Kagara Limited Propose to Acquire Einasleigh Copper Project from Copper Strike Limited

13:39 AEST July 5, 2011 ABN Newswire (C) 2004-2011 Asia Business News PL. All Rights Reserved.

Perth, Australia (ABN Newswire) - Kagara Limited (ASX: KZL) advises that it has submitted a proposal to Copper Strike Limited (ASX: CSE) to acquire CSE's Einasleigh Copper Project in North Queensland.

Under the proposal, Kagara has made a conditional offer to enter into a definitive agreement by 1 August 2011 to purchase the Einasleigh Project for total consideration comprising A$16 million in cash and the cancellation of Kagara's 17.5% shareholding in CSE. The completion of any sale agreement would be subject to receipt of approval from CSE shareholders, both for the sale of the Project and the proposed cancellation of CSE shares held by Kagara.

If an agreement is finalised, the Board of CSE will recommend the sale of the Project to Kagara to its shareholders without qualification in the absence of a superior proposal.

The Einasleigh Copper Project, which comprises a tenement package covering a total area of approximately 450 sq km located 350km north-west of Townsville, lies immediately to the south-west of the Mt Garnet copper and polymetallic processing facilities and to the north west of its Thalanga polymetallic processing facility. The Project comprises a measured, indicated and Inferred resource of 15 million tonnes @ 0.84% copper at Kaiser Bill and 1.1 million tonnes at 2.9% copper at Einasleigh.

Kagara's Managing Director, Mr Geoff Day, said the proposed acquisition was consistent with Kagara's objective of strengthening its resource and reserve positions at each of its operating centres to establish an 8-12 year production outlook for both copper and zinc production.

'This proposal, if it leads to a definitive agreement, would deliver genuine win-win outcomes for shareholders of both companies,' Mr Day said. 'From CSE's perspective, it would immediately monetise the identified copper resources at Einasleigh - which we believe were unlikely to ever be developed as a standalone project - and deliver a cash injection which could be used to underpin their core business as a focused explorer.'

'From Kagara's perspective, it further increases our copper resource inventory and strategic exploration tenement holdings in North Queensland,' he added. 'We believe we can develop and efficiently mine the Einasleigh Copper Project, providing a complementary ore feed to the high-grade ore coming from our Balcooma operations to the south and, in due course, lower grade feed from Baal Gammon.'


About Kagara Limited:

Kagara Limited is an S&P ASX 200 Australian resources group and one of Australia's lower cost producers of zinc, copper, lead and nickel.

The Company's base metals operations centre on the Mt Garnet-Chillagoe region of north Queensland, with three underground mines, one open pit mine and three processing facilities and a substantial production profile targeting copper production of 23,000 tonnes in FY2011 and zinc production of 100,000 tonnes in FY2012.

Production is also underway at the Lounge Lizard Nickel Project in Western Australia at a targeted nickel ore production rate of 50,000 tonnes per annum.

In addition, Kagara holds an extensive portfolio of high quality development and exploration assets, including the world-class Admiral Bay zinc-lead-silver-barite deposit in Western Australia, capable of delivering long term growth for the Company's shareholders well into the future.



Contact:

Geoff Day
Managing Director & CEO
Kagara Limited

Joe Treacy
Executive Director
Kagara Limited

Tel: +61-8-9481-1211
Email: admin@kagara.com.au
http://www.kagara.com.au