28 March
2008
Dear Shareholder,
TAKE NO
ACTION ON OPPORTUNISTIC SINOSTEEL OFFER
Soon you
will receive in the mail documents from Sinosteel Corporation
(“Sinosteel”) which has announced an unsolicited takeover offer
(“Offer”) for all your shares in Midwest Corporation Limited
(“Midwest”).
The Midwest
Board urges you to TAKE NO ACTION until we have had an opportunity to
fully evaluate the Offer and advise shareholders.
It is
important that you are aware of our concern that the current Offer may not
reflect the full value of Midwest’s five
high-potential iron ore projects. The Board previously rejected an indicative
and incomplete offer from Sinosteel at the same price because it
undervalued Midwest’s assets. Since
then, iron-ore benchmark prices for Brazilian sourced iron ore have increased
between 65% and 71% with Rio and BHP seeking
even larger increases. These increases, reflecting the high demand for iron ore
particularly in China,
appear to have been disregarded in the new Offer.
Midwest’s
five projects are at different stages but all are producing good results. Our
job is to capture for you, our shareholders, the full intrinsic value of our
projects including the anticipated resources that have been identified but not
yet fully explored.
Midwest has
a good working relationship with Sinosteel in the exploration Joint Venture at Weld Range.
However, their Offer is opportunistically timed before the commencement
of intrinsic value negotiations between Sinosteel and Midwest
for their JV buy-in option to the Weld Range Hematite Project, which is only one
of our five high-potential projects.
The
Sinosteel offer also appears to disregard the strategic value of our projects. China
needs iron ore, and this unsolicited offer shows that the Chinese Government,
through its agent Sinosteel, is taking action to secure supplies for the
future. Midwest’s five projects are also the ‘Jewel in the
Crown’ of West Australia’s Mid
West Region. Our quality, size and location will enable us to lead the
development of this important new Australian iron ore province. Sinosteel
has contributed to date in excess of $30 million to the exploration JV and
approximately $215 million in acquiring 19.89 per cent of Midwest
stock. Sinosteel recognises the intrinsic value of our assets and should be
prepared to pay a premium to control them.
We are very
confident in our ability to develop our assets and deliver shareholders full
value. The Board will only support an offer if the terms fully reflect the intrinsic
and strategic value, and potential of all our projects.
Your Board
urges you to TAKE NO ACTION in relation to the Offer.
Yours
sincerely,
Jesse Taylor
Chairman
For further
information please contact the Midwest shareholder information line 1300 135
195 (within Australia) or
+61 3 9415 4288 (outside Australia).
