Elemental Minerals receives non-binding indicative offer and enters into exclusive discussions

Background to the Proposal

PERTH, Australia, April 11, 2013 /CNW/ - Elemental Minerals Ltd. (ASX, TSX: ELM) ("Elemental" or "the Company") today announces that it has received an indicative, non-binding, incomplete and conditional proposal which, if it were to proceed to a formal offer, could result in an offer being made to acquire all of the outstanding shares in Elemental for a cash price of A$0.66 per share (the "Proposal").

The Proposal has been made by Dingyi Group Investment Limited ("Dingyi"), a company incorporated in Bermuda and listed on the Hong Kong Stock Exchange. Dingyi is an investment company with interests based primarily in Hong Kong and Mainland China. Dingyi is a company controlled by Mr. Li Kwong Yuk, a Chinese entrepreneur.  Mr. Li also controls a number of other substantial Mainland Chinese and international business interests in sectors including infrastructure, real estate, financial institutions and natural resource, among others.

Receipt of the Proposal is a result of the process initiated by the Board of Elemental in June 2012 to explore strategic alternatives for the Company.

Pre-conditions to the Proposal

The Proposal is expressed to be subject to pre-conditions to any formal offer being made including the completion of satisfactory confirmatory due diligence, execution of a bid implementation agreement, the recommendation of a majority of the Board of Elemental and receipt by Dingyi of undertakings from shareholders holding 13.6% of the issued shares to accept any formal offer. As the Proposal is indicative, non-binding and subject to pre-conditions, there can be no assurance that any formal offer will be made by Dingyi for the shares in Elemental and this announcement does not result in Dingyi being required to make such an offer.

The Proposal, if made, is expected to proceed by way of takeover bid made under Chapter 6 of the Corporations Act which will be subject to a 50.1% minimum acceptance condition, the approval of the transaction by the shareholders of Dingyi, other standard conditions for a transaction of that kind, and possibly other conditions identified during due diligence and negotiations.

Importantly, the Proposal states that if made, any formal offer will not be subject to finance, Chinese regulatory approvals or FIRB approval. In support of Dingyi's ability to finance the Proposal Dingyi has provided Elemental with a non-binding letter of support from Hopu Investment Management Limited.

Exclusivity and cost reimbursement undertaking

Having regard to the size of the premium that the Proposal represents when compared to recent share trading prices (for example, the proposed offer price of the Proposal represents a premium of 126% to the volume weighted average price per Elemental share over the past 20 trading days), the Board of Elemental was unanimous in its view that the Proposal ought to be progressed to determine whether it was capable of being put to shareholders in a binding form. To do so, Elemental has entered into an exclusivity and cost reimbursement agreement with Dingyi pursuant to which it grants Dingyi until a maximum period of 11 May 2013 (unless extended by agreement) in which to complete confirmatory due diligence and negotiate definitive documentation.

During this period, Elemental has agreed to customary 'no shop', 'no talk', 5 business day 'matching rights' and notification obligations, with the latter three obligations subject to a customary fiduciary carve out allowing the Board of Elemental to respond to receipt of a bona fide competing proposal which is likely to be superior to the current Proposal. Elemental has also agreed to reimburse Dingyi its costs incurred in pursuing the Proposal with a minimum of A$950,000 or, if actual external costs exceed that an amount up to a maximum of A$1,900,000 if:

Board guidance

The Board intends to continue to progress negotiations with Dingyi during the exclusivity period to a point where it is able to assess whether a suitable binding agreement can be considered and if thought appropriate put to shareholders. If such an outcome can be achieved, the Board will provide a formal recommendation to shareholders as to the merits of the Proposal at that time.

Shareholder Support

Pala Investments Limited together with John Ian Stalker and Fiducs Limited (an entity controlled by Mr Stalker), being shareholders of Elemental who together hold 13.6% of the Company (the Supportive Shareholders), have each entered into a letter of intent with Dingyi in which they confirm they are supportive of the Proposal, intend in the absence of a superior proposal to accept a formal takeover offer from Dingyi for all of the outstanding shares in Elemental on terms not substantially less favourable than those set out in this announcement if it is made (Offer) and would be prepared to enter into pre-bid agreements on mutually agreed terms setting out the basis on which they would agree to sell their shares to Dingyi or accept the Offer. The letter of intent expires upon the earlier of signing a mutually agreed pre-bid agreement or 11 May 2013, at which time the undertakings and statements of intent above cease to bind the Supportive Shareholders. Each Supportive Shareholder has authorised Elemental to include this paragraph in this announcement.

Conclusion

The Board of Elemental looks forward to working closely with Dingyi over the coming month to progress the Proposal. The Board remains committed to optimising value for shareholders and will continue to act in their best interests as the negotiations progress.

RBC Capital Markets is acting as financial adviser and Norton Rose is acting as legal adviser to Dingyi.

BMO Capital Markets is acting as financial adviser and Corrs Chambers Westgarth and Stikeman Elliott are acting as legal advisers to Elemental.

About Elemental Minerals

Elemental Minerals Limited is an advanced mining exploration and development company that aims to grow shareholder value through its 93%-owned Sintoukola Potash Project on the Republic of Congo coastline.  Elemental Minerals is dual listed on the Australian Stock Exchange and the Toronto Stock Exchange under the symbol ELM. For more information, visit www.elementalminerals.com

Forward Looking Statements

No representation or warranty, express or implied, is made or given by or on behalf of the Company or any of their subsidiary undertakings or any of the directors, officers or employees of any such entities as to the accuracy, completeness or fairness of the information or opinions contained in this Release and no responsibility or liability is accepted by any person for such information or opinions.  In furnishing this Release, the Company does not undertake or agree to any obligation to provide the attendees with access to any additional information or to update this Release or to correct any inaccuracies in, or omissions from, this Release that may become apparent. The information and opinions contained in this Release are provided as at the date of this Release. The contents of this Release are not to be construed as legal, financial or tax advice. Each prospective investor should contact his, her or its own legal adviser, independent financial adviser or tax adviser for legal, financial or tax advice.

www.elementalminerals.com

SOURCE Elemental Minerals Limited