when HER finally takes full control of dairi things should start moving. stong buy on this one from grange securities, huntleys, noalls, ozequities & jb were. IAX in canada are up 50% in 5 days (30 to 45c) and today's bid from HER values IAX at CDN60c. full announcement was released after market today. HER certainly carries plenty of sovereign risk however it's aussie gold operations are making the company look better by the day. where to from here?
HER - ASX Company Announcement
$gol2
4 June 2002
Part 3/7
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HERALD RESOURCES LIMITED
------------------------
HOMEX - Perth
-------------------------
Notice of General Meeting
INTERNATIONAL ANNAX VENTURES INC
DIRECTOR'S REPORT TO THE MEMBERS
At our Extraordinary Meeting of the Shareholders to be held on June
7, 2002 we will be asking you to approve a proposed Plan of
Arrangement with Herald Resources Limited ("Herald") of Perth
Australia. If approved, the Plan of Arrangement will result in Herald
purchasing all outstanding common shares of Annax in exchange for
common shares of Herald on a one-for-one basis. If the Plan of
Arrangement is compleed, Annax will become a wholly-owned subsidiary
of Herald, and Herald will be the surviving public corporate entity.
Shareholders of Annax will become shareholders of Herald.
A fairness opinion of the proposed Plan of Arrangement, prepared by
an independent valuator, is summarized as follows:
"Based on the findings and observations as well as analyses prepared
by the writer and other relevant factors applying to the companies,
it is the writer's considered opinion that the Arrangement on the
basis of 1.0 Herald share for each 1.0 Annax share is fair, from a
financial point of view, to the minority shareholders of Annax."
Based on the independent fairness opinion, your Board of Directors is
in favour of the Plan of Arrangemnt and recommends that shareholders
give favourable consideration to accepting the proposal. The proposal
is also in keeping with the average relative share price trading
range of Herald and Annax over the recent past. Additional
information pertaining to the Plan of Arrangement is more fully
disclosed within the enclosed Information Circular.
HERALD RESOURCES LIMITED
Herald is an Australian-based public mining and mineral exploration
company that has been listed on the Australian Stock Exchange for 53
years. Herald has a successful gold mine operating record in Western
Australia and has also operated exploration projects throughout
Southeast Asia, including Indonesia. It was Herald who brought the
Dairi Zinc Project in Sumtra to Annax in 1996. Since that time,
Herald has managed the exploration program at Dairi and has either
provided or arranged for over 80% of the exploration funding for the
benefit of Annax. Accordingly, Herald now owns approximately 73% of
the issued shares of International Annax. Herald has working capital
of approximately of CDN$5 million, no debt and a CDN$6 million line
of credit which it expects to utilize for commencement of production
at its Coolgardie Gold Project.
INTERNATIONAL ANNAX VENTURES INC
Annax is a Canadian-based public mineral exploration company listed
on the TSX Venture Exchange (formerly CDNX). Annax's major mineral
resource asset is the Dairi Zinc Project in Sumatra, Indonesia. In
spite of the highzinc grade and tonnage potential of the Dairi
Project, Annax has not been successful in arranging significant
funding for exploration at the Dairi Project. This has primarily been
due to a depressed zinc price and political uncertainty in Indonesia.
Accordingly, as Herald has been financing exploration during the past
year, Annax is indebted to Herald in an amount exceeding CDN$1
million.
ADVANTAGES OF A BUSINESS COMBINATION
A business combination with Herald will provide Annax shareholders
with an investment in a company that brings asset value comprised of:
* proven mine operating expertise
* established gold resources with near term production plans
* positive working capital
* a strong presence in the public marketplce
* a diversity of opportunities in a variety of metal commodities
* elimination of Annax's indebtedness to Herald
* development of new opportunities to advance the Dairi Project.
Your Board of Directors favours combining the assets of Annax and
Herald under one corporate entity that will be advantageous for all
shareholders, and therefore recommends that you, the Annax
shareholder, consider voting in favour of the Plan of Arrangement.
J S Brock
PRESIDENT
HER - ASX Company Announcement
$gol2
4 June 2002
Part 4/7
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HERALD RESOURCES LIMITED
------------------------
HOMEX - Perth
-------------------------
Notice of General Meeting
LETTER TO ANNAX SHAREHOLDERS
The directors of Herald Resources Limited (Herald) believe that you
will be best served financially by exchanging your International
Annax Ventures (IAX) shares for Herald shares as set out in the
Information Circular enclosed relating to a proposed Plan of
Arrangement whereby IAX will become a wholly-owned subsidiary of
Herald. If the Plan of Arrangement is approved it is believed that
funding for the Dairi project will be more readily available with the
projet under one corporate roof based in Australia, and held by a
company with experience in Indonesian operations. Herald also brings
the advantage of diversification, as it is not a one commodity
resource company, and has existing gold projects, on which a decision
to proceed to mining has already been made.
The independent fairness opinion included in the Information Circular
determined that the Plan of Arrangement was fair, from a financial
point of view, to the shareholders of IAX, even prior to the decision
to start gold mining operations.
Herald is very proud of its reputation as a conservative company. It
has not sought funds from its shareholders for over eight years.
Herald has been listed on the Australian Stock Exchane for 53 years,
the last twenty under current management. The 42.5 million shares on
issue have had no previous restructuring. This expresses the board's
desire to preserve shareholder equity.
The Herald board would welcome you as shareholders, and believe that
with your continued support Herald can enhance the value of the Dairi
project with the minimum amount of shareholder dilution possible. It
should be remembered that disposal of IAX shares in exchange for
Herald shares does not preclude you from the upside potential in the
Dairi Project. In addition to that upside, you obtain exposure in
another commodity, gold, including potential production in a short
time frame. Herald is domiciled in a politically stable country,
Autralia, with the gold operations in that country. This will help
balance the poor international perception of investment in Indonesia.
Due to Herald's gold assets and expectation of cash flow from the
reopening of the Coolgardie mine we expect more positive investor
interest than has been experienced by IAX in raising funds for the
Dairi project. In addition, we expect that considerable savings in
administration and management can be achieved for the group.
As pointed out in the fairness opinion, the market liquidity of
Herald shares is greater than that of IAX, hence giving you a greater
opportunity to liquidate or increase your holdings if you so desire.
As you may not be familiar in dealing in foreign shares, details
withn the Information Circular will help you understand the
procedure, and consultation with your advisor is recommended.
The following bullet points summarise Herald's position.
* Herald vended the Dairi project to IAX believing that exploration
finance would be more readily available via funding in Canada.
* The facts are that of all the funds raised by IAX since that date,
approximately 80% has been supplied by Herald or Australian brokers,
as IAX has found it extremely difficult to raise funds for Indonesian
projects since the BreX debacle.
* In addition to subscribed funding, Herald has made available a loan
facility to ensure that the Dairi project is kept in good standing.
This has now been drawn down by IAX to $1 milion, and is increasing
daily.
* Herald has managed all exploration programs on behalf of IAX, so
all of the Indonesia experience and goodwill developed in that
country (which is essential to operate in Indonesia) is due to the
efforts of Herald staff. IAX does not employ any direct technical
field people.
* If the Plan of Arrangement does not proceed, a large fund raising
will be required by IAX, which in today's market place will cause a
significant dilution. The fairness opinion addresses this
possibility.
* If the Plan of Arrangement does not proceed, any funds raised by
IAX will go first to repaying loans to Herald, making any such fund
raising even more difficult, whereas if the Plan of Arrangement
proceeds, these oans will cease to exist.
* Since the fairness opinion was prepared, Herald has announced the
reopening of its Coolgardie gold mine, which will generate cash flows
in the near future. Management of Herald believes that this increases
the value of Herald's gold assets, when compared to that used in the
fairness opinion. The cash flows generated from gold mining may be
used to fund the Dairi project after project finances are repaid.
* Herald staff are experienced miners, who have been operating mines
for many years. This experience will serve well for the development
of the Dairi project.
* Herald has many other exploration projects not highlighted in the
document. These are first class projects and could add considerable
alue to Herald's asset base. Please visit Herald's website on
www.herald.net.au to review these.
If the Plan of Arrangement does not proceed we greatly fear for the
future of the ownership of the Dairi project as Indonesia requires
regular exploration on their mining contracts. IAX has found it very
difficult to raise external finance in the past, and there is no sign
of improvement in the short term. After you have reviewed the
Information Circular, we urge you to support the Plan of Arrangement
as proposed jointly by both companies directors, and send your proxy
votes or attend the meeting to cast your vote to that effect.
T Allen
CHAIRMAN
HER - ASX Company Announcement
$gol2
4 June 2002
Part 5/7
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HERALD RESOURCES LIMITED
------------------------
HOMEX - Perth
-------------------------
Notice of General Meeting
NOTICE OF SPECIAL GENERAL MEETING OF SHAREHOLDERS
OF INTERNATIONAL ANNAX VENTURES INC
Take notice that a special general meeting (the "Meeting") of
shareholders of International Annax Ventures Inc ("Annax") will be
held at the Xchange Conference Centre, 2nd Floor, 888 Dunsmuir
Street, Vancouver, British Columbia on Tuesday, July 2, 2002, at
10:00 am for the following purposes:
1. To consider and, if deemed advisable, to pass a special resolution
in the form attached as Exhibit B to the Crcular, with or without
amendment, authorizing, approving and agreeing to the acquisition by
Herald Resources Limited ("Herald") of the outstanding shares of
Annax pursuant to an arrangement agreement dated as of May 23, 2002
between Annax and Herald (the "Arrangement Agreement") and plan of
arrangement (the "Arrangement") involving Annax, Herald and the
shareholders of Annax, all as more particularly described in the
Circular;
2. To authorize the directors, in their discretion, either to proceed
with or refrain from the Arrangement, if some or all of the
conditions set out in the Arrangement Agreement are not satisfied;
3. To consider and, if deemed advisable, to pass an ordinary
resolution authorizing and approving an amedment to the exercise
price of certain stock options previously granted to insiders of the
Company, all as more particularly described in the Circular;
4. To consider any amendment or variation to any matter identified in
this Notice; and
5. To transact such other business as may properly come before the
Meeting or any adjournment thereof. A complete description of the
Arrangement, which will be completed pursuant to the Arrangement
Agreement, is included in the Circular.
A shareholder who is unable to attend the Meeting in person and who
wishes to ensure that such shareholder's shares will be voted at the
Meeting, is requested to complete, sign, date and return the enclosed
proxy in the enclosed envelope and to forward i to Computershare
Trust Company of Canada, 4th Floor, 510 Burrard Street, Vancouver,
British Columbia, V6C 3B9 before the close of business on June 27,
2002.
Pursuant to an order of the Supreme Court of British Columbia (the
"Interim Order"), registered shareholders of Annax have been granted
the right to dissent in respect of the special resolution approving
the Plan of Arrangement and, if the Arrangement becomes effective, to
be paid the fair value of their shares in accordance with the
provisions of Article 5 of the Plan of Arrangement. To exercise such
right, the Corporate Secretary of Annax, prior to the Meeting, must
receive from the dissenting registered shareholder, a written
objection to the special resolution and th dissenting registered
shareholder must have otherwise complied with the provisions of the
Interim Order. The right to dissent is described in the Information
Circular. Failure to strictly comply with Article 5 of the Plan of
Arrangement may result in the loss of any right of dissent.
J S Brock
President
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