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Press release from Marketwire

Cash Acquisition of Talison Lithium by Rockwood

Thursday, August 23, 2012

Cash Acquisition of Talison Lithium by Rockwood08:15 EDT Thursday, August 23, 2012PERTH, WESTERN AUSTRALIA--(Marketwire - Aug. 23, 2012) - Talison Lithium Limited ("Talison" or the "Company") (TSX:TLH) announced today that it has entered into a definitive Scheme Implementation Agreement ("SIA") with Rockwood Holdings, Inc. ("Rockwood") under which it is proposed that Rockwood, or a wholly-owned entity of Rockwood, will acquire 100% of the ordinary shares in the capital of Talison (the "Shares") by way of a Scheme of Arrangement ("Scheme") under the Australian Corporations Act 2001 (Cth) for cash consideration of C$6.50 per share. This values the equity of Talison at approximately C$724 million on a fully diluted basis.The cash consideration of C$6.50 per Share, represents:A 53% premium to Talison's last closing price on August 22, 2012 of C$4.24; A 52% premium to Talison's 10 day volume weighted average price ("VWAP") of C$4.28; and A 59% premium to Talison's 30 day VWAP of C$4.08.The cash consideration provides an opportunity for Talison Shareholders to realise immediate value for their Shares at a substantial premium to market and reflects the size, strategic nature and growth potential of Talison's lithium operations.The SIA entered into by Talison and Rockwood also proposes that Rockwood, or a wholly-owned entity of Rockwood, will acquire 100% of the options to acquire Shares ("Options") through an option scheme of arrangement ("Option Scheme") for cash consideration of C$6.50 per Option less the exercise price for that Option. The board of directors of Talison ("Talison Directors") has considered the Scheme and the Option Scheme and unanimously recommends that Shareholders and Optionholders vote in favour of the Scheme and the Option Scheme, in the absence of a Superior Proposal (as defined in the SIA) and subject to an Independent Expert concluding that the Schemes are in the best interests of security holders. Each of the Talison Directors intends to vote the Shares and Options held or controlled by them in favour of the Scheme and Option Scheme.Resource Capital Fund IV L.P. and Resource Capital Fund V L.P. (collectively, the "RCF Funds"), together having a 36.8% shareholding interest in Talison, have each confirmed to Talison that, in the absence of an offer which the RCF Funds determine is superior, they support the Scheme and intend to vote all of their Shares in favour of the Scheme.Peter Robinson, Chairman of the Board of Talison, said, "Today marks a significant milestone in the history of Talison. Under the Scheme, Rockwood is offering cash consideration representing an attractive premium for Shareholders and allowing Shareholders to realise immediate value for their Talison Shares. This reflects positively on Talison's position in the global lithium market." Macquarie Capital in Australia and Canada are acting as financial advisor to Talison. A special committee comprised of independent directors of Talison has received a fairness opinion from Macquarie Capital, effective on the date hereof, which provides that, subject to the assumptions and limitations contained therein, the consideration to be received by Shareholders pursuant to the Scheme is fair, from a financial point of view, to the Shareholders. As Talison is an Australian incorporated company listed on the Toronto Stock Exchange, the Scheme will be implemented in accordance with the requirements of the Australian Corporations Act and any applicable Canadian requirements. Consistent with best practice in Australia, an Independent Expert will shortly be appointed to opine on whether the Scheme and the Option Scheme are in the best interests of Shareholders and Optionholders respectively. Rockwood is a NYSE-listed global specialty chemicals and advanced materials company. Rockwood focuses on global niche segments of the specialty chemicals, pigments and additives and advanced materials markets. The expectation of Talison's Directors is that Talison, as part of the Rockwood group, will continue to support its existing lithium concentrate customers in China and the rest of the world. Scheme Details and TimetableThe completion of the Scheme and Option Scheme is subject to minimal conditions including: Approval under the Australian Foreign Acquisitions and Takeovers Act 1975 (Cth); Regulatory approvals from the Australian Securities and Investments Commission and the Australian Court; Approval of the requisite majority of Talison Shareholders at a meeting of Shareholders; No Material Adverse Change (as defined in the SIA) occurring to Talison; and No Prescribed Occurrence (as defined in the SIA) occurring in relation to Talison.Further due diligence is not a condition to completion of the Scheme or the Option Scheme.The SIA contains terms typical for a transaction of this nature for an Australian incorporated company, including "no shop" and "no talk" provisions (subject to typical directors' fiduciary duty exemptions), notification and matching rights. A mutual break fee ("Break Fee") of C$7 million is also payable in certain circumstances. Talison is not liable to pay the Break Fee by reason only of the Scheme not being approved by Talison shareholders or by the Australian Courts, nor in the event that Talison Directors withdraw their recommendation for the Scheme as a result of the Independent Expert finding that the Scheme is not in the best interests of Talison Shareholders. A Break Fee is payable by Rockwood if it materially breaches an obligation under the SIA and fails to remedy such breach. Any payment of the Break Fee will be in full and final satisfaction of all claims to which the party paying the break fee may be subject.Implementation of the Scheme and the Option Scheme will also be subject to the terms and conditions set out in the Scheme and Option Scheme documentation when issued. Further details are included in the executed SIA which is available on SEDAR at www.sedar.com and on the Talison website www.talisonlithium.com. Scheme and Option Scheme booklets will be mailed to Shareholders and Optionholders. The booklets will contain, among other things, further information about the Scheme, the Option Scheme, a copy of the Independent Expert's report and related securityholder meeting materials. Talison expects that the approval of the Scheme and the Option Scheme will be put to Shareholders and Optionholders at meetings expected to be held in October 2012, and that the Scheme and Option Scheme will be completed shortly thereafter.AdvisorsMacquarie Capital is acting as financial advisor to Talison. Clayton Utz and Blake, Cassels & Graydon LLP are acting as legal advisors to Talison. Cautionary Note Regarding Forward-Looking Statements Certain information contained in this press release, including any information as to Talison's mineral reserve and mineral resource estimates, strategy, projects, plans, prospects, future outlook, anticipated events or results or future financial or operating performance, may constitute "forward-looking information" within the meaning of Canadian securities laws. All statements, other than statements of historical fact, constitute forward-looking information. Forward-looking information can often, but not always, be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "predicts", "potential", "continue" or "believes", or variations (including negative variations) of such words, or statements that certain actions, events or results "may", "could", "would", "should", "might", "potential to", or "will" be taken, occur or be achieved or other similar expressions concerning matters that are not historical facts. The purpose of forward-looking information is to provide the reader with information about management's expectations and plans. Readers are cautioned that forward-looking statements are not guarantees of future performance. All forward-looking statements made or incorporated in this press release are qualified by these cautionary statements. Forward-looking statements are necessarily based on a number of factors, estimates and assumptions that, while considered reasonable by Talison, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Such factors, estimates and assumptions include, but are not limited to: anticipated financial and operating performance of Talison, its subsidiaries and their respective projects; Talison's market position; future prices of lithium or lithium concentrates; estimation of mineral reserves and mineral resources; realization of mineral reserve and mineral resource estimates; timing, amount and costs of estimated future production; grade, quality and content of concentrate produced; sale of production; capital, operating and exploration expenditures; costs and timing of the expansion of the Greenbushes Lithium Operations; exploration and development of the Salares 7 lithium project; costs and timing of future exploration; requirements for additional capital; government regulation of exploration, development and mining operations; environmental risks; reclamation and rehabilitation expenses; title disputes or claims; absence of significant risks relating to Talison's mining operations; the costs of Talison's hedging policy; sales risks related to China; currency; interest rates, and limitations of insurance coverage. While Talison considers these factors, estimates and assumptions to be reasonable based on information currently available to it, they may prove to be incorrect and actual results may vary. Readers are cautioned that forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Talison and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such risk factors include, amount others, those described in the unaudited condensed consolidated interim financial statements of Talison and the related notes thereto as at March 31, 2012 and for the nine months ended March 31, 2012 and under the heading "Risk Factors" in the annual information form of Talison for the year ended June 30, 2011 dated September 23, 2011, each of which can be found on Talison's SEDAR profile at www.sedar.com. While Talison considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect and actual results may vary. Although Talison has attempted to identify statements containing important factors that could cause actual actions, event or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking information contained herein is made as of the date of this press release based on the opinions and estimates of management on the date statements containing such forward-looking information are made. Except as required by law, Talison disclaims any obligation to update any forward-looking information, whether as a result of new information, estimates or opinions, future events or results or otherwise. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information.FOR FURTHER INFORMATION PLEASE CONTACT: Frank WheatleyTalison LithiumExecutive Director+1 (604) 985 0528www.talisonlithium.comORMichael AshforthMacquarie CapitalExecutive Director+61 (8) 9224 0644ORDavid CobboldMacquarie CapitalManaging Director+1 (416) 848 3654