30._2011-10-03_announcement_albidon_restructuring

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12 W ALKER ST

WEST PERTH 6005W ESTERN AUSTRAL IA ARBN 107 288 755

TE L : +61 8 9211 4600FA X : +61 8 9211 4699

EMAIL : INFO@ALBIDON .C OM

ASX CODE : ALBW WW .ALBIDON.C OM

3 October 2011

The Manager CompaniesCompany AnnouncementsAustralian Securities Exchange LtdLevel 8 Exchange Plaza2 The EsplanadePerth WA 6000

Dear Sir,

ALBIDON TO RESTRUCTURE FOLLOWING STRATEGIC REVIEW

Intention to reorganise and restructure existing finance facilities to reduce debt and align

payments with revised life of mine plan.

Seeking new strategic and institutional investors to participate in a capital raising.

Recruit new independent directors.

Recruit new senior management with international mining experience for Perth head officeand Munali operations.

Restructure and recapitalisation planned to be completed by 31 December 2011.

The Board of Albidon Limited (Albidon) (ASX: ALB) today announced it has approved the

implementation of a series of steps intended to:

Address operational issues impacting the efficiency of the Companys Munali nickel mine in

Zambia

Restructure Albidons debt and capital structure so that the Company is more attractive to

investors

Ensure that Albidon has permanent quality management for the next stage of the Companys

development

Provide Albidon with a diverse Board of Directors with the appropriate skills to guide the

Company through its future growth

The proposals follow a comprehensive review of Albidons operations, its board composition and

management, and its debt and capital structures, conducted by Riverstone Advisory Pty Ltd

(Riverstone).

We believe we have an excellent asset at Munali and the basis for a sound mining business, said

Acting Managing Director Harold Ou Wang. The Board has unanimously accepted all of the

recommendations from Riverstone as necessary actions for Albidon to increase efficiency and

profitability.


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The Riverstone review confirms the Boards belief that the underlying resource at Munali appears

capable of supporting a profitable operation, and has the potential for an extended life. However, it also

confirms that in order for this potential to be fulfilled it is imperative that the Company is successful in

completing the restructuring initiatives we have announced today, Mr Wang said.

Subject to negotiation and regulatory approvals, the Boards desire is to complete the restructuring of the

Company prior to 31 December 2011.

Raise new equity capital to strengthen the balance sheet and introduce new strategic investors

The Board has engaged Patersons Securities (Patersons) and Riverstone Capital for the purpose of

determining the optimum strategy for raising new equity capital. In particular, Patersons and Riverstone

have been instructed to seek new strategic and institutional investors prepared to subscribe for a

minimum of $20 million and a maximum of $30 million of new equity. This is considered necessary to

provide funding to address operational issues at the mine identified as part of the Riverstone review (as

announced on 9 September 2011), strengthen the Companys balance sheet and provide financial

flexibility.

Jinchuan Group Ltd (Jinchuan), which currently owns 49.93% of Albidons current issued share capital,

has advised the Board that it is supportive of the Company raising new capital from external parties. It is

expected that Jinchuans interest in Albidon will be diluted as a result of any capital raising. Jinchuan has

further advised the Board that it will agree to reduce the number of its nominee Directors to reflect the

revised shareholding structure.Further details of the proposed capital raising will be announced in due course.

Reorganise and restructure finance facilities

The quantum and servicing requirement of Albidons debt is disproportionate to projected cash flow and

mine life. As at 30 June 2011, Albidon had a total debt obligation of $125 million, including convertible

notes with a book value of $19.6 million and accrued interest of $10.4 million.

Jinchuan controlled entities have provided all of the Companys debt facilities (having acquired all third

party debt during the Companys time in Administration). Jinchuan has provided Albidon with written

assurances that it will not take any action available to it as a result of Albidon being in default of its loan

obligations, and will continue to provide Albidon with the necessary financial support.

Following a request from the Board, Jinchuan has provided the Company with a written assurance of its

support for the reorganisation proposals detailed in this announcement. Albidon and Jinchuan will work

together to agree the terms of a restructure of Albidons debt to reduce the outstanding principal to

approximately $50 million and to align the repayment terms with the new life of mine plan. The final

agreed terms of any restructure, including any regulatory approvals required, will be announced to the

ASX in due course.

Jinchuan has also indicated it is prepared to facilitate the entry of new strategic investors by divesting

convertible notes currently held by it. It is the Boards intention that such a transaction would only be

undertaken on the condition that the notes are immediately converted into new equity by the new note

holder. Transfer of the convertible notes in such a circumstance will supersede the agreement

announced on 31 May 2011 to restructure the convertible note facilities by converting half to a secured

loan.


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Recruit experienced new management and independent directors

In order to lead the Company through the next stage of the Companys development, the Board has

commenced a recruitment process for permanent new senior management with requisite international

mining experience for its operations in Munali and in Perth.

The Board is also seeking to appoint additional non-executive Directors with Australian listed company

and/or international mining company credentials.

Upon the appointment of a new Managing Director and/or Chief Executive Officer, it is the Boards

intention that Harold Ou Wang will resume his position as an independent non-executive Director.

Appointment of Chief Financial Officer and Company Secretary

Mr Noel McAuliffe, who has been Acting CFO and Company Secretary since 4th July 2011, has been

appointed permanent CFO and Company Secretary.

Noel has already made an important and significant contribution to Albidon and I am delighted he has

agreed to join the Company on a full time basis, said Mr Wang. He has extensive experience with

public companies, has worked in the nickel industry and has Zambia and Africa work experience.

Suspension of trading in Shares

In order to ensure that the Companys securities are traded in a fully informed market in which the

Companys financial future is more secure, the Company is therefore requesting that its securities

remain in voluntary suspension pending finalisation of the terms of the transactions contemplated by thisannouncement. In the Companys view, it would be materially prejudicial to the successful completion of

the interdependent and complex transactions outlined above for trading in Albidon s securities to be

reinstated at this time.

These transactions are considered by the Board to be necessary to raise sufficient capital to implement

initiatives designed to address operational issues identified in the Companys announcement made on 9

September and to ensure debt is restructured so that servicing and repayment obligations are more

appropriate for the expected life and cash flows of the Munali mine.

It is anticipated that the required financial objectives and contractual completion can be achieved by 31

December 2011.

The transactions outlined above impact directly on the finalisation of the Companys Interim Financial

Report for the six months ended 30 June 2011 (such as the impact on the carrying value of non-current

assets if operational issues cannot be adequately rectified) with release being delayed pending the

Company having sufficient certainty as to the successful implementation of the restructure.

The Company is not aware of any reason why its request for the continuation of the voluntary

suspension should not be granted.

For and on behalf of Albidon Limited.


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Noel McAuliffe

Company Secretary

Further information:

Alan Jury

FTI Consulting

+61 418 833 149

[email protected]

30._2011-10-03_announcement_albidon_restructuring

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