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 -------- 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 -------- 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 -------- 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.