Kagara Ltd : Sale of Kagara Group Assets North Queensland

ASX ANNOUNCEMENT MEDIA RELEASE 17 DECEMBER 2012 Update: Sale of Kagara Group Assets - North Queensland Central Region

The Administrators of Kagara Limited (Administrators Appointed) ("Kagara") and its three wholly-owned subsidiaries ("the Group")* are pleased to announce that Kagara and one of its wholly owned subsidiaries, Einasleigh Mining Pty Ltd (Administrators Appointed) have entered into an agreement for the sale of the Group's assets in the North Queensland Central region for a total consideration of $40 million, including the assumption of $10.7m of environmental bonds. The purchaser is Snow Peak Mining Pty Ltd (the "Purchaser"), which is a company associated with Consolidated Tin Mines Limited (ASX: CSD). A $4m deposit has been paid by the Purchaser and is being held by a stakeholder agent pending completion.
As previously announced on 3 October 2012, the Group's assets across North Queensland lie within three regional centres including, but not limited to, the Northern region, the Central region and the Southern region. These mining assets and processing plants have been offered for sale through a competitive bid process, run by PCF Capital Group, either parcelled together, or separately - by region, by mining project and/or by asset type.
This transaction will see the acquisition by the Purchaser of all of the Group's assets in the Central Region, including the resources and processing plant at Mt Garnet; the Balcooma and Baal Gammon mining areas and the Einasleigh and Maitland exploration projects.
The sale agreement follows the commencement by the Administrators in August 2012 of a dual-track process to market the Group's assets for sale, while continuing to consider all available possibilities for a restructure of the Group, including through a recapitalisation via a Deed of Company Arrangement ("DOCA"). This transaction enables the Administrators to continue to review the restructuring options available to the Group. The proceeds from the sale will largely be used to extinguish the Group's secured debt, trading costs, and administration expenses, with the balance to be retained for working capital. The Administrators are currently considering offers on other assets of the Group and are considering possible DOCA scenarios.
Michael Ryan, of Taylor Woodings, said: "The Administrators are pleased to formally agree the sale of the Group's Central region projects and wish to thank the Kagara staff, a number of whom are expected to be offered employment by the Purchaser, for their assistance through this part of the process.

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ASX ANNOUNCEMENT MEDIA RELEASE 17 DECEMBER 2012

"Following the recent announcement of the execution of a binding Heads of Agreement with Mungana Goldmines Ltd to terminate the Gold Rights Agreement between the companies, this transaction is another positive step that may facilitate the restructuring of the Group, or assist in maximising the value which can be returned to creditors."
On 23 October 2012 the Administrators obtained an extension of time to 28 February 2013 to convene the second creditors meeting. "The Administrators are continuing to work towards this date to make their recommendations to creditors as to the future of the Group", said Michael Ryan.
Completion of the transaction is conditional on FIRB approval and indicative approvals to transfer certain mining tenements. It is currently anticipated that completion of the sale will occur in late January 2013.
Interested parties, creditors and other enquiries should contact Taylor Woodings on (08)
9321 8533 / [phone] or visit its webpage www.taylorwoodings.com.aufor further information.
* Michael Ryan, Mark Englebert, Stefan Dopking and Quentin Olde, all of Taylor Woodings, were appointed joint and several voluntary administrators of Kagara Ltd, Kagara Copper Pty Ltd, Mungana Pty Ltd and Einasleigh Mining Pty Ltd on 29 April 2012.

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Taylor Woodings is a national independent accounting firm specialising in the areas of restructuring, corporate recovery, advisory and transaction services, and forensic accounting. For more information please see www.taylorwoodings.com.au.

FURTHER INFORMATION: Interested Parties/Creditors Media Enquiries Taylor Woodings Ian Pope - [phone] or 0416 826 037 (08) 9321 8533 or [phone] MAGNUS Investor Relations +

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