LIM lionore mining international limited.

xstrata bid details

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    Released in London:

    RNS Number:6744T
    Xstrata PLC
    26 March 2007


    NEWS RELEASE

    XSTRATA ANNOUNCES FRIENDLY C$18.50 PER SHARE CASH OFFER FOR LIONORE

    Highlights:

    * Cash Offer of C$18.50 per share

    * Premium of 16.5% to the 30-day volume weighted average price

    * Unanimously recommended by LionOre Board of Directors

    * Irrevocable lock-up agreements from shareholders representing
    approximately 19% of the outstanding LionOre shares

    * Represents a cash premium at a time of record high nickel prices

    * Consolidates Xstrata Nickel's position as a top-tier nickel producer
    with a global reach

    * Creates value for Xstrata Nickel through vertical integration and
    combination of complementary businesses


    Toronto and Zug, March 26 2007


    Xstrata plc (LSE: XTA.L, ZSE: XTA.S) ("Xstrata") and LionOre Mining
    International Ltd. (TSX/ASX: LIM, LSE: LOR, BSE:) ("LionOre") announced today
    that they have entered into a support agreement for an all-cash offer to acquire
    all of the issued and outstanding shares of LionOre by way of a friendly
    take-over bid (the "Offer"). The Offer is for C$18.50 per share, valuing the
    transaction at approximately C$4.6 billion (US$4.0 billion). The Offer
    represents a 5.8% premium over the closing price of C$17.49 per LionOre share on
    the Toronto Stock Exchange (the "TSX") on March 23, 2007 and a 16.5% premium
    over the volume weighted average price of the LionOre shares over the last 30
    trading days on the TSX.


    The support agreement between Xstrata and LionOre provides for, among other
    things, a non-solicitation covenant on the part of LionOre, subject to customary
    "fiduciary out" provisions that entitle LionOre to consider and accept a
    superior proposal, a right in favour of Xstrata to match any superior proposal
    and the payment to Xstrata of a termination payment of approximately C$130
    million, if the acquisition is not completed as a result of the superior
    proposal.


    In connection with the Offer, certain shareholders including directors and
    officers of LionOre have entered into irrevocable lock-up agreements with
    Xstrata pursuant to which they have agreed to deposit all of their LionOre
    shares under the Offer, subject to certain exceptions, representing
    approximately 19% of the issued and outstanding LionOre shares.


    The Board of Directors of LionOre, after consultation with its financial and
    legal advisors, has unanimously approved entering into the support agreement and
    recommends that LionOre shareholders tender to the Offer. JP Morgan, acting as
    financial advisor to the LionOre Board, has provided an opinion that the Offer
    is fair, from a financial point of view, to LionOre shareholders.


    The Offer represents the culmination of a strategic review process by the
    LionOre Board to maximize value for its shareholders. The Offer, in the view of
    the LionOre Board, represents the most attractive and certain value for LionOre
    shareholders. Xstrata Nickel has undertaken extensive and detailed due
    diligence to ensure that LionOre operations, projects and upside potential are
    understood and reflected in the Offer.


    Successful completion of the transaction will strengthen Xstrata's position as a
    significant participant in the nickel industry, and ensure that the growth
    potential in the LionOre portfolio can be optimized through its combination with
    Xstrata Nickel's downstream processing facilities. Xstrata Nickel will also
    increase its degree of vertical integration and gain geographic and technical
    diversification across its operations.


    The Offer documents are expected to be mailed by April 6, 2007. The Offer will
    be open for acceptance for a period of not less than 35 days and will be
    conditional upon, among other things, valid acceptances of the Offer by LionOre
    shareholders owning not less than 66 2/3% of the LionOre shares on a
    fully-diluted basis. In addition, the Offer will be subject to certain
    customary conditions, relevant regulatory approvals including in Canada,
    Australia and South Africa, the absence of a material adverse change with
    respect to LionOre, and a waiver of the LionOre shareholder rights plan
    implemented by the LionOre Board as it may pertain to the Offer. Once the 66 2/
    3% acceptance level is met, Xstrata intends to take steps available to it under
    relevant securities laws to acquire any outstanding LionOre shares. Xstrata may
    waive the conditions of the Offer in certain circumstances.


    Colin Steyn, President and CEO of LionOre said, "We are very pleased to support
    this Offer. The bid offers clear value to shareholders, and also positions our
    operations and employees as part of a growing, successful global nickel
    producer. This is an extremely attractive opportunity for our shareholders to
    lock in the substantial growth in value they have seen recently in their
    investment. To realize cash at this point in the commodity cycle eliminates the
    risk that our shareholders would remain exposed to as a stand-alone group, and
    enables them to realize value for their investment at a time of historically
    high nickel prices."


    Ian Pearce, CEO of Xstrata Nickel, noted, "The combination of LionOre with
    Xstrata Nickel brings together two very complementary businesses and creates
    significant opportunity for the enlarged Xstrata Nickel business. This is an
    important step in our strategy to grow Xstrata Nickel into a truly global nickel
    business. With LionOre, we unleash opportunities to create value through
    additional production, strong synergy potential, access to new markets and
    increased opportunities for growth, and through optimization of technology.
    There is a unique industrial logic in the combination of these two businesses
    which is recognized in the price being offered to LionOre shareholders."


    The acquisition of the LionOre shares will be financed through Xstrata's
    existing credit facilities and cash on hand.
 
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