Exhibit 1.1
This document is important and requires your immediate attention. If you have any questions as to how to deal with it, you should consult your investment dealer, broker, bank manager, lawyer or other professional advisor. If you are a resident of the United Kingdom and you have any doubt about the Offer or what action you should take, you should immediately consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorized under the United Kingdom Financial Services and Markets Act 2000. No securities regulatory authority in Canada, the United States or the United Kingdom has expressed an opinion about, or passed upon the fairness or merits of, the offer contained in this document, the securities offered pursuant to such offer or the adequacy of the information contained in this document and it is an offence to claim otherwise. In particular, this document does not constitute a prospectus for the purposes of the Prospectus Rules published by the Financial Services Authority of the United Kingdom. Accordingly, this document has not been, and will not be, reviewed or approved by the Financial Services Authority or by the London Stock Exchange plc.
April 18, 2006
NOTICE OF VARIATION AND EXTENSION
by
FIRST QUANTUM MINERALS LTD.
of its
OFFER TO PURCHASE
all of the outstanding common shares of
ADASTRA MINERALS INC.
on the revised basis of, at the election of each holder,
(a) Cdn.$2.92 in cash per common share of Adastra Minerals Inc. (the “Cash Alternative”); or
(b) one common share of First Quantum Minerals Ltd. and Cdn.$0.265 for every 14.76 common shares
of Adastra Minerals Inc. (the “Share Alternative”)
subject, in each case, to pro ration as set out herein
First Quantum Minerals Ltd. (“ First Quantum ” or the “ Offeror ”) hereby gives notice that it has amended its offer dated February 2, 2006, as previously varied and extended by the notice of variation and extension dated March 10, 2006, the notice of variation and extension dated March 21, 2006 and the notice of extension dated April 3, 2006 (collectively, the “ Original Offer ”) to purchase all of the outstanding common shares of Adastra Minerals Inc. (“ Adastra ”), together with the associated rights (the “ SRP Rights ”) issued under the Shareholder Rights Plan of Adastra (together, the “ Adastra Shares ”), in order to: (i) increase the consideration offered for the Adastra Shares; (ii) extend the Original Offer to 11:59 p.m. (Toronto time) on April 28, 2006 unless further extended or withdrawn; (iii) revise the conditions of the Original Offer; and (iv) provide additional disclosure with respect to certain matters.
THE OFFER HAS BEEN AMENDED AND EXTENDED AND IS NOW OPEN FOR ACCEPTANCE UNTIL 11:59 P.M. (TORONTO TIME) ON APRIL 28, 2006 UNLESS FURTHER EXTENDED OR WITHDRAWN
THE BOARD OF DIRECTORS OF ADASTRA HAS UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS OF ADASTRA ACCEPT THE OFFER AND TENDER THEIR ADASTRA SHARES TO THE OFFER
The Dealer Manager for the Offer is:
| In Canada | In the United States |
| RBC Dominion Securities Inc. | RBC Capital Markets Corporation |
NOTICE TO SHAREHOLDERS IN THE UNITED STATES
This Offer is made by a Canadian issuer that is permitted, under a multi-jurisdictional disclosure system adopted by the United States, to prepare the Offer and Circular and this Notice of Variation and Extension in accordance with the disclosure requirements of Canada. The Offer is subject to applicable disclosure requirements in Canada. Holders of Adastra Shares (“Shareholders”) should be aware that such requirements are different from those of the United States. Financial statements included or incorporated herein have been derived from publicly available financial statements which have been prepared in accordance with Canadian generally accepted accounting principles and thus may not be comparable to financial statements of United States companies.
The enforcement by investors of civil liabilities under the federal securities laws may be affected adversely by the fact that First Quantum is incorporated under the laws of Canada, that some or all of its officers and directors may reside outside the United States, that the Canadian Dealer Manager for the Offer and some or all of the experts named in the Offer and Circular may reside outside the United States, and that a substantial portion of the assets of First Quantum and said persons are located outside the United States.
THE FIRST QUANTUM SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFER AND CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
Prospective investors should be aware that acquisition of First Quantum Shares may have tax consequences both in the United States and in Canada. Such consequences for investors who are resident in, or citizens of, the United States, may not be described fully in the Offer and Circular.
The Offer does not constitute an offer to sell or a solicitation of an offer to buy any securities in any state in the United States in which such offer or solicitation is unlawful. The Offer is not being made or directed to, nor is this document being mailed to, nor will deposits of Adastra Shares be accepted from or on behalf of, Shareholders in any state in the United States in which the making or acceptance of the Offer would not be in compliance with the laws of such state. The Offeror may, in its sole discretion, take such action as it may deem desirable to extend the Offer to Shareholders in any such state. Notwithstanding the foregoing, the Offeror may elect not to complete such action in any given instance. Accordingly, the Offeror cannot at this time assure holders of Adastra Shares that otherwise valid tenders can or will be accepted from holders resident in all states in the United States.
Shareholders should be aware that the Offeror or its affiliates, directly or indirectly, may bid for or make purchases of the Adastra Shares, or of related securities, or of common shares of First Quantum, or of related securities, during the period of the Offer, as permitted by applicable laws or regulations of Canada or its provinces or territories.
The Offer and Circular and this Notice of Variation and Extension, and certain of the information incorporated by reference into the Offer and Circular and this Notice of Variation and Extension, have been prepared in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of United States securities laws. In particular, and without limiting the generality of the foregoing, the terms “mineral reserves,” “probable reserves,” “proven reserves,” “inferred resources,” “indicated resources,” “measured resources” and “mineral resources” used or incorporated by reference in the Offer and Circular are, unless otherwise stated, Canadian mining terms as defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Mineral Reserves (“CIM”). CIM standards differ significantly from standards in the United States. While the terms “mineral resource,” “measured resources,” “indicated resources,” and “inferred resources” are recognized and required by Canadian regulations, they are not defined terms under standards in the United States. As such, information regarding mineralization and resources contained or incorporated by reference in the Offer and Circular may not be comparable to similar information made public by United States companies.
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NOTICE TO SHAREHOLDERS IN THE UNITED KINGDOM
No action has been or is intended to be taken by First Quantum, by Numis Securities Limited or by RBC Capital Markets and its affiliated entities that would permit a public offer of First Quantum Shares to be made in the United Kingdom, which would require an approved prospectus to be made available to the public in the United Kingdom (in accordance with the United Kingdom Financial Services and Markets Act 2000 (“FSMA”) and the Prospectus Rules published by the Financial Services Authority of the United Kingdom (the “FSA”)) before such an offer is made.
Accordingly, as regards Shareholders resident in, or who have received the Offer in, the United Kingdom (“U.K. Shareholders”), the Offer is only being made to or directed at, and deposits of Adastra Shares will only be accepted from, a U.K. Shareholder who: (a) is, and is able to establish to the satisfaction of the Offeror that it is: (i) a qualified investor acting as principal; (ii) a qualified investor which operates in the financial markets acting on behalf of a person, not being a qualified investor, on a discretionary basis concerning the acceptance of offers on that person’s behalf; or (iii) acting on behalf, and on the instructions, of a qualified investor (in which case the Offer is made to or directed at that qualified investor); or (b) is a person to whom the Offer may otherwise be made or at whom the Offer may otherwise be directed in the United Kingdom without an approved prospectus having been made available to the public in the United Kingdom before the Offer is made. A “qualified investor” is (i) a legal entity which is authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; (ii) a legal entity which has two or more of: (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; (iii) a person entered on the register of qualified investors maintained by the FSA for this purpose pursuant to section 87R of FSMA; or (iv) an investor authorized by an EEA State other than the United Kingdom to be considered as a qualified person. Accordingly, any U.K. Shareholder purporting to accept the Offer must provide supporting evidence satisfactory to the Offeror that it is entitled to do so, and the Offeror shall in its sole discretion be entitled to reject any such purported acceptance of the Offer, as further described in the Offer and Circular. Shareholders who have received the Offer in the United Kingdom should consult with their legal advisors to determine whether they (or any person on whose behalf they act) are able to receive and accept the Offer. Further details in connection with the Offer and its acceptance by U.K. Shareholders are set out in the Offer and Circular.
The content of this document, which has been prepared by and is the responsibility of the Offeror, has been approved by Numis Securities Limited of Cheapside House, 13 Cheapside, London, United Kingdom EC2V 6LH, solely for the purposes of section 21 of the FSMA. Numis Securities Limited is acting exclusively for First Quantum in connection with the Offer and no one else, and will not be responsible to anyone other than First Quantum for providing the protections afforded to clients of Numis Securities Limited nor for providing advice in relation to the Offer or any other matter referred to in this document. Numis Securities Limited is authorized by the FSA and its FSA registration number is 2285918.
This Notice of Variation and Extension should be read in conjunction with the Original Offer and the circular that accompanied the offer dated February 2, 2006 (the “ Original Circular ” and, together with the Original Offer, the “ Offer and Circular ”). Except as otherwise set forth herein, the terms and conditions previously set forth in the Offer and Circular and in the letters of transmittal (the “ Revised Letters of Transmittal ”) and notice of guaranteed delivery (the “ Revised Notice of Guaranteed Delivery ”) that accompanied the notice of variation and extension dated March 21, 2006 and the letters of transmittal (the “ Original Letters of Transmittal ”) and the notice of guaranteed delivery (the “ Original Notice of Guaranteed Delivery ”) that accompanied the offer dated February 2, 2006 continue to be applicable in all respects. All references to the “Offer” in the Offer and Circular, the Letters of Transmittal, the Notice of Guaranteed Delivery and this Notice of Variation and Extension mean the Original Offer as amended hereby, all references in such documents to the “Letters of Transmittal” mean the Original Letters of Transmittal as amended by the Revised Letters of Transmittal, all references in such documents to the “Notice of Guaranteed Delivery” mean the Original Notice of Guaranteed Delivery as amended by the Revised Notice of Guaranteed Delivery and all references in such documents to the “Circular” mean the Original Circular as amended by the notice of variation and extension dated March 10, 2006, the notice of variation and extension dated March 21, 2006, the notice of extension dated April 3, 2006 and hereby. Unless the context requires otherwise, capitalized terms used herein but not defined herein have the respective meanings given to them in the Offer and Circular.
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Shareholders who (i) have validly deposited and not withdrawn their Adastra Shares using the appropriate Original Letter of Transmittal and, if applicable, an Original Notice of Guaranteed Delivery and (ii) wish to elect the Share Alternative need take no further action to accept the Offer. Shareholders who (i) have validly deposited and not withdrawn their Adastra Shares using the appropriate Original Letter of Transmittal and, if applicable, an Original Notice of Guaranteed Delivery and (ii) wish to elect the Cash Alternative must withdraw their Adastra Shares by following the procedures set forth in Section 8 of the Offer to Purchase, “Right to Withdraw Deposited Adastra Shares” and redeposit their Adastra Shares by following the procedures set out below and in Section 4 of the Offer to Purchase, “Time and Manner for Acceptance”. Shareholders who wish to accept the Offer must properly complete and duly execute the appropriate Revised Letter of Transmittal (printed on purple paper in the case of all Shareholders other than Eligible U.K. Shareholders and on orange paper in the case of Eligible U.K. Shareholders) that accompanied the notice of variation and extension dated March 21, 2006 or a manually signed facsimile thereof and deposit it, together with the certificates representing their Adastra Shares and any required evidence confirming that the Shareholder purporting to accept the Offer is eligible to do so, at one of the offices of the Depositary in accordance with the instructions in the applicable Revised Letter of Transmittal. Any Shareholder holding Adastra Shares in the form of CREST Depository Interests must additionally arrange for the appropriate electronic acceptance instructions to be sent to CREST Depository Limited. Alternatively, certain Shareholders may follow the procedure for guaranteed delivery set forth in Section 5 of the Offer to Purchase, “Procedure for Guaranteed Delivery”, by using the Revised Notice of Guaranteed Delivery (printed on pink paper) that accompanied the notice of variation and extension dated March 21, 2006 or a manually signed facsimile thereof. Persons whose Adastra Shares are registered in the name of a dealer, broker, bank, trust company or other nominee should contact such registered holder for assistance if they wish to accept the Offer.
Questions and requests for assistance may be directed to RBC Dominion Securities Inc. in Canada, to RBC Capital Markets Corporation in the United States (the “ Dealer Manager ”), to Innisfree M&A Incorporated (the “ Information Agent ”) or to Computershare Investor Services Inc. (the “ Depositary ”). Additional copies of this Notice of Variation and Extension, the Offer and Circular, the Letters of Acceptance and Transmittal and the Notice of Guaranteed Delivery may be obtained without charge on request from the Dealer Manager or the Depositary at their respective offices shown on the last page of this Notice of Variation and Extension.
No person has been authorized to give any information or make any representation other than those contained in the Offer and Circular, the Letters of Acceptance and Transmittal and this Notice of Variation and Extension and, if given or made, that information or representation must not be relied upon as having been authorized by the Offeror.
The Offer has not been approved or disapproved by any securities regulatory authority nor has any securities regulatory authority passed upon the fairness or merits of the Offer or upon the adequacy of the information contained in this Notice of Variation and Extension. Any representation to the contrary is unlawful.
This Notice of Variation and Extension does not constitute an offer or a solicitation to any person in any jurisdiction in which such offer or solicitation is unlawful. The Offer is not being made to, nor will deposits be accepted from or on behalf of, Shareholders in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. However, the Offeror or its agents may, in its or their sole discretion, take such action as it or they may deem necessary to extend the Offer to Shareholders in any such jurisdiction.
EXCHANGE RATE INFORMATION
All references to “dollars” or “$” in this document refer to United States dollars, unless otherwise indicated. The following table sets forth the average exchange rate for one U.S. dollar expressed in Canadian dollars for each period indicated, and the exchange rate at the end of such period, based upon the noon buying rates provided by the Bank of Canada:
| Year Ended December 31 | |||||
|---|---|---|---|---|---|
|
|
|||||
| 2005 | 2004 | 2003 | 2002 | 2001 | |
|
|
|||||
| Rate at end of period | 1.1659 | 1.2036 | 1.2924 | 1.5796 | 1.5926 |
| Average rate for period | 1.2116 | 1.3015 | 1.4015 | 1.5704 | 1.5484 |
On April 17, 2006, the exchange rate for one U.S. dollar expressed in Canadian dollars based upon the noon buying rates provided by the Bank of Canada was Cdn.$1.1453.
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NOTICE OF VARIATION AND EXTENSION
April 18, 2006
TO: THE HOLDERS OF ADASTRA SHARES
This Notice of Variation and Extension amends and supplements the Offer and Circular and the Letters of Transmittal and Notice of Guaranteed Delivery, pursuant to which the Offeror is offering to purchase, on the terms and subject to the conditions contained therein, all of the outstanding Adastra Shares, which includes the associated SRP Rights.
Except as otherwise set forth in this Notice of Variation and Extension, the terms and conditions previously set forth in the Offer and Circular, Letters of Transmittal and Notice of Guaranteed Delivery continue to be applicable in all respects and this Notice of Variation and Extension should be read in conjunction with the Offer and Circular, Letters of Transmittal and Notice of Guaranteed Delivery. Unless the context requires otherwise, capitalized terms used herein but not defined have the meanings set forth in the Offer and Circular, the Letters of Transmittal and the Notice of Guaranteed Delivery.
All references to the “Offer” in the Offer and Circular, the Letters of Transmittal, the Notice of Guaranteed Delivery and this Notice of Variation and Extension mean the Original Offer as amended hereby, all references in such documents to the “Letters of Transmittal” mean the Original Letters of Transmittal as amended by the Revised Letters of Transmittal, all references in such documents to the “Notice of Guaranteed Delivery” mean the Original Notice of Guaranteed Delivery as amended by the Revised Notice of Guaranteed Delivery and all references in such documents to the “Circular” mean the Original Circular as amended by the notice of variation and extension dated March 10, 2006, the notice of variation and extension dated March 21, 2006, the notice of extension dated April 3, 2006 and hereby.
1. Increase in Consideration Offered
The Offeror has amended the Offer by increasing the consideration offered to Shareholders from, at the election of each Shareholder, (a) Cdn.$2.65 in cash for each Adastra Share, or (b) one First Quantum Share for every 14.76 Adastra Shares, to, at the election of each Shareholder, (a) Cdn.$2.92 in cash for each Adastra Share, or (b) one First Quantum Share and Cdn.$0.265 in cash for every 14.76 Adastra Shares subject, in each case, to pro ration based upon the maximum amount of cash and First Quantum Shares offered.
Any Shareholder who (i) deposits his or her Adastra Shares using an Original Letter of Transmittal and, if applicable, Original Notice of Guaranteed Delivery, or (ii) fails to complete the appropriate Revised Letter of Transmittal and, if applicable, the Revised Notice of Guaranteed Delivery electing the Cash Alternative or (iii) does not properly elect either the Cash Alternative or the Share Alternative in the appropriate Revised Letter of Transmittal and, if applicable, the Revised Notice of Guaranteed Delivery with respect to any Adastra Shares deposited by such Shareholder pursuant to the Offer will be deemed to have elected the Share Alternative.
The maximum amount of cash payable by the Offeror pursuant to the Offer (including in respect of the Cdn.$0.265 in cash for every 14.76 Adastra Shares paid to Shareholders who elect the Share Alternative) has been increased such that it shall not exceed Cdn.$0.475 multiplied by the number of outstanding Adastra Shares on a fully diluted basis on the date of the Offer (the “ Maximum Cash Consideration ”). Based on the number of Adastra Shares outstanding on a fully diluted basis on April 11, 2006, the Maximum Cash Consideration will be approximately Cdn.$41.0 million. All references in the Offer and Circular, the Letters of Transmittal and the Notice of Guaranteed Delivery to the Maximum Cash Consideration are amended to reflect the foregoing changes. The maximum number of First Quantum Shares issuable by the Offeror pursuant to the Offer shall not exceed the number of outstanding Adastra Shares on a fully diluted basis on the date of the Offer divided by 17.5 (the “ Maximum Share Consideration ”). Based on the number of Adastra Shares outstanding on a fully diluted basis on April 11, 2006, the Maximum Share Consideration will be approximately 4.9 million First Quantum Shares.
Assuming that either all Shareholders tender to the Cash Alternative or all Shareholders tender to the Share Alternative, each Shareholder will be entitled to receive Cdn.$0.475 in cash and approximately 0.057 of a First Quantum Share for each Adastra Share tendered, subject to adjustment for fractional shares. In light of the total amount of cash available under the Offer relative to the size of the Offer, it is unlikely that Shareholders who elect to receive the Cash Alternative will receive only cash consideration for their Adastra Shares. Conversely, in light of the total number of First Quantum Shares available under the Offer relative to the size of the Offer, it is unlikely that Shareholders who elect to receive the Share Alternative will receive only First Quantum Shares in consideration for their Adastra Shares.
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The consideration payable under the Offer will be pro rated on each date (“ Take-Up Date ”) upon which the Offeror takes up or acquires Adastra Shares pursuant to the Offer as necessary to ensure that the total aggregate consideration payable under the Offer and in any Compulsory Acquisition or Subsequent Acquisition Transaction does not exceed the Maximum Cash Consideration or the Maximum Share Consideration and will be based on the number of Adastra Shares acquired in proportion to the number of Adastra Shares outstanding on a fully diluted basis at the Take-Up Date. The Offeror reserves the right, to the extent permitted by applicable Laws, to have multiple Take-Up Dates. The actual consideration to be received by a Shareholder will be determined in accordance with the following:
| (a) | the aggregate amount of cash that the Offeror will pay as consideration for Adastra Shares acquired in respect of the Cash Alternative and the Share Alternative on any Take-Up Date shall not exceed the Maximum Cash Consideration multiplied by a fraction, the numerator of which is the number of Adastra Shares to be taken up on such Take-Up Date and the denominator of which is the number of outstanding Adastra Shares on a fully diluted basis (the “ Maximum Take-Up Date Cash Consideration ”); |
| (b) | the aggregate number of First Quantum Shares that the Offeror will issue as consideration for Adastra Shares acquired in respect of the Share Alternative on any Take-Up Date shall not exceed the Maximum Share Consideration multiplied by a fraction, the numerator of which is the number of Adastra Shares to be taken up on such Take-Up Date and the denominator of which is the number of outstanding Adastra Shares on a fully diluted basis (the “ Maximum Take-Up Date Share Consideration ”); |
| (c) | if, on any Take-Up Date, the aggregate cash consideration that would otherwise be payable by the Offeror to Shareholders who elect to receive cash under the Cash Alternative in respect of their Adastra Shares to be taken up on such Take-Up Date, together with the Cdn.$0.265 in cash per First Quantum Share to be paid to Shareholders who elect (or are deemed to elect) the Share Alternative in respect of their Adastra Shares to be taken up on such Take-Up Date, exceeds the Maximum Take-Up Date Cash Consideration, the amount of cash consideration available to those Shareholders who have so elected the Cash Alternative will be allocated pro rata (on a per share basis) among such Shareholders in an amount equal to the aggregate amount of the cash sought by each such Shareholder who has so elected the Cash Alternative multiplied by a fraction, the numerator of which is the Maximum Take-Up Date Cash Consideration, less the Cdn.$0.265 in cash per First Quantum Share to be paid to Shareholders who have elected (or are deemed to have elected) the Share Alternative in respect of their Adastra Shares to be taken up on such Take-Up Date, and the denominator of which is the aggregate amount of the cash consideration sought by those Shareholders who have elected the Cash Alternative in respect of their Adastra Shares to be taken up on such Take-Up Date, and each such Shareholder will receive First Quantum Shares (or cash in lieu of any fractional First Quantum Common Share calculated by valuing each First Quantum Share at Cdn.$39.11) as consideration for any balance which exceeds the amount of cash so allocated to the Shareholder; and |
| (d) | if, on any Take-Up Date, the number of First Quantum Shares that would otherwise be issuable to Shareholders who elect (or are deemed to elect) the Share Alternative in respect of their Adastra Shares to be taken up on such Take-Up Date exceeds the Maximum Take-Up Date Share Consideration, the number of First Quantum Shares available to those Shareholders who have so elected (or are deemed to have elected) the Share Alternative will be allocated pro rata (on a per share basis) among such Shareholders in an amount equal to the number of First Quantum Shares sought by each such Shareholder who has so elected (or is deemed to have elected) the Share Alternative in respect of its Adastra Shares to be taken up on such Take-Up Date multiplied by a fraction, the numerator of which is the Maximum Take-Up Date Share Consideration and the denominator of which is the aggregate number of First Quantum Shares sought by those Shareholders who have elected (or are deemed to have elected) the Share Alternative in respect of their Adastra Shares to be taken up on such Take-Up Date, rounded down to the nearest whole number (with cash paid in lieu of any fractional First Quantum Common Share calculated by valuing each First Quantum Share at Cdn.$39.11), and each such Shareholder will receive cash as consideration for any balance which exceeds the number of First Quantum Shares allocated to the Shareholder. |
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For greater certainty, unless a Shareholder receives only cash consideration for all Adastra Shares tendered by the Shareholder, in all circumstances, including those described in paragraphs (c) and (d) above, a Shareholder will be deemed to have received a proportionate amount of cash and First Quantum Shares as consideration for each whole Adastra Share tendered by such Shareholder such that the Shareholder will receive (a) cash as consideration for a fraction of each Adastra Share tendered (which fraction will equal the percentage of the total consideration paid to such Shareholder that is paid in cash) and (b) First Quantum Shares as consideration for the remaining fraction of each Adastra Share.
No fractional First Quantum Shares will be issued pursuant to the Offer. Where a Shareholder is to receive First Quantum Shares as consideration under the Offer and the aggregate number of First Quantum Shares to be issued to such Shareholder would result in a fraction of a First Quantum Share being issuable, the number of First Quantum Shares to be received by such Shareholder will be rounded down and the amount of cash to be received by such Shareholder will correspondingly be increased (on the basis of Cdn.$39.11 per First Quantum Share). The amount of cash payable to Shareholders in lieu of issuing fractional First Quantum Shares will not be included in, but will be in addition to, the Maximum Cash Consideration.
All references in the Offer and Circular, the Letters of Transmittal and the Notice of Guaranteed Delivery to the Offered Consideration are amended to reflect the foregoing changes.
Based on the closing price of the First Quantum Shares on the TSX of Cdn.$49.96 on April 10, 2006, the last trading day prior to the Offeror’s announcement of its intention to increase the Offered Consideration, the implied value of the Share Alternative is Cdn.$3.40, representing a premium of approximately 89% over the closing price of the Adastra Shares on the TSX of Cdn.$1.80 on January 17, 2006, the last trading day prior to the Offeror’s announcement of its intention to make the Original Offer.
Assuming that all of the conditions to the Offer are satisfied or waived, all Shareholders whose Adastra Shares are taken up under the Offer, including Shareholders who have already deposited their Adastra Shares to the Offer, will receive the increased Offered Consideration for their Adastra Shares.
2. Extension of the Offer
By notice to the Depositary given on April 18, 2006 and a news release issued by the Offeror, the Offeror has extended the expiry of the Original Offer to 11:59 p.m. (Toronto time) on April 28, 2006, unless the Offeror further extends the period during which the Offer is open for acceptance pursuant to Section 6 of the Offer to Purchase, “Extensions, Variations and Changes to the Offer”. Accordingly, the definitions of “Expiry Date” and “Expiry Time” in the Offer and Circular are amended to read in full as follows:
“ Expiry Date ” means April 28, 2006 or such later date as is set out in a notice of variation and extension of the Offer issued at any time and from time to time extending the period during which Adastra Shares may be deposited to the Offer, provided that, if such day is not a business day, then the Expiry Date shall be the next business day.
“ Expiry Time ” means 11:59 p.m. (Toronto time) on the Expiry Date.
3. Amendments to Conditions of the Offer
Section 2 of the Offer to Purchase, “Conditions of the Offer” (found at pages 11-14 of the Offer and Circular) is deleted in its entirety and replaced by the following:
“The Offeror reserves the right to withdraw the Offer and not take up, purchase or pay for, and shall have the right to extend the period of time during which the Offer is open and postpone taking up and paying for, any Adastra Shares deposited under the Offer unless all of the following conditions are satisfied or, where permitted, waived by the Offeror prior to the Expiry Time:
| (a) | the Minimum Tender Condition; |
| (b) | the Support Agreement shall not have been terminated (i) by Adastra, whether in accordance with its terms or otherwise, or (ii) by the Offeror in accordance with its terms; |
| (c) | (i) no act, action, suit or proceeding shall have been threatened in writing or taken before or by any Governmental Entity, any elected or appointed public official or private person (including, without limitation, any individual, corporation, firm, group or other entity) in Canada or elsewhere, whether or not having the force of Law; and (ii) no Law, regulation or policy shall have been proposed, enacted, promulgated or applied, in either case: |
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| (i) | to cease trade, enjoin, prohibit or impose material limitations or conditions on the purchase by or the sale to the Offeror of the Adastra Shares or the right of the Offeror to own or exercise full rights of ownership of the Adastra Shares; |
| (ii) | which, if the Offer were consummated, would have a Material Adverse Effect with respect to Adastra or the Offeror; or |
| (iii) | which would materially and adversely affect or make uncertain the ability of the Offeror or its affiliates to take up and pay for any Adastra Shares deposited under the Offer; |
| (d) | the Offeror shall have determined, acting reasonably, that there shall not exist or have occurred (or, if there does exist or shall have occurred prior to the commencement of the Offer, there shall not have been disclosed, generally or to the Offeror in writing on or before the date of the Support Agreement) any change (or any condition, event or development involving a prospective change) in the business, operations, assets, capitalization, properties, condition (financial or otherwise), licenses or permits, results of operations, rights or privileges (whether contractual or otherwise), prospects or liabilities (whether accrued, absolute, contingent or otherwise) of Adastra or any of the Subsidiaries or any material joint venture of Adastra which, when considered either individually or in the aggregate, has resulted in, or would reasonably be expected to result in, a Material Adverse Effect with respect to Adastra; |
| (e) | Adastra shall not have executed definitive agreements necessary to give effect to Adastra’s proposed transaction with Mitsubishi Corporation as described in the directors’ circular of Adastra dated February 17, 2006; |
| (f) | Adastra shall have complied in all material respects with its covenants and obligations under the Support Agreement to be complied with at or prior to the Expiry Time and all representations and warranties made by Adastra in the Support Agreement shall be true and correct at and as of the Expiry Time as if made at and as of such time (except for those expressly stated to speak at or as of an earlier time) without giving effect to, applying or taking into consideration any materiality or Material Adverse Effect qualification already contained within such representation and warranty, where such inaccuracies in the representations and warranties, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect in respect of Adastra or materially and adversely affect the ability of the Offeror to proceed with the Offer; |
| (g) | there shall not have occurred, developed or come into effect or existence any event, action, state, condition, or any Law, regulation, action, government regulation, inquiry or other occurrence of any nature whatsoever, that materially adversely affects or involves, or could reasonably be expected to materially adversely affect or involve, the financial, banking or capital markets generally, but for greater certainty, changes in the price of copper or cobalt shall not constitute such a condition; |
| (h) | (i) the Adastra Board shall have waived the application of the Shareholder Rights Plan to the purchase of Adastra Shares by the Offeror under the Offer, any Compulsory Acquisition and any Subsequent Acquisition Transaction; (ii) a cease trade order or an injunction shall have been issued that has the effect of prohibiting or preventing the exercise of SRP Rights or the issue of Adastra Shares upon the exercise of the SRP Rights in relation to the purchase of Adastra Shares by the Offeror under the Offer, any Compulsory Acquisition or any Subsequent Acquisition Transaction; (iii) a court of competent jurisdiction shall have ordered that the SRP Rights are illegal or of no force or effect or may not be exercised in relation to the Offer, any Compulsory Acquisition or any Subsequent Acquisition Transaction; or (iv) the SRP Rights and the Shareholder Rights Plan shall have otherwise become or been held unexercisable or unenforceable in relation to the Adastra Shares with respect to the Offer, any Compulsory Acquisition and any Subsequent Acquisition Transaction; |
The foregoing conditions are for the exclusive benefit of the Offeror and may be asserted by the Offeror regardless of the circumstances giving rise to any such condition. Subject to the provisions of the support agreement between the Offeror and Adastra dated April 11, 2006 (the “ Support Agreement ”), the Offeror may waive any of the foregoing conditions in whole or in part at any time and from time to time prior to the Expiry Time, without prejudice to any other rights which the Offeror may have. The failure by the Offeror at any time prior to the Expiry Time to exercise any of the foregoing rights will not be deemed to be a waiver of any such right and each such right shall be deemed to be an ongoing right which may be asserted at any time and from time to time prior to the Expiry Time.
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Any waiver of a condition or the withdrawal of the Offer shall be effective upon written notice or other communication confirmed in writing by the Offeror to that effect to the Depositary at its principal office in Toronto. The Offeror, forthwith after giving any such notice, shall make a public announcement of such waiver or withdrawal, shall cause the Depositary, if required by law, as soon as practicable thereafter to notify Shareholders in the manner set forth in Section 11 of the Offer to Purchase and shall provide a copy of such notice to the TSX and AIM. Any notice of waiver will be deemed to have been given and to be effective on the day on which it is delivered or otherwise communicated to the Depositary at its principal office in Toronto. In the event of any waiver, all Adastra Shares deposited previously and not taken up or withdrawn will remain subject to the Offer and may be accepted for purchase by the Offeror in accordance with the terms of the Offer. If the Offer is withdrawn, the Offeror shall not be obligated to take up or pay for any Adastra Shares deposited under the Offer and (i) the Depositary will promptly return all certificates for deposited Adastra Shares to the parties by whom they were deposited in acceptance of the Offer, and (ii) CREST Depository will credit the original balances of Shareholders who deposited Shares in the form of CDIs. See Section 9 of the Offer to Purchase, “Return of Deposited Adastra Shares”.”
4. Time and Manner for Acceptance
Adastra Shares may be deposited to the Offer in accordance with the provisions of Section 4 of the Offer to Purchase, “Time and Manner for Acceptance”.
5. Recent Developments
On March 30, 2006, Adastra’s legal counsel contacted legal counsel to the Offeror in order to request that certain senior officers of Adastra be put in touch with Philip Pascall, the Chief Executive Officer of the Offeror. The basis of the request was that Adastra wished to discuss the possibility of a negotiated transaction for the acquisition by the Offeror of the outstanding Adastra Shares in light of the increase to the implied value of the Offer resulting from the recent rise in the trading price of the First Quantum Shares.
On the morning of March 31, 2006, Timothy Read, the President and Chief Executive Officer of Adastra, and Bernard Vavala, the Chairman of the Adastra Board, telephoned Mr. Pascall and Clive Newall, the President of the Offeror, to initiate discussions regarding a potential negotiated transaction. Mr. Read and Mr. Vavala advised Mr. Pascall and Mr. Newall that the Adastra Board had discussed the fact that the increased trading price of the First Quantum Shares resulted in the implied value of the Offer being in the range of values that the Adastra Board might be prepared to support. However, Mr. Read and Mr. Vavala advised that the Adastra Board was concerned that Shareholders might prefer a cash alternative in order to avoid any exposure to potential volatility in the trading price of First Quantum Shares. Mr. Pascall and Mr. Newall responded that, while the support of the Adastra Board was certainly of interest to the Offeror, the Offeror was reluctant to take any further action without a more definitive indication from Adastra regarding the terms upon which the Adastra Board might be willing to support an amended Offer. Nevertheless, it was agreed that the financial advisors to the Offeror and Adastra should have a discussion as soon as possible that day in order to determine whether there was sufficient common ground between the parties to justify pursuing discussions in respect of a negotiated transaction.
On that basis, on the afternoon of March 31, 2006, representatives of RBC Capital Markets (“ RBC ”), financial advisors to the Offeror, had a telephone conversation with representatives of N M Rothschild & Sons Limited (“ Rothschild ”), financial advisors to Adastra, during which the possibility of a negotiated transaction between Adastra and the Offeror was further pursued. RBC requested that Rothschild provide to RBC a letter indicating the terms upon which the Adastra Board would be prepared to negotiate a supported transaction. Shortly thereafter, Rothschild provided RBC with a non-binding memorandum setting out indicative, high-level terms on which such a transaction might be possible. RBC and the Offeror spent the next several days reviewing the memorandum from Rothschild and exploring potential alternative structures for a negotiated transaction.
Also on March 31, 2006, the Offeror released its annual information form for the year ended December 31, 2005 and, by written notice delivered to the Depositary prior to 5:00 p.m. (Toronto time), extended the time for acceptance of the Offer to 5:00 p.m. (Toronto time) on April 18, 2006. In connection with the latter, a notice of extension was mailed to Shareholders on April 3, 2006.
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On April 4, 2006, at the request of RBC, senior management of the Offeror and RBC met with representatives of Rothschild, senior management of Adastra and members of the special committee of independent directors of Adastra. During the course of the meeting, which lasted for several hours, the broad financial terms of a negotiated transaction were agreed to in principle, subject to the negotiation of definitive documentation and the resolution of certain non-financial matters, including the terms upon which the directors and senior directors of Adastra would agree to tender their Adastra Shares to the Offer.
During the period between April 4, 2006 and April 11, 2006, the legal and financial advisors to both the Offeror and Adastra negotiated the definitive Support Agreement and related documents, including letter agreements (“ Letter Agreements ”) governing the manner in which senior officers and directors of Adastra would deal with their Adastra Shares and Options in the period during which the Offer remained open for acceptance.
On April 11, 2006, the Offeror and Adastra entered into the Support Agreement, pursuant to which, among other things, the Offeror agreed to increase the Offered Consideration and extend the expiry of the Offer and Adastra agreed to recommend that Shareholders accept the Offer. For a summary of the terms of the Support Agreement, refer to Section 6 of this Notice of Variation and Extension, “Support Agreement and Letter Agreements”. In connection with, and in order to induce the Offeror to enter into, the Support Agreement, the senior officers and directors of Adastra entered into Letter Agreements with the Offeror on the same day. Further details in respect of the Letter Agreements are set out in Section 6 of this Notice of Extension and Variation, “Support Agreement and Letter Agreements”.
Also on April 11, 2006, the Offeror released its management information circular in respect of the annual general meeting of the Offeror to be held on May 9, 2006.
As at 5:00 p.m. (Toronto time) on April 17, 2006, 22,376,015 Adastra Shares had been validly deposited to the Offer and not withdrawn.
6. Support Agreement and Letter Agreements
Section 10 of the Circular, “Arrangements, Agreements or Understandings” (found at page 36 of the Offer and Circular), is deleted in its entirety and replaced by the following:
“Except as set forth below, there are (a) no arrangements or agreements made or proposed to be made between the Offeror and any of the directors or senior officers of Adastra; and (b) no contracts, arrangements or understandings, formal or informal, between the Offeror and any Shareholder with respect to the Offer. Except as set forth below, there are no contracts, arrangements or understandings, formal or informal, between the Offeror and any person or company with respect to any securities of Adastra in relation to the Offer.
On April 11, 2006, the Offeror and Adastra entered into the Support Agreement, which sets forth, among other things, the terms and conditions upon which the Offer is to be amended by the Offeror. Also on April 11, 2006, and in order to induce the Offeror to enter into the Support Agreement, each of the following directors and senior officers of Adastra entered into a Letter Agreement with the Offeror governing their dealings with any Adastra Shares and Options they hold during the period in which the Offer remains open for acceptance: John Bentley, T. David Button, Etienne Denis, Paul MacNeill, Bernard Pryor, Timothy Read, Bernard Vavala and Patrick Walsh (collectively, the “ Insider Shareholders ”). Pursuant to the terms of the Letter Agreements, the Insider Shareholders agreed, if permitted to do so legally, either directly or indirectly through commercially reasonable arrangements, to enter into lock-up agreements with the Offeror, providing for the tender of their Adastra Shares (including those issuable upon the exercise of Options) to the Offer or, if not permitted to do so legally, to refrain from selling or otherwise disposing of their Adastra Shares (including those issuable upon the exercise of Options) or any interest therein at any time while the Offer remains open for acceptance (unless the Letter Agreements are terminated in accordance with their terms). Collectively, the Insider Shareholders hold 6,921,929 Adastra Shares (including those issuable upon the exercise of Options), representing 8.0% of the outstanding Adastra Shares on a fully diluted basis.
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Support Agreement
The following is a summary of certain provisions of the Support Agreement. It does not purport to be complete and is qualified in its entirety by the full text of the Support Agreement filed by the Offeror (i) with the Canadian securities regulatory authorities and available at www.sedar.com and (ii) with the SEC and available at www.sec.gov .
The Offer
The Offeror agreed in the Support Agreement to amend the Offer by, among other things, increasing the consideration payable thereunder to, at the election of each Shareholder, (a) Cdn.$2.92 in cash for each Adastra Share, or (b) one First Quantum Share plus Cdn$0.265 in cash for every 14.76 Adastra Shares, subject in each case to pro ration. The Offeror also agreed to extend the period during which Shares may be deposited under the Offer to 11:59 p.m. (Toronto time) on April 28, 2006, subject to the Offeror’s right to extend such period from time to time. In addition, the Offeror has agreed that without the prior consent of Adastra, the Offeror will not be permitted to waive the Minimum Tender Condition or otherwise modify or vary the Offer or any of its terms or conditions in a manner that is adverse to Shareholders.
Support of the Offer
Adastra has represented and warranted to the Offeror in the Support Agreement that the Adastra Board, upon consultation with its financial and legal advisors and on receipt of a recommendation from its special committee of independent directors, has determined that the Offer is fair to all Shareholders and that the Offer is in the best interests of Adastra and the Shareholders. Accordingly, the Adastra Board has approved the making of a unanimous recommendation that Shareholders accept the Offer. Adastra has agreed to take all reasonable actions to support the Offer and ensure success of the Offer in accordance with the Support Agreement.
Board Representation
Pursuant to the terms of the Support Agreement, provided that at least a majority of the then outstanding Adastra Shares on a fully diluted basis are purchased by the Offeror, the Offeror will, promptly and in any event within 10 days of such purchase (and from time to time thereafter), be entitled to designate such number of members of the Adastra Board, and any committee thereof, as is proportionate to the percentage of the outstanding Adastra Shares owned by the Offeror, and Adastra will co-operate with the Offeror, subject to all applicable Laws, to enable the Offeror’s designees to be elected or appointed including, at the request of the Offeror, by using its reasonable best efforts to obtain the resignations of a majority of the incumbent members of the Adastra Board on the date specified by the Offeror and/or to increase the size of the Adastra Board.
No Solicitation
Adastra has agreed in the Support Agreement that it will not, directly or indirectly, through any officer, director, employee, representative (including for greater certainty any financial or other advisors) or agent of Adastra or any Subsidiary, (i) make, solicit, assist, initiate, encourage or otherwise facilitate (including by way of furnishing non-public information, permitting any visit to any facilities or properties of Adastra or any Subsidiary, or entering into any form of written or oral agreement, arrangement or understanding) any inquiries, proposals or offers regarding an Acquisition Proposal (as defined below); (ii) except in respect of the transaction with Mitsubishi Corporation (the “Mitsubishi Transaction”) described in the directors’ circular of Adastra dated February 17, 2006 (but no other transaction with Mitsubishi Corporation and provided there are no material amendments to the consideration paid or assets acquired) engage in any discussions or negotiations regarding, or provide any confidential information with respect to, any Acquisition Proposal; (iii) withdraw, modify or qualify, or propose publicly to withdraw, modify or qualify, in any manner adverse to the Offeror, the approval or recommendation of the Adastra Board or any committee thereof of the Support Agreement or the Offer; (iv) approve or recommend, or propose publicly to approve or recommend, any Acquisition Proposal; or (v) accept or enter into, or publicly propose to accept or enter into, any letter of intent, agreement in principle, agreement, arrangement or undertaking related to any Acquisition Proposal.
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The Support Agreement defines an “ Acquisition Proposal ” as (a) any merger, take-over bid, amalgamation, plan of arrangement, business combination, consolidation, recapitalization, liquidation or winding-up in respect of Adastra or any of its subsidiaries; (b) except in respect of the Mitsubishi Transaction, any sale or acquisition of all or a material portion of the assets of Adastra on a consolidated basis; (c) any sale or acquisition of all or a material portion of the Adastra Shares; (d) any similar business combination or transaction, of or involving Adastra or any of its Subsidiaries, other than with the Offeror; or (e) any proposal or offer to, or public announcement of an intention to do, any of the foregoing from any Person other than the Offeror.
Adastra has also agreed in the Support Agreement to immediately cease and cause to be terminated any existing solicitation, discussion or negotiation with any Person (other than the Offeror) by Adastra or any subsidiary or any of its or their representatives or agents with respect to any potential Acquisition Proposal. Adastra has agreed not to release any third party from any confidentiality agreement or standstill agreement and to request the return or destruction of all confidential information provided to any third party which, at any time since November 30, 2005, has entered into a confidentiality agreement or standstill agreement with Adastra relating to a potential Acquisition Proposal. The foregoing will not prevent the Adastra Board from considering and accepting any unsolicited bona fide written Acquisition Proposal which would, if consummated in accordance with its terms, result in a transaction that is more favourable financially to Shareholders than the Offer (a “ Superior Proposal ”) that might be made by any third party, provided that the remaining provisions of the Support Agreement are complied with.
Finally, Adastra has agreed in the Support Agreement to notify the Offeror, as soon as practicable and in any event within 48 hours, of any proposal, inquiry, offer (or any amendment thereto) or request relating to or constituting a bona fide Acquisition Proposal, any request for discussions or negotiations, and/or any request for non-public information relating to Adastra or any subsidiary of which Adastra’s directors, officers, employees, representatives or agents are or became aware, or any amendments to the foregoing.
Superior Proposals
Pursuant to the terms of the Support Agreement, if Adastra receives a request for material non-public information from a party who proposes to Adastra a bona fide Acquisition Proposal and the Adastra Board determines that the failure to provide such party with access to information regarding Adastra would be inconsistent with the fiduciary duties of the Adastra Board, then, and only in such case, Adastra may provide such party with access to information regarding Adastra, subject to the execution of a confidentiality and standstill agreement and to providing the Offeror with a list of all information provided to such party and copies of any information provided to such party that has not been previously provided to the Offeror.
Adastra has agreed in the Support Agreement not to accept, approve or recommend, or enter into any agreement relating to an Acquisition Proposal unless: (i) the Acquisition Proposal constitutes a Superior Proposal; (ii) Adastra has complied with its non-solicitation covenants in the Support Agreement; (iii) five business days have elapsed from the later of the date the Offeror received written notice of Adastra’s proposed determination to accept, approve, recommend or enter into any agreement relating to such Superior Proposal and the date the Offeror received notice of the Acquisition Proposal; (iv) if the Offeror has proposed to amend the terms of the Offer in accordance with the Support Agreement, the Adastra Board (after receiving advice from its financial advisors and outside legal counsel) has determined in good faith that the Acquisition Proposal is a Superior Proposal compared to the proposed amendment to the terms of the Offer by the Offeror; (v) Adastra concurrently terminates the Support Agreement pursuant to the terms of the Support Agreement; and (vi) Adastra pays to the Offeror the termination fee contemplated by the Support Agreement.
Opportunity to Match
Pursuant to the Support Agreement, Adastra has agreed that, during the five business day period referred to in subparagraph (iii) of the preceding paragraph, or such longer period as Adastra may approve for such purpose, the Offeror will have the opportunity, but not the obligation, to propose to amend the terms of the Offer. The Adastra Board will review any proposal by the Offeror submitted within such period to amend the terms of the Offer in order to determine, in good faith in the exercise of its fiduciary duties, whether the Offeror’s proposal to amend the Offer would result in the Acquisition Proposal not being a Superior Proposal compared to the proposed amendment to the terms of the Offer. Adastra has agreed that, for the purposes of this opportunity to match, each successive material modification of any Acquisition Proposal will constitute a new Acquisition Proposal and initiate an additional five business day period.
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The Adastra Board has agreed in the Support Agreement to promptly reaffirm its recommendation of the Offer by press release after: (i) any Acquisition Proposal (which is determined not to be a Superior Proposal) is publicly announced or made; or (ii) the Adastra Board determines that a proposed amendment to the terms of the Offer would result in the Acquisition Proposal not being a Superior Proposal, and the Offeror has so amended the terms of the Offer.
Subsequent Acquisition Transaction
The Support Agreement provides that if, within four months after the date of the Offer, the Offer has been accepted by holders of not less than 90% of the outstanding Adastra Shares (calculated on a fully diluted basis as at the Expiry Time), the Offeror will, to the extent legally permissible, effect a Compulsory Acquisition, under the YBCA, to acquire the remainder of the Adastra Shares from those Shareholders who have not accepted the Offer. If that statutory right of acquisition is not legally available or, in the event the Offeror takes up and pays for Adastra Shares under the Offer representing at least 66 2 / 3 % of the outstanding Adastra Shares (calculated on a fully diluted basis as at the Expiry Time), the Offeror will acquire the remaining Adastra Shares not tendered to the Offer by way of statutory arrangement or other Subsequent Acquisition Transaction and the consideration per Adastra Share offered in connection with the Subsequent Acquisition Transaction will be at least equivalent in value to the consideration per Adastra Share offered under the Offer. All Adastra Shares held by U.K. Shareholders that are not acquired pursuant to the Offer will be acquired in a Compulsory Acquisition or Subsequent Acquisition Transaction whether or not such U.K. Shareholders are Qualified Investors.
Termination of the Support Agreement
The Support Agreement may be terminated at any time prior to the time that designees of the Offeror represent a majority of the Adastra Board: (a) by mutual written consent of the Offeror and Adastra; (b) by the Offeror, if any condition to amending the Offer for the Offeror’s benefit is not satisfied or waived by April 18, 2006 other than as a result of the Offeror’s default under the Support Agreement; (c) by the Offeror, if the Minimum Tender Condition or any other condition of the Offer is not satisfied at the Expiry Time and the Offeror has not elected to waive such condition; (d) by Adastra, if the Offeror does not take up and pay for the Adastra Shares deposited under the Offer by May 11, 2006, or, if the foregoing condition has been satisfied but the Expiry Time has not occurred, by the date that is 30 days from the date that the foregoing condition has been met; (e) by either Adastra or the Offeror, if the other party is in default of a material covenant or obligation under the Support Agreement or if any representation or warranty of the other party under the Support Agreement was, as at April 11, 2006, or has since become, untrue or incorrect in any material respect and such default or inaccuracy is not curable or, if curable, is not cured by the Expiry Time; (f) by the Offeror, if: (i) the Adastra Board or any committee thereof withdraws, modifies, changes or qualifies its approval or recommendation of the Support Agreement or the Offer in any manner adverse to the Offeror; (ii) the Adastra Board or any committee thereof recommends or approves an Acquisition Proposal; or (iii) the Adastra Board does not reaffirm its recommendation in favour of the Offer in a press release or directors’ circular within two business days, and in any event prior to the Expiry Time, after the public announcement of an Acquisition Proposal and a written request by the Offeror for Adastra to do so; or (g) by Adastra, if Adastra proposes to enter into a definitive agreement with respect to a Superior Proposal, provided that Adastra has not breached any of its covenants, agreements or obligations in the Support Agreement.
Termination Fee
Adastra will be obligated to pay a termination fee to the Offeror in an amount to be determined as specified below if the Support Agreement is terminated in any of the following circumstances:
| (a) | if the Support Agreement is terminated: |
| (i) | by the Offeror as a result of the Adastra Board or any committee thereof recommending or approving an Acquisition Proposal; |
| (ii) | by the Offeror as a result of the Adastra Board not reaffirming its recommendation in favour of the Offer in a press release or directors’ circular within two business days, and in any event prior to the Expiry Time, after the public announcement of an Acquisition Proposal and a written request by the Offeror for Adastra to do so; or |
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| (iii) | by Adastra in circumstances where Adastra proposes to enter into a definitive agreement with respect to a Superior Proposal; |
| the Offeror will be entitled to a termination fee of Cdn.$4.8 million, payable by 12:00 p.m. (Toronto time) on the first business day following the consummation of the Superior Proposal; or |
| (b) | if the Support Agreement is terminated by the Offeror as a result of the Adastra Board or any committee thereof withdrawing, modifying, changing or qualifying its approval or recommendation of the Support Agreement or the Offer in any manner adverse to the Offeror and: |
| (i) | the volume-weighted average trading price of the First Quantum Shares on the TSX over the seven trading day period immediately preceding the date of such withdrawal, modification, change or qualification, divided by 17.5 plus Cdn.$0.475 (the “ See-Through Value ”) is greater than Cdn.$2.895; and |
| (ii) | there has been no Material Adverse Effect in respect of the Offeror; |
| the Offeror will be entitled to a termination fee, payable within 90 days of the date of termination, the amount of which will be determined on a sliding scale, ranging from Cdn.$2.4 million, where the See-Through Value is equal to Cdn.$2.90, to Cdn.$4.8 million, where the See-Through Value is equal to or greater than Cdn.$2.95; |
provided, in each case, that the Offeror is not in material default in the performance of its obligations under the Support Agreement on the date that the Support Agreement is terminated.
Representations and Warranties
The Support Agreement contains a number of customary representations and warranties of the Offeror and Adastra relating to, among other things: organization; capitalization; the corporate authorization and enforceability of, and board approval of, the Support Agreement and the Offer; and the absence of any Material Adverse Effect and certain other changes or events since the date of the respective parties’ most recently filed financial statements. The representations and warranties of Adastra also address various matters relating to the business, operations and properties of Adastra and its subsidiaries, including: absence of litigation or other actions which if determined adversely would reasonably be expected to have a Material Adverse Effect; employee severance payments upon a change of control; and accuracy of reports required to be filed with applicable securities regulatory authorities. In addition, the Offeror has represented that it has made adequate arrangements to ensure that the required funds are available to effect payment in full of the cash consideration for all of the Adastra Shares acquired pursuant to the Offer.
Conduct of Business
The Offeror and Adastra have each covenanted and agreed in the Support Agreement that, prior to the earlier of (i) the time that designees of the Offeror represent a majority of the Adastra Board and (ii) the termination of the Support Agreement, except with the prior written consent of the other party or as expressly contemplated or permitted by the Support Agreement, each party will, and will cause each of its subsidiaries to, conduct its and their respective businesses in the ordinary course consistent with past practice in all material respects and to use reasonable best efforts to preserve intact its present business organization and goodwill, to preserve intact their respective real property interests, mining leases, mining concessions, mining claims, exploration permits or other property, mineral or proprietary interests or rights in good standing, to keep available the services of its officers and employees as a group and to maintain satisfactory relationships with suppliers, distributors, employees and others having business relationships with them. Each of the Offeror and Adastra has also agreed that it will not, and will cause each of its Subsidiaries not to, take certain actions specified in the Support Agreement.
Each of the Offeror and Adastra has also agreed in the Support Agreement to notify the other party of (a) the occurrence, or failure to occur, of any event which occurrence or failure would cause or may cause any of the representations or warranties of such party contained in the Support Agreement to be untrue or inaccurate in any material respect at any time up to the time that designees of the Offeror represent a majority of the Adastra Board; and (b) any failure of such party, or any officer, director, employee, representative or agent of such party, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under the Support Agreement.
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Other Covenants
Each of Adastra and the Offeror has agreed in the Support Agreement to a number of mutual covenants, including to co-operate, where appropriate, and use all reasonable efforts to take all action and do all things necessary, proper or advisable: (a) to consummate and make effective as promptly as is practicable the transactions contemplated by the Offer and the Support Agreement; and (b) to obtain all necessary waivers, consents and approvals and to effect all necessary registrations and filings, including filings under applicable Laws and submissions of information requested by governmental authorities.
Officers’ and Directors’ Insurance and Indemnification
The Offeror has agreed in the Support Agreement that for a period of not less than six years from the date on which designees of the Offeror represent a majority of the Adastra Board, the Offeror will cause Adastra (or its successor) to maintain Adastra’s and its Subsidiaries’ current directors’ and officers’ insurance policies (or substitute policies of at least the same coverage and amounts containing terms and conditions which are, in the aggregate, no less advantageous to the insured in any material respect) with respect to claims arising from facts or events which occurred on or before such date. After the date on which designees of the Offeror represent a majority of the Adastra Board, the Offeror will cause Adastra to indemnify the directors and officers of Adastra and its Subsidiaries during all periods prior to such date to the fullest extent to which Adastra and the Subsidiaries are permitted to indemnify such officers and directors under their respective articles, by-laws, applicable Law and contracts of indemnity.
Outstanding Stock Options
Adastra has agreed in the Support Agreement to use its commercially reasonable efforts to encourage all holders of Options to conditionally exercise or terminate such Options and all holders of Warrants to exercise such Warrants and to tender the Adastra Shares to be issued as a result of such conditional exercise or termination of Options or exercise of Warrants to the Offer.”
7. Other Changes to the Offer and Circular
Definitions
The following definitions are added to the “Definitions” section of the Offer and Circular (found at pages 1-5 of the Offer and Circular):
“ Acquisition Proposal ” has the meaning ascribed thereto in Section 10 of the Circular, “Arrangements, Agreements or Understandings – Support Agreement”.
“ fully diluted basis ” means, with respect to the number of outstanding Adastra Shares, such number of outstanding Adastra Shares calculated on the assumption that all Options, Warrants and other rights to acquire Adastra Shares (excluding the IFI Rights) are exercised in full.
“ IFI Rights ” means the rights granted to the International Finance Corporation and the Industrial Development Corporation of South Africa Limited to convert their shareholdings in Kingamyambo Musonoi Tailings S.A.R.L. into Adastra Shares upon the acquisition by one or more persons of more than 50% of the Adastra Shares, as described in Adastra’s directors’ circular dated February 17, 2006.
“ Insider Shareholders ” means the following directors and senior officers of Adastra: John Bentley, T. David Button, Etienne Denis, Paul MacNeill, Bernard Pryor, Timothy Read, Bernard Vavala and Patrick Walsh.
“ Letter Agreements ” means the letter agreements dated April 11, 2006 between the Offeror and each of the Insider Shareholders.
“ Material Adverse Effect ” when used in connection with a party, means any effect that is, or could reasonably be expected to be, material and adverse to the condition (financial or otherwise), properties, assets, liabilities, obligations (whether absolute, accrued, conditional or otherwise), businesses, operations or results of operations of that party or its subsidiaries taken as a whole, other than any effect:
| (a) | relating to the economic, political conditions or securities markets in general in Canada, the United Kingdom or the DRC; |
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| (b) | affecting the mining industry in general; |
| (c) | relating to a change in the market trading price of shares of that party, either: |
| (i) | related to the Support Agreement and the Offer or the announcement thereof; |
| (ii) | related to such a change in the market trading price primarily resulting from a change, effect, event or occurrence excluded from this definition of Material Adverse Effect; or |
| (iii) | relating to any generally applicable change in applicable Laws or regulations (other than orders, judgments or decrees against that party, any of its subsidiaries or any of its material joint ventures) or in Canadian GAAP; |
provided, however, that such effect does not primarily relate only to (or have the effect of primarily relating only to) that party and its subsidiaries, taken as a whole, or disproportionately adversely affect that party and its subsidiaries taken as a whole, compared to other companies of similar size operating in the industry in which that party and its subsidiaries operate.
“ See-Through Value ” has the meaning ascribed thereto in Section 10 of the Circular, “Arrangements, Agreements or Understandings – Support Agreement”.
“ Superior Proposal ” has the meaning ascribed thereto in Section 10 of the Circular, “Arrangements, Agreements or Understandings – Support Agreement”.
“ Support Agreement ” means the support agreement between the Offeror and Adastra dated April 11, 2006, as the same may be amended or supplemented from time to time.
The following definitions in the “Definitions” section of the Offer and Circular (found at pages 1-5 of the Offer and Circular) are deleted in their entirety and replaced by the following:
“ Canadian GAAP ” means Canadian generally accepted accounting principles or interpretations thereof.
“ Current Market Price ” means Cdn.$39.11.
“ Governmental Entity ” means:
| (a) | any supranational body or organization, nation, government, state, province, country, territory, municipality, quasi-government, administrative, judicial or regulatory authority, agency, board, body, bureau, commission, instrumentality, court or tribunal or any political subdivision thereof, or any central bank (or similar monetary or regulatory authority) thereof, any taxing authority, any ministry or department or agency of any of the foregoing; |
| (b) | any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government; and |
| (c) | any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of such entities or other bodies pursuant to the foregoing. |
“ Laws ” means any applicable laws including, without limitation, supranational, national, provincial, state, municipal and local civil, commercial, banking, securities, tax, personal and real property, security, environmental, water, energy, investment, property ownership, land use and zoning, sanitary, occupational health and safety laws, treaties, statutes, ordinances, judgments, decrees, injunctions, writs, certificates and orders, by-laws, rules, regulations, orders, decrees, ordinances, protocols, codes, guidelines, policies, notices, directions and judgments or other requirements of any Governmental Entity.
“ Minimum Tender Condition ” means the condition to the Offer that there shall have been validly deposited under the Offer and not withdrawn at the Expiry Time such number of Adastra Shares which, excluding any Adastra Shares directly or indirectly owned by the Offeror, constitutes at least 50.1% of the Adastra Shares outstanding (calculated on a fully diluted basis).
16
“ Person ” means an individual, general partnership, limited partnership, corporation, company, limited liability company, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator or other legal representative.
“ Subsidiaries ” means:
| (a) | with respect to Adastra: Congolese Zinc Investments Ltd., Kolwezi Holdings Ltd., Kolwezi Investment Ltd., Adastra Offshore Ltd., Congo Mineral Developments Limited, IDAS Resources N.V., Kingamyambo Musonoi Tailings S.A.R.L., Roan Prospecting and Mining SPRL, ZamGold Ltd., Catapult Holdings Ltd., Zamgold Zambia Limited and Zincongo Limited; or |
| (b) | with respect to any other specified body corporate: any body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified body corporate and shall include any body corporate, partnership, joint venture or other entity over which such specified body corporate exercises direction or control or which is in a like relation to a Subsidiary. |
Take up of and Payment for Deposited Adastra Shares
Section 3 of the Offer to Purchase, “Take up of and Payment for Deposited Adastra Shares” (found at page 14 of the Offer and Circular), is amended by adding the following to the end of the first paragraph:
“Under the Support Agreement the Offeror has agreed that, provided that all of the conditions to the Offer have been satisfied or waived, the Offeror shall take up and pay for all of the Adastra Shares deposited under the Offer as soon as reasonably practicable and in any event no later than two Business Days following the time at which it becomes entitled to take up such Adastra Shares pursuant to applicable Laws.”
Information Concerning Adastra
The second paragraph of the preamble to the Circular (found at page 22 of the Offer and Circular) is deleted in its entirety and replaced by the following:
“ Except as otherwise indicated, the information concerning Adastra contained in the Offer to Purchase and this Circular has been taken from or is based upon publicly available documents and records of Adastra on file with Canadian securities regulatory authorities and other public sources. Although the Offeror has no knowledge which would indicate that any of the statements contained herein and taken from or based on such information is untrue or incomplete, the Offeror does not assume any responsibility for the accuracy or completeness of such information, or for any failure by Adastra to disclose publicly events or facts which may have occurred and which are unknown to the Offeror and may affect the significance or accuracy of any such information. Unless otherwise indicated, information concerning Adastra is given as at January 31, 2006. ”
Authorized and Outstanding Capital
Section 2 of the Circular, “Adastra” (found at pages 25-27 of the Offer and Circular), is amended by deleting the first paragraph of “– Authorized and Outstanding Share Capital” in its entirety and replacing it with the following:
“Adastra’s authorized capital consists of an unlimited number of Adastra Shares. According to Adastra, as at April 11, 2006 Adastra had 77,397,831 Adastra Shares issued and outstanding. In addition, according to Adastra, Adastra had 7,126,209 Options and 1,711,292 Warrants issued and outstanding as at that date and would be required to issue a further 2,358 Warrants were the 46,000 Options existing at February 12, 2003 and still outstanding to be exercised.”
Acquisition of Shares Not Deposited
Section 5 of the Circular, “Acquisition of Shares Not Deposited” (found at pages 33-35 of the Offer and Circular), is supplemented as follows:
Under the Support Agreement, the Offeror has agreed that all Shares held by Shareholders resident in the United Kingdom and not acquired pursuant to the Offer shall be acquired in a Compulsory Acquisition or Subsequent Acquisition Transaction whether or not the Shareholders are Qualified Investors.
17
Source of Offered Consideration
Section 6 of the Circular, “Source of Offered Consideration” (found at page 35 of the Offer and Circular) and Section 9 of the notice of variation and extension dated March 21, 2006, “Source of Offered Consideration” (found at page 9 of the notice of variation and extension dated March 21, 2006), are deleted in their entirety and replaced with the following:
“According to Adastra, as at April 11, 2006 Adastra had 77,397,831 Adastra Shares issued and outstanding. In addition, according to Adastra, Adastra had 7,126,209 Options and 1,711,292 Warrants issued and outstanding as at that date and would be required to issue a further 2,358 Warrants were the 46,000 Options existing at February 12, 2003 and still outstanding to be exercised. Assuming all such Options and Warrants issued and outstanding are exercised, Adastra would have to issue 8,839,859 Adastra Shares, resulting in 86,237,690 Adastra Shares being issued and outstanding on a fully diluted basis. First Quantum will issue First Quantum Shares to Shareholders who elect the Share Alternative under the Offer. If all holders of Options and Warrants issued and outstanding as at April 11, 2006 exercise such Options and Warrants in accordance with their terms and the Offeror acquires all of the Adastra Shares outstanding on a fully diluted basis pursuant to the Offer, the total number of First Quantum Shares required for the purchase of such Adastra Shares will be approximately 4.9 million. Fractional First Quantum Shares will not be issued. Cash shall be paid to Shareholders by First Quantum in lieu of any fractional First Quantum Share payable to a Shareholder under the Offer. The Maximum Cash Consideration payable pursuant to the Offer (including in respect of the Cdn.$0.265 in cash for every 14.76 Adastra Shares paid to Shareholders who elect the Share Alternative) is approximately Cdn.$41.0 million. First Quantum intends to pay such cash component of the purchase price for Adastra Shares acquired under the Offer, as well as any cash payable in lieu of fractional First Quantum Shares, with cash on hand and available balances in its bank accounts. As at December 31, 2005, First Quantum had cash on hand and balances in its bank accounts of approximately $74.3 million.”
Acceptance of the Offer
Section 11 of the Circular, “Acceptance of the Offer” (found at page 37 of the Offer and Circular), is deleted in its entirety and replaced with the following:
“Except as set forth below, the Offeror has no knowledge as to whether any Shareholder will accept the Offer.
On April 11, 2006, in connection with, and in order to induce the Offeror to enter into, the Support Agreement, the Insider Shareholders entered into Letter Agreements with the Offeror governing their dealings with any Adastra Shares and Options they hold during the period in which the Offer remains open for acceptance. Pursuant to the terms of the Letter Agreements, the Insider Shareholders agreed, if permitted to do so legally, directly or indirectly through commercially reasonable arrangements, to enter into lock-up agreements with the Offeror on or prior to April 18, 2006, providing for the tender of their Adastra Shares (including those issuable upon the exercise of Options) to the Offer or, if not permitted to do so legally, to refrain from selling or otherwise disposing of their Adastra Shares (including those issuable upon the exercise of Options) or any interest therein at any time while the Offer remains open for acceptance (unless the Letter Agreements are terminated in accordance with their terms). Collectively, the Insider Shareholders hold 6,921,929 Adastra Shares (including those issuable upon the exercise of Options), representing 8.0% of the outstanding Adastra Shares on a fully diluted basis.”
8. Withdrawal of Deposited Shares
Shareholders have the right to withdraw Adastra Shares deposited pursuant to the Offer under the circumstances and in the manner described in Section 8 of the Offer to Purchase, “Right to Withdraw Deposited Adastra Shares”.
9. Take Up of and Payment for Deposited Adastra Shares
Upon the terms and subject to the conditions of the Offer (including, if the Offer is further extended or varied, the terms and conditions of any such extension or variation), the Offeror will take up and pay for all Adastra Shares validly deposited under the Offer (and not withdrawn prior to the Expiry Time pursuant to Section 8 of the Offer to Purchase, “Right to Withdraw Deposited Adastra Shares”), as soon as reasonably possible and in any event no later than 4:00 p.m. (Toronto time) on the second business day following (i) the Expiry Time, or (ii) such other time at which it becomes entitled to take up Adastra Shares under the Offer pursuant to applicable law. See Section 3 of the Offer to Purchase, “Take Up of and Payment for Deposited Adastra Shares”.
18
10. Amendments to the Offer
The Offer and Circular, the Letters of Transmittal and the Notice of Guaranteed Delivery shall be read as amended in order to give effect to the specified amendments set forth in this Notice of Variation and Extension.
11. Offerees’ Statutory Rights
Securities legislation in certain of the provinces and territories of Canada provides Shareholders of Adastra with, in addition to any other rights they may have at law, rights of rescission or damages, or both, if there is a misrepresentation in a circular or notice that is required to be delivered to such Shareholders. However, such rights must be exercised within the time limit prescribed by the securities legislation of the Shareholder’s province or territory. Shareholders should refer to the applicable provisions of the securities legislation of their province or territory for the particulars of those rights or consult with a lawyer.
12. Documents Filed With the SEC
The Offeror has filed with the SEC (i) a registration statement on Form F-80 under the U.S. Securities Act, as amended, which covers the First Quantum Shares to be issued pursuant to the Offer, (ii) a tender offer statement on Schedule 14D-1F, as amended and (iii) Form F-X to appoint an agent for service of process and provide required undertakings. The Offer and Circular do not contain all of the information set forth in the registration and tender offer statements. Reference is made to those documents and the exhibits thereto for further information.
In addition to the documents listed in Section 24 of the Original Circular, “Documents Filed with the SEC”, in Section 15 of the notice of variation and extension dated March 21, 2006, “Documents Filed with the SEC” and in Section 8 of the notice of extension dated April 3, 2006, “Documents Filed with the SEC”, the following exhibits have been filed with the SEC as part of the Registration Statement on Form F-80, as amended:
| 1. | the management information circular of the Offeror dated April 11, 2006; |
| 2. | the Support Agreement; and |
| 3. | the Letter Agreements. |
13. Directors’ Approval
The contents of this Notice of Variation and Extension have been approved, and the sending thereof to the Shareholders has been authorized, by the First Quantum Board.
19
APPROVAL AND CERTIFICATE
DATED: April 18, 2006
The contents of this Notice of Variation and Extension have been approved, and the sending thereof to Shareholders has been authorized, by the First Quantum Board.
The foregoing, together with the Offer and Circular dated February 2, 2006, the notice of variation and extension dated March 10, 2006, the notice of variation and extension dated March 21, 2006 and the notice of extension dated April 3, 2006, contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made. In addition, the foregoing, together with the Offer and Circular dated February 2, 2006, the notice of variation and extension dated March 10, 2006, the notice of variation and extension dated March 21, 2006 and the notice of extension dated April 3, 2006, does not contain any misrepresentation likely to affect the value or the market price of the Adastra Shares which are the subject of the Offer.
|
(Signed) PHILIP K.R. PASCALL Chairman and Chief Executive Officer |
(Signed) MARTIN R. ROWLEY Chief Financial Officer |
|
On behalf of the Board of Directors |
|
|
(Signed) PETER ST. GEORGE Director |
(Signed) RUPERT PENNANT-REA Director |
20
The Depositary for the Offer is:
COMPUTERSHARE INVESTOR SERVICES INC.
Toronto
| By Mail | By Registered Mail, Hand or Courier |
|
P.O. Box 7021 |
100 University Avenue |
| 31 Adelaide Street E | 9th Floor |
| Toronto, ON M5C 3H2 | Toronto, ON M5J 2Y1 |
| Attention: Corporate Actions | Attention: Corporate Actions |
Fax Number: (905) 771-4082
Toll Free (North America): 1-866-982-9674
Overseas Calls: 1-514-982-7135
E-Mail: adastraquantumoffer@computershare.com
By Hand or Courier
|
Montreal
650 de Maisonneuve Blvd West Suite 700 Montreal, QC H3A 3S8 |
Vancouver
510 Burrard Street 2nd Floor Vancouver, BC V6C 3B9 |
Calgary
Western Gas Tower Suite 600, 530 8th Avenue S.W. Calgary, AB T2P 3S8 |
The Dealer Manager for the Offer is:
RBC CAPITAL MARKETS
|
In Canada
200 Bay Street, 4th Floor Royal Bank Plaza, South Tower Toronto, Ontario M5J 2W7 Canada Telephone: (416) 842-7675 Toll Free: 1-866-246-3902 |
In the United States
Two Embarcadero Center Suite 1200 San Francisco, California 94111 U.S.A. Toll Free: 1-866-246-3902 |
The Information Agent for the Offer is:
501 Madison Avenue
20th Floor
New York, NY 10022
U.S.A.
Shareholders Call Toll Free:
1-888-750-5834 (English speakers)
1-877-825-8777 (French speakers)
Banks and Brokers Call Collect:
(212) 750-5833
Any questions and requests for assistance may be directed by Shareholders to the Dealer Manager, the Depositary or the Information Agent at their respective telephone numbers and locations set out above.
This document is important and requires your immediate attention. If you have any questions as to how to deal with it, you should consult your investment dealer, broker, bank manager, lawyer or other professional advisor. If you are a resident of the United Kingdom and you have any doubt about the Offer or what action you should take, you should immediately consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorized under the United Kingdom Financial Services and Markets Act 2000. No securities regulatory authority in Canada, the United States or the United Kingdom has expressed an opinion about, or passed upon the fairness or merits of, the offer contained in this document, the securities offered pursuant to such offer or the adequacy of the information contained in this document and it is an offence to claim otherwise. In particular, this document does not constitute a prospectus for the purposes of the Prospectus Rules published by the Financial Services Authority of the United Kingdom. Accordingly, this document has not been, and will not be, reviewed or approved by the Financial Services Authority or by the London Stock Exchange plc.
April 3, 2006
NOTICE OF EXTENSION
by
FIRST QUANTUM MINERALS LTD.
of its
OFFER TO PURCHASE
all of the outstanding common shares of
ADASTRA MINERALS INC.
on the basis of, at
the election of each holder,
(a) Cdn.$2.65 in cash per common share
of Adastra Minerals Inc. (the “Cash Alternative”); or
(b) one
common share of First Quantum Minerals Ltd. for every 14.76 common shares of
Adastra Minerals Inc. (the “Share
Alternative”)
subject, in each case, to pro ration as set
out in the notice of extension and
variation dated March 21, 2006
| THE OFFER HAS BEEN EXTENDED AND IS NOW OPEN FOR ACCEPTANCE UNTIL 5:00 P.M. (TORONTO TIME) ON APRIL 18, 2006 UNLESS FURTHER EXTENDED OR WITHDRAWN. |
First Quantum Minerals Inc. (“ First Quantum ” or the “ Offeror ”) hereby gives notice that it has extended its offer dated February 2, 2006, as previously varied and extended by the notice of variation and extension dated March 10, 2006 and the notice of variation and extension dated March 21, 2006 (collectively, the “ Original Offer ”) to purchase all of the outstanding common shares of Adastra Minerals Inc. (“ Adastra ”), together with the associated rights (the “ SRP Rights ”) issued under the Shareholder Rights Plan of Adastra (together, the “ Adastra Shares ”), in order to extend the Original Offer to 5:00 p.m. (Toronto time) on April 18, 2006.
The Dealer Manager for the Offer is:
RBC Capital Markets
| In Canada | In the United States | ||
| RBC Dominion Securities Inc. | RBC Capital Markets Corporation |
NOTICE TO SHAREHOLDERS IN THE UNITED STATES
This Offer is made by a Canadian issuer that is permitted, under a multi-jurisdictional disclosure system adopted by the United States, to prepare the Offer and Circular and this Notice of Extension in accordance with the disclosure requirements of Canada. The Offer is subject to applicable disclosure requirements in Canada. Shareholders should be aware that such requirements are different from those of the United States. Financial statements included or incorporated herein have been derived from publicly available financial statements which have been prepared in accordance with Canadian generally accepted accounting principles and thus may not be comparable to financial statements of United States companies.
The enforcement by investors of civil liabilities under the federal securities laws may be affected adversely by the fact that First Quantum is incorporated under the laws of Canada, that some or all of its officers and directors may reside outside the United States, that the Canadian Dealer Manager for the Offer and some or all of the experts named in the Offer and Circular may reside outside the United States, and that a substantial portion of the assets of First Quantum and said persons are located outside the United States.
THE FIRST QUANTUM SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFER AND CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
Prospective investors should be aware that acquisition of First Quantum Shares may have tax consequences both in the United States and in Canada. Such consequences for investors who are resident in, or citizens of, the United States, may not be described fully in the Offer and Circular.
The Offer does not constitute an offer to sell or a solicitation of an offer to buy any securities in any state in the United States in which such offer or solicitation is unlawful. The Offer is not being made or directed to, nor is this document being mailed to, nor will deposits of Adastra Shares be accepted from or on behalf of, Shareholders in any state in the United States in which the making or acceptance of the Offer would not be in compliance with the laws of such state. The Offeror may, in its sole discretion, take such action as it may deem desirable to extend the Offer to Shareholders in any such state. Notwithstanding the foregoing, the Offeror may elect not to complete such action in any given instance. Accordingly, the Offeror cannot at this time assure holders of Adastra Shares that otherwise valid tenders can or will be accepted from holders resident in all states in the United States.
Shareholders should be aware that the Offeror or its affiliates, directly or indirectly, may bid for or make purchases of the Adastra Shares, or of related securities, or of the First Quantum Shares, or of related securities, during the period of the Offer, as permitted by applicable laws or regulations of Canada or its provinces or territories.
The Offer and Circular and this Notice of Extension, and certain of the information incorporated by reference into the Offer and Circular and this Notice of Extension, have been prepared in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of United States securities laws. In particular, and without limiting the generality of the foregoing, the terms “mineral reserves,” “probable reserves,” “proven reserves,” “inferred resources,” “indicated resources,” “measured resources” and “mineral resources” used or incorporated by reference in the Offer and Circular are, unless otherwise stated, Canadian mining terms as defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Mineral Reserves (“CIM”). CIM standards differ significantly from standards in the United States. While the terms “mineral resource,” “measured resources,” “indicated resources,” and “inferred resources” are recognized and required by Canadian regulations, they are not defined terms under standards in the United States. As such, information regarding mineralization and resources contained or incorporated by reference in the Offer and Circular may not be comparable to similar information made public by United States companies.
2
NOTICE TO SHAREHOLDERS IN THE UNITED KINGDOM
No action has been or is intended to be taken by First Quantum, by Numis Securities Limited or by RBC Capital Markets and its affiliated entities that would permit a public offer of First Quantum Shares to be made in the United Kingdom, which would require an approved prospectus to be made available to the public in the United Kingdom (in accordance with the United Kingdom Financial Services and Markets Act 2000 (“FSMA”) and the Prospectus Rules published by the Financial Services Authority of the United Kingdom (the “FSA”)) before such an offer is made.
Accordingly, as regards Shareholders resident in, or who have received the Offer in, the United Kingdom (“U.K. Shareholders”), the Offer is only being made to or directed at, and deposits of Adastra Shares will only be accepted from, a U.K. Shareholder who: (a) is, and is able to establish to the satisfaction of the Offeror that it is: (i) a qualified investor acting as principal; (ii) a qualified investor which operates in the financial markets acting on behalf of a person, not being a qualified investor, on a discretionary basis concerning the acceptance of offers on that person’s behalf; or (iii) acting on behalf, and on the instructions, of a qualified investor (in which case the Offer is made to or directed at that qualified investor); or (b) is a person to whom the Offer may otherwise be made or at whom the Offer may otherwise be directed in the United Kingdom without an approved prospectus having been made available to the public in the United Kingdom before the Offer is made. A “qualified investor” is (i) a legal entity which is authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; (ii) a legal entity which has two or more of: (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; (iii) a person entered on the register of qualified investors maintained by the FSA for this purpose pursuant to section 87R of FSMA; or (iv) an investor authorized by an EEA State other than the United Kingdom to be considered as a qualified person. Accordingly, any U.K. Shareholder purporting to accept the Offer must provide supporting evidence satisfactory to the Offeror that it is entitled to do so, and the Offeror shall in its sole discretion be entitled to reject any such purported acceptance of the Offer, as further described in the Offer and Circular. Shareholders who have received the Offer in the United Kingdom should consult with their legal advisors to determine whether they (or any person on whose behalf they act) are able to receive and accept the Offer. Further details in connection with the Offer and its acceptance by U.K. Shareholders are set out in the Offer and Circular.
The content of this document, which has been prepared by and is the responsibility of the Offeror, has been approved by Numis Securities Limited of Cheapside House, 13 Cheapside, London, United Kingdom EC2V 6LH, solely for the purposes of section 21 of the FSMA. Numis Securities Limited is acting exclusively for First Quantum in connection with the Offer and no one else, and will not be responsible to anyone other than First Quantum for providing the protections afforded to clients of Numis Securities Limited nor for providing advice in relation to the Offer or any other matter referred to in this document. Numis Securities Limited is authorized by the FSA and its FSA registration number is 2285918.
_________________
This Notice of Extension should be read in conjunction with the Original Offer and the circular that accompanied the offer dated February 2, 2006 (the “ Original Circular ” and, together with the Original Offer, the “ Offer and Circular ”). Except as otherwise set forth herein, the terms and conditions previously set forth in the Offer and Circular and in the letters of transmittal (the “Revised Letters of Transmittal ”) and notice of guaranteed delivery (the “ Revised Notice of Guaranteed Delivery ”) that accompanied the notice of variation and extension dated March 21, 2006 and the letters of transmittal (the “ Original Letters of Transmittal ”) and the notice of guaranteed delivery (the “ Original Notice of Guaranteed Delivery ”) that accompanied the offer dated February 2, 2006 continue to be applicable in all respects. All references to the “Offer” in the Offer and Circular, the Letters of Transmittal, the Notice of Guaranteed Delivery and this Notice of Extension mean the Original Offer as amended hereby, all references in such documents to the “Letters of Transmittal” mean the Original Letters of Transmittal as amended by the Revised Letters of Transmittal, all references in such documents to the “Notice of Guaranteed Delivery” mean the Original Notice of Guaranteed Delivery as amended by the Revised Notice of Guaranteed Delivery and all references in such documents to the “Circular” mean the Original Circular as amended by the notice of variation and extension dated March 10, 2006, the notice of variation and extension dated March 21, 2006 and hereby. Unless the context requires otherwise, capitalized terms used herein but not defined herein have the respective meanings given to them in the Offer and Circular.
3
Holders of Adastra Shares (“Shareholders”) who (i) have validly deposited and not withdrawn their Adastra Shares using the appropriate Original Letter of Transmittal and, if applicable, an Original Notice of Guaranteed Delivery and (ii) wish to elect the Share Alternative need take no further action to accept the Offer. Shareholders who (i) have validly deposited and not withdrawn their Adastra Shares using the appropriate Original Letter of Transmittal and, if applicable, an Original Notice of Guaranteed Delivery and (ii) wish to elect the Cash Alternative must withdraw their Adastra Shares by following the procedures set forth in Section 8 of the Offer to Purchase, “Right to Withdraw Deposited Adastra Shares” and redeposit their Adastra Shares following the procedures set out below and in Section 4 of the Offer to Purchase, “Time and Manner for Acceptance”. Shareholders who wish to accept the Offer must properly complete and duly execute the appropriate Revised Letter of Transmittal (printed on purple paper in the case of all Shareholders other than Eligible U.K. Shareholders and on orange paper in the case of Eligible U.K. Shareholders) that accompanied the notice of variation and extension dated March 21, 2006 or a manually signed facsimile thereof and deposit it, together with the certificates representing their Adastra Shares and any required evidence confirming that the Shareholder purporting to accept the Offer is eligible to do so, at one of the offices of the Depositary in accordance with the instructions in the applicable Revised Letter of Transmittal. Any Shareholder holding Adastra Shares in the form of CREST Depository Interests must additionally arrange for the appropriate electronic acceptance instructions to be sent to CREST Depository Limited. Alternatively, certain Shareholders may follow the procedure for guaranteed delivery set forth in Section 5 of the Offer to Purchase, “Procedure for Guaranteed Delivery”, by using the Revised Notice of Guaranteed Delivery (printed on pink paper) that accompanied the notice of variation and extension dated March 21, 2006 or a manually signed facsimile thereof. Persons whose Adastra Shares are registered in the name of a dealer, broker, bank, trust company or other nominee should contact such registered holder for assistance if they wish to accept the Offer.
Questions and requests for assistance may be directed to RBC Dominion Securities Inc. in Canada, to RBC Capital Markets Corporation in the United States (the “ Dealer Manager ”), to Innisfree M&A Incorporated (the “ Information Agent ”) or to Computershare Investor Services Inc. (the “ Depositary ”). Additional copies of this Notice of Extension, the notice of variation and extension dated March 10, 2006, the notice of variation and extension dated March 21, 2006, the Offer and Circular, the Letters of Acceptance and Transmittal, and the Notice of Guaranteed Delivery may be obtained without charge on request from the Dealer Manager or the Depositary at their respective offices shown on the last page of this Notice of Extension.
No person has been authorized to give any information or make any representation other than those contained in the Offer and Circular, the Letters of Acceptance and Transmittal and this Notice of Extension and, if given or made, that information or representation must not be relied upon as having been authorized by the Offeror.
The Offer has not been approved or disapproved by any securities regulatory authority nor has any securities regulatory authority passed upon the fairness or merits of the Offer or upon the adequacy of the information contained in this Notice of Extension. Any representation to the contrary is unlawful.
This Notice of Extension does not constitute an offer or a solicitation to any person in any jurisdiction in which such offer or solicitation is unlawful. The Offer is not being made to, nor will deposits be accepted from or on behalf of, Shareholders in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. However, the Offeror or its agents may, in its or their sole discretion, take such action as it or they may deem necessary to extend the Offer to Shareholders in any such jurisdiction.
EXCHANGE RATE INFORMATION
All references to “dollars” or “$” in this document refer to United States dollars, unless otherwise indicated. The following table sets forth the exchange rate for one U.S. dollar expressed in Canadian dollars for each period indicated, the average of such exchange rates, and the exchange rate at the end of such period, based upon the noon buying rates provided by the Bank of Canada:
|
|
|||||
| Year Ended December 31 | |||||
|
|
|||||
| 2005 | 2004 | 2003 | 2002 | 2001 | |
|
|
|||||
| Rate at end of period | 1.1659 | 1.2036 | 1.2924 | 1.5796 | 1.5926 |
| Average rate for period | 1.2116 | 1.3015 | 1.4015 | 1.5704 | 1.5484 |
On March 31, 2006, the exchange rate for one U.S. dollar expressed in Canadian dollars based upon the noon buying rates provided by the Bank of Canada was Cdn.$1.1671.
4
NOTICE OF EXTENSION
April 3, 2006
TO: THE HOLDERS OF ADASTRA SHARES
This Notice of Extension amends and supplements the Offer and Circular and the Letters of Transmittal and Notice of Guaranteed Delivery, pursuant to which the Offeror is offering to purchase, on the terms and subject to the conditions contained therein, all of the outstanding Adastra Shares, which includes the associated SRP Rights.
Except as otherwise set forth in this Notice of Extension, the terms and conditions previously set forth in the Offer and Circular, Letters of Transmittal and Notice of Guaranteed Delivery continue to be applicable in all respects and this Notice of Extension should be read in conjunction with the Offer and Circular, Letters of Transmittal and Notice of Guaranteed Delivery. Unless the context requires otherwise, terms not defined herein have the meanings set forth in the Offer and Circular and the Letters of Transmittal and Notice of Guaranteed Delivery.
All references to the “Offer” in the Offer and Circular, the Letters of Transmittal, the Notice of Guaranteed Delivery and this Notice of Extension mean the Original Offer as amended hereby, all references in such documents to the “Letters of Transmittal” mean the Original Letters of Transmittal as amended by the Revised Letters of Transmittal, all references in such documents to the “Notice of Guaranteed Delivery” mean the Original Notice of Guaranteed Delivery as amended by the Revised Notice of Guaranteed Delivery and all references in such documents to the “Circular” mean the Original Circular as amended by the notice of variation and extension dated March 10, 2006, the notice of extension and variation dated March 21, 2006 and hereby. Unless the context requires otherwise, capitalized terms used herein but not defined herein have the respective meanings given to them in the Offer and Circular.
1. Extension of the Offer
By notice to the Depositary given on March 31, 2006 and a news release subsequently issued by the Offeror, the Offeror extended the time for acceptance of the Offer to 5:00 p.m. (Toronto time) on April 18, 2006, unless the Offeror further extends the period during which the Offer is open for acceptance pursuant to Section 6 of the Offer to Purchase, “Extensions, Variations and Changes to the Offer”. Accordingly, the definitions of “Expiry Date” and “Expiry Time” in the Offer and Circular are deleted in their entirety and replaced by the following:
“Expiry Date” means April 18, 2006 or such later date as is set out in a notice of variation and extension of the Offer issued at any time and from time to time extending the period during which Adastra Shares may be deposited to the Offer, provided that, if such day is not a business day, then the Expiry Date shall be the next business day.
“Expiry Time” means 5:00 p.m. (Toronto time) on the Expiry Date.
2. Recent Developments
As at 5:00 p.m. (Toronto time) on March 31, 2006, 21,221,406 Adastra Shares had been validly deposited to the Offer and not withdrawn.
In light of the revised Expiry Time of 5:00 p.m. (Toronto time) on April 18, 2006, it is unlikely that Shareholders will be eligible to receive, in respect of any First Quantum Shares that may be received by them pursuant to the Offer, the dividend announced by First Quantum on March 13, 2006 of Cdn.$0.265 per First Quantum Share, which will be paid on May 10, 2006 only to First Quantum shareholders of record as of April 19, 2006.
3. Time and Manner for Acceptance
Adastra Shares may be deposited to the Offer in accordance with the provisions of Section 4 of the Offer to Purchase, “Time and Manner for Acceptance”.
4. Withdrawal of Deposited Shares
Shareholders have the right to withdraw Adastra Shares deposited pursuant to the Offer under the circumstances and in the manner described in Section 8 of the Offer to Purchase, “Right to Withdraw Deposited Adastra Shares”.
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5. Take Up of and Payment for Deposited Adastra Shares
Upon the terms and subject to the conditions of the Offer (including, if the Offer is further extended or varied, the terms and conditions of any such extension or variation), the Offeror will take up Adastra Shares validly deposited under the Offer (and not withdrawn prior to the Expiry Time pursuant to Section 8 of the Offer to Purchase, “Right to Withdraw Deposited Adastra Shares”), promptly following the Expiry Time and, after such take up, will promptly pay for the Adastra Shares taken up pursuant to applicable law. See Section 3 of the Offer to Purchase, “Take Up of and Payment for Deposited Adastra Shares”.
6. Amendments to the Offer
The Offer and Circular, the Original Letters of Transmittal and the Original Notice of Guaranteed Delivery shall be read as amended in order to give effect to the specified amendments set forth in this Notice of Extension.
7. Offerees’ Statutory Rights
Securities legislation in certain of the provinces and territories of Canada provides Shareholders of Adastra with, in addition to any other rights they may have at law, rights of rescission or damages, or both, if there is a misrepresentation in a circular or notice that is required to be delivered to such Shareholders. However, such rights must be exercised within the time limit prescribed by the securities legislation of the Shareholder’s province or territory. Shareholders should refer to the applicable provisions of the securities legislation of their province or territory for the particulars of those rights or consult with a lawyer.
8. Documents Filed With the SEC
The Offeror has filed with the SEC (i) a registration statement on Form F-80 under the U.S. Securities Act, as amended, which covers the First Quantum Shares to be issued pursuant to the Offer, (ii) a tender offer statement on Schedule 14D-1F, as amended and (iii) Form F-X to appoint an agent for service of process and provide required undertakings. The Offer and Circular do not contain all of the information set forth in the registration and tender offer statements. Reference is made to those documents and the exhibits thereto for further information.
In addition to the documents listed in Section 24 of the Original Circular, “Documents Filed with the SEC”, and in Section 15 of the notice of variation and extension dated March 21, 2006, “Documents Filed with the SEC”, the following exhibit has been filed with the SEC as part of the Registration Statement on Form F-80, as amended:
1. The annual information form of First Quantum dated March 31, 2006 for the year ended December 31, 2005.
9. Directors’ Approval
The contents of this Notice of Extension have been approved, and the sending thereof to the Shareholders has been authorized, by the First Quantum Board.
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APPROVAL AND CERTIFICATE
DATED: April 3, 2006
The contents of this Notice of Extension have been approved, and the sending thereof to Shareholders has been authorized, by the First Quantum Board.
The foregoing, together with the Offer and Circular dated February 2, 2006, the notice of variation and extension dated March 10, 2006 and the notice of variation and extension dated March 21, 2006, contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made. In addition, the foregoing, together with the Offer and Circular dated February 2, 2006, the notice of variation and extension dated March 10, 2006 and the notice of variation and extension dated March 21, 2006, does not contain any misrepresentation likely to affect the value or the market price of the Adastra Shares which are the subject of the Offer.
| (Signed) P HILIP K.R. P ASCALL | (Signed) M ARTIN R. R OWLEY |
| Chairman and Chief Executive Officer | Chief Financial Officer |
On behalf of the Board of Directors
| (Signed) P ETER S T . G EORGE | (Signed) R UPERT P ENNANT -R EA |
| Director | Director |
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The Depositary for the Offer is:
COMPUTERSHARE INVESTOR SERVICES INC.
Toronto
| By Mail | By Registered Mail, Hand or Courier |
| P.O. Box 7021 | 100 University Avenue |
| 31 Adelaide Street E | 9th Floor |
| Toronto, ON M5C 3H2 | Toronto, ON M5J 2Y1 |
| Attention: Corporate Actions | Attention: Corporate Actions |
Fax Number: (905)
771-4082
Toll Free (North America):
1-866-982-9674
Overseas Calls:
1-514-982-7135
E-Mail:
adastraquantumoffer@computershare.com
By Hand or Courier
| Montreal | Vancouver | Calgary |
| 650 de Maisonneuve Blvd West | 510 Burrard Street | Western Gas Tower |
| Suite 700 | 2nd Floor | Suite 600, 530 8th Avenue S.W. |
| Montreal, QC H3A 3S8 | Vancouver, BC V6C 3B9 | Calgary, AB T2P 3S8 |
The Dealer Manager for the Offer is:
RBC CAPITAL MARKETS
| In Canada | In the United States |
| 200 Bay Street, 4th Floor | Two Embarcadero Center |
| Royal Bank Plaza, South Tower | Suite 1200 |
| Toronto, Ontario M5J 2W7 | San Francisco, California 94111 |
| Canada | U.S.A. |
| Telephone: (416) 842-7675 | Toll Free: 1-866-246-3902 |
| Toll Free: 1-866-246-3902 |
The Information Agent for the Offer is:
501 Madison Avenue
20th Floor
New York, NY 10022
U.S.A.
Shareholders Call Toll
Free:
1-888-750-5834 (English
speakers)
1-877-825-8777 (French
speakers)
Banks and Brokers Call
Collect:
(212) 750-5833
Any questions and requests for assistance may be directed by Shareholders to the Dealer Manager, the Depositary or the Information Agent at their respective telephone numbers and locations set out above.
NOTICE TO SHAREHOLDERS IN THE UNITED STATES
This Offer is made by a Canadian issuer that is permitted, under a multi-jurisdictional disclosure system adopted by the United States, to prepare the Offer and Circular and this Notice of Variation and Extension in accordance with the disclosure requirements of Canada. The Offer is subject to applicable disclosure requirements in Canada. Shareholders should be aware that such requirements are different from those of the United States. Financial statements included or incorporated herein have been derived from publicly available financial statements which have been prepared in accordance with Canadian generally accepted accounting principles and thus may not be comparable to financial statements of United States companies.
The enforcement by investors of civil liabilities under the federal securities laws may be affected adversely by the fact that First Quantum is incorporated under the laws of Canada, that some or all of its officers and directors may reside outside the United States, that the Canadian Dealer Manager for the Offer and some or all of the experts named in the Offer and Circular may reside outside the United States, and that a substantial portion of the assets of First Quantum and said persons are located outside the United States.
THE FIRST QUANTUM SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFER AND CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospective investors should be aware that acquisition of First Quantum Shares may have tax consequences both in the United States and in Canada. Such consequences for investors who are resident in, or citizens of, the United States, may not be described fully in the Offer and Circular.
The Offer does not constitute an offer to sell or a solicitation of an offer to buy any securities in any state in the United States in which such offer or solicitation is unlawful. The Offer is not being made or directed to, nor is this document being mailed to, nor will deposits of Adastra Shares be accepted from or on behalf of, Shareholders in any state in the United States in which the making or acceptance of the Offer would not be in compliance with the laws of such state. The Offeror may, in its sole discretion, take such action as it may deem desirable to extend the Offer to Shareholders in any such state. Notwithstanding the foregoing, the Offeror may elect not to complete such action in any given instance. Accordingly, the Offeror cannot at this time assure holders of Adastra Shares that otherwise valid tenders can or will be accepted from holders resident in all states in the United States.
Shareholders should be aware that the Offeror or its affiliates, directly or indirectly, may bid for or make purchases of the Adastra Shares, or of related securities, or of the First Quantum Shares, or of related securities, during the period of the Offer, as permitted by applicable laws or regulations of Canada or its provinces or territories.
The Offer and Circular and this Notice of Variation and Extension, and certain of the information incorporated by reference into the Offer and Circular and this Notice of Variation and Extension, have been prepared in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of United States securities laws. In particular, and without limiting the generality of the foregoing, the terms “mineral reserves,” “probable reserves,” “proven reserves,” “inferred resources,” “indicated resources,” “measured resources” and “mineral resources” used or incorporated by reference in the Offer and Circular are, unless otherwise stated, Canadian mining terms as defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Mineral Reserves (“CIM”). CIM standards differ significantly from standards in the United States. While the terms “mineral resource,” “measured resources,” “indicated resources,” and “inferred resources” are recognized and required by Canadian regulations, they are not defined terms under standards in the United States. As such, information regarding mineralization and resources contained or incorporated by reference in the Offer and Circular may not be comparable to similar information made public by United States companies.
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NOTICE TO SHAREHOLDERS IN THE UNITED KINGDOM
No action has been or is intended to be taken by First Quantum, by Numis Securities Limited or by RBC Capital Markets and its affiliated entities that would permit a public offer of First Quantum Shares to be made in the United Kingdom, which would require an approved prospectus to be made available to the public in the United Kingdom (in accordance with the United Kingdom Financial Services and Markets Act 2000 (“FSMA”) and the Prospectus Rules published by the Financial Services Authority of the United Kingdom (the “FSA”)) before such an offer is made.
Accordingly, as regards Shareholders resident in, or who have received the Offer in, the United Kingdom (“U.K. Shareholders”), the Offer is only being made to or directed at, and deposits of Adastra Shares will only be accepted from, a U.K. Shareholder who: (a) is, and is able to establish to the satisfaction of the Offeror that it is: (i) a qualified investor acting as principal; (ii) a qualified investor which operates in the financial markets acting on behalf of a person, not being a qualified investor, on a discretionary basis concerning the acceptance of offers on that person’s behalf; or (iii) acting on behalf, and on the instructions, of a qualified investor (in which case the Offer is made to or directed at that qualified investor); or (b) is a person to whom the Offer may otherwise be made or at whom the Offer may otherwise be directed in the United Kingdom without an approved prospectus having been made available to the public in the United Kingdom before the Offer is made. A “qualified investor” is (i) a legal entity which is authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; (ii) a legal entity which has two or more of: (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; (iii) a person entered on the register of qualified investors maintained by the FSA for this purpose pursuant to section 87R of FSMA; or (iv) an investor authorized by an EEA State other than the United Kingdom to be considered as a qualified person. Accordingly, any U.K. Shareholder purporting to accept the Offer must provide supporting evidence satisfactory to the Offeror that it is entitled to do so, and the Offeror shall in its sole discretion be entitled to reject any such purported acceptance of the Offer, as further described in the Offer and Circular. Shareholders who have received the Offer in the United Kingdom should consult with their legal advisors to determine whether they (or any person on whose behalf they act) are able to receive and accept the Offer. Further details in connection with the Offer and its acceptance by U.K. Shareholders are set out in the Offer and Circular.
The content of this document, which has been prepared by and is the responsibility of the Offeror, has been approved by Numis Securities Limited of Cheapside House, 13 Cheapside, London, United Kingdom EC2V 6LH, solely for the purposes of section 21 of the FSMA. Numis Securities Limited is acting exclusively for First Quantum in connection with the Offer and no one else, and will not be responsible to anyone other than First Quantum for providing the protections afforded to clients of Numis Securities Limited nor for providing advice in relation to the Offer or any other matter referred to in this document. Numis Securities Limited is authorized by the FSA and its FSA registration number is 2285918.
This Notice of Variation and Extension should be read in conjunction with the Original Offer and the circular that accompanied the offer dated February 2, 2006 (the “ Original Circular ” and, together with the Original Offer, the “ Offer and Circular ”). Except as otherwise set forth herein or in the letters of transmittal (the “ Revised Letters of Transmittal ”) and notice of guaranteed delivery (the “ Revised Notice of Guaranteed Delivery ”) accompanying this Notice of Variation and Extension, the terms and conditions previously set forth in the Offer and Circular and in the letters of transmittal (the “Original Letters of Transmittal ”) and the notice of guaranteed delivery (the “ Original Notice of Guaranteed Delivery ”) that accompanied the offer dated February 2, 2006 continue to be applicable in all respects. All references to the “Offer” in the Offer and Circular, the Letters of Transmittal, the Notice of Guaranteed Delivery and this Notice of Variation and Extension mean the Original Offer as amended hereby, all references in such documents to the “Letters of Transmittal” mean the Original Letters of Transmittal as amended by the Revised Letters of Transmittal, all references in such documents to the “Notice of Guaranteed Delivery” mean the Original Notice of Guaranteed Delivery as amended by the Revised Notice of Guaranteed Delivery and all references in such documents to the “Circular” mean the Original Circular as amended by the notice of variation and extension dated March 10, 2006 and hereby. Unless the context requires otherwise, capitalized terms used herein but not defined herein have the respective meanings given to them in the Offer and Circular.
Holders of Adastra Shares (“Shareholders”) who (i) have validly deposited and not withdrawn their Adastra Shares using an appropriate Original Letter of Transmittal and, if applicable, an Original Notice of
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Guaranteed Delivery and (ii) wish to elect the Share Alternative need take no further action to accept the Offer. Shareholders who (i) have validly deposited and not withdrawn their Adastra Shares using an Original Letter of Transmittal and, if applicable, an Original Notice of Guaranteed Delivery and (ii) wish to elect the Cash Alternative must withdraw their Adastra Shares by following the procedures set forth in Section 8 of the Offer to Purchase, “Right to Withdraw Deposited Adastra Shares” and redeposit their Adastra Shares following the procedures set out below and in Section 4 of the Offer to Purchase, “Time and Manner for Acceptance”. Shareholders who wish to accept the Offer must properly complete and duly execute the appropriate Revised Letter of Transmittal (printed on purple paper in the case of all Shareholders other than Eligible U.K. Shareholders and on orange paper in the case of Eligible U.K. Shareholders) accompanying this Notice of Variation and Extension or a manually signed facsimile thereof and deposit it, together with the certificates representing their Adastra Shares and any required evidence confirming that the Shareholder purporting to accept the Offer is eligible to do so, at one of the offices of the Depositary in accordance with the instructions in the applicable Revised Letter of Transmittal. Any Shareholder holding Adastra Shares in the form of CREST Depository Interests must additionally arrange for the appropriate electronic acceptance instructions to be sent to CREST Depository Limited. Alternatively, certain Shareholders may follow the procedure for guaranteed delivery set forth in Section 5 of the Offer to Purchase, “Procedure for Guaranteed Delivery”, by using the Revised Notice of Guaranteed Delivery (printed on pink paper) accompanying this Notice of Variation and Extension or a manually signed facsimile thereof. Persons whose Adastra Shares are registered in the name of a dealer, broker, bank, trust company or other nominee should contact such registered holder for assistance if they wish to accept the Offer.
Questions and requests for assistance may be directed to RBC Dominion Securities Inc. in Canada, to RBC Capital Markets Corporation in the United States (the “ Dealer Manager ”), to Innisfree M&A Incorporated (the “ Information Agent ”) or to Computershare Investor Services Inc. (the “ Depositary ”). Additional copies of this Notice of Variation and Extension, the notice of variation and extension dated March 10, 2006, the Offer and Circular, the Letters of Acceptance and Transmittal, and the Notice of Guaranteed Delivery may be obtained without charge on request from the Dealer Manager or the Depositary at their respective offices shown on the last page of this Notice of Variation and Extension.
No person has been authorized to give any information or make any representation other than those contained in the Offer and Circular, the Letters of Acceptance and Transmittal, the notice of variation and extension dated March 10, 2006, and this Notice of Variation and Extension and, if given or made, that information or representation must not be relied upon as having been authorized by the Offeror.
The Offer has not been approved or disapproved by any securities regulatory authority nor has any securities regulatory authority passed upon the fairness or merits of the Offer or upon the adequacy of the information contained in this Notice of Variation and Extension. Any representation to the contrary is unlawful.
This Notice of Variation and Extension does not constitute an offer or a solicitation to any person in any jurisdiction in which such offer or solicitation is unlawful. The Offer is not being made to, nor will deposits be accepted from or on behalf of, Shareholders in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. However, the Offeror or its agents may, in its or their sole discretion, take such action as it or they may deem necessary to extend the Offer to Shareholders in any such jurisdiction.
EXCHANGE RATE INFORMATION
All references to “dollars” or “$” in this document refer to United States dollars, unless otherwise indicated. The following table sets forth the exchange rate for one U.S. dollar expressed in Canadian dollars for each period indicated, the average of such exchange rates, and the exchange rate at the end of such period, based upon the noon buying rates provided by the Bank of Canada:
| Year Ended December 31 | |||||
|---|---|---|---|---|---|
|
|
|||||
| 2005 | 2004 | 2003 | 2002 | 2001 | |
|
|
|||||
| Rate at end of period | 1.1659 | 1.2036 | 1.2924 | 1.5796 | 1.5926 |
| Average rate for period | 1.2116 | 1.3015 | 1.4015 | 1.5704 | 1.5484 |
On March 20, 2006, the exchange rate for one U.S. dollar expressed in Canadian dollars based upon the noon buying rates provided by the Bank of Canada was Cdn.$1.1628.
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NOTICE OF VARIATION AND EXTENSION
March 21, 2006
TO: THE HOLDERS OF ADASTRA SHARES
This Notice of Variation and Extension and the accompanying Revised Letters of Transmittal and Revised Notice of Guaranteed Delivery amend and supplement the Offer and Circular and the Original Letters of Transmittal and Original Notice of Guaranteed Delivery, pursuant to which the Offeror is offering to purchase, on the terms and subject to the conditions contained therein, all of the outstanding Adastra Shares, which includes the associated SRP Rights.
Except as otherwise set forth in this Notice of Variation and Extension and the accompanying Revised Letters of Transmittal and Revised Notice of Guaranteed Delivery, the terms and conditions previously set forth in the Offer and Circular, Original Letters of Transmittal and Original Notice of Guaranteed Delivery continue to be applicable in all respects and this Notice of Variation and Extension should be read in conjunction with the Offer and Circular, Letters of Transmittal and Notice of Guaranteed Delivery. Unless the context requires otherwise, terms not defined herein have the meanings set forth in the Offer and Circular and the Letters of Transmittal and Notice of Guaranteed Delivery.
All references to the “Offer” in the Offer and Circular, the Letters of Transmittal, the Notice of Guaranteed Delivery and this Notice of Variation and Extension mean the Original Offer as amended hereby, all references in such documents to the “Letters of Transmittal” mean the Original Letters of Transmittal as amended by the Revised Letters of Transmittal, all references in such documents to the “Notice of Guaranteed Delivery” mean the Original Notice of Guaranteed Delivery as amended by the Revised Notice of Guaranteed Delivery and all references in such documents to the “Circular” mean the Original Circular as amended by the notice of variation and extension dated March 10, 2006 and hereby. Unless the context requires otherwise, capitalized terms used herein but not defined herein have the respective meanings given to them in the Offer and Circular.
| 1. | Increase in Consideration Offered |
The Offeror has amended the Offer by increasing the consideration offered to Shareholders from one First Quantum Share for every 17.5 Adastra Shares to, at the election of each Shareholder, (a) Cdn.$2.65 in cash per Adastra Share, or (b) one First Quantum Share for every 14.76 Adastra Shares, subject, in each case, to pro ration based upon the maximum amount of cash and First Quantum Shares offered.
Assuming that either all Shareholders tendered to the Cash Alternative or all Shareholders tendered to the Share Alternative, each Shareholder would be entitled to receive Cdn.$0.42 in cash and approximately 0.057 of a First Quantum Share for each Adastra Share tendered, subject to adjustment for fractional shares. In light of the total amount of cash available under the Offer relative to the size of the Offer, it is unlikely that Shareholders who elect to receive the Cash Alternative will receive only cash consideration for their Adastra Shares.
Any Shareholder who (i) deposits his or her Adastra Shares using an Original Letter of Transmittal and, if applicable, Original Notice of Guaranteed Delivery, or (ii) fails to complete the appropriate Revised Letter of Transmittal and, if applicable, the Revised Notice of Guaranteed Delivery electing the Cash Alternative or (iii) does not properly elect either the Cash Alternative or the Share Alternative in the appropriate Revised Letter of Transmittal and, if applicable, the Revised Notice of Guaranteed Delivery with respect to any Adastra Shares deposited by such Shareholder pursuant to the Offer will be deemed to have elected the Share Alternative.
The maximum amount of cash payable by the Offeror pursuant to the Offer shall not exceed Cdn.$0.42 multiplied by the number of outstanding Adastra Shares on a fully diluted basis on the date of the Offer (the “ Maximum Cash Consideration ”). Based on the number of Adastra Shares outstanding on a fully diluted basis on January 31, 2006, the maximum amount of cash payable will be approximately Cdn.$36.3 million. The maximum number of First Quantum Shares issuable by the Offeror pursuant to the Offer shall not exceed 0.057 multiplied by the number of outstanding Adastra Shares on a fully diluted basis on the date of the Offer (the “ Maximum Share Consideration ”). Based on the number of Adastra Shares outstanding on a fully diluted basis on January 31, 2006, the maximum number of First Quantum Shares issuable by the Offeror pursuant to the Offer shall not exceed 4,927,733 First Quantum Shares.
The consideration payable under the Offer will be pro rated on each date (“ Take-Up Date ”) upon which the Offeror takes up or acquires Adastra Shares pursuant to the Offer as necessary to ensure that the total aggregate
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consideration payable under the Offer and in any Compulsory Acquisition or Subsequent Acquisition Transaction does not exceed these maximum aggregate amounts and will be based on the number of Adastra Shares acquired in proportion to the number of Adastra Shares outstanding on a fully diluted basis at the Take-Up Date. The Offeror reserves the right, to the extent permitted by applicable Laws, to have multiple Take-Up Dates. The actual consideration to be received by a Shareholder will be determined in accordance with the following:
| (a) | the aggregate amount of cash that the Offeror will pay as consideration for Adastra Shares acquired in respect of the Cash Alternative and the Share Alternative on any Take-Up Date shall not exceed the Maximum Cash Consideration multiplied by a fraction, the numerator of which is the number of Adastra Shares to be taken up on such Take-Up Date and the denominator of which is the number of outstanding Adastra Shares on a fully diluted basis (the “ Maximum Take-Up Date Cash Consideration ”); |
| (b) | the aggregate number of First Quantum Shares that the Offeror will issue as consideration for Adastra Shares acquired in respect of the Share Alternative on any Take-Up Date shall not exceed the Maximum Share Consideration multiplied by a fraction, the numerator of which is the number of Adastra Shares to be taken up on such Take-Up Date and the denominator of which is the number of outstanding Adastra Shares on a fully diluted basis (the “ Maximum Take-Up Date Share Consideration ”); |
| (c) | if, on any Take-Up Date, the aggregate cash consideration that would otherwise be payable by the Offeror to Shareholders who elect to receive cash under the Cash Alternative in respect of their Adastra Shares to be taken up on such Take-Up Date exceeds the Maximum Take-Up Date Cash Consideration, the amount of cash consideration available to those Shareholders who have so elected the Cash Alternative will be allocated pro rata (on a per share basis) among such Shareholders in an amount equal to the aggregate amount of the cash sought by each such Shareholder who so elected the Cash Alternative multiplied by a fraction, the numerator of which is the Maximum Take-Up Date Cash Consideration and the denominator of which is the aggregate amount of the cash consideration sought by those Shareholders who elected the Cash Alternative in respect of their Adastra Shares to be taken up on such Take-Up Date, and each such Shareholder will receive First Quantum Shares (or cash in lieu of any fractional First Quantum Common Share) as consideration for any balance which exceeds the amount of cash so allocated to the Shareholder (calculated by valuing each First Quantum Share at $39.11); and |
| (d) | if, on any Take-Up Date, the number of First Quantum Shares that would otherwise be issuable to Shareholders who elect (or are deemed to elect) the Share Alternative in respect of their Adastra Shares to be taken up on such Take-Up Date exceeds the Maximum Take-Up Date Share Consideration, the number of First Quantum Shares available to those Shareholders who have so elected (or are deemed to have elected) the Share Alternative will be allocated pro rata (on a per share basis) among such Shareholders in an amount equal to the number of First Quantum Shares sought by each such Shareholder who so elected (or is deemed to have elected) the Share Alternative in respect of its Adastra Shares to be taken up on such Take-Up Date multiplied by a fraction, the numerator of which is the Maximum Take-Up Date Share Consideration and the denominator of which is the aggregate number of First Quantum Shares sought by those Shareholders who elected (or are deemed to have elected) the Share Alternative in respect of their Adastra Shares to be taken up on such Take-Up Date, rounded down to the nearest whole number, and each such Shareholder will receive cash as consideration for any balance which exceeds the number of First Quantum Shares allocated to the Shareholder (calculated by valuing each First Quantum Share at $39.11). |
For greater certainty, unless a Shareholder receives only cash consideration for all Adastra Shares tendered by the Shareholder, in all circumstances, including those described in paragraphs (c) and (d) above, a Shareholder will be deemed to have received a proportionate amount of cash and First Quantum Shares as consideration for each whole Adastra Share tendered by such Shareholder such that the Shareholder will receive (a) cash as consideration for a fraction of each Adastra Share tendered (which fraction will equal the percentage of the total consideration paid to such Shareholder that is paid in cash) and (b) First Quantum Shares as consideration for the remaining fraction of each Adastra Share.
All references in the Offer and Circular, the Letters of Transmittal and the Notice of Guaranteed Delivery to the Offered Consideration are amended to reflect the foregoing changes.
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Based on the closing price of the First Quantum Shares on the TSX on March 17, 2006 of Cdn.$39.11, the increased Offered Consideration represents a premium of approximately 47% over the closing price of the Adastra Shares on the TSX of Cdn.$1.80 on January 17, 2006, the last trading day prior to the Offeror’s announcement of its intention to make the Original Offer, and a premium of approximately 56% over the Cdn.$1.70 price received by Adastra in connection with its December 2005 equity financing.
Assuming that all of the conditions to the Offer are satisfied or waived, all Shareholders whose Adastra Shares are taken up under the Offer, including Shareholders who have already deposited their Adastra Shares to the Offer, will receive the increased Offered Consideration for their Adastra Shares.
In addition, assuming that First Quantum takes up the Adastra Shares deposited to the Offer, Shareholders who deposit their Adastra Shares to, and do not withdraw their Adastra Shares from, the Offer on or prior to the revised Expiry Time of 5:00 p.m. (Toronto time) on March 31, 2006 will be eligible to receive, in respect of any First Quantum Shares received by them pursuant to the Offer, the dividend announced by First Quantum on March 13, 2006 of Cdn.$0.265 per First Quantum Share, which will be paid on May 10, 2006 to First Quantum shareholders of record on April 19, 2006.
| 2. | Extension of the Offer |
By notice to the Depositary on March 10, 2006 and a news release issued by the Offeror, the Offeror extended the expiry of the Original Offer to midnight (Toronto time) on March 20, 2006. The Offeror has subsequently further amended the Original Offer by delivering notice to the Depositary on March 20, 2006 and issuing a further news release extending the time for acceptance of the Offer to 5:00 p.m. (Toronto time) on March 31, 2006, unless the Offeror further extends the period during which the Offer is open for acceptance pursuant to Section 6 of the Offer to Purchase, “Extensions, Variations and Changes to the Offer”. Accordingly, the definitions of “Expiry Date” and “Expiry Time” in the Offer and Circular are amended to read in full as follows:
“Expiry Date” means March 31, 2006 or such later date as is set out in a notice of variation and extension of the Offer issued at any time and from time to time extending the period during which Adastra Shares may be deposited to the Offer, provided that, if such day is not a business day, then the Expiry Date shall be the next business day.
“Expiry Time” means 5:00 p.m. (Toronto time) on the Expiry Date.
| 3. | Amendments to Conditions of the Offer |
The Offeror has amended the Original Offer by reducing the number of Adastra Shares that must be deposited under, and not withdrawn from, the Offer as a condition of the Offeror’s obligation to take up, purchase and pay for any Adastra Shares deposited under the Offer from 66 2 / 3 % of the Adastra Shares outstanding (on a fully diluted basis) to 50.1% of the Adastra Shares outstanding (on a fully diluted basis). Accordingly, the definition of “Minimum Tender Condition” in the Offer and Circular is amended to read in full as follows:
“ Minimum Tender Condition ” means the condition to the Offer that there shall have been validly deposited under the Offer and not withdrawn at the Expiry Time that number of Adastra Shares which constitutes at least 50.1% of the Adastra Shares outstanding (on a fully diluted basis).
| 4. | Time and Manner for Acceptance |
Adastra Shares may be deposited to the Offer in accordance with the provisions of Section 4 of the Offer to Purchase, “Time and Manner for Acceptance”.
| 5. | Recent Developments |
On March 15, 2006, Adastra announced that, effective as of March 14, 2006, the Adastra Board had waived the application of the Shareholder Rights Plan to the Offer on the basis that the Offer would expire more than 60 days since first being announced such that the Shareholder Rights Plan had served its purpose in relation to the Offer and Shareholders should be permitted to make a decision in respect of the Offer.
On March 16, 2006, representatives of RBC Capital Markets (“ RBC ”), in their capacity as financial advisors to First Quantum, contacted representatives of NM Rothschild (“ Rothschild ”), financial advisors to Adastra, in order to
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raise the possibility of negotiating a friendly transaction between First Quantum and Adastra and to seek a preliminary indication as to the financial terms on which agreement in respect of any such negotiated transaction might be reached. Rothschild responded that Adastra, while willing to meet with First Quantum to discuss and respond to any proposal that First Quantum might care to make, was not prepared to indicate the financial terms on which it would support an offer by First Quantum for the Adastra Shares. In light of this, RBC suggested that representatives of RBC and Rothschild meet on March 17, 2006, without the principal parties in attendance, in order to discuss the value of Adastra in broad, general terms and determine, based on the outcome of that discussion, whether it would be appropriate for the principal parties to meet in order to pursue those discussions further.
The proposed meeting between the representatives of RBC and Rothschild took place on the morning of March 17, 2006 at Rothschild’s offices in London, U.K. While neither side proposed specific financial terms on which an agreement might be reached, sufficient progress was made that later that afternoon RBC and Rothschild agreed to arrange a meeting among themselves and senior management of First Quantum and Adastra in order to pursue further discussions regarding the financial terms of a negotiated transaction.
On March 18, 2006, members of senior management of First Quantum and representatives of RBC met with members of senior management of Adastra and representatives of Rothschild at the offices of Rothschild. The parties held detailed discussions in an effort to reach agreement on a negotiated transaction. These discussions, however, were ultimately inconclusive.
As at 5:00 p.m. (Toronto time) on March 20, 2006, 556,447 Adastra Shares had been validly deposited to the Offer and not withdrawn.
| 6. | Withdrawal of Deposited Shares |
Shareholders have the right to withdraw Adastra Shares deposited pursuant to the Offer under the circumstances and in the manner described in Section 8 of the Offer to Purchase, “Right to Withdraw Deposited Adastra Shares”.
| 7. | Take Up of and Payment for Deposited Adastra Shares |
Upon the terms and subject to the conditions of the Offer (including, if the Offer is further extended or varied, the terms and conditions of any such extension or variation), the Offeror will take up Adastra Shares validly deposited under the Offer (and not withdrawn prior to the Expiry Time pursuant to Section 8 of the Offer to Purchase, “Right to Withdraw Deposited Adastra Shares”), promptly following the Expiry Time and, after such take up, will promptly pay for the Adastra Shares taken up pursuant to applicable law. See Section 3 of the Offer to Purchase, “Take Up of and Payment for Deposited Adastra Shares”.
| 8. | Changes in Capitalization of Adastra; Dividends and Distributions; Liens |
Section 7 of the Offer to Purchase, “Changes in Capitalization of Adastra; Dividends and Distributions; Liens” (found at page 17 of the Offer and Circular) is deleted in its entirety and replaced by the following:
“If, on or after the date of the Offer, Adastra should divide, combine, reclassify, consolidate, convert or otherwise change any of the Adastra Shares or its capitalization, or should disclose that it has taken or intends to take any such action, then the Offeror may, in its sole discretion and without prejudice to its rights under Section 2 of the Offer to Purchase, “Conditions of the Offer,” make such adjustments as it deems appropriate to the Offered Consideration or the other terms of the Offer (including, without limitation, the type of securities offered to be purchased and the consideration payable therefor) to reflect such division, combination, reclassification, consolidation, conversion or other change.
Adastra Shares acquired pursuant to the Offer shall be transferred by the holder of Adastra Shares and acquired by the Offeror free and clear of all liens, restrictions, charges, encumbrances, security interests, claims and equities or rights of others of any nature or kind whatsoever and together with all rights and benefits arising therefrom, including, without limitation, the right to all other securities which may be declared, paid, issued, accrued, distributed, made or transferred on or after the date of the Offer or in respect of the Adastra Shares.
If, on or after the date of the Offer, Adastra should declare or pay any dividend or declare, make or pay any other distribution or payment on or declare, allot, reserve or issue any securities, rights or other interests with respect to the
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Adastra Shares that is payable or distributable to the holders of the Adastra Shares on a record date that precedes the date of transfer of the Adastra Shares into the name of the Offeror or its nominees or transferees on the Adastra Share register maintained by or on behalf of Adastra Shares, then without prejudice to the Offeror’s rights under Section 2 of the Offer to Purchase, “Conditions of the Offer”: (a) in the case of cash dividends, distributions or payments, the amount of the dividends, distributions or payments shall be received and held by the depositing holder of Adastra Shares, and to the extent that such dividends, distributions or payments do not exceed the cash consideration per Adastra Share payable by the Offeror pursuant to the Offer (as determined by the Offeror), the cash consideration per Share payable by the Offeror pursuant to the Offer will be reduced by the amount of any such dividend, distribution or payment; (b) in the case of non-cash dividends, distributions, payments, rights or other interests, the whole of any such non-cash dividend, distribution, payment, right or other interest shall be received and held by the depositing holder of Adastra Shares for the account of the Offeror and shall be promptly remitted and transferred by the depositing holder of Adastra Shares to the Depositary for the account of the Offeror, accompanied by appropriate documentation of transfer; and (c) in the case of any cash dividends, distributions or payments in an amount that exceeds the cash consideration per Adastra Share payable by the Offeror pursuant to the Offer, the whole of any such cash dividend, distribution or payment shall be received and held by the depositing holder of Adastra Shares for the account of the Offeror and shall be required to be promptly remitted and transferred by the depositing holder of Adastra Shares to the Depositary for the account of the Offeror, accompanied by appropriate documentation of transfer. Pending such remittance in the case of (b) and (c) above, the Offeror will be entitled to all rights and privileges as owner of any such dividend, distribution, payment, right or other interest and may withhold all of the cash or share consideration otherwise issuable to the non-remitting holders of Adastra Shares pursuant to the Offer or deduct from the cash or share consideration to be delivered by the Offeror pursuant to the Offer value equal to the amount or value of the dividend, distribution, payment, right or other interest, as determined by the Offeror in its sole discretion. The declaration or payment of any such dividend or distribution may have tax consequences not discussed under “Certain Canadian Federal Income Tax Considerations”, “Certain U.S. Federal Income Tax Considerations” or “Certain U.K. Tax Considerations” in Sections 17, 18 and 19 of the Circular, respectively.”
| 9. | Source of Offered Consideration |
Section 6 of the Circular, “Source of Offered Consideration” (found at page 35 of the Offer and Circular) is hereby supplemented as follows:
The maximum amount of cash payable pursuant to the Offer is approximately Cdn.$36.3 million (based on the number of Adastra Shares outstanding on a fully-diluted basis as at January 31, 2006). First Quantum intends to pay such cash component of the purchase price for Adastra Shares acquired under the Offer with cash on hand and available balances in its bank accounts. As at December 31, 2005, First Quantum had cash on hand and balances in its bank accounts of approximately $74.3 million.
| 10. | Certain Canadian Federal Income Tax Considerations |
Section 17 of the Circular, “Certain Canadian Federal Income Tax Considerations” (found at pages 41-45 of the Offer and Circular) is hereby supplemented as follows:
The following only applies to Shareholders who receive cash or partial cash consideration. See the Original Circular for a description of the Canadian federal income tax consequences of receiving only share consideration and the tax consequences if Adastra Shares are not deposited pursuant to the Offer.
A Resident Shareholder who only receives cash consideration under the Offer will generally realize a capital gain or capital loss under the Tax Act. Such capital gain (or capital loss) will be equal to the amount by which the cash proceeds received exceed (or is exceeded by) the aggregate of the adjusted cost base of the Resident Shareholder’s Adastra Shares and any reasonable costs of making the disposition.
A Resident Shareholder who accepts the Offer and receives both cash and share consideration will receive (a) cash as consideration for a fraction of each Adastra Share tendered, which fraction will equal the percentage of the total consideration paid to the Resident Shareholder that is paid in cash, and (b) First Quantum Shares as consideration for the remaining fraction of each Adastra Share. The disposition of the fraction of the Adastra Share disposed of for cash will occur on a taxable basis in the same manner as the disposition of an Adastra Share by a Resident Shareholder who only receives cash consideration (see preceding paragraph). The disposition of the fraction of the Adastra Share disposed of for First Quantum Shares may occur on a tax-deferred basis as described in Section 17 of the Original
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Circular, “Certain Canadian Federal Income Tax Considerations”, under the heading “Shareholders Resident in Canada – Resident Shareholders Accepting the Offer”.
The tax consequences under the Tax Act to a Non-Resident Shareholder who receives cash only, or partial cash and partial share consideration will be the same as the tax consequences that apply to a Non-Resident Shareholder described in the Original Circular.
| 11. | Certain U.S. Federal Income Tax Considerations |
Section 18 of the Circular, “Certain U.S. Federal Income Tax Considerations” (found at pages 45-48 of the Offer and Circular) is hereby supplemented as follows:
The exchange of Adastra Shares pursuant to the Offer will be taxable for U.S. federal income tax purposes. Consequently, a U.S. Holder will recognize gain or loss equal to the difference between the fair market value of any First Quantum Shares plus the amount of any cash received in the Offer and the U.S. Holder’s adjusted tax basis in the Adastra Shares exchanged. U.S. Holders should consult their tax advisors in light of their particular circumstances.
| 12. | Certain U.K. Tax Considerations |
Section 19 of the Circular, “Certain U.K. Tax Considerations” (found at pages 48-50 of the Offer and Circular) is hereby supplemented as follows:
Liability to capital gains tax or corporation tax on chargeable gains (as appropriate) (“ U.K. CGT ”) will depend on the individual circumstances of Shareholders and on the form of consideration received by them. See the Original Circular for a description of chargeable gains applicable to the extent that a Shareholder receives First Quantum Shares as consideration under the Offer.
To the extent that a Shareholder receives cash consideration under the Offer in exchange for the transfer of such Shareholder’s Adastra Shares, this will constitute a disposal or partial disposal of such Adastra Shares for the purposes of U.K. CGT. Such a disposal or partial disposal may, depending on the Shareholder’s personal circumstances (including the availability of exemptions, reliefs and/or allowable losses), give rise to a liability to U.K. CGT.
For individual Shareholders who acquired their Adastra Shares before April 1, 1998, indexation allowance and taper relief may be available to reduce any gain arising. Indexation allowance will be given for the period of ownership up to and including the month of April 1998 in respect of the acquisition cost of the Adastra Shares, but not for any period thereafter. Indexation allowance cannot be used to create or augment a loss for UK CGT purposes. Taper relief reduces the proportion of the gain brought into charge to capital gains tax depending in part on the number of complete years for which the Adastra Shares have been held from April 6, 1998. The percentage rate of taper relief available for an individual will depend on whether the individual’s Adastra Shares are business or non-business assets. The capital gains annual exemption (which is £8,500 for 2005/06) will also be available to offset any chargeable gain (to the extent that it is not already utilised).
For Shareholders within the charge to U.K. corporation tax but which do not qualify for the substantial shareholdings exemption in respect of their Adastra Shares, indexation allowance will be available in respect of the full period of ownership of the Adastra Shares to reduce any chargeable gain arising, but not to create or increase an allowable loss.
| 13. | Amendments to the Offer |
The Offer and Circular, the Original Letters of Transmittal and the Original Notice of Guaranteed Delivery shall be read as amended in order to give effect to the specified amendments set forth in this Notice of Variation and Extension, the Revised Letters of Transmittal and the Revised Notice of Guaranteed Delivery.
| 14. | Offerees’ Statutory Rights |
Securities legislation in certain of the provinces and territories of Canada provides Shareholders of Adastra with, in addition to any other rights they may have at law, rights of rescission or damages, or both, if there is a
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misrepresentation in a circular or notice that is required to be delivered to such Shareholders. However, such rights must be exercised within the time limit prescribed by the securities legislation of the Shareholder’s province or territory. Shareholders should refer to the applicable provisions of the securities legislation of their province or territory for the particulars of those rights or consult with a lawyer.
| 15. | Documents Filed With the SEC |
The Offeror has filed with the SEC (i) a registration statement on Form F-80 under the U.S. Securities Act, as amended, which covers the First Quantum Shares to be issued pursuant to the Offer, (ii) a tender offer statement on Schedule 14D-1F, as amended and (iii) Form F-X to appoint an agent for service of process and provide required undertakings. The Offer and Circular do not contain all of the information set forth in the registration and tender offer statements. Reference is made to those documents and the exhibits thereto for further information.
In addition to the documents listed pursuant to Section 24 of the Original Circular, “Documents Filed with the SEC”, the following exhibits have been filed with the SEC as part of the Registration Statement on Form F-80, as amended:
| 1. | The Consolidated Financial Statements of First Quantum as at December 31, 2005 and 2004; and |
| 2. | Management’s discussion and analysis and financial review of First Quantum for the quarter and twelve months ended December 31, 2005. |
| 16. | Directors’ Approval |
The contents of this Notice of Variation and Extension have been approved, and the sending thereof to the Shareholders has been authorized, by the First Quantum Board.
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APPROVAL AND CERTIFICATE
DATED: March 21, 2006
The contents of this Notice of Variation and Extension have been approved, and the sending thereof to Shareholders has been authorized, by the First Quantum Board.
The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made. In addition, the foregoing does not contain any misrepresentation likely to affect the value or the market price of the Adastra Shares which are the subject of the Offer.
| (signed) PHILIP K.R. PASCALL | (Signed) MARTIN R. ROWLEY |
| Chairman and Chief Executive Officer | Chief Financial Officer |
On behalf of the Board of Directors
| (Signed) PETER ST. GEORGE | (Signed) RUPERT PENNANT-REA |
| Director | Director |
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The instructions accompanying this Letter of Acceptance and Transmittal should be read carefully before this Letter of Acceptance and Transmittal is completed. The Depositary, the Information Agent, the Dealer Manager or your broker or other financial advisor can assist you in completing this Letter of Acceptance and Transmittal (see back page of this document for addresses and telephone numbers). If you are in any doubt about the Offer or what action you should take, you should immediately consult your stock broker, bank manager, solicitor, accountant or other independent financial advisor duly authorized under the Financial Services and Markets Act 2000.
LETTER OF ACCEPTANCE AND TRANSMITTAL
FOR COMMON SHARES OF
ADASTRA MINERALS INC.
Pursuant to the Offer dated February 2, 2006 of
FIRST QUANTUM MINERALS LTD.
as amended by the Notice of Variation and Extension
dated March 10, 2006, and as further amended by
the Notice of Variation and Extension dated March 21, 2006
This Letter of Acceptance and Transmittal (or a manually executed facsimile thereof), properly completed and duly executed, together with all other required documents, must accompany an appropriate electronic transfer instruction to CREST Depository Limited for common shares (the “Adastra Shares”) of Adastra Minerals Inc. (“Adastra”), which includes common shares that may become outstanding after the date of the Offer but before the time of expiry of the Offer upon conversion, exchange or exercise of options or convertible debentures or other securities of Adastra that are convertible into or exchangeable or exercisable for common shares, and certificates for associated rights issued under the Shareholder Rights Plan of Adastra (the “SRP Rights”, an Adastra Share with the associated SRP Right, a “Share”), deposited pursuant to the offer dated February 2, 2006, as amended by the Notice of Variation and Extension dated March 10, 2006, and as further amended by the Notice of Variation and Extension dated March 21, 2006 (the “Offer”), made by First Quantum Minerals Ltd. (“First Quantum” or the “Offeror”) to holders of Adastra Shares, and certain other documentation as referred to herein.
The terms and conditions of the Offer are incorporated by reference in this Letter of Acceptance and Transmittal. Capitalized terms used but not defined in this Letter of Acceptance and Transmittal which are defined in the Offer to Purchase (the “Offer to Purchase”) and accompanying Circular (together, the “Offer to Purchase and Circular”), dated February 2, 2006, have the meanings ascribed to them in the Offer to Purchase and Circular, as amended by the Notice of Variation and Extension dated March 10, 2006 and as further amended by the Notice of Variation and Extension dated March 21, 2006.
Delivery of this Letter of Acceptance and Transmittal to an address other than set forth below will not constitute a valid delivery to the Depositary.
TO: FIRST QUANTUM
MINERALS LTD.
AND TO: COMPUTERSHARE INVESTOR SERVICES INC. (the “Depositary”), at its offices set out herein
The undersigned hereby: (i) acknowledges that it has sent an electronic acceptance instruction to CREST Depository Limited; and (ii) delivers to the Depositary the enclosed certificate(s) for SRP Rights, if applicable, and, subject only to the provisions of the Offer regarding withdrawal, irrevocably accepts the Offer for such Shares. The undersigned understands that by depositing Adastra Shares to the Offer, the undersigned will be deemed to have deposited the SRP Rights associated with such Adastra Shares. No additional consideration will be paid for the SRP Rights and no amount of the First Quantum Shares to be issued as consideration by the Offeror will be allocated to the SRP Rights. Unless waived by the Offeror, holders of Adastra Shares are required to deposit one SRP Right for each Adastra Share in order to effect a valid deposit of such Adastra Shares. The following are the details of the electronic acceptance instruction and the enclosed certificate(s):
| * | A separate Letter of Acceptance and Transmittal should be used for each CREST Member Account in respect of which Adastra Shares are deposited to the Offer. |
| ** | The following procedures must be followed in order to effect the valid delivery of certificates representing SRP Rights (“Rights Certificates”): (i) if the Separation Time under the Shareholder Rights Plan has not occurred prior to the Expiry Time and Rights Certificates have not been distributed by Adastra, a deposit of Adastra Shares by the undersigned will also constitute a deposit of the associated SRP Rights; (ii) if Rights Certificates have been distributed by Adastra and received by the undersigned prior to the time the undersigned deposits Adastra Shares pursuant to the Offer, Rights Certificate(s) representing SRP Rights equal in number to the number of Adastra Shares deposited must be delivered with this Letter of Acceptance and Transmittal in addition to the sending of an electronic acceptance instruction to CREST Depository Limited in respect of the Adastra Shares; or (iii) if the Separation Time occurs and Rights Certificates are not distributed by the time the undersigned deposits its Adastra Shares pursuant to the Offer, the undersigned should contact the Depositary regarding the deposit of its SRP Rights prior to receipt of Rights Certificate(s). Note that in any case, a deposit of Adastra Shares constitutes an agreement by the undersigned to deliver Rights Certificate(s) equal in number to the number of deposited Adastra Shares to the Depositary on or before the third trading day on the TSX after the date, if any, that any Rights Certificates are distributed. The Offeror reserves the right to require, if the Separation Time occurs before the Expiry Time, that the Depositary receive from the undersigned, prior to taking up the Adastra Shares for payment pursuant to the Offer, Rights Certificate(s) representing SRP Rights equal in number to the Adastra Shares deposited by the undersigned. |
| *** | Unless otherwise indicated, the total number of Adastra Shares held in any CREST Member Account in respect of which Adastra Shares are deposited to the Offer, and SRP Rights evidenced by all certificate(s) submitted to the Depositary, will be deemed to have been deposited under the Offer. See Instruction 4 below, “Partial Deposits”. |
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IN CONSIDERATION OF THE OFFER AND FOR VALUE RECEIVED , upon the terms and subject to the conditions set forth in the Offer and in this Letter of Acceptance and Transmittal, subject only to the withdrawal rights set out in the Offer, the undersigned:
| (a) | acknowledges receipt of the Offer to Purchase and Circular; |
| (b) | delivers to you the enclosed certificate(s) representing Rights Certificate(s), if applicable, and, subject only to the provisions of the Offer regarding withdrawal, irrevocably accepts the Offer for and in respect of the Adastra Shares the subject of an electronic acceptance instruction as referred to above, together with associated SRP Rights (the “Purchased Securities”) and, on and subject to the terms and conditions of the Offer, deposits and sells, assigns and transfers to the Offeror all right, title and interest in and to the Purchased Securities, including any and all dividends (other than certain cash dividends), distributions, payments, securities, rights, warrants, assets or other interests including the SRP Rights (collectively, “Other Securities”), which may be declared, paid, accrued, issued, distributed, made or transferred on or in respect of the Purchased Securities on or after the date of the Offer, except as otherwise indicated in Section 7 of the Offer to Purchase, “Changes in Capitalization of Adastra; Dividends and Distributions; Liens”; |
| (c) | represents and warrants that the undersigned has full power and authority to deposit, sell, assign and transfer the Purchased Securities and that when the Purchased Securities are taken up and paid for by the Offeror, the Offeror will acquire good title thereto free and clear of all liens, charges, encumbrances, claims and equities; |
| (d) | represents and warrants that the undersigned either owns the Purchased Securities and any Other Securities being deposited within the meaning of applicable securities laws or holds those Purchased Securities on behalf of a Qualified Investor, who has instructed the undersigned to accept the Offer in respect of such Purchased Securities on behalf of that Qualified Investor; |
| (e) | represents and warrants that the deposit of the Purchased Securities complies with applicable securities laws; |
| (f) | represents and warrants that the undersigned is: |
| (i) | a Qualified Investor acting as principal and for no other person (in which case please check Block A(a)); |
| (iii) | a Qualified Investor, being a legal entity which is authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities, engaged by a person who is not a Qualified Investor to act as his or its agent on terms enabling the undersigned to make decisions concerning the acceptance of the Offer on behalf of, and without reference to him or it (in which case please check Block A(b)); or |
| (iii) | an agent or fiduciary holding Adastra Shares on behalf of a Qualified Investor who has been instructed by that Qualified Investor to accept the Offer in respect thereof and who has power and actual authority to do so (in which case please check Block A(c)); |
| (g) | acknowledges that the Depositary and/or the Offeror is entitled to request such documentary evidence from the undersigned as it requires in its sole discretion to substantiate the representations and warranties made pursuant to (f) above, including any authority or instructions under which the undersigned may be acting on behalf of a Qualified Investor, and encloses evidence in respect thereof as described by the undersigned at Block B below; |
| (h) | directs the Offeror and the Depositary, upon the Offeror taking up the Purchased Securities, to arrange for CREST Depository Limited to: (a) credit the CREST Member Account of the undersigned in respect of First Quantum Shares and/or the amount of cash, if any, to which the undersigned is entitled for the Purchased Securities under the Offer; and (b) credit the CREST Member Account of the undersigned for Adastra Shares, and to return any Rights Certificates, not purchased under the Offer; |
| 1. | “ Qualified Investor ” means a person which is: (i) a legal entity which is authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; (ii) a legal entity which has two or more of (1) an average of at least 250 employees during the last financial year, (2) a total balance sheet of more than €43,000,000, and (3) an annual net turnover of more than €50,000,000, in each case as shown in its last annual or consolidated accounts; or (iii) a person entered on the register of qualified investors maintained by the United Kingdom Financial Services Authority (“FSA”) for this purpose pursuant to section 87R of the United Kingdom Financial Services and Markets Act, 2000 (“FSMA”); or (iv) an investor authorized by an EEA State other than the United Kingdom to be considered as a qualified investor for the purposes of the prospectus directive (2003/71/EC), in each case within the meaning of and as more particularly described in section 86(7) of FSMA. |
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| (i) | irrevocably constitutes and appoints the Depositary and any officer of the Offeror, and each of them and any other persons designated by the Offeror in writing, the true and lawful agent, attorney and attorney-in-fact and proxy of the undersigned with respect to the Purchased Securities taken up and paid for under the Offer, and with respect to any and all Other Securities declared, paid, issued, distributed, made or transferred on or in respect of the Purchased Securities on or after the date of the Offer, with full power of substitution, in the name of and on behalf of the undersigned (such power of attorney being deemed to be an irrevocable power coupled with an interest) to: |
| (i) | register or record the transfer of Purchased Securities and Other Securities on the registers of Adastra; |
| (ii) | execute and deliver, as and when requested by the Offeror, any instruments of proxy, authorization or consent in form and on terms satisfactory to the Offeror in respect of such Purchased Securities and Other Securities, revoke any such instrument, authorization or consent or designate in such instrument, authorization or consent any Person or Persons as the proxy of such holder in respect of the Purchased Securities for all purposes, including in connection with any meeting (whether annual, special or otherwise or any adjournment thereof) of holders of relevant securities of Adastra; |
| (iii) | execute and negotiate any cheques or other instruments representing any Other Securities payable to the undersigned; and |
| (iv) | exercise any rights of the undersigned with respect to such Purchased Securities and Other Securities, all as set forth in this Letter of Acceptance and Transmittal; |
| and after the date (the “Effective Date”) that the Offeror takes up for the deposited Shares covered by this Letter of Acceptance and Transmittal, revokes any and all other authority, whether as agent, attorney-in-fact, attorney, proxy or otherwise, previously conferred or agreed to be conferred by the undersigned at any time with respect to the Purchased Securities; |
| (j) | agrees, effective on and after the Effective Date, not to vote any of the Purchased Securities or Other Securities at any meeting (whether annual, special or otherwise and any adjournments thereof) of holders of securities of Adastra and, except as may otherwise be agreed, not to exercise any and all of the other rights or privileges attached to the Purchased Securities or Other Securities, and agrees to execute and deliver to First Quantum any and all instruments of proxy, authorizations or consents in respect of the Purchased Securities and to designate in any such instruments of proxy the person or persons specified by First Quantum as the proxy or proxy nominee or nominees of the holder of the Purchased Securities and acknowledges that upon such appointment, all prior proxies given by the holder of such Purchased Securities with respect thereto shall be revoked and no subsequent proxies may be given by the holder with respect thereto; |
| (k) | acknowledges and agrees that if, on or after the date of the Offer, Adastra should declare or pay any dividend or declare, make or pay any other distribution or payment on or declare, allot, reserve or issue any securities, rights or other interests with respect to the Adastra Shares that is payable or distributable to the holders of the Adastra Shares on a record date that precedes the date of transfer of the Adastra Shares into the name of the Offeror or its nominees or transferees on the Adastra Share register maintained by or on behalf of Adastra Shares, then without prejudice to the Offeror’s rights under Section 2 of the Offer to Purchase, “Conditions of the Offer”: (a) in the case of cash dividends, distributions or payments, the amount of the dividends, distributions or payments shall be received and held by the depositing holder of Adastra Shares, and to the extent that such dividends, distributions or payments do not exceed the cash consideration per Adastra Share payable by the Offeror pursuant to the Offer (as determined by the Offeror), the cash consideration per Adastra Share payable by the Offeror pursuant to the Offer will be reduced by the amount of any such dividend, distribution or payment; (b) in the case of non-cash dividends, distributions, payments, rights or other interests, the whole of any such non-cash dividend, distribution, payment, right or other interest shall be received and held by the depositing holder of Adastra Shares for the account of the Offeror and shall be promptly remitted and transferred by the depositing holder of Adastra Shares to the Depositary for the account of the Offeror, accompanied by appropriate documentation of transfer; and (c) in the case of any cash dividends, distributions or payments in an amount that exceeds the cash consideration per Adastra Share payable by the Offeror pursuant to the Offer, the whole of any such cash dividend, distribution or payment shall be received and held by the depositing holder of Adastra Shares for the account of the Offeror and shall be required to be promptly remitted and transferred by the depositing holder of Adastra Shares to the Depositary for the account of the Offeror, accompanied by appropriate documentation of transfer. Pending |
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| such remittance in the case of (b) and (c) above, the Offeror will be entitled to all rights and privileges as owner of any such dividend, distribution, payment, right or other interest and may withhold all of the cash or share consideration otherwise issuable to the non-remitting holders of Adastra Shares pursuant to the Offer or deduct from the cash or Share consideration to be delivered by the Offeror pursuant to the Offer value equal to the amount or value of the dividend, distribution, payment, right or other interest, as determined by the Offeror in its sole discretion; |
| (l) | acknowledges and agrees that if the Separation Time does not occur before the Expiry Time, a deposit of Adastra Shares will also constitute a deposit of the associated SRP Rights. If the Separation Time occurs before the Expiry Time and Rights Certificates are distributed by Adastra to holders of Adastra Shares prior to the time that the undersigned’s Adastra Shares are deposited pursuant to the Offer, in order for the Adastra Shares to be validly deposited, Rights Certificate(s) representing SRP Rights equal in number to the number of Adastra Shares deposited must be delivered to the Depositary. If the Separation Time occurs before the Expiry Time and Rights Certificates are not distributed by the time that the undersigned deposits its Adastra Shares pursuant to the Offer, the undersigned should consult the Depositary regarding the deposit of its SRP Rights before receiving Rights Certificate(s). In any case, a deposit of Adastra Shares constitutes an agreement by the undersigned to deliver Rights Certificate(s) representing SRP Rights equal in number to the number of Adastra Shares deposited pursuant to the Offer to the Depositary on or before the third trading day on the TSX after the date, if any, that Rights Certificate(s) are distributed. The Offeror reserves the right to require, if the Separation Time occurs before the Expiry Time, that the Depositary receive, prior to taking up the Adastra Shares for payment pursuant to the Offer, Rights Certificate(s) from the undersigned representing SRP Rights equal in number to the Adastra Shares deposited by the undersigned; |
| (m) | covenants to execute, upon request of the Offeror, any additional documents, transfers and other assurances as may be necessary or desirable to complete the sale, assignment and transfer of the Purchased Securities or Other Securities to the Offeror; |
| (n) | acknowledges that all authority conferred or agreed to be conferred by the undersigned herein may be exercised during any subsequent legal incapacity of the undersigned and shall survive the death or incapacity, bankruptcy or insolvency of the undersigned and all obligations of the undersigned herein shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned; and |
| (o) | by virtue of the execution of this Letter of Acceptance and Transmittal, shall be deemed to have agreed that all questions as to validity, form, eligibility (including timely receipt) and acceptance of any Shares deposited pursuant to the Offer (including, without limitation, the status of the undersigned as set out under (f) above and in Block A) will be determined by First Quantum in its sole discretion and that such determination shall be final and binding and acknowledges that there shall be no duty or obligation on the Offeror, the Dealer Manager, the Depositary, or any other person to give notice of any defect or irregularity in any deposit and no liability shall be incurred by any of them for failure to give any such notice. |
By virtue of the execution of this Letter of Acceptance and Transmittal, the undersigned agrees with the Offeror and the Depositary that any contract contemplated by the Offer and this Letter of Acceptance and Transmittal as well as all documents relating thereto, including, without limitation, the Notice of Guaranteed Delivery, be drawn up exclusively in the English language.
En signant la présente lettre de transmission, le soussigné est réputé d’avoir convenu avec l’initiateur et le dépositaire que tous les contrats découlant de l’offre et de la présente lettre de transmission et tous les documents y afférents incluant, sans limiter la généralité de ce qui précède, l’avis de livraison garantie, soient rédigés exclusivement en anglais.
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INSTRUCTIONS
| 1. | Use of Letter of Acceptance and Transmittal |
| (a) | This Letter of Acceptance and Transmittal (or a manually signed facsimile thereof) together with any accompanying Rights Certificates and all other documents required by the terms of the Offer to Purchase and this Letter of Acceptance and Transmittal must be received by the Depositary at any of the offices specified on the last page of this Letter of Acceptance and Transmittal no later than 5:00 p.m. (Toronto time), on March 31, 2006, unless the Offer in respect of the Shares is extended. |
| (b) | The method used to deliver this Letter of Acceptance and Transmittal and any accompanying Rights Certificates or any electronic acceptance instruction is at the option and risk of the holder, and delivery will be deemed effective only when such documents are actually received by the Depositary and such instruction is actually received by CREST Depository Limited. The Offeror recommends that the necessary documentation be hand delivered to the Depositary at any of its offices specified below, and a receipt obtained; otherwise the use of registered mail with return receipt requested, properly insured, is recommended. Shareholders whose Shares are registered in the name of a broker, dealer, bank, trust company or other nominee should contact that nominee for assistance in depositing those Shares. |
| 2. | Signatures |
This Letter of Acceptance and Transmittal must be completed and signed by the registered holder of deposited Shares accepting the Offer described above or by such holder’s duly authorized representative (in accordance with Instruction 3). If this Letter of Acceptance and Transmittal is signed by the registered owner(s) of the deposited Shares, such signature(s) on this Letter of Acceptance and Transmittal must correspond with the name(s) of the CREST Member Account without any change whatsoever. If such deposited Shares are owned of record by two or more joint owners, all such owners must sign this Letter of Acceptance and Transmittal.
| 3. | Fiduciaries, Representatives and Authorizations |
Without prejudice and in addition to (g) above, where this Letter of Acceptance and Transmittal is executed by a person acting as an executor, administrator, trustee or guardian, or on behalf of a corporation, partnership or association or is executed by any other person acting in a representative capacity, such person should so indicate when signing and this Letter of Acceptance and Transmittal must be accompanied by satisfactory evidence of the authority to act. The Offeror or the Depositary, at their discretion, may require additional evidence of authority or additional documentation.
| 4. | Partial Deposits |
If less than the total number of Shares held in any CREST Member Account or evidenced by any certificate submitted is to be deposited, fill in the number of Shares to be deposited in the appropriate space on this Letter of Acceptance and Transmittal. The total number of Shares held in any CREST Member Account or evidenced by all certificates delivered will be deemed to have been deposited unless otherwise indicated.
| 5. | Right to Withdraw Deposited Adastra Shares |
Except as otherwise provided in this Section 5, all deposits of the Shares under the Offer are irrevocable. The Shares may be withdrawn by or on behalf of a depositing Shareholder (unless otherwise required or permitted by applicable law):
| (a) | at any time where the Shares have not been taken up by the Offeror; |
| (b) | at any time before the expiration of ten days from the date of a notice of change or variation in respect of the Offer; or |
| (c) | if the Shares have not been paid for by the Offeror within three (3) business days after having been taken up. |
A notice of withdrawal of deposited Shares must: be made by a method that provides the Depositary with a written or printed copy of such notice (which includes a telegraphic or electronic facsimile communication); be made by or on behalf of the depositing Shareholder; be signed by or on behalf of the person who signed the Letter of Acceptance and Transmittal that accompanied the Shares being withdrawn; specify that person’s name, the number of Shares to be withdrawn, the name of the registered holder of, and the certificate number shown on each certificate evidencing the Shares to be withdrawn; and to be effective, actually be received by the Depositary at the place of deposit within the applicable time specified above.
Withdrawals may not be rescinded and any Shares withdrawn will thereafter be deemed not validly deposited for purposes of the Offer. However, withdrawn Shares may be redeposited at any time before the Expiry Time by again following one of the procedures described in Section 4 of the Offer to Purchase.
Any depositing Shareholder wishing to withdraw deposited Shares must additionally contact CREST Depository Limited to arrange for the appropriate electronic withdrawal instructions.
All questions as to the validity (including timely receipt) and form of notices of withdrawal shall be determined by the Offeror in its sole discretion and such determinations shall be final and binding. None of the Offeror, the Depositary, or any other Person will be under any duty to give notice of any defect or irregularity in any notice of withdrawal or shall incur any liability for failure to give such notice.
| 6. | Stock Transfer Taxes |
Except as otherwise provided in this Instruction 6, the Offeror will pay all stock transfer taxes with respect to the transfer and sale of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if certificates for Shares not deposited
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or not accepted for payment are to be registered in the name of, any person other than the registered holder(s), or if deposited certificates for Shares are registered in the name of any person other than the person(s) signing this Letter of Acceptance and Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such other person) payable on account of the transfer to such other person will be deducted from the purchase price of such Shares purchased unless evidence satisfactory to the Offeror, in its sole discretion, of the payment of such taxes, or exemption therefrom, is submitted.
| 7. | Miscellaneous |
| (a) | No alternative, conditional or contingent deposits will be acceptable. All depositing holders of Shares by execution of this Letter of Acceptance and Transmittal (or a facsimile hereof) waive any right to receive any notice of the acceptance of deposited Shares for payment, except as required by applicable law. |
| (b) | The Offer and any agreement resulting from the acceptance of the Offer will be construed in accordance with and governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein. Each party to any agreement resulting from the acceptance of the Offer unconditionally and irrevocably attorns to the exclusive jurisdiction of the courts of the Province of Ontario. |
| (c) | The Offeror will not pay any fees or commissions to any broker or dealer or any other Person for soliciting deposits of Shares pursuant to the Offer except as otherwise set forth in the Offer to Purchase and Circular (other than to the Dealer Manager and the Depositary). |
| (d) | Additional copies of the Offer to Purchase and Circular, the Notice of Variation and Extension dated March 10, 2006, the Notice of Variation and Extension dated March 21, 2006, this Letter of Acceptance and Transmittal and the Notice of Guaranteed Delivery may be obtained from the Depositary at the addresses listed below. |
| 8. | Lost Certificates |
If a Rights Certificate has been lost or destroyed, this Letter of Acceptance and Transmittal should be completed as fully as possible and forwarded, together with a letter describing the loss, to the Depositary. The Depositary will forward such letter to Adastra’s registrar and transfer agent so that the transfer agent may provide replacement instructions. If a Rights Certificate has been lost or destroyed, please ensure that you provide your telephone number so that the Depositary or Adastra’s transfer agent may contact you.
| 9. | 28% Backup Withholding |
In order to avoid backup withholding of U.S. federal income tax on any payments of cash pursuant to the Offer, a stockholder surrendering Shares in the Offer must, unless an exemption applies, provide the Depositary with such stockholder’s correct taxpayer identification number (“TIN”) on Substitute Form W-9 in this Letter of Acceptance and Transmittal and certify under penalties of perjury that such TIN is correct, that such stockholder is not subject to backup withholding and that such stockholder is a U.S. person (including a U.S. resident alien). If a stockholder does not provide such stockholder’s correct TIN or fails to provide the certifications described above, the Internal Revenue Service (the “IRS”) may impose a penalty on such stockholder and payment of cash to such stockholder pursuant to the Offer may be subject to backup withholding of 28%. All stockholders surrendering Shares pursuant to the Offer should complete and sign the main signature form and the Substitute Form W-9 to provide the information and certification necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a manner satisfactory to the Offeror and the Depositary).
Backup withholding is not an additional tax. Rather, the amount of the backup withholding can be credited against the Federal income tax liability of the person subject to the backup withholding, provided that the required information is timely given to the IRS. If backup withholding results in an overpayment of tax, a refund can be obtained by the stockholder upon filing an income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social security number or employer identification number) of the record owner of the Shares. If the Shares are held in more than one name or are not in the name of the actual owner, consult the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional guidance on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the stockholder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Depositary will withhold 28% on all payments made prior to the time a properly certified TIN is provided to the Depositary. However, such amounts will be refunded to such stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations, individual retirement accounts and certain non-U.S. individuals and entities) are not subject to backup withholding. Noncorporate non-U.S. stockholders should complete and sign the main signature form and the appropriate Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for more instructions.
THIS LETTER OF ACCEPTANCE AND TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE (TOGETHER WITH ANY RIGHTS CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS) OR A MANUALLY SIGNED FACSIMILE THEREOF MUST BE RECEIVED BY THE DEPOSITARY NO LATER THAN THE EXPIRY TIME.
IN ADDITION TO FORWARDING THE ABOVE DOCUMENTS TO THE DEPOSITARY, YOU MUST EMAIL OR FAX A COPY OF THIS LETTER OF ACCEPTANCE AND TRANSMITTAL TO CREST DEPOSITORY LIMITED AT: icap@crestco.co.uk OR + 44 (0) 208 418 6907.
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GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER – Social Security numbers have nine digits separated by two hyphens: e.g., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: e.g., 00-0000000. The table below will help determine the number to give the payer.
| (1) | List first and circle the name of the person whose number you furnish. |
| (2) | Circle the minor’s name and furnish the minor’s social security number. |
| (3) | Circle the ward’s, minor’s or incompetent person’s name and furnish such person’s social security number. |
| (4) | Show the name of the owner but you may also enter your business or “doing business as” name. You may use either your social security number or your employer identification number (if you have one). |
| (5) | List first and circle the name of the legal trust, estate, or pension trust. |
Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.
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GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don’t have a taxpayer identification number or you don’t know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the following:
| – | A corporation. |
| – | A financial institution. |
| – | An organization exempt from tax under section 501(a), or an individual retirement plan. |
| – | The United States or any agency or instrumentality thereof. |
| – | A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. |
| – | A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. |
| – | An international organization or any agency, or instrumentality thereof. |
| – | A registered dealer in securities or commodities registered in the United States or a possession of the United States. |
| – | A real estate investment trust. |
| – | A common trust fund operated by a bank under section 584(a). |
| – | An entity registered at all times under the Investment Company Act of 1940. |
| – | A foreign central bank of issue. |
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FROM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE “EXEMPT” ON THE FACE OF THE FORM AND CHECK THE BOX IN PART X, AND RETURN IT TO THE PAYER. ALSO SIGN AND DATE THE FORM.
Certain payments that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under section 6041, 6041A(a), 6045 and 6050A.
PRIVACY ACT NOTICE. – Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 28% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
| (1) | PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. – If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. |
| (2) | CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. – If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. |
| (3) | CRIMINAL PENALTY FOR FALSIFYING INFORMATION. – Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. |
FOR ADDITIONAL
INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
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The instructions accompanying this Letter of Acceptance and Transmittal should be read carefully before this Letter of Acceptance and Transmittal is completed. The Depositary, the Information Agent, the Dealer Manager or your broker or other financial advisor can assist you in completing this Letter of Acceptance and Transmittal (see back page of this document for addresses and telephone numbers).
LETTER OF ACCEPTANCE AND TRANSMITTAL
FOR COMMON SHARES OF
ADASTRA MINERALS INC.
pursuant to the Offer dated February 2, 2006 of
FIRST QUANTUM MINERALS LTD.
as
amended by the Notice of Variation and Extension dated March 10, 2006,
and as further amended by the Notice of Variation and Extension dated March 21, 2006
This Letter of Acceptance and Transmittal (or a manually executed facsimile thereof), properly completed and duly executed, together with all other required documents, must accompany share certificates for common shares (the “Adastra Shares”) of Adastra Minerals Inc. (“Adastra”), which includes common shares that may become outstanding after the date of the Offer but before the time of expiry of the Offer upon conversion, exchange or exercise of options or convertible debentures or other securities of Adastra that are convertible into or exchangeable or exercisable for common shares, and associated rights issued under the Shareholder Rights Plan of Adastra (the “SRP Rights”, an Adastra Share with the associated SRP Right, a “Share”), deposited pursuant to the offer dated February 2, 2006, as amended by the notice of variation and extension dated March 10, 2006 and as further amended by the notice of variation and extension dated March 21, 2006 (the “Offer”) made by First Quantum Minerals Ltd. (“First Quantum” or the “Offeror”) to holders of Adastra Shares.
The terms and conditions of the Offer are incorporated by reference in this Letter of Acceptance and Transmittal. Capitalized terms used but not defined in this Letter of Acceptance and Transmittal which are defined in the Offer to Purchase (the “Offer to Purchase”) and accompanying Circular (together, the “Offer to Purchase and Circular”), dated February 2, 2006, have the meanings ascribed to them in the Offer to Purchase and Circular, as amended by the Notice of Variation and Extension dated March 10, 2006 and as further amended by the Notice of Variation and Extension dated March 21, 2006.
Shareholders who wish to deposit such Shares but whose certificates for such Shares are not immediately available or who cannot deliver all the certificates and Letter of Acceptance and Transmittal to the Depositary at or before the Expiry Time must deposit their Shares according to the guaranteed delivery procedure set forth in Section 5 of the Offer to Purchase, “Procedure for Guaranteed Delivery”. See Instruction 2 herein, “Procedure for Guaranteed Delivery”.
This Letter of Acceptance and Transmittal is to be used if certificates representing Shares are to be forwarded herewith. Delivery of this Letter of Acceptance and Transmittal to an address other than set forth below will not constitute a valid delivery to the Depositary.
TO: FIRST QUANTUM
MINERALS LTD.
AND TO: COMPUTERSHARE INVESTOR SERVICES INC. (the “Depositary”), at its offices set out herein
The undersigned hereby delivers to the Depositary the enclosed certificate(s) for Adastra Shares and SRP Rights, if applicable, and, subject only to the provisions of the Offer regarding withdrawal, irrevocably accepts the Offer for such Shares. The undersigned understands that by depositing Adastra Shares to the Offer, the undersigned will be deemed to have deposited the SRP Rights associated with such Adastra Shares. No additional consideration will be paid for the SRP Rights and no amount of the First Quantum Shares to be issued as consideration by the Offeror will be allocated to the SRP Rights. Unless waived by the Offeror, holders of Adastra Shares are required to deposit one SRP Right for each Adastra Share in order to effect a valid deposit of such Adastra Shares. The following are the details of the enclosed certificate(s):
(If space is insufficient please attach a list to this Letter of Acceptance and Transmittal in the form below.)
| * | Unless otherwise indicated, the total number of Adastra Shares and SRP Rights evidenced by all certificate(s) submitted to the Depositary will be deemed to have been deposited under the Offer. See Instruction 6 below, “Partial Deposits”. |
| ** | The following procedures must be followed in order to effect the valid delivery of certificates representing SRP Rights (“Rights Certificates”): (i) if the Separation Time under the Shareholder Rights Plan has not occurred prior to the Expiry Time and Rights Certificates have not been distributed by Adastra, a deposit of Adastra Shares by the undersigned will also constitute a deposit of the associated SRP Rights; (ii) if Rights Certificates have been distributed by Adastra and received by the undersigned prior to the time the undersigned deposits Adastra Shares pursuant to the Offer, Rights Certificate(s) representing SRP Rights equal in number to the number of Adastra Shares deposited must be delivered with the certificate(s) representing the Adastra Shares; or (iii) if the Separation Time occurs and Rights Certificates are not distributed by the time the undersigned deposits its Adastra Shares pursuant to the Offer, the undersigned may deposit its SRP Rights before receiving Rights Certificate(s) by using the guaranteed delivery procedure described below. See Instruction 2, “Procedure for Guaranteed Delivery”. Note that in any case, a deposit of Adastra Shares constitutes an agreement by the undersigned to deliver Rights Certificate(s) equal in number to the number of deposited Adastra Shares to the Depositary on or before the third trading day on the TSX after the date, if any, that any Rights Certificates are distributed. The Offeror reserves the right to require, if the Separation Time occurs before the Expiry Time, that the Depositary receive from the undersigned, prior to taking up the Adastra Shares for payment pursuant to the Offer, Rights Certificate(s) representing SRP Rights equal in number to the Adastra Shares deposited by the undersigned. |
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IN CONSIDERATION OF THE OFFER AND FOR VALUE RECEIVED, upon the terms and subject to the conditions set forth in the Offer and in this Letter of Acceptance and Transmittal, subject only to the withdrawal rights set out in the Offer, the undersigned:
| (a) | acknowledges receipt of the Offer to Purchase and Circular; |
| (b) | delivers to you the enclosed certificate(s) representing Adastra Shares and Rights Certificate(s), if applicable, and, subject only to the provisions of the Offer regarding withdrawal, irrevocably accepts the Offer for and in respect of the Adastra Shares represented by such certificates, together with associated SRP Rights (the “Purchased Securities”) and, on and subject to the terms and conditions of the Offer, deposits and sells, assigns and transfers to the Offeror all right, title and interest in and to the Purchased Securities, including any and all dividends (other than certain cash dividends), distributions, payments, securities, rights, warrants, assets or other interests including the SRP Rights (collectively, “Other Securities”), which may be declared, paid, accrued, issued, distributed, made or transferred on or in respect of the Purchased Securities on or after the date of the Offer, except as otherwise indicated in Section 7 of the Offer to Purchase, “Changes in Capitalization of Adastra; Dividends and Distributions; Liens”; |
| (c) | represents and warrants that the undersigned has full power and authority to deposit, sell, assign and transfer the Purchased Securities and that when the Purchased Securities are taken up and paid for by the Offeror, the Offeror will acquire good title thereto free and clear of all liens, charges, encumbrances, claims and equities; |
| (d) | represents and warrants that the undersigned owns the Purchased Securities and any Other Securities being deposited within the meaning of applicable securities laws; |
| (e) | represents and warrants that the deposit of the Purchased Securities complies with applicable securities laws and in particular represents and warrants that the undersigned: |
| (i) | as not received or sent copies or originals of the Offer to Purchase and Circular, this Letter of Acceptance and Transmittal or any related documents in, into, or from the United Kingdom and has not otherwise utilised in connection with the Offer, directly or indirectly, the mails, or any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone or e-mail) of interstate or foreign commerce, or any facility of a national securities exchange of, the United Kingdom; |
| (ii) | was outside the United Kingdom when this Letter of Acceptance and Transmittal was delivered or executed; and |
| (iii) | in respect of the Adastra Shares to which this Letter of Acceptance and Transmittal relates, is not an agent or fiduciary acting on a non-discretionary basis for a principal, unless such principal has given any instructions with respect to the Offer from outside the United Kingdom; |
| (f) | represents and warrants that the jurisdiction of residence of the undersigned is as specified below; |
| (g) | directs the Offeror and the Depositary, upon the Offeror taking up the Purchased Securities: (a) to issue or cause to be issued certificate(s) for First Quantum Shares to which the undersigned is entitled for the Purchased Securities under the Offer in the name indicated below and to send such certificates by first class insured mail, postage prepaid, to the address, or to hold the same for pick-up, as indicated below; (b) to mail the cheques representing the amount of cash, if any, to which the undersigned is entitled for the Purchased Securities under the Offer in the name indicated below by first class mail, postage prepaid, or to hold such cheques for pick-up, in accordance with the instructions given below; and (c) to return any certificates for Adastra Shares and any Rights Certificates not purchased under the Offer to the address indicated below in Block A (and if no name, address or delivery instructions are indicated, to the undersigned at the address of the undersigned as shown on the registers maintained by Adastra); |
| (h) | irrevocably constitutes and appoints the Depositary and any officer of the Offeror, and each of them and any other persons designated by the Offeror in writing, the true and lawful agent, attorney and attorney-in-fact and proxy of the undersigned with respect to the Purchased Securities taken up and paid for under the Offer, and with respect to any and all Other Securities declared, paid, issued, distributed, made or transferred on or in respect of the Purchased Securities on or after the date of the Offer, with full power of substitution, in the name of and on behalf of the undersigned (such power of attorney being deemed to be an irrevocable power coupled with an interest) to: |
| (i) | register or record the transfer of Purchased Securities and Other Securities on the registers of Adastra; |
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| (ii) | execute and deliver, as and when requested by the Offeror, any instruments of proxy, authorization or consent in form and on terms satisfactory to the Offeror in respect of such Purchased Securities and Other Securities, revoke any such instrument, authorization or consent or designate in such instrument, authorization or consent any Person or Persons as the proxy of such holder in respect of the Purchased Securities for all purposes, including in connection with any meeting (whether annual, special or otherwise or any adjournment thereof) of holders of relevant securities of Adastra; |
| (iii) | execute and negotiate any cheques or other instruments representing any Other Securities payable to the undersigned; and |
| (iv) | exercise any rights of the undersigned with respect to such Purchased Securities and Other Securities, all as set forth in this Letter of Acceptance and Transmittal; |
| and after the date (the “Effective Date”) that the Offeror takes up for the deposited Shares covered by this Letter of Acceptance and Transmittal, revokes any and all other authority, whether as agent, attorney-in-fact, attorney, proxy or otherwise, previously conferred or agreed to be conferred by the undersigned at any time with respect to the Purchased Securities; |
| (i) | agrees, effective on and after the Effective Date, not to vote any of the Purchased Securities or Other Securities at any meeting (whether annual, special or otherwise and any adjournments thereof) of holders of securities of Adastra and, except as may otherwise be agreed, not to exercise any and all of the other rights or privileges attached to the Purchased Securities or Other Securities, and agrees to execute and deliver to First Quantum any and all instruments of proxy, authorizations or consents in respect of the Purchased Securities and to designate in any such instruments of proxy the person or persons specified by First Quantum as the proxy or proxy nominee or nominees of the holder of the Purchased Securities and acknowledges that upon such appointment, all prior proxies given by the holder of such Purchased Securities with respect thereto shall be revoked and no subsequent proxies may be given by the holder with respect thereto; |
| (j) | acknowledges and agrees that if, on or after the date of the Offer, Adastra should declare or pay any dividend or declare, make or pay any other distribution or payment on or declare, allot, reserve or issue any securities, rights or other interests with respect to the Adastra Shares that is payable or distributable to the holders of the Adastra Shares on a record date that precedes the date of transfer of the Adastra Shares into the name of the Offeror or its nominees or transferees on the Adastra Share register maintained by or on behalf of Adastra Shares, then without prejudice to the Offeror’s rights under Section 2 of the Offer to Purchase, “Conditions of the Offer”: (a) in the case of cash dividends, distributions or payments, the amount of the dividends, distributions or payments shall be received and held by the depositing holder of Adastra Shares, and to the extent that such dividends, distributions or payments do not exceed the cash consideration per Adastra Share payable by the Offeror pursuant to the Offer (as determined by the Offeror), the cash consideration per Adastra Share payable by the Offeror pursuant to the Offer will be reduced by the amount of any such dividend, distribution or payment; (b) in the case of non-cash dividends, distributions, payments, rights or other interests, the whole of any such non-cash dividend, distribution, payment, right or other interest shall be received and held by the depositing holder of Adastra Shares for the account of the Offeror and shall be promptly remitted and transferred by the depositing holder of Adastra Shares to the Depositary for the account of the Offeror, accompanied by appropriate documentation of transfer; and (c) in the case of any cash dividends, distributions or payments in an amount that exceeds the cash consideration per Adastra Share payable by the Offeror pursuant to the Offer, the whole of any such cash dividend, distribution or payment shall be received and held by the depositing holder of Adastra Shares for the account of the Offeror and shall be required to be promptly remitted and transferred by the depositing holder of Adastra Shares to the Depositary for the account of the Offeror, accompanied by appropriate documentation of transfer. Pending such remittance in the case of (b) and (c) above, the Offeror will be entitled to all rights and privileges as owner of any such dividend, distribution, payment, right or other interest and may withhold all of the cash or share consideration otherwise issuable to the non-remitting holders of Adastra Shares pursuant to the Offer or deduct from the cash or share consideration to be delivered by the Offeror pursuant to the Offer value equal to the amount or value of the dividend, distribution, payment, right or other interest, as determined by the Offeror in its sole discretion; |
| (k) | acknowledges and agrees that if the Separation Time does not occur before the Expiry Time, a deposit of Adastra Shares will also constitute a deposit of the associated SRP Rights. If the Separation Time occurs before the Expiry Time and Rights Certificates are distributed by Adastra to holders of Adastra Shares prior |
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| to the time that the undersigned’s Adastra Shares are deposited pursuant to the Offer, in order for the Adastra Shares to be validly deposited, Rights Certificate(s) representing SRP Rights equal in number to the number of Adastra Shares deposited must be delivered to the Depositary. If the Separation Time occurs before the Expiry Time and Rights Certificates are not distributed by the time that the undersigned deposits its Adastra Shares pursuant to the Offer, the undersigned may deposit its SRP Rights before receiving Rights Certificate(s) by using the guaranteed delivery procedure set forth in the Offer and the Notice of Guaranteed Delivery. In any case, a deposit of Adastra Shares constitutes an agreement by the undersigned to deliver Rights Certificate(s) representing SRP Rights equal in number to the number of Adastra Shares deposited pursuant to the Offer to the Depositary on or before the third trading day on the TSX after the date, if any, that Rights Certificate(s) are distributed. The Offeror reserves the right to require, if the Separation Time occurs before the Expiry Time, that the Depositary receive, prior to taking up the Adastra Shares for payment pursuant to the Offer, Rights Certificate(s) from the undersigned representing SRP Rights equal in number to the Adastra Shares deposited by the undersigned; |
| (l) | covenants to execute, upon request of the Offeror, any additional documents, transfers and other assurances as may be necessary or desirable to complete the sale, assignment and transfer of the Purchased Securities or Other Securities to the Offeror; |
| (m) | acknowledges that all authority conferred or agreed to be conferred by the undersigned herein may be exercised during any subsequent legal incapacity of the undersigned and shall survive the death or incapacity, bankruptcy or insolvency of the undersigned and all obligations of the undersigned herein shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned; and |
| (n) | by virtue of the execution of this Letter of Acceptance and Transmittal, shall be deemed to have agreed that all questions as to validity, form, eligibility (including timely receipt) and acceptance of any Shares deposited pursuant to the Offer will be determined by First Quantum in its sole discretion and that such determination shall be final and binding and acknowledges that there shall be no duty or obligation on the Offeror, the Dealer Manager, the Depositary, or any other person to give notice of any defect or irregularity in any deposit and no liability shall be incurred by any of them for failure to give any such notice. |
By virtue of the execution of this Letter of Acceptance and Transmittal, the undersigned agrees with the Offeror and the Depositary that any contract contemplated by the Offer and this Letter of Acceptance and Transmittal as well as all documents relating thereto, including, without limitation, the Notice of Guaranteed Delivery, be drawn up exclusively in the English language.
En signant la présente lettre de transmission, le soussigné est réputé d’avoir convenu avec l’initiateur et le dépositaire que tous les contrats découlant de l’offre et de la présente lettre de transmission et tous les documents y afférents incluant, sans limiter la généralité de ce qui précède, l’avis de livraison garantie, soient rédigés exclusivement en anglais.
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INSTRUCTIONS
| 1. | Use of Letter of Acceptance and Transmittal |
| (a) | This Letter of Acceptance and Transmittal (or a manually signed facsimile thereof) together with accompanying certificates representing the deposited Shares and all other documents required by the terms of the Offer to Purchase and this Letter of Acceptance and Transmittal must be received by the Depositary at any of the offices specified on the last page of this Letter of Acceptance and Transmittal no later than 5:00 p.m. (Toronto time), on March 31, 2006, unless the Offer in respect of the Shares is extended or unless the procedure for guaranteed delivery set out in Instruction 2 below is used. |
| (b) | The method used to deliver this Letter of Acceptance and Transmittal and any accompanying certificates representing Shares is at the option and risk of the holder, and delivery will be deemed effective only when such documents are actually received by the Depositary. The Offeror recommends that the necessary documentation be hand delivered to the Depositary at any of its offices specified below, and a receipt obtained; otherwise the use of registered mail with return receipt requested, properly insured, is recommended. Shareholders whose Shares are registered in the name of a broker, dealer, bank, trust company or other nominee should contact that nominee for assistance in depositing those Shares. |
| 2. | Procedure for Guaranteed Delivery |
If a Shareholder (other than a Shareholder who holds Adastra Shares in the form of CREST depositary interests) wishes to accept the Offer and either (i) the certificates representing such Shareholder’s Shares are not immediately available or (ii) such Shareholder cannot deliver the certificates and Letter of Acceptance and Transmittal to the Depositary by the Expiry Time, those Shares may nevertheless be deposited under the Offer, provided that all of the following conditions are met:
| (a) | such deposit is made only at the applicable address set out in the Notice of Guaranteed Delivery by or through an Eligible Institution; |
| (b) | a properly completed and duly executed Notice of Guaranteed Delivery (or a manually signed facsimile) is received by the Depositary at the applicable address set out in the Notice of Guaranteed Delivery at or before the Expiry Time; |
| (c) | the certificate or certificates representing the deposited Adastra Shares, and, if the Separation Time has occurred before the Expiry Time and Rights Certificates have been distributed to Shareholders before the Expiry Time, the Rights Certificate(s) representing the deposited SRP Rights, in proper form for transfer, together with a properly completed and duly signed Letter of Acceptance and Transmittal (or a manually signed facsimile copy) and other documents required by such Letter of Acceptance and Transmittal, are received by the Depositary at the applicable address set out in the Notice of Guaranteed Delivery by 5:00 p.m. (Toronto time) on the third trading day on the TSX after the Expiry Date; and |
| (d) | in the case of SRP Rights where the Separation Time has occurred before the Expiry Time but Rights Certificates have not been distributed to Shareholders before the Expiry Time, the Rights Certificate(s) representing the deposited SRP Rights in proper form for transfer, together with a properly completed and duly signed Letter of Acceptance and Transmittal (or a manually signed facsimile copy) and other documents required by such Letter of Acceptance and Transmittal, are received by the Depositary at the applicable address set out in the Notice of Guaranteed Delivery by 5:00 p.m. (Toronto time) on the third trading day on the TSX after Rights Certificates are distributed to Shareholders. |
“ Eligible Institution ” means a Canadian Schedule 1 chartered bank, a major trust company in Canada, a member of a Securities Transfer Agents Medallion Program (STAMP), a member of the Stock Exchange Medallion Program (SEMP) or a member of the New York Stock Exchange, Inc. Medallion Signature Program (MSP). Members of these programs are usually members of a recognized stock exchange in Canada or the United States, members of the Investment Dealers Association of Canada, members of the National Association of Securities Dealers or banks and trust companies in the United States.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile or mail to the Depositary at the applicable address set out in the Notice of Guaranteed Delivery and must include a guarantee by an Eligible Institution in the form set out in the Notice of Guaranteed Delivery. Delivery of the Notice of Guaranteed Delivery and this Letter of Acceptance and Transmittal and accompanying certificate(s) to any office other than such office of the Depositary does not constitute delivery for purposes of satisfying a guaranteed delivery.
| 3. | Signatures |
This Letter of Acceptance and Transmittal must be completed and signed by the registered holder of deposited Shares accepting the Offer described above or by such holder’s duly authorized representative (in accordance with Instruction 5).
| (a) | If this Letter of Acceptance and Transmittal is signed by the registered owner(s) of the accompanying certificate(s), such signature(s) on this Letter of Acceptance and Transmittal must correspond with the name(s) as registered or as written on the face of such certificate(s) without any change whatsoever, and the certificate(s) need not be endorsed. If such transmitted certificate(s) are owned of record by two or more joint owners, all such owners must sign this Letter of Acceptance and Transmittal. |
| (b) | If this Letter of Acceptance and Transmittal is signed by a person other than the registered owner(s) of the accompanying certificate(s), or if a cheque is to be issued to a person other than the registered owner(s): |
| (i) | such deposited certificate(s) must be endorsed or accompanied by an appropriate transfer power of attorney duly and properly completed by the registered owner(s); and |
| (ii) | the signature(s) on such endorsement or power of attorney must correspond exactly to the name(s) of the registered owner(s) as registered or as appearing on the certificate(s) and must be guaranteed as noted in Instruction 4 below. |
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| 4. | Guarantee of Signatures |
If this Letter of Acceptance and Transmittal is signed by a person other than the registered owner(s) of the deposited Shares, or if deposited Shares not purchased are to be returned to a person other than such registered owner(s) or sent to an address other than the address of the registered owner(s) as shown on the registers of Adastra or if payment is to be issued in the name of a person other than the registered owner(s) of the deposited Shares, such signature must be guaranteed by an Eligible Institution (except that no guarantee is required if the signature is that of an Eligible Institution).
| 5. | Fiduciaries, Representatives and Authorizations |
Where this Letter of Acceptance and Transmittal is executed by a person acting as an executor, administrator, trustee or guardian, or on behalf of a corporation, partnership or association or is executed by any other person acting in a representative capacity, such person should so indicate when signing and this Letter of Acceptance and Transmittal must be accompanied by satisfactory evidence of the authority to act. The Offeror or the Depositary, at their discretion, may require additional evidence of authority or additional documentation.
| 6. | Partial Deposits |
If less than the total number of Shares evidenced by any certificate submitted is to be deposited, fill in the number of Shares to be deposited in the appropriate space on this Letter of Acceptance and Transmittal. In such case, the Depositary will use commercially reasonable efforts to cause new certificate(s) for the number of Shares not deposited to be sent to the registered holder as soon as practicable after the Expiry Time. The total number of Shares evidenced by all certificates delivered will be deemed to have been deposited unless otherwise indicated.
| 7. | Solicitation |
Identify the dealer or broker, if any, who solicited acceptance of the Offer by completing the appropriate box on this Letter of Acceptance and Transmittal and present a list of beneficial holders, if applicable.
| 8. | Right to Withdraw Deposited Adastra Shares |
Except as otherwise provided in this Section 8, all deposits of the Shares under the Offer are irrevocable. The Shares may be withdrawn by or on behalf of a depositing Shareholder (unless otherwise required or permitted by applicable law):
| (a) | at any time where the Shares have not been taken up by the Offeror; |
| (b) | at any time before the expiration of ten days from the date of a notice of change or variation in respect of the Offer; or |
| (c) | if the Shares have not been paid for by the Offeror within three (3) business days after having been taken up. |
A notice of withdrawal of deposited Shares must: be made by a method that provides the Depositary with a written or printed copy of such notice (which includes a telegraphic or electronic facsimile communication); be made by or on behalf of the depositing Shareholder; be signed by or on behalf of the person who signed the Letter of Acceptance and Transmittal (or Notice of Guaranteed Delivery) that accompanied the Shares being withdrawn; specify that person’s name, the number of Shares to be withdrawn, the name of the registered holder of, and the certificate number shown on each certificate evidencing the Shares to be withdrawn; and to be effective, actually be received by the Depositary at the place of deposit within the applicable time specified above.
In addition, any signature in the withdrawal notice must be guaranteed in the same manner as in the Letter of Acceptance and Transmittal or Notice of Guaranteed Delivery, except where the Shares were deposited for the account of an Eligible Institution. Withdrawals may not be rescinded and any Shares withdrawn will thereafter be deemed not validly deposited for purposes of the Offer. However, withdrawn Shares may be redeposited at any time before the Expiry Time by again following one of the procedures described in Section 4 of the Offer to Purchase.
In addition to the foregoing rights of withdrawal, Shareholders in certain provinces of Canada are entitled to statutory rights of rescission or damages or both in certain circumstances. See Section 22 of the Circular, “Offerees’ Statutory Rights”.
All questions as to the validity (including timely receipt) and form of notices of withdrawal shall be determined by the Offeror in its sole discretion and such determinations shall be final and binding. None of the Offeror, the Depositary, or any other Person will be under any duty to give notice of any defect or irregularity in any notice of withdrawal or shall incur any liability for failure to give such notice.
| 9. | Stock Transfer Taxes |
Except as otherwise provided in this Instruction 9, the Offeror will pay all stock transfer taxes with respect to the transfer and sale of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if certificates for Shares not deposited or not accepted for payment are to be registered in the name of, any person other than the registered holder(s), or if deposited certificates for Shares are registered in the name of any person other than the person(s) signing this Letter of Acceptance and Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such other person) payable on account of the transfer to such other person will be deducted from the purchase price of such Shares purchased unless evidence satisfactory to the Offeror, in its sole discretion, of the payment of such taxes, or exemption therefrom, is submitted.
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| 10. | 28% Backup Withholding |
In order to avoid backup withholding of U.S. federal income tax on any payments of cash pursuant to the Offer, a stockholder surrendering Shares in the Offer must, unless an exemption applies, provide the Depositary with such stockholder’s correct taxpayer identification number (“TIN”) on Substitute Form W-9 in this Letter of Acceptance and Transmittal and certify under penalties of perjury that such TIN is correct, that such stockholder is not subject to backup withholding and that such stockholder is a U.S. person (including a U.S. resident alien). If a stockholder does not provide such stockholder’s correct TIN or fails to provide the certifications described above, the Internal Revenue Service (the “IRS”) may impose a penalty on such stockholder and payment of cash to such stockholder pursuant to the Offer may be subject to backup withholding of 28%. All stockholders surrendering Shares pursuant to the Offer should complete and sign the main signature form and the Substitute Form W-9 to provide the information and certification necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a manner satisfactory to the Offeror and the Depositary).
Backup withholding is not an additional tax. Rather, the amount of the backup withholding can be credited against the Federal income tax liability of the person subject to the backup withholding, provided that the required information is timely given to the IRS. If backup withholding results in an overpayment of tax, a refund can be obtained by the stockholder upon filing an income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social security number or employer identification number) of the record owner of the Shares. If the Shares are held in more than one name or are not in the name of the actual owner, consult the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional guidance on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the stockholder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Depositary will withhold 28% on all payments made prior to the time a properly certified TIN is provided to the Depositary. However, such amounts will be refunded to such stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations, individual retirement accounts and certain non-U.S. individuals and entities) are not subject to backup withholding. Noncorporate non-U.S. stockholders should complete and sign the main signature form and the appropriate Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for more instructions.
| 11. | Miscellaneous |
| (a) | If the space on this Letter of Acceptance and Transmittal is insufficient to list all certificates for deposited Shares, additional certificate numbers and number of deposited Shares may be included on a separate signed list affixed to this Letter of Acceptance and Transmittal. |
| (b) | If deposited Shares are registered in different forms (e.g., “John Doe” and “J. Doe”), a separate Letter of Acceptance and Transmittal should be signed for each different registration. |
| (c) | No alternative, conditional or contingent deposits will be acceptable. All depositing holders of Shares by execution of this Letter of Acceptance and Transmittal (or a facsimile hereof) waive any right to receive any notice of the acceptance of deposited Shares for payment, except as required by applicable law. |
| (d) | The Offer and any agreement resulting from the acceptance of the Offer will be construed in accordance with and governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein. Each party to any agreement resulting from the acceptance of the Offer unconditionally and irrevocably attorns to the exclusive jurisdiction of the courts of the Province of Ontario. |
| (e) | The Offeror will not pay any fees or commissions to any broker or dealer or any other Person for soliciting deposits of Shares pursuant to the Offer except as otherwise set forth in the Offer to Purchase and Circular (other than to the Dealer Manager and the Depositary). |
| (f) | Additional copies of the Offer to Purchase and Circular, the Notice of Variation and Extension dated March 10, 2006, the Notice of Variation and Extension dated March 21, 2006, this Letter of Acceptance and Transmittal and the Notice of Guaranteed Delivery may be obtained from the Depositary at the addresses listed below. |
| 12. | Lost Certificates |
If a Share certificate has been lost or destroyed, this Letter of Acceptance and Transmittal should be completed as fully as possible and forwarded, together with a letter describing the loss, to the Depositary. The Depositary will forward such letter to Adastra’s registrar and transfer agent so that the transfer agent may provide replacement instructions. If a Share certificate has been lost or destroyed, please ensure that you provide your telephone number so that the Depositary or Adastra’s transfer agent may contact you.
THIS LETTER OF ACCEPTANCE AND TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE (TOGETHER WITH CERTIFICATES FOR SHARES AND ALL OTHER REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY OR A MANUALLY SIGNED FACSIMILE THEREOF MUST BE RECEIVED BY THE DEPOSITARY NO LATER THAN THE EXPIRY TIME.
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GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER – Social Security numbers have nine digits separated by two hyphens: e.g., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: e.g., 00-0000000. The table below will help determine the number to give the payer.
| (1) | List first and circle the name of the person whose number you furnish. |
| (2) | Circle the minor’s name and furnish the minor’s social security number. |
| (3) | Circle the ward’s, minor’s or incompetent person’s name and furnish such person’s social security number. |
| (4) | Show the name of the owner but you may also enter your business or “doing business as” name. You may use either your social security number or your employer identification number (if you have one). |
| (5) | List first and circle the name of the legal trust, estate, or pension trust. |
Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.
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GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don’t have a taxpayer identification number or you don’t know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the following:
| – | A corporation. |
| – | A financial institution. |
| – | An organization exempt from tax under section 501(a), or an individual retirement plan. |
| – | The United States or any agency or instrumentality thereof. |
| – | A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. |
| – | A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. |
| – | An international organization or any agency, or instrumentality thereof. |
| – | A registered dealer in securities or commodities registered in the United States or a possession of the United States. |
| – | A real estate investment trust. |
| – | A common trust fund operated by a bank under section 584(a). |
| – | An entity registered at all times under the Investment Company Act of 1940. |
| – | A foreign central bank of issue. |
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FROM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE “EXEMPT” ON THE FACE OF THE FORM AND CHECK THE BOX IN PART X, AND RETURN IT TO THE PAYER. ALSO SIGN AND DATE THE FORM.
Certain payments that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under section 6041, 6041A(a), 6045 and 6050A.
PRIVACY ACT NOTICE. – Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 28% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
| (1) | PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. – If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. |
| (2) | CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. – If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. |
| (3) | CRIMINAL PENALTY FOR FALSIFYING INFORMATION. – Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. |
FOR ADDITIONAL
INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
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This is not a letter of Acceptance and Transmittal. This Notice of Guaranteed Delivery is for use in accepting the offer by First Quantum Minerals Ltd. for all of the outstanding common shares (including the associated rights under the Shareholder Rights Plan) of Adastra Minerals Inc.
NOTICE OF GUARANTEED DELIVERY
for Common Shares
of
Adastra Minerals Inc.
Pursuant to the Offer dated February 2, 2006
of
FIRST QUANTUM MINERALS LTD.
as
amended by the Notice of Variation and Extension dated March 10, 2006,
and as further amended by the Notice of Variation and Extension dated March 21, 2006
This Notice of Guaranteed Delivery must be used to accept the offer dated February 2, 2006, as amended by the Notice of Variation and Extension dated March 10, 2006, and as further amended by the Notice of Variation and Extension dated March 21, 2006 (the “Offer”), made by First Quantum Minerals Ltd. (the “Offeror”) to purchase all of the outstanding common shares (the “Adastra Shares”) of Adastra Minerals Inc. (“Adastra”), which includes common shares that may become outstanding after the date of the Offer but before the time of expiry of the Offer upon conversion, exchange or exercise of options or convertible debentures or other securities of Ada