Perilya to Buy Globestar Mining for C$182 Million

Perilya Limited today announced that it has entered into a binding pre-bid agreement with GlobeStar Mining Corporation for it to pursue an all-cash offer to acquire all of the issued and outstanding shares of GlobeStar by way of a friendly take-over bid.

Under the terms of the Pre-Bid Agreement, Perilya has agreed to offer C$1.65 per share, valuing GlobeStar at approximately C$184 million (A$186.1 million) on a fully diluted basis.

GlobeStar is a mining and exploration company headquartered in Toronto and listed on the Toronto Stock Exchange (TSX: GMI). The primary assets are the low cost Cerro de Maigeita gold mine tanzaniamón coppergold- silver project and an extensive portfolio of exploration tenements covering base metals and nickel in the Dominican Republic and 60 % ownership of the Moblan lithium development project in Quebec, Canada.

Highlights:

• The acquisition gives Perilya immediate access to a low cost operating project producing copper, gold and silver with a seven year mine life and potential to increase both mine life and production rate


• Perilya will operate two significant producing mines which are both cashflow positive and profitable


• It delivers geographical diversification through the addition of an operating asset outside Australia


• Provides a presence in the Latin America region and a Spanish speaking exploration team with regional experience


• The operating mine and extensive exploration tenements in the Dominican Republic, which is an underexplored region, include areas alongside Barrick’s Pueblo Viejo deposit and Xstrata’s Falcondo nickel mine


• The Dominican Republic is a stable democracy with good infrastructure in close proximity to the operations


• The transaction is unanimously recommended by GlobeStar’s Board of Directors


• Lock-up agreements representing 48.77% of GlobeStar’s fully diluted share capital have been received from GlobeStar Directors and shareholders in support of the Offer

The Offer represents a premium of 29.9% based on the closing price of C$1.27 per GlobeStar share on the TSX on 6 October 2010 and a 44% premium to the 30-trading day volume weighted average on the TSX for the period ending 6 October 2010.

The Board of Directors of GlobeStar has unanimously determined that the Offer is fair, from a financial point of view, to the holders of GlobeStar common shares and is in the best interests of GlobeStar and, subject to the entering into of a support agreement, will recommend acceptance of the Offer by its shareholders. The directors have entered into lock-up agreements for all the common shares and options of GlobeStar they beneficially own or over which they exercise control or direction in support of the Offer.

In total, lock-up agreements representing 48.77% of the fully diluted share capital of GlobeStar have been entered into by directors, management and other shareholders. The lock-up agreements require shareholders to tender into the bid within the first ten days of the Offer period, subject to a better and higher offer.

The definitive support agreement will be on the same terms as set forth in the Pre-Bid Agreement and will be executed immediately prior to mailing of Perilya’s Bid Circular, which is expected to occur by 5th November 2010. Entering into a support agreement is subject, among other things, to confirmation financing arrangements. The Offer will be financed through a combination of debt finance and Perilya’s existing cash reserves. Perilya’s major shareholder, Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd (“Zhongjin Lingnan”) fully supports the transaction.

Under the Pre-Bid Agreement GlobeStar has agreed to pay Perilya a termination fee of C$7.35 million under certain circumstances. GlobeStar has also provided Perilya with certain customary rights, including a right to match competing offers.

“The acquisition of GlobeStar will enhance Perilya’s base metals portfolio with the addition of Cerro de Maimón, an open pit copper-gold-silver mine with strong positive cashflow, a mine life of seven years with potential to extend the mine life. It also offers commodity diversification with gold and silver by-products from the copper production and exposure to nickel and lithium through GlobeStar’s exploration tenements. We are also excited about working with the Spanish speaking team to pursue future growth opportunities in the highly prospective Latin American region” said Perilya CEO, Paul Arndt.

Perilya’s Chairman, Mr. Zhang Shuijian said that, “the addition by Perilya of another profitable, cash accretive operation significantly de-risks Perilya’s reliance on its Broken Hill operations and is in line with the Company’s strategic plan of pursuing growth through both internal and external opportunities as appropriate.” He added that, “Zhongjin Lingnan, Perilya’s major shareholder, is fully supportive of the acquisition”.

“Our Board of Directors has unanimously determined that Perilya’s Offer is fair, from a financial point of view to our shareholders, and is in the best interests of GlobeStar. The Offer provides GlobeStar shareholders with immediate value at an attractive premium to the current and volume weighted average share price. Our independent financial adviser has determined the Offer is fair, from a financial point of view, to our shareholders. We are working with Perilya to finalise the support agreement and progress the transaction” said GlobeStar CEO, David Brace.