oxr makes recommended offer for agincourt reso

29 January 2007
AUSTRALIAN STOCK EXCHANGE AND MEDIA RELEASE
OXIANA MAKES RECOMMENDED OFFER FOR AGINCOURT RESOURCES
Oxiana Limited (ASX:OXR) (Oxiana) today announced a scrip offer (the Offer) for all the issued shares in Agincourt Resources Limited, (ASX:AGC) (Agincourt) valuing Agincourt at A$415 million (1).
The Board of Agincourt has unanimously resolved to recommend that Agincourt shareholders accept the Offer in the absence of a superior proposal and has indicated that the directors intend to accept the Offer in respect of all shares and options they control. The Offer is also supported by Agincourt’s major shareholder, Newmont Mining Corporation, which has signed an option and pre-bid acceptance deed in respect of its 19.9% holding in Agincourt. A summary of the deed with Newmont is attached as Appendix A.
Oxiana’s Managing Director, Mr Owen Hegarty, said:
“The acquisition of Agincourt continues the Oxiana strategy of owning, developing and operating quality resource assets in the Asian/Australian region.
Agincourt’s Martabe Gold Project in North Sumatra, Indonesia, will significantly enhance Oxiana’s gold portfolio, increasing the company’s gold resource base to about 16 million ounces (including silver equivalents). Martabe will add an advanced and significant project in Indonesia to Oxiana’s recent exploration JV with Kalimantan Gold. It is Oxiana’s intention to maintain the focused approach to timely development of the Martabe project, subject to the results of the ongoing Feasibility Study.
Agincourt also has the controlling stake in Nova Energy Limited (ASX:NEL) (Nova), which holds the advanced Lake Way / Centipede uranium project in Western Australia. Nova represents another uranium opportunity for Oxiana which started with our investment in Toro Energy.
The Wiluna Gold operation in Western Australia also provides us with extra gold production and the opportunity to explore for more gold and for nickel resources in a prospective region. The infrastructure at Wiluna may also have future value in a development of the Nova “Lake Way” uranium project. Oxiana will carefully assess its strategy for Wiluna following completion of the Agincourt acquisition.
Overall the Agincourt package is another significant development step for Oxiana.”
OFFER TERMS
�� Oxiana is offering 0.65 Oxiana shares for every 1 Agincourt share.
�� The Implied Offer Price(1) represents a premium to Agincourt’s closing share price and volume weighted average price (VWAP)(2.) of:
Closing trading price on 25 January 2007 34%
- 5-day VWAP 35%
- 30-day VWAP 38%
- 90-day VWAP 53%
�� The recommended Offer is subject to a 90% minimum acceptance condition and other standard conditions as set out in Appendix B.
Notes:
(1) Equivalent to $1.924 per ordinary Agincourt share (Implied Offer Price) based on Oxiana’s closing trading price as at 25 January 2007 of $2.96.
(2) Based on Agincourt’s closing trading price of $1.44 and VWAPs as at 25 January 2007. OXIANA LIMITED │ Respect – Action – Performance – Openness │ WWW.OXIANA.COM.AU
Level 9, 31 Queen Street
Melbourne, Victoria 3000
T: +61 3 8623 2200
F: +61 3 8623 2222
E: [email protected]
ABN: 40 005 482 824 ASX OXR
OXIANA LIMITED │ Respect – Action – Performance – Openness │ WWW.OXIANA.COM.AU
Level 9, 31 Queen Street
Melbourne, Victoria 3000
T: +61 3 8623 2200
F: +61 3 8623 2222
E: [email protected]
ABN: 40 005 482 824 ASX OXR
Key benefits for Agincourt shareholders are:
�� A substantial premium to the Agincourt share price;
�� Improved share liquidity via ownership of Oxiana shares;
�� A share in a company with a strong balance sheet and the financial capability with which to develop Martabe and pursue other opportunities;
�� Exposure to Oxiana’s diversified portfolio of quality assets;
�� Access to an experienced management team with a strong operating and development track record, particularly in Asia; and
�� Continued interest in the Agincourt assets.
Commenting on the Offer, Agincourt’s Managing Director Peter Bowler said:
“This offer confirms the Agincourt Board’s view on the value of the company. The combination of Agincourt’s development projects with Oxiana’s team and financial capacity is excellent. We will be working closely with Oxiana to ensure that this Offer and our recommendation are put to Agincourt shareholders as soon as possible”.
Transaction Implementation
Oxiana and Agincourt have entered into a Transaction Implementation Agreement under which the parties agree to certain undertakings and arrangements to facilitate the making of the Offer. This includes the provision by Oxiana to Agincourt of a A$10 million interest bearing working capital facility. Key terms of the Transaction Implementation Agreement are summarized in Appendix C.
Offer to Option Holders
A separate offer will be made to all Agincourt option-holders with consideration as follows:
Agincourt options Oxiana shares offered
$1.15 (expiring 30 June 2010) 0.35 Oxiana shares per Agincourt option
$1.30 (expiring 30 June 2009) 0.28 Oxiana shares per Agincourt option
$1.36 (expiring 31 August 2009) 0.26 Oxiana shares per Agincourt option
Offer Process
Further information regarding the Offer will be provided in the Bidder’s Statement. It is anticipated the Bidder’s Statement will be delivered to Agincourt by the end of February 2007, and dispatched to Agincourt’s shareholders, together with the Target’s Statement, by mid- March. Under this schedule, Oxiana would target completion of the Offer by mid-April.
Oxiana’s financial adviser in relation to the Offer is Gryphon Partners and legal advice is being provided by Clayton Utz.
Owen L Hegarty
Managing Director
OXIANA LIMITED │ Respect – Action – Performance – Openness │ WWW.OXIANA.COM.AU
Level 9, 31 Queen Street
Melbourne, Victoria 3000
T: +61 3 8623 2200
F: +61 3 8623 2222
E: [email protected]
ABN: 40 005 482 824 ASX OXR
Background Information – Oxiana
Oxiana owns and operates the Sepon gold and copper mines in Laos, the Golden Grove base and precious metals operation in Western Australia and is currently constructing the Prominent Hill copper-gold mine in South Australia. Oxiana is also actively exploring in Laos, Thailand, China, Cambodia, Indonesia and Australia, with a strategy to expand its resource base in Australia, Asia and the Pacific.
Based in Melbourne, Australia, Oxiana is listed on ASX (Code: OXR) where it is included in the S&P ASX 100 Index. Oxiana also has a Level 1 American Depositary Receipt in the United States of America.
Oxiana has more than 4,000 employees and contractors in operations and offices in Laos and Australia.
The 30 June 2006 half year profit was $263.2 million with the full year results due about 21 February 2007. Oxiana’s market capitalisation was A$ 4.1 billion as at 25 January 2007.
Oxiana’s strategy has been to grow, through exploration and the development of high quality base and precious metal assets and the operation of these assets to the highest standards. Oxiana aims to create a positive legacy wherever it operates.
Background Information – Agincourt
Agincourt Resources Limited is an Australian domestic gold producer with an international outlook. The Company’s Wiluna Gold Mine in Western Australia is currently producing approximately 110,000 oz p.a.
In September 2006, Agincourt acquired the advanced Martabe Gold and Silver Project in Sumatra, Indonesia from Newmont Mining Corporation. Martabe is a world class project with a resource containing 5.8 million ounces of gold and 60 million ounces of silver, with potential for further resource expansions.
The Company also has a 57 per cent interest in Nova Energy an ASX-listed uranium developer and explorer with assets in Western Australia, South Australia and the Northern Territory, Namibia and Guinea, West Africa. Nova’s Lake Way/Centipede undeveloped uranium project in Australia has a resource of 9,000 tonnes of uranium.
Investor enquiries: Richard Hedstrom
Media enquiries: Natalie Worley
+61 3 8623 2200
OXIANA LIMITED │ Respect – Action – Performance – Openness │ WWW.OXIANA.COM.AU
Level 9, 31 Queen Street
Melbourne, Victoria 3000
T: +61 3 8623 2200
F: +61 3 8623 2222
E: [email protected]
ABN: 40 005 482 824 ASX OXR
Appendix A
Summary of Option and Pre-Bid Acceptance Deed with Newmont
The following is a summary only of the key terms of the Option and Pre-Bid Acceptance Deed between Oxiana and Newmont in respect of Newmont's 19.9% shareholding in Agincourt.
Option
Oxiana has a call option to acquire all of Newmont's shareholding in Agincourt in consideration for Oxiana shares equivalent in value to 0.65 of an Oxiana share in respect of each Agincourt share held by Newmont (Option).
The option is exercisable until:
• Newmont accepts the Offer;
• the Option is terminated by Newmont in the event an alternative offer that is at least 5% higher than the Offer (Higher Alternative Offer) is announced; or
• 180 days after the date of the deed.
Further Call Option
If a Higher Alternative Offer is made by a third party, Newmont may terminate the Option within 10 business days. If Newmont terminates the Option in these circumstances and Oxiana matches the Higher Alternative Offer within 10 business days of the announcement of the Higher Alternative Offer, Newmont has granted Oxiana a call option to acquire all of Newmont’s shareholding for the consideration offered by Oxiana in matching the Higher Alternative Offer.
Restriction on Dealing
Newmont has undertaken not to deal with the Option shares during the term of the deed except where Oxiana fails to match a Higher Alternative Offer within the 10 business day period referred to above.
OXIANA LIMITED │ Respect – Action – Performance – Openness │ WWW.OXIANA.COM.AU
Level 9, 31 Queen Street
Melbourne, Victoria 3000
T: +61 3 8623 2200
F: +61 3 8623 2222
E: [email protected]
ABN: 40 005 482 824 ASX OXR
Appendix B
Offer Terms
1. Terms
0.65 Oxiana Shares for each Agincourt Share.
2. Conditions
The offer under the Offer will be subject to conditions substantially as set out below:
2.1 (Minimum acceptance): that during, or at the end of, the Offer Period:
(a) Oxiana and its associates have relevant interests in at least 90% (by number) of the Agincourt Shares; and
(b) Oxiana and its associates acquire at least 75% (by number) of the Agincourt Shares that Oxiana offers to acquire under the Offer (whether under the Offer or otherwise); and
(c) Oxiana becomes entitled to compulsorily acquire all Agincourt Shares and Agincourt Options in accordance with Chapter 6A of the Corporations Act.
2.2 (No regulatory action): that, between the Announcement Date and the end of the Offer Period:
(a) no preliminary or final decision, order or direction is made or issued by any Regulatory Authority;
(b) no action, proceeding or investigation is announced, commenced or threatened by any Regulatory Authority; and
(c) no application is made to any Regulatory Authority (other than by Oxiana or an associate of Oxiana),
which is likely to or purports or threatens to restrain, prohibit, impede or otherwise materially adversely affect the making of the Offer, the acquisition of the Agincourt Shares by Oxiana, the rights of Oxiana in respect of Agincourt and the Agincourt Shares or the continued operation of the businesses of Oxiana, Agincourt or their subsidiaries (other than any action or decision by or application to ASIC or the Takeovers Panel in exercise of the powers or discretions conferred by the Corporations Act). For the purposes of this condition, a "Regulatory Authority" means any court or governmental, semi-governmental, administrative, statutory, judicial, quasi-judicial or other regulatory body, authority or agency (including ASIC, ASX and any other securities exchange or private entity which exercises regulatory functions), whether in Australia or elsewhere.
2.3 (No material adverse change): that, between the Announcement Date and the end of the Offer Period:
(a) no act, fact, matter, event or circumstance occurs, is announced, becomes public or otherwise becomes known to Oxiana, which has, will or is reasonably likely to result in a material adverse change in or in relation to Agincourt, a subsidiary of Agincourt or the assets, liabilities, structure, operation, business, financial or trading position or performance, profitability or prospects of Agincourt or its subsidiaries, other than any act, fact, matter, event or circumstance known to Oxiana or fairly disclosed in writing by Agincourt to Oxiana prior to Announcement Date;
(b) Oxiana does not become aware that any document filed by or on behalf of Agincourt with any Regulatory Authority prior to the Announcement Date contains a material inaccuracy or is misleading (whether by omission or otherwise) in a material respect; and
(c) without limiting paragraph (a), no person exercises or purports to exercise, or states an intention to exercise, any rights under any provision of any agreement or other instrument to which Agincourt or any subsidiary of Agincourt is a party, or by or to which Agincourt or any subsidiary of Agincourt or any of its assets may be bound or subject, which has or will or is reasonably likely to have a material adverse effect on Agincourt, a
OXIANA LIMITED │ Respect – Action – Performance – Openness │ WWW.OXIANA.COM.AU
Level 9, 31 Queen Street
Melbourne, Victoria 3000
T: +61 3 8623 2200
F: +61 3 8623 2222
E: [email protected]
ABN: 40 005 482 824 ASX OXR
subsidiary of Agincourt or the assets, liabilities, structure, operation, business, financial or trading position or performance, profitability or prospects of Agincourt or its subsidiaries, including as a result of:
(i) any monies borrowed by Agincourt or any subsidiary of Agincourt being or becoming repayable or being capable of being declared repayable immediately or earlier than the repayment date stated in such agreement or instrument;
(ii) any such agreement or other instrument being terminated or modified or any action being taken or arising there under;
(iii) the interest of Agincourt or any subsidiary of Agincourt in any firm, joint venture, trust, corporation or other entity (or any arrangements relating to such interest) being terminated, modified or required to be transferred or redeemed; or
(iv) the business of Agincourt or any subsidiary of Agincourt with any other person being adversely affected,
as a result (directly or indirectly) of the acquisition or proposed acquisition of Agincourt Shares by Oxiana.
2.4 (No disposal of Nova Energy Limited): that, between the Announcement Date and the end of the Offer Period, Agincourt does not dispose of, assign, transfer, encumber, grant any option over or in respect of, declare itself trustee of or otherwise deal with, dispose of or enter into any agreement, arrangement or understanding in respect of the shares held by Agincourt as at the Announcement Date in Nova Energy Limited ACN 111 599 154.
2.5 (No material transactions): that, except in accordance with any public announcement by Agincourt before the Announcement Date, none of Agincourt nor any of its subsidiaries does any of the following between the Announcement Date and the end of the Offer Period:
(a) other than in the ordinary course of its or their business, purchases or otherwise acquires, sells or otherwise disposes of, or offers or agrees to purchase, acquire, sell or dispose of, any property or assets (or any right, title or interest therein) the total consideration for which, or value of which, exceeds or would exceed $500,000 in aggregate;
(b) other than in the ordinary course of its or their business, enters into, or offers or agrees to enter into, any other agreement, arrangement, joint venture, partnership or other commitment of any kind which would require expenditure, or the foregoing of revenue, of an amount which exceeds or would exceed $500,000 in aggregate;
(c) declares or pays any dividends (other than in the ordinary course) or other distributions of profits or capital to any Agincourt shareholder;
(d) amends its constitution or the terms of issue of any shares, options or other convertible securities; or
(e) resolves or announces an intention to do any of the things referred to in paragraphs (a) to (d) above.
OXIANA LIMITED │ Respect – Action – Performance – Openness │ WWW.OXIANA.COM.AU
Level 9, 31 Queen Street
Melbourne, Victoria 3000
T: +61 3 8623 2200
F: +61 3 8623 2222
E: [email protected]
ABN: 40 005 482 824 ASX OXR
2.6 (No Prescribed Occurrences): that, between the Announcement Date and the end of the Offer Period, none of the events listed in sections 652C(1)(a) to (h) of the Corporations Act inclusive and 652C(2)(a) to (e) of the Corporations Act inclusive occur (other than the issue of Agincourt Shares pursuant to the exercise or conversion of options or other securities which had been issued and notified to ASX prior to the Announcement Date).
2.7 (Stock and financial markets): that, between the Announcement Date and the end of the Offer Period:
(a) the S&P/ASX Index 200 does not fall below 4875 for a period of 3 or more consecutive ASX Business Days; or
(b) the price of gold (as determined by the London pm fix) does not fall below US$550 for a period of 3 consecutive business days.
OXIANA LIMITED │ Respect – Action – Performance – Openness │ WWW.OXIANA.COM.AU
Level 9, 31 Queen Street
Melbourne, Victoria 3000
T: +61 3 8623 2200
F: +61 3 8623 2222
E: [email protected]
ABN: 40 005 482 824 ASX OXR
Appendix C
Summary of
Transaction Implementation Agreement
The following is a summary only of the key terms of the Transaction Implementation Agreement between Oxiana and Agincourt under which the parties agree to co-operate in relation to the necessary actions to facilitate the making of the Offer.
Conduct of Agincourt Business
Agincourt agrees to conduct its business in the ordinary course until the end of the Offer Period (including not entering into any related party transactions or material transactions) and to consult in good faith with Oxiana in relation to material matters regarding the conduct of the Agincourt business. In addition, Agincourt agrees to not deal in any way with the shares held by Agincourt in Nova Energy Limited.
Representations and Warranties
Mutual representations and warranties are given in relation to authorisation, capacity, no breach of continuous disclosure obligations and the accuracy of information exchanged between the parties.
Exclusivity
(a) During the period from the date of the Transaction Implementation Agreement until the termination of the Transaction Implementation Agreement, Agincourt must:
• No-shop - ensure that neither it nor any of its representatives take any actions with a view to obtaining any expression of interest or proposal from any person in relation to a competing transaction;
• No-due diligence - not permit due diligence investigations on it or any of its subsidiaries, or make available to any other person any information relating to it or any of its subsidiaries or any competing transaction;
• No-talk conditions - ensure that neither it nor any of its representatives negotiates or enters into any negotiations or discussions with any person regarding a competing transaction;
• No termination - ensure that neither it nor any of its representatives enters into any agreement requiring Agincourt to terminate the Transaction.
(b) Fiduciary duties exception - Despite the restrictions in (a) above, Agincourt shall be entitled to respond to an unsolicited superior proposal where failing to respond would constitute a breach of directors' fiduciary or statutory obligations, having received written advice from external legal advisers to that effect and Agincourt gives Oxiana prior written notice of the competing transaction.
Termination Rights
Either party may terminate the Transaction Implementation Agreement if:
• a majority of Agincourt Directors withdraw their recommendation of the Offer for any reason or Agincourt enters into any agreement or arrangement to support, pursue or effect a competing transaction;
• the other party remains in material breach of the Transaction Implementation Agreement for at least 7 business days after notice has been given by the party not in breach;
• the proposed transaction is permanently restrained or prohibited by a court or government or regulatory agency; or
OXIANA LIMITED │ Respect – Action – Performance – Openness │ WWW.OXIANA.COM.AU
Level 9, 31 Queen Street
Melbourne, Victoria 3000
T: +61 3 8623 2200
F: +61 3 8623 2222
E: [email protected]
ABN: 40 005 482 824 ASX OXR
• the Offer closes without becoming unconditional or Oxiana withdraws the Offer for any reason.
Reimbursement of Costs
(a) Agincourt agrees to pay Oxiana $4,000,000 for reimbursement of costs (including opportunity costs) if:
• subject to (b) below, a majority of Agincourt Directors withdraw their recommendation of the Offer for any reason; or
• Agincourt enters into any agreement or arrangement to support, pursue or effect a competing transaction.
(b) Agincourt agrees to pay Oxiana $2,000,000 for reimbursement of costs (including opportunity costs) if a majority of Agincourt Directors withdraw their support or recommendation of the Offer due to a superior competing transaction which subsequently lapses.
Loan Agreement
Subject to Agincourt's compliance with its obligation to consult with Oxiana regarding the conduct of the business, Oxiana shall lend to Agincourt $10 million to be used by Agincourt to fund its working capital requirements on agreed commercial terms. Oxiana shall be entitled to elect to convert the loan into shares in Agincourt at the volume weighted average price of Agincourt shares over the 5 days preceding the date of such election. The loan will be repayable in full within 90 days of the date of the Offer lapsing or immediately in the event of completion or success of a competing transaction.