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Intention to Make Takeover Bid for PacMin Mining Corporation

Document date:  Thu 23 Aug 2001
Published:  Thu 23 Aug 2001 00:00:00
Document No:  200685
Document part:  A
Market Flag:  Y
Classification: 

PACMIN MINING CORPORATION LIMITED             2001-08-23  ASX-SIGNAL-G

HOMEX - Perth                                                         

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Sons of Gwalia Ltd ("SGW") today announced that it intends to
undertake an off-market takeover offer ("Offer") to acquire all of
the issued ordinary shares of PacMin Mining Corporation Limited
("PacMin") for a consideration of five (5) SGW shares for every
twenty-eight (28) PacMin shares.

Details of the Offer, including conditions, are set out in Schedule 1
to this announcement.

The Offer price for PacMin ordinary shares, based on SGW's closing
price on 22 August 2001, values PacMin at approximately A$159 million
or A$1.20 per PacMin share based on 131.9 million ordinary shares on
issue. This represents a premium of 29.4% to the PacMin closing share
price on 22 August 2001.

In addition, SGW intends to separately offer to acquire PacMin's
Convertible Preference Shares, on terms, the details of which are
also set out in Schedule 1.

RATIONALE FOR THE PACMIN ACQUISITION

1. The acquisition will be immediately earnings per share positive to
SGW.

2. The acquisition adds new long life, gold production to SGW'S Gold
Division. Combined gold production from SGW and PacMin for the 2002
financial year will be approximately 650,000-700,000 ounces hence the
merger of SGW and PacMin will create one of Australia's largest gold
producers.

3. SGW's gold resources will nearly double in Leonora and Laverton,
two of the most important gold regions of Australia and complement
SGW's dominant position in the Southern Cross region.

4. The scale and structure of the gold assets will enhance the
balance of SGW's portfolio of assets as the highly profitable
Advanced Minerals Division rapidly expands, producing 2 million
pounds of Ta(2)O(5) for the 2002 financial year.

5. As a result of the merger, SGW's average cash cost of production
for the 2002 financial year, is expected to reduce to approximately
$340-$360 per ounce.

6. Significant financial and operating synergies are expected to
result from the consolidation of PacMin's and SGW's Leonora and
Laverton operations.

Preliminary analysis estimates the value of these synergies to be in
the order of $8 million per annum. Such estimates reflect savings
that will materialise by combining the operations and do not include
amounts that may arise from the potential to rationalise and optimise
mining and milling operations in the region.

Additional gold production and the merging of each company's gold
hedge book will substantially enhance flexibility and the maintenance
of premium gold prices for all gold production.

7. Consolidation of ground positions in the Leonora and Laverton
regions will facilitate a rationalisation and enhancement of the
exploration effort in these regions.

OFFER FUNDING

The offer for PacMin ordinary shares is 100% scrip based.

SGW has secured an Acquisition Finance Facility from JPMorgan to
provide funding for the purchase of PacMin Convertible Preference
Shares.

In addition, should the Offer be successful, SGW intends to offer
shareholders the opportunity to subscribe for additional shares up to
a value of $3,000 through a Share Purchase Plan. Under the proposed
Share Purchase Plan, shares would be offered at an issue price
determined by reference to SGW's market price proximate to the
conclusion of the Offer.

MORE TO FOLLOW

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