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Recommended A$23.00 per Share Cash Offer

Monday, October 29th, 2007

Xstrata plc and Jubilee Mines NL announce that they have entered into a Bidding Agreement for an all-cash offer by Ithaki Australia Pty Limited, a wholly owned subsidiary of Xstrata plc, to acquire all of the issued and outstanding shares of Jubilee by way of a recommended off-market takeover offer.
The Offer is for A$23.00 per share, valuing Jubilee at approximately A$3.1 billion (US$2.9 billion). The Offer represents a 35% premium over the closing price of A$17.10 per Jubilee share on the Australian Securities Exchange on 26 October 2007, a 36% premium over the volume weighted average price of Jubilee shares over the last 30 trading days on the ASX and a 25% premium to Jubilee’s all time record high share price. The Offer will be financed through Xstrata’s existing credit facilities and cash on hand.
The Board of Directors of Jubilee, after consultation with its financial and legal advisors, has unanimously recommended Xstrata’s Offer in the absence of a superior offer and believes that it is in the best interests of Jubilee shareholders to accept the Offer. Each of the Directors of Jubilee intends to accept the Offer in respect to the shares held or controlled by them.
Executive Chairman of Jubilee, Kerry Harmanis and certain other shareholders, including the other directors and senior management of Jubilee, have agreed to sell all of their Jubilee shares to Xstrata and no other party for A$23.00 per share. In addition, the Directors and senior management have committed their employee options to Xstrata. In total, these agreements represent 17.5% of Jubilee’s fully diluted shares outstanding
Kerry Harmanis, Jubilee Executive Chairman said: “This is a great offer to be able to recommend to Jubilee shareholders and an important milestone for Jubilee, representing the culmination of 20 years of exploration success, growth and development.
“Jubilee shares have significantly outperformed the market during this time as the company has met its key growth milestones at the Cosmos Nickel Project and continued to build shareholder value through an organic growth strategy which has delivered a strong pipeline of new development projects. Jubilee is, however, at an important stage and will benefit from the deeper capabilities and balance sheet of a major mining company such as Xstrata to maximise the potential of its resource base.
“As a result of a number of expressions of interest, the Jubilee Board approved a due diligence process involving several interested parties (including Xstrata) to determine whether a suitable change of control would provide superior value to shareholders, compared with remaining independent. Xstrata’s bid offers shareholders a compelling opportunity to realise in cash the substantial growth in value created by their investment at an attractive point in the commodity cycle and equity markets overall, without taking on the risks associated with the next phase of Jubilee’s development.
“We believe Xstrata’s recommended offer is the most attractive option for shareholders and positions our operations and employees as part of a rapidly growing, successful global nickel producer. The Jubilee Directors believe that Xstrata is well placed to continue Jubilee’s development, and that Jubilee’s employees, suppliers, contractors and other stakeholders will benefit from Xstrata’s capital, expertise and significant nickel mining and marketing capabilities.”
Ian Pearce, CEO of Xstrata Nickel, said, “The combination of Jubilee with Xstrata Nickel marks an exciting step in our strategy to create a world-class nickel business, and represents our entry into Western Australia, one of the world’s great nickel provinces.
“Jubilee is clearly the premier independent nickel company in Australia and benefits from a highly experienced team of people. In making this Offer, we have taken full account of Jubilee’s existing operations and its various exploration and development projects. We believe this Offer presents Jubilee shareholders with a highly attractive, fully priced cash premium for their investment.
“Xstrata Nickel will establish a regional base for its activities and future growth in Western Australia headquartered in Perth. In line with Xstrata’s devolved management approach, our intention is for this regional base to be developed around and managed by Jubilee’s existing team, which has an exceptional track record of creating and delivering shareholder value through the operation, exploration and development of Jubilee’s mining projects.
“Jubilee offers Xstrata Nickel immediate access to additional production, geographic diversification and introduces substantial near term growth potential into its portfolio. In particular, the combination of two of the most successful exploration teams in the nickel industry, together with Jubilee’s highly prospective regional land position, offer excellent prospects for significant additional growth in the region. We look forward to optimizing Jubilee’s growth potential, creating additional employment opportunities and increasing capital and community investment in the region, for the benefit of shareholders, employees and the stakeholders in Jubilee’s current and future operations.”
Xstrata and Jubilee have entered into a Bidding Agreement, which includes customary deal protection including traditional “no shop” and “no talk” clauses, and the payment to Xstrata of a break fee of A$31.3 million in certain circumstances where a deal is not completed.
Xstrata expects to dispatch its Bidder’s Statement to all Jubilee shareholders containing detailed information relevant to the Offer within one month. Jubilee expects to dispatch its Target’s Statement either together with or shortly after dispatch of the Bidder’s Statement.
The Offer will be open for acceptance for a period of not less than one month from the date the documents are mailed and will be conditional upon, among other things, valid acceptances of the Offer by Jubilee shareholders owning not less than 90% of the Jubilee shares. Once the 90% acceptance level is achieved, Xstrata intends to take steps available to it to acquire any outstanding Jubilee shares.
Xstrata has received informal clearance from the Australian Competition and Consumer Commission (ACCC) for its Offer. No further anti-trust approvals are required. The Offer will be subject to certain customary conditions, namely approval by Australia’s Foreign Investment Review Board and the absence of a material adverse change with respect to Jubilee. Xstrata may waive the conditions of the Offer in certain circumstances.
Morgan Stanley is acting as financial adviser and Cochrane Lishman is acting as legal adviser to Jubilee in relation to the Xstrata Offer. Macquarie Bank Limited is acting as financial adviser and Mallesons Stephens Jacques and Freshfields Bruckhaus Deringer are acting as legal counsel to Xstrata.
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