Information  X 
Enter a valid email address

Pala Investments (SRX)

  Print      Mail a friend

Monday 03 October, 2011

Pala Investments

Pala significantly increases mandatory cash off...

Pala significantly increases mandatory cash offer for Sierra Rutile Limited and offers shareholders opportunity to sell by private treaty—Replacement

Pala Investments

The issuer advises that the following replaces the Pala Investments announcement released at 15:08 BST today.

ISIN for Sierra Rutile Limited has been added.

All other details remain unchanged.

The full corrected version is shown below.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN.

Pala significantly increases mandatory cash offer

for

Sierra Rutile Limited

and

offers shareholders opportunity to sell by private treaty

  • Pala Investments Holdings Limited ("Pala"), through its wholly-owned subsidiary, Pala Minerals Limited ("PML"), is pleased to announce an Improved Offer of 30 pence per share to all shareholders of Sierra Rutile Limited ("Sierra Rutile") for the shares in Sierra Rutile not already owned by PML and persons acting in concert with PML.
  • The Improved Offer price represents a premium of:
    • 51 per cent. to the 20-day volume weighted average price of 19.86 pence per Sierra Rutile Share on 6 September 2011, being the last business day prior to the date of the Original Offer Announcement. In comparison, the closing market prices of Sierra Rutile's peers, Iluka Resources Ltd ("Iluka") and Kenmare Resources Plc ("Kenmare"), on 30 September 2011 have each declined 19 per cent. compared to their respective 20-day volume weighted average prices on 6 September 2011;
    • 41 per cent. to the closing middle market price of 21.25 pence per Sierra Rutile Share on 6 September 2011, being the last business day prior to the date of the Original Offer Announcement. In comparison, the closing market prices of shares in Iluka and Kenmare on 30 September 2011 have declined 17 per cent. and 18 per cent., respectively, compared to their respective closing market prices on 6 September 2011; and
    • 30 per cent. to the closing middle market price of 23.12 pence per Sierra Rutile Share on 30 September 2011, being the last business day before the date of this announcement.
  • From 8 October 2011, Sierra Rutile Shareholders will also be able to sell their shares directly to Pala at a price of 30 pence per share by private treaty. Sierra Rutile Shareholders electing the private treaty option will receive 30 pence in cash for each Sierra Rutile Share even if the Improved Offer lapses. To be valid, applications from Sierra Rutile Shareholders wishing to sell by private treaty must be received by no later than 1.00 p.m. (London time) on 1 November 2011.
  • By taking advantage of the private treaty, Sierra Rutile Shareholders will be guaranteed liquidity and assurance that they will receive the price of 30 pence per Sierra Rutile Share. Sierra Rutile Shareholders who have already accepted the Original Offer can elect the private treaty option and ensure they receive the benefits of the Improved Offer price even if the Improved Offer lapses.
  • The Improved Offer is extended until 1.00 p.m. (London time) on 4 November 2011. If the Improved Offer lapses, Sierra Rutile Shareholders who did not sell their shares to Pala by private treaty will retain their shares and receive no sale proceeds in cash.
  • Pala believes that the Improved Offer, and the private treaty option, represent a significant premium for Sierra Rutile Shareholders and present a liquidity opportunity in an otherwise illiquid stock. Additionally, in its 19 September 2011 announcement, Sierra Rutile’s ongoing strategic review identified up to $189 million of capital requirements needed to expand its operations. Pala believes that the liquidity and premium offered by the Improved Offer, and the private treaty option, provide an exit opportunity for any Sierra Rutile Shareholders not wanting to be exposed to any future financing activities that may be taken by Sierra Rutile to fund such capital requirements.

This summary should be read in conjunction with the full text of the following announcement including the Appendices. The Acceptance Condition and the further terms of the Improved Offer are set out in Appendix I to PML’s earlier offer announcement made on 7 September 2011 (the "Original Offer Announcement") (as modified by paragraph 4 of this announcement). Appendix I of this announcement sets out the bases of calculation used in this announcement. Unless the context otherwise requires, definitions used in the Original Offer Announcement also apply to this announcement, together with the definitions set out in Appendix II to this announcement.

For enquiries:

Colin Murray
Pala Investments AG
+41 41 560 9070

About Pala

Pala Investments Holdings Limited is a multi-strategy investment company dedicated to investing in, and creating value across, the mining sector in both developed and emerging markets. Pala's exclusive investment advisor, Pala Investments AG, has extensive experience within the mining sector. Pala seeks to assist companies in which it has long-term shareholdings by providing strategic advice and innovative financing solutions. For more information, visit www.pala.com.

Application of the City Code on Takeovers and Mergers (the "Code")

By virtue of its status as a company incorporated in the British Virgin Islands, the Code does not apply to Sierra Rutile. Shareholders are reminded that whilst Sierra Rutile's articles of association require offers to be made on terms that would be required by the Code, save to the extent that the Board of Sierra Rutile otherwise determines, the Panel on Takeovers and Mergers does not have responsibility for ensuring compliance with the Code in respect of the Improved Offer and is not able to answer shareholders' queries in relation to Sierra Rutile, Pala or the Improved Offer.

In particular, the Board of Sierra Rutile has confirmed to Pala that it does not intend to require Opening Position Disclosures and Dealing Disclosures (as referred to in the Code) to be made by shareholders (other than PML and persons acting in concert with PML) in accordance with Rule 8 of the Code. Shareholders are reminded that public disclosures consistent with the provisions of Rule 8.3 of the Code should not be e-mailed to the Panel on Takeovers and Mergers.

Overseas jurisdictions

The Improved Offer will not be made, directly or indirectly, in or into, or by the use of the mails or any means of instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facilities of a national securities exchange of the United States, Canada, Australia or Japan. Accordingly, except as required by applicable law, copies of this announcement are not being, and may not be, mailed or otherwise forwarded, distributed or sent in, into or from the United States, Canada, Australia or Japan. Persons receiving this announcement (including, without limitation, nominees, trustees or custodians) must not forward, distribute or send it into the United States, Canada, Australia or Japan.

The availability of the Improved Offer to Sierra Rutile Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. In particular, as described in Appendix I of the Original Offer Announcement, the Improved Offer will not be made directly or indirectly into the United States, Canada, Australia or Japan. Sierra Rutile Shareholders who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements and read paragraph 6 of Part B, paragraph (c) of Part C and paragraph (c) of Part D of Appendix I of the Original Offer Announcement before taking any action.

Publication of this announcement

A copy of this announcement will be available at www.pala.com by no later than 12.00 p.m. (London time) on the business day after the date of this announcement. You can obtain a hard copy of this announcement or any information incorporated by reference by contacting Computershare Investor Services PLC, Corporate Actions Projects, Bristol, BS99 6AH. You will not receive a hard copy of this announcement or any information incorporated by reference unless you so request. You may also inform Computershare that you wish all future documents, announcements and information in relation to the Improved Offer be sent to you in hard copy.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN.

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the Offer or the action you should take, you are recommended to seek your own independent financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

Pala significantly increases mandatory cash offer

for

Sierra Rutile Limited

and

offers shareholders opportunity to sell by private treaty

1. Introduction

On 7 September 2011, Pala Minerals Limited ("PML"), a wholly-owned subsidiary of Pala Investments Holdings Limited ("Pala"), announced a mandatory offer to acquire all the Sierra Rutile Shares not already held by PML and persons acting in concert with PML at a price of 25 pence per Sierra Rutile Share in cash. Full details of the Offer were contained in the offer announcement made by PML on that date (the "Original Offer Announcement").

PML is today announcing an Improved Offer to acquire all the Sierra Rutile Shares not already held by PML and persons acting in concert with PML at an increased price of 30 pence per Sierra Rutile Share in cash.

PML is also today announcing:

  • an extension of the Improved Offer until 1.00 p.m. (London time) on 4 November 2011; and
  • an opportunity for Sierra Rutile Shareholders to apply to sell Sierra Rutile Shares to Pala regardless of the outcome of the Improved Offer, at any time from 8 October 2011 until 1.00 p.m. (London time) on 1 November 2011.

Pala believes that the Improved Offer, and the private treaty option, represent a significant premium for Sierra Rutile Shareholders and present a liquidity opportunity in an otherwise highly illiquid stock. Additionally, in its 19 September 2011 announcement, Sierra Rutile’s ongoing strategic review identified up to $189 million of capital requirements needed to expand its operations. Pala believes that the liquidity and premium offered by the Improved Offer, and the private treaty option, provide an exit opportunity for any Sierra Rutile Shareholders not wanting to be exposed to any future financing activities that may be taken by Sierra Rutile to fund such capital requirements.

As at 5.00 p.m. (London time) on 30 September 2011, being the latest practicable date prior to the publication of this announcement, PML had received valid acceptances in respect of 163,452 Sierra Rutile Shares, representing 0.03 per cent. of Sierra Rutile’s issued shares. Pala beneficially held 192,273,344 Sierra Rutile Shares (representing approximately 38.5 per cent. of Sierra Rutile’s issued shares) prior to making the Original Offer.

The aggregate of the Sierra Rutile Shares beneficially held by Pala and acceptances received by PML amounts to 192,436,796 Sierra Rutile Shares, representing 38.5 per cent. of Sierra Rutile’s issued shares.

If by 1.00 p.m. (London time) on 4 November 2011 the total of the Sierra Rutile Shares beneficially held by Pala and acceptances received falls short of 50 per cent. of Sierra Rutile’s issued shares, the Improved Offer will lapse (unless otherwise extended). If the Improved Offer lapses, you will retain your Sierra Rutile Shares and receive no sale proceeds in cash. However, if you wish to sell your Sierra Rutile Shares to Pala regardless of the outcome of the Improved Offer at 30 pence per Sierra Rutile Share (the Improved Offer price), you may apply to do so as explained in paragraph 12 of this announcement.

By taking advantage of the private treaty, Sierra Rutile Shareholders will be guaranteed liquidity and assurance that they will receive the price of 30 pence per Sierra Rutile Share. Sierra Rutile Shareholders who have already accepted the Original Offer can elect the private treaty option and ensure they receive the benefits of the Improved Offer price even if the Improved Offer lapses.

Unless the context otherwise requires, definitions used in the Original Offer Announcement also apply to this announcement, together with the definitions set out in Appendix II to this announcement.

2. The Improved Offer

Subject to paragraph 3 below, PML hereby offers to acquire all of the Sierra Rutile Shares not already owned by PML and persons acting in concert with PML on the following basis:

for each Sierra Rutile Share   30 pence in cash

Assuming the exercise of all outstanding options (other than those which have been granted at an exercise price in excess of the Improved Offer price) under the Sierra Rutile Share Schemes, the Improved Offer values all of the issued shares of Sierra Rutile at £155,646,000.

Calculated on the basis set out in Appendix I to this announcement, the Improved Offer represents a premium of:

  • 51 per cent. to the 20-day volume weighted average price of 19.86 pence per Sierra Rutile Share on 6 September 2011, being the last business day prior to the date of the Original Offer Announcement. In comparison, the closing market prices of Sierra Rutile's peers, Iluka and Kenmare, on 30 September 2011 have each declined 19 per cent. compared to their respective 20-day volume weighted average prices on 6 September 2011;
  • 41 per cent. to the closing middle market price of 21.25 pence per Sierra Rutile Share on 6 September 2011, being the last business day prior to the date of the Original Offer Announcement. In comparison, the closing market prices of shares in Iluka and Kenmare on 30 September 2011 have declined 17 per cent. and 18 per cent., respectively, compared to their respective closing market prices on 6 September 2011; and
  • 30 per cent. to the closing middle market price of 23.12 pence per Sierra Rutile Share on 30 September 2011, being the last business day prior to the date of this announcement.

The Improved Offer is not being made in, and this announcement may not be distributed into, the United States, Australia, Japan or Canada.

The availability of the Improved Offer to Sierra Rutile Shareholders who are citizens or residents of jurisdictions outside the United Kingdom, or who are nominees of, or custodians or trustees for, any such person, or who intend to forward this announcement to any jurisdiction outside the United Kingdom may be affected by the laws of other relevant jurisdictions. Such persons should inform themselves about and observe such applicable requirements and read paragraph 6 of Part B, paragraph (c) of Part C and paragraph (c) of Part D of Appendix I of the Original Offer Announcement before taking any action.

3. Improved Offer extended to 4 November 2011

PML hereby announces that the Improved Offer is being extended to, and will remain open for acceptances until, 1.00 p.m. (London time) on 4 November 2011.

The Offer was originally expected to close at 5.00 p.m. (London time) on 7 October 2011. PML reserves the right to extend the Improved Offer further.

4. Terms and conditions of the Improved Offer

The Improved Offer is subject to the Acceptance Condition and the further terms set out the Form of Acceptance. The Improved Offer is also subject to the further terms set out in Appendix I to the Original Offer Announcement, save that the paragraph below shall be deemed to be inserted as a new paragraph 3(g) of Part B of Appendix I to the Original Offer Announcement:

"At any time from 8 October 2011, PML may, at its sole discretion, waive acceptances in relation to some only or all of the acceptances under the Offer and PML, Pala or their nominee(s) may, by agreement with such accepting Sierra Rutile Shareholder(s), acquire absolutely some or all of the Sierra Rutile Shares the subject of such waived acceptances, either (i) pursuant to a transaction on a regulated market; or (ii) by agreement evidenced, in the case of Certificated Sierra Rutile Shares, by such accepting Sierra Rutile Shareholder(s) signing a share sale form, or, in the case of Depositary Interests, by the sending of an ESA Instruction including the appropriate member account ID of the Escrow Agent for the election to sell Depositary Interests to PML, Pala or their nominee(s)."

The reason for the insertion of this new term of the Improved Offer is to enable PML, Pala or their nominee(s) to seek to buy Sierra Rutile Shares from 8 October 2011 (either by market purchases or by sales through private treaty), regardless of the outcome of the Improved Offer, directly from Sierra Rutile Shareholders who have accepted the Original Offer or who accept the Improved Offer, as described more fully in paragraph 12 of this announcement.

Due to the extension of the Improved Offer referred to in paragraph 3 of this announcement, in accordance with the terms of the Improved Offer, all references in the Original Offer Announcement and in the Form of Acceptance to "5.00 p.m. (London time) on 7 October 2011" shall (except in paragraph 1(a) of Part B of Appendix I of the Original Offer Announcement and where the context otherwise requires) be deemed to refer to "1.00 p.m. (London time) on 4 November 2011".

The Improved Offer is a revision of the Original Offer and shall be construed accordingly.

5. Information relating to Pala and PML

There have been no changes to the information set out in paragraph 3 of the Original Offer Announcement.

6. Information relating to Sierra Rutile

There have been no changes to the information set out in paragraph 4 of the Original Offer Announcement.

7. Background to and reasons for the Improved Offer

There have been no changes to the information set out in paragraph 5 of the Original Offer Announcement.

8. Sierra Rutile Share Schemes

There have been no changes to the information set out in paragraph 6 of the Original Offer Announcement.

9. Financing arrangements

Full acceptance of the Improved Offer would (assuming exercise of all options under the Sierra Rutile Share Schemes which have been granted at an exercise price at or below the Improved Offer price) involve a maximum cash payment of approximately £98.0 million.

The difference in value between the consideration which would be payable by PML under the Original Offer and the increased consideration which would be payable by PML under the Improved Offer will be satisfied out of the proceeds of a proposed subscription by Pala for new shares in PML for cash pursuant to the terms of the Subscription Agreement, funded by Pala's existing cash and cash equivalent resources.

10. Management and employees

There have been no changes to the information set out in paragraph 8 of the Original Offer Announcement.

11. Procedure for acceptance of the Improved Offer

There have been no changes to the information set out in paragraph 9 of the Original Offer Announcement, except that, due to the extension of the Improved Offer referred to in paragraph 3 of this announcement, in accordance with the terms of the Improved Offer all references in paragraph 9 of the Original Offer Announcement to "5.00 p.m. (London time) on 7 October 2011" shall be deemed to refer to "1.00 p.m. (London time) on 4 November 2011".

If you have not accepted the Original Offer prior to the date of this announcement and you wish to accept the Improved Offer:

(a) holders of Certificated Sierra Rutile Shares should return the Form of Acceptance duly completed in accordance with the procedure set out in paragraph 9(a) of the Original Offer Announcement and in the Form of Acceptance by post to Computershare Investor Services PLC, Corporate Actions Projects, Bristol, BS99 6AH, as soon as possible and, in any event, to be received by no later than 1.00 p.m. (London time) on 4 November 2011; and

(b) holders of Depositary Interests should send (or, if you are a CREST sponsored member procure that your CREST sponsor sends) a TTE Instruction in accordance with the procedure set out in paragraph 9(b) of the Original Offer Announcement, as soon as possible and in any event so that the TTE Instruction settles not later than 1.00 p.m. (London time) on 4 November 2011.

If you have accepted the Original Offer prior to the date of this announcement, your acceptance will remain valid in respect of the Improved Offer and you need take no action to benefit from the Improved Offer. Your attention is drawn to paragraph 4 of Part B of Appendix I of the Original Offer Announcement.

12. Procedure for applying to sell Sierra Rutile Shares directly to Pala by private treaty

Private treaty sale

The Improved Offer is conditional on PML receiving valid acceptances for such number of Sierra Rutile Shares which, when added to the Sierra Rutile Shares acquired or agreed to be acquired by PML and persons acting in concert with PML, carry not less than 50 per cent. of the voting rights then exercisable at a general meeting of Sierra Rutile. If this condition is not satisfied by 1.00 p.m. (London time) on 4 November 2011, the Improved Offer will lapse (unless otherwise extended).

However, Pala wishes to increase its percentage holding regardless of the outcome of the Improved Offer.

Therefore, from 8 October 2011 until 1.00 p.m. (London time) on 1 November 2011, Pala will be seeking to purchase Sierra Rutile Shares directly from Sierra Rutile Shareholders (regardless of whether or not they have accepted the Original Offer or the Improved Offer) at a price of 30 pence per Sierra Rutile Share in cash.

If the Improved Offer lapses, accepting Sierra Rutile Shareholders who have not sold by private treaty will retain their Sierra Rutile Shares and receive no sale proceeds in cash. However, if Sierra Rutile Shareholders wish to sell their Sierra Rutile Shares to Pala regardless of the outcome of the Improved Offer at the sale price of 30 pence per Sierra Rutile Share, they may apply to do so.

Sierra Rutile Shareholders should note that if Sierra Rutile Shares are sold by private treaty, and the Offer price is increased after the sale of such Sierra Rutile Shares has been effected, the cash due to the seller will be the sale price of 30 pence per Sierra Rutile Share, not the increased Offer price.

Sierra Rutile Shareholders in the United States, Canada, Australia or Japan will not be sent a Share Sale Form and applications to sell Sierra Rutile Shares to Pala should only be made by overseas shareholders if such application is not in breach of any overseas law or regulations.

Procedure for application

The procedure for applications to sell Sierra Rutile Shares to Pala by private treaty will depend on whether you hold Certificated Sierra Rutile Shares (i.e. represented by share certificates) or Depositary Interests (i.e. held in electronic form in CREST).

No applications to sell Sierra Rutile Shares to Pala by private treaty will be accepted by Pala prior to 8 October 2011.

If you hold any Certificated Sierra Rutile Shares (that is, not in CREST), you should complete, sign and return a Share Sale Form together with your share certificate(s), if they have not already been lodged with a Form of Acceptance under the Offer, by post to Computershare Investor Services PLC, Corporate Actions Projects, Bristol, BS99 6AH as soon as possible on or after 8 October 2011 and, in any event, so as to be received by no later than 1.00 p.m. (London time) on 1 November 2011. A reply paid envelope will be enclosed with the Share Sale Form for your convenience.

Holders of Depositary Interests who have not accepted the Original Offer or the Improved Offer may apply to sell their Sierra Rutile Shares to Pala by sending (or procuring that their CREST sponsor sends) a TTE Instruction through CREST as soon as possible on or after 8 October 2011 and, in any event, so that the TTE Instruction settles by no later than 1.00 p.m. (London time) on 1 November 2011.

Each TTE Instruction must, in order to be valid, contain the following details:

(A) the number of Depositary Interests in respect of which the application is made (the “Sale Depositary Interests”), together with their ISIN Number, which is VGG812641063;

(B) the selling shareholder’s member account ID, together with their participant ID;

(C) the member account ID of the Escrow Agent which is SIEPAL02 for the Sale Depositary Interests, together with the Escrow Agent’s Participant ID, which is 3RA32;

(E) the intended settlement date for the application (this should be as soon as possible after 8 October 2011 and, in any event, no later than 1.00 p.m. (London time) on 1 November 2011);

(F) the corporate action number for the Offer; and

(G) input with standard delivery instruction priority of 80.

If a holder of Depositary Interests who has already accepted the Original Offer or the Improved Offer wishes to elect to sell his Sierra Rutile Shares under the private treaty sale arrangement he may change his election by sending (or procuring that his CREST sponsor sends) an ESA Instruction through CREST as soon as possible on or after 8 October 2011 and, in any event, so that the ESA Instruction settles by no later than 1.00 p.m. (London time) on 1 November 2011.

Each ESA Instruction must, in order to be valid, contain the following details:

(A) the number of Depositary Interests in respect of which the application is made, together with their ISIN Number, which is VGG812641063;

(B) the selling shareholder’s member account ID, together with their participant ID;

(C) the member account ID of the Escrow Agent, which is SIEPAL01 for the Sale Depositary Interests, together with the Escrow Agent’s Participant ID, which is 3RA32;

(D) the transaction reference number of the Electronic Acceptance in respect of the original acceptance of the Original Offer or the Improved Offer, if any

(E) the intended settlement date for the application (this should be as soon as possible after 8 October 2011 and, in any event, no later than 1.00 p.m. (London time) on 1 November 2011);

(F) the corporate action number for the Offer;

(G) input with standard delivery instruction priority of 80,

and, in order that the desired change of election can be effected, must include the member account ID of the Escrow Agent relevant to the new election, which is SIEPAL02.

Any such election to apply to sell Depositary Interests (regardless of the outcome of the Improved Offer) will be conditional upon the Escrow Agent verifying that the request is validly made. Accordingly, the Escrow Agent will on behalf of Pala reject or accept the requested change of election by transmitting in CREST a receiving agent reject (AEAD) or receiving agent accept (AEAN) message.

No withdrawal from private treaty sale following the making of applications to sell

Share Sale Forms and CREST Instructions completed and received in accordance with this paragraph 12 may not be revoked or withdrawn on or after 8 October 2011.

Settlement of sales by private treaty

Computershare will settle the consideration due in respect of Sierra Rutile Shares sold (i) by sending cheques to sellers of Certificated Sierra Rutile Shares and (ii) by means of a CREST payment in favour of the seller’s payment bank in accordance with the CREST payment arrangements to sellers of Depositary Interests. Payments will be made within ten days of receipt of a properly completed Share Sale Form, TTE Instruction or ESA Instruction (as the case may be).

All documents and remittances sent by, to or from Sierra Rutile Shareholders or their appointed agents will be at their own risk. The consideration will be sent to Sierra Rutile Shareholders at their addresses shown on the register of members, or in the case of joint holders, to the first named such holder.

Terms and conditions – Share Sale Form

Each holder of Certificated Sierra Rutile Shares by whom, or on whose behalf, a Share Sale Form is executed irrevocably undertakes, represents, warrants and agrees to and with Pala and Computershare (so as to bind him, his personal representatives, heirs, successors and assigns) to the following effect:

(a) that he is the sole legal and beneficial owner of the Certificated Sierra Rutile Shares to which the Share Sale Form relates or he is the legal owner of such Certificated Sierra Rutile Shares and he has the necessary capacity and authority to execute the Share Sale Form;

(b) that the Certificated Sierra Rutile Shares to which the Share Sale Form relates are sold fully paid up and free from all liens, equities, charges, encumbrances and other third party rights and/or interests;

(c) that the provisions of this paragraph 12 shall be deemed to be incorporated in, and form part of, the Share Sale Form which shall be read and construed accordingly;

(d) that he will do all such acts and things as shall be necessary or expedient to vest the Certificated Sierra Rutile Shares to which the Share Sale Form relates in Pala or its nominee(s) or such other persons as it may decide;

(e) that he agrees to ratify each and every act or thing which may be done or effected by Pala or Computershare, as the case may be, in the exercise of any of his powers and/or authorities set out in this paragraph 12 and the Share Sale Form; and

(f) that if any provision of this paragraph 12 or the Share Sale Form shall be unenforceable or invalid or shall not operate so as to afford Pala or Computershare the benefit or authority expressed to be given therein, he shall with all practicable speed do all such acts and things and execute all such documents as may be required to enable Pala and/or Computershare to secure the full benefits of this paragraph 12 and the Share Sale Form.

References in this paragraph 12 to a Sierra Rutile Shareholder shall include references to the person or persons executing a Share Sale Form, and if more than one person executes a Share Sale Form, the provisions of this paragraph 12 shall apply to them jointly and severally.

Terms and conditions – TTE and ESA Instructions

Each Sierra Rutile Shareholder by whom, or on whose behalf, a TTE Instruction or an ESA Instruction (together referred to in this paragraph 12 as a “CREST Instruction”) is effected in accordance with this paragraph 12 irrevocably undertakes, represents, warrants and agrees to and with Pala and Computershare (so as to bind him, his personal representatives, heirs, successors and assigns) to the following effect:

(a) that the submission of a CREST Instruction constitutes the irrevocable appointment of each of Pala and Computershare as such Sierra Rutile Shareholder’s attorney and an irrevocable instruction to the attorney to do all such acts and things as may in the opinion of such attorney be necessary or expedient for the purpose of, or in connection with, the sale of the Depositary Interests to which the CREST Instruction relates to Pala or its nominee(s) or such other persons as it may decide;

(b) that he is the sole legal and beneficial owner of the Depositary Interests in respect of which the CREST Instruction is submitted or he is the legal owner of such Depositary Interests and he has the necessary capacity and authority to effect a sale of the Depositary Interests;

(c) that the Depositary Interests in respect of which a CREST Instruction is submitted are sold fully paid up and free from all liens, equities, charges, encumbrances and other third party rights and/or interests;

(d) that he will do all such acts and things as shall be necessary or expedient to vest the Depositary Interests the subject of the CREST Instruction in Pala or its nominee(s) or such other persons as it may decide;

(e) that he agrees to ratify each and every act or thing which may be done or effected by Pala or Computershare, as the case may be, in the exercise of any of his powers and/or authorities set out in this paragraph 12; and

(f) that if any provision of this paragraph 12 shall be unenforceable or invalid or shall not operate so as to afford Pala or Computershare the benefit or authority expressed to be given therein, he shall with all practicable speed do all such acts and things and execute all such documents that may be required to enable Pala and/or Computershare to secure the full benefits of this paragraph 12.

13. Settlement of the Improved Offer

Paragraph 10 of the Original Offer Announcement sets out information in relation to the settlement mechanics of the Offer. There have been no changes to the information set out in paragraph 10 of the Original Offer Announcement, save that the information in paragraph 10(c) of the Original Offer Announcement in relation to the return of documents of title and retransfer of Depositary Interests upon the Offer lapsing shall not apply in respect of any Sierra Rutile Shares sold directly to Pala by private treaty prior to the Improved Offer lapsing.

Sierra Rutile Shareholders who wish to apply to sell their shares directly to Pala by private treaty sale should refer to the settlement information in paragraph 12 of this announcement.

14. Disclosure of interests and dealings

Save as set out in paragraph 15 below, as at 5.00 p.m. (London time) on 30 September 2011, being the latest practicable date prior to the publication of this announcement, there have been no changes to the information on interests and dealings set out in paragraph 11 of the Original Offer Announcement.

15. Update on acceptances

As at 5.00 p.m. (London time) on 30 September 2011, valid acceptances of the Original Offer have been received in respect of a total of 163,452 Sierra Rutile Shares, representing approximately 0.03 per cent. of the existing issued shares of Sierra Rutile.

Furthermore, on 7 September 2011, Pala disclosed that it is beneficially interested in 192,273,344 Sierra Rutile Shares in aggregate, representing approximately 38.5 per cent. of the issued shares of Sierra Rutile, which PML may count towards satisfaction of the Acceptance Condition.

In aggregate, therefore, PML and persons acting in concert with PML have acquired, agreed to acquire or received valid acceptances in respect of 192,436,796 Sierra Rutile Shares, representing approximately 38.5 per cent. of the issued shares of Sierra Rutile.

No acceptances of the Original Offer have been received from persons acting in concert with PML. No Sierra Rutile Shares are the subject of an irrevocable commitment or letter of intent procured by PML or persons acting in concert with PML.

16. Action to be taken

Action to be taken to accept the Improved Offer

If you have accepted the Original Offer prior to the date of this announcement, your acceptance will remain valid in respect of the Improved Offer and you need take no action to benefit from the Improved Offer. Your attention is drawn to paragraph 4 of Part B of Appendix I of the Original Offer Announcement.

If you have not accepted the Original Offer prior to the date of this announcement and if you wish to accept the Improved Offer in respect of Certificated Sierra Rutile Shares, please return the Form of Acceptance duly completed by post to Computershare Investor Services PLC, Corporate Actions Projects, Bristol, BS99 6AH, as soon as possible and, in any event, to be received by no later than 1.00 p.m. (London time) on 4 November 2011. The procedure for acceptance is set out in paragraph 9(a) of the Original Offer Announcement and in the Form of Acceptance.

If you have not accepted the Original Offer prior to the date of this announcement and if you wish to accept the Improved Offer in respect of your Depositary Interests, please send (or, if you are a CREST sponsored member procure that your CREST sponsor sends) a TTE Instruction in accordance with the procedure set out in paragraph 9(b) of the Original Offer Announcement, as soon as possible and in any event so that the TTE Instruction settles not later than 1.00 p.m. (London time) on 4 November 2011.

Action to be taken to apply to sell Sierra Rutile Shares by private treaty

The procedure for applications to sell Sierra Rutile Shares to Pala by private treaty will depend on whether you hold Certificated Sierra Rutile Shares (i.e. represented by share certificates) or Depositary Interests (i.e. held in electronic form in CREST).

Details of the procedures for the sale of your Sierra Rutile Shares under the private treaty arrangements are set out in paragraph 12 of this announcement. Applications may be submitted at any time on or after 8 October 2011 and, to be valid, must be received by no later than 1.00 p.m. (London time) on 1 November 2011.

17. Responsibility

The directors of Pala and the directors of PML, whose names are set out below, accept responsibility for the information contained in this announcement, other than any information in relation to Sierra Rutile that is incorporated into this announcement by reference. To the best of the knowledge and belief of the directors of Pala and the directors of PML (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they take responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

The directors of PML are J. Colin Murray and Gregory Radke. The directors of Pala are Susan Garrod, David Hopkins and Keith Mackenzie.

18. General

The Acceptance Condition and the further terms of the Improved Offer are set out in Appendix I to the Original Offer Announcement (as modified by paragraph 4 of this announcement). Appendix I of this announcement sets out the bases of calculation used in this announcement. Unless the context otherwise requires, definitions used in the Original Offer Announcement also apply to this announcement, together with the definitions set out in Appendix II to this announcement.

Save as disclosed in this announcement, as at 5.00 p.m. (London time) on 30 September 2011, being the latest practicable date prior to the publication of this announcement, there has been no material change to the information set out in the Original Offer Announcement.

Enquiries:

Colin Murray, Vice President - Operations, Pala Investments AG +41 41 560 9070

Further details

The Improved Offer will not be made, directly or indirectly, in or into, or by the use of the mails or any means of instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facilities of a national securities exchange of the United States, Canada, Australia or Japan. Accordingly, except as required by applicable law, copies of this announcement are not being, and may not be, mailed or otherwise forwarded, distributed or sent in, into or from the United States, Canada, Australia or Japan. Persons receiving this announcement (including, without limitation, nominees, trustees or custodians) must not forward, distribute or send it into the United States, Canada, Australia or Japan.

The availability of the Improved Offer to Sierra Rutile Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. In particular, as described in Appendix I of the Original Offer Announcement, the Improved Offer will not be made directly or indirectly into the United States, Canada, Australia or Japan. Sierra Rutile Shareholders who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements and read paragraph 6 of Part B, paragraph (c) of Part C and paragraph (c) of Part D of Appendix I of the Original Offer Announcement before taking any action.

Application of the Code

By virtue of its status as a company incorporated in the British Virgin Islands, the Code does not apply to Sierra Rutile.

Shareholders are reminded that whilst Sierra Rutile's articles of association require offers to be made on terms that would be required by the Code, save to the extent that the Board of Sierra Rutile otherwise determines, the Panel on Takeovers and Mergers does not have responsibility for ensuring compliance with the Code in respect of the Improved Offer and is not able to answer shareholders' queries in relation to Sierra Rutile, Pala, PML or the Improved Offer.

In particular, the Board of Sierra Rutile has confirmed to Pala and PML that it does not intend to require Opening Position Disclosures and Dealing Disclosures (as referred to in the Code) to be made by shareholders (other than PML and persons acting in concert with PML) in accordance with Rule 8 of the Code. Shareholders are reminded that public disclosures consistent with the provisions of Rule 8.3 of the Code should not be e-mailed to the Panel on Takeovers and Mergers.

Forward-looking statements

This announcement contains certain forward-looking statements, including statements regarding Pala's and PML's plans. Such statements relate to events and depend on circumstances that will occur in the future and are subject to risks, uncertainties and assumptions. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements, including, among others, the enactment of legislation or regulation that may impose costs or restrict activities; the re-negotiation of contracts or licences; fluctuations in demand and pricing in the mining industry; fluctuations in exchange controls; changes in government policy and taxations; industrial disputes; war and terrorism. These forward-looking statements speak only as at the date of this announcement.

Publication of this announcement

A copy of this announcement will be available at www.pala.com by no later than 12.00 p.m. (London time) on the business day after the date of this announcement. You can obtain a hard copy of this announcement or any information incorporated by reference by contacting Computershare Investor Services PLC, Corporate Actions Projects, Bristol, BS99 6AH. You will not receive a hard copy of this announcement or any information incorporated by reference unless you so request. You may also inform Computershare that you wish all future documents, announcements and information in relation to the Improved Offer be sent to you in hard copy.

Documents available for inspection

Copies of the following documents will be available for inspection at the offices of Herbert Smith LLP, Exchange House, Primrose Street, London EC2A 2HS, during usual business hours on any weekday (public holidays excepted) and at www.pala.com during the offer period:

(a) the Memorandum and Articles of Association of PML;

(b) the Original Offer Announcement;

(c) the Form of Acceptance; and

(d) this announcement.

APPENDIX I

BASES OF CALCULATIONS

(a) References to the value of the Improved Offer assume the number of issued shares of Sierra Rutile in certificated form and represented by depositary interests to be 499,525,000 of which 192,273,344 are already beneficially owned by Pala. References to the value of the Improved Offer assuming the exercise of all outstanding options (other than those which have been granted at an exercise price in excess of the Improved Offer price) are based upon the Sierra Rutile Shares currently in issue as referred to above, and the 19,295,000 Sierra Rutile Shares which are at 30 September 2011 (being the latest practicable date prior to the publication of this announcement) the subject of options granted under the Sierra Rutile Share Schemes (other than those which have been granted at an exercise price in excess of the Improved Offer price). Where the premium represented by the Improved Offer price has been shown as a percentage in this document, such percentage has been calculated to the nearest whole number.

(b) Unless otherwise stated, all prices and closing prices for Sierra Rutile Shares are closing middle market quotations derived from the AIM Appendix to the Daily Official List.

(c) Closing market prices for Iluka shares and Kenmare shares, and the volume weighted average prices for Sierra Rutile Shares, Iluka shares and Kenmare shares for the 20 trading days up to and including 6 September 2011, are sourced from Bloomberg.

(d) The references to the changes in share prices of Iluka and Kenmare, Sierra Rutile’s mineral sands producer peers, are based on the following:

  • The closing market prices of Iluka shares on 6 September 2011 and 30 September 2011 were A$15.16 and A$12.51, respectively, per Iluka share, representing a decline of 17 per cent. during this period.
  • The 20-day volume weighted average price to 6 September 2011, and the closing market price on 30 September 2011, of Iluka shares, were A$15.47 and A$12.51, respectively, per Iluka share, representing a decline of 19 per cent. when comparing the closing market price on 30 September 2011 to the 20-day volume weighted average price to 6 September 2011.
  • The closing market prices of Kenmare shares on 6 September 2011 and 30 September 2011 were 41.54 pence and 34.00 pence, respectively, per Kenmare share, representing a decline of 18 per cent. during this period.
  • The 20-day volume weighted average price at 6 September 2011, and the closing market price on 30 September 2011, of Kenmare shares, were 42.10 pence and 34.00 pence, respectively, per Kenmare share, representing a decline of 19 per cent. when comparing the closing market price on 30 September 2011 to the 20-day volume weighted average price to 6 September 2011.
  • Where changes in the share prices of Iluka and Kenmare have been shown as a percentage in this document, such percentages have been calculated to the nearest whole number.

APPENDIX II

DEFINITIONS

Unless the context otherwise requires, definitions used in the Original Offer Announcement also apply to this announcement, together with the definitions set out below:

"CREST Instruction"  

has the meaning given to that term in paragraph

12 of this announcement

"Iluka" Iluka Resources Limited
"Improved Offer" the Offer (as defined in the Original Offer Announcement) as modified by this announcement
"Kenmare" Kenmare Resources Plc
"Original Offer" the Offer (as defined in the Original Offer Announcement) excluding any modifications made to the Offer by this announcement
"Original Offer Announcement" the announcement made by PML on 7 September 2011 of a mandatory offer to acquire all the Sierra Rutile Shares not already held by PML and persons acting in concert with PML at a price of 25 pence per Sierra Rutile Share in cash, which announcement set out the full terms and conditions of such mandatory offer
"Sale Depositary Interests"

has the meaning given to that term in paragraph 12 of this announcement

"Share Sale Form"

the share sale form to be sent to holders of Certificated Sierra Rutile Shares for use by such holders who wish to sell some or all of their Certificated Sierra Rutile Shares to Pala under the private treaty sale arrangements described in paragraph 12 of this announcement

"A$" Australian dollars, the lawful currency for the time being of Australia