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Aurion Gold - Rejects takeover offer

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    No surprise!

    Announced on: 31/07/2002 20:35:36
    Part: B 798 words


    HOMEX - Sydney


    You should be aware that Placer Dome has revised its takeover offer
    for your shares. On Monday, 29 July, Placer Dome amended its offer by
    adding a cash payment of A$0.35 per AurionGold share to the original
    offer of 17.5 Placer Dome shares per 100 AurionGold shares. At the
    time of writing this valued your shares at $3.10.

    Placer Dome has declared that this is its final offer and the offer
    is free of conditions and is scheduled to close at 7.00pm (AEST), 7
    August 2002 (unless it is extended).


    The revised offer fails to address many of the shortcomings that were
    brought to the attention of shareholders in AurionGold's Target's
    Statement. The inadequacies of Placer Dome's offer are outlined
    below, and in further detail in the attached booklet. The booklet
    also details the various options available to shareholders.

    Your board believes the offer represents unacceptable value for your
    shares. It is over 10% below the $3.48 price at which AurionGold
    shares were trading before the Placer Dome bid was announced. In
    addition, the average purchase price for AurionGold shares since
    completion of the Delta/Goldfields merger has been $3.35 per share.
    At the close of trade on the NYSE on 30 July, Placer Dome's revised
    offer represented a 7% discount to this volume weighted average
    price. In the view of your directors, Placer Dome is offering an
    unacceptable price for your company having regard to the quality of
    AurionGold's assets and its future prospects.

    We are concerned about the consequences for AurionGold shareholders
    if they accept the offer (and receive shares in Placer Dome). Placer
    Dome shares have shown considerable volatility and the share price
    has collapsed by some 40% since the bid for AurionGold was announced.
    This fall could be exacerbated by future selling pressure resulting
    from accepting shareholders seeking to liquidate their Placer Dome
    holdings. In addition, there may be tax issues for any accepting
    shareholders (as outlined in the attached material).

    A shareholding in Placer Dome brings with it new risks for AurionGold
    shareholders. In particular, as at 31 December 2001, 65% of Placer
    Dome's gold reserves were in South Africa. The South African
    Government has initiated debate on the role of Black Economic
    Empowerment groups in the ownership of mining assets in that country.
    It has been reported that the South African Department of Minerals
    and Energy has proposed in a discussion paper that local black
    empowerment groups should, within 10 years, hold 51% equity in all
    new mining projects, and up to 30% of existing mining operations.
    This creates significant uncertainty, although it is not clear if, or
    how, this will affect Placer Dome's operations.

    In addition Placer Dome's recent June quarterly report confirmed
    declining gold production and a fall in operating earnings and cash

    You lose any potential benefit from AurionGold's franking credits. As
    a Canadian company, Placer Dome is unable to attach franking credits
    to dividends paid to Australian shareholders. If you accepted the
    offer, you could also be subject to Canadian withholding taxes of 15%
    on any dividends paid by Placer Dome. AurionGold has consistently
    paid higher dividends than Placer Dome, as indicated in our Target's
    Statement. Placer Dome has given no indication that it is going to
    improve its dividend performance.

    Most importantly, in considering whether to accept Placer Dome's
    offer or retain your AurionGold shareholding you should take into
    account AurionGold's strong future. As you are aware, the creation of
    AurionGold has already delivered significant value for shareholders.
    We have achieved cost savings and efficiencies in excess of those
    forecast at the time of the merger, and have recently announced
    initiatives to create further opportunities to unlock value.

    Our strategic Kalgoorlie landholding, successful exploration
    strategy, attractive earnings, strong balance sheet and historically
    successful hedging program all combine to underpin our short and
    medium term growth plans.

    You should be aware that the AurionGold board is scheduled to meet
    late on 12 August to finalise the accounts for the year ended 30 June
    2002, and to consider the declaration of a fully franked dividend to
    shareholders. Promptly after that meeting the board will announce the
    amount of the dividend and the record date for determining

    If you have any questions or comments, please call AurionGold's
    shareholder information line on 1800 65 65 68 or check our website at

    Each of your directors who has an interest in AurionGold shares
    intends to reject the offer, and does not intend to sell on market.
    We believe Placer Dome's offer undervalues our AurionGold shares and
    falls to compensate us for the strong future AurionGold offers.

    R F E Warburton

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