First Quantum Minerals Ltd.
LSE : FQM
TSX : FM

First Quantum Minerals Ltd.
Scandinavian Minerals Limited
TSX : SGL
FRANKFURT : W3M

Scandinavian Minerals Limited

April 21, 2008 09:01 ET

First Quantum to Acquire Scandinavian Minerals

Cash and Share Transaction Valued at Approximately Cdn.$281 Million

LONDON, ENGLAND and TORONTO, ONTARIO--(Marketwire - April 21, 2008) - First Quantum Minerals Ltd. ("First Quantum") (TSX:FM)(LSE:FQM) and Scandinavian Minerals Limited ("Scandinavian Minerals") (TSX:SGL)(FRANKFURT:W3M) today announced that they have entered into a definitive agreement pursuant to which a wholly-owned subsidiary of First Quantum will acquire, by way of a court-approved plan of arrangement, all of the outstanding common shares of Scandinavian Minerals on the basis of Cdn.$9.00 in cash plus 0.01 common shares of First Quantum for each common share of Scandinavian Minerals.

The implied value of the purchase price is Cdn.$9.89 per Scandinavian Minerals share (based on the closing price of First Quantum shares on the Toronto Stock Exchange of Cdn.$89.36 on April 18, 2008), representing a 41.3% premium to the closing price of Scandinavian Minerals shares on the Toronto Stock Exchange of Cdn.$7.00 on April 18, 2008 and a 53.8% premium to the volume-weighted average trading price of the Scandinavian Minerals shares on the Toronto Stock Exchange of Cdn.$6.43 for the 20 trading days ended April 18, 2008.

The Board of Directors of Scandinavian Minerals has unanimously approved the transaction and resolved to recommend to the holders of Scandinavian Minerals shares that they vote in favour of the transaction. In addition, the directors and senior officers of Scandinavian Minerals have entered into voting agreements with First Quantum, pursuant to which they have irrevocably agreed to vote their shares (including any shares issuable upon the exercise of options), representing approximately 13.6% of the issued and outstanding common shares of Scandinavian Minerals, in favour of the transaction. In determining to recommend the transaction to the shareholders of Scandinavian Minerals, the Board of Directors considered a number of factors and relied, in part, on an opinion from Paradigm Capital Inc., financial advisors to Scandinavian Minerals, to the effect that, subject to the assumptions and conditions set forth in such opinion, the consideration to be received by the holders of Scandinavian Minerals common shares pursuant to the transaction is fair, from a financial point of view, to such holders.

Commenting on the transaction, Mr. Peter Walker, President and Chief Executive Officer of Scandinavian Minerals, said, "We believe that the transaction creates a compelling opportunity for the shareholders of Scandinavian Minerals to realize immediate and substantial value for their shares whilst also gaining exposure to profitable and fast-growing metal production through the receipt of First Quantum shares. First Quantum has the experience and track record to take the Kevitsa project through development to production smoothly and expeditiously."

Mr. Philip Pascall, Chairman and Chief Executive Officer of First Quantum, said, "The acquisition of the Kevitsa nickel-copper-PGE deposit fits First Quantum's strategy of developing or acquiring projects where, with our experience, we can add material value to the process of bringing them to commercial production and their subsequent efficient operation. Accordingly we look forward to lending our expertise to the development of one of the world's major undeveloped sulphide nickel deposits and one of the largest mineral discoveries in Finland's history. This acquisition is also consistent with our goal of diversifying our assets geographically and across commodities."

About the Transaction

The transaction will be carried out by way of a statutory plan of arrangement pursuant to the Canada Business Corporations Act and must be approved by the Ontario Superior Court of Justice and the affirmative vote of Scandinavian Minerals' shareholders at a special meeting of shareholders to be called and held to consider the transaction.

The proposed transaction is expected to close in the second quarter of 2008, shortly after receipt of shareholder and court approvals.

The completion of the transaction is subject to customary closing conditions, including the receipt of any required regulatory approvals.

The arrangement agreement contains customary non-solicitation provisions, but permits Scandinavian Minerals, in certain circumstances, to terminate the arrangement and accept an unsolicited superior proposal, subject to fulfilling certain conditions. Scandinavian Minerals has agreed to pay First Quantum a break fee of US$8 million in such circumstances and certain other limited circumstances if the transaction is not completed.

First Quantum will finance the acquisition through a combination of cash-on-hand and access to existing credit facilities. The transaction is not contingent on any financing condition.

Details regarding these and other terms of the transaction are set out in the arrangement agreement, which will be filed by First Quantum and Scandinavian Minerals on the Canadian SEDAR website at www.sedar.com.

Further information regarding the transaction will be contained in a proxy circular that Scandinavian Minerals will prepare and mail to holders of Scandinavian Minerals common shares in connection with the special meeting of shareholders to be held to approve the transaction. It is expected that these materials will be mailed in May 2008 for a meeting to be held in June 2008. Once mailed, the proxy circular will also be available on SEDAR at www.sedar.com. All shareholders are urged to read the proxy circular once it becomes available as it will contain additional important information concerning the transaction.

Paradigm Capital Inc. has acted as financial advisor to Scandinavian Minerals in connection with the transaction. RBC Capital Markets has acted as financial advisor to First Quantum in connection with the transaction.

About Scandinavian Minerals

Scandinavian Minerals is a Canadian public company listed on the Toronto Stock Exchange under the symbol "SGL" and on the Frankfurt Freiverkehr market under the symbol W3M. The Company's current focus is the development of its 100%-owned Kevitsa nickel-copper-PGE project in northern Finland.

Kevitsa, situated in northern Finland, is one of the world's major undeveloped sulphide nickel deposits and one of the largest mineral discoveries in Finland's history. The Kevitsa deposit is easily accessible by road. Water and hydroelectric power are available nearby.

In April 2007 Scandinavian Minerals commenced the Feasibility Study for the Kevitsa project. The Study is being coordinated by St Barbara LLP of London, UK. The metallurgical process has been developed by the Mineral Processing Laboratory of the Geological Survey of Finland. Plant engineering and design is being performed by Outotec Oyj. The Feasibility Study is based on an open pit operation mining approximately 5 million tons per year of ore, with production of nickel and copper concentrates for sale to local or overseas smelters and is expected to be completed in the second quarter of calendar 2008.

About First Quantum

First Quantum is a mining and metals company whose principal activities include mineral exploration, development and mining. First Quantum produces LME grade "A" copper cathode, copper in concentrate, gold and sulphuric acid. First Quantum's operations in Zambia include the 100% owned Bwana Mkubwa SX/EW facility and sulphuric acid plants and the 80% owned Kansanshi open pit copper-gold deposit. In the Democratic Republic of Congo, First Quantum operates both the 100% owned Lonshi open pit copper mine, which provides oxide copper ore for processing at Bwana Mkubwa, and the 95% owned Frontier copper mine. In addition, First Quantum holds a 65% interest in the Kolwezi copper-cobalt tailings project currently under development. In Mauritania, First Quantum operates the 80% Guelb Moghrein copper-gold mine.

About Finland

Finland is a republic which became a member of the European Union in 1995. Its population is 5.3 million, of which approximately 560,000 live in the capital Helsinki and two-thirds live in urban areas. Finland is situated in northern Europe between latitudes 60 degrees and 70 degrees North with approximately a quarter of its total area north of the Arctic Circle. However, due to the Gulf Stream, its climate is relatively mild and temperate. Finland has an advanced industrial economy, with the metal, engineering and electronics industries accounting for approximately 60% of export revenues. First Quantum believes that Finland is a mining-friendly country, with:

- a long history of minerals exploration and metals production;

- a well-developed mining act; and

- excellent mining industry infrastructure, with major processing and refining facilities for copper and nickel plus zinc, cobalt and stainless steel.

In addition, Finland has in recent years ranked consistently in the top six of the world's national economies for competitiveness and productivity, according to the Global Competitiveness Index published by the Geneva-based World Economic Forum. Since 1995, Transparency International organization, an international organization combating corruption, has regularly ranked Finland at or near the top of its list of least corrupt countries in the world.

On Behalf of the Board of Directors of First Quantum Minerals Ltd.

G. Clive Newall, President

Certain information contained in this news release constitutes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information under applicable Canadian securities legislation. Such forward-looking statements or information, including but not limited to those with respect to the proposed transaction, the development of the Kevitsa project, the prices of nickel, gold, copper, cobalt and sulphuric acid, estimated future production, estimated costs of future production, the Company's hedging policy and permitting time lines, involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Such factors include, among others, the ability of each of First Quantum and Scandinavian Minerals to satisfy all of the closing conditions to complete the transaction, the possibility that the shareholders of Scandinavian Minerals will not approve the transaction, the actual prices of copper, nickel, gold, cobalt and sulphuric acid, the factual results of current exploration, development and mining activities, changes in project parameters as plans continue to be evaluated, as well as those factors disclosed in the Company's documents filed from time to time with the Alberta, British Columbia, and Ontario Securities Commissions, the Autorite des marches financiers in Quebec, the United States Securities and Exchange Commission and the London Stock Exchange.

12g3-2b-82-4461

Listed in Standard and Poor's

Contact Information

  • First Quantum Minerals Ltd.
    Clive Newall
    President
    +44 140 327 3484
    +44 140 327 3494 (FAX)
    Email: clive.newall@fqml.com
    Website: www.first-quantum.com
    or
    Hogarth Partnership Ltd.
    Harriet Pask
    +44 (0) 20 7357 9477
    or
    Hogarth Partnership Ltd.
    Sarah MacLeod
    +44 (0) 20 7357 9477
    or
    Scandinavian Minerals Limited
    John Kearney
    Chairman
    (416) 203-6128
    or
    Scandinavian Minerals Limited
    Peter Walker
    President & CEO
    (+358) 400 499 390
    Website: www.scandinavianminerals.com