3 June 2009

Company Announcements Office
Australian Securities Exchange
4th Floor, 20 Bridge Street
SYDNEY  NSW  2000

Via:  Electronic Announcement

GUJARAT NRE MINERALS LIMITED ANNOUNCES TAKEOVER OFFER FOR REY RESOURCES LIMITED

Gujarat NRE Minerals Limited (“Gujarat” – ASX:  GNM) today announced its intention to make an off market takeover offer to acquire all the issued shares in Rey Resources Limited (“Rey” – ASX:  REY).  The all scrip offer is based on one (1) Gujarat share for every five (5) Rey shares, (the “Offer”).  Currently, the Offer is not for any Rey options.

Highlights

  • One (1) Gujarat share for every five (5) Rey shares, which values Rey at A$0.09 per share based on Gujarat’s 5 day volume weighted average price (“VWAP”) (“Implied Offer Price”) on 2 June 2009

  • The Implied Offer Price represents a substantial premium of 40.6% on Rey’s last trading price and 44.2% on Rey’s 5 day VWAP

  • Rey shareholders accepting GNM scrip will benefit from the combined group’s exposure to a pure play coal company with producing coking coal mines while maintaining exposure to Rey’s thermal coal exploration projects

Proposed Offer
Based on Gujarat’s 5 day VWAP, the Offer represents:

  • A 40.6% premium to Rey’s closing share price on 2 June 2009

  • A 44.2% premium to Rey’s 5 day VWAP of $0.0624

  • A 64.8% premium to Rey’s 30 day VWAP of $0.0546

  • A 40.2% premium to Rey’s 3 month VWAP of $0.0642

  • A 42.6% premium to Rey’s 6 month VWAP of $0.0631

Gujarat believes its Offer is compelling for Rey shareholders for the following reasons:

  • The Offer represents a substantial premium to Rey’s trading price and VWAP

  • Rey shareholders will obtain exposure to the producing coking coal assets of Gujarat

  • Gujarat has a market capitalisation of $450 million and has two producing mines in the Southern Coalfields of New South Wales, producing premium hard coking coal and has significant expansion opportunities

  • Gujarat is a substantial company with a strong cornerstone shareholder which has a long term interest in the coal market and has the ability to finance the development of Rey’s Canning Basin thermal coal exploration projects

  • Gujarat has the experience to operate in the key markets likely to support Rey’s production, namely India and other Asian countries

  • Rey shareholders who accept the Offer will reduce their exposure to the inherent risks and uncertainties facing Rey, including financial markets, volatile commodity prices, development risk, financing risk, infrastructure issues and an unproven market for the potential Rey product

  • Gujarat has a highly experienced Board and Management team

  • Gujarat provides increased liquidity and institutional support with greater access to capital markets

  • Gujarat’s parent company, Gujarat NRE Coke Limited, has a relevant interest in approximately 16.7% of Rey

Mr Arun Jagatramka, Chairman of Gujarat NRE Minerals said “Gujarat’s Offer provides Rey shareholders  the opportunity to gain exposure to a significantly larger and more diversified coal company with producing mines and the ability to advance the exploration projects of Rey.”
“Gujarat’s Board is confident that putting the Gujarat assets together with the Rey assets and potentially realising the upside offered by the Combined Group, with its exposure to the Indian coal markets, will be a dramatic value driver for the shareholders of Rey and Gujarat.”

Gujarat’s Offer will be subject to a number of conditions which are set out in Annexure A.

Offer Process
Gujarat is in the process of preparing a formal Bidder’s Statement which will be lodged with the Australian Securities Exchange and the Australian Securities and Investments Commission in due course.

Gujarat Advisers
Ernst & Young Transaction Advisory Services Limited is acting as Lead Corporate Adviser and Steinepreis Paganin as legal adviser.

Enquiries
Mr Sanjay Sharma
Gujarat NRE Minerals Limited
(02) 4223 6836

Background to Gujarat NRE Minerals Limited
Gujarat NRE Minerals Limited ("Gujarat"), which listed on the ASX in July 2007, has a current market capitalisation of approximately $450 million.  It is a hard coking coal producer with two operational collieries in the southern coalfields of New South Wales.  Currently its product is shipped via Port Kembla to India and utilised in the production of Coke for use in steel making.
Major developments are in progress to achieve a total production of up to 7 million tonnes per annum from both collieries by 2012/2013.

ANNEXURE A

conditions

Minimum acceptance condition

During, or at the end of, the Offer Period the number of Target Shares in which Bidder and its associates together have relevant interests (disregarding any relevant interest that Bidder has merely because of the operation of section 608 (3) of the Corporations Act) is at least 90% of all the Target Shares (even if that number later becomes less than 90% of all the Target Shares as a result of the issue of further Target Shares).

No prescribed occurrences

None of the following events happens during the period beginning on the date the Bidder’s Statement is given to Target and ending at the end of the Offer Period:

Target converts all or any of its shares into a larger or smaller number of shares;

Target or a subsidiary of Target resolves to reduce its share capital in any way;

Target or a subsidiary of Target:

enters into a buy-back agreement; or

resolves to approve the terms of a buy-back agreement under section 257C(1) or 257D(1) of the Corporations Act;

Target or a subsidiary of Target issues shares or grants an option over its shares, or agrees to make such an issue or grant such an option;

Target or a subsidiary of Target issues, or agrees to issue, convertible notes;

Target or a subsidiary of Target disposes, or agrees to dispose, of the whole, or a substantial part, of its business or property;

Target or a subsidiary of Target charges, or agrees to charge, the whole, or a substantial part, of it business or property;

Target or a subsidiary of Target resolves to be wound up;

the appointment of a liquidator or provisional liquidator of Target or of a subsidiary of Target;

a court makes an order for the winding up of Target or of a subsidiary of Target;

an administrator of Target, or of a subsidiary of Target, is appointed under section 436A, 436B or 436C of the Corporations Act;

Target or a subsidiary of Target executes a deed of company arrangement; or

a receiver, or a receiver and manager, is appointed in relation to the whole, or a substantial part, of the property of Target or of a subsidiary of Target.

No material acquisitions, disposals, etc.

Except for any proposed transaction publicly announced by Target before 3 June 2009, none of the following events occur during the period from that date to the end of the Offer Period without the written consent of Bidder:

Target, or any subsidiary of Target, acquires, offers to acquire or agrees to acquire one or more companies or assets (or an interest in one or more companies or assets) for an amount in aggregate greater than $50,000 or makes an announcement about such an acquisition;

Target, or any subsidiary of Target, disposes, offers to dispose or agrees to dispose of one or more companies or assets (or an interest in one or more companies or assets) for an amount in aggregate greater than $50,000 or makes an announcement about such a disposal;

Target, or any subsidiary of Target, enters into, offers to enter into or announces that it proposes to enter into any joint venture or partnership involving a commitment of greater than $50,000 or dual listed company structure, or makes an announcement about such a commitment; or

Target, or any subsidiary of Target, incurs or commits to, or grants to another person a right the exercise of which would involve Target or any subsidiary of Target incurring or committing to any capital expenditure or liability for one or more related items of greater than $50,000 or makes an announcement about such a commitment.

No material failings in filings

Bidder does not become aware, during the Offer Period, that any document filed by or on behalf of Target with ASX or ASIC contains a statement which is incorrect or misleading in any material particular or from which there is a material omission.

No break fees

Subject to section 1(e)(ii), during the Offer Period none of Target, and any body corporate which is or becomes a subsidiary or Target, pays or provides or agrees (whether conditionally or contingently) to pay or provide any benefit to any person, or foregoes or otherwise reduces any payment or benefit or agrees to forgo or reduce any payment or benefit to which it would otherwise be entitled, in connection with any person making or agreeing to participate in, or enter into negotiations concerning:

a takeover offer for Target or any body corporate which is or becomes a subsidiary of Target; or

any other proposal to acquire any interest (whether equitable, legal, beneficial or economic) in shares in, or assets of, Target or any body corporate which is or becomes a subsidiary of Target, or to operate Target as a single economic entity with another body corporate.

Section 1(e)(i) does not apply to a payment, benefit or agreement:

for providing professional advisory services to Target;

which is approved in writing by Bidder;

which is approved by a resolution passed at a general meeting of Target; or

which is made to, provided to, owed by or made with Bidder.

Non-existence of certain rights

No person has any right (whether subject to conditions or not) as a result of Bidder acquiring Target Shares to:

acquire, or require Target or a subsidiary of Target to dispose of, or offer to dispose of, any material asset of Target or a subsidiary of Target; or

terminate or vary any material agreement with Target or a subsidiary of Target.

Conduct of Target’s business

During the Offer Period, none of Target, or any body corporate which is or becomes a subsidiary of Target, without the written consent of Bidder:

declares, or distributes any dividend, bonus or other share of its profits or assets;

issues or grants options over, or agrees to issue or grant options over, or otherwise makes any commitments regarding any shares or other securities, or alters its capital structure or the rights attached to any of its shares or other securities, or issues or agrees to issue any convertible notes;

makes any changes in its constitution or passes any special resolution;

gives or agrees to give any Encumbrance over any of its assets otherwise than in the ordinary course of business;

borrows or agrees to borrow any money (except for temporary borrowing from its bankers in the ordinary course of business);

releases, discharges or modifies any substantial obligation to it of any person, firm or corporation or agrees to do so;

has appointed any additional director to its board of directors whether to fill a casual vacancy or otherwise;

enters or agrees to enter into any contract of service or varies or agrees to vary any existing contract of service with any director or manager, or pays or agrees to pay any retirement benefit or allowance to any director, manager or other employee, or makes or agrees to make any substantial change in the basis or amount of remuneration of any director, manager or other employee (except as required by law or provided under any superannuation, provident or retirement scheme as in effect on 3 June 2009);

conducts its business otherwise than in the ordinary course;

has threatened or commenced against it any material claims or proceedings in any court or tribunal (including a petition for winding up or an application for appointment of a receiver and manager); or

executes a deed of company arrangement or passes any resolution for liquidation, or has appointed or becomes susceptible to the appointment of an administrator, a receiver, a receiver and manager or a liquidator, or becomes subject to investigation under the Australian Securities and Investments Commission Act 2001 (Cth) or any corresponding legislation.

No force majeure event

During the Offer Period no act of war (whether declared or not) or terrorism, mobilisation of armed forces, civil commotion or labour disturbance, fire or natural disaster, or other event beyond the control of Target or the relevant subsidiary occurs which affects or is likely to affect the assets, liabilities, financial position, performance, profitability or prospects of Target or any of its subsidiaries.

No material adverse change to Target

During the Offer Period, no change occurs, is discovered or becomes public which has or could reasonably be expected to have a materially adverse effect on the assets, liabilities, financial position, performance, profitability or prospects of Target and its subsidiaries taken as a whole or of any of them including:

any creditor demanding repayment of a debt of $50,000 or more;

Target or a subsidiary of Target entering into an agreement (including an option agreement) in relation to acquiring or disposing of assets the price or aggregate unencumbered value of which is $50,000 or more; or

any person having, as a result of Bidder acquiring Target Shares, the right (which may be subject to conditions) to:

acquire, or require Target or a subsidiary of Target to dispose of, or offer to dispose of, any asset of Target or a subsidiary of Target; or

terminate any agreement with Target or a subsidiary of Target.

Restriction on others acquiring shares in Target

During the Offer Period, no person other than Bidder or an associate of Bidder (as defined in section 12(2) of the Corporations Act) gains 10% or more of voting power in Target.

Bidder Shareholder Approval

Before the end of the Offer Period, the holders of ordinary shares in the issued capital of the Bidder meet and resolve by ordinary resolution for the purposes of ASX Listing Rules 10.1 and 10.11 to approve the acquisition by the Bidder of Target Shares held by Gujarat NRE Coke Limited and its associates.

Regulatory Approval

Before the end of the Offer Period, the Bidder obtains any regulatory approval required for the Offers including, without limitation, any approval required under the Foreign Acquisitions and Takeovers Act 1975 (Cth).

definitions for purpose of annexure A

ASIC means the Australian Securities and Investments Commission.
ASX means ASX Limited.
Bid means an off-market takeover bid made by Bidder for all Target Shares.
Bidder means Gujarat NRE Minerals Limited ABN 28 111 244 896.
Corporations Act means the Corporations Act 2001 (Cth).
Offers means the offers to be made by Bidder to Target shareholders for their Target Shares under a Bid.
Offer Period means the period during which the Offers remain open for acceptance under the Bid.
Target means Rey Resources Limited ABN 84 108 003 890.
Target Group means Target and its subsidiaries.
Target Share means a fully paid ordinary share in Target.
Target Shareholder means a holder of Target Shares.

All Rights Reserved. A GNCL creation.