Nickel & Cobalt

[Tackler]

Frick I was looking at this at $3.50, the deal is priced at $4.88 trading at $4.50 now... wanna make 8% return?

Some big blocks getting moved - wow!

Dynatec board recommends approval of Sherritt takeover

2007-04-20 06:45 MT - News Release

Mr. Bruce Walter reports

SHERRITT TO ACQUIRE DYNATEC

Under a plan of arrangement, Sherritt International Corp. will acquire all of the issued and outstanding common shares of Dynatec Corp. for a total value of $1.6-billion.

Under the proposed transaction, Dynatec shareholders will receive 0.190 of a Sherritt common share and approximately 0.0635 of an FNX Mining Company Inc. (TSX: FNX) common share, which are currently owned by Dynatec, for each Dynatec common share held. Based on yesterday's respective Toronto Stock Exchange closing prices of $17.15 for Sherritt and $25.46 for FNX, the consideration is valued at $4.88 per Dynatec common share. The consideration represents a premium of 29 per cent to Dynatec's closing share price on April 19, 2007, or a 39-per-cent premium based on the 20-day volume weighted average share prices for the three companies from that date.

Sherritt and Dynatec have entered into a combination agreement pursuant to which the board of directors of Dynatec has unanimously agreed to support the proposed transaction and recommends that Dynatec shareholders vote in favour of it. Management and directors of Dynatec have entered into support agreements with Sherritt under which they have agreed to vote 20.2 million common voting shares, representing a 6.4-per-cent interest in Dynatec, in favour of the transaction.

Jowdat Waheed, president and chief executive officer of Sherritt, said: "This is an important step in the growth strategy of our metals division, enabling us to become a premier, globally diversified lateritic nickel producer based in Canada. The Ambatovy nickel project enhances our already strong metals operating platform, from which we will be able to meet demand in a growing market."

Bruce V. Walter, president and chief executive officer of Dynatec, added: "This transaction provides an immediate and attractive premium to Dynatec's shareholders. It also affords them an opportunity to participate in an exciting, diversified growth company through their investment in Sherritt, and to have greater exposure to the strong nickel price environment. In addition, the combination of our companies' strengths will benefit the Ambatovy project as it moves forward with development. Our shareholders will also continue to participate in the significant value potential of the Sudbury basin through a direct interest in FNX."

Concurrent with this transaction, an agreement was entered into with FNX, whereby FNX has been granted a right, subject to closing of the transaction, to purchase Dynatec's mining services division from Sherritt for cash at a price based upon independent assessments of value. FNX has stated its current intent to exercise this right upon closing of the transaction.

Successful completion of the transaction will strengthen Sherritt Metals' position in the global nickel market. Sherritt Metals' operating experience at its existing lateritic nickel mine and processing facility, and its continuing metals expansion project, will result in significant capital build-out, operating and knowledge-transfer synergies.

Ambatovy's estimated reserve life of 27 years combined with Sherritt's existing metals operations, with reserves of approximately 25 years, positions Sherritt with leading long-life nickel assets. Long-term gross annual production from the combined company's operating mines is expected to be 109,000 tonnes of nickel and 10,600 tonnes of cobalt (net interest to Sherritt of approximately 49,000 and 4,740 tonnes of nickel and cobalt, respectively).

The transaction will be completed by way of a court-approved plan of arrangement, whereby each Dynatec common share will be exchanged for 0.190 of a Sherritt common share and approximately 0.0635 of an FNX common share. Sherritt will continue to trade on the Toronto Stock Exchange, under the symbol S.

The board of directors of Dynatec, having received the unanimous recommendation of a special committee of independent directors, is recommending that holders of Dynatec common shares vote in favour of the transaction. Dynatec's financial advisers have provided an opinion to the special committee that the consideration to be offered to Dynatec shareholders pursuant to the plan of arrangement is fair, from a financial point of view, to the holders of common shares of Dynatec.

The transaction is subject to all requisite regulatory and court approvals, third party consents, and other conditions customary to transactions of this nature. The combination must be approved by at least 66-2/3 per cent of the votes cast by shareholders of Dynatec at a meeting of holders of common shares. The information circular for shareholders is expected to be mailed shortly. The shareholder meeting is expected to be held in early June with the transaction anticipated to close shortly thereafter.

The combination agreement between Dynatec and Sherritt provides for, among other things, a non-solicitation covenant on the part of Dynatec, subject to customary "fiduciary out" provisions that entitle Dynatec to consider and accept a superior proposal; a right in favour of Sherritt to match any superior proposal; and the payment to Sherritt of a termination payment of approximately $46-million if, among other things, the acquisition is not completed as a result of a superior proposal.

No Sherritt shares will be issued to U.S. persons. Instead a mechanism will be established pursuant to which Sherritt shares otherwise issuable to U.S. persons will be issued to a trustee, which will sell such shares in the market and remit the proceeds (net of selling expenses and applicable withholding) to such holders.

Sherritt's financial and legal advisers are National Bank Financial Inc. and Torys LLP, respectively. Dynatec's financial and legal advisers are Merrill Lynch Canada Inc. and GMP Securities LP, and Davies Ward Phillips & Vineberg LLP and Aird & Berlis LLP, respectively.

Conference call and webcast information

The investment community is invited to participate in the conference call and webcast as follows:

April 20, 2007, at 10 a.m. EDT
Toll-free: 1-800-732-0232
International: 1-416-644-3415

The live webcast can be accessed by visiting the company's website.

The conference call will be available for replay until May 18, 2007, by calling 1-877-289-8525 for North American callers and 1-416-640-1917 for international callers, pin No. 21227995 followed by the number sign. The archival webcast of the presentation can be accessed via the Internet by visiting the company's website.