Exchange.
Your Directors believe the Skardon River Bauxite Project is already a significant project on
its own and its advanced status places the project well ahead of the Metro Bauxite Hills
Project. Metro’s unsolicited approach fails to recognise the key value differentials between
the two projects and should be rejected.

We recommend that shareholders do nothing until the Board provides a detailed response to
the Metro proposal in due course.

Should you wish to discuss the issue in the interim, please don’t hesitate to contact me.
Yours