rdi proposal

Company Announcements Office
Australian Securities Exchange Limited
Significant proposal received
Would see ARH play key role in 20+ Bt iron ore entity
Key points:
�� ARH receives a merger proposal from unlisted company Resource Development International Ltd (RDI)
�� RDI is controlled by ARH major shareholder Professor Clive Palmer
�� RDI proposes to control significant iron ore, nickel and energy interests, including iron ore entity with rights in excess of 20 billion tonnes
Timefull Investments
(Shougang Concord)
6.33%
�� RDI is currently finalising plans for a proposed A$5 billion IPO in late 2008 and listing on the Hong Kong Stock Exchange
Mount Sun Investments
Ltd (APAC Resources)
4.74%
�� ARH will continue to work closely with its partner Shougang to progress development of the Balmoral South Iron Ore Project Australian Minerals
(Hong Kong) Holding Ltd
3.49%
Australian iron ore company Australasian Resources Limited (ASX: ARH, “the company”) wishes to advise that it has received a proposal from Resource Development International Ltd (RDI) regarding a merger of the two companies. * escrowed until April 2009
Balmoral Project
Highlights
• Right to mine 1 billion tonnes of
magnetite iron ore.
• Strategic alliance with China’s fourth
largest steelmaker, Shougang
Corporation.
• Shougang has committed A$56
million to ARH and has the option to:
inject a further A$42 million; fully
fund the project through an interest
free debt facility; and purchase all
iron ore products from the Balmoral
South Project.
Media contact
PPR (WA) Mr David Tasker
Tel:+61 8 9388 0944
RDI is a company which has recently been formed to acquire substantial iron ore, nickel, exploration and energy interests, including rights to 20 billion tonnes of iron ore on the Balmoral tenements held by Professor Clive Palmer. It has announced plans to raise up to A$5 billion through an Initial Public Offering (IPO) in late 2008 and to list on the Hong Kong Stock Exchange (HKSE) and/or the Australian Securities Exchange (ASX).
Professor Clive Palmer, who holds approximately 66.37% of the shares in ARH, currently controls RDI. RDI’s directors are Professor Palmer and Messrs Domenic Martino and Clive Mensink, who are directors of ARH.
The proposal that has been presented to ARH provides an outline of proposed terms and the mechanism by which the merger may occur.
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The proposal currently does not constitute a formal offer by RDI for ARH shares. If the proposal is accepted by the Board of ARH, a Scheme Implementation Agreement will be executed between RDI and ARH to progress the opportunity.
Under the terms of the proposal, existing ARH staff would be engaged to manage RDI’s Iron Ore Division.
At present, the proposed terms and key features of the merger proposal are:
�� RDI will offer to acquire all shares in ARH for shares in RDI by means of a scheme of arrangement;
�� The proposal places a notional price of A$2.20 on each ARH share. The proposal provides that the consideration to be offered to ARH shareholders will consist of RDI shares, with the number of RDI shares to be issued for each ARH share to be determined by dividing the sum of A$2.20 by the A$ equivalent of the price of an RDI share offered under RDI’s disclosure document for its proposed initial public offer;
�� The total number of RDI shares proposed to be offered to the public and to ARH shareholders has yet to be determined. If the proposal is implemented, ARH shareholders would exchange their ARH shares for RDI shares and collectively hold a significant minority interest in the total RDI shares on issue;
�� The proposed merger would be conditional on RDI listing on the Hong Kong Stock Exchange. It is understood RDI may also consider applying to list on the Australian Securities Exchange;
�� Details of the timing of the proposed merger and the listing of RDI have yet to be determined. It is proposed that the merger and the listing would be completed by late 2008;
�� The merger would be conditional on capital gains tax rollover relief being available to ARH’s shareholders;
�� Any scheme would be subject to the approval of ARH’s non-associated shareholders, Court approval and any other necessary regulatory approvals;
�� Should terms of a proposed merger be agreed between RDI and ARH, ARH shareholders would be provided with an independent expert’s report as to whether the proposal is in the best interests of ARH shareholders;
�� International Minerals Pty Ltd (presently a 100% subsidiary of ARH) will continue to advance the Balmoral South Project per current plans with Shougang Corporation (Shougang); and
�� Under the proposal, ARH would become a subsidiary of RDI. The assets of ARH would form part of a significantly larger RDI asset base.
A Board committee of non-associated directors of ARH comprising Andrew Caruso, Nicholas Jukes and Paul Piercy has been formed to consider the proposal and conduct negotiations on behalf of the board.
The Board committee will be considering the merger proposal and its implications for all ARH shareholders, and will make a recommendation to ARH’s shareholders in due course.
Advisors will be appointed to assist in the further negotiation and consideration of the proposal and the implementation of any agreed scheme.
Shougang, ARH’s development partner for the Balmoral South Project, has been briefed on the RDI proposal. Shougang was open and receptive to the opportunity outlined by ARH. In the interim, the two parties will continue to advance current plans and efforts to obtain a Finance Offer from Shougang and develop the Balmoral South Iron Ore Project.
Plans to de-merge International Exploration Ltd from ARH and negotiations with Professor Palmer regarding the acquisition of the right to mine additional tonnes at Balmoral South, have been put on hold pending the outcome of further consideration and negotiation of RDI’s proposal. All other operational and corporate activity will continue as normal.
Further updates will be available from the ARH website, www.austresources.com.au, via a dedicated link.
Andrew Caruso
Managing Director
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