OREANDA-NEWS. August 12, 2010. SAT & Company (Almaty), securities of which are listed on Kazakhstan Stock Exchange (KASE), provided to KASE the following joint press release of SAT & Company and ShalkiyaZinc N.V., reported the press-centre of KASE:

This press release constitutes an announcement falling under Rule 2.4 of the UK City Code on Takeovers and Mergers (the "Code"). It does not constitute an offer or invitation to purchase any securities nor an announcement of a firm intention to make an offer or to pursue any other transaction under Rule 2.5 of the Code. Accordingly, there can be no certainty that a formal offer will be made even if the conditions set out below are satisfied.

ShalkiyaZinc N.V. (LSE: SKZ) ("ShalkiyaZinc" or the "Company"), a Kazakhstan mining group engaged in the lead-zinc mining sector, and SAT & Company JSC (KASE: SATC) ("SAT"), a Kazakhstan industrial holding group engaged in the metallurgy and petrochemical industries, are pleased to announce that the parties have concluded negotiations in relation to a conditional capital investment by SAT of USD50 million in ShalkiyaZinc in return for an equity interest equal to 81.39% of the enlarged issued share capital of ShalkiyaZinc (the "Proposed Transaction").                                                    

ShalkiyaZinc and SAT have entered into a conditional investment agreement (the "Investment Agreement"), pursuant to which SAT has agreed, subject to the satisfaction of certain conditions, to subscribe in cash for up to 24,715,769 new ordinary shares in the Company (the "New Shares") at a subscription price  of USD2.023 per New Share (the "Subscription Price"). The Subscription Price represents a price equivalent to the volume weighted average price per GDR during the six months period prior to 27 July 2010.

Subject to completion of the Proposed Transaction:

- The interest of the certain principal shareholders who hold ordinary shares in  the capital of the ShalkiyaZinc ("Ordinary Shares") representing 74.45% of the issued share capital of ShalkiyaZinc (the "Principal Shareholders") will be diluted to 13.85%.

- In addition, the interests of the holders of ShalkiyaZinc's global depositary receipts ("GDRs") which are listed on the London Stock Exchange, each representing one-tenth of an Ordinary Share, currently equal to 25.55% of the issued share capital in ShalkiyaZinc, will be diluted to 4.75%.

The management boards of ShalkiyaZinc and SAT approved the Proposed Transaction on 3 August 2010 and the Investment Agreement was executed on the same day.  ShalkiyaZinc's Management Board, which has been so advised by its financial adviser, Houlihan Lokey (Europe) Limited, is of the opinion  that the Proposed Transaction is in the best interests of ShalkiyaZinc and its shareholders taken as a whole.  In providing advice to the Management Board, Houlihan Lokey relied upon the Management Board's commercial assessment of the Proposed Transaction.  ShalkiyaZinc's Management Board has resolved to convene a general meeting of ShalkiyaZinc's shareholders (the "Shareholders' Meeting") recommending that the shareholders approve the Proposed Transaction.

Completion of the Proposed Transaction is subject to no adverse changes in market conditions or material adverse changes to the financial condition of the Group and is conditional upon the satisfaction of a number of matters including, among other things: (i) SAT completing confirmatory due diligence of ShalkiyaZinc group (the "Operating Subsidiary") to SAT's satisfaction by 23 August 2010; (ii) ShalkiyaZinc obtaining a waiver from the Government of Kazakhstan in respect of its pre-emption rights on the New Shares in ShalkiyaZinc to be issued to SAT; and (iii)  approval by ShalkiyaZinc's shareholders' of the Proposed Transaction at a shareholders' meeting to take place on 17 September 2010 at 13:30 (central European time).

ShalkiyaZinc intends to use the net proceeds of the Proposed Transaction to fund the repayment of a significant part of its indebtedness (in particular the loans from JSC BTA Bank) and to provide the Company with working capital  to address immediate needs.

SAT has expressed confidence in the ShalkiyaZinc Groups' current management and expects that the Operating Subsidiary willretain the current management board following completion of the Proposed Transaction, including Mr. Sarkytbayev in his capacity as the General Director of the Operating Subsidiary, for optimal continuity.  It is proposed that, at the ShalkiyaZinc level, a new management board will be appointed, comprising Mr. Sarkytbayev and five new non-executive directors.