This document is important and requires your immediate attention.

If you are in doubt as to how to deal with this document please consult your fi nancial or other professional adviser.

Dated 17 January 2008

Target’s Statement by Allegiance Mining NL in response to the Offer for all Allegiance Shares by Zinifex Australia Limited

The Directors of Allegiance REJECT Mining NL unanimously recommend that you Zinifex’s unsolicited, REJECT the conditional Offer by Zinifex Australia Limited to acquire all of opportunistic and your Shares in Allegiance Mining NL inadequate Offer

Financial advisers For personal use only use personal For

Legal advisers

SAB off Zinifex Important Information

Important Dates

Zinifex’s Offer lodged with ASIC Zinifex information in this Target’s Forward looking statements 3 January 2008 Statement This Target’s Statement contains forward looking Except where disclosed otherwise, the information statements. You should be aware that such Allegiance’s Target’s Statement on Zinifex in this Target’s Statement has been statements are only predictions and are subject to lodged with ASIC obtained by Allegiance from the Bidder’s Statement inherent risks and uncertainties. Those risks and 17 January 2008 and other publicly available information. Allegiance uncertainties include factors and risks specifi c to and its Directors are unable to verify the accuracy Allegiance in addition to general economic and Zinifex’s Offer expires or completeness of the information on Zinifex. fi nancial markets conditions. Subject to the Corporations Act, neither Allegiance (unless extended or withdrawn) Actual events or results may differ materially from nor its offi cers make any representation or warranty, 8 February 2008 the events or results expressed or implied in any express or implied, regarding such information forward looking statement and such deviations and disclaim any responsibility in respect of that Target’s Statement are both normal and to be expected. None of information. This Target’s Statement is dated 17 January Allegiance, any of its offi cers nor any person 2008 and is given by Allegiance Mining NL Investment and fi nancial advice named in this Target’s Statement or involved in ABN 38 059 676 783 under Part 6.5 of the You should read this Target’s Statement and the the preparation of this Target’s Statement makes Corporations Act in response to the Bidder’s Bidder’s Statement in their entirety before making any representation or warranty (either express or Statement lodged by Zinifex Australia Limited a decision about what to do with your Allegiance implied) as to the accuracy or likelihood of fulfi lment with ASIC on 3 January 2008. Shares. of any forward looking statement, or any events or results expressed or implied in any forward looking ASIC lodgement This Target’s Statement does not take into account statement, and you are cautioned not to place A copy of this Target’s Statement was lodged with your investment objectives, fi nancial situation or undue reliance on those statements. ASIC on 17 January 2008. Neither ASIC nor any of particular needs. You should obtain independent its offi cers takes any responsibility for the contents fi nancial, investment, legal and taxation advice The forward looking statements in this Target’s of this Target’s Statement. before deciding whether or not to accept Zinifex’s Statement refl ect views held only as at the date ASX disclaimer Offer. of this Target’s Statement. A copy of this Target’s Statement was provided to Tax consequences of the Offer Shareholder enquiries the ASX on 17 January 2008. Neither the ASX nor Neither Allegiance nor its advisers accepts any If you have any queries regarding Zinifex’s Offer

any of its offi cers takes any responsibility for the liability or responsibility in respect of any statement or this Target’s Statement, please contact the For personal use only use personal For contents of this Target’s Statement. in the Bidder’s Statement concerning the tax Allegiance Shareholder Information Line on Defi ned terms consequences in connection with the Offer, or in 1300 135 871 (from within Australia) or Capitalised terms in this Target’s Statement respect of the taxation consequences themselves. +61 3 9415 4395 (from outside Australia) from are defi ned in the defi nitions in section 8 of this 9.00am to 5.00pm ESDT Monday to Friday. Target’s Statement. The Directors unanimously recommend that you REJECT Zinifex’s unsolicited,

opportunistic and inadequate Offer For personal use only use personal For

Avebury Mill, December 2007 1 Contents

Important Information IFC 7 Profi le of Allegiance 24 What You Should Do 37.1 Overview of Allegiance 24 7.2 The Avebury Nickel Project 24 What You Need to Do to REJECT the Offer 3 7.3 Allegiance Nickel Province 25 1 Chairman’s Letter 47.4 Geothermal energy 34 2 Why You Should REJECT Zinifex’s Offer 67.5 Jinchuan arrangements 34 2.1 The Zinifex Offer is opportunistically timed 9 7.6 Net smelter royalty 35 2.2 The Offer undervalues the Allegiance Nickel Province 11 7.7 Board of Directors 36 2.3 The Offer is inadequate 12 7.8 Senior Management 38 2.4 Shareholders representing 21.5% have either confi rmed 14 8 Additional Information 40 the Offer is inadequate or will REJECT the Offer 8.1 Price movements in Allegiance Shares 40 2.5 Allegiance has received a number of third party approaches 15 8.2 Recommendations of Directors 40 2.6 Accepting the Offer may have potential adverse consequences 17 8.3 Allegiance’s Directors interests in Allegiance securities 40 3 Frequently Asked Questions 18 8.4 Allegiance’s Directors interests in Zinifex’s securities 42 4 Your Choices as an Allegiance Shareholder 21 8.5 Share dealings in Zinifex securities by Allegiance’s associates 42 4.1 Ignore all Zinifex documents and keep your Allegiance Shares 21 8.6 Share dealings in Allegiance securities by Allegiance’s associates 42 4.2 Sell your Allegiance Shares on market 21 8.7 Change in Allegiance’s fi nancial position 42 4.3 Choose to accept the Offer 21 8.8 Effect of a takeover on Allegiance’s material contracts 43 8.9 Agreements connected with or conditional on the Offer 43 5 Issues Arising from Zinifex’s Offer 22 8.10 Interest of Directors in contracts 43 5.1 Minority ownership consequences 22 8.11 Consents 43 5.2 Compulsory acquisition 22 8.12 Disclaimers 44 5.3 Tax considerations 22 8.13 No other material information 44 6 Your Directors Recommendation and Their Reasons 23 8.14 Defi nitions and interpretation 44 6.1 Allegiance Directors 23 8.15 Approval of Target’s Statement 47 6.2 Recommendation 23 Corporate Directory 48

For personal use only use personal For

2 What You Should Do

Your Directors Recommendation – REJECT the Offer 1 Your Directors unanimously recommend that you REJECT Zinifex’s Offer for your Shares. 2 Your Directors do not intend to accept the Offer for Shares they own or control.

What You Need to Do to REJECT the Offer 1 To REJECT the Offer, do nothing. Ignore all documents sent to you by Zinifex. 2 You should read this Target’s Statement, which contains your Directors recommendation to REJECT the Offer and reasons for this recommendation. 3 You may be contacted by representatives of Zinifex by telephone. You do not need to speak to them, take any action or complete any forms. Do not be pressured into accepting Zinifex’s Offer. 4 If you have any queries regarding Zinifex’s Offer, please contact the Allegiance Shareholder Information Line on 1300 135 871 (from within Australia) or +61 3 9415 4395 (from outside Australia) from 9.00am to 5.00pm ESDT Monday to Friday.

For personal use only use personal For To REJECT the Offer Do Nothing and Ignore Documents Sent by Zinifex

3 Section Chairman’s Letter 1 17 January 2008

Dear Fellow Shareholder of the 87 square kilometre Allegiance Nickel Province is still to be explored. Should Zinifex really wish to purchase your Allegiance Nickel Province with Your Directors unanimously recommend that you all that future potential they must adequately compensate you not only for the REJECT Zinifex’s unsolicited, opportunistic and Avebury Mine, but for the exploration potential of the whole nickel province and inadequate Offer. any future mines that may come. Firstly, let me thank you for your overwhelming support for the “Allegiance Participate in the creation of a world class Team” since Zinifex’s opportunistic and unsolicited Offer was announced just nickel company before Christmas. You will by now have received the formal Offer to acquire all your Allegiance Shares. After a detailed assessment of the Zinifex Offer, X The Allegiance mine geology team has expanded the resource at over your Directors are unanimous in the view that you should REJECT 16% p.a. on average in nickel metal terms since 2005. This increase the Offer. Our reasoning is as follows: represents signifi cant excess over the planned ore depletion rate, providing your Board with confi dence in the longevity of the resource. Our exploration X The purpose built Avebury mill is due for completion in the current discovery cost of nickel is $0.05 per pound – amongst industry lows! quarter. Over the last 12 months Allegiance has been developing the mine, stockpiling ore and accessing the North Avebury and Viking ore bodies in Let your exploration team unlock the potential preparation to supply the mill. These ore bodies are expected to produce nickel “treasure chest” for your benefi t! amongst the world’s highest premium grade concentrate (20% nickel) and Allegiance has progressively added value for Shareholders with the Share our sales agreement with Jinchuan Group Limited (Jinchuan) positions us X price increasing many multiples from $0.03 over the decade since the well for excellent returns. Avebury discovery in January 1998. More recently the Allegiance share Zinifex’s Offer before production even commences short circuits the value price has increased 373% since December 2005, well above returns creation process set in motion a decade ago. generated by S&P/ASX 300 Metals and Mining index over the same period. You deserve to reap the rewards of your X The Allegiance Team has attracted to your Company a most talented, Company’s success since the discovery of dedicated and competent team of highly motivated individuals skilled in all aspects of the business from exploration through to mining, Avebury in January 1998! processing and sales, including Allegiance Director, Shi Peirong, Vice X Over the last 10 years Allegiance has acquired a new nickel province and President, Vice Chairman and Chief Financial Offi cer of Jinchuan, the largest discovered a new nickel deposit type. This was acknowledged by the nickel producer in China. The Allegiance Team are, like you, Shareholders

For personal use only use personal For London Mining Journal Pioneering Award in 2003 and the Award of Prospector in Allegiance and are committed to adding value going forward in their of the Year in 2007. The initial exploration strategy was to defi ne the Avebury various fi elds. The geothermal potential of the Hot Granites on the west Nickel Project and move towards a cash generating operational mine to fund coast of Tasmania is but one example of initiatives being pursued by your the exploration of the Allegiance Nickel Province. This strategy is expected to Allegiance Team. provide signifi cant exploration upside for Shareholders as approximately 90% Let your Allegiance Team continue to deliver for you

4 X Allegiance is committed to maximising your Company’s unique assets X Whilst we believe the Allegiance Team is best equipped to deliver you ensuring your Company is well positioned for future growth opportunities. the best return, we will, of course, evaluate all opportunities with vigour. Plans for co-operative exploration with Allegiance’s major Since the announcement of Zinifex’s Offer we have had a number Shareholder, Jinchuan, in Australia and overseas are underway. of approaches from domestic and international parties interested in Allegiance has also had discussions with the Hong Kong Stock Exchange, holding discussions. Your Board is driven at all times by a commitment major investment banks and brokers with respect to a potential listing in to maximising value for Allegiance’s Shareholders. We are very confi dent Hong Kong. The response has been most encouraging. in our ability to develop Allegiance into a world class mining company, but of course remain ever vigilant in examining opportunities to enhance Participate directly in China’s growth Shareholder value – after all, we are all Shareholders together. through nickel Maintain your Allegiance – IGNORE the offer X Your Allegiance Team was far sighted enough in 2003, before the nickel price rise, to design the original exploration decline for 1.5 Million tonnes per The enclosed Target’s Statement is your Board’s formal response to the annum (Mtpa) mining rate and similarly the mill was designed for expansion Zinifex Offer. We encourage you to read carefully all of the information to 1.5Mtpa with only minimal disruption. For the past six months we have contained in that document and seek independent advice if you are unsure. been working on an immediate low cost expansion to 1.2Mtpa, with a We will keep you updated of any further developments as they occur. further expansion to 1.5Mtpa to follow. London Mining Journal In the meantime, if you have any queries in relation to your Directors Pioneering Award 2003 Reap the benefi ts of the well planned recommendation, please call the Allegiance Shareholder Information future expansion Line on 1300 135 871 (from within Australia) or +61 3 9415 4395 (from outside Australia). X Shareholders representing a combined interest of 11.1% of Allegiance With best personal regards Shares, including your Directors (6.4%), intend to REJECT the Offer.

In addition, Allegiance’s major Shareholder, Jinchuan (10.4%), has stated that “Jinchuan believes there to be signifi cant further upside in Allegiance and therefore the A$1.00 per share offer for Allegiance is not refl ective of the true value of the company”.

Accordingly, Shareholders representing a combined interest of 21.5% have either confi rmed the Offer is inadequate or will REJECT the Offer. For personal use only use personal For Tony Howland-Rose Follow your Directors – REJECT the offer MSc, DIC, FGS, FIMMM, FAusIMM, MAICD, FAIG, CEng Chairman

AMEC Prospector of the Year Award 2007 5 Section Why You Should REJECT Zinifex’s Offer

2 1234

The Offer is The Offer undervalues The Offer is inadequate Shareholders opportunistically timed the Allegiance Nickel and fails to refl ect: representing a to take advantage of Province of which 90% – The successful combined interest your Company shortly is still to be explored track record of your of 21.5% have either before production Allegiance Team in confi rmed the Offer commences at the creating substantial is inadequate or will Avebury Nickel Project Shareholder value REJECT the Offer – Signifi cant value enhancing initiatives identifi ed – Expansion opportunities available at the Avebury Nickel Project

Opportunistically Undervalues the Inadequate Offer Directors Intend For personal use only use personal For Timed Allegiance Nickel to REJECT Province

6 Allegiance Mining NL Target’s Statement

56

Since the Offer was Accepting the Offer may announced, Allegiance have potential adverse has received a consequences for you The Zinifex number of third party approaches expressing interest in holding Offer does not discussions with the Company compensate Shareholders for what Directors believe to be the value of Allegiance Other Interested Adverse For personal use only use personal For Parties Consequences

7 Section 2 Why You Should REJECT Zinifex’s Offer continued

Reasons why you should REJECT Zinifex’s unsolicited, opportunistic

and inadequate Offer For personal use only use personal For

Avebury Mill, December 2007

8 Why You Should REJECT the Offer Reason The Zinifex Offer is opportunistically timed 1

Your Directors believe the Zinifex Offer has been timed to take Near-term milestones advantage of the Company before production commences at the You deserve 1st half 2008 – Helicopter exploration commenced at Trial Avebury Nickel Project and prior to a number of key value enhancing to reap the Harbour, Godkin and East Renison milestones. Your Directors have also noted that Zinifex’s Offer was timed rewards of your – Deep drilling at Melba Flats commenced within two weeks of the fi rst drawdown of project fi nance facilities from Company’s – Societe Generale and Australia and New Zealand Banking Group Limited (ANZ) Plant commissioning, production and fi rst success, concentrate shipment to Jinchuan (total facility $73 million), a signifi cant event that underscores the Directors’ high not Zinifex degree of confi dence in the Avebury Nickel Project and Allegiance’s ongoing – Potential geothermal public offer ability to access fi nance for the Company’s development. – Drill results due from drilling programs The Allegiance success story began in 1997 with the completion of the – 1.2Mtpa expansion feasibility studies at fi rst drill hole at Avebury in joint venture with CRA Exploration Pty Ltd. With Avebury scheduled to complete commissioning at the Avebury Nickel Project expected shortly, the fi rst part of this strategy is almost complete, and Allegiance is on track to deliver 2nd half 2008 – Drilling and assaying on the Allegiance Nickel the associated benefi ts to its Shareholders. Province scheduled to continue The discovery of a new nickel ore type and nickel province in Tasmania has – Potential Hong Kong listing of Allegiance provided Allegiance Shareholders with the unique Avebury Nickel Project – 1.2Mtpa plant expansion scheduled to complete which will be a low cost operation producing some of the highest grade – 1.5Mtpa plant expansion feasibility studies nickel concentrate in the world. This makes Allegiance a true nickel pioneer scheduled to complete by global standards.

Zinifex’s Offer short circuits the value creation process set in motion a decade ago. In the near-term, a number of value enhancing milestones are expected 2009 – Melba Flats mines pre-feasibility studies to be achieved. scheduled to complete

– 1.5Mtpa plant expansion scheduled to complete For personal use only use personal For

9 Section 2 Why You Should REJECT Zinifex’s Offer continued

Mt Lyell Copper Mine

East Avebury Bismark – Saxon Bison Bintje West Avebury

Avebury Mine

Foundation Stone North Avebury Avebury plant site

Melba Flats, Trial Harbour, Godkin, Burbank East Renison Pontiac (5 km)

(26 km – 40 km) For personal use only use personal For

Western Tenements – Allegiance Nickel Province

Prospect Deposit Operating Mine

10 Why You Should REJECT the Offer Reason The Offer undervalues the Allegiance Nickel Province 2

Allegiance has commenced the next phase of its strategic exploration plan to defi ne Let the Allegiance and develop further nickel deposits throughout the Allegiance Nickel Province. 20 11.7% growth Team unlock the 0.95% Ni In the fi rst stage Allegiance has concentrated its strategic drilling programs, 18 27.0% growth potential nickel primarily on or around the Avebury deposit, achieving considerable exploration 16 10.0% growth 0.97% Ni success with reportable resources (0.4% cut off grade) increasing at a compound “treasure chest” annual growth rate (CAGR) of 16% from 2005 to 2008. The initial exploration 14 for your benefi t, 1.03% Ni strategy was to defi ne the Avebury Nickel Project and move quickly towards a 12 1.02% Ni not for Zinifex cash generating operational mine to fund the exploration of the Allegiance Nickel 10 Province. This strategy provides signifi cant exploration upside for Shareholders as 8 approximately 90% of the 87km2 Allegiance Nickel Province is still to be explored. Mtonnes of ore 6 In the last 10 years Allegiance has spent in the order of $10 million on exploration. The Company intends to spend an estimated $40 million on exploration over the 4 next fi ve years on the Allegiance Nickel Province. Allegiance is well positioned to 2

fund the forward exploration program from the contracted nickel sales to Jinchuan. 0

Your Directors believe the Allegiance Nickel Province is capable of providing 2005 2006 2007 2008 signifi cant resource upside for Shareholders.

Allegiance’s exploration success can be measured by its new ore zone Above discoveries, such as East Avebury-Saxon, Bison and Bintje and the Company’s 16 17.4% growth Avebury cost of $0.05 per pound of discovered nickel, which is amongst industry lows. resource growth – The creative and innovative approach of the Allegiance Team has resulted in 14 18.8% growth 1.04% Ni 0.4% Ni cut off continued resource upgrades and high drilling success rates. Inferred 12 1.11% Ni Indicated Allegiance has laid a sound foundation for future growth over the past ten years. Measured 10 1.15% Ni Your Directors believe Shareholders are well positioned to benefi t as the Allegiance Below success story accelerates with the commencement of production. 8 Avebury Not available resource growth – Should Zinifex wish to purchase your nickel province with all that future potential, 6 Mtonnes of ore For personal use only use personal For they must adequately compensate you, the Shareholders, not only for the 0.7% Ni cut off Avebury Nickel Project, but for the exploration potential of the whole Allegiance 4 Inferred Indicated Nickel Province. 2 Measured

Let the Allegiance Team unlock the 0 potential nickel “treasure chest” for 2005 2006 2007 2008 your benefi t, not for Zinifex 11 Reason Why You Should REJECT the Offer 3 The Offer is inadequate

Your Directors believe the Offer is inadequate and fails to refl ect the aggregate Shareholder value by seeking to develop Allegiance into a highly profi table Give the value of the Avebury Nickel Project, Allegiance Nickel Province and also: nickel producer and explorer. Like you, the majority of our team has an Allegiance Team – The successful track record of your Allegiance Team in creating substantial ownership interest in Allegiance through shares and/or options. the opportunity Shareholder value. The chart below provides insight into signifi cant milestones Allegiance has – to continue Signifi cant value enhancing initiatives identifi ed. achieved. The consistent achievement of strategic milestones underpins creating value – Expansion opportunities available at the Avebury Nickel Project. Allegiances commitment to maximising Shareholder value and demonstrates for you the foresight of the Allegiance Team in anticipating the rise in base metal prices. 3.1 Successful track record creating substantial Shareholder value 3.2 Signifi cant value enhancing initiatives identifi ed Your Directors have adopted a long-term view towards maximising Shareholder The Directors of Allegiance continue to evaluate new and exciting opportunities value. Between 15 December 2005 and 14 December 2007, the last trading to maximise Shareholder value. These strategic initiatives are further evidence date prior to the announcement of the Zinifex Offer, Allegiance’s share price of the Directors’ long-term vision and commitment to Allegiance and its had risen 373% versus 94% for the S&P/ASX 300 Metals and Mining index. Shareholders. The Directors have attracted to Allegiance an experienced, talented, dedicated Diversifi cation and competent team of highly motivated individuals skilled in all aspects of The west coast of Tasmania is a world class mining province and has the business from exploration, project development, mining and processing demonstrated that it is highly prospective for a suite of base and precious to sales. This dedicated team will continue working to create and deliver metals (copper, lead, tin, zinc, nickel, cobalt, gold, silver, platinum group metals Allegiance’s key Visionary Period Value Creation Period milestones $1.60

Allegiance Mining Feb 07 Jan 08 Rebased Nickel (LME) $1.40 Plant Resources construction update commences $1.20 Sep 07 Jan 07 Executed Mining SG/ANZ $1.00 commences project at Avebury finance facility $0.80 Dec 03 Mar 04 Jun 05 Dec 05 Apr 06 Sep 06 Development 1.2km Avebury regulatory Avebury Jinchuan Discovery of approval Avebury and environmental project off-take Saxon nickel $0.60 A$ Rebased of decline decline approvals received feasibility agreement deposit

For personal use only use personal For begins study signed completed $0.40 Dec 07 Zinifex Offer $0.20

Note The Nickel LME price has been $0.00 rebased to the Allegiance Share price to provide a comparison over time JUL 03 JAN 04 JUL 04 JAN 05 JUL 05JAN 06 JUL 06JAN 07 JUL 07 JAN 08

12 Allegiance Mining NL Target’s Statement

and iron). West Coast mines are renowned for their longevity. The Company – The expanded production scenario of 1.5Mtpa is supported by a 10-year intends to explore and defi ne other base metals with a long-term view of mine life on current resources.1 The Allegiance becoming a diversifi ed explorer and producer. Allegiance is in the process of – The Avebury plant was designed and constructed to be easily expanded Team is actively enlisting the support of its major Shareholder Jinchuan and strengthening its with minimal disruption to nickel production. seeking to existing relationship by exploring and evaluating other base metal opportunities – The exploration decline was designed in 2003 as a fully functional enhance your in Australia and overseas together. production decline for 1.5Mtpa capacity. Company’s value Hong Kong listing – let us continue With continued exploration success, Allegiance is targeting a medium-term The Directors have been evaluating for six months a Hong Kong listing for production rate of 1.8Mtpa within the next fi ve years. and REJECT Allegiance during 2008 and have already held preliminary discussions with the the Offer! Hong Kong Stock Exchange and Allegiance’s fi nancial advisers. A Hong Kong The Directors believe that with further exploration success within the Allegiance listing would provide the Company with exposure to the dynamic Asian markets Nickel Province, the Company is well positioned to increase production in the and position the Company for future growth both domestically and internationally. longer term. These initiatives provide the Avebury Nickel Project with a strong foundation for future growth. Geothermal In May 2007 Allegiance Mining NL, through its 100% subsidiary Geothermal The Company’s most recent update on its resource position was released to Energy Tasmania Holdings Limited (GXT), announced its plans to investigate the the market on 15 January 2008 and is available on the Company’s website. potential of deep hot rocks in western Tasmania to generate geothermal energy.

Generation of renewable zero emission power from deep hot rocks is rapidly Avebury Nickel emerging around the world as a potential major source of base load electrical Project production energy, with operations in several countries approaching commercialisation. Blue Sky Potential Greenfields Exploration Expansion This new initiative has the potential to provide cost saving opportunities for the Brownfields Exploration Expansion Avebury Nickel Project and considerable value for Allegiance Shareholders. 14,000 1,500 kt (Expansion Phase 2)2 1,200 kt (Expansion Phase 1)2 The Directors are considering separately listing GXT during 2008 and inviting 12,000 900 kt (Base Case) Allegiance Shareholders to participate in this event. 10,000

3.3 Expansion opportunities available at the Avebury 8,000 Nickel Project 6,000 Tpa Ni Produced For personal use only use personal For For the past six months the Allegiance Team have been evaluating a low cost, short-term production expansion at the Avebury Nickel Project to 1.2Mtpa 4,000 followed by a medium-term expansion to 1.5Mtpa. Both expansions are Note 1 2,000 Mine life is calculated using a 0.7% expected to create additional Shareholder value. resource cut off grade 0 The expansion opportunities arise from initiatives implemented during the Note 2 Subject to feasibility studies which 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 construction of the Avebury Nickel Project: are in train 13 Reason Why You Should REJECT the Offer Shareholders representing 21.5% have either confi rmed the Offer is inadequate or will 4 REJECT the Offer

Allegiance Shareholders representing a combined interest of 11.1% of In addition, Allegiance’s major Shareholder, Jinchuan (10.4%), has stated that Your Directors Allegiance’s Share capital on issue have indicated in writing that they intend “Jinchuan believes there to be signifi cant further upside in Allegiance are REJECTING to REJECT the Zinifex Offer. and therefore the A$1.00 per share offer for Allegiance is not refl ective the Zinifex Offer of the true value of the company”. Your Directors and related parties collectively hold or control 6.4% of the outstanding Share capital. Each of your Directors has stated that they will Accordingly, Shareholders representing 21.5% have either confi rmed the Offer REJECT the Zinifex Offer as it is opportunistic and fails to recognise the is inadequate or will REJECT the Offer.

true value of Allegiance. For personal use only use personal For

Signing ceremony between Allegiance and Jinchuan

14 Why You Should REJECT the Offer Reason Allegiance has received a number of third party approaches 5

Since the Zinifex Offer was announced on 17 December 2007, Allegiance has received approaches from a number of third parties, both domestic and Allow your Board international. Whilst your Directors will evaluate these opportunities, there is to explore all no guarantee that any other offer will eventuate. opportunities to maximise Shareholder

value For personal use only use personal For

15 Section 2 Why you should REJECT Zinifex’s Offer continued

a b

a Jumbo drilling decline at Avebury

For personal use only use personal For b Mucking development ore from the Viking ore body

c Entrance to the Viking decline

d Stockpiling at Avebury c d 16 Why You Should REJECT the Offer Reason Accepting the Offer may have potential adverse consequences for you 6

You should be aware of the following potential adverse consequences that may arise if you accept the Zinifex Offer: Your Directors believe this – You may only receive $0.90 per Allegiance Share. is unlikely to – Even if you receive the maximum $1.00 per Allegiance Share under be Zinifex’s the Offer, your Directors still consider this is inadequate and does not compensate Shareholders for what your Directors consider to be the true last move value of the Company. – Allegiance Shares have consistently traded above $1.00 per Share since 20 December 2007, suggesting that the market considers the Zinifex Offer is inadequate. – Whilst the Offer remains conditional, you will lose the ability to accept any rival offer or to sell your Allegiance Shares on market for more than the price offered by Zinifex. You are only entitled to withdraw your acceptance in certain limited circumstances. – Whilst the Offer remains conditional, you will relinquish control of your Allegiance Shares with no guarantee of payment until fi ve business days after the Offer becomes, or is declared, unconditional. Allegiance Share – If the Offer becomes unconditional, any acceptance by you will be fi nal and $1.10 price performance you will lose the ability to accept any rival offer or to potentially sell Shares on post Offer market for more than the price offered by Zinifex. $1.05 announcement 17 December

$1.00 High Offer of $1.00 p/s $0.95

$0.90 For personal use only use personal For Base Offer of $0.90 p/s $0.85

$0.80 2 Jan08 3 Jan 08 3 Jan 08 4 Jan 08 7 Jan 08 8 Jan 08 9 Jan 11 08 Jan 10 Jan 08 Jan 10 17 Dec 07 Dec 17 18 Dec 07 18 Dec 19 Dec 07 19 Dec 24 Dec 07 24 Dec 31 Dec 07 Dec 31 21 Dec 07 Dec 21 27 Dec 07 Dec 27 28 Dec 07 28 Dec 20 Dec 07 20 Dec

17 Section Frequently Asked Questions 3

This section answers commonly asked questions that you may have about the Offer. It is not intended to address all relevant issues for Shareholders. This section should be read together with all other parts of this Target’s Statement.

Why is this document This Target’s Statement is Allegiance’s formal response to Zinifex’s Offer. It contains information prepared by your Directors being sent to you? to help you determine whether to accept or REJECT Zinifex’s Offer. Your board unanimously recommends you REJECT Zinifex’s Offer.

What do your Directors Your Directors unanimously recommend that you REJECT Zinifex’s Offer. recommend that you do?

What do the Directors Each of your Directors intends to REJECT Zinifex’s inadequate Offer, for the Shares held or controlled by them. intend to do with their Allegiance Shares?

How do you REJECT If you wish to follow the Directors unanimous recommendation and REJECT Zinifex’s inadequate Offer, you do not need to Zinifex’s inadequate do anything. Simply ignore all documents sent to you by Zinifex. Offer?

What is being offered Zinifex’s conditional Offer at the date of this Target’s Statement is only $0.90 per Allegiance Share. for your Allegiance If Zinifex obtains more than 30% of Allegiance Share capital, it will only pay you $1.00 per Allegiance Share, assuming the

Shares? Offer becomes unconditional. For personal use only use personal For

18 Allegiance Mining NL Target‘s Statement

What choices do I have Your Directors unanimously recommend that you REJECT the Offer. However, as an Allegiance Shareholder you have the as a Shareholder? following choices: – REJECT the Offer, in which case do nothing and ignore documents sent by Zinifex; – sell your Allegiance Shares on market (unless you have previously accepted the Offer and have not validly withdrawn that acceptance); or – accept the Offer, in which case you need to follow the instructions in the Bidder’s Statement.

More information on the implications of these choices is set out in section 4.

Is the Zinifex Offer Yes. conditional? The Offer is subject to the conditions set out in section 9.7 of the Bidder’s Statement, being (in summary): 1. Foreign Investment Review Board approval; 2. No material adverse change in the business, assets, liabilities, fi nancial or operating position, profi tability or prospects of the Allegiance Group occurs; and 3. No changes to the capital structure of Allegiance or its subsidiaries occur.

What happens if the If the conditions are not satisfi ed or waived, the Offer will lapse and you will be free to deal with your Shares even if you conditions are not previously accepted the Offer. satisfi ed?

Can you withdraw your Once you accept the Offer you cannot withdraw your acceptance, except in the following limited circumstances: acceptance once you – If the conditions of the Offer (as detailed in section 9.7 of the Bidder’s Statement and summarised above) have not been accept the Offer? satisfi ed or waived by the date for satisfaction of those conditions; and – The Offer is extended for more than one month and you are entitled to withdraw your acceptance under section 650E of

the Corporations Act. For personal use only use personal For See section 9.5 of the Bidder’s Statement for further details.

19 Section 3 Frequently Asked Questions continued

Can you be forced to Your Directors consider that Zinifex will not be able to compulsorily acquire your Allegiance Shares because they will not sell your Allegiance be able to satisfy the 90% threshold required for compulsory acquisition based on their current Offer. See section 5.2 for Shares to Zinifex? further details.

Why did Allegiance not An Independent Expert Report is not required under the Corporations Act. engage an Independent Furthermore, due to the unique nature of Allegiance’s new nickel deposit type, geology of the Avebury Nickel Project and Expert? Allegiance Nickel Province, and based on their intimate understanding of your Company, your Directors believe they are best placed to assess the Offer and make a recommendation.

What if you have further Announcements made to the ASX by Allegiance and other important information can be obtained from the ASX website at questions? www.asx.com.au. Announcements are also posted on Allegiance’s website at www.allegiance-mining.com.au where you can also subscribe to receive immediate email updates. Allegiance Shareholders can also contact the Shareholder Information Line at 1300 135 871 (within Australia)

or +61 3 9415 4395 (outside Australia) for further information. For personal use only use personal For

20 Your Choices as an Allegiance Shareholder Section 4

Your Directors unanimously recommend that you REJECT Zinifex’s Offer. – You will lose the ability to accept Zinifex’s Offer and receive the consideration To REJECT Zinifex’s Offer, simply ignore all documents sent to you by Zinifex. (including any possible increase in consideration) offered under that Offer in relation to those Shares; As an Allegiance Shareholder, the following three choices are currently available to you: – You will not receive any possible benefi ts associated with being an owner of Allegiance Shares; 4.1 Ignore all Zinifex documents and keep your – You may have a capital gain or a capital loss on the disposal of those Allegiance Shares Shares and therefore, if you have a capital gain, may be liable for capital Allegiance Shareholders who do not wish to accept the Offer should simply gains tax; and ignore documents sent to them by Zinifex. – You may incur a brokerage charge. You should note that: Allegiance Shareholders who wish to sell their Shares on the ASX should – If you do not accept the Offer and Zinifex and its associates acquire contact their broker for information on how to execute the sale. a relevant interest in at least 90% of the Allegiance Shares, Zinifex will be entitled to compulsorily acquire the remaining Allegiance Shares, 4.3 Choose to accept the Offer and Zinifex has stated in its Bidder’s Statement that it intends to seek Your Directors unanimously recommend that you REJECT Zinifex’s Offer. to exercise those rights (see section 5.2 for further information); and However, you may choose to accept Zinifex’s Offer. Zinifex has stated that the Offer remains open until 8 February 2008. It is possible that Zinifex will choose – If Zinifex acquires majority ownership of Allegiance but is not able to extend the Offer Period in accordance with the Corporations Act. If that to compulsorily acquire the remaining Allegiance Shares, Allegiance happens, Zinifex will fi le a notice of extension with the ASX and will send that Shareholders who do not accept the Offer will become minority notice to you. Details of the consideration that you will receive if you accept shareholders in Allegiance, which in those circumstances would Zinifex’s Offer are set out in the Bidder’s Statement. be controlled by Zinifex (see section 5.1 for further information). Before you consider accepting Zinifex’s Offer, you should read the effect of 4.2 Sell your Allegiance Shares on market acceptance set out in section 9.5 of the Bidder’s Statement. That section Allegiance Shareholders may sell all or some of their Allegiance Shares on describes the rights attached to your Allegiance Shares that you will be the ASX for cash unless they have accepted Zinifex’s Offer for those Shares. giving up, the representations and warranties that you will be making and The amount that will be received by an Allegiance Shareholder who sells on the irrevocable authorities and appointments that you will be granting Zinifex, the ASX will depend on the prevailing market price for Allegiance Shares at if you accept Zinifex’s Offer. that time, which may be higher or lower than the value of the Zinifex Offer. If you accept Zinifex’s Offer: For personal use only use personal For The market price of Allegiance Shares can change for a variety of reasons. The latest price for Allegiance Shares may be obtained from the ASX website – You will not receive any possible benefi ts associated with being an owner at www.asx.com.au. of Allegiance Shares; and If you sell your Allegiance Shares on market: – You may have a capital gain or a capital loss on the disposal of those Shares and therefore, if you have a capital gain, may be liable for capital gains tax. – You will receive the consideration for the sale of those Shares sooner than if you accept Zinifex’s Offer; 21 Section Issues Arising from Zinifex’s Offer 5

5.1 Minority ownership consequences 5.2 Compulsory acquisition In section 6.4 of the Bidder’s Statement, Zinifex sets out its intentions in the In its Bidder’s Statement, Zinifex states that if it becomes entitled to event Allegiance becomes a controlled entity of Zinifex but it is not entitled to compulsorily acquire Allegiance Shares at any time during or at the end of the proceed with compulsory acquisition under the Corporations Act. If this were to Offer Period, it intends to do so. Zinifex may compulsorily acquire all remaining occur (such that Allegiance would not be a wholly owned subsidiary of Zinifex), Allegiance Shares under the Corporations Act if, at any time during or at the those Allegiance Shareholders who do not accept the Offer, and retain their end of the Offer Period, Zinifex and its associates: Allegiance Shares, will become minority shareholders in Allegiance. This has – Have a relevant interest in at least 90% (by number) of Allegiance Shares; and a number of possible implications including: – Have acquired at least 75% (by number) of the Allegiance Shares that Zinifex – Zinifex would be in a position to control the majority of votes at a general offered to acquire under the Offer (whether the acquisitions happened under meeting of Allegiance. This will enable Zinifex to control the composition the Offer or otherwise). of Allegiance’s Board of Directors and Senior Management, control the strategic direction of Allegiance and control Allegiance’s fi nancial and As previously noted, Allegiance Shareholders representing a combined interest operating policies. of 11.1% of Allegiance’s Share capital on issue, and 12.2% on a fully dilluted basis, have indicated in writing that they intend to REJECT the Zinifex Offer. On – Subject to the requirements of the Corporations Act and Allegiance’s this basis, your Directors consider that Zinfex will not be able to satisfy constitution, Zinifex intends to replace some members of the Allegiance the 90% threshold and so will not be able to compulsorily acquire your Board with nominees of Zinifex. Allegiance Shares. Nevertheless, if these thresholds are met, Zinifex will – If Zinifex acquires at least 75% of the Shares in Allegiance it will be able to have up to one month after the end of the Offer Period within which to lodge a pass a special resolution of Allegiance. This will enable Zinifex to, among compulsory acquisition notice with ASIC and to send the notice to the ASX and other things, change Allegiance’s constitution. Allegiance Shareholders who have not accepted the Offer. The consideration – Whilst the Directors cannot predict the actual effect this will have on per Allegiance Share under compulsory acquisition must be the same as the Allegiance’s Share price, it may result in a decrease in Allegiance’s Share price Offer Consideration. as Allegiance’s Share price may not contain any possible takeover premium. The Corporations Act provides Allegiance Shareholders with rights to challenge – It is likely that liquidity of Allegiance Shares will be signifi cantly lower than at a compulsory acquisition in Court. The Court may only prevent the compulsory present. If the number of Allegiance Shareholders is less than that required acquisition from proceeding if the Court is satisfi ed that the consideration is by the ASX Listing Rules to maintain an ASX listing, Zinifex may apply for not fair value for the securities. Allegiance Shareholders should be aware that Allegiance’s removal from the offi cial list of the ASX. If this occurs, Allegiance if they do not accept the Offer and their Allegiance Shares are compulsorily Shares will not be able to be bought or sold on the ASX.

For personal use only use personal For acquired in this way, they are not likely to receive any consideration until at least – The change of control provisions in the facility referred to in section 8.8 will one month after compulsory acquisition notices are sent. be triggered. Depending on the action taken by the relevant counterparties, 5.3 Tax considerations there may be an adverse effect on Allegiance, and therefore the value of A general outline of the Australian income tax implications of accepting Zinifex’s your Allegiance Shares. Offer is set out in section 7 of the Bidder’s Statement. As this is only a general – Zinifex may decide not to retain existing Allegiance Senior Management outline, Allegiance Shareholders should consult their own tax adviser for tax or it is possible that one or more of them may resign. advice tailored to their own particular circumstances. 22 Your Directors Recommendation Section and Their Reasons 6

6.1 Allegiance Directors 6.2 Recommendation The Allegiance Directors are: After taking into account each of the matters described in this document, in particular the reasons to REJECT Zinifex’s Offer set out in section 2, – Mr Anthony (Tony) William Howland-Rose and in the Bidder’s Statement, each of your Directors recommends that you – Mr Eddie Lee REJECT Zinifex’s Offer. – Mr Barry Sullivan In considering whether to accept Zinifex’s Offer, your Directors encourage – Mr David Deitz you to: – Mr Shi Peirong – Read the whole of this Target’s Statement and the Bidder’s Statement; – Mr Zhang Yimin (Alternative Director for Mr Shi Peirong) – Consider your individual risk profi le, portfolio strategy, tax position and Details of the interests of your Directors and their intentions in respect fi nancial circumstances; and of such shareholdings are set out below. – Obtain independent fi nancial and taxation advice if you believe it

is necessary. For personal use only use personal For

Allegiance Directors (left to right) David Deitz, Tony Howland-Rose, Eddie Lee and Barry Sullivan

23 Section Profi le of Allegiance 7

Location of the 7.1 Overview of Allegiance Avebury Nickel Allegiance Mining NL is an Australian mining company that listed on Burnie Project in Tasmania, Tasmania the ASX on 29 October 1993. The Company is currently in the process Australia of developing the Avebury Nickel Project, located on the west coast of Burnie Tasmania. In addition to the Avebury Nickel Project, the Company holds Zeehan approximately 87km2 of tenements (Allegiance Nickel Province) that the Directors believe have the potential to contain substantial nickel resources. Allegiance also holds three geothermal tenements for the west coast of Hobart Tasmania, covering 8,512km2. 7.2 The Avebury Nickel Project Location The Avebury site is located close to Trial Harbour and approximately eight kilometres west of Zeehan on the west coast of Tasmania. Waratah Background The Avebury Nickel Project is planned to commence production shortly. Savage River Key facts about the Avebury Nickel Project are: Hellyer – Fully funded, including a debt facility of $73 million from Societe Generale Que River and ANZ – Construction on the mill and plant is currently underway and scheduled for completion in the fi rst quarter of 2008

RAIL – The Avebury underground mine is fully operational Mt. Farrell – Barminco, Allegiance’s mining contractor, commenced mining in December Rosebery Mine 2006 with current ore stockpiles of approximately 45,000 tonnes Renison Mine Rosebery – It will be a low cost operation that the Directors believe will provide strong Hercules Melba operating margins

For personal use only use personal For Zeehan – Good ground conditions provide straightforward mining Avebury – Simple mineralogy results in greater than 20% nickel concentrate grades, Trial Harbour Nickel creating a new global benchmark Project 01020 km Queenstown Mt. Lyell Mine

24 Allegiance Mining NL Target‘s Statement

Resource and exploration success at Avebury Avebury contained

Allegiance’s primary focus has been the development of the Avebury Nickel 200 8.9% growth nickel growth – Project and delineation of a quality resource to provide a mine life greater 0.4% cut off than 10 years. The Avebury team has successfully increased the resource at 180 19.7% growth 160 Avebury Nickel Project to 172,000 tonnes of contained nickel assuming a cut 11.9% growth 172kt off grade of 0.4% nickel (145,000 tonnes at a cut off grade of 0.7% nickel). 140 158kt

7.3 Allegiance Nickel Province 120 132kt Following the successful commissioning of the Avebury Nickel Project, 100 118kt

Allegiance is proposing to turn its attention to the next part of its strategy, kt Ni the discovery of new nickel deposits. The initial exploration strategy was to 80 defi ne the Avebury Nickel Project and move quickly towards a cash generating 60

operational mine to fund the exploration of the Allegiance Nickel Province which 40 extends for some 30km of highly prospective terrain as shown in the map on page 24. It consists of the western tenements close to the Avebury deposit 20 with potential for a similar size deposit in the Trial Harbour area and the eastern 0

tenements close to the long-life Renison and Rosebery base metal mines. 2005 2006 2007 2008 The stage is now set to build on the early exploration successes which have provided a strong platform for signifi cant future growth. With Avebury now rapidly Avebury contained approaching production, major drilling programs recently initiated at Trial Harbour, 200 nickel growth – Melba, East Renison and Godkin are designed to accelerate the realisation of this 0.7% cut off 180 larger potential, with very encouraging early drill results from Melba. 10.7% growth 160 14.9% growth 140 145kt 120 131kt 100 114kt kt Ni 80

Not available For personal use only use personal For 60

40

20

0

2005 2006 2007 2008

25 Section 7 Profi le of Allegiance continued

Schematic geological

map showing extent 350 000mE 360 000mE 370 000mE 380 000mE of Allegiance Nickel PIEMAN Sn Province EASTERN CURRENT EXPLORATION TENEMENTS 3 drill rigs on eastern tenements SALMON ROSEBERY MINE 2 drill rigs on western tenements Ag-Pb-Zn Ag-Pb-Zn-Cu

RENISON MINE Sn EL 5/02 0 10km MELBA EL 43/92 Ni 5 370 000mN

COLEBROOK SKARN Cu-W

EL 50/07 GODKIN WESTERN Granite Ridge PROJECT TENEMENTS Heemskirk Granite Zeehan Field Altered ultramafics Ag-Pb EL 22/97 Altered gabbro EL 28/88 5 360 000mN Heemskirk Granite EL 22/97 EL 28/88 For personal use only use personal For Granite Ridge AVEBURY Ni

EL 37/03 TRIAL HARBOUR Ni ALLEGIANCE NICKEL PROVINCE

26 Allegiance Mining NL Target‘s Statement

Melba Flats Project EL 43/1992, ML 2M/2007 – Intersection in DDH MF 83 of 4.7m (drill width) 1.3% Ni, 0.94% Cu, Nickel and copper sulfi de deposits at Melba formed within a series of gabbro 120 vertical metres beneath the former Devereaux Mine workings, dykes, genetically associated with a large adjacent mass of altered ultramafi c 800m west of Nickel Reward; this is a new and exciting discovery in rocks. Mineralisation occurs as deposits of disseminated sulfi des and sporadic an area in which the only previous testing was three shallow (<20m) lenses of very high grade massive sulfi des, enriched in gold and platinum group drill holes in the 1950s metals. It has been traced intermittently over a strike length of 3km. Within this – Confi rmation that the North Cuni-Genets host gabbro dykes are not limited 3km zone, massive sulfi de lenses, which typically assay 8–12% Ni and 4–6% to 2–3 narrow dykes but are present as multiple dykes up to 100m thick, Cu, outcrop in seven locations. extending undiminished to much greater depths (>300 vertical metres) Intermittent exploration by others during the period 1950–1995 was focused than previously thought on searching for shallow extensions of these high grade massive sulfi de lenses, As a result of this persistent, but limited, exploration effort by Allegiance and there was no drilling deeper than 50m below surface. over the past decade, Melba has emerged as an exciting opportunity for In the late 1990s Allegiance commenced a steady but limited drilling program the discovery of major nickel-copper-gold-platinum group metals and at Melba aimed at testing the broader potential of the area. This initial drilling further exploration potential. was concentrated around the Nickel Reward and North Cuni-Genets prospects This view is supported by the following: and achieved the following: – The host gabbro dykes are far more extensive than previously thought – Identifi ed modest shallow resources at both prospects: – Mineralisation exists in several dykes, rather than one – Nickel Reward: 30,000 tonnes 3% Ni – Mineralisation is not terminated at shallow depths (<50m) but continues – North Cuni-Genets: 95,000 tonnes 0.8% Ni, 1.0% Cu undiminished at least to 250 vertical metres (limit of current drilling) – Confi rmed the elevated levels of gold, platinum and palladium in the massive – The width and abundance of host gabbro dykes increases with depth sulfi de zones, which typically average 1–2 g/t Au and 2–3 g/t Pt and Pd – Alteration of these dykes at depth is intense, suggesting proximity to either – Demonstrated that the sulfi de mineralisation extended at Nickel Reward to the parent ultramafi c body or the underlying interpreted granite ridge at least 100 vertical metres, thereby dispelling the long-held concept that mineralisation at Melba stopped around 50m depth Allegiance believes that Melba represents a strong opportunity for future growth of the Company and has put in place a two-pronged strategy to Encouraged by these early drilling results, Allegiance expanded its drilling assess and realise this opportunity: program at Melba through 2006–2007 and the results continue to be very

For personal use only use personal For positive. Highlights of this more recent work are: – Develop the identifi ed shallow resources at Nickel Reward and North Cuni-Genets, by way of modest open-cuts, as a supplementary feed – Extensions of mineralisation at Nickel Reward to vertical depths of at least into the Avebury Mill 200m, in two parallel gabbro dykes, including a massive sulfi de zone in – Accelerate the drill evaluation of the larger, deeper, long-term potential DDH MF 81A, which assayed 0.7m (drill width) 10.8% Ni, 3.81% Cu of the area

27 Section 7 Profi le of Allegiance continued

Melba Flats Project – Nickel Reward prospects showing gabbro dykes hosting Cu and Ni mineralisation Gabbro dikes host mineralisation

Mineralisation For personal use only use personal For

NICKEL REWARD PROSPECTS

28 Allegiance Mining NL Target‘s Statement

Work to give effect to this strategy is already well advanced: East Renison and Godkin Ridge – Mining Lease 2M/2007 has been granted to facilitate development of COLEBROOK DRILLING aeromagnetic survey the shallow resources Ni-Cu-W Skarn Target – Permitting procedures for shallow open-cuts and underground SALMON DRILLING Ag-Pb-Zn Ni, W Target developments have commenced with respect to operations at North Cuni-Genets and Nickel Reward – Planning of deeper drilling at Nickel Reward is complete and drilling is scheduled to commence mid-January 2008 – Planning of more extensive drilling at Devereaux is complete and scheduled to commence late February 2008 Renison Mine (Tin) – Planning of deeper drilling at North Cuni-Genets is in progress with drilling due to commence March 2008 EL 5/2002 Godkin Project EL 50/2007 One of the crucial factors in the Avebury discovery story was the early recognition that Avebury was hosted by an altered ultramafi c that did not outcrop. The top of the deposit was 100–150m below surface. This precluded or reduced the chances of discovery by previous explorers. It was, therefore,

logical to expand the search in the 30km long high prospectivity belt identifi ed TMI nT by Allegiance for similar concealed ultramafi c bodies. EL 50/2007 A high resolution aeromagnetic survey completed by Allegiance located one such opportunity at Godkin, to the east of Melba. The survey defi ned a large 3,000m long magnetic anomaly within an area mapped as non- magnetic sediments. Drilling by previous explorers in the early 1980s was too shallow and two drill holes by RGC in the late 1980s intersected a large body of ultramafi cs

For personal use only use personal For containing fi ne-grained nickel sulfi de but the core was not assayed for nickel. Following completion of the aeromagnetic survey, Allegiance was very keen to GODKIN DRILLING Ni-sulfi de Target acquire the area. (4 drill holes) However, it was held under licence by Zinifex. When it relinquished its licence in 2007, Allegiance successfully tendered for the area and immediately Note TMI nT is a measure of commenced planning a substantial helicopter supported drilling program. magnetic intensity

29 Section 7 Profi le of Allegiance continued

This program commenced in early January 2008 and is due for completion Avebury Nickel Project Extensions (ML 3M/2003, EL 28/1998) in March 2008. A concentrated drilling effort on the Avebury deposit in the 10 years since discovery has not only identifi ed a substantial nickel sulfi de resource, but also The Godkin area is regarded as highly prospective for Avebury style nickel highlighted the tremendous opportunity for further discovery in the immediate sulfi de deposits for the following reasons: mine area. – Aeromagnetics has identifi ed a major 3km long anomaly The greatest opportunities for further discoveries are: – Drilling has identifi ed the source of this anomaly as a large altered ultramafi c – East of the current mine as extensions of the recently discovered Saxon, – Mineralogical studies of this drill core have identifi ed signifi cant nickel Bison and East Avebury deposits where a good geological model has been sulfi des and pyrrhotite developed and the mineralisation is well understood – Geochemistry and geophysics suggest the source of the alteration is an – West of the mine as down-plunge extensions of North Avebury and Viking underlying granitic intrusion – North of the mine through the Pontiac area where sparse drilling to date has East Renison Project EL 5/2002 identifi ed mineralised ultramafi cs extending from close to surface to depth Allegiance regards the East Renison area as highly prospective for a range and with potential for a large low-grade disseminated deposit of targets, including: – Down-dip of the current resources, which are open at depth – Nickel sulfi de deposits in altered ultramafi cs – Silver-lead-zinc deposits in altered gabbros

– Copper-tungsten deposits in altered sediments and altered gabbros Mineral Resources 0.4% Ni cut off Inferred 9.76Mt @ 0.88% Ni – Tin deposits in vein and fault structures Indicated 6.05Mt @ 1.01% Ni Measured 2.37Mt @ 1.03% Ni Drilling by others in the 1970s and 1980s identifi ed resources of tin and silver- Total 18.18Mt @ 0.95% Ni lead-zinc in the altered western gabbro formation, and intersected major copper-tungsten skarn zones in altered sediments in the eastern section of

the licence area. North Avebury 5357500N East Allegiance regards the East Renison area as not only highly prospective Avebury for a range of commodities and target styles but also very underexplored. Central Avebury

Drilling programs are currently in place to further test the Colebrook Hill skarn For personal use only use personal For zone at depth for copper and tungsten mineralisation, and also the Salmon Viking Bintje

zone for silver-lead-zinc, tungsten and nickel sulfi de deposits. This program Saxon Bison Measured commenced in early January 2008 and will continue for the remainder of 5357000N the year. and Indicated Resource 356000EN 355000EN 354000EN 30 Allegiance Mining NL Target‘s Statement

Major discoveries in any of these highly prospective areas will provide the basis Main components of this program, estimated to cost $1–2 million p.a. for future long-term growth and expansion of the current mine. for the foreseeable future, are: The Company clearly recognised the commercial benefi ts of this opportunity – Drill testing of the strongly magnetic, faulted northern margin of the and, therefore, has every intention of continuing the major exploration program ultramafi c (1–2km strike length) which has been so successful in resource discovery in recent years. – Drill testing of the western and eastern fl anks of the ultramafi c between Key features of this program are: Trial Harbour and Burbank – Initial exploration studies in the Fen Creek area south-east of Burbank – Ongoing exploration budget commitment of $3–4 million p.a. where the ultramafi cs are interpreted as plunging beneath cover rocks – 1–2 drill rigs continuously drilling on the mine extension areas adjacent to the major Firewood Siding Fault and are associated with To give effect to this strategy, an experienced exploration team, motivated major geological structures. by discovery success, has been established at Avebury. Trial Harbour (EL 28/1988, EL 22/1997, EL 37/2003) Allegiance holds three exploration tenements over areas west of the Avebury Nickel Project near Trial Harbour. The areas are underlain by a large body of altered ultramafi cs which plunge beneath cover rocks to the south-east of Trial Harbour. Small deposits of nickel sulfi de were mined in the early 1900s from deposits to the immediate east of Trial Harbour. Recent drilling by Allegiance between Avebury and Trial Harbour, combined with a reinterpretation of aeromagnetic data, supports the concept that the Trial Harbour ultramafi c may be a fault-displaced section of the Avebury ultramafi c host. The Trial Harbour ultramafi c mass is approximately the same size as the mass which hosts the Avebury deposits. Drill testing to date has been limited to shallow drilling by others in the 1970s and 1980s and six holes by Allegiance For personal use only use personal For at the Burbank Prospect. Discovery of new resources in these western areas, which are only 3–5km from Avebury, would have a very benefi cial impact on that operation, signifi cantly expanding its resource base and therefore mine life. For this reason, Allegiance has adopted a strategy to accelerate exploration in the region.

31 Section 7 Profi le of Allegiance continued

a b

a Plant construction at Avebury

For personal use only use personal For b Plant construction at Avebury

c Discovery hole 1998 A001 12 metres at 1.7% Ni

d Helicopter drilling c d 32 Allegiance Mining NL Target‘s Statement

Current Allegiance Exploration Program

Status Historical Drilling Comment Exploration Program

Eastern Tenements Melba Flats Greenfi elds Surface 89 holes Persistent but limited exploration Multiple drilling programs commencing EL 43/1992, ML 2M/2007 development 10.8% Ni intersects recorded. conducted to date. Highly prospective mid January, late February and March Mineralisation intersected to target with the potential for multiple 2008 focusing on deeper targets at least 230m depth mines. Mining lease granted Godkin Project Greenfi elds 2 drill holes, aeromagnetic Tenement granted in late 2007 Drilling commenced January 2008, EL 50/2007 exploration survey completed (previously held by Zinifex), the Godkin with completion of a four hole program area is regarded as highly prospective scheduled for March 2008 for Avebury style nickel sulfi de East Renison Project Greenfi elds Limited historical drilling, Highly prospective for a range of Drilling recommenced in January 2008 EL 5/2002 exploration Allegiance completed 6 holes commodities in 2006–2007 Intersects of nickel, silver, lead and zinc Western Tenements Avebury/East Avebury Brownfi elds Surface 126 holes 56,800m Good geological model, well Continued underground drilling ML 3M/2003, EL 28/1988 development Underground 210 holes understood geology, with untested 31,200m greenfi elds potential to the east Pontiac Near mine 15 holes, 4,600m Potential to be an add on for the Further drilling to commence in early ML 3M/2003, EL 28/1988 exploration Avebury Nickel Project as a large 2008 to follow up intersections to date low grade deposit West Avebury Near mine 5 holes 2,600m Moderate potential to be an add Further drilling to commence in early

EL 22/1997 exploration on to the Avebury Nickel Project 2008 to follow up intersections to date For personal use only use personal For Trial Harbour and Burbank Brownfi elds Surface 34 holes 5,800m The Trial Harbour/Burbank Further drilling to commence in early EL 22/1997, EL 28/1988 exploration ultramafi c mass is approximately 2008 to follow up intersections to date the same size as the mass which hosts the Avebury deposits Fen Creek Greenfi elds None Unexplored outcropping to Structural geology mapping as EL 22/1997, EL 37/2003 exploration shallow depth precursor to further drilling 33 Section 7 Profi le of Allegiance continued

Allegiance 7.4 Geothermal energy geothermal Geothermal energy is generated using the power of hot rocks buried deep tenements in the earth’s crust. It is environmentally friendly, renewable, sustainable and Burnie emission-free. Australia Devonport Allegiance Mining through its wholly owned subsidiary GXT has assembled Launceston a portfolio of tenements prospective for hot rocks in Western Tasmania. The Directors are considering separately listing GXT during 2008 and inviting

Hobart Allegiance Shareholders to participate in this event. Queenstown The geothermal industry has recently gained signifi cant public investment as the Australian Government has fi nancially pledged support for geothermal energy research and development. The majority of the listed Australian geothermal companies outperformed the S&P/ASX 300 Metals and Mining Hobart index over the past 12 months to 14 December 2007.3

90km 7.5 Jinchuan arrangements In April 2006, Allegiance signed an off take agreement with Jinchuan. Under the terms of the agreement, Jinchuan will buy all nickel concentrates Share price growth produced from the Avebury Nickel Project and will have the fi rst right to enter into negotiations related to securing additional nickel concentrates from the of Australian listed 350 geothermal companies Allegiance Nickel Province. 300 331% On 1 May 2007, an additional off take agreement was negotiated to cover all further metalliferous discoveries made in Tasmania by Allegiance. This provides 250 additional incentives for Allegiance to further explore and diversify its current nickel strategy. 200 230% Allegiance and Jinchuan have a long standing and successful relationship % 150 178% which is further refl ected by Jinchuan’s injection of $50 million of equity capital

147.4% into Allegiance over the past few years and the appointment of Jinchuan’s Vice For personal use only use personal For 100 122.2% President and Chief Financial Offi cer, Mr Shi Peirong, to the Allegiance Board.

50

51.1% 38% Note 3 0 18% KUth Energy has only been listed since 25 September 2007 Geothermal Torrens Petratherm Geodynamics Green Rock KUTh S&P/ASX 300 All Resources Energy Energy Energy Metals & Mining Ordinaries 34 Allegiance Mining NL Target‘s Statement

7.6 Net smelter royalty Rio Tinto has a 2% net smelter royalty over certain mining tenements owned by Allegiance (Allegiance Royalties). Allegiance understands that a member of the Rio Tinto Group has entered into an agreement for the sale of 16 royalties, including the Allegiance Royalties, to International Royalty Corporation. Allegiance maintains it has a fi rst right of refusal to acquire the Allegiance Royalties and intends to pursue being given the

opportunity conferred by this right. For personal use only use personal For

Grinding section, Avebury Mill

35 Section Profi le of Allegiance continued 7

7.7 Board of Directors Tony Howland-Rose David Deitz Executive Chairman of Directors Executive Director MSc, DIC, FGS, FIMMM, FAusIMM, BCom, CPA, MAusIMM MAICD, FAIG, CEng Tony Howland-Rose is a qualifi ed and as Chairman and Managing David is a fi nancial accountant who geophysicist who has extensive Director of its local subsidiary Scintrex has had some 15 years experience in experience in mining exploration Pty Ltd. Other positions have included the mineral exploration industry. He is and has contributed to many major Directorships of Australia China also the Chairman of Gullewa Limited. discoveries in Australia including the Ventures Ltd, Technomin Ltd and Appointed to the Board of Directors Mt Windarra and South Mt Keith General Gold NL. on 24 August 2000. nickel deposits in Western Australia, Tony was also instrumental in forming the Elura lead zinc deposit in New the fi rst post revolutionary mineral South Wales, the Sandy Flat Redbank joint venture with China National Copper Project and the Cape Horn Nonferrous Mining Corp (CNNC) in (Mount Lyell) copper, gold and other the early 1980s and the Huangshan base metals deposits on the west Xingjian nickel discovery in 1985. coast of Tasmania. His experience includes acting as Director and as Appointed to the Board of Directors Vice President of the listed Canadian on 30 January 1996.

geophysical company Scintrex Ltd For personal use only use personal For

36 Allegiance Mining NL Target‘s Statement

Eddie Lee Barry Sullivan Shi Peirong Zhang Yimin Non-executive Director Non-executive Director Non-executive Director Alternative Director for BE (Syd), BSc, DIP BDG Sc BS(Min), ARSM, FAusIMM, MAICD Mr Shi Peirong

Mr Lee has an extensive background Mr Sullivan has had a long and Mr Shi Peirong is Vice President, Vice Mr Zhang Yimin is Jinchuan’s in corporate management and is the successful career in the mining Chairman and Chief Financial Offi cer Chief Australian Representative. Australian representative of several industry, both in South Africa with of Jinchuan. He joined Jinchuan in He received a Diploma at the substantial Asian investment and Anglo America (1969–74) and in 1980 after receiving a Masters Degree Metallurgical and Architectural corporate groups. He is the Chairman Australia with Mount Isa Mines from in Economics and Marketing at the Institute of Chung Chan before of Metroland Australia Limited. Mr Lee 1974 to 1995. He spent the latter Marxism College, Beijing. joining Jinchuan in 1981. has wide experience in the fi elds of six years as Executive General Appointed to the Board of Directors Appointed as an alternate Director civil engineering, fi nance, construction Manager, in which capacity Barry on 7 November 2007. on 7 November 2007. and mining. was responsible for total operations at Mt Isa including four underground Appointed to the Board of Directors mines and one open cut mine, power on 20 March 1995. stations, dams and comprehensive support services such as workshops, a chemical laboratory and a medical centre.

He is currently Chairman of Exco Resources Limited and a Director of Sedimentary Holdings Ltd.

Appointed to the Board of Directors

on 8 March 2004. For personal use only use personal For

37 Section 7 Profi le of Allegiance continued

7.8 Senior Management Exploration Avebury Nickel Project The Senior Management of Allegiance, other than Board Lindsay Newnham Paul Richardson David Leedham members, is comprised of the General Manager – Exploration General Manager Avebury Mining Manager following individuals: and Business Development Operations BEng (Mining) BSc, FAusIMM BSc (Hons), ACSM, MAusIMM Lindsay commenced his professional Paul has worked for 24 years in the David started in the mining industry career in mining with RGC at the Australian mining industry, initially in over 30 years ago, fi rstly as a Mt Lyell copper mine, Tasmania in the technical fi eld of metallurgy and Mine Surveyor then Underground 1966 and was promoted to Chief later mining, at a series of operations Miner, completing his Bachelor of Geologist for Renison Limited working producing base metals, tin, tantalum, Engineering (Mining) in Ballarat in on the Renison tin mine, Tasmania gold and gold/copper products. 1985. Since then he has worked and tin exploration in Eastern Australia for a number of mining companies For the last 10 years Paul has held (1971–82). He was also Exploration throughout Australia on existing positions of Mine Manager for open Manager for RGC (1982–88) during mining projects plus others at pit and underground mines, and which time he played a major role in pre-feasibility, feasibility and more recently positions of General the discovery of the Henty Goldmine development and expansion phases. Manager Operations for two mining in Tasmania. David has worked as a Graduate companies. During this time he has Engineer through to General Manager Lindsay became Manager of New been involved with the development and has been involved with the mining Projects for Spectrum Resources of new projects, feasibility studies and and processing of tin, wolfram, silver, (1988–1990), focusing on developing start-up of new mining operations. lead, zinc, nickel, copper and gold. the Anchor Tin Mine in eastern Paul took up the position of General Tasmania. He has operated his Manager Avebury Operations with consultancy fi rm, Newnham Allegiance in late November 2004. Exploration and Mining Services, since 1990 and undertook the role of Project Manager at Beaconsfi eld gold

mine. Following this, he commenced For personal use only use personal For undertaking many projects including, in conjunction with Tony Howland- Rose, managing the exploration and discovery of the Avebury Nickel Project.

38 Allegiance Mining NL Target‘s Statement

Corporate

Tim Callaghan Peter Clay Duncan Aplin Graham Hurwitz Chief Geologist Processing Manager Administration Manager, Chief Financial Offi cer M. Econ. Geol, BSc (Hons), MAusIMM BSc (Hons) Applied Mineral Sciences, Avebury Operations BCom (Hons), CA Leeds UK, MAusIMM MBA Tim was educated at the University Peter has more than 30 years Duncan has worked in the mining Graham is a Chartered Accountant of Tasmania majoring in Geology experience in mineral processing and mineral processing industry for and holds a Bachelor of Commerce (Honours) (also a Master of Economic operations in Australia and overseas, over 25 years. Before joining the (Honours) degree. At present, he Geology), after which he commenced processing nickel, copper, zinc, Avebury operations, he worked for is a Principal of WHK Horwath, work with a Northern Territory gold gold, iron ore and mineral sands. BHP, Western Mining Corporation, a national fi rm of Chartered mine. He has spent half his working He has helped design, commission Pancontinental Mining and Mount Accountants. Prior to this, he was a life as an exploration geologist and operate three new plants, two Isa Mines and spent some time in Director of an accountancy practice for gold and tin before joining the of which as Plant Superintendent. corporate roles with Mount Isa Mines. for over 20 years. Graham has Avebury Nickel Project. Tim joined He also has extensive experience in He has had signifi cant exposure to extensive experience in the areas the Avebury Nickel Project as Chief both operations management and all facets of accounting, supply, HR, of taxation, business services, Geologist in April 2004. process development. IR, site management, marketing business acquisitions and disposals. (including base metal concentrates

sold into northern Asia) and logistics. For personal use only use personal For

39 Section Additional Information 8

8.1 Price movements in Allegiance Shares The following table sets out the VWAP of Allegiance Shares at certain dates prior to 17 December 2007 (the date that Zinifex announced its Offer).

Date Price traded

VWAP for 6 months before Offer announcement $0.70 VWAP for 3 months before Offer announcement $0.71 VWAP for 1 month before Offer announcement $0.70 14 December 2007 (last trading day before Offer announcement) $0.71

8.2 Recommendations of Directors Each of your Directors recommends that you REJECT the Offer for the reasons set out in this Target’s Statement. 8.3 Allegiance’s Directors’ interests in Allegiance securities As at the date of this Target’s Statement, your Directors have the following

direct and indirect interests in Allegiance securities: For personal use only use personal For

40 Allegiance Mining NL Target‘s Statement

Director Number and class of securities Interest in the securities

Tony Howland-Rose 21,951,027 ordinary shares 4,093,949 (Direct interest) 5,000,000 options 17,857,078 (Indirect interest) 5,000,000 options exercisable at 98.57 cents, expiring 18 July 2012 Eddie Lee 1,000,000 ordinary shares 1,000,000 (Direct interest) 2,000,000 options 500,000 options exercisable at 24 cents, expiring 12 January 2009 500,000 options exercisable at 34 cents, expiring 1 June 2012 1,000,000 options exercisable at 98.57 cents, expiring 18 July 2012 Barry Sullivan 2,158,449 ordinary shares 2,000,000 (Direct interest) 1,000,000 options 158,449 (Indirect interest) 1,000,000 options exercisable at 98.57 cents, expiring 18 July 2012 David Deitz 24,330,578 ordinary shares 41,809 (Direct interest)

5,000,000 options 24,288,769 (Indirect interest) 5,000,000 options exercisable at 98.57 cents, expiring 18 July 2012 Shi Peirong Nil –

Zhang Yimin Nil – For personal use only use personal For

41 Section 8 Additional Information continued

8.4 Allegiance’s Directors’ interests in Zinifex’s securities (b) Exploration, evaluation and development As at the date of this Target’s Statement, your Directors have no direct or Capitalised exploration, evaluation and development expenditure has indirect interests in securities of Zinifex. increased from $48 million at 31 December 2006 to $168 million (unaudited) at 31 December 2007, due to additional drilling programs undertaken during 8.5 Share dealings in Zinifex securities by the period and continued development of the Avebury Nickel Mine and Mill. Allegiance’s associates There have been no acquisitions or disposals of shares in Zinifex by (c) Trade and other receivables Allegiance, or any associate of Allegiance, in the four months ending on Trade and other receivables have increased from $8 million at December 2006 the day immediately before the day on which the Bidder’s Statement to $13 million (unaudited) at 31 December 2007 due to the increased activities was served on Allegiance. of Allegiance. 8.6 Share dealings in Allegiance securities by (d) Other assets Allegiance’s associates Other assets increased from $4 million at December 2006 to $12 million There have been no acquisitions or disposals of securities in Allegiance by (unaudited) at 31 December 2007 principally due to an increase in available any associate of Allegiance or Director in the four months ending on the day for sale fi nancial assets. immediately before the day that the Bidder’s Statement was served on Allegiance. (e) Borrowings 8.7 Change in Allegiance’s fi nancial position Current and non current borrowings at 31 December 2006 totalled $9 million, Allegiance‘s last published audited fi nancial statements are for the year ended comprising a secured loan from Societe Generale Australia Branch of $5 million 31 December 2006 and were lodged with the ASX on 27 March 2007. Such and a secured subordinated loan payable of $4 million from Jinchuan. As at fi nancial statements were the last fi nancial statements presented before 31 December 2007, these loans had been repaid. Allegiance at a general meeting (being the annual general meeting of Allegiance As at 31 December 2007, unaudited current and non current borrowings held on 22 May 2007). totalled $23 million, comprising a secured loan facility from Societe Generale So far as is known to any of the Directors of Allegiance, the fi nancial position and ANZ. In connection with the facility, Allegiance has put in place hedging of Allegiance has not materially changed since 31 December 2006 except: arrangements with respect to movements in US dollar foreign exchange and interest rates. (a) Cash and cash equivalents Cash and cash equivalents have decreased from $51 million at On 9 January 2008, the Company drew down a further $11 million as 31 December 2006 to $24 million (unaudited) at 31 December 2007. scheduled under its secured loan facility. Cash infl ows are principally attributable to an increase in issued capital and For personal use only use personal For (f) Trade and other payables borrowings while cash outfl ows are principally attributable to an increase Trade and other payables have increased from $5 million at December 2006 exploration, evaluation and development expenditure. to $27 million (unaudited) at 31 December 2007 largely due to the amounts owing at year end with respect to the Company’s exploration, evaluation and development and investment activities.

42 Allegiance Mining NL Target‘s Statement

(g) Issued capital 8.11 Consents The issued capital of Allegiance has increased from $122 million at As permitted by ASIC Class Order 01/1543, this Target’s Statement contains 31 December 2006 to $195 million (unaudited) at 31 December 2007. The statements that are made, or based on statements that are made, in increase is attributable to the issue of 104.8 million shares during the period. documents lodged with ASIC or given to the ASX (in compliance with the Listing Rules). In accordance with this Class Order, the consent of persons The costs associated with the defence of the proposed takeover of Allegiance such statements are attributed to is not required for the inclusion of such have not been included in the unaudited 31 December 2007 accounts. statements. Any Shareholder who would like a copy of any of those documents 8.8 Effect of a takeover on Allegiance’s material contracts may obtain a copy (free of charge) during the Offer Period by contacting the Allegiance has undertaken a review of those contracts to which an Allegiance Shareholder Information Line on 1300 135 871 (from within Australia) Allegiance Group entity is a party that it considers to be material to its or +61 3 9415 4395 (from outside Australia) from 9.00am to 5.00pm ESDT operations, such that if a counterparty to any such contract exercises Monday to Friday. any contractual change of control rights this could have a material impact Merrill Lynch International Australia Pty Ltd ABN 31 002 892 846 has given, on the future prospects of Allegiance. and has not withdrawn before the date of this Target’s Statement, its consent From the review, Allegiance has identifi ed one contract that contains a to being named as fi nancial adviser to Allegiance in this Target’s Statement in change of control provision that may allow the counterparty to terminate the form and context in which it is named. the contract as a result of the change of ownership of Allegiance Shares. Australia and New Zealand Banking Group Limited ABN 11 005 357 522 The Project Finance Facility Agreement entered into by Allegiance Metals has given, and has not withdrawn before the date of this Target’s Statement, Pty Limited with ANZ and Societe Generale for a fi nance facility contains its consent to being named as fi nancial adviser to Allegiance in this Target’s an event of default which could be triggered if another party gains control Statement in the form and context in which it is named. of Allegiance or more than 50% of its voting shares. The consequence of such event of default could be the acceleration of repayment of the facility Minter Ellison have given, and have not withdrawn before the date of this and enforcement of the relevant security. Target’s Statement, their consent to being named in this Target’s Statement 8.9 Agreements connected with or conditional on the Offer as lawyers and legal advisers to Allegiance in the form and context in which they are named. There is no agreement or arrangement made between any Director or offi cer of Allegiance and any other person in connection with or conditional on the Schetzer Brott & Appel have given, and have not withdrawn before the date outcome of the Offer. of this Target’s Statement, their consent to being named in this Target’s 8.10 Interest of Directors in contracts Statement as lawyers and legal advisers to Allegiance in the form and context For personal use only use personal For in which they are named. None of your Directors has any interest in any contract entered into by Zinifex. In addition, as permitted by ASIC Class Order 07/429, this Target’s Statement contains share price trading information sourced from IRESS without its consent.

43 Section 8 Additional Information continued

8.12 Disclaimers – The information contained in the Bidder’s Statement (to the extent that Each of the persons named in section 8 as having given their consent to the the information is not inconsistent or superseded by information in this inclusion of a statement or being named in this Target’s Statement: Target’s Statement); – Does not make, or purport to make, any statement in this Target’s Statement – The information contained in Allegiance’s releases to the ASX, and in or any statement on which a statement in this Target’s Statement is based the documents lodged by Allegiance with ASIC, before the date of this other than, in the case of a person referred to above as having given their Target’s Statement; and consent to the inclusion of a statement, any statement that has been – The information contained in this Target’s Statement. included in this Target’s Statement with the consent of that person; and Your Directors have assumed, for the purposes of preparing this Target’s – To the maximum extent permitted by law, expressly disclaims and takes no Statement, that the information in the Bidder’s Statement is accurate. However, responsibility for any part of this Target’s Statement, other than a reference your Directors do not take any responsibility for the contents of the Bidder’s to its name and, in the case of a person referred to above as having given Statement, and are not to be taken as endorsing, in any way, any or all their consent to the inclusion of a statement, any statement which has statements contained in it. been included in this Target’s Statement with the consent of that party. In deciding what information should be included in this Target’s Statement, 8.13 No other material information the Directors have had regard to: This Target’s Statement is required to include all the information that Allegiance Shareholders and their professional advisers would reasonably – The nature of the Allegiance Shares; require to make an informed assessment whether to accept the Offer, but: – The matters that Shareholders may reasonably be expected to know; – Only to the extent to which it is reasonable for Shareholders and their – The fact that certain matters may reasonably be expected to be known professional advisers to expect to fi nd this information in this Target’s to Shareholders’ professional advisers; and Statement; and – The time available to Allegiance to prepare this Target’s Statement. – Only if the information is known to any Director of Allegiance. 8.14 Defi nitions and interpretation Your Directors are of the opinion that the information that Allegiance Defi nitions Shareholders and their professional advisers would reasonably require In this statement, unless the context otherwise requires:

to make an informed assessment whether to accept the Offer is: For personal use only use personal For

44 Allegiance Mining NL Target‘s Statement

Allegiance or Company Allegiance Mining NL ABN 38 059 676 783

Allegiance Group Allegiance and its subsidiaries

Allegiance Nickel Province the Allegiance Tasmanian base metals mining and exploration leases

Allegiance Royalties a 2% net smelter royalty over certain mining tenements owned by Allegiance

Allegiance Team employees and contractors of Allegiance

AMEC Association of Mining and Exploration Companies Inc

ANZ Australia and New Zealand Banking Group Limited ABN 11 005 357 522

ASIC the Australian Securities and Investments Commission

ASX ASX Limited ACN 008 624 691 or, as the context requires, the fi nancial market conducted by it

Avebury Nickel Project the Avebury mine in Tasmania owned by Allegiance

Barminco Barminco Limited ACN 109 439 894

Bidder’s Statement the bidder’s statement by Zinifex dated 17 December 2007

Board the Board of Directors of Allegiance

Brownfi elds Exploration extensions of existing discoveries

CAGR compound annual growth rate

Corporations Act the Corporations Act 2001 (Cth)

CRA Exploration CRA Exploration Pty Ltd now Rio Tinto Exploration Pty Limited ACN 000 057 125

Cu copper

For personal use only use personal For Directors the directors of Allegiance

Greenfi elds Exploration new exploration on prospective targets

GXT Geothermal Energy Tasmania Holdings Limited ACN 126 183 006 and its subsidiaries

45 Section 8 Additional Information continued

Hot Granites hot rocks found below the surface and used for geothermal energy production

Jinchuan Jinchuan Group Limited

km2 square kilometres

kt thousands of tonnes

Listing Rules the offi cial listing rules of the ASX

Ni nickel

Offer or Zinifex Offer the offer from Zinifex made in the Bidder’s Statement to acquire all the Allegiance Shares

Offer Period the period for which the Offer is open for acceptance

RGC the Renison Goldfi elds group, including Iluka Corporation ACN 002 048 464, formerly known as Renison Goldfi elds Consolidated Limited, and its subsidiaries

Senior Management those persons set out in section 7.8, including employees and consultants

Share an ordinary share in Allegiance

Shareholder a holder of any ordinary share(s) in Allegiance

Societe Generale Societe Generale Australia Branch ARBN 092 516 286

Target’s Statement this target statement issued under section 633 of the Corporations Act

VWAP volume weighted average price

Zinifex Zinifex Australia Limited ABN 23 004 074 962 For personal use only use personal For

46 Allegiance Mining NL Target‘s Statement

Interpretation 8.15 Approval of Target’s Statement In this statement unless the context otherwise requires: This Target’s Statement has been approved by unanimous resolution of the Directors of Allegiance. Pursuant to section 351 of the Corporations Act, (a) the singular includes the plural and vice versa and words importing one signed on behalf of Allegiance Mining NL by Anthony William Howland-Rose gender include other genders; who is authorised to sign this Target’s Statements on behalf of Allegiance. (b) terms defi ned in the Corporations Act as at the date of this statement have the meanings ascribed to them in the Corporations Act at that date; (c) a reference to any currency is a reference to Australian currency; (d) a reference to a statute of any parliament or any section, provision or schedule of a statute of any parliament includes a reference to any statutory amendment, variation or consolidation of the statute, section, provision or schedule and includes all statutory instruments issued under the statute, section, provision or schedule; Tony Howland-Rose (e) a reference to a paragraph, clause, schedule or annexure is a reference MSc, DIC, FGS, FIMMM, FAusIMM, MAICD, FAIG, CEng to a part of this statement and a reference to this statement includes any Chairman schedules and annexures; and Dated 17 January 2008 (f) a reference to time is a reference to time in Sydney, Australia. Headings

In this statement, headings are used for reference only. For personal use only use personal For

47 Corporate Directory

Directors Financial advisers Anthony (Tony) William Howland-Rose Merrill Lynch International (Australia) Limited Eddie Lee Level 38 David Deitz Governor Phillip Tower Barry Sullivan 1 Farrer Place Shi Peirong Sydney NSW 2000 Zhang Yimin (alternate for Shi Peirong) Australia and New Zealand Banking Group Limited Company secretaries Level 17 David Deitz 20 Martin Place Elan Glenn Slater Sydney NSW 2000 Registered offi ce Legal advisers Level 11 Minter Ellison Quantum House Aurora Place 49–51 York Street 88 Phillip Street Sydney NSW 2000 Sydney NSW 2000 Telephone: +61 2 9397 7777 Schetzer Brott & Appel Facsimile: +61 2 9397 7788 52 Market Street Website: www.allegiance-mining.com.au Melbourne VIC 3000 Share registry Computershare Investor Services Pty Limited Level 3 60 Carrington Street Sydney NSW 2000 Telephone: 1300 850 505 (within Australia) or +61 3 9415 5000 (outside Australia) Facsimile: +61 3 9473 2500

For personal use only use personal For Website: www.computershare.com

48 For personal use only

REJECT For personal use only use personal For