NEWS RELEASE :
Agreement To Acquire International Ballater Resources Inc. & Special
Warrant Financing For $25.5 Million
G. Clive Newall, President of First Quantum Minerals Ltd. ("First Quantum") and Michael D. Philpot,
President of International Ballater Resources Inc. ("Ballater") announced today that First Quantum
and Ballater have entered into a letter of agreement whereby First Quantum proposes to acquire the
shares of Ballater pursuant to a plan of arrangement (the "Arrangement").
Under the proposed terms of the Arrangement, each shareholder of Ballater will be entitled to receive
one common share of First Quantum for every 2.75 common shares of Ballater. All unexercised
options and unexercised warrants as well as other convertible securities of Ballater would be
converted into options, warrants and convertible securities of First Quantum on the same share
exchange ratio with corresponding changes to the exercise price. The share ratio was determined by
a special committee of each company's board of directors in consultation with each company's
respective financial advisor, with CIBC Wood Gundy Securities Inc. ("CIBC Wood Gundy") acting as
financial advisor to First Quantum and Goepel Shields & Partners Inc. ("Goepel Shields") acting as
financial advisor to Ballater.
The acquisition is subject to completion of due diligence, receipt of fairness opinions, completion of
definitive documentation and shareholder, regulatory, and court approvals and is expected to be
completed within 60 days.
The combination of First Quantum and Ballater will create a larger, more diversified corporate entity
with an expanded asset and property base and strengthened balance sheet. G. Clive Newall,
President of First Quantum said: "The Arrangement will reflect the commonality of focus of the two
companies in the same region of Africa and allows us to capitalize on the privatization of world class
assets in the Democratic Republic of Congo (the "DRC") where the two companies have established
a joint venture." Michael D. Philpot, President of Ballater said: "The strengths of the combined
management team and the directors of the two companies and a greater critical mass will provide a
unique opportunity for the new company to pursue larger project acquisitions, attract new
institutional investors and to supplement the existing management and board of directors with high
caliber candidates."
Earlier this month, First Quantum and Ballater announced that proposals by International Quantum
Resources Limited ("IQR"), owned 70% by First Quantum and 30% by Ballater, to acquire 51%
interests in two large tailings dumps, the Luilu hydrometallurgical tailings and Kingamyambo
sulphide tailings, in the DRC had received acceptance by La G‚n‚rale Des CarriŠres et des Mines
("G‚camines"). In addition to these two near term cash flow projects, IQR has also entered into an
agreement to acquire 14% of Anvil Mining NL ("Anvil"), an Australian public company listed on the
Australian Stock Exchange. Anvil's primary asset is the Dikulushi Project in the DRC, which
consists of a very high grade, near surface, copper/silver deposit containing 176,000 tonnes of
copper and 480 tonnes of silver, and a licence area covering 12,945 square kilometres of highly
prospective ground. Anvil is currently undertaking a confirmation drilling program the results of which
shall be incorporated into a planned feasibility study. IQR will also be granted a first right of refusal to
enter into a joint venture with Anvil on the Dikulushi Project for a period of 12 months from the date of
closing.
First Quantum is developing a substantial base of mining and exploration assets in south-central
Africa. Its 100% owned Bwana Mkubwa Copper Project ("BMCP") in Zambia is currently under
construction with the first copper cathode production from the 10,000 tonne per annum facility
expected in the first quarter of 1998. The plant will also produce 100,000 tonnes of sulphuric acid
annually, of which 60,000 tonnes of acid will be available for external sale or use in the company's
other projects in the DRC. Sulphuric acid is in demand regionally, and will be sold to further augment
revenues and significantly enhance the economics of the BMCP. First Quantum is bidding, preparing
bids for, or in negotiation on a number of other assets in the copperbelt, which runs through the DRC
and Zambia. First Quantum is also participating in three gold exploration joint ventures with Reunion
Mining PLC in Niger, Botswana and Guinea. In order to finance development at the BMCP and costs
associated with bids for new projects, First Quantum recently arranged two credit facilities: a
corporate facility for US $12,000,000 with CIBC Wood Gundy Capital (a division of Canadian Imperial
Bank of Commerce), and a project loan for US $19,069,026 with Investec Bank Limited ("Investec")
of South Africa.
Ballater is focused on the exploration, development and mining of quality gold/copper projects in
central and south eastern African countries. Ballater owns a 95% interest in the Connemara
heap-leach gold mine in Zimbabwe (the "Connemara Mine"), which has been upgraded to produce
approximately 26,000 ounces per annum, as well as two other gold exploration projects in
Zimbabwe, four gold/copper projects in Zambia, and one gold project in Tanzania. To date in 1997,
the Connemara Mine has operating cash costs of $238 per ounce of gold, and with the upgrade to
750,000 tonnes per annum, cash costs are projected to drop to $192 per ounce. The Connemara
Mine has a five-year mine life with the potential to significantly expand both oxide and sulphide
resources. Gerald Metals, Inc. of Stamford, Connecticut and Investec have recently provided Ballater
with loan facilities totalling US $3,750,000 which are repayable by an agreed schedule of gold
deliveries from the Connemara Mine.
Upon the completion of the Arrangement, the combined company will have approximately 20.1
million shares issued and outstanding. After completion of the BMCP and the upgrade of the
Connemara Mine, the combined company will have annual production of 22,000,000 pounds of
copper and 26,000 ounces of gold at an operating cash cost of approximately $0.33 per pound and
$192 per ounce, respectively.
First Quantum is also pleased to report that it has retained CIBC Wood Gundy to lead a syndicate
which also includes Goepel Shields and Newcrest Capital Inc. (the "Agents") as agents for a best
efforts private placement of up to 6,000,000 Special Warrants at a price of $4.25 per Special Warrant
for total proceeds of up to $25,500,000. Each Special Warrant shall be converted (for no additional
consideration) into one unit of First Quantum (the "Unit"). Each Unit will consist of one common
share and one-half of a share purchase warrant. Each whole warrant will entitle the holder thereof to
purchase one additional common share in the capital of First Quantum for a period of 12 months at a
price of $5.00. A commission in cash will be payable to the Agents from the proceeds of the offering.
First Quantum has agreed to file a prospectus in Ontario, British Columbia, Quebec and such other
jurisdictions as may be agreed between the Agents and First Quantum in order to qualify the
distribution of the Units to be issued to the subscribers upon exercise of the Special Warrants. If a
receipt for the final prospectus is not received within 120 days of closing, each Special Warrant shall
be convertible into 1.1 Units of First Quantum.
The proceeds of the private placement will be used to expand the reserve base at the Connemara
Mine, repay short term credit facilities, bid for additional assets in the copperbelt region of Zambia
and the DRC, fund ongoing exploration of the companies' highly prospective properties and for
general working capital.
The private placement is subject to regulatory approval.
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