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Kazakhmys PLC (KAZ)

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Tuesday 02 October, 2007

Kazakhmys PLC

Notice of EGM

Kazakhmys PLC
02 October 2007

                                                                  2 October 2007

   Kazakhmys PLC calls EGM to approve acquisition of 18.8% stake in ENRC PLC

   •  EGM convened for 19 October 2007 to allow independent shareholders of
      Kazakhmys to approve the exercise of the option to acquire an 18.8% holding
      in the ENRC Group

   •  Approval from the Government of Kazakhstan has now been received to allow
      Kazakhmys to become a direct 18.8% shareholder in ENRC PLC

   •  Acquisition is conditional on the approval of independent shareholders
      and the receipt of regulatory approval from the Government

   •  Estimated cost of exercising the option is US$806.5 million, pursuant to
      the terms of the option agreement

   •  The Independent Directors of Kazakhmys unanimously recommend that
      shareholders vote in favour of the acquisition

   •  Shareholder circular and notice of EGM will be sent to Kazakhmys
      shareholders today

Kazakhmys PLC ("Kazakhmys" or the "Company") today announces that further to its
announcement of 4 September 2007 and following receipt of approval from the
Government of Kazakhstan ("Government"), an Extraordinary General Meeting
("EGM") has been convened to allow independent shareholders of Kazakhmys to vote
on the proposed acquisition of a direct 18.8% stake in Eurasian Natural
Resources Corporation PLC ("ENRC"), from a vehicle wholly owned by the Chairman
of Kazakhmys, Mr Vladimir Kim.

The Acquisition is conditional on the approval of independent shareholders of
the Company at the EGM and the receipt of regulatory approval from the
Government relating to the indirect change in ownership of subsoil rights.

The ENRC Group is a large diversified mining and natural resources group with
significant, high quality assets in Kazakhstan. The Independent Directors
consider the investment key to Kazakhmys' long-term strategy of seeking to
acquire interests in existing regional natural resources businesses with
attractive internal and external growth prospects and its execution will bring
significant benefits to Kazakhmys and its Shareholders.

Commenting upon the Acquisition, Mr James Rutland, Senior Independent
Non-executive Director of Kazakhmys said, "As stated at the time of our Interim
Results, the Independent Directors are unanimous in believing that this
transaction will create value for shareholders and consider that it is in the
best interests of the shareholders as a whole to vote in favour of this
transaction at the forthcoming EGM."

Kazakhmys notified the market on 14 March 2006 that it had been granted an
option (the "Option") to acquire a 25% stake in ENRC Kazakhstan Holding B.V.
("EKH") by Mr Vladimir Kim. As stated in Kazakhmys' Annual Report and Accounts
published on 5 April 2007, the 25% stake in EKH represented an 18.8% economic
interest in ENRC, the holding company of the ENRC Group and its operating
assets. Following the receipt of Governmental approval, as mentioned above, a
change in the EKH corporate structure has now taken place, so that by exercising
the Option, Kazakhmys, through a wholly owned subsidiary, will become the direct
owner of 3,756,725 shares in ENRC PLC, representing 18.8% of ENRC's share

In its announcement on 14 March 2006, Kazakhmys stated that the then independent
members of the Board of Kazakhmys had considered the possibility of Kazakhmys
itself acquiring the 25% stake in EKH but had decided that this would not be
appropriate due to, among other things, the ongoing restructuring of the ENRC
Group and the fact that EKH was not, in the opinion of Kazakhmys, in a position
to provide the type of due diligence or warranty package that a listed company
would expect.

The reorganisation of the ENRC Group is now substantially complete following a
significant restructuring as part of its own efforts to simplify its group
structure as ENRC management consider options for the strategic direction of the
business, including a possible initial public offering. In addition, with the
consent and co-operation of ENRC, a due diligence exercise has been undertaken
in respect of the ENRC Group with, among other things, production and certain
financial information in respect of ENRC having been made available to Kazakhmys
and site visits to ENRC's operations in Kazakhstan have been undertaken by
Kazakhmys' management and technical advisers, IMC Consulting Ltd. The
Independent Directors believe that it is now in the best interests of the
Shareholders as a whole that Kazakhmys acquire the ENRC stake currently held by
a vehicle wholly owned by Mr Vladimir Kim.

The Board considers the Acquisition to be in the best interests of the
Shareholders as a whole and, having been so advised by JPMorgan Cazenove and
Merrill Lynch, to be fair and reasonable so far as the Shareholders as a whole
are concerned. In providing advice to the Board, JPMorgan Cazenove and Merrill
Lynch have taken into account the Directors' commercial assessments of the
proposed Acquisition. In addition, Kazakhmys has received legal advice from
Linklaters LLP, advice on accounting for the Acquisition from Ernst & Young LLP,
tax advice from PricewaterhouseCoopers LLP and technical mining advice from IMC
Consulting Ltd.

Mr Vladimir Kim, the Related Party, has not taken part in the Board's
consideration of the Acquisition. In addition, none of Messrs Oleg Novachuk,
David Munro or Vladimir Ni has taken part in the Board's consideration of the
Acquisition as it was deemed appropriate that only the non-executive directors
of Kazakhmys, who are independent in relation to the Acquisition, should
consider the Acquisition.

Acquisition Price, Financing and Financial Effects of the Acquisition
The amount payable by Kazakhmys in respect of the Acquisition under the terms of
the Option, which were disclosed in the announcements of 14 March 2006 and 4
September 2007, will be approximately:

   •  the initial purchase price of US$751 million paid by Mr Kim to acquire
      the 25% stake in EKH (the "Original Acquisition");
   •  a 10% margin of US$75.1 million reflecting the risk that Mr Kim took in
      making this investment on his own account;
   •  the associated actual transaction costs incurred by Mr Kim at the time of
      the Original Acquisition and the actual financing costs incurred by him
      relating to the Original Acquisition, (totalling approximately US$75.4
      million) (subject to non-material adjustment when known in March 2008);
   •  less dividends and other capital distributions amounting to US$95.0
      million received to date by Mr Kim in respect of his shareholding in EKH
      since the date of the Original Acquisition.

The total cost to Kazakhmys of purchasing the interest in ENRC will therefore be
approximately US$806.5 million, subject to non-material adjustment. The
acquisition of the stake will be accounted for as an investment by Kazakhmys and
it is intended to be funded from the existing cash resources of Kazakhmys.

EGM and Voting
An Extraordinary General Meeting of the Company has been convened in connection
with the Acquisition to be held at 9.00am on Friday 19 October 2007 at the
offices of Linklaters LLP, One Silk Street, London EC2Y 8HQ. Mr Vladimir Kim,
the Related Party, will abstain, and has undertaken to take all reasonable steps
to ensure that his associates will abstain, from voting at the Extraordinary
General Meeting and at any adjournment of such meeting. Mr Kim and his
associates currently have voting rights over 44.3 per cent. of the Issued
Ordinary Share Capital. In addition, each of Messrs Oleg Novachuk (being the
Chief Executive of Kazakhmys), Eduard Ogay (being the Chief Executive of
Kazakhmys Corporation LLC, Kazakhmys' principal operating subsidiary in
Kazakhstan) and Vladimir Ni (being a Non-Executive Director of Kazakhmys) (and
his immediate family) and their associates have volunteered to abstain from
voting at the Extraordinary General Meeting in relation to the approval of the
Acquisition and at any adjournment of such meeting. Although Messrs Novachuk,
Ogay and Ni (and his immediate family) and their associates are not associates
of Mr Kim for the purposes of the Listing Rules, they do form a concert party
with Mr Kim for the purposes of the Takeover Code. Although being a member of a
concert party would not of itself prevent them from voting in relation to the
Acquisition, they have volunteered not to vote and this is considered
appropriate by the Independent Directors. They have however confirmed to the
Independent Directors that if they were to vote in relation to the approval of
the Acquisition, they would vote in favour of the Resolution. Messrs Novachuk,
Ogay and Ni (and his immediate family) and their associates together currently
have voting rights over 12.1 per cent. of the Issued Ordinary Share Capital.

Capitalised terms used in this announcement but not defined herein shall have
the meaning given to them in the shareholder circular dispatched to shareholders
of Kazakhmys today.

- ends -

For further information please contact:

 John Smelt, Head of Corporate Communication           Tel:+44 20 7901 7882     
                                                       Mob: +44 787 964 2675    

 Sergei Stephantsov, Investor Relations Manager        Tel:+44 20 7901 7814     
 Kazakhmys PLC                                                                  

 Robin Walker                                                                   
 Finsbury                                              Tel:+44 20 7251 3801     

Notes to Editors

Kazakhmys PLC
Kazakhmys PLC is the largest copper producer in Kazakhstan and one of the
leading copper producers in the world.  Kazakhmys is a fully integrated copper
producer from mining ore through to the production of finished copper cathode
and rod.  The Group produces significant volumes of other metals as by-products,
including zinc, silver and gold.  Existing operations include 19 open pit and
underground mines, 8 concentrators, two copper smelting and refining complexes,
a copper rod plant, a zinc plant and a precious metals refinery.  Production is
backed by a captive power supply and significant rail infrastructure.  Kazakhmys
also owns MKM, a copper products fabrication company in Germany, and has Gold
and Petroleum Divisions with assets in Kazakhstan and Central Asia.  The Group's
strategic aim is to diversify and participate in the development of the
significant natural resource opportunities in Central Asia.

ENRC Group
ENRC is a privately owned natural resources company with fully integrated
mining, processing, energy and transport operations in Kazakhstan. ENRC's
operations, spread throughout Kazakhstan, are principally comprised of
vertically integrated ferroalloy, iron ore and alumina businesses which employ
over 60,000 people and generated estimated revenues of approximately US$3
billion in 2006. ENRC benefits from high operating margins as its operations and
growth profile are underpinned by relatively low costs of production at the
company's major operations and it has access to a captive energy supply and
in-house logistics and transportation operation.

ENRC's operations are comprised of:

   •  Kazchrome, whose principal activities include the extraction and sale of
      chrome ore as well as the production and supply of high quality ferroalloys
      to steel-makers worldwide. It is one of the top three ferrochrome producers
      in the CIS, based on volume of chrome (as of 2006) and is ranked in the
      lowest cost quartile amongst global ferrochrome producers. Kazchrome is
      98.30 per cent. owned by ENRC;

   •  SSGPO, which is a significant CIS iron ore producer with sizable reserves
      estimated to be in the region of 1.5 billion tonnes which would ensure a
      mine life of approximately 40 years. It is a low cost producer which
      produces iron ore pellets and iron ore concentrates. SSGPO is 98.14 per
      cent. owned by ENRC;

   •  Aluminium of Kazakhstan, which is Kazakhstan's largest producer of
      alumina and a substantial producer globally. Aluminium of Kazakhstan also
      has its own bauxite reserve. Aluminium of Kazakhstan is 96.59 per cent.
      owned by ENRC;

   •  Kazakhstan Aluminium Smelter, which is due to start production in late
      2007 with an anticipated initial capacity of 60,000 tonnes of aluminium per
      annum which is expected to increase to 250,000 tonnes by 2011. The smelter
      will be 100 per cent. owned by ENRC;

   •  EEC, which operates an open pit coal mine and is Kazakhstan's largest
      electricity supplier, with a 2,155MW capacity, providing approximately 16
      per cent. of the country's current installed capacity. EEC is 99.11 per
      cent. owned by ENRC; and

   •  Other divisions including ENRC Logistics (100 per cent. owned by ENRC, a
      transportation and logistics company); ENRC Marketing (100 per cent. owned
      by ENRC, the trading and marketing arm of ENRC) and Zhairemskiy GOK (99.83
      per cent. owned by ENRC, a producer of manganese, ferromanganese and

                      This information is provided by RNS
            The company news service from the London Stock Exchange