PMCI Platinum Min

RNS Number:1781L
Platinum Mining Corp of India PLC
30 October 2006



                      PLATINUM MINING CORPORATION OF INDIA



30 October 2006



Platinum Mining Corporation of India PLC ("PMCI" or "the Company") announces
today that it has posted to all shareholders its response to the offer made by
Montrose Partners LLP on behalf of SPI Partners Limited ("SPI") to acquire all
of the PMCI shares not already owned by SPI or its associates.



Set out below is the Chairman Philip Adeane's letter to PMCI shareholders,
extracted from the circular sent to shareholders:



Dear Fellow Shareholder



I wrote to you on 4 October 2006 to inform you of the unsolicited and unwelcome
offer by SPI to acquire all of the PMCI Shares for cash at 12 pence per share.
Your Board's recommendation was to take no action in relation to your PMCI
Shares and I am writing to you now to explain in more detail why your Board's
recommendation continues to be that you should reject SPI's opportunistic offer.



In summary, your Board advises you to reject the SPI Offer as it believes that:



* The SPI Offer materially undervalues the PGM potential at the Boula Mine



* The SPI Offer fails to take due account of significant increases in PGM prices
  since PMCI's flotation on AIM



* Your current Board has the expertise and determination to progress exploration
  at the Boula Mine



Given the opportunities that we are confident lie ahead for our business, the
Board firmly believes that the price being offered by SPI is wholly inadequate
and does not reflect the prospects of PMCI and its business.



The reasons are set out in more detail below:



1. The SPI Offer materially undervalues the PGM potential at the Boula Mine



Your Board believes that the SPI Offer materially undervalues the potential of
the PGM resources at the Boula Mine.



PMCI was admitted to trading on AIM on 19 April 2005 at a price of 22 pence per
PMCI Share. Immediately after Admission, the business of PMCI (net of its cash
balances) was valued at approximately #26.3 million, which equated to 15.0 pence
per PMCI Share. The SPI Offer of 12 pence per PMCI Share values the business of
PMCI (net of its cash balances) at approximately #10.9 million which equates to
only 6.2 pence per PMCI Share. This is less than 42 per cent. of the market
value of PMCI (net of its cash balances) immediately after Admission.



For the purposes of the AIM flotation, PMCI commissioned SRK to carry out a
technical review of the deposit at the Boula Mine and to review the results of
BRGM's investigation of the area covered by the Mining Lease that was completed
in 1999. SRK's report stated that:



"This breccia, termed the Mineralised Breccia Zone, has now been demonstrated to
be up to 75m wide, and to extend for at least 180m down dip and for at least 2km
along strike from the Boula mine into adjacent leases held by other chromite
mining companies.'



"BRGM reported an Indicated and Inferred Mineral Resource, as defined by the
Council for Mining and Metallurgical Institutions (CMMI), for the Mineralised
Breccia Zone of some 14.2Mt with a Platinum equivalent (platinum plus palladium)
grade of 1.5g/t (680,000 ozs.,  More than 12Mt of this at the same mean grade
fell within the FACOR lease. The estimates were made from surface to a vertical
depth of about 200m, suggesting that at least a portion of this may be amenable
to open pit mining and, in fact, part of the mineralised zone is already exposed
in the existing chromite open-pit. The zone is open at depth and along strike to
the north within the FACOR lease."



"it is likely that there will be other areas, in addition to the Mineralised
Breccia Zone, where PGEs have been sufficiently concentrated to form continuous
zones of potentially economic grades".



This means that, based on the limited exploration conducted, more than 12
million tonnes of the Indicated and Inferred Mineral Resource (approximately
575,000 ozs) of platinum and palladium falls into the part of the Mineralised
Breccia Zone covered by the Mining Lease. In addition, the country rocks
adjacent to the Mineralised Breccia Zone falling within the area covered by the
Mining Lease also offers significant exploration potential.



The SRK report also indicates that PMCI intended:



"to investigate the following waste rock left from the chrome operated which has
been surveyed by PMCI with a view to determining their resource potential:



* The 1.65Mt of stockpiled chromite ore.



* The 24.5Mt of mixed origin waste rock.



* The Country and host rocks, such as the Bangur Gabbro, that contain widespread
  disseminated finegrained PGEs with recorded spot values up to 10g/t Pt+Pd."



Since the date of the SRK report, the Company has announced PGM assay results on
100 samples from this stockpiled ore and waste rock. These results indicate an
overall combined average grade of 1.53g/tonne of platinum plus palladium, which
is consistent with previous analysis as reported on by SRK.



Nothing has arisen since the AIM flotation to alter the Board's belief in the
potential for PGM exploration at the Boula Mine, as reported on by SRK. Your
Board continues to be confident in the prospects for the Boula Mine and believes
that the SPI Offer materially undervalues this potential.



2. The SPI Offer fails to take due account of significant increases in PGM
prices



In the period since PMCI was admitted to trading on AIM, the market prices of
PGMs (including platinum and palladium) have increased significantly:



* The price of platinum has increased 23 per cent. from US$868 per oz on 19
  April 2005 to US$1,069 per oz on 25 October 2006 (the Latest Practicable Date).



* The price of palladium has increased 61 per cent. from US$200 per oz on 19
  April 2005 to US$322 per oz on 25 October 2006 (the Latest Practicable Date).



Your Board believes that the SPI Offer fails to take due account of the
significant increases in PGM prices, which are fundamental to any proper
assessment of the value of PMCI.



3. The current Board has the expertise and determination to progress exploration
at

the Boula Mine and to deliver value to all shareholders



In the Offer Document SPI indicates that it has become increasingly frustrated
with the delays in the development of the Boula Mine. So has the Board of PMCI.



The facts are that, since PMCI's admission to trading on AIM, progress at the
Boula Mine has been severely hindered by the departure of the then Managing
Director, Steven Newbery, in June 2005. There have also been various changes to
the Board, largely as a result of Dr Newbery's and Lisa Pickering's continuing
influence as substantial shareholders.



The reasons for Dr Newbery's departure and these changes are as follows:



On 1 June 2005, Dr Newbery, who was then Managing Director of PMCI and Ms
Pickering, who was then also a director, were dismissed for their failure to
disclose to the rest of the Board their ownership of a property which had been
leased to a member of the PMCI Group.



On 23 February 2006, at the Company's Annual General Meeting, Dr Newbery and Ms
Pickering voted against the re-election of Richard Healey (then Chairman and
Chief Executive) and Alan Kingsley (a Non-Executive Director). Neither of them
were re-elected.



On 2 June 2006, at an extraordinary general meeting which had been requisitioned
by Dr Newbery, Dr Robert Weinberg and Patrick Gorman (then acting Chairman and
Chief Executive respectively) were removed from office as directors.



The Board considers that the dismissal and removal of many of the executive and
non-executive directors has been extremely time consuming, costly and
frustrating. It has diverted attention away from the Boula Mine and has
prevented and delayed the exploration effort and the formulation of a mine plan
- both fundamental to the progression of the project.



Dr Newbery and Ms Pickering continue to hold a significant shareholding in PMCI
and are now acting in concert with SPI (for the purposes of the Takeover Code)
and have both entered into irrevocable undertakings to accept the SPI Offer. In
addition, Dr Newbery now:



* is a full-time consultant of Taybridge Limited, a wholly-owned subsidiary of
SUN (the parent company of SPI), and is a director of Great Northern Mining &
Exploration Inc., a company in which the SUN Group holds a 32 per cent.
interest; and



* may become entitled to participate in incentive plans applicable to employees
of and full time consultants to the SUN Group.



These Board changes have diverted attention away from making progress. The Board
has been strengthened and that the current Board can move forward towards
achieving PMCI's objectives.



The members of the current Board are:



Philip Adeane, Non-Executive Chairman

From 1982 to March 2005, he was Managing Director of Antofagasta plc, the
FTSE-100 listed copper mining company. He now retains the role of Senior Advisor
to Antofagasta plc. During his term as Managing Director, Antofagasta developed,
amongst others, the Los Pelambres mine from the exploration stage through to
feasibility, financing, mine construction and production. He has also been a
director of several mining companies with a focus on gold and precious metals
across Central and West Africa.



Dr Jeffrey O'Leary, Non-Executive Director

A Fellow of the Institute of Materials, Minerals and Mining and a Chartered
Engineer, he holds a BSc in Mining Geology and a PhD in Geostatistics from the
Royal School of Mines in London. He has substantial mining experience, including
as RTZ Plc's Chief Mine Geologist and Geostatistician and joint author of its
mine valuation software. After joining HSBC in 1984, he was involved in a wide
variety of mining transactions, including the first debt/equity swap in the
mining industry. He is also a director of a number of other listed mining
companies including Monterrico Metals plc.



Vijay Tandon, Non-Executive Director

Currently a corporate finance adviser with Sindicatum Limited, Vijay has
recently held positions with Saga Petroleum in Oslo and Marathon Oil
International in London. He holds an MBA from the Rotterdam School of Management
and an MSc from the Royal School of Mines.



Umesh Sahdev, Operations Director

Umesh holds a B. Tech degree from Punjab University, India and a Diploma in
Management from IGNOU, New Delhi. He was General Manager of the Indian
operations of Siam Superior, a Thailand-based business group, and before joining
PMCI, he was Head of Merchant Banking Operations at Mefcom Capital Markets
Limited.



Malcolm Groat, Finance Director and Company Secretary

After qualifying as a chartered accountant with PricewaterhouseCoopers in
London, Malcolm has worked in investment banking in the UK, USA and Middle East
and holds an MBA from Warwick University. More recently, Malcolm served as
Finance Director of global divisions of T&N Plc and Morgan Crucible Plc, two
FTSE 250 UK engineering groups, and as group Finance Director of two large
global services groups.



SPI has confirmed that the existing employment rights, including pension rights,
of employees of members of the PMCI Group will be fully safeguarded. The Board
of PMCI takes comfort from this statement in the interests of its employees and
believes that SPI's strategy for PMCI (as set out in the Offer Document) will
not prejudice its employees if the SPI offer becomes, or is declared,
unconditional in all respects.



I believe that the current Board has the balance of necessary skills, expertise
and determination to advance PMCI's exploration at the Boula Mine and to deliver
value to all shareholders.



4. PMCI's Strategy



Since June 2006, the current Board has reviewed PMCI's situation and has
developed a process to work with FACOR to secure the necessary consent for the
transfer of the Mining Lease to BPM in accordance with the Joint Venture and
Shareholders' Agreement. This agreement, which remains in full force and effect,
obliges FACOR to transfer the Mining Lease and certain mining assets (such as
existing buildings and infrastructure in the area covered by the Mining Lease)
to BPM once it has received consent to the transfer of the Mining Lease from the
State Government of Orissa.  It is not known how long it will take for the State
Government to make its decision after the application has been submitted.



In parallel, your Board has decided to progress as a matter of urgency the
exploration for PGMs in the area covered by the Mining Lease. As summarised in
the document sent to shareholders, PMCI Group is entitled to undertake the
exploration activities under the terms of the Joint Venture and Shareholders'
Agreement.



In furtherance of this strategy, the current Board has taken the following
steps:



* Meetings with FACOR: discussions with FACOR have taken place for several
weeks, including a meeting earlier this week in New Delhi, following which the
Board believes that exploration can be advanced at the Boula Mine as soon as
possible.



* Recruitment Programme: the Board has engaged an independent mining sector
recruiting firm which has identified appropriate technical consultants to work
as part of a structured exploration team under the direction of Jeff O'Leary.
The Board expects to announce the resulting appointments in due course.



* Exploration Programme: an exploration programme and work plan which is
budgeted to be fully funded from PMCI's existing cash resources has been
developed and approved. From the commencement of this plan a JORC-compliant PGM
resource is anticipated to be determined within twelve months.



Your current Board has now developed and adopted a budgeted exploration
programme and work plan to explore for PGMs at the Boula Mine. The Board is
confident that this approach will deliver value to all shareholders.



Currently, much of the required operational infrastructure and equipment is in
place to enable PMCI to pursue the action plan envisaged above.



5. Operating Arrangements with FACOR



At the same time as the Joint Venture and Shareholders' Agreement (referred to
above) was executed, BPM entered into an Operating Agreement with FACOR to cover
the period between the commencement of exploration, mining and processing of ore
at the Boula Mine and the date on which the Mining Lease is transferred to BPM.



An agreement, dated 9 August 2005, which is described in the document sent to
shareholders, purports to terminate the Operating Agreement. As referred to in
the announcement of 11 October 2006, there is some doubt as to the validity of
the Termination Agreement.



Notwithstanding these doubts, the Board has determined that it would be in
PMCI's interests - and the interests of the joint venture - to negotiate and
enter into New Contracts which are intended to replace the Operating Agreement.
Like the Operating Agreement, the New Contracts are intended to cover the period
between the commencement of exploration, mining and processing of ore at the
Boula Mine and the date on which the Mining Lease is transferred to BPM; this
period has not yet commenced.



Most recently, negotiation of the New Contracts was progressed at a meeting in
New Delhi between members of the Board and representatives of FACOR earlier this
week. At this meeting it was also discussed how best to effect the transfer of
the Mining Lease to BPM.



There can be no assurance that the New Contracts will be agreed and, in any
event during the current offer period, they can only be entered into by PMCI
following the approval of the Panel on Takeover and Mergers pursuant to Rule 21
of the Takeover Code.



Overall, your Board believes that it has a good working relationship with FACOR
and believes that the New Contracts can be agreed between PMCI and FACOR
shortly.



6. Maximising Value for ALL PMCI Shareholders



As described above, your Board is determined to advance the project at the Boula
Mine and is confident that it can deliver value to all shareholders by this
strategy.



However, following the announcement of the SPI Offer, the Board has resolved to
explore suitable alternatives in order to maximise value for all shareholders.
To this end, as announced on 19 October 2006, the Board has appointed Argent
Partners to assist it in doing so.



Following the appointment of Argent Partners, a number of parties in the global
PGM sector have been contacted. Subsequent to that, certain parties have been
provided with information in the public domain on PMCI to better understand the
company, its business and prospects.



There can be no certainty that any alternatives will be forthcoming.
Shareholders will be kept informed of progress.



Recommendation



Your Board, which has been so advised by WH Ireland, unanimously believes that
the SPI Offer materially undervalues PMCI and unanimously recommends that you
should take no action in relation to it. In providing advice to the Board, WH
Ireland has taken into account the Board's commercial assessments.



Your Directors do not intend to accept the SPI Offer in respect of their own
beneficial shareholdings. You are strongly advised not to sign any document
which SPI or its advisers send to you.



Yours sincerely



Philip Adeane

Chairman



Enquiries to:



Malcolm Groat

Platinum Mining Corporation of India PLC

Telephone: 01202 606010



Paul Dudley / Peter Jackson

W.H. Ireland Limited

Telephone: 020 7220 1666



Andrew Simkin / Torben Thordsen

Argent Partners Limited

Telephone: 020 7256 8661



Keith Irons

Bankside Consultants

Telephone: 020 7367 8888


                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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