Kagara Limited (ASX: KZL)

FIRB Approves GFTG Investment

Kagara Ltd (Kagara) is pleased to announce that Guangdong Foreign Trade Group Co Limited (GFTG) has received notice that Foreign Investment Review Board (FIRB) approval has been granted for up to a 19.9% investment in Kagara.

As reported previously, GFTG will initially invest A$57 million at A$0.60 per share through the Entitlement Offer Shortfall and a placement to achieve a 15% equity in Kagara. This will increase total funds received from the capital raising to A$226 million. In addition, GFTG is entitled to increase its equity in Kagara to 19.9% by subscribing for additional Kagara shares at A$0.80 per share by 10 August 2009. Should GFTG elect to increase its equity above 15%, the issuance of any new Kagara shares to GFTG will be subject to shareholder approval, to the extent it exceeds Kagara?s placement capacity under ASX Listing Rules.

We look forward to welcoming GFTG as a cornerstone investor in Kagara. The proposed investment will allow Kagara to significantly reduce its debt and enhance its future funding flexibility. This is an exciting development which cements a strategic relationship between Kagara and GFTG and will enable the Company to unlock the considerable value within its pipeline of high quality assets.

As part of the strategic alliance, GFTG will be entitled to appoint one member to the Kagara Board.