Zinifex Sweetens Allegiance Bid

Sydney, Feb 25, 2008 (ABN Newswire) - Allegiance Mining (AGM) has recommended an improved offer from Zinifex that values the nickel miner at $852.42 million.

Under the revised offer, Allegiance will be offered $1.10 cash per share, up from $1.

Allegiance directors Tony Howland-Rose, David Deitz, Barry Sullivan and Eddie Lee have each recommended that shareholders accept the revised offer, in the absence of a higher bid.

They plan to accept the offer in respect to their own holdings in Allegiance, which owns the Avebury nickel mine in Tasmania.

"I believe the revised offer better reflects the value of the Avebury project," said Allegiance Chairman Tony Howland-Rose.

"In the absence of a superior proposal I, and the majority of the board intend to accept the $1.10 offer and we recommend that shareholders also accept the revised offer."

"This recommendation to accept Zinifex's offer has been made after careful consideration and the decision to recommend it was not taken lightly, particularly in light of the current volatility in world equity markets," said Mr Howland-Rose.

Zinifex chief executive Andrew Michelmore said the increased offer is very attractive and represents a fair value for Allegiance shareholders, reflecting the high quality of the Avebury nickel project.

Zinifex and Allegiance have entered into an agreement, which includes a traditional no-shop clause, which requires Allegiance to close its data room immediately.

Allegiance has also agreed to appoint Zinifex nominees to Allegiance's board once Zinifex reaches 50.1% acceptances, at which time the majority of Allegiance directors will resign.

Zinifex will allow two of current directors - Barry Sullivan and Mr Shi Peirong - to remain on the board, at their discretion, until it acquires a relevant interest in 90% of Allegiance shares

The offer is scheduled to close at 7PM (Melbourne Time) on March 7, and Zinifex says it may not be extended.

Also in the news today, Zinifex has recorded 74.3% rise in first half profit and says demand for zinc is expected to remain healthy in 2008 on the back of strong Chinese demand.

Zinifex reported net profit for the six months ended December 31 of $1.309 billion, up from $751 million in the same period in fiscal 2007.

Allegiance shares were up 2.8% at $1.10 on Monday as was Zinifex, 3.5% up at $10.50.

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