Offer Information

On 18 May 2012 UCL Resources Limited (UCL) announced its intention to make an offer to acquire all of the shares of Minemakers through an off-market takeover bid (UCL Offer).

Under the UCL Offer Minemakers shareholders are offered 1 UCL share for every 1.6 Minemakers shares held and 4.5 cents for every Minemakers share held.

You should have recently received a target’s statement from Minemakers in response to a bidder's statement from UCL in relation to its unsolicited, conditional cash and share takeover offer to acquire all of your Minemakers Shares (UCL Offer).  UCL's delay in sending its bidder's statement is due to the Australian Takeovers Panel finding UCL's original bidder's statement to be materially deficient and ordering UCL to issue a replacement bidder’s statement (Replacement Bidder's Statement).

Despite the recommendation to reject the UCL Offer, Minemakers remains willing to discuss and agree a fair transaction which combines UCL and Minemakers to the benefit of both sets of shareholders.

The reasons for Minemakers’ Board recommendation to REJECT THE UCL OFFER are as follows:

The Independent Expert concluded the UCL Offer is NEITHER FAIR NOR REASONABLE

The UCL Offer:

• is NOT FAIR, because the value of a Minemakers Share is higher than the consideration offered by UCL
• is NOT REASONABLE and there are a number of disadvantages to accepting the UCL Offer

The terms of the UCL Offer are unattractive for Minemakers Shareholders

The UCL Offer:

• is priced at a discount to Minemakers' trading values
• materially dilutes Minemakers Shareholders' interest in the Combined Group compared to under Minemakers' offer for UCL
• materially undervalues Minemakers' other assets, including the Wonarah project
• includes a mandatory cash component which, despite providing certainty of value, is unattractive, particularly given Minemakers is trading at historical lows
• is not conditional on achieving a 100% outcome

Minemakers has clear, methodical and achievable plans to maximise the value of both the Sandpiper and Wonarah projects

Minemakers is well progressed in the transition from explorer to developer by adding fertiliser industry and project development expertise to its Board and management team.

Minemakers has outlined clear, methodical and achievable plans to finance and develop the Sandpiper project.

Minemakers plans to develop the Wonarah project in a manner that minimises near-term cash outlay and maximises long-term shareholder value.

UCL's board and management team lacks the necessary skills, experience and creditility to maximise the value of the Combined Group

UCL does not have the same level of depth, fertiliser knowledge or project development experience as Minemakers.

UCL's conduct in rejecting Minemakers' attempts to combine the two entities and then making its own offer for Minemakers is hypocritical and wasteful.

UCL's own shareholders (excluding Mawarid) would hold less of the Combined Group under the UCL Offer than under Minemakers' previous offer for UCL.

UCL's disclosure practices are questionable.  For example, the Takeovers Panel declared that UCL's initial bidder's statement was materially deficient and found UCL failed to conduct itself in a professional and businesslike fashion.

UCL has a limited understanding of the Wonarah project and is not well placed to maximise its significant potential value.

A successful combination of Minemakers and UCL must create an entity that will be attractive to capital markets and maximise future fund raising options.  The UCL Offer fails the test

The board and management team proposed by UCL for the Combined Group is unlikely to have market appeal.

UCL's proposed funding arrangements with Mawarid are unattractive and would limit the financial flexibility of the Combined Group by providing Mawarid significant influence in future fundraisings.

The shareholding structure of the Combined Group is unlikely to be conducive to attracting institutional investors.

Minemakers is the preferred vehicle for consolidating ownership of the Sandpiper project.

 
To REJECT THE UCL OFFER, shareholders should simply TAKE NO ACTION.