Reunion Mining PLC - Rec. Cash Offer by Minorco SA

RNS No 8791t
REUNION MINING PLC
20 April 1999

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN

RECOMMENDED CASH OFFER BY CAZENOVE & CO.
ON BEHALF OF MINORCO FINANCE (U.K.) PLC
A WHOLLY OWNED SUBSIDIARY OF MINORCO S.A.
FOR REUNION MINING PLC

- The boards of Minorco S.A. ("Minorco") and Reunion
  Mining PLC ("Reunion") announce that they have reached
  agreement on the terms of a recommended cash offer to
  be made by Cazenove & Co. on behalf of Minorco Finance
  (U.K.) plc (the "Offeror"), a wholly owned subsidiary
  of Minorco, for the entire issued share capital of
  Reunion not already owned by the Offeror.

- The Offer is 88 pence in cash for each Reunion Share,
  valuing the current issued share capital of Reunion at
  #37.2 million.  In addition, the Offeror will, in due
  course, make a cash cancellation offer under which
  holders of Reunion Options and Reunion Warrants may
  agree that their Reunion Options and Reunion Warrants
  are cancelled in consideration of the payment to them
  of the amount per underlying Reunion Share (if any) by
  which 88 pence exceeds the exercise price of the
  Reunion Options and Reunion Warrants.  If all such
  holders accept the cash cancellation offer, the
  aggregate consideration payable under the Offer and the
  cash cancellation offer will be #38.1 million.

- The Offeror has purchased from the Reunion
  Directors their entire beneficial holdings of Reunion
  Shares, amounting in aggregate to 4,960,390 Reunion
  Shares, representing approximately 11.7 per cent. of
  Reunion's current issued share capital.  In addition,
  the Offeror has purchased from certain institutions
  15,837,863 Reunion Shares, representing approximately
  37.5 per cent. of Reunion's current issued share
  capital.

- Taken together with a further 500,000 Reunion Shares
  already held by Firecrest Investments Limited, a
  wholly owned subsidiary of Minorco, the Offeror now
  owns or controls approximately 50.4 per cent. of the total current
  issued share capital of Reunion.  Accordingly, once the
  purchases of the Shares which the Offeror owns have
  been settled and registered, the Offer will become
  wholly unconditional.

- The Reunion Directors, who have been so advised by SG
  Securities, consider the terms of the Offer to be fair
  and reasonable and accordingly unanimously recommend
  Reunion Shareholders to accept the Offer. In providing
  advice to the Reunion Directors, SG Securities has
  taken into account the Reunion Directors' commercial
  assessments.

- The Offer represents a premium of 68 per cent. to the
  Reunion Share price of 52.5 pence at the close of
  business on 8 February 1999, the business day
  immediately prior to the day on which Reunion announced
  that it was in discussions which may or may not lead to
  an offer.

- Minorco has announced that it intends to combine with
  Anglo American Corporation of South Africa Limited
  ("AAC") to form Anglo American plc, a new UK domiciled
  company whose base metals division will include a
  substantial portfolio of projects recently developed or
  under development.

Julian Ogilvie Thompson, Chairman of Minorco, said:

"The base metals activities of Minorco and Anglo American
Corporation of South Africa Limited are to be combined
and Anglo Base, as it will be called, will be one of the
core business divisions of Anglo American plc.  Its
strategy will be to continue development of its business
in primary base metals, in particular copper, nickel and
zinc.  The Offer for Reunion, and the consequent securing
of 100 per cent. ownership in Skorpion, a Namibian zinc
project that AAC knows well through its existing 40 per
cent. ownership, is consistent with this strategy.  A
fully owned Skorpion deposit, when combined with the
Gamsberg zinc deposit in South Africa (on which a US$16
million feasibility study is underway), the Lisheen
project in Ireland (currently under construction) and
Hudson Bay Mining and Smelting in Canada, will provide
Anglo American plc, once all of the projects are brought
to account, with a significant position in the zinc
market.

The acquisition brings to a close the good working
relationship which AAC has enjoyed with its mining
partner, Reunion."

Andrew Woollett, Chairman of Reunion, said:

"Following a review by the board of the options available
to achieve the fullest value from Reunion's assets, we
believe the Offer is at a level that enables the
shareholders to realise the best assured value and which
the board is able unanimously to recommend."

Enquiries

Minorco :
  Mike Gordon, Executive Vice President, Head of Strategic Planning
       0171 404 2060
  Nick von Schirnding, Vice President, Investor & Corporate Affairs
    0171 404 2060

Cazenove & Co:
  Nick Wiles
    0171 588 2828

Reunion Mining PLC :
  Andrew Woollett, Chairman
    0171 535 0400

SG Securities (London) Ltd:
  Andrew Dawber
    0171 676 6000

This summary should be read in conjunction with the full
text of the announcement.

The Offer will not be made, directly or indirectly, in or
into the United States, Canada, Australia or Japan.
Copies of this announcement are not being, and must not
be, mailed or otherwise distributed or sent in or into or
from the United States, Canada, Australia or Japan.

Cazenove, which is regulated by The Securities and
Futures Authority, is acting for Minorco and for no one
else in connection with the Offer and will not be
responsible to anyone other than Minorco for providing
the protections afforded to customers of Cazenove nor for
providing advice in relation to the Offer or any matter
referred to herein or in the Offer Document.

SG Securities (London) Ltd, which is regulated by The
Securities and Futures Authority, is acting for Reunion
and for no one else in connection with the Offer and will
not be responsible to anyone other than Reunion for
providing the protections afforded to customers of SG
Securities (London) Ltd nor for providing advice in
relation to the Offer or any matter referred to herein or
in the Offer Document.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN

RECOMMENDED CASH OFFER BY CAZENOVE & CO.
ON BEHALF OF MINORCO FINANCE (U.K.) PLC
A WHOLLY OWNED SUBSIDIARY OF MINORCO S.A.
FOR REUNION MINING PLC

Introduction

- The boards of Minorco S.A. ("Minorco") and Reunion
  Mining PLC ("Reunion") announce that they have reached
  agreement on the terms of a recommended cash offer to
  be made by Cazenove & Co. on behalf of Minorco Finance
  (U.K.) plc (the "Offeror"), a wholly owned subsidiary
  of Minorco, for the entire issued share capital of
  Reunion not already owned by the Offeror.

The Offer

- The Offer, which will be made on the terms and subject
  to the condition set out in Appendix I and to be set
  out in the Offer Document will be on the following
  basis:

    for each Reunion Share      88 pence in cash

- The Offer represents a premium of 68 per cent. to the
  Reunion Share price of 52.5 pence at the close of
  business on 8 February 1999, the business day
  immediately prior to the day on which Reunion announced
  that it was in discussions which may or may not lead to
  an offer.

- The Offeror has purchased from the Reunion
  Directors their entire beneficial holdings of Reunion
  Shares, amounting in aggregate to 4,960,390 Reunion
  Shares, representing approximately 11.7 per cent. of
  Reunion's current issued share capital.  In addition,
  the Offeror has purchased from certain institutions
  15,837,863 Reunion Shares, representing approximately
  37.5 per cent. of Reunion's current issued share
  capital.

- Taken together with a further 500,000 Reunion Shares
  already held by Firecrest Investments Limited, a
  wholly owned subsidiary of Minorco, the Offeror now
  owns or controls approximately 50.4 per cent. of the total current
  issued share capital of Reunion.  Accordingly, once the
  purchases of the Shares which the Offeror owns have
  been settled and registered, the Offer will become
  wholly unconditional.

- On 15 April 1999, the latest practicable date prior to
  the making of this announcement, certain directors of
  Minorco and its subsidiaries owned 112,000 Reunion
  Shares and a wholly owned subsidiary of Minorco,
  Firecrest Investments Limited, held 500,000 Reunion
  Shares.  These holdings represent 612,000 Reunion
  Shares in total and 1.5 per cent. of the total current
  issued share capital of Reunion.

- Except as set out above, the Offeror does not own any
  Reunion Shares or rights over Reunion Shares.  In
  addition, following an enquiry throughout the AAC
  Group, there are no holdings of Reunion Shares within
  the AAC Group of which the Offeror is aware.  In the
  event that the Offeror becomes aware of the ownership
  of additional Reunion Shares within the AAC Group, the
  Offeror will inform the Panel and make a further
  announcement if required.

Recommendation of the Offer

- The Reunion Directors, who have been so advised by SG
  Securities, consider the terms of the Offer to be fair
  and reasonable and accordingly unanimously recommend
  Reunion Shareholders to accept the Offer.  In providing
  advice to the  Reunion Directors, SG Securities has
  taken into account the Reunion Directors' commercial
  assessments.

Information relating to the Offeror

- Minorco Finance (U.K.) plc is a wholly owned subsidiary
  of Minorco.  As part of a wider reorganisation of the
  shareholding structures of the AAC Group, it was
  announced by Minorco and AAC on 15 October 1998 that
  they had agreed in principle to combine their
  businesses to form Anglo American plc, a company which
  is expected to be listed in London during May.  The
  Directors believe that Anglo American plc will, if
  listed, become a constituent of the FTSE 100 index in
  due course.

- Anglo American plc will be one of the world's largest
  mining and natural resource companies, with a
  formidable range of interests in gold, platinum and
  diamonds and an important presence in coal, base and
  ferrous metals, industrial minerals (in the markets in
  which it operates) and forest products.  It will also
  have an internationally diversified exploration
  programme and important industrial and financial
  activities.

- The combination of the businesses of Minorco and AAC to
  establish Anglo American plc will be achieved by share
  exchange offers to shareholders of Minorco and AAC.
  The posting of documentation relating to these
  transactions and an announcement of the formal offers
  are expected to take place shortly.

- The offer to Minorco shareholders will be by means of a
  public offer of one new Anglo American plc share for
  every two Minorco shares held, with a cash alternative
  of US$16 per Minorco share.  In addition, Anglo
  American plc intends to propose a scheme of arrangement
  between AAC and all its shareholders under the terms of
  which all AAC shareholders will be offered one share in
  Anglo American plc for each share they hold in AAC.

- Minorco's results for the 12 months ended 31 December
  1998 show turnover of US$5,601m (1997: US$5,662m) and
  profit on ordinary activities before taxation of
  US$377m (1997: US$666m). Minorco's market
  capitalisation, as at 19 April 1999, was US$5.4bn.

Information relating to Reunion

- Reunion is a company devoted exclusively to mineral
  exploration and mining in Africa.  Reunion was set up
  in 1989 to take advantage of increasing African
  economic liberalisation and the opportunities that this
  presented for employing modern prospecting and mining
  technologies to explore for, and re-evaluate, major
  deposits.

- Reunion intends, as a result of this transaction, to
  relinquish its rights to participate in the Mufulira
  consortium in Zambia, allowing the potential partners,
  with whom it has been negotiating, to proceed in their
  own rights.

- Reunion has two productive mines: Sanyati Mine in
  Zimbabwe, producing LME grade A copper and Dunrobin
  Gold Mine in Zambia, producing dore gold.  In addition,
  Reunion has exploration interests in Botswana, Gabon,
  Ghana, Namibia, Zambia and Zimbabwe.

- In November 1998 Reunion completed a feasibility study
  of the Skorpion zinc project in Namibia.  The
  conclusions of this study were that Skorpion, if put
  into production, would rank as one of the larger
  integrated zinc mines and refineries in the world with
  the potential to be amongst the lowest cost producers
  in the world.

- Reunion was listed on the London Stock Exchange on 21
  December 1995.  For the year to 31 December 1998,
  Reunion reported a loss after taxation of #5.5 million
  (1997: #4.6 million) on turnover of #2.1 million (1997:
  #2.9 million).  As at 31 December 1998 Reunion had net
  assets of #1.1 million (1997: #4.2 million).

- On 9 February 1999 Reunion announced that it was
  investigating a number of options regarding the
  financing of the Skorpion zinc project in Namibia.  As
  one of these options, Reunion announced that
  discussions were ongoing which might or might not lead
  to an offer being made for the entire issued share
  capital of the company, or for all or part of Reunion's
  interest in the Skorpion zinc project.

Background to and reasons for the Offer

- The Directors of Minorco believe investment in the
  development of primary base metals requires a long-term
  commitment of management skills, expertise and resource
  supported by a strong, well-capitalised financial base.
  The base metals activities of Minorco and AAC will be a
  core business for Anglo American plc.  Its strategy
  will be to continue development of its business in
  primary base metals, in particular copper, nickel and
  zinc.  Given the long term nature of investments in
  this area, the current weakness in world base metal
  prices provides a good opportunity for Minorco to
  review its position in these and other primary base
  metals, to consolidate its international position in
  its current base metals business and to explore
  additional areas for broadening the scope of the base
  metals operations.  In reviewing opportunities in
  primary base metals, including those projects currently
  underway in the division, Minorco is seeking to develop
  opportunities as an operator of long life, low cost
  mines which are capable of generating a satisfactory
  shareholder return over the longer term.

- Minorco intends to increase its exposure to zinc mining
  and production.  The acquisition of Reunion, and in
  particular the 60 per cent. of the Skorpion zinc
  deposit held by Reunion, is consistent with this
  strategy.  Upon the combination of Minorco and AAC, 100
  per cent. of the project will be owned by Anglo
  American plc which will enable it to enhance the
  potential returns to shareholders and to optimise the
  financing of this major zinc deposit.

- The completion of a project feasibility study for
  Skorpion in November 1998 by Reunion allowed it to
  satisfy its earn-in entitlement to 60 per cent. of the
  project and AAC subsequently confirmed its intention to
  maintain its 40 per cent. interest in Skorpion.  The
  study quoted proven and probable ore reserves of 19.5
  million tonnes at a zinc grade of 10.1 per cent. and
  anticipated average output over the first six and a
  half years of 150,000 tonnes of zinc metal per annum.
  Project implementation is planned to commence in 2000,
  with production of zinc planned to start in 2002.  The
  capital cost of Skorpion is estimated by the project
  feasibility study to be US$279 million.

- The Reunion Directors have, over several months, been
  investigating a number of financing options in order to
  establish the most appropriate means by which Reunion
  can meet its 60 per cent. share of these capital costs.
  In addition, given the scale of the project compared to
  Reunion's stock market capitalisation, Reunion
  Directors have also undertaken a broader evaluation to
  consider whether it is in the best interests of
  Reunion's Shareholders for Reunion to maintain its
  existing participation in Skorpion with the attendant
  financing obligations.  Central to this evaluation was
  the acknowledgement that any Skorpion project financing
  would require Reunion to undertake a major equity
  related fund raising, the size of which would be likely
  to be comparable to the stock market capitalisation of
  Reunion.  This compares to total equity fund raisings
  of #4.4 million undertaken by Reunion since its
  introduction to the Official List in 1995.

- Against this background, on 9 April 1999, Reunion
  announced its results for the year ended 31 December
  1998.  A loss after taxation of #5.5 million was
  reported.  The auditors included a reference to going
  concern in their audit report on these financial
  statements.  Loans of #6.7 million advanced to Reunion
  fall due for repayment during 1999.  Reunion does not,
  at the present time, have the cash resources to meet
  these obligations.

- The opportunities for junior mining companies to equity
  finance projects have been in decline for some years.
  Since there is little prospect of this changing in the
  foreseeable future, and having carefully considered the
  financial position of Reunion and the financing needs
  of Skorpion, the Reunion Directors consider that the
  Offer represents the most assured way for shareholders
  to obtain a material benefit from Reunion's interest in
  Skorpion.

Management and Employees

- The Offeror has confirmed that the existing rights,
  including pension rights, of all Reunion employees will
  be safeguarded.

Further details of the Offer

- The Offer extends to any Reunion Shares issued or
  unconditionally allotted while the Offer remains open
  for acceptance (or by such earlier date as the Offeror
  may, subject to the City Code, determine).

- The Reunion Shares will be acquired by the Offeror
  fully paid and free from all liens, equities, charges,
  encumbrances and other interests and together with all
  rights now or hereafter attaching to them, including
  the right to receive and retain all dividends and other
  distributions declared, made or paid hereafter.

- The Offer and the cash cancellation offer will be
  financed from existing cash resources of the Offeror.
  Cazenove is satisfied that the necessary resources to
  satisfy the Offer and the cash cancellation offer are
  available in full.

- The Offer will be subject to the condition and certain
  further terms set out in Appendix I to this
  announcement.

Reunion Share Options and Reunion Warrants

- The Offeror has agreed to make the cash cancellation
  offer, under which holders of Reunion Options and
  Reunion Warrants may agree that their Reunion Options
  and Reunion Warrants are cancelled in consideration of
  the payment to them of the amount per underlying
  Reunion Share (if any) by which 88 pence exceeds the
  exercise price of the Reunion Options and Reunion
  Warrants per Reunion Share.

General

- The formal Offer Document will be posted to Reunion
  shareholders in due course.

- The Offer will not be made directly or indirectly, in
  or into the United States, Canada, Australia or Japan.
  Copies of this announcement are not being, and must not
  be, mailed or otherwise distributed or sent in or into
  or from the United States, Canada, Australia or Japan.

- Cazenove, which is regulated by The Securities and
  Futures Authority, is acting for Minorco and for no one
  else in connection with the Offer and will not be
  responsible to anyone other than Minorco for providing
  the protections afforded to customers of Cazenove nor
  for providing advice in relation to the Offer or any
  matter referred to herein or in the Offer Document.

- SG Securities (London) Ltd, which is regulated by The
  Securities and Futures Authority, is acting for Reunion
  and for no one else in connection with the Offer and
  will not be responsible to anyone other than Reunion
  for providing the protections afforded to customers of
  SG Securities (London) Ltd nor for providing advice in
  relation to the Offer or any matter referred to herein
  or in the Offer Document.

- Appendix II contains the definitions used in this
  announcement.

APPENDIX I

Condition and certain further terms of the Offer

Condition of the Offer

The Offer will be subject to valid acceptances being
received (and not, where permitted, withdrawn) by 3.00pm
on the first closing date of the Offer or such later
time(s) and/or date(s) as the Offeror may, subject to the
rules of The City Code, decide, in respect of Reunion
Shares which, together with any other Reunion Shares
which the Offeror and any person acting in concert with
it has acquired or agreed to acquire (either pursuant to
the Offer or otherwise) by such date, will result in the
Offeror and any person acting in concert with it holding
shares carrying more than 50 per cent. of the voting
rights then exercisable at general meetings of Reunion.
For the purposes of this condition, shares which have
been unconditionally allotted but not issued shall be
deemed to carry the voting rights they will carry upon
their being entered into the register of members of
Reunion.

Terms

The Offer will lapse if the European Commission either
initiates proceedings under article 6(1)(c) of Council
Regulation (EEC) 4064/89 in respect of the Offer or,
following a referral to a competent authority of the
United Kingdom under Article 9(1) thereof or otherwise,
the Offer is referred to the Competition Commission, in
any case before 3.00pm on the first closing date of the
Offer or the date on which the Offer becomes or is
declared unconditional as to acceptances, whichever is
the later.  If the Offer so lapses, it will cease to be
capable of further acceptance and accepting Reunion
Shareholders and the Offeror will cease to be bound by
forms of acceptance submitted before the time when the
Offer lapses.
The Offer will remain open for acceptance for 21 days
following the posting of the formal Offer Document or
such later date as the Offeror may, subject to the City
Code, decide.
The Offer will not be made, directly or indirectly, in or
into the United States, Canada, Australia and Japan, or
by the use of the mails, or by any other means or
instrumentality (including, without limitation, facsimile
transmission, telex or telephone) of interstate or
foreign commerce of, or any facilities of a national
securities exchange of, the United States, Canada,
Australia or Japan.
The Offer will be governed by English Law and will be
subject to the exclusive jurisdiction of the Courts of
England.

APPENDIX II

Definitions

The following definitions apply throughout this press
release unless the context requires otherwise.

"AAC"
  Anglo American Corporation of South Africa Limited

"AAC Group" or "Group"
  AAC and its subsidiary and associated undertakings,
  including Minorco and Minorco Finance (U.K.) plc

"AAC Shareholders"
  holders of AAC Shares

"Anglo American plc"
  Anglo American plc and those companies which will be
  its subsidiary undertakings or associates following
  completion of the reorganisation of the AAC Group

"cash cancellation offer"
  the offer under which holders of Reunion Options and
  Reunion Warrants may elect for their Reunion Options
  and Reunion Warrants to be cancelled in consideration
  of a cash payment, as more fully described in this
  announcement

"Cazenove"
  Cazenove & Co. which is acting as financial adviser to
Minorco

"City Code"
  The City Code on Takeovers and Mergers

"Companies Act"
  the Companies Act 1985 (as amended)

"Directors" or "Board"
  the directors of Minorco

"Form of Acceptance"
  the form of acceptance relating to the Offer

"London Stock Exchange"
  London Stock Exchange Limited

"Minorco"
  Minorco S.A.

"Offer"
  the recommended offer to be made by Cazenove on behalf
  of Minorco Finance (U.K.) plc to acquire the Reunion
  Shares and, where the context admits, any subsequent
  revision, variation, extension or renewal thereof

"Offer Document"
  the offer document to be addressed to Reunion
  Shareholders in connection with the Offer, including
  the Form of Acceptance

"Offeror"
  Minorco Finance (U.K.) plc

"Official List"
  the Daily Official List of the London Stock Exchange

"Panel"
  The Panel on Takeovers and Mergers

"Reunion "
  Reunion Mining PLC

"Reunion Directors"
  the directors of Reunion

"Reunion Group"
  Reunion and its subsidiary and associated undertakings

"Reunion Options"
  options over Reunion Shares granted pursuant to the
Reunion Share Option Schemes

"Reunion Share"
  an ordinary share of 10 pence each in the share capital
of Reunion

"Reunion Shareholders"
  holders of Reunion Shares

"Reunion Share Option Schemes"
  the Reunion Mining PLC Executive Share Option Scheme
  and the Reunion Mining PLC 1996 Executive Share Option
  Scheme (Unapproved)

"Reunion Warrants"
  warrants over Reunion Shares

"SG Securities"
  SG Securities (London) Ltd. which is acting as
financial adviser to Reunion

"UK"
  the United Kingdom

"United States"
  the United States of America, its possessions or
  territories or any area subject to its jurisdiction or
  any political subdivision thereof

END

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