Merger of Perilya and CBH Resources Creation of a globally - - PowerPoint PPT Presentation

Merger of Perilya and CBH Resources

Creation of a globally significant zinc and lead producer

26 March 2008

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Important notice

The purpose of this material is to provide general information about the proposed transaction between Perilya Limited (“Perilya”) and CBH Resources Limited (“CBH”). This material is not and does not constitute an offer, invitation or recommendation to subscribe for, or purchase any shares. Neither this material nor anything contained in it shall form the basis of any contract or commitment. Reliance should not be placed on the information or opinions contained in this material. This material does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. Any decision to purchase or subscribe for shares should only be made after undertaking an independent assessment and determination as to the information to be contained in the Scheme Booklets to be subsequently issued and after seeking appropriate financial advice. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this material. To the maximum extent permitted by law, Perilya, CBH and their affiliates and related bodies corporate, and their respective officers, directors, employees, agents and advisers disclaim any liability (including, without limitation any liability arising from fault or negligence) for any loss or damage arising from any use of this material or its contents, including any error or omission therefrom, or otherwise arising in connection with it. Any forecasts and other forward-looking statements set out in this material are based on a number of estimates, assumptions and pro forma adjustments that are subject to business, economic and competitive uncertainties and contingencies, with respect to future business decisions, which are subject to change and in many cases outside the control of Perilya and CBH. Any forecasts contained in this material may vary from actual financial results, and these variations may be material and, accordingly, neither Company nor their Directors can give any assurance that the forecast performance in any forecasts or any forward-looking statement contained in this material will be achieved. Neither Company undertakes to revise the material to reflect any future events or circumstances. This material may not be lawfully published in some jurisdictions or may only be provided to certain persons and you must not view this material if to do so would be unlawful in your jurisdiction or may otherwise place either Company under obligations which it has not complied with. All figures are expressed in Australian dollars unless stated otherwise.

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Presenters

Stephen Dennis Chief Executive Officer Patrick O’Connor Chairman

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Agenda

1 2 3 Merger summary Transaction rationale Indicative timetable

S ECTION 1 Merger summary

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Merger of Perilya and CBH

Unification of Broken Hill ownership for the first time —significant operational efficiencies and value creation

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Creation of a globally significant zinc and lead producer

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Significant reserve and resource inventory with attractive commodity mix

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Quality portfolio of base metal assets at varying stages of development

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Increased equity market scale and ongoing liquidity

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Merger highlights

• 1 Perilya share for every 3 CBH shares, plus
• CBH shareholders to receive 1 listed Perilya option for every 20 CBH shares held
• with an exercise price of $2.00 and a December 2010 expiry
• CBH shareholders to receive an interest in Kimberley Metals Limited, to be listed on an internationally

recognised securities exchange, consisting of advanced stage CBH exploration assets

• through a share distribution expected to be 1 Kimberley Metals share for every 9.2 CBH shares held
• CBH listed convertible notes replaced with listed convertible notes in the Combined Group issued on

substantially the same terms

Merger terms Unanimous board recommendation and support of CBH’s largest stakeholder

• Merger unanimously recommended by CBH’s Board in the absence of a superior proposal and subject to

Independent Expert concluding the merger is in the best interest of CBH security holders

• Toho (CBH’s largest shareholder (25.5%) and noteholder (25.5%)) has publicly stated that it will support the

merger in the absence of a superior proposal

• A separate Toho convertible note (approx. $14 million) will be converted by Toho into ordinary shares in CBH

(up to the maximum allowed by law) with the balance of this note replaced with a convertible note over the Combined Group

Implementation

• Merger to be implemented via interdependent schemes of arrangement for the CBH ordinary shares and

convertible notes

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Merger highlights

• Perilya’s shareholders will own 41% and CBH shareholders 59% of the Combined Group respectively1
• Approximately 479 million of shares on issue upon completion of the interdependent schemes
• Significant balance sheet flexibility with 31 December 2007 pro forma cash of $313 million and indebtedness
• f $243 million (including $187 million in convertible notes due in 2012)

Ownership and capital structure

• The Proposed Merger will approximately reflect the relative market values of both companies as at 19 March

2008

• Premium of 27% (excluding the value of Kimberley Metals) based on the volume weighted average of the

closing prices on ASX of Perilya and CBH shares for the 1 month period leading up to and including 19 March 2008, the last day of trading before both companies went into trading halt

Offer terms

• CBH shareholder and CBH noteholder approval at interdependent schemes
• Court approval of schemes
• No unusual conditions
• Mutual break fee of $2 million payable in specified circumstances

Offer conditions and break fee

Notes: 1. Not including impact of exercise of Perilya options issued as consideration to CBH shareholders

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Merger highlights

• Kimberley Metals to hold Mineral Hill, Sorby Hills, Constance Range and certain other pre-

development assets not required for operation of the Endeavor Mine, Panorama Project and Broken Hill operations

• Separation to be effected through equal access capital reduction (requires approval of 50% of the

shares voting)

• Separation not conditional upon completion of proposed CBH / Perilya merger
• CBH shareholder meeting to approve capital reduction likely to take place prior to merger scheme

meetings Separation of certain of CBH’s early stage assets

• Board will consist of four Perilya directors and three CBH directors and will provide an appropriate

blend of industry, technical and commercial experience

• Patrick O’Connor will be Chairman of the Combined Group and Stephen Dennis will be Managing

Director Board and senior management

S ECTION 2 Transaction rationale

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S ummary of merger benefits

• Benefits and efficiencies will include
• Timing of Rasp mining and development brought forward
• $70 million savings from the eliminated capital requirement for a mill at Rasp mine
• Significantly lower milling unit costs from utilising spare capacity at Perilya’s Broken

Hill concentrator

• Combined resources provides greater flexibility and reduced risk to production
• Expected to add material life to Broken Hill mining through efficient access to combined

resources, elimination of tenement boundaries and access to remnant ore Unification of Broken Hill ownership — significant operational efficiencies

• Combination of Broken Hill and Endeavor will provide the Combined Group with a material

presence in Western New South Wales (a globally significant base metals region)

• Proximity between the two production centres should allow for increased flexibility

regarding staff and pooling of common resources

• The Combined Group will have opportunities to reduce corporate overhead across both

sets of operations Additional

• perational benefits
• Operating mines – Broken Hill (including Rasp mine), Endeavor and Flinders

(Beltana)

• Development projects – Rasp, Potosi, North Mine Deeps, Panorama, Mt Oxide and

Flinders (Reliance)

• Exploration – Broken Hill, Flinders, Cobar Basin, Kangaroo Caves, Napier Range,

Fossil Downs, Hera etc Quality portfolio of base metal assets at varying stages of development

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S ummary of merger benefits

• Key assets all located in Australia

Maintenance of low sovereign risk

• Pro forma equity market value of approximately $491 million, placing it within the

top 40 of ASX listed mining companies

• Enhanced scale is likely to provide greater liquidity for investors. Perilya is a

member of the S&P/ASX 200

• Enhanced scale to provide stronger base to assess further growth opportunities

Increased equity market scale and ongoing liquidity

• Reserves of 2.2 million tonnes of zinc, 1.1 million tonnes of lead and 186,000

tonnes of copper

• Resources of 5.1 million tonnes of zinc, 3.0 million tonnes of lead and 470,000

tonnes of copper

• Gold exposure through Hera
• Based on the Combined Group’s pro forma enterprise value of approx $418

million, the company would be trading at a EV/Resource multiple of only approximately US$37/t of contained zinc equivalent Significant reserve and resource inventory with attractive commodity mix

• The merger will create a globally significant producer of zinc and lead
• Pro forma annual production (based on 12 months to December 2007 and including 96,100

tonnes from Beltana) of:

• 220,100 tonnes of zinc
• 71,700 tonnes of lead

Globally significant zinc and lead producer

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Operational efficiencies at Broken Hill— lease boundaries

Plan view of Broken Hill mineral assets Existing Broken Hill mineral assets of Perilya and CBH affected by lease boundaries

B r

• k

e n H i l l C i t y CBH Leases Perilya Leases Perilya Leases

Satellite Pits Southern Extension Southern Operations Centenary North Mine North Mine Deeps Flying Doctor Potosi Northern Boundary Central Remnants Western Mineralisation Southern Boundary

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Operational efficiencies at Broken Hill— lease boundaries

For the first time all Broken Hill assets will be under same ownership Line of lode

Satellite Pits Flying Doctor Potosi North Mine Deeps North Mine Northern Boundary Centenary Western Mineralisation Central Remnants Southern Extension Southern Operations Southern Boundary

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Operational efficiencies at Broken Hill— financial benefits

Flexibility and reduced risk

• increased ore sources provide greater flexibility, enhanced scheduling and reduced risk in production plan

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Capital costs savings at Rasp (approximately $70 million) through utilising the Perilya concentrator Lower cost from fully utilising capacity of existing Southern Operations concentrator and tailings infrastructure

• current through-put of approximately 1.8mt per annum could be increased to 2.8mt per annum which would

materially lower the cost structure of Perilya’s Broken Hill mill Collective approach to recovery of mineralised tailings in tailings storage facility and stope fill Reduced power costs to Rasp Mine through use of Perilya infrastructure and supply terms Significant exploration lease holding in Broken Hill region as a result of combining assets Ability to rationalise and standardise equipment and optimise the use of residential workforce

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Very significant benefits to both sets of shareholders from unified ownership

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Life of mine extensions to 15 years plus

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Quality portfolio of assets at varying stages of development

Suite of exploration, development and operating assets Exploring Feasibility Producing Developing

Southern Ops North Mine Potosi Flying Doctor North Mine Deeps Flinders (Beltana) Flinders (Reliance) Mount Oxide Pinnacles

Endeavor Panorama Broken Hill (Rasp) Hera

Zinc, Lead Zinc, Lead Zinc, Lead Zinc, Lead Zinc Copper Zinc, Lead Zinc, Lead Zinc Zinc, Lead Zinc, Lead Polymetallic Zinc Copper

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Reserves Ore (kt) Zn (%) Pb (%) Cu (%) Endeavor 17,900 5.5 3.2 0.2 Panorama 10,000 3.7 – 1.5 Resources Ore (kt) Zn (%) Pb (%) Cu (%) Endeavor 27,400 6.5 3.7 0.2 Broken Hill 10,000 4.3 3.5 – Panorama 15,500 3.5 – 1.3 Kangaroo Caves1 1,700 9.8 – 0.6 Hera 2,200 4.2 3.1 0.2

S ignificant reserve and resource inventory

Perilya CBH

Reserves Ore (kt) Zn (%) Pb (%) Cu (%) Broken Hill 11,200 6.7 4.9 – Flinders 160 38.1 2.8 – Resources Ore (kt) Zn (%) Pb (%) Cu (%) Broken Hill 18,200 10.2 8.4 – Flinders 970 29.8 2.1 – Mount Oxide 15,500 – – 1.3

Perilya assets CBH assets Mount Oxide Broken Hill Beltana / Flinders Endeavor Panorama Sorby Hills CBH assets to be demerged Mineral Hill Hera Constance range

Reserves and resources spread across several quality Australian base metal assets

Notes: 1. 100% basis. CBH own 60% 2. Perilya JORC reserves and resources as at 30 June 2007. Mt Oxide as at 19 February 2008 3. CBH JORC reserves and resources as at 30 June 2007. Panorama as at 18 December 2007

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Combined Group Zinc (kt) 814 1,355 2,169 Lead (kt) 555 573 1,128 Copper (kt) – 186 186 Gold (koz) – – – Total Zinc equiv (kt) 1,466 2,666 4,132

S ignificant reserve and resource inventory mix

Reserves (contained metal) Resources (contained metal) Combined Group Reserves split 1 Combined Group Resource split 1

Combined Group Zinc (kt) 2,148 2,946 5,094 Lead (kt) 1,551 1,432 2,983 Copper (kt) 203 267 470 Gold (koz) – 241 241 Total Zinc equiv (kt) 4,667 5,643 10,309

Note: 1. Zinc equivalency calculation based on spot metal prices as at 20 March 2008 2. Perilya JORC reserves and resources as at 30 June 2007. Mt Oxide as at 19 February 2008 3. CBH JORC reserves and resources as at 30 June 2007. Panorama as at 18 December 2007

Zinc equivalent resource base of over 10.3 million tonnes

34% 49% 16% 1% Zinc Lead Copper Gold 32% 53% 15% Zinc Lead Copper

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100 200 300 400 500 600 700 Teck Cominco Limited Zinifex Limited Falconbridge Limited Hindustan Zinc Ltd Boliden AB Xstrata Volcan Cia Minera S.A.A. Anglo American plc Combined Group Industrias Peñoles SA de CV Cia Mineira de Metais (CMM) Glencore Perilya Limited Breakwater Resources Ltd HudBay Minerals Inc. Lundin Mining Corporation BHP Billiton Southern Peru Copper Milpo CBH Resources Omnium Nord Africa (ONA) Grupo Mexico SA de CV Inmet Mining Corp Apex Silver Mines Limited Ivernia West plc Agnico-Eagle Mines Ltd Newmont Mining Corporation Oxiana Limited Compañía Minera Atacocha S.A.A. Kumba Resources Kt payable zinc 100 200 300 400 500 600 BHP Billiton Xstrata AG The Doe Run Company Teck Cominco Limited Minera Volcan Glencore Combined Group Hindustan Zinc Western Mining Zinifex Industrias Penoles Anglo American plc New Boliden Perilya Limited Lundin Mining Corporation Shenzhen Zhongjin Lingnan Yunnan Chihong Metallurgy ZGH Boleslaw Mengzi Mining Industry Ltd Omnium Nord Africain Hecla Mining Solway Investment Fund Votorantim Grupo Fernadini Gansu Nonferrous Metals Exxaro Resources Southern Copper (ex SPCC) Buenaventura Blue Note Mining Inc CBH Resources Kt payable lead

S ignificant zinc and lead production

Based on industry estimates for the 12 months to December 2007, the Combined Group would have been a Top 10 producer of Zinc and Lead Top 30 global zinc producers Top 30 global lead producers

Source: Zinc data taken from AME and Lead figures taken from Brook Hunt.

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Enhanced equity market scale and ongoing index inclusion

The Combined Group will be one of the 40 largest mining companies on the ASX. Perilya is already a member of the S&P / ASX 200 Mid sized ASX listed base metal companies

Source: IRESS Notes: 1. Based on closing prices on ASX as at 25 March 2008 2. CBH equity value based on offer consideration as at 19 March 2008 3. Perilya equity value based on closing price on ASX as at 19 March 2008 and undiluted shares outstanding

• 100

200 300 400 500 600 700 800 900 1,000 Allegiance Kagara Mirabela Albidon Aditya Birla Herald Mincor Combined Group Cga Mining Terramin CBH Resources² Jabiru Indophil Admiralty Compass CopperCo Perilya³ Tamaya Kings Minerals Heron Aim Fox Matrix $ million

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Management team and Board

• Stephen Dennis to be Managing Director of Combined Group
• Len Jubber will not take up a place on the Board of the Combined Group
• Senior management to be drawn from existing teams
• Emphasis will be on retaining high quality personnel that both organisations bring

to the Combined Group

Combined Group Board Board and senior management will combine resources and commercial experience from both Perilya and CBH Combined Group Management

• Patrick O’Connor and Stephen Dennis to be Chairman and Managing Director

respectively of Combined Group

• Remainder of board to comprise 3 current Perilya Board members and 2 CBH

Board members (Jim Wall and a representative from Toho Zinc)

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Kimberley Metals Proj ects

• Perilya will not acquire CBH’s interests in the Mineral Hill, Sorby Hills or Constance Range projects and certain other

exploration assets that are not required for the operation of CBH’s Endeavor Mine, Panorama Project or Broken Hill

• Kimberley Metals Limited will provide CBH shareholders with ongoing exposure to some of the advanced stage CBH

exploration assets

• Jim Wall will become Chairman of Kimberley Metals and the dedicated exploration vehicle is intended to be listed on

an internationally recognised securities exchange, likely to be the Australian Securities Exchange

MINERAL HILL Cu, Pb, Zn, Au, Ag SORBY HILLS Pb, Zn, Ag CONSTANCE RANGE IRON (30% Interest)

• Inferred Resource 10.7Mt, 6.6%Pb,

0.6%Zn, 81g/tAg

• Shallow mineralisation, open cut plan
• Near infrastructure (Kununurra) and

port (Wyndham)

• 200,000 tpa Cu-Au plant on care and

maintenance

• Drilling in progress to define open cut

resource

• Target 2 to 5 million tonnes to 200m

depth combined oxide and sulphide mineralisation

• Inferred Resource (Deposit A)

250Mt @ 52%Fe

• Regional iron ore basin

S ECTION 3 Indicative timetable

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Indicative Timetable

1 3 5 6 Announcement of proposed merger Scheme booklets for proposed merger despatched CBH ordinary share and convertible note scheme Court approval and schemes effective date 26 March Late April/Early May Early July Late July 2 Documentation for separation of Kimberley Metals despatched Early April 4 Early June CBH shareholders vote on capital reduction to approve separation of Kimberley Metals