Acquisition of Minova

17 October, 2006

Orica Limited (“Orica”) today announced that it has signed an agreement to acquire leading mining services company Minova for a purchase price of A$857m (£343m) plus A$13m (£5m) of acquisition costs.

UK based Minova is the clear global leader in providing specialist chemical products for underground mining and civil engineering activities.  These products include resin capsules, powders and injection chemicals for use in strata support, ground consolidation and ventilation systems.

Minova operates in all of the world’s major mining regions with the exception of South America.  It has over 1,200 employees, operates 17 manufacturing facilities in 10 countries and sells into more than 50 countries.

“The acquisition of Minova is consistent with our strategy to grow Orica into a truly global company that delivers superior shareholder returns,” Orica Managing Director and CEO, Mr Graeme Liebelt said.

“Minova is an outstanding business in an attractive and growing market segment that is closely adjacent to Orica’s existing Mining Services business.  It has a high quality and committed management team that has demonstrated an excellent track record of significant earnings and cashflow growth.

“The operations are highly complementary with Orica’s existing Mining Services business which will provide significant benefits going forward.  We see a number of further opportunities to grow the business, both organically and by way of acquisition.

“Minova is also well positioned in higher growth markets such as Russia, Kazakhstan and China where we see strong prospects due to ongoing demand growth and product penetration with an increasing focus on the safety and efficiency of underground mining.” Mr Liebelt said.

Strategically the acquisition is compelling for Orica:

Enhances Orica’s position as the clear global leader in mining services

Is well positioned for growth and emerging markets

Provides earnings diversification for Orica with low earnings volatility

Has a strong financial position with very strong cashflow and earnings

Provides product, geographic, customer and sector diversification

Retains committed management team with strong record of success.

Transaction Structure and Timing

The acquisition of Minova is expected to be completed before the end of calendar year 2006, after required regulatory clearances are obtained.

Minova will be held as a separate business alongside Orica Mining Services and will not impact the ongoing integration of the Dyno Nobel businesses.  Minova’s Chief Executive Officer Sandy Arbuthnot will report directly to Orica Managing Director & CEO, Graeme Liebelt. 

Financial Impact

The acquisition of Minova will be immediately EPS accretive after transaction costs.

Expected calendar 2006 sales revenue for Minova is approximately A$420m (£168m) with EBITDA of approximately A$98m (£39m).  Orica’s purchase price represents a multiple, after transaction costs, of 8.9 times 2006 calendar EBITDA and the acquisition is forecast to achieve Orica’s 18% RONA target in the third full year after full integration of the business.

Funding

The purchase price will be funded through a combination of cash and drawdown of existing debt facilities.  Post-acquisition gearing will remain below Orica’s target range of 35% – 45% (net debt to net debt plus equity).

Further Information

Further details regarding Minova, its activities, financial dimensions and the financial impact of the acquisition on Orica, are included in the slide pack lodged with the Australian Stock Exchange together with this announcement.