21 August 2009Dear Fellow ShareholderI am writing to give you...

21 August 2009

Dear Fellow Shareholder

I am writing to give you background on why your board unanimously supports the proposed takeover offer from Mineral Resources and intends subject to an Independent Expert’s Report concluding that the offer is fair and reasonable to Polaris shareholders, and in the absence of a superior offer, to recommend that Polaris shareholders accept the offer.

Mineral Resources is offering one Mineral Resources share for every 12.5 Polaris shares you hold.
Based on the closing prices of Polaris and Mineral Resources shares on Friday 14 August 2009, being the last trading day before Polaris entered a trading halt, the offer is valued at $0.38 per Polaris share, representing:
•
a 26% premium to $0.30, the closing price of Polaris shares on the last trading day; and
•
a 42% premium to $0.27, the volume weighted average price of Polaris shares for one month up to and including the last trading day.
Mineral Resources is a mining services and processing company with operations in contract crushing, general mine services, infrastructure provision and recovery of base metal concentrate for export sales, including a Woodie Woodie manganese fines operation.
Mineral Resources’ proposal provides all of our shareholders with the opportunity to secure a number of important benefits in addition to the headline premium noted above, including:
•
Financial strength – The Combined Group will have a pro forma market capitalisation in excess of $651 million, minimal net debt and strong cashflows from its ownership of three key operating divisions1.
•
Diversified exposure – Polaris shareholders will gain exposure to the assets, operations and growth prospects of the Combined Group.
•
Continuing participation – Polaris shareholders will not only retain exposure to the assets, operations and growth prospects of Polaris, but will also be able to participate in the synergies between Mineral Resources and Polaris which are expected to be realised as a result of the offer and the creation of the Combined Group2.
1 Based on market prices as at 14 August 2009 and on the assumption of 100% acceptance of the offer by shareholders.
2 The extent of the synergies derived from the combined group will depend on the level of acceptances under the offer.
1
Depending on the level of acceptance of the Mineral Resources offer, eligible Polaris shareholders and optionholders may be entitled to Australian capital gains tax (“CGT”) roll-over relief in respect of the disposal of their Polaris shares and options pursuant to the offer. If so, eligible shareholders may defer any potential CGT liability, which may arise from the acceptance of the offer, until they dispose of the new Mineral Resources shares or options. Further details will be provided in our Target Statement.
Along with each of my fellow directors, I have advised Mineral Resources that, subject to the independent expert concluding that the offer is fair and reasonable to Polaris shareholders, and in the absence of a superior offer, I intend to accept the offer.
Your board, your management team and all of our employees have worked hard over a long period of time to create value for our shareholders, and this offer represents a major step forward in providing Polaris shareholders with operational diversification and increased financial strength to progress the development of the company’s iron ore projects. The proposal allows our shareholders to benefit from continued exposure to Polaris’ suite of iron ore projects via ownership of shares in Mineral Resources.
Mineral Resources is a rapidly growing company with a strong balance sheet and a diversified and growing portfolio of projects. Polaris’ iron ore projects will complement Mineral Resources’ current operating divisions and business strategy, and Mineral Resources has indicated that its investment in Polaris will form a key part of a new Specialist Iron Ore Resources business unit.
I am confident that under Mineral Resources’ control, the Polaris projects and the employees that work there will enjoy success. Your board believes that Mineral Resources has the financial, technical and marketing resources necessary to unlock the full potential of our asset base.
You can expect to receive Minerals Resources’ Bidder’s Statement in mid September and Polaris will prepare a Target’s Statement (including an Independent Expert’s Report) to follow in late September.
The offer must remain open for a minimum of one month from the dispatch of the Bidder’s Statement.
In the meantime, on behalf of my fellow directors, I thank you for the support that you have shown for the company and look forward to bringing this offer to a successful close.
Yours sincerely
Lewis Cross
Chairman
2
€