PASMINCO AGREES TO SELL ERNEST HENRY SHAREHOLDING

Pasminco Limited has reached a conditional agreement for the sale of its 49% interest in the Ernest Henry copper-gold mine to Aquila Resources Limited.

The sale is for a consideration of $145 million cash, on completion of the transaction in late March. Proceeds from the sale will be used to retire debt.

The sale will complete the disposal of the non-zinc assets acquired by Pasminco through the takeover of Savage Resources Limited in 1999. That process realised a total of $247 million, after taking into account the $33 million Pasminco has received to date via loan repayments from Ernest Henry Mine and the $69 million received for the coal assets sold in July 1999.

The agreement provides an option for the purchaser to pay a higher sale price of $150 million incorporating an interest bearing deferred component of $35 million, repayable over a maximum period of 9 years. This will provide Aquila with some flexibility in funding the purchase.

Aquila and its financiers must complete due diligence in order to finalise the acquisition. The transaction is also subject to the non-exercise of the pre-emptive right of Mt Isa Mines Limited, the 51% owner and operator of the Ernest Henry Mine.

“It is taking us a little longer than we had originally predicted to dispose of the non-core Savage assets, but we are determined to maximise the value Pasminco shareholders realise from the transaction,” said Pasminco Managing Director and Chief Executive David Stewart. “Ernest Henry has made a solid contribution to our earnings during the past 21 months, but a minority investment in a copper-gold mine does not fit with our focus on zinc and lead,” Mr Stewart said.

The sale price compares to the carrying value of the investment at 31 December 2000 of $130 million, although the impact of capital gains tax on the equity portion of the transaction is likely to result in a breakeven result for the company.

For further information contact:

Peter Griffin
Group Manager Public Affairs
(03) 9288 0463 or 0419 314 265

Matt Pollard
Executive General Manager
Human Resources & Corporate Affairs
(03) 9288 0428 or 0408 387 229

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