Herald Resources, Annax enter into business combination agreeement

Australian listed mining firm Herald Resources Limited announced on Friday that it had entered into business combination agreement with its 72 percent-owned subsidiary, CDNX listed International Annax Resources.

Under the agreement, Herald will acquire all of the outstanding shares of Annax not already owned by Herald, in consideration for issuing 1 Herald share for each Annax share share.

Similarly, at the date of the business combination becomes effective, all outstanding options to purchase shares of Annax will be converted into options to purchase shares of Herald on the same terms of exercise.

Upon completion of the transaction, IAX will be a wholly owned subsidiary of Herald. The Board of Herald will remain the same.

Annax's principal resource asset, the Dairi Zinc Project in North Sumatra, is recognized as being a significant zinc discovery with exploration potential for additional resources.

Annax commenced exploration at the Dairi Project in 1997, and since then the price of zinc has declined by 5 percent from US$0.70 to US$0.35 per pound. The weak zinc market coupled with North American investors? resistance to Indonesian-based projects has made it difficult for Annax to attract both financing and stock market interest. As a result, equity financing for Annax has largely been provided by Herald, resulting in Herald now owning approximately 72 percent of the issued shares of Annax

It is for the reasons above that the Board of Directors of Annax is recommending its shareholders accept the Business Combination that will, if approved, see the assets of Annax combined with the assets of Herald, thereby resulting in a stronger corporate entity for all shareholders.

Annax owns 80 percent stakes in PT Dairi Prima Mineral, the North Sumatra zinc-lead project operator. The remaining 20 percent shares in PT Dairi Prima Mineral is owned by state mining firm PT Aneka Tambang Tbk. (alex/robert)