Circular to Shareholders

RNS Number:9362D
Van Dieman Mines plc
17 September 2007

                                                               17 September 2007

                              VAN DIEMAN MINES PLC
                                   (AIM: VDM)

                         Circular sent to Shareholders

                Notice of Extraordinary General Meeting ("EGM")

    Proposed placing of up to 55,000,000 ordinary shares ("Ordinary Shares")

Van Dieman Mines plc ("Van Dieman" or "the Company"), the AIM listed mining
company which is developing tin and sapphire mines in Tasmania, announces its
intention to raise additional funds to allow it to develop its existing projects
the first of which is expected to come into production this year.

The Company announces that on 14 September 2007 a Circular was sent to
shareholders of the Company ("Shareholders") in connection with a proposed
increase in the Directors' authorities to allot securities under section 80 and
section 95 of the Companies Act 1985. The Circular explains why the Directors
are seeking to increase their authorities and gives notice that an EGM has been
called for 10am on 9 October 2007 at the offices of Lawrence Graham LLP, 4 More
London Riverside, London SE1 2AU.

In addition, as announced by the Company on 22 August 2007 in order to appoint
Mr Ron Goodman to the board of directors the Company will need to increase the
maximum number of directors allowed on the board from 5 to 6 and pursuant to the
articles of association is seeking shareholder consent to such a change.

The following text comprises edited extracts from the Chairman's letter to
Shareholders of the Company:

The Placing

At the Company's annual general meeting on 23 August 2007, the Directors stated
that they were considering raising additional capital. In order for the Company
to continue financing its current projects, it proposes to undertake a
fundraising by way of a placing of up to 55,000,000 Ordinary Shares (the
"Placing Shares") at a price to be determined (the "Placing"). The net proceeds
of the Placing will be applied to the ongoing development of the Company's mine
projects.

The Directors currently have residual authorities under section 80 and section
95 of the Companies Act 1985 which would be insufficient to allot the Placing
Shares. Accordingly, in order for the Company to complete any such Placing, the
Company needs to obtain approval from its shareholders to grant the Board
authority to allot the Placing Shares, and to disapply statutory pre-emption
rights which would otherwise apply to the allotment of any Placing Shares (the
"Resolutions"). The Placing will also be conditional upon the admission of the
Placing Shares to AIM ("Admission").

As the Placing cannot be completed until the Resolutions have been approved by
the shareholders of the Company, the Company is also considering seeking interim
funding of up to #1 million in order that it can meet its current capital
expenditure plans. The Company envisages that, prior to completion of the
proposed Placing, it may raise funds by way of a loan note instrument pursuant
to which, following the passing of the Resolutions and subject to any further
terms and conditions, the loan stock granted under the loan note instrument
would be converted into Ordinary Shares at a conversion price to be determined
(the "Loan Note Instrument").

Reasons for the Placing and use of proceeds

The Company is currently seeking funding of A$25.9 million and this is being
sought through a mixture of debt and equity funding. An offer of debt funding
has been received from an Australian financial institution for A$15.4 million to
fund plant and equipment for both the Scotia and Endurance mines. The debt
finance offer is conditional, inter alia, on the Company raising not less than
A$10.5 million by way of an equity fundraising.

The Company intends to use the proceeds of the proposed debt funding and the
Placing and the proposed Loan Note Instrument for ongoing capital expenditure
including (i) applying a significant proportion of the Placing proceeds to the
development of the processing plants, the pit conveyors, the concentrate
clean-up shed and the infrastructure of the overall project; (ii) commencement
of production at its Scotia mine by the end of 2007 and Endurance mine during
the second half of 2008; (iii) for general working capital purposes going
forward in the next 12 months. The Company is also required to pay Tasmanian
government security bonds for which the Directors estimate that they will
require A$700,000 and this is included in the Directors' budget of A$25.9
million.

After an extensive evaluation of the range of possible funding alternatives, the
Directors consider that the raising of funds through the issue of new Ordinary
Shares and consequently the increase in authority to enable this, is in the best
interests of the Company and of the Shareholders as a whole.

Details of the Placing

The Company proposes to issue up to 55,000,000 Placing Shares at a price to be
determined of which #1 million may be raised through the issue of loan notes
pursuant to the Loan Note Instrument.

Expenses

The Company estimates that its expenses in relation to the proposed Placing will
be approximately #390,000. In addition, to their commission and corporate
finance fee the Company has also agreed to grant Fox-Davies Capital Limited, as
broker to the Company, warrants to subscribe for such number of Ordinary Shares
as are equal to 6 per cent. of the aggregate number of Placing Shares, the
warrants will be exercisable at the proposed placing price.

New Director

As announced on 22 August 2007, it is intended that Mr Ron Goodman be appointed
to the board of Directors subject to approval from the shareholders to increase
the maximum number of directors from 5 to 6.

Mr Goodman is aged 64 and has over 35 years in the mining and mineral processing
industry. He is based in Victoria and has been the Managing Director of Devlure
Pty Ltd since 1987. Devlure is a company that he set up in 1987 as the vehicle
for the freelance consulting metallurgist work that he has carried out over the
past 20 years.

Mr Goodman qualified with an HNC in Metallurgy in 1996 and in July 2000 he was
elected to membership of The Australian Institute of Mining and Metallurgy.

In the past 5 years Mr Goodman has not held any other positions where he was
acting as a director.

Extraordinary General Meeting

The Circular posted to shareholders and posted on the Company website explains
the background and reasons for the contemplated Placing, and why the Directors
unanimously recommend that you vote in favour of the Resolutions to be proposed
at the EGM.

As mentioned above, the Company currently has insufficient directors'
authorities in place to issue the Ordinary Shares both pursuant to the proposed
Placing and under the proposed convertible Loan Note Instrument. Accordingly, to
enable the Directors to issue the Ordinary Shares for the purposes set out above
the Directors are seeking authority:

(i)                  under section 80 of the Companies Act 1985, as amended (the
"Act") by way of an ordinary resolution, up to 55,000,000 Ordinary Shares in
connection with the Placing and a further additional authority of 10,000,000
Ordinary Shares (representing approximately 10 per cent. of the Company's
enlarged issued share capital following the Placing); and

(ii)                under section 95 of the Act to disapply statutory
pre-emption rights, by way of a special resolution, to issue up to 55,000,000
Ordinary Shares and a further additional authority of 10,000,000 Ordinary Shares
(representing approximately 10 per cent. of the Company's enlarged issued share
capital following the Placing).

The authorities will expire at the conclusion of the Company's next annual
general meeting to be held in 2008 or 15 months after the passing of the
Resolutions whichever is the earlier.

In addition, the current Articles of Association state that the maximum number
of directors shall be limited to five. The Company wishes to increase this to
six and pursuant to article 77 of the Company's articles of association, the
Company may vary this by way of an ordinary resolution.

Expected timetable

Latest time and date for receipt of proxy forms    10 a.m. on 7 October 2007.
Date of Extraordinary General Meeting              10 a.m. on 9 October 2007.

Recommendation

The Directors consider that the resolutions described above are in the best
interests of the Company and the Shareholders as a whole. The Directors
unanimously recommend Shareholders to vote in favour of the resolutions as set
out in the Notice of EGM, as the Directors who are shareholders intend to do so
in respect of their own holdings and interests in which they are beneficially
interested (amounting to 37,350,000 Ordinary Shares, representing approximately
38.1 per cent. of the current issued share capital of the Company).

In relation to the above, the Company has posted a circular to shareholders
convening the EGM to be held on 9 October 2007 at 10 a.m. at the offices of
Lawrence Graham LLP, 4 More London Riverside, London SE1 2AU.
 
The document is available on the Company's website www.vandiemanmines.com

ENQUIRIES:

VAN DIEMAN MINES plc               Tel: [phone]
Clive Trist, Managing Director     Email: [e-mail]

BANKSIDE CONSULTANTS               Tel: [phone]
Michael Padley / Libby Moss

Background on Van Dieman (AIM: VDM)

VDM is in the process of developing its alluvial tin, sapphire and accompanying
mineral deposits in the northeast of Tasmania, Australia where it owns 15
exploration and retention licenses. Exploration and development planning consent
is now complete for VDM's Scotia tin and sapphire mine which is scheduled to
move to first production later this year. When in full production the Scotia
Mine will produce annually an estimated 700 tonnes of tin and 1.5 million carats
of mine rough gem quality sapphire. Thaisarco, the Thai tin smelter and refiner,
has agreed to take the Company's entire expected tin concentrate output of
1,350-1,500 tonnes contained tin per year once both the Scotia and Endurance
mines are in production. Agreements are also in place for the marketing of the
sapphire and spinel production.



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