realease to ASX...this is turning out to be an entertaining...

realease to ASX...this is turning out to be an entertaining little tussle...great too watch.

Cdchi1

CopperCo assertion
CopperCo asserts that the Xstrata agreement represents “a curious reversal of strategy” by the Universal
board.
Universal’s response
Universal has never had a strategy of not dealing with the Roseby asset. However, the company was
frustrated by the lack of progress made by Bolnisi Gold NL in the last 12-18 months of the Bolnisi joint
venture on Roseby. Having bought the project back from Bolnisi, the company assessed ways by which
shareholder value could be further enhanced. The deal with Xstrata will, in the opinion of your directors,
provide an excellent opportunity to progress the Roseby feasibility study as rapidly as possible whilst at
the same time progressing and developing the exploration potential of the project.
Universal shareholders should gain significant benefits from the increased activity on the project.
CopperCo assertion:
“Universal’s core assets are being handed to Xstrata Copper for an unknown price and the synergies,
which under our proposal will be shared by Universal shareholders, we believe will now largely accrue
to Xstrata.”
Universal response:
This is misleading. Xstrata must earn its right to acquire a 51% interest in the Roseby Project. If it earns
that right, it must then pay a price to be agreed with Universal or, failing agreement, a price based upon
the fair market value at the time, as determined by an independent expert.
If Xstrata exercises its right to buy, Universal will receive what is likely to be a substantial cash payment
for the sale of an interest in the project.
The alternative proposed by CopperCo is for Universal shareholders to accept the CopperCo offer, which
would involve a transfer of an effective 60% interest in the Roseby Project to CopperCo shareholders in
return for an effective 40% interest in the economically unproven Lady Annie heap leach operation,
without any of the other benefits that the Xstrata alliance offers.
CopperCo asserts that it can deliver synergies. As your directors have previously said, we believe there
are more advantages for CopperCo shareholders than for Universal shareholders in combining Roseby
and Lady Annie. In any event it is far too early in the life of either project to try and identify synergies or
ascribe value to them.
The synergies to be gained by the Xstrata alliance include off-take and marketing agreements and access
to infrastructure, technology and technical advice from one of the world’s major mining companies.
Universal will also be advised of proposed project disposals by Xstrata. CopperCo simply cannot match
these synergies and is unlikely to be able to in the forseeable future.
The link with Xstrata will also accelerate exploration for, and development of, any mineralisation
deriving from exploration potential associated with the stratabound copper deposits at Roseby.
CopperCo assertion:
“The placement to Xstrata is only an effective premium per Universal share of 0.8 cents.”
Universal response:
This assertion by CopperCo is confusing and misleading to Universal shareholders.
Xstrata has agreed to pay 22 cents per share. This is a 37.5% premium to the closing price for
Universal shares on Friday 11 March, when the deal was signed. Xstrata is acquiring a 13.2%
interest in Universal, which is well short of a controlling interest.
CopperCo assertion:
“When will Universal shareholders receive a premium for control of Roseby?”
Universal response:
One fact is now clear. Universal shareholders are certainly not being offered a premium by CopperCo
to cede control of the Roseby Project.
For weeks, the value of the CopperCo offer has been “out of the money” when compared to the market
value of Universal shares, as shown in the graph below. The rise in the Universal share price following
the announcement of the Xstrata agreement has increased the disparity still further.
Consider the current value of CopperCo’s offer of 6 CopperCo shares for each of your Universal shares.
Using CopperCo’s closing price on 15 March 2005 of 2.1 cents the CopperCo offer values your Universal
shares at just 12.6 cents, compared to the closing price of Universal shares, on the same day, of 18.5
cents.
Based on these closing prices, the CopperCo offer is now at a discount of 31.9% to the value of
your Universal shares.
The second point to note in response to CopperCo’s question is that if Xstrata earns its rights to acquire
51% of the Roseby Project, Universal will receive a significant cash injection equal to the market value of
a 51% interest in the Roseby Project at that time. That market value will reflect the fact that Xstrata will
be gaining control of the project.
Universal would then hold a 49% interest in a project operated by one of the world’s leading mining
companies. It would also have significant cash reserves and other assets in its portfolio. Those cash
reserves would be available to improve returns to shareholders or invest in new growth initiatives.
In the unanimous opinion of your directors, the advantages of the Xstrata transaction vastly outweigh any
of the supposed benefits that CopperCo believes its offer provides to Universal shareholders.
_______________________________________
Your board looks forward to your continued support as we work hard for shareholders to unlock the value
we believe will be delivered through the successful development of the Roseby Project, now with
Xstrata’s support.
In the meantime, your directors continue to unanimously recommend that you reject CopperCo’s
offer.