Matrix Metals | Copper Production and Exploration

Matrix is pleased to inform shareholders that KPMG have concluded in its Expert's Report that the proposed Summo Transaction is "fair and reasonable". The Directors of Matrix agree with the conclusions of the Independent Expert Report and will unanimously recommend to shareholders that they approve the Transaction.

The Independent Expert's Report was commissioned in order to ensure that Matrix's shareholders are provided with all necessary information to enable them to assess the merits of the proposed Summo Transaction, the key aspects of which are:

• Summo Minerals Corporation will acquire Murchison United NL's and Majestic Resources NL's shares in Matrix for a net consideration of 23.8 cents per share to become a 48% shareholder of Matrix; and
• Summo will provide a A$3.25 million debt facility to the Company, of which A$500,000 was advanced to the Company on 26 February 2001.

Expert's Conclusions

The Independent Expert has concluded that the Summo Transaction, on balance and in the absence of a more attractive alternative transaction, is fair and reasonable to the non-associated shareholders of Matrix. The principle factors taken into account by KPMG in forming its opinion are:

• The $3.25 million of funding secured by the transaction (the "Loan") will alleviate current cashflow pressures and ensures ownership of the Company's assets;
• The Loan can, at Matrix's option, be converted to equity if required to satisfy any medium term funding requirements;
• The proposed transaction does not substantially change the equity interests of the non-associated shareholders' interests in Matrix;
• Summo will contribute a technical focus to the Board to enhance current and future operations and is focussed on developing Matrix's copper assets to enhance the prospect of realising shareholder value;
• The commitment shown by Summo in providing the first $500,000 tranche of the Loan without requiring approval of the Matrix shareholders for the balance of the transaction;
• The cash consideration payable by Summo equals the prospectus subscription price of 25 cents per share;
• The net consideration received by Murchison and Majestic is 23.8 cents per share after allowing for the portion of the transaction costs to be borne by these parties; and
• The transaction both enhances and detracts from the potential for a future takeover bid for Matrix.

In KPMG's opinion, the disadvantages of the Summo transaction are:

• the net cash consideration of 23.8 cents per share receivable by Murchison and Majestic is at a premium to the recent price at which Matrix shares have traded at ASX and is at the upper end of KPMG's fair values range of 12 cents to 28.8 cents with a midpoint of 20.8 cents, and that this premium is not being offered to other shareholders; and
• Matrix may need to source further short to medium term funding, depending upon operational performance, if the Loan is not converted to equity.

Directors Comments on Independent Expert's Report

The Directors would like to bring the following issues to the attention of shareholders:

• Although Murchison and Majestic may be receiving a premium to the current share price that is not being offered to other shareholders, Murchison and Majestic will receive:

  • less than the Directors view on the underlying value of the Company once allowance is made for the upside in the Company's existing projects;
  • less than the top end of the KPMG value range of 28.8 cents; and
  • slightly less than the 25 cent IPO price a large number of the minority shareholders paid to acquire their interests.

  
  
• The Directors consider that the market price of Matrix Shares is impacted by the current uncertainties
• The Directors consider there is a degree of conservatism in the KPMG value range and if greater allowance for project upside were included, KPMG would have concluded that Summo was not paying a premium.
• The Director's consider the Summo Transaction places the company in a far more robust position as it will alleviate the current cashflow situation as well as enabling the Company to proceed with work programs to ensure other sources of funding are available as required. At it's sole bulletretion, Matrix has right to convert the Summo $3.25 million Loan to shares in Matrix at the 16 cents per share conversion price provides the Company with a valuable fall back option.

Meeting Date

Following the granting of required regulatory approvals, the general meeting to consider these transactions will be held at the Celtic Club - "Function Room", 48 Ord Street West Perth WA 6005, on Monday, 9 April 2001 commencing at 10.00 am.. Formal notification of the meeting and a detailed Explanatory Memorandum, including a full copy of the Expert's Report, is in the process of being printed and will be mailed to shareholders shortly.

Shareholders are encouraged to read the documentation in full when it is received, seek professional advice if required and to exercise their right to vote at the General Meeting either in person or by proxy. Shareholders may also contact Matrix's management or its financial advisers if they wish to bulletuss the proposed Summo Transaction.

Yours sincerely,

Andrew Chapman
Chief Executive Officer