Cerillion Regulatory News (CER)

7 Nov 2006 07:02

Eureka Mining PLC07 November 2006 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO ORFROM ANY JURISDICTION WHERE TO DO THE SAME WOULD CONSTITUTE A VIOLATION OF THERELEVANT LAWS OF SUCH JURISDICTION. Recommended proposal for the acquisition of Eureka Mining Plc ("Eureka") By Celtic Resources Holdings Plc ("Celtic") To be effected by a scheme of arrangement Summary • The boards of Eureka and Celtic announce a recommended offer by Celticfor Eureka on the basis of 5 Celtic Shares for every 16 Eureka Shares. • The Proposal is to be effected by means of a scheme of arrangement andvalues each Eureka Share at approximately 53.4 pence based on a Celtic shareprice of 171 pence. • The Enlarged Group will have two operating gold mines and an operatingmolybdenum mine, all in the same region of Kazakhstan, which will permit costsavings and optimal use of expertise across the Enlarged Group. • The directors of both companies believe that the Proposal will createa more attractive investment vehicle for all shareholders. The proposedacquisition of Eureka will create a solid platform upon which to develop furtherCeltic's plans to build a significant gold and base metals mining businessfocussed on the FSU. • The Proposal will provide the funding to continue to develop Eureka'sprojects, in particular its substantial copper/gold project in Chelyabinsk,Russia and will also address Eureka's short term funding requirement. • The Enlarged Group will benefit from the increased scale, diversityand management expertise and experience of operating in the Former Soviet Union. • A Court Meeting and an EGM to approve the Proposal are to be held on30 November 2006 Jonathan Scott-Barrett Chief Executive Officer of Eureka commented, "Thisproposal will enable Eureka to continue to develop its projects and will provideEureka's shareholders with an investment in an enlarged group with financialstability, increased scale and diversity and considerable management expertiseand experience of operating in the FSU." Peter Hannen, Celtic Chairman, commented, "We are delighted to have reachedagreement with Eureka Mining on this transaction. The business environment inresource companies tougher and more competitive, but opportunities still aboundin the FSU. Therefore, the combined entities of Celtic and Eureka willrepresent a strong, results orientated group with three operating mines inKazakhstan and two outstanding copper-gold projects in Russia. We intend to beacquisitive to expand existing operations and aim to make Celtic an attractiveinvestment vehicle." Summary timetable for the SchemeVoting Record Time for the Court Meeting and EGM 1 6.00 p.m. on 28 NovemberCourt Meeting 10.00 a.m. on 30 NovemberEGM 2 10.05 a.m. on 30 NovemberScheme Record Time 3 6.00 p.m. on 19 DecemberCourt Hearing of the petition to sanction the Scheme 20 DecemberSuspension of trading in Eureka Shares, following the court hearing 20 DecemberonEffective Date of the Scheme 21 DecemberAdmission and first dealing date for New Celtic Shares 22 DecemberCREST accounts credited 22 DecemberLatest date for despatch of share certificates for New Celtic by 4 January 2007Shares Notes 1. If either the Court Meeting or the EGM is adjourned, the Voting RecordTime for the adjourned meeting will be 48 hours before the time stated for thestart of the adjourned meeting. 2. To commence at the time stated, or, if later, immediately after theconclusion or adjournment of the Court Meeting. 3. This date is indicative only and will depend on, among other things,the date upon which the Court sanctions the Scheme. This summary should be read in conjunction with, and is subject to, the fulltext of the following announcement and the Appendices. Appendix I sets out certain further terms and conditions of the Scheme andAppendix II contains the definitions of certain terms used in this announcement. For further information please contactJonathan Scott-Barrett Michael PalmerChief Executive Officer Finance DirectorEureka Mining Plc Celtic Resources Holdings PlcTel: +44 (0)20 7921 8810 Tel: +44 (0)20 7921 8800 Ian Soanes Frank MoxonCenkos Securities plc Evolution Securities LimitedTel: +44 (0)20 7397 8900 Tel: 020 7071 4300 Laurence ReadConduit PRTel: +44 (0)20 7618 8760 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO ORFROM ANY JURISDICTION WHERE TO DO THE SAME WOULD CONSTITUTE A VIOLATION OF THERELEVANT LAWS OF SUCH JURISDICTION. Recommended proposal for the acquisition of Eureka Mining Plc by Celtic Resources Holdings Plc 1. Introduction On 12 September 2006 the boards of Eureka and Celtic confirmed that they were indiscussions concerning the possibility of Celtic acquiring Eureka. The Boards ofEureka and Celtic are pleased to announce their agreement on the terms of arecommended proposal for the acquisition of Eureka by Celtic. The Proposal is tobe effected by way of a scheme of arrangement (the "Scheme") under section 425of the Companies Act, which requires approval by Eureka Shareholders andsanction of the Court. In order to approve the Proposal, Eureka Shareholders will need to vote infavour of the resolutions to be proposed at two shareholders' meetings, (theCourt Meeting and the EGM), to be held on 30 November 2006. 2. Summary of the terms of the Proposal The Proposal is to be effected by way of a scheme of arrangement of Eureka undersection 425 of the Companies Act. The purpose of the Scheme is to enable Celticto acquire the whole of the issued and to be issued share capital of Eureka.Under the terms of the Scheme, the Eureka Shares will be cancelled and, upon theScheme becoming effective, Eureka Shareholders excluding Celtic will receive: 5 New Celtic Shares for every 16 Eureka Shares The Proposal values the entire issued share capital of Eureka at approximately£14.2 million and each Eureka Share at approximately 53.4 pence based on theclosing price of one Celtic Share of 171.0 pence on 6 November 2006, the lastdealing day prior to the release of this announcement. The New Celtic Shares will be issued credited as fully paid, on identical termsto and will rank pari passu with the existing issued Celtic Shares, includingthe right to receive and retain all dividends and other distributions declared,paid or made after the Scheme becomes effective. Completion of the Proposal, assuming the issue of all contractual Eureka Sharesdue, will result in the issue of 7,451,537 New Celtic Shares by Celtic,representing 13.35 per cent. of the Enlarged Share Capital of Celtic. Those withcontractual obligations due to be satisfied by the issue of Eureka Shares whichhave not been fulfilled by the Effective Date will be offered equivalentobligations to be satisfied by the issue of Celtic Shares. Fractions of New Celtic Shares will be rounded down to the nearest whole shareand will not be allotted or issued to Eureka Shareholders pursuant to theProposal. To become effective, the Scheme requires, amongst other things, approval by thenecessary majorities at the Court Meeting of the Eureka Shareholders present andvoting, either in person or by proxy; the passing of the special resolution setout in the notice of the EGM; satisfaction or waiver of the other conditions setout in Appendix I of this announcement; and the Court Sanction being obtained.The Court Meeting and the EGM, and the nature of the approvals required to begiven at these meetings, are described in more detail in paragraph 11 of thisannouncement. All Eureka Shareholders are entitled to attend the Court Hearingin person or to be represented by counsel to support or oppose the sanctioningof the Scheme. The Scheme will become effective upon the sanctioning by the Court of the Schemeand the reduction of capital involved therein, the delivery to the Registrar ofCompanies of a copy of the Order and the registration of the Order of the Courtsanctioning the reduction of capital which, subject to the Court's timetable, isexpected to occur by the close of business on 21 December 2006. It is expectedthat trading in Eureka Shares will be suspended upon announcement by Eureka ofthe Court's sanction of the Scheme on 20 December 2006. If the Scheme becomes effective, it will be binding on all Eureka Shareholdersirrespective of whether or not they attended or voted in favour of the Scheme atthe Court Meeting or in favour of the special resolution to be proposed at theEGM. Unless the Scheme becomes effective by no later than 29 December 2006, or suchlater date, if any, as Eureka and Celtic may agree and the Court may allow, theScheme will not become effective and the Scheme will not proceed. 3. Background to and reasons for the Proposal Eureka has two principal assets, its fifty per cent. interest in a molybdenummining operation at Shorskoye, Kazakhstan, which is now in production, and asubstantial copper and gold project in Chelyabinsk in Russia. In September 2005 Eureka placed 7.2 million shares at £1.25 per share to raise£9 million (US$16.38 million) to finance the pre-feasibility study atChelyabinsk (the "PFS") and pay part of the consideration for the acquisition ofthe Chelyabinsk project. The PFS was successfully completed and announced inJuly 2006. The Eureka Directors estimate that a further $16 million will have tobe spent in order to complete a definitive feasibility study ("DFS") and therebyadvance the project to the point where bank debt can be obtained. Work on theDFS has already started with hydrological and environmental studies but, as setout in the Chairman's statement accompanying the audited results for the yearended 31 December 2005 which were announced on 3 May 2006, it was anticipatedthat further funding would be sought in the summer of 2006 to provide fullfunding for the study. It was intended to raise these further equity funds following completion of thePFS in July 2006. However, between May 2006 and July 2006, Eureka's share pricefell from 135p to 65p. Against this background, and because the results of thePFS were less positive than Eureka had expected based on the earlier scopingstudy, the Eureka Directors considered that a substantial share issue in theprevailing circumstances would not be in the best interests of EurekaShareholders. They therefore began to consider alternative financing options,including the possibility of combining the business of Eureka with that ofCeltic. Eureka's principal asset at Chelyabinsk will require very substantial funding tobring it into production and although operations at Shorskoye are now generatingcash, that cash cannot be distributed by the joint venture company to Eurekauntil its own debt of $12 million is repaid which the directors estimate willtake a further 12 - 14 months. Eureka's Directors consider that a sale of one ormore of these assets to provide working capital would not be practicable. Inorder to enable Eureka to meet its obligations as they fall due, Celtic hasprovided secured loans of $4.65 million due for repayment on 29 December 2006 toEureka of which $2 million has been used to pay the overdue balance of theconsideration for the purchase of the Chelyabinsk project. Celtic has a stated policy of seeking mining projects in the FSU and it hasliquid resources which could be deployed to finance the development of theChelyabinsk project, a management team with more than 16 years continuousexperience of operating in Kazakhstan and Russia and, having been a coreinvestor in Eureka, a close relationship with its management. In view of thesecredentials, Celtic's need to invest its cash balance productively, Eureka'surgent need for funds and the close relationship between the two companies, theDirectors of Eureka and the Celtic Directors consider the acquisition of Eurekaby Celtic to be attractive. Reports from St. Barbara Consultancy Services ("St Barbara") contained in theScheme Circular provide independent opinions on the valuations of Eureka'sprincipal properties, Shorskoye and Miheevskoye (part of the Chelyabinskproject). With respect to Shorskoye, St Barbara has estimated an NPV of $11.5 million forEureka's 50 per cent. share of the operations based on Eureka's current mineplan with the possibility of that valuation increasing if the resource proveslarge enough to provide for a longer mine life and/or higher throughput. ForMiheevskoye, on a similar basis an NPV of $89.2 million has been estimated. StBarbara considers that this value would increase by $15 million were recovery ofa molybdenum concentrate by-product to be developed and that a number of furtheropportunities exist at Miheevskoye which offer the possibility of an increase inthe NPV by the order of $50 million. The value of Eureka implied by the Proposal is lower than the total of thesevaluations. One reason for this is that the Eureka Directors believe that inorder to mine a substantial new property of the size and complexity ofMiheevskoye successfully, it is essential to have a Russian partner, and it isexpected that approximately half of the potential value of the project will behave to be foregone in order to secure the support of an appropriate partner.Furthermore, in accordance with the guidance provided by AIM, these valuationsassume an illustrative cost of capital of 10 per cent. and do not take accountof either the likely difficulty and cost, in practice, of securing the financerequired to develop the Miheevskoye project, or Eureka's current actual cashrequirements. In addition, the NPV figures are calculated pre-tax. 4. Benefits of the Proposal for Eureka Shareholders The Eureka Directors consider that the Proposal will provide Eureka with accessto the funding required to enable it to exploit the Chelyabinsk project to itsfullest potential and to maintain its operations at Shorskoye. EurekaShareholders will retain exposure to Eureka's projects within the Enlarged Groupas well as to those of Celtic. The Eureka Directors consider that EurekaShareholders will benefit from the experience of Celtic's management andoperating teams in Russia and Kazakhstan and their ability to find, develop andoperate mining projects. This expertise and the combined mining teams of bothcompanies will provide opportunities for the Enlarged Group to seek out newresource opportunities in the FSU thereby enabling it to continue the long termstrategy of both companies to expand operations as a means of providingincreased value to shareholders. In addition, Eureka will become part of a larger mining resource group with goldproduction in Kazakhstan. It is Celtic's stated intention to increase its goldand other resources and production by acquisition as well as by expansion. Theproposed acquisition of Eureka will provide further resources of some 1 millionounces of gold and is expected, in time, to provide annual production ofapproximately 55,000 ounces of gold from the Chelyabinsk project. It is the view of the Eureka Directors that the recent price corrections inresource based equities have affected many junior companies and the environmentfor raising capital and debt finance for projects is appreciably more difficultthan in previous years. Smaller companies are competing with larger, betterfinanced local and international companies for assets in the FSU and we arewitnessing a changing landscape in markets and politics. Eureka Directorsbelieve that this environment will become even tougher for smaller companies andthat a consolidation of interests with like-minded companies in the FSU willresult in a lowering of the risk profile and creation of stronger and moreattractive investment vehicles for existing and future shareholders. Thisconsolidation will also mitigate some of the risks of operating in the FSU. Accordingly the Eureka Directors believe that the key benefits to EurekaShareholders of the proposal are: • They are offered a shareholding in an Enlarged Group that has a strongbalance sheet, a sound operating record in the FSU with the intention ofcontinuing the development of Eureka's assets. • The Enlarged Group will have two operating gold mines and an operatingmolybdenum mine, all in the same region in Kazakhstan which will enable costsavings and maximum use of expertise across the Enlarged Group. • The Enlarged Group will have the capacity to expand existing productionat its mines, develop strong working relationships with FSU partners andaccelerate the development of the Chelyabinsk Project. • The execution of Celtic's plans to make further acquisitions ofappropriate assets in the FSU which will benefit and add value and increase thescale of the Enlarged Group and will create a more attractive investmentvehicle. 5. Financial effects of the Scheme on Eureka Shareholders The following table shows, for illustrative purposes only and on the basis ofthe assumptions set out in the notes below, the financial effects of theProposal on the capital value for a holder of 160 Eureka Shares if the Schemebecomes effective. Value of 50 New Celtic Shares to be £85.50issued for 160 Eureka SharesValue of 160 Eureka Shares £88.80Decrease in value £3.30This represents a decrease of 3.7 per cent.approximately 1. The illustration is based on the closing price of 171p per Celtic Shareon 6 November 2006 (the last dealing day before the release of thisannouncement) and the closing price of 55.5p per Eureka Share the same day. 2. No account has been taken of any liability to taxation. Save for one dividend in specie by Celtic, neither Eureka nor Celtic has paiddividends and, accordingly, no comparison of income is presented. 6. Eureka Directors, management and employees The Independent Celtic Directors have confirmed that the existing employmentrights, including pension rights, of all employees of Eureka will be fullysafeguarded. The combined business will be managed by the existing board of directors ofCeltic with the addition of Jonathan Scott-Barrett, a current director ofEureka. The remaining Eureka Directors, with the exception of Kevin Foo, who isa director of Celtic, are resigning or retiring. The current senior managementteams of the projects of both Eureka and Celtic will continue in their currentpositions. 7. Irrevocable undertakings Irrevocable undertakings to vote in favour of the resolutions to be put to theCourt Meeting and the EGM have been received by Celtic from the directors ofEureka other than Kevin Foo, who is also a director of Celtic, and David Bartley(the "Independent Eureka Directors") who hold beneficial interests in EurekaShares. They have provided voting undertakings in respect of their entire legaland beneficial holdings of Eureka Shares amounting, in aggregate, to 1,326,066Eureka Shares (representing approximately 4.97 per cent. of Eureka's existingissued share capital). The voting undertakings provided by such IndependentEureka Directors will not cease to be binding if a higher offer is made forEureka. 8. Information on Celtic Celtic is a mining company whose activities are focused on the FSU. Its shareshave been traded on AIM since 2002. Earlier in 2006, following several years of negotiations, it disposed of itsinterest in SVMC, the owner of the Nezhdaninskoye gold mine in Russia, realisingUS$80m before costs. It owns and operates gold mines at Suzdal in Kazakhstanwhere it has successfully pioneered the introduction of BIOX(R) technology forthe extraction of gold from sulphide ores and has a 75 per cent. interest in theopen pit/heap leach mine at Zherek in Kazakhstan. Celtic has significantinterests in Eureka (14.04 per cent.) and, following the sale of its oil and gasexploration assets, in Victoria Oil & Gas Plc (5.54 per cent.). Suzdal The Suzdal mine is an underground and open pit operation treating refractorysulphide ores. A treatment plant using BIOX(R) technology has been developed toextract gold. This is the first successful application of such BIOX(R)technology in the FSU and the first gold was poured from this new plant in May2005. The treatment plant has the capacity to process 300,000 tonnes of ore per yearand plans are underway to expand this to treat higher ore volumes, feed stockfrom low grade stockpiles or purchased concentrates. Monthly throughput iscurrently averaging 20,000 tonnes. SRK has derived an audited Mineral ResourceStatement for Suzdal of some 4.9 Mt at a mean grade of 8.3 g/t Au of which some0.79 Mt at a mean grade of 18.5 g/t has been classed as Indicated and 4.1 Mt asa mean grade of 6.4 g/t has been classed as Inferred. SRK has also derived anaudited Probable Ore Reserve Statement of 0.7 Mt at a mean grade of 16.3 g/t Au.SRK considers that there is good potential to both increase the resource throughfurther exploration and also to upgrade the reported Inferred Mineral Resourceto the Indicated Category which would at the same time enable more of theresource to be converted to an Ore Reserve. Table 1. SRK Audited Mineral Resource Statement, Suzdal Mine, 01/01/2006 Oxide Tonnes Grade Gold Gold ('000) (g/tAu) (kg) (koz)Measured - - - -Indicated 40 16.4 700 23Inferred 780 1.1 840 27 ---- ---- ---- ---Meas + Ind 40 16.4 700 23 ---- ---- ---- ---Total 820 1.9 1,540 50 ---- ---- ---- --- Sulphide Tonnes Grade Gold Gold ('000) (g/tAu) (kg) (koz)Measured - - - -Indicated 750 18.7 14,040 452Inferred 3,370 7.6 25,560 822 ---- ---- ---- ---Meas + Ind 750 18.7 14,040 452 ---- ---- ---- ---Total 4,120 9.6 39,600 1,274 ---- ---- ---- --- Suzdal Total Tonnes Grade Gold Gold ('000) (g/tAu) (kg) (koz)Measured - - - -Indicated 790 18.5 14,750 475Inferred 4,150 6.4 26,390 849 ---- ---- ---- ---Meas + Ind 790 18.5 14,750 475 ---- ---- ---- ---Total 4,940 8.3 41,140 1,324 ---- ---- ---- --- Table 2. SRK Audited Suzdal Ore Reserve Statement (01/01/2006) Tonnes Grade Gold GoldDescription (kt) (g/t) (kg) (koz)Proven - - - -Probable 700 16.3 12,390 366 ---- ---- ---- --Total 700 16.3 12,390 366 ---- ---- ---- -- Zherek The Zherek mine is an open pit and heap leach operation treating oxide ores,situated some 28 km from the Suzdal mine. Production for the full year 2005 was 17,406 ounces, with 402,276 tonnes of oremined at an average grade of 2.51 grammes of gold per tonne. It is anticipated that oxide ore will be exhausted at Zherek in late 2007, whenopen pit mining will cease. Studies and a drilling programme have begun tobetter define the sulphide ore body and a review of the economics of developmentof an underground mine and pre-concentrator is underway. If it is economicallyfeasible to do so, it is anticipated that concentrate would be trucked to theSuzdal plant for final gold recovery. Celtic is seeking ways to reinvest the cash realised from the Russian sale inaccordance with its aim to become a significant mining company focused on theFSU. SRK has derived an audited Mineral Resource Statement of some 5.4 Mt at a meangrade of 4.8 g/t Au of which some 0.5 Mt at a mean grade of 2.1 g/t has beenclassed as Indicated and 4.9 Mt as a mean grade of 5.1 g/t has been classed asInferred. SRK has also derived an audited Probable Ore Reserve Statement forZherek of 0.5 Mt at a mean grade of 2.0 g/t Au. All of the reported IndicatedMineral Resource and also the Probable Ore Reserve relates to oxidised materialwhich is planned to be exploited by the current open pit. Celtic continues to review mining opportunities in the FSU and as stated abovehas a consolidatory strategy aimed at creating a large and profitable miningcompany. Table 3. SRK Audited Mineral Resource Statement, Zherek Mine, 01/01/2006Balance Oxide Tonnes Grade Gold Gold ('000) (g/tAu) (kg) (koz)Measured - - - -Indicated 550 2.1 1,170 37Inferred - - - - ---- ---- ---- ----Meas + Ind 550 2.1 1,170 37 ---- ---- ---- ----Total 550 2.1 1,170 37 ---- ---- ---- ----Balance Transition Tonnes Grade Gold Gold ('000) (g/tAu) (kg) (oz)Measured - - - -Indicated - - - -Inferred 510 2.8 1,400 45 ---- ---- ---- ----Meas + Ind - - - - ---- ---- ---- ----Total 510 2.8 1,400 45 ---- ---- ---- ----Balance Sulphide Tonnes Grade Gold Gold ('000) (g/tAu) (kg) (oz)Measured - - - -Indicated - - - -Inferred 4,370 5.4 23,610 759 ---- ---- ---- ----Meas + Ind - - - - ---- ---- ---- ----Total 4,370 5.4 23,610 759 ---- ---- ---- ----Zherek Balance Total Tonnes Grade Gold Gold ('000) (g/tAu) (kg) (oz)Measured - - - -Indicated 550 2.1 1,170 37Inferred 4,880 5.1 25,010 804 ---- ---- ---- ----Meas + Ind 550 2.1 1,170 37 ---- ---- ---- ----Total 5,430 4.8 26,180 841 ---- ---- ---- ----Table 4. SRK Audited Zherek Ore Reserve Statement (01/01/2006) Tonnes Grade Gold GoldSuzdal Total (kt) (g/t) (kg) (koz)Proved - - - -Probable 520 2.0 1,050 366 ---- ---- ---- ----Total 520 2.0 1,050 366 ---- ---- ---- ---- Current trading of Celtic Monthly gold production at Suzdal has been increasing and the BIOX(R) plant hascompleted an annual cycle which in Kazakhstan covers climatic temperatures from-40degreesC to +40degreesC. Improvements in plant throughput and gold recoveryare continuing. In addition, consideration is being given to expanding thecapacity of the plant to treat concentrates from other sources, including minesin the region which have sulphide ores similar to Suzdal. Since the interim results, published on 12 September 2006, internal forecastshave been reviewed and due to lower mined grades at Suzdal, Celtic now expectsgold production this year to be around 50,000 ozs. Also, due to treatment oflower grade transitional ores at Zherek, production there should be around12,000 ozs of gold this year. At 62,000 ozs, the combined group production willbe 60% higher than last year. At Zherek, Celtic's preliminary technical and economic studies suggest thatsulphide ore could be mined and trucked to Suzdal. Celtic continues to reviewother mining opportunities, primarily in the FSU. 9. Information on Eureka Eureka's business is focused on the development and management of mining assetsin the FSU. Information on Eureka's properties and operations is provided belowand, in more detail, in the Scheme Circular to be published shortly whichcontains an independent experts' report on Shorskoye and an independent reviewand valuation of Chelyabinsk - Miheevskoye based upon the pre-feasibility studywhich was announced a 26 July 2006. Shorskoye Eureka acquired a 65 per cent. interest in this project from Celtic and thebalance from local Kazakh interests in December 2003, when this was anexploration project. During 2005 a definitive feasibility study was carried outand the results were released in July 2005. This project is a molybdenum deposit with a JORC resource of more than 20million tonnes of ore at 0.10 per cent. molybdenum and 0.06 per cent. copper. Ahigh grade zone of 3.1 million tonnes was identified and mining operationsstarted in this zone in September 2005. Mining operations are supplying theconcentrator, commissioned in May 2006, and this is currently building up tofull production. In July 2005 Eureka signed a joint venture agreement with KazAtomProm, the stateuranium company of Kazakhstan. This joint venture, Molyken, utilisesKazAtomProm's Stepnogorsk industrial and plant facilities to process molybdenumore from Shorskoye in exchange for a 50 per cent interest in Ar-Man LLP, theEureka subsidiary that is owner of Shorskoye. A production licence for theconcentrate has been granted and contracts for the sale of the ongoingconcentrate have been signed. First sales receipts of US$1.25 million wereachieved and announced in September 2006. The cost of the initial mining capitalat Shorskoye and plant modifications were financed through local initial bankdebt finance of $12 million from KazKommersbank LLP. It is anticipated that thebank loan will be repaid within 12-14 months. Chelyabinsk - Miheevskoye This project is a large copper/porphyry deposit located at Miheevskoye some 250km from Chelyabinsk, within the Chelyabinsk oblast in Southern Russia. Apre-feasibility study has been completed on Miheevskoye, which has provided aTotal Indicated Resource to JORC standards of 373.5 million tonnes averaging0.38 per cent. copper and 0.10 grams per tonne of gold, containing 1.42 milliontonnes of copper and 1.20 million ounces of gold. There is a total inferredresource of 52.1 million tonnes containing 0.31 per cent. copper and 0.07 gramsper tonne of gold. The study evaluated the project on the basis of a mine life of approximately 12years with a throughput of 25 million tonnes per year, with average annualproduction of 81,000 tonnes of copper and 55,000 ounces of gold, and a totalproduction of 967,000 tonnes of copper and 668,000 ounces of gold. Drilling for the study has demonstrated that the southern zone of the depositremains open to the south and to the west. Further drilling is planned to testthese areas during the definitive feasibility phase, with the expectation ofextending the defined resource. Based on the pre-feasibility study, the definitive feasibility has alreadystarted and is planned for completion in the third quarter of 2007; if studiesare positive and financing is achieved, plant commissioning could begin beforethe end of 2009. Chelyabinsk - Tominskoye This project is a large copper/porphyry deposit located 40km from Chelyabinsk.The proximity to Chelyabinsk means it has access to basic services includingtransportation infrastructure. Initial studies on Tominskoye, by others provided a total indicated resource of241 million tonnes averaging 0.58 per cent. copper and 0.12 grams per tonne ofgold, containing 1.4 million tonnes of copper and 0.93 million ounces of gold. Further exploration at the site is planned for the coming year along withinitial development scoping studies. Kentau Kentau Exploration & Mining LLP, which was acquired from Celtic in December2003, holds two licences in the Kentau district, first granted in 1997. It is alarge and highly prospective area from which large volumes of geological datahave been accrued. Eureka has completed additional surveys (including RCdrilling) as well as an extensive data review, with a comprehensive GeographicInformation Systems database created. On the basis of these results a focusedexploration programme on previously identified targets is planned. Dostyk Dostyk, which was also acquired from Celtic in December 2003, is the currentholder of licence No 785 with an exploration period for years 2006-2007. Theevaluation of achieved results is being completed and decisions regardingfurther activities will be made. Current trading of Eureka The interim results of Eureka for the six months ended 30 June 2006 wereannounced on 21 September 2006. Since that date Eureka has received a furtherloan of $3 million from Celtic to enable it to continue to meet its financialobligations as they fall due. The loan from Celtic is due for repayment on 29December 2006. Although operations at Shorskoye have now begun to generate cashfor Molyken, Eureka's joint venture company, operations continue to consume cashand in the event that the Proposal fails to complete there is currently nocommitted source of replacement finance. 10. Structure of the Scheme It is proposed that, under the Scheme, all the Eureka Shares in issue prior tothe Voting Record Time will be cancelled. Any further Eureka Shares issuedbefore the Scheme Record Time and in respect of which the holders are or haveconsented to be bound by the Scheme will also be cancelled. New ordinary shares of 1p each in Eureka will be issued by Eureka to Celtic bycapitalisation of the reserve arising from the cancellation of the Eureka Sharesso that when the Scheme becomes effective Eureka will become a wholly ownedsubsidiary of Celtic. Eureka Shareholders who are on the register of members ofEureka at the Scheme Record Time will receive 5 New Celtic Shares for every 16existing Eureka Shares held. Shares in Eureka issued after the Scheme RecordTime will not be subject to the Scheme. Accordingly, it is proposed that thearticles of association of Eureka ("the Articles") be amended so that ordinaryshares of 1p in Eureka Shares issued after the Scheme Record Time (other than toCeltic or a nominee of Celtic) will be required to be transferred to Celtic (orits nominee(s)) on the same terms as under the Scheme, including as to thenumber of New Celtic Shares receivable as consideration for such shares. It is expected that the Scheme will become effective by the close of business on21 December 2006. The Scheme can only become effective if all the conditions towhich the Scheme is subject have been satisfied or waived by no later than 29December 2006 or such later date, if any, as Eureka and Celtic may agree and theCourt may allow. The Scheme will become effective upon a copy of the Order being registered bythe Registrar of Companies. If the Scheme becomes effective, it will be binding on all Eureka Shareholders,irrespective of whether or not they attended the Court Meeting or the EGM andirrespective of the manner in which they voted. 11. Action to be taken to approve the Scheme A Court Meeting is required to be held at the direction of the Court to seek theapproval of Eureka Shareholders for the Scheme. An EGM is also being convenedfor the same day to consider and, if thought fit, approve the Scheme, thecancellation of Eureka's entire issued share capital required as part of theScheme and the amendment to the Articles referred to below. These meetings areto be held at Wedlake Bell, 52 Bedford Row, London WC1R 4LR. The Court Meetingwill take place at 10.00 a.m. on 30 November 2006 and the EGM will take place at10.05 a.m. on 30 November 2006 (or, if later, immediately after the conclusionor adjournment of the Court Meeting) respectively. At the Court Meeting the approval of a majority in number of those EurekaShareholders voting (in person or by proxy) representing at least 75 per cent.in nominal value of the Eureka Shares in respect of which votes are cast (eitherin person or by proxy) will be required. Once the necessary approval has beenobtained, the Scheme will become effective upon sanction by the Court of theScheme and the reduction of capital involved therein, and delivery of the Orderto the Registrar of Companies for registration and registration by the Registrarof Companies of the Order sanctioning the reduction of capital. If the Schemebecomes effective, it will be binding on all Eureka Shareholders as at theEffective Date irrespective of whether or how they voted. Details of theconditions to the implementation of the Proposal and the Scheme are set out inAppendix I of this announcement. Any shares in Eureka issued to holders of warrants on exercise of their warrantsafter the Effective Date and any shares in Eureka issued in satisfaction ofcontractual obligations will not be included in the Scheme and therefore suchholders of warrants will not be bound by the Scheme. To ensure that sharesissued to holders of warrants after the Effective Date are bound by the Scheme,the amendments to the Articles to be proposed at the EGM will provide that anyperson acquiring shares in Eureka after the Effective Date will be required totransfer them to Celtic on the basis that they will receive the same number ofNew Celtic Shares to which they would have been entitled had their shares beensubject to the Scheme. At the EGM, the resolution requires to be passed by 75 per cent. of the votescast (in person or by proxy). 12. Independent Eureka Directors As he is a Director of both Celtic and Eureka, Kevin Foo has a conflict ofinterest. Accordingly, he has taken no part in the discussions of the EurekaBoard relating to the Scheme and the Proposal. David Bartley became ill towards the end of 2005 and in February 2006 he stooddown from executive responsibilities, whilst remaining a non-executive director.He is currently recovering from an operation and has been unable to take part inthe formulation of the Proposal or the preparation of this announcement. In thecircumstances, the Panel on Takeovers and Mergers has agreed that he is notrequired to take responsibility for any information contained in thisannouncement. Accordingly, the Proposal has been considered by Jonathan Scott-Barrett, MalcolmJames and Andrzej Sliwa, being the Independent Eureka Directors. 13. Recommendation The Independent Eureka Directors, who have been so advised by Cenkos Securitiesplc, consider the Proposal to be fair and reasonable. In providing advice to theIndependent Eureka Directors, Cenkos Securities plc has taken into account thecommercial assessments of the Independent Eureka Directors. Accordingly, the Independent Eureka Directors unanimously recommend that EurekaShareholders vote in favour of the resolutions to be proposed at the CourtMeeting and the EGM as the Independent Eureka Directors, Mr Bartley and certainpersons connected with them (within the meaning of section 346 of the CompaniesAct) who beneficially own Eureka Shares have irrevocably undertaken to do inrespect of, in aggregate, 1,326,066 Eureka Shares, in which they are interested,representing approximately 4.97 per cent. of the current issued share capital ofEureka. 14. Related Party Transaction Under the AIM rules, the acquisition of Eureka by Celtic constitutes a relatedparty transaction by virtue of Kevin Foo being a director of both companies.The independent directors of Celtic consider, after consultation with theCompany's Nominated Adviser, Evolution Securities, that the terms of thetransaction are fair and reasonable insofar as the shareholders of the Companyare concerned. 15. Further Information Eureka has agreed to an exclusivity period of until 30 November 2006 duringwhich neither it, nor its directors nor subsidiaries will solicit or initiatethe submission of any proposals or offers to any person or entity for the saleof Eureka or its assets or subsidiaries. Eureka further agrees to pay aninducement fee to Celtic equal to one per cent. of the value of its total issuedshare capital if it wishes to pursue a third party offer or in the event thatthe Scheme does not become effective due to the conduct or actions of thedirectors of Eureka, or an announcement by any third party of a firm intentionto make an offer for Eureka or if the directors publicly recommend a transactionproposed by a third party or if Eureka breaches the terms of the exclusivityperiod. As at 6 November 2006 (being the last dealing day prior to the release of thisannouncement) irrevocable undertakings to vote in favour of the resolutions tobe proposed in connection with the Proposal have been given by the EurekaDirectors in respect of the following numbers of Eureka Shares in which they andcertain persons connected with them (within the meaning of section 346 of theCompanies Act) are interested: Name Number of Eureka Shares PercentageJonathan Scott-Barrett 44,219 0.17Andrzej Sliwa 200,653 0.41Malcolm James 282,676 0.58David Bartley 798,518 1.65 As at 6 November 2006 (being the last dealing day prior to this announcement),Celtic held 3,742,743 Eureka Shares (14.04 per cent. of the issued share capitalof Eureka), and Celtic Employee Benefit Trust held 168,631 shares (0.63 percent. of the issued share capital of Eureka). Celtic did not hold any shortpositions in respect of Eureka Shares at that date. As at 6 November 2006 (being the last dealing day prior to this announcement),the Celtic directors, their immediate families and their connected persons(within the meaning of section 328 of the Companies Act) had the followinginterests in Eureka Shares: Name Number of Eureka Shares PercentagePeter Hannen - -Kevin Foo 911,192 3.42Michael Palmer - -Euan Worthington 8,372 0.03Michael Nesbitt 3,012 0.01Neil McDermott 71,000 0.27Peter McKenna - -Boris Karlov - - Each of the Celtic Directors is a beneficiary of Celtic's Employee BenefitTrust, which held 168,631 Eureka Shares as at 6 November 2006 (being the lastdealing day prior to the posting of this announcement). As at 6 November 2006 (being the last dealing day prior to the release of thisannouncement), Evolution Securities Limited, financial adviser to Celtic, and/orpersons controlling, controlled by or under the same control as EvolutionSecurities have the following interests in Eureka Shares: Name Number of Eureka Shares PercentageEvolution Securities 58,888 0.22Williams de Broe 57,520 0.22 Save for David Bartley, the Eureka Directors accept responsibility for allinformation contained in this document other than the information for which theCeltic Directors accept responsibility and the recommendations as set out inparagraphs 13 above. The Independent Eureka Directors accept responsibility forthose recommendations. To the best of the knowledge and belief of the EurekaDirectors (who have taken all reasonable care to ensure that such is the case),the information contained in this document for which they accept responsibilityis in accordance with the facts and does not omit anything likely to affect theimport of such information. David Bartley became ill towards the end of 2005 andin February 2006 he stood down from executive responsibilities, whilst remaininga non-executive director. He is currently recovering from an operation and hasbeen unable to take part in the formulation of the Proposal or the preparationof this document. In the circumstances, the Panel has agreed that he is notrequired to take responsibility for any information contained in thisannouncement. Kevin Foo has a conflict of interest as a director of Celtic and therefore doesnot take responsibility for the views of the Eureka Board on the Scheme. The Celtic Directors, whose names are set out in paragraph 2.2 below, acceptresponsibility for all information contained in this document insofar as itrelates to the Celtic Group, the Celtic Directors and their interests. To thebest of the knowledge and belief of the Celtic Directors (who have taken allreasonable care to ensure that such is the case), the information contained inthis document for which they accept responsibility is in accordance with thefacts and does not omit anything likely to affect the import of suchinformation. Cenkos Securities plc, which is authorised and regulated by the FinancialServices Authority, is acting exclusively for Eureka and for no-one else inconnection with the Proposal and will not be responsible to anyone other thanEureka for providing the protections afforded to customers of Cenkos Securitiesplc, nor for providing advice in relation to the Proposal or any mattersreferred to in this announcement. Evolution Securities Limited, which is authorised and regulated by the FinancialServices Authority, is acting exclusively for Celtic and for no-one else inconnection with the Proposal and will not be responsible to anyone other thanCeltic for providing the protections afforded to customers of EvolutionSecurities Limited, nor for providing advice in relation to the Proposal or anymatters referred to in this announcement. The distribution of this announcement in jurisdictions other than England andWales may be restricted by law and therefore persons in such jurisdictions intowhose possession this announcement comes should inform themselves about andobserve such restrictions. Any failure to comply with the applicablerestrictions may constitute a violation of the securities laws of any suchjurisdiction. This announcement has been prepared for the purposes of complyingwith English law and the Takeover Code, and the information disclosed may not bethe same as that which would have been disclosed if this announcement had beenprepared in accordance with the laws of jurisdictions outside of England andWales. This announcement is not intended to and does not constitute, or form part of,any offer or invitation to purchase any securities or the solicitation of anyvote or approval in any jurisdiction pursuant to the Proposal or otherwise. TheProposal will be made solely through the Scheme Circular, which will contain thefull terms and conditions of the Proposals, including details of how to vote inrespect of the Proposal. Any response to the Proposal should be made only on thebasis of the information contained in the Scheme Circular. The New Celtic Shares to be issued pursuant to the Proposal have not been andwill not be registered under the United States Securities Act of 1933 (asamended). Furthermore, the New Celtic Shares have not been and will not beregistered under any of the relevant securities laws of Canada, Japan or theRepublic of South Africa. Accordingly, the New Celtic Shares may not be offered,sold, resold or delivered directly or indirectly in or into Canada, Japan, theRepublic of South Africa or the United Sates or any jurisdiction in which to doso is unlawful (except in compliance with applicable legislation). Eureka will prepare the Scheme Document to be distributed to Shareholders.Eureka and Celtic urge Eureka Shareholders to read the Scheme Document when itbecomes available because it will contain important information relating to theProposal. This announcement includes 'forward-looking statements' under United Statessecurities laws, including statements about the expected timing of theAcquisition, the expected effects on Celtic of the Proposal, anticipatedearnings enhancements, estimated cost savings and other synergies, potentialstrategic options, plans for and benefits of integration, estimated futuregrowth, market position and steelmaking capacity and all other statements inthis announcement other than statements of historical fact. Forward-lookingstatements include, without limitation, statements that typically contain wordssuch as 'will', 'may', 'should', 'continue', 'aims', 'believes', 'expects','estimates', 'intends', 'anticipates', 'projects', 'plans' or similarexpressions. By their nature, forward-looking statements involve known orunknown risks and uncertainties because they relate to events and depend oncircumstances that all occur in the future. Actual results may differ materiallyfrom those expressed in the forward-looking statements depending on a number offactors, including, but not limited to, the satisfaction of the conditions tothe Proposal, future market conditions, the behaviour of other marketparticipants, an adverse change in the economic climate, a fluctuation in thelevel of clients' commercial activity, appropriate consultation with employeerepresentative bodies, a loss of key personnel and the extent to which theCeltic and Eureka businesses are successfully integrated. Many of these risksand uncertainties relate to factors that are beyond the companies' abilities tocontrol or estimate precisely, such as future market conditions and thebehaviours of other market participants. The forward looking statementscontained in this announcement are made as of the date hereof and Celtic, Eurekaassume no obligation and do not intend publicly to update or revise theseforward-looking statements, whether as a result of future events, newinformation or otherwise except as required pursuant to applicable law. Dealing Disclosure Requirements Under the provisions of Rule 8.3 of the Takeover Code (the "Code"), if anyperson is, or becomes, "interested" (directly or indirectly) in 1% or more ofany class of "relevant securities" of Celtic or of Eureka, all "dealings" in any"relevant securities" of that company (including by means of an option inrespect of, or a derivative referenced to, any such "relevant securities") mustbe publicly disclosed by no later than 3.30 pm (London time) on the Londonbusiness day following the date of the relevant transaction. This requirementwill continue until the date on which the offer becomes, or is declared,unconditional as to acceptances, lapses or is otherwise withdrawn or on whichthe "offer period" otherwise ends. If two or more persons act together pursuantto an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of Celtic or Eureka company, they will bedeemed to be a single person for the purpose of Rule 8.3. Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevantsecurities" of Celtic or Eureka by the offeror or the offeree company, or by anyof their respective "associates", must be disclosed by no later than 12.00 noon(London time) on the London business day following the date of the relevanttransaction. A disclosure table, giving details of the companies in whose "relevantsecurities" "dealings" should be disclosed, and the number of such securities inissue, can be found on the Takeover Panel's website atwww.thetakeoverpanel.org.uk. "Interests in securities" arise, in summary, when aperson has long economic exposure, whether conditional or absolute, to changesin the price of securities. In particular, a person will be treated as having an"interest" by virtue of the ownership or control of securities, or by virtue ofany option in respect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on thePanel's website. If you are in any doubt as to whether or not you are requiredto disclose a "dealing" under Rule 8, you should consult the Panel." Appendix I Conditions to Implementation of the Scheme The Proposal is conditional upon the Scheme becoming unconditional and becomingeffective by not later than 29 December 2006 or such later date (if any) asEureka and Celtic may agree and the Court may allow. 1 The Scheme is conditional upon: (a) the approval by a majority in number representing three-fourthsin value of the holders of Eureka Shares present and voting, either in person orby proxy, at the Court Meeting; (b) the special resolution required to approve and implement theScheme being passed at the EGM of Eureka; (c) the Court Sanction being obtained and an office copy of theOrder being delivered for registration to the Registrar of Companies andregistration of the Order by the Registrar of Companies; and (d) permission being granted for the admission of the New CelticShares to trading on AIM in accordance with the AIM Rules or (if Celtic sodetermines and subject to the consent of the Panel) the London Stock Exchangeagreeing to admit such shares to trading on AIM subject only to the allotment ofsuch shares. 2 Eureka and Celtic have agreed that, subject as stated inparagraph 3 below, the Court Sanction will only be sought if: (a) Authorisations (i) all authorisation in any jurisdiction necessary for or in respectof the Proposal, its implementation or any acquisition of any shares in, orcontrol of, Eureka or any other member of the Wider Eureka Group by any memberof the Wider Celtic Group having been obtained in terms and in a formsatisfactory to Celtic acting reasonably from any relevant person or from anyperson or body with whom any member of the Wider Eureka Group has entered intocontractual arrangements and all such authorisations remaining in full force andeffect and there being no intimation of any intention to revoke or not renew thesame; and (ii) all authorisations necessary to carry on the business of anymember of the Wider Eureka Group remaining in full force and effect and therebeing no notification of any intention to revoke or not to renew the same; and (iii) all necessary filings having been made and all applicable waitingand other periods having expired, lapsed or been terminated and all applicablestatutory or regulatory obligations in any jurisdiction in respect of theProposal having been complied with. (b) Regulatory intervention No relevant person having taken, instituted, implemented or threatened any legalproceedings, or having required any action to be taken or otherwise having doneanything or having enacted, made or proposed any statute, regulation, order ordecision or taken any other step and there not continuing to be outstanding anystatute, regulation, order or decision that would or might reasonably beexpected to (in each case to an extent which is material and adverse in thecontext of the Wider Eureka Group): (i) make the Proposal, its implementation or the acquisition orproposed acquisition of any shares in, or control or management of, the WiderEureka Group by Celtic illegal, void or unenforceable; or (ii) otherwise directly or indirectly prevent, prohibit or otherwiserestrict, restrain, delay or interfere with the implementation of, or imposeadditional conditions or obligations with respect to or otherwise challenge orrequire amendment of, the Proposal or the proposed acquisition of Eureka byCeltic or any acquisition of shares in Eureka by Celtic; or (iii) require, prevent or delay the divestiture by Celtic of any shares orother securities in Eureka; or (iv) impose any limitation on the ability of any member of the WiderCeltic Group or any member of the Wider Eureka Group to acquire or hold orexercise effectively, directly or indirectly, any rights of ownership of sharesor other securities or the equivalent in any member of the Wider Eureka Group ormanagement control over any member of the Wider Eureka Group; or (v) require, prevent or delay the disposal by Celtic or any member of theWider Celtic Group, or require the disposal or alter the terms of any proposeddisposal by any member of the Wider Eureka Group, of all or any part of theirrespective businesses, assets or properties or impose any limitation on theability of any of them to conduct their respective businesses or own theirrespective assets or properties; or (vi) (save as required pursuant to the Proposal) require any member of theWider Celtic Group or of the Wider Eureka Group to offer to acquire any sharesor other securities (or the equivalent) in any member of the Wider Eureka Groupowned by any third party (in each case, other than in implementation of theProposal); or (vii) impose any limitation on the ability of any member of the Wider CelticGroup or the Wider Eureka Group to integrate or co-ordinate its business, or anypart of it, with the businesses or any part of the businesses of any othermember of the Wider Celtic Group and/or the Wider Eureka Group; or (viii) result in any member of the Wider Celtic Group or the Wider EurekaGroup ceasing to be able to carry on business under any name under which itpresently does so; or (ix) otherwise materially and adversely affect any or all of thebusinesses, assets or financial condition of any member of the Wider CelticGroup or the Wider Eureka Group; and all applicable waiting and other timeperiods during which any such relevant person could institute or implement orthreaten any legal proceedings having expired, lapsed or been terminated. (c) Consequences of the Proposal Save as Disclosed, there being no provision of any agreement to which any memberof the Wider Eureka Group is a party, or by or to which any such member, or anypart of its assets, may be bound, entitled or subject, which would as aconsequence of the Proposal or of the acquisition or proposed acquisition of allor any part of the issued share capital of, or change of control or managementof, Eureka or any other member of the Eureka Group result in (in each case to anextent which is material and adverse in the context of the Wider Eureka Group): (i) any material assets or interests of any member of the WiderEureka Group being or falling to be disposed of or charged in any way or ceasingto be available to any member of the Wider Eureka Group or any rights arisingunder which any such asset or interest could be required to be disposed of orcharged in any way or could cease to be available to any member of the WiderEureka Group; or (ii) any monies borrowed by, or other indebtedness (actual orcontingent) of, or any grant available to, any member of the Wider Eureka Groupbeing or becoming repayable or capable of being declared repayable immediatelyor earlier than the repayment date stated in such agreement or the ability ofsuch member of the Wider Eureka Group to incur any such borrowing orindebtedness becoming or being capable of becoming withdrawn, inhibited orprohibited; or (iii) any such agreement or the rights, liabilities, obligations orinterests of any such member under it being terminated or materially andadversely modified or affected or any onerous obligation arising or any materialadverse action being taken under it; or (iv) the interests or business of any such member in or with anythird party (or any arrangements relating to any such interests or business)being terminated or adversely modified or affected; or (v) the financial or trading position or prospects or value of anymember of the Wider Eureka Group being materially prejudiced or materiallyadversely affected; or (vi) the creation of any mortgage, charge or other security interestover the whole or any part of the business, property or assets of any member ofthe Wider Eureka Group or any such security (whenever arising or having arisen)becoming enforceable or being enforced; or (vii) any member of the Wider Eureka Group ceasing to be able to carryon business under any name under which or on the terms on which it currentlydoes so or any person presently not able to carry on business under any nameunder which any member of the Wider Eureka Group currently carries on businessbecoming able to do so; or (viii) the creation of actual or contingent liabilities by any memberof the Wider Eureka Group; or (ix) the ability of any member of the Celtic Group to carry on itsbusiness being materially and adversely affected, and no event having occurred which, under any provision of any such agreement towhich any member of the Wider Eureka Group is a party, or by or to which anysuch member, or any of its assets, may be bound, entitled or subject, couldresult in any of the events or circumstances as are referred to insub-paragraphs (i) to (ix) inclusive. (d) No corporate action taken since 31 December 2005 (the "Accounting Date") Since the Accounting Date, save as otherwise Disclosed or pursuant totransactions in favour of Eureka or a wholly-owned subsidiary of Eureka, nomember of the Wider Eureka Group having (in each case to an extent which ismaterial and adverse in the context of the Wider Eureka Group): (i) issued or agreed to issue or authorised or proposed the issueor grant of additional shares of any class or securities convertible into orexchangeable for, or rights, warrants or options to subscribe for or acquire,any such shares or convertible securities (save pursuant to the issue of EurekaShares on the exercise of Eureka Warrants and any shares in Eureka issued insatisfaction of contractual obligations); or (ii) redeemed, purchased, repaid or reduced or announced theredemption, purchase, repayment or reduction of any part of its share capital ormade or announced the making of any other change to its share capital; or (iii) recommended, declared, paid or made or proposed to recommend,declare, pay or make any dividend, bonus issue or other distribution whetherpayable in cash or otherwise other than dividends lawfully paid to Eureka orwholly owned subsidiaries of Eureka; or (iv) (save for transactions between two or more wholly owned membersof the Eureka Group) merged or demerged with or from, or acquired, any bodycorporate or authorised or proposed or announced any intention to propose anysuch merger or demerger; or (v) other than in the ordinary course of business acquired ordisposed of, transferred, mortgaged or charged, or created or granted anysecurity interest over, any material assets (including shares and tradeinvestments) or authorised or proposed or announced any intention to propose anyacquisition, disposal, transfer, mortgage, charge or creation or grant of anysecurity interest; or (vi) (save for transactions between two or more wholly owned membersof the Eureka Group) issued or authorised or proposed the issue of anydebentures or incurred or increased borrowings, indebtedness or liability(actual or contingent); or (vii) entered into or varied, or authorised or proposed the entry intoor variation of, or announced its intention to enter into or vary, anytransaction, arrangement, contract or commitment (whether in respect of capitalexpenditure or otherwise) which is material and of a long term, onerous orunusual nature or magnitude or which is restrictive to the existing business ofany member of the Wider Eureka Group or which is not in the ordinary course ofbusiness; or (viii) entered into, implemented, effected, authorised or proposed orannounced its intention to enter into, implement, effect, authorise or proposeany material contract, reconstruction, amalgamation, scheme, commitment or othertransaction or arrangement otherwise than in the ordinary course of business; or (ix) waived or compromised any material claim (other than in theordinary course of business); or (x) entered into or varied or made any offer (which remains openfor acceptance) to enter into or vary the terms of any material contract withany of the directors or senior executives of Eureka or any of the directors orsenior executives of any other member of the Wider Eureka Group; or (xi) taken or proposed any corporate action or had any legalproceedings instituted or threatened against it or petition presented for itswinding-up (voluntary or otherwise), dissolution or reorganisation or for theappointment of a receiver, administrator, administrative receiver, trustee orsimilar officer of all or any of its assets and revenues or for any analogousproceedings or steps in any jurisdiction or for the appointment of any analogousperson in any jurisdiction; or (xii) been unable, or admitted in writing that it is unable, to payits debts or has stopped or suspended (or threatened to stop or suspend) paymentof its debts generally or ceased or threatened to cease carrying on all or asubstantial part of its business; or (xiii) made any material alteration to its memorandum or articles ofassociation, or other incorporation documents; or (xiv) entered into any agreement or passed any resolution or made anyoffer (which remains open for acceptance) or proposed or announced any intentionwith respect to any of the transactions, matters or events referred to in thiscondition 2(d). (e) Other events since the Accounting Date In the period since the Accounts Date, save as Disclosed: (i) no litigation or arbitration proceedings, prosecution,investigation or other legal proceedings having been announced, instituted,threatened or remaining outstanding by, against or in respect of, any member ofthe Wider Eureka Group or to which any member of the Wider Eureka Group is ormay become a party (whether as claimant, defendant or otherwise) which in anycase, would be likely to have a material adverse effect on the financialposition of the Wider Eureka Group; and (ii) no material adverse change or deterioration having occurred inthe business or assets or financial or trading position, assets, or profits ofany member of the Wider Eureka Group; and (iii) no enquiry or investigation by, or complaint or reference to,any relevant person against or in respect of any member of the Wider EurekaGroup having been threatened, announced, implemented or instituted or remainingoutstanding by, against or in respect of, any member of the Wider Eureka Groupwhich, in any case, would be likely to have a material adverse effect on thefinancial position of the Wider Eureka Group; and (iv) no contingent or other liability having arisen or becomeapparent or increased which, in any case, would be likely to have a materialadverse effect on the financial position of the Wider Eureka Group. (f) Other issues Save as Disclosed, Celtic not having discovered that (in each case to an extentwhich is material and adverse in the context of the Wider Eureka Group): (i) the financial, business or other information disclosed at anytime by any member of the Wider Eureka Group, whether publicly or in the contextof the Proposal either contained a material misrepresentation of fact or omittedto state a fact necessary to make the information disclosed not misleading inany material respect; or (ii) any contingent liability disclosed in such disclosedinformation would or might materially and adversely affect, directly orindirectly, the business or profits of the Wider Eureka Group taken as a whole;or (iii) any information disclosed at any time by or on behalf of anymember of the Wider Eureka Group is or becomes incorrect in any materialrespect. 3 Celtic reserves the right to waive all or any of the conditionscontained in paragraphs 2(a) to 2(f) above inclusive, in whole or in part. IfCeltic is required by the Panel to make an offer for Eureka Shares under theprovisions of Rule 9 of the City Code, Celtic may make such alterations to theconditions as may be necessary to comply with the provisions of that Rule. 4 The Proposal will be governed by English law. The rules of theCity Code and the Court will, so far as they are appropriate, apply to theProposal. 5 The Scheme will not proceed if, before the EffectiveDate, implementation of the Proposal is referred to the Competition Commission. Appendix II The following definitions apply throughout this announcement, unless the contextrequires otherwise: "Accounting Date" 31 December 2005; "Act" or "Companies Act" the Companies Act 1985, as amended; "Admission" admission of the New Celtic Shares to trading on AIM becoming effective in accordance with the AIM Rules; "agreements" arrangements, agreements, commitments, licences, permits, franchises, partnerships, joint ventures, authorisations or other instrument; "AIM" AIM, a market operated by the London Stock Exchange; "AIM Rules" rules published by the London Stock Exchange governing, inter alia, admission to AIM and the continuing obligations of companies admitted to AIM, as amended from time to time; "Annual Report" the report and accounts of Eureka for the period ended 31 December 2005; "Articles" the articles of association of Eureka; "authorisations" authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals; "Au" chemical symbol for gold; "BIOX(R)" bacterial oxidation process developed by Goldfields Ltd, to treat refractory sulphide gold ores "Board" the board of Celtic or the board of Eureka as the context requires; "Celtic" Celtic Resources Holdings plc "Celtic Director" a director of Celtic; "Celtic Group" Celtic and its subsidiary undertakings; "Celtic Shareholder(s)" holders of Celtic Shares; "Celtic Shares" ordinary shares EU0.25 each in the capital of Celtic; "Cenkos" Cenkos Securities plc "Computershare" or "Registrars" Computershare Investor Services PLC; "Closing Price" the middle market quotation of one Eureka Share and/or of one Celtic Share as derived from the Daily Official List of the London Stock Exchange; "Code" or "City Code" the City Code on Takeovers and Mergers as from time to time interpreted by the Panel; "Companies Act 1990" the Companies Act 1990 of Ireland, as amended; "Conditions" the conditions to the implementation of the Proposal (including the Scheme) set out in Appendix I of this announcement; "Conflicted Parties" the directors of Celtic who also hold Eureka Shares; "Consideration" the New Celtic Shares to be issued to the Eureka Shareholders pursuant to the Scheme; "Court" the High Court of Justice in England and Wales; "Court Hearing" the hearing of the petition for the purposes of obtaining the Court Sanction; "Court Meeting" the meeting of Eureka Shareholders convened by order of the Court pursuant to section 425 of the Companies Act to consider and, if thought fit, approve the Scheme, including any adjournment thereof; "Court Sanction" the sanction (with or without modification) of the Scheme and confirmation of the reduction of capital of Eureka in accordance with the terms of the Scheme by the Court; "Dealing Day" a day on which the London Stock Exchange is open for business in the trading of securities admitted to AIM; "Disclosed" (i) as disclosed in the Annual Report, (ii) as publicly announced by Eureka (through a Regulatory Information Service) prior to the date of this announcement, (iii) as disclosed in the Announcement, or (iv) as otherwise fairly disclosed in writing (including facsimile) to Celtic or its advisers by or on behalf of Eureka prior to the date of the Announcement; "Effective Date" the date on which the Scheme becomes effective in accordance with its terms; "EGM" the extraordinary general meeting of Eureka to consider any resolution required to approve and implement the Scheme and the Proposal, including any adjournment thereof; "Enlarged Group" the Celtic Group as enlarged by the Proposal; "Enlarged Share Capital" the issued share capital of Celtic as enlarged by the issue of the New Celtic Shares; "Eureka" Eureka Mining plc; "Eureka Director" a director of Eureka; "Eureka Group" Eureka and its subsidiary undertakings; "Eureka Shareholder(s)" holders of Eureka Shares excluding Celtic; "Eureka Shares" (i) the existing unconditionally issued ordinary shares of 1p each in the capital of Eureka; and (ii) any further such shares which are issued after the date of the Scheme Circular and before the Voting Record Time; and (iii) any further such shares issued at or after the Voting Record time and before the making of the Order either on terms that the original or any subsequent holder thereof shall be bound by the Scheme or in respect of which the holder shall have agreed in writing by such time to be bound by the Scheme; "Evolution Securities" Evolution Securities Limited "Existing Celtic Shares" the Celtic Shares in issue at the date of this announcement; "FSA" the UK Financial Services Authority; "FSMA" the Financial Services and Markets Act 2000, as amended; "FSU" Former Soviet Union; "GOK" mining and processing enterprise or plant; "g/t" gramme per metric tonne; "Hearing Date" the date on which the Order is made; "Independent Celtic Directors" the directors of Celtic other than Kevin Foo who is also a director of Eureka; "Independent Eureka Directors" the directors of Eureka other than Kevin Foo who is also a director of Celtic and David Bartley; "JORC" the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Mineral Council of Australia. Common reference to the Australasian Code for reporting of Identified Mineral Resources and Ore Reserves, 1996; "London Stock Exchange" London Stock Exchange plc; "New Celtic Shares" the new Celtic Shares proposed to be issued by Celtic (credited as fully paid) as consideration under the Proposal; "Offer Period" the period from 30 August 2006 until the Effective Date; "Order" the order of the Court sanctioning the Scheme under section 425 of the Companies Act and confirming the reduction of share capital of Eureka pursuant to the Scheme under section 137 of the Companies Act; "Ore" mineral bearing rock that contains one or more minerals, at least one of which can be mined and treated profitably under current or immediately foreseeable economic conditions; "Overseas Shareholders" Eureka Shareholders resident in, or national or citizens of, jurisdictions outside the UK; "Panel" the Panel on Takeovers and Mergers; "Proposal" the proposed acquisition of all of the issued and to be issued ordinary share capital of Eureka by Celtic by means of the Scheme and pursuant to the Articles as proposed to be amended at the EGM; "Registrar of Companies" the Registrar of Companies in England and Wales; "Regulatory Information Service" any of the services on the list of Regulatory Information Services maintained by the FSA; "Scheme" the proposed scheme of arrangement under section 425 of the Companies Act between Eureka and Eureka Shareholders, with or subject to any modification or addition thereto or condition approved or imposed by the Court and agreed by Eureka and Celtic; "Scheme Circular" the circular to be delivered to shareholders describing the terms and conditions of the Scheme; "Scheme Record Time" 6.00 p.m. on the Dealing Day immediately preceding the Hearing Date; "third party" includes person, firm, company or body; "UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland; "US" or "United States" the United States of America, its territories and possessions, any state of the United States and the District of Columbia; "US Securities Act" the United States Securities Act of 1933, as amended; "Voting Record Time" in relation to both the Court Meeting and the EGM, 6.00 p.m. on 28 November 2006 or, if either the Court Meeting or the EGM is adjourned, 48 hours before the time set for any such adjourned meeting; "Wardrop" Wardrop Engineering Inc.; "Wider Celtic Group" Celtic and its subsidiary undertakings, associated undertakings and any other undertaking in which Celtic and/or such undertakings (aggregating their interest) have a significant interest; "Wider Eureka Group" Eureka and its subsidiary undertakings, associated undertakings and any other undertaking in which Eureka and/or such undertakings (aggregating their interest) have a significant interest. All references to legislation in this announcement are to English legislationunless the contrary is indicated. All references to time in this announcementare to London time unless the contrary is indicated. Any reference to any provision of any legislation shall include any amendment,modification, reenactment or extension thereof. Words importing the singular shall include the plural and vice versa, and wordsimporting the masculine gender shall include the feminine or neutral gender. This information is provided by RNS The company news service from the London Stock Exchange