hebei wenfeng chairmans letter to shareholders

Hi Fellow Shareholders

Copy of letter being sent to ADY shareholders from the Chairman of Hebei Wenfeng

Dear Admiralty Shareholder,
I am the Chairman of Hebei Wenfeng Industrial Group Co. Ud ("Hebei Wenfeng")
which is a privately owned corporation listed in China which includes a number of
companies within the Hebei Wenfeng Group engaged with mineral exploration,
mining and iron refining projects and assets in Canada, Africa, Latin America and
Chile. In 04 May 2010 Hebei Wenfeng was invited to submit proposals for joint
ventures with SCM Vallenar lron Company ("Vallenar"), a subsidiary of Admiralty
Resources NL ("Admiralty") , of which you are a shareholder.
Hebei Wenfeng undertook due diligence of the assets of Vallenar from July 2010 to
September 2010 in preparation to making an offer for purchase of assets and joint
venture opportunities with Admiralty and Vallenar. At no time during our due
diligence process was Hebei Wenfeng advised by Mr Prior or any other
representative of Admiralty or Vallenar that our company was not a suitable joint
venture partner or prospective purchaser of the assets of Vallenar.
On 01 September 2010 Hebei Wenfeng was advised by Mr Stephen Prior, the CEO
of Admiralty, that Admiralty had entered into a binding agreement with Icarus
Derivatives Limited (Tcarus Derivatives") for the sale of a significant portion of the
assets of Vallenar including those assets upon which Hebei Wenfeng was
undertaking due diligence. Hebei Wenfeng was denied the opportunity to place an
offer to the Board or shareholders of Admiralty.
Hebei Wenfeng subsequently received a copy of the offer made by Icarus Derivatives
(and guaranteed by Corsair Capital Limited). On 15 September 2010 Hebei
Wenfeng made an offer to Mr Prior that it would match and exceed the offer made by
Icarus Derivatives. On 18 October 2010 Hebei Wenfeng made an offer to Admiralty
to meet each of the terms and conditions of the Icarus Agreement and increase the
cash payments and Royalty payments by 50% above the Icarus transaction. On 28
October 2010 Hebei Wenfeng was informed by the Australian legal representative of
Admiralty to the effect that the Admiralty Board of Directors did not consider that its
50% higher offer was superior. At no time has Hebei Wenfeng been advised why a
50% higher offer was not superior.
Hebei Wenfeng has subsequently been informed that Mr Prior disclosed to the
shareholders at the EGM heId on 29 October 2010 in Australia that another offer had
been received but that the Board of Admiralty did not consider it superior to the
Icarus offer. Further we are informed that a director of Admiralty stated that the board
of Admiralty did not believe that the offeror could "complete the deal". If that director
was referring to Hebei Wenfeng and its 50% higher offer this statement is inaccurate.
In light of this information provided by the CEO of Admiralty and the extensive due
diligence process in which my company was involved, we provide you with the
following further information on Hebei Wenfeng and the offer which we made to the
Board of Admiralty.
1. Our Experience
Hebei Wenfeng Industrial Group Ca. Ud. was established in September 21st, 2009.
The business units hold investments in mining factoring, hotels and food services.
The group currently has 12,000 employees and the total assets are RMB 15 billion
Yuan (US$2.26 billion)

The companies that are part of Hebei Wenfeng Group include: Hebei Wenfeng lron &
Steel Ud., and Tangshan Wenfeng Qiyuan Pipe Ud. Hebei Wenfeng lron & Steel Ud
owns 49% of Tangshan Steel Plate Ud. (51% of the remaining is controlled by
Tangshan Steel).
Hebei Wenfeng Iron and Steel Co., Ud.
Hebei Wenfeng Iron and Steel Co., Ud. was Registered and founded in 2001. Hebei
Wenfeng lron and Steel is a Sino-foreign joint venture, which integrates iron making,
steel-making, steel rolling, sintering, energy and power and so on, with RMB 8.4
billion Yuan (US$1.26 billion) of total assets as well as more than 7,000 employees.
The main products are: billets, hot rolled plates, hot rolled strips and light rails. The
capacity of iron is 3.5 million tons per year, steel 3.5 million tons per year as well as
rolled steel 3.55 million tons per year.
Please refer to HebeiWenfeng lron and Steel Co., Ltd's website www.wfsteel corn
for more information on the company.
2. Our Financial Resources - : Hebei Wenfeng Iron & Steel Ltd.
The Hebei Wenfeng Industrial Group Company Limited also known worldwide as the
Hebei Wenfeng Group has been listed in the Top 500 Chinese Companies for the
years 2006, 2007, 2008 and 2009. The Hebei Wenfeng Industrial Group employees
12,000 persons and has USD$ 2.26 Billion in assets. One of the principie
components of the Hebei Wenfeng Industrial Group is the Hebei Wenfeng Iron &
Steel Company Limited a major player in the international iron mining and refining
sector which employees 7,000 persons and has USD$ 1.03 Billion in assets and
during the period encompassing January to October 2010 had a net profit of USD$
70.0 Million. Hebei Wenfeng Iron & Steel Company has activities in China, Canada,
Africa and Chile and is actively seeking opportunities to develop sources of iron feed
to its steel refineries. Hebei Wenfeng lron & Steel Company's Chilean subsidiary;
Minera San Fierro Limitada isdeveloping an integrated iron mining and commercial
port project in Chile's Third Region in addition to actively exploring for additional iron
mining opportunities in Chile.
3. Our Ofter
Our offer of 18 October 2010 reconfirmed Hebei Wenfeng Iron & Steel Ud would
meet each of the terms and conditions of the Icarus Agreement (to the extent
disclosed in the EGM circular) and offered to:
a) provide $6 million of guaranteed cash payments (compared to $4 million by
Icarus);
b) increase the high-rate royalty from 10 million tonnes to 15 million tonnes (an
increase of $25 million when compared to the Icarus Agreement); and
e) provide suitable financial guarantees.
In addition, the offer contained no due diligence conditions.
Hebei Wenfeng deeply regrets that it was not afforded the opportunity to provide this
information to the shareholders of Admiralty as this opportunity would have provided
you with a 50% higher return on your assets than the return on the agreement
between Admiralty and Icarus Derivatives.
Hebei Wenfeng remains open to continuing discussions with the Board, management
and shareholders of Admiralty in order to maximise the returns to Admiralty and its
shareholders from the Northern assets and the remaining assets. If you have any
enquiries please forward them to the following contacts.
Liu Wenfeng
tel: 0056-2-3641500
mail: [email protected]
Yours sincerely
Chairman
Hebei Wenfeng