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ARI
ARIM
ARM / Xstrata - Exercise of option
JOINT ANNOUNCEMENT
African Rainbow Minerals Limited
(Incorporated in the Republic of South Africa)
(Registration number 1933/004580/06)
JSE Share code: ARI
ISIN: ZAE000054045
("ARM")
Xstrata plc
(Incorporated in England)
(Registered number 4345939)
LSE Share code: XTA.L
ZSE Share code: XTA.S
("Xstrata")
Exercise Of Option To Acquire A Further 10% Interest In Xstrata"s South
African Coal Business, Excluding Goedgevonden Jv
1. INTRODUCTION
Further to the announcements dated 28 February 2006 and 6 July 2006 whereby
ARM and Xstrata announced the establishment of a major black controlled
coal mining company ("ARM Coal), ARM and Xstrata are pleased to announce
that ARM has exercised the option granted by Xstrata South Africa
(Proprietary) Limited ("XSA") to acquire a direct equity-based
participation interest in XSA"s coal business, excluding the Goedgevonden
joint venture, of 10%.
The exercise of the option will result in further meaningful and
sustainable empowerment ownership and involvement in XSA"s coal assets. The
exercise of the option further strengthens the relationship between ARM and
Xstrata and positions the parties to jointly pursue future opportunities.
2. TERMS OF THE OPTION
Under the terms of the option, ARM will subscribe for new participating
preference shares ("preference shares") in the capital of XSA for a
subscription price of R400 million payable in cash. The preference shares
will carry the same rights and obligations as the preference shares already
in issue save that no facilitation (relating to interest and capital
standstill arrangements and the application of the cash upstream principle
as more fully described in the announcement dated 28 February 2006) will be
provided by XSA. Accordingly, the preference shares will entitle ARM to
participate in 10% of the free cash flow of XSA"s existing coal operations
and dividends received from the preference shares will flow directly to
ARM.
3. CAUTIONARY ANNOUNCEMENT
A further announcement will be made on SENS and in the press in due course
as soon as the final transaction documents have been signed and the
financial effects have been finalised. Accordingly, shareholders of ARM are
advised to exercise caution when trading in their securities until such
time as a further announcement is made.
Johannesburg
31 August 2006
Financial adviser and sponsor to ARM Investment Bank to Xstrata
Deutsche Securities (SA) (Pty) Ltd Standard Bank
Attorneys to ARM Attorneys to Xstrata
Bowman Gilfillan Werksmans Inc.
Date: 31/08/2006 08:01:04 AM Produced by the JSE SENS Department
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