Allegiance May Drop Zinifex Bid

Sydney, Feb 13, 2008 (ABN Newswire) - Zinifex Australia (ZFX) has hinted it may drop its hostile takeover bid for Allegiance Mining NL if it transpires that the target's leveraged speculative share trading losses are worse than it has so far revealed.

Zinifex, which is set to close its $745 million hostile bid for the nickel miner on February 22, is seeking assurances from the directors of Allegience Mining that leveraged speculative share trading has ceased and that all losses have been disclosed to the ASX.

The trading was alleged in media reports and appears to be confirmed in Allegiance's December quarter report, which revealed that the company had lost $7.88 million through the trades in the 2007 calendar year.

"Zinifex is legitimately concerned to know if there are additional losses, real or potential, beyond the $7.9 million dollars already reported to the ASX," said Zinifex CEO Andrew Michelmore.

"In the event that Allegiance is facing additional potential losses in the current volatile market or fails to provide adequate disclosure, Zinifex reserves the right to allow its offer for Allegiance shares to lapse."

"Allegiance is not the only game in town. We have other opportunities we are assessing."

Mr Michelmore said the share trading should have been disclosed in Allegiance's target's statement and that all Allegience shareholders should be advised at the extent of these positions, whether they remain, how they are financed and what are the nature of the relationships with companies invested in.

Allegiance said in its December quarter report that $2.44 million was lost from the disposal of trading investments, with a further $5.44 million lost because of a decline in world markets.

Shares in Allegiance were steady at $1.04, while Zinifex was down 37 cents to $9.16.

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