Gladstone Pacific Nickel Limited (ACN 104 261 887) ("GPNL" or "the Company") - Signing of New Agreements with Clive Palmer - Notice of EGM



    TORONTO, July 22 /CNW/ -

    
    -   GPNL today announces the signing of Share Sale Agreements with
        Egidia Pty Ltd and Dasines Pty Ltd, companies owned by Mr Clive
        Palmer, Chairman of GNPL, whereby GPNL will acquire the interest in
        Marlborough Nickel Pty Ltd ("MNPL") not owned by the Company for an
        interest in GPNL, subject to Shareholder approval.

    -   Pursuant to these Share Sale Agreements, Mr Palmer agrees to roll up
        the 50% interest in MNPL which he will earn on delivery of a fully
        funded turnkey project, as outlined in the announcement of Share
        Subscription Agreements on 11 December 2007, for a 50% interest in
        GPNL.

    -   Shareholder approval is being sought for the introduction of an
        alternative event to trigger Mr Palmer's entitlement to a 25%
        interest in MNPL. This possible future event being the making of an
        unconditional takeover bid or the completion of a takeover via a
        scheme of arrangement, by Resource Development International Limited,
        a Company associated with Mr Palmer and Mr Martino, at a minimum
        price of (pnds stlg)2.20.

    -   The Company today notifies Shareholders of a General Meeting to be
        held on 14th August 2008 to approve these transactions.
    

    The Board of Gladstone Pacific Nickel Limited ("GPNL" or "Company")
announces today that GPNL has entered into agreements to acquire 100% of the
issued share capital of Egidia Pty Ltd ("Egidia") and Dasines Pty Ltd
("Dasines") (the "Acquisitions"), companies owned 100% by Mr Clive Palmer, in
consideration for the issue of GPNL Shares representing a minimum of 50% of
the issued shares in GPNL on a fully diluted basis. The Acquisitions are
subject to the approval by the shareholders of the Company not associated with
Mr Clive Palmer and the satisfaction of certain conditions. Mr Palmer
currently holds 13.95% of the issued share capital of GPNL.
    "The general effect of the Acquisitions is that GPNL will regain 100%
ownership of MNPL. Mr Palmer's interests in MNPL (held through Egidia and
Dasines) will be rolled up to a direct interest in GPNL, thus simplifying the
capital structure and facilitating the financing and development of the
Project" said Mr John Downie, CEO of GPNL.
    A shareholders meeting will be held in London at 9.00am (BST) on 14th
August 2008 to obtain the approvals necessary to complete these transactions.
The Notice of Meeting, Explanatory Memorandum and Independent Experts Report
providing full details of the transactions were today mailed to shareholders
and are available on the Company's website www.gladstonepacificnickel.com.au.

    Summary of the Share Sale Agreements

    a. Egidia

    Mr Palmer will sell all of the issued shares in Egidia to GPNL in
consideration for 28,645,233 new GPNL shares to be issued to Mr Palmer.
    Egidia currently has a 33% interest in Marlborough Nickel Pty Ltd
("MNPL"). If GPNL was to satisfy the acquisition of Egidia with the issue of
GPNL shares such that they equated to a 33% holding in GPNL, then it would
have been required to issue Mr Palmer with 21,145,233 GPNL shares. However Mr
Palmer is to receive 28,645,233 shares in GPNL. The additional 7,500,000
shares represent 50% of the shares which may be issued to Société Minière
Georges Montagnat ("SMGM") in approximately August 2010 under the terms of the
agreement between SMGM and GPNL. The reasons for the inclusion of these
additional shares are set out in Section 2.9 of the Explanatory Memorandum.

    b. Dasines

    Mr Palmer will sell all of the issued shares in Dasines to GPNL in
consideration for 28,645,233 new GPNL shares to be issued to Mr Palmer if and
when the milestones triggering the conversion of the converting shares
currently held by Dasines in MNPL are met.
    In addition, the Company will issue further new ordinary shares in GPNL
to Mr Palmer if certain other ordinary shares in GPNL are issued to third
parties in accordance with agreements currently in place with those third
parties.
    Upon converting its converting shares to ordinary shares in MNPL Dasines
will have a 25% interest in MNPL. If GPNL was to satisfy the acquisition of
Dasines with the issue of GPNL shares such that they equated to a 25% holding
in GPNL, then it would have been required to issue Mr Palmer with 21,145,233
GPNL shares. However Mr Palmer is to receive 28,645,233 shares in GPNL. The
additional 7,500,000 shares represent 50% of the shares which may be issued to
SMGM in approximately August 2010 under the terms of the agreement between
SMGM and GPNL. The reasons for the inclusion of these additional shares are
set out in Section 2.9 of the Explanatory Memorandum.
    At the date of the Dasines Share Sale Agreement GPNL has the obligation
to issue approximately 3,742,490 additional GPNL shares in the Company in
respect of options that the Company has issued and agreements that it has
entered into to issue Shares. The Dasines Share Sale Agreement provides Mr
Palmer the right to be issued with an equivalent number of fully paid Shares
in GPNL if Shares in GPNL are issued to third parties. This right provides Mr
Palmer with a minimum 50% interest in GPNL from the Acquisitions on a fully
diluted basis by reference to those options and other agreements which exist
at the date of the Dasines Share Sale Agreement. The MNPL shares form part of
the consideration paid for this right by Mr Palmer and there is no additional
consideration paid. This right may be assigned by Mr Palmer.

    c. Conditions Precedent

    Both agreements are conditional upon Shareholder approval and the Dasines
agreement is conditional upon conversion of Dasines' converting shares in MNPL
into fully paid ordinary shares in MNPL in accordance with their terms of
issue. (See section 2.2 of the Explanatory Memorandum for details of the
conversion milestones)

    Summary of the Amendment to the Dasines Share Subscription Agreement

    The effect of the proposed amendment to the Dasines Subscription
Agreement is to include an alternative milestone for the conversion of
Dasines' converting shares in MNPL to ordinary shares in MNPL, which then
results in the Dasines Acquisition being completed.
    That alternative milestone is the occurrence of a defined control
transaction event in respect of GPNL on or before 31 December 2008, or a date
up to 90 days later at GPNL's discretion.
    The defined control transaction event in respect of GPNL which will
satisfy the milestone is:

    
    (a)    either:

           (i)      a takeover bid at a price equal to or more than a certain
                    bid price (refer below) is made by Resource Development
                    International Limited ("RDI"), a company of which Clive
                    Palmer is a director and a major shareholder and Domenic
                    Martino is a director, (the securities of which are
                    intended to be quoted on the Hong Kong Stock Exchange or
                    other recognised stock exchange) to GPNL's Shareholders
                    to acquire all of the Shares in GPNL in which RDI does
                    not already have a relevant interest; OR

           (ii)     a scheme of arrangement is approved at a meeting of GPNL
                    shareholders and approved by a court of competent
                    jurisdiction under section 411(6) of the Corporations Act
                    under which RDI will acquire all of the issued Shares in
                    GPNL in which RDI does not already have a relevant
                    interest in exchange for shares in RDI at a certain
                    effective price per GPNL share (refer below); and

    (b)    RDI raises at least US$1 billion in cash and RDI's shares are
           quoted on the Hong Kong Stock Exchange (or such other recognised
           stock exchange of a size and liquidity acceptable to GPNL); and

    (c)    either:

           (i)      the takeover bid is, becomes or is declared
                    unconditional: or

           (ii)     the scheme of arrangement is approved by a court of
                    competent jurisdiction under section 411(6) of the
                    Corporations Act,

           on or before 31 December 2008 or, at the absolute discretion of
           GPNL, a date no later than 90 days after 31 December 2008.
    

    The takeover or scheme must be at an offer price which is a number of
shares in RDI for each share in GPNL at a value equal to or exceeding
(pnds stlg)2.20 per GPNL share, which will be calculated according to a
formula which values the RDI shares at their cash issue price under its
intended IPO prospectus, converted to UK pounds sterling at the then
prevailing exchange rate.

    IMPORTANT NOTE: In relation to the control transaction milestone, the
Board has not received notice of any public proposal or announcement of a
control transaction from RDI at this point in time and the milestone should
not in any way be interpreted as an announcement of an intention to make a
takeover bid in respect of GPNL's shares. No control transaction proposal may
be forthcoming from RDI or at all. The milestone only describes an event
which, if it was to occur, will trigger the conversion of Dasines' converting
shares in MNPL to ordinary shares in MNPL. There is also no certainty that
(pnds stlg)2.20 in RDI shares will be an attractive offer at the time it is
made depending on the value of GPNL Shares and other prevailing circumstances
at that time.

    If Resolution 3 is not passed by GPNL's shareholders, the Dasines
Subscription Agreement will remain unchanged and the milestones for conversion
of Dasines' converting shares in MNPL into ordinary shares will be the
execution by 8 December 2010 of a legally binding construction loan facility
and a legally binding turnkey construction contract by MCC or a Chinese
substantially government owned company to finance and construct the Project.

    Resolutions to be Considered at the General Meeting

    There are three Resolutions to be considered at the General Meeting. The
first two are required to implement the Acquisitions of Egidia and Dasines,
thereby giving effect to the indirect acquisition by GPNL of all the shares in
MNPL which it does not own. The third resolution is to include an alternative
milestone to the current finance and construction milestones for Dasines to
earn its interest in MNPL and trigger the Dasines Acquisition by GPNL.
    Each Resolution will result in a direct or indirect benefit to Mr Clive
Palmer, a director of the Company. The extent of those benefits is discussed
in the Explanatory Memorandum.
    Extracts from the Notice of Meeting and Explanatory Memorandum issued
today are set out in Appendices 1 and 2 below. A full copy of the Notice of
Meeting, Explanatory Memorandum and Independent Experts Report providing full
details of the transactions are available on the Company's website
www.gladstonepacific.com.au

    Related Party Transactions

    a. Resolutions 1 & 2

    Egidia Pty Limited, a company related to Clive Palmer, a director of
GPNL, and of which Clive Palmer is the sole shareholder, will be issued
28,645,233 ordinary shares in GPNL. The transaction with Egidia is therefore
classified as a related party transaction for the purposes of the AIM Rules.
    Dasines Pty Limited, a company related to Clive Palmer, a director of
GPNL, and of which Clive Palmer is the sole shareholder, will be issued
28,645,233 ordinary shares in GPNL. The transaction with Dasines is therefore
classified as a related party transaction for the purposes of the AIM Rules.
    Directors Mr John Downie, Mr Benjamin Hill, Mr James Henderson and Mr
Domenic Martino being the only Directors who are not associated with
Resolutions 1 and 2, consider, having consulted with Grant Thornton UK LLP,
the Company's Nominated Adviser ("the Nominated Adviser"), that the terms of
Resolutions 1 and 2 are fair and reasonable insofar as the Company's
shareholders are concerned. Accordingly the Directors recommend that
Shareholders vote in favour of Resolutions 1 and 2. The Directors in forming
their view, as to their recommendation, have considered the advantages and
disadvantages of the Acquisitions in sections 2.12 and 2.13 and have had
regard to the opinions of the Independent Expert and the views of the
Nominated Adviser.
    The Nominated Adviser has considered the advantages of the proposals in
Resolutions 1 and 2, together with the disadvantages, which include the lack
of a control premium payable by Mr Palmer in gaining a controlling stake in
GPNL and the receipt of additional shares in relation to the SMGM agreement
(as outlined in Section 2.9) prior to and irrespective of whether shares in
GPNL ever become issuable to SMGM. With regard to both the advantages and
disadvantages, the Nominated Adviser has considered the proposals in their
entirety, and views the proposals in Resolutions 1 and 2 to be fair and
reasonable in accordance with Rule 13 of the AIM Rules for companies. This
view, whilst required by the AIM Rules, does not conform with Australian legal
requirements. The Nominated Adviser has not been engaged to and does not
provide an opinion under the Australian Corporations Act and this AIM view
does not meet the requirements of ASIC's Regulatory Guide 111.

    b. Resolution 3

    Resource Development International Limited is a company related to Clive
Palmer and Domenic Martino, directors of GPNL, and of which Clive Palmer is a
director and a major shareholder and Domenic Martino is a director. The
amendment to the Dasines Share Subscription Agreement in respect of the
defined control transaction event is therefore classified as a related party
transaction for the purposes of the AIM Rules.
    Managing Director, Mr John Downie, who is not associated with
Resolution 3, considers, having consulted with the Nominated Adviser, that the
terms of Resolution 3 are "fair and reasonable" insofar as the Company's
shareholders are concerned. Accordingly Mr Downie recommends that Shareholders
vote in favour of Resolution 3. Mr Downie in forming his view as to his
recommendation, has considered the advantages and disadvantages in section
3.3. Mr Downie states his reasons as follows:
    "The opportunity to attract a proposal to acquire the Company at a
significant premium to the current share price is attractive. In my opinion,
it would be in the interest of Shareholders for Shareholders to encourage an
unconditional takeover offer or scheme proposal by accepting Resolution 3 as I
believe that the risk that the share price will exceed (pnds stlg)2.20 at the
time any proposal is made is quite small in comparison to the additional
optionality that the offer provides to Shareholders. By Shareholders approving
Resolution 3 it is arguable that Shareholders are forgoing the requirement for
Mr Palmer to deliver a fully financed project with a turnkey construction
agreement. Mr Palmer will in any event have a significant holding in the
Company and in my opinion, he is commercially driven to advance the Project.
If the proposal never happens or if Shareholders reject any offer, they retain
their opportunity of being fully exposed to the Project."
    Non Executive Director, Mr Benjamin Hill, who is not associated with
Resolution 3, considers, having consulted with the Nominated Adviser, that the
terms of Resolution 3 are "not fair and not reasonable" insofar as the
Company's shareholders are concerned. Accordingly Mr Hill recommends that
Shareholders do not vote in favour of Resolution 3. Mr Hill in forming his
view as to his recommendation, has considered the advantages and disadvantages
in section 3.3. Mr Hill states his reasons as follows:
    "It is clear that given the current share price, a scrip offer of
(pnds stlg)2.20 would seem attractive. However, Shareholders at this point are
unable to know if a proposal, when made, will be attractive. If an offer is
made by scheme of arrangement, shareholders will be able to vote for or
against the proposal. However, if it is a takeover offer, it is possible that
no shareholders will accept the takeover offer. Nevertheless, if the takeover
offer is unconditional, just the making of the takeover offer will trigger the
issue of GPNL shares to Mr Palmer. This in my view is an unacceptable position
for shareholders and hence I recommend shareholders do not vote in favour of
Resolution 3."
    The Nominated Adviser concurs with the view of Mr Benjamin Hill that the
terms of Resolution 3 are "not fair and not reasonable" insofar as the
Company's shareholders are concerned. In addition to the basis for this view
articulated by Mr Hill in the paragraph above, the Nominated Adviser also
draws the Shareholders' attention to the fact that the alternative milestone
in Resolution 3, for which no additional consideration has been paid, would
grant Mr Palmer a controlling interest in GPNL without the achievement of a
binding contract for the financing and construction of the Project, which was
a necessary achievement of the milestones in the Subscription Agreement.
    Further information in relation to these views and considerations can be
found in the appendices below and the full notice of meeting and explanatory
memorandum available on the Company's website
www.gladstonepacificnickel.com.au

    Note to Editors:
    Gladstone Pacific Nickel Limited (GPNL) is an Australian mining
development company presently undertaking an Integrated Definitive Feasibility
Study (IDFS) for the Gladstone Nickel Project (GNP). The company's vision is
to build a major long-life nickel cobalt refinery at the deepwater Port of
Gladstone, in Central Queensland, Australia, treating abundant high grade
nickel laterite ores from New Caledonia and other south-west Pacific islands,
underpinned by beneficiated ores from its own Marlborough deposits. The
Project has the potential to be one of the largest of its type in the world
producing some 126,000 tpa nickel (8 -10% of global nickel demand) and
10,400 tpa of cobalt metal from its first two stages.

    This news release includes certain statements that may be deemed
"forward-looking statements". All statements in this news release, other than
statements of historical facts, that address future exploration drilling,
exploration activities and events or developments that the Company expects,
are forward looking statements. Although the Company believes the expectations
expressed in such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future performance and
actual results or developments may differ materially from those in
forward-looking statements. Factors that could cause actual results to differ
materially from those in forward-looking statements include metal prices,
exploration success, continued availability of capital and financing, and
general economic, market or business conditions.

    Appendix 1 - Letter from the Board

    Dear Shareholder,

    The Board of Gladstone Pacific Nickel Limited ("GPNL" or "Company")
announced on 22nd July 2008 that GPNL had entered into agreements to acquire
100% of the issued share capital of Egidia Pty Ltd ("Egidia") and Dasines Pty
Ltd ("Dasines") (the "Acquisitions"), companies owned 100% by Mr Clive Palmer,
in consideration for the issue of GPNL Shares representing a minimum of 50% of
the issued shares in GPNL on a fully diluted basis. The Acquisitions are
subject to the approval by the shareholders of the Company not associated with
Mr Clive Palmer and the satisfaction of certain conditions.
    As announced on the 30th January 2008, Egidia has acquired a 33% interest
in GPNL's subsidiary, Marlborough Nickel Pty Ltd ("MNPL"), through achieving
the milestones described in the subscription agreements that were announced to
the market on 11 December 2007. This milestone related to the execution of a
Memorandum of Understanding ("MOU") for the financing and development of the
Gladstone Nickel Project ("Project") with China Metallurgical Construction
(Group) Corporation ("MCC").
    Dasines holds 20,999,999 converting shares in MNPL which were issued by
the Company on 11 December 2007. These will convert to a 24.99% interest in
the ordinary shares of MNPL on the achievement of certain milestones, detailed
in the subscription arrangements announced to the market on 11 December 2007.
Those milestones are a legally binding agreement to finance or underwrite the
arrangement of finance for 100% of the Project, or a lesser amount agreed by
MNPL, and a legally binding turn-key construction contract to substantially
construct the Project as the Company requires.
    Upon achievement of all the milestones, Egidia and Dasines will hold a
combined interest of 49.99% in MNPL. Mr Palmer has an option to acquire an
additional share in MNPL to take his total interest in MNPL to 50%.
    The purpose of this General Meeting is to seek the Shareholder approvals
necessary to allow the Company to complete the Acquisitions. The general
effect of the Acquisitions is that GPNL will regain 100% ownership of MNPL and
Mr Palmer's interests in MNPL (held through Egidia and Dasines) will be rolled
up to a direct interest in GPNL, thus simplifying the capital structure and
facilitating the financing and development of the Project.
    The Egidia Acquisition will take effect immediately following Shareholder
approval as the share conversion milestones have already been achieved. Upon
completion of the Egidia Acquisition, Mr Palmer's interest in GPNL will
increase from 13.95% to 48.70%.
    The Dasines Acquisition will remain conditional on the achievement of the
existing milestones for Dasines being satisfied or, if the third resolution on
the agenda discussed below is passed, the satisfaction of an alternative
milestone relating to a control proposal being made. Upon completion of the
Dasines Acquisition, Mr Palmer's interest in GPNL will initially increase to
63.46% (see section 2.9 of the Explanatory Memorandum for full details of the
timing of dilution to 54.83% through the future issue of Shares).

    
    The Company continues to progress the Project. Key recent events include:

    -   Signed a Memorandum of Understanding with MCC for both financing of
        the Project and a turn-key construction agreement for construction of
        the Project.

    -   Re-focussed strategy to concentrate on the Asia-Pacific region. The
        Company elected to delist from the Toronto Stock Exchange on
        22 February 2008;

    -   Signed Joint Venture agreement with Société Minière Georges Montagnat
        ("SMGM") that provides GPNL with a 49% interest in nickel ore
        tenements in New Caledonia;

    -   Completed a drilling program to substantiate historical results on
        the New Caledonia Joint Venture tenements and commenced an 8,000
        metre drilling program in February 2008;

    -   The Environmental Impact Statement in relation to the Project has
        been completed and a supplement to that statement is under
        consideration by Queensland's Coordinator-General;

    -   GPNL finalised an agreement with the Queensland Government to acquire
        land at Gladstone for its refinery and residue storage for
        A$33 million;

    -   Feasibility study results were obtained confirming both operating and
        capital costs for the Project;

    -   A change in Board composition was made to provide additional strength
        and skill to fast track the Project to construction;

    -   Appointment of General Manager, China to further GPNL's interest in
        that country; and

    -   Management projections based on current global commodity prices
        indicate that the Project would, if successfully completed, be
        profitable.
    

    The Project is now well positioned for development. However, it is the
Board's view that it is extremely challenging for a company with a small
capitalisation to progress with the development of a US$3.84 billion Project.
The arrangements that were entered into with Egidia and Dasines in December
2007 sought to recognise these challenges and provide the Company with a
framework through which Shareholder value may be delivered.
    A further proposal is brought to this meeting by way of Resolution 3
which describes the making of a control transaction by Resource Development
International Limited ("RDI") by 31 December 2008 (or a date up to 90 days
later at GPNL's discretion) as an alternative milestone to the current finance
and construction milestones for Dasines to earn its interest in MNPL and
trigger the Dasines Acquisition by GPNL.
    To satisfy the new milestone, this future control transaction (which may
be an unconditional takeover bid or a completed scheme of arrangement) must be
an all scrip proposal to acquire all the shares in GPNL at a minimum price of
(pnds stlg)2.20 per Share. RDI is a newly formed company, which is in part
being promoted by Mr Palmer and of which Messrs Palmer and Martino are
directors. The Board understands that the intention of this company is to
acquire a portfolio of resources assets and seek quotation of its shares on
the Hong Kong Stock Exchange (or another recognised stock exchange) with a
minimum capital raising of US$1 billion cash.

    Shareholders should be aware that there is no public proposal or
commitment to implement such a control transaction, no proposal for a control
transaction has been announced and no proposal for a control transaction may
be forthcoming even if Resolution 3 is passed. Also, there is no certainty
that (pnds stlg)2.20 in RDI shares will be an attractive offer for GPNL
shareholders at the time that any such control transaction is proposed or
implemented.

    Shareholder approval is sought to make this variation to the milestones
in the Dasines subscription arrangements. Resolution 3 is not essential to
give effect to the resolutions relating to the Acquisitions, which can stand
without Resolution 3 being passed.
    Resolutions 1 and 2 for consideration by the Shareholders will lead to a
simplification of the capital structure of the Company and, in the opinion of
the Directors, will help pave the way to securing finance and turnkey
construction commitments for the Project.
    Enclosed you will find a Notice of Meeting and Proxy Form, together with
an Explanatory Memorandum and Independent Expert's Report, dealing with all
the resolutions that the Directors are asking you to consider at the General
Meeting of Shareholders scheduled for 9:00 am (BST), 14th August 2008.
    Each Resolution will result in a direct or indirect benefit to Mr Clive
Palmer, a director of the Company which generally will result in a significant
personal gain for him. The extent of those benefits and that gain is discussed
in the Explanatory Memorandum.
    We recommend you carefully read the Explanatory Memorandum. The
Explanatory Memorandum includes a report by an Independent Expert, BDO
Kendalls Corporate Finance (Qld) Limited ("BDO Kendalls") in relation to the
Acquisitions (Resolutions 1 and 2). They have concluded that the Acquisitions
are "fair and reasonable" to the shareholders in the Company not associated
with Mr Palmer.
    Directors Mr John Downie, Mr Benjamin Hill, Mr James Henderson and Mr
Domenic Martino being the only Directors who are not associated with
Resolutions 1 and 2, consider, having consulted with Grant Thornton UK LLP,
the Company's Nominated Adviser ("the Nominated Adviser"), that the terms of
Resolutions 1 and 2 are fair and reasonable insofar as the Company's
shareholders are concerned. Accordingly the Directors recommend that
Shareholders vote in favour of Resolutions 1 and 2. The Directors in forming
their view, as to their recommendation, have considered the advantages and
disadvantages of the Acquisitions in sections 2.12 and 2.13 and have had
regard to the opinions of the Independent Expert and the views of the
Nominated Adviser.
    The Nominated Adviser has considered the advantages of the proposals in
Resolutions 1 and 2, together with the disadvantages, which include the lack
of a control premium payable by Mr Palmer in gaining a controlling stake in
GPNL and the receipt of additional shares in relation to the SMGM agreement
(as outlined in Section 2.9) prior to and irrespective of whether shares in
GPNL ever become issuable to SMGM. With regard to both the advantages and
disadvantages, the Nominated Adviser has considered the proposals in their
entirety, and views the proposals in Resolutions 1 and 2 to be fair and
reasonable in accordance with Rule 13 of the AIM Rules for companies. This
view, whilst required by the AIM Rules, does not conform with Australian legal
requirements. The Nominated Adviser has not been engaged to and does not
provide an opinion under the Australian Corporations Act and this AIM view
does not meet the requirements of ASIC's Regulatory Guide 111.
    Managing Director, Mr John Downie, who is not associated with
Resolution 3, considers, having consulted with the Nominated Adviser, that the
terms of Resolution 3 are "fair and reasonable" insofar as the Company's
shareholders are concerned. Accordingly Mr Downie recommends that Shareholders
vote in favour of Resolution 3. Mr Downie in forming his view as to his
recommendation, has considered the advantages and disadvantages in section
3.3. Mr Downie states his reasons as follows:
    "The opportunity to attract a proposal to acquire the Company at a
significant premium to the current share price is attractive. In my opinion,
it would be in the interest of Shareholders for Shareholders to encourage an
unconditional takeover offer or scheme proposal by accepting Resolution 3 as I
believe that the risk that the share price will exceed (pnds stlg)2.20 at the
time any proposal is made is quite small in comparison to the additional
optionality that the offer provides to Shareholders. By Shareholders approving
Resolution 3 it is arguable that Shareholders are forgoing the requirement for
Mr Palmer to deliver a fully financed project with a turnkey construction
agreement. Mr Palmer will in any event have a significant holding in the
Company and in my opinion, he is commercially driven to advance the Project.
If the proposal never happens or if Shareholders reject any offer, they retain
their opportunity of being fully exposed to the Project."
    Non Executive Director, Mr Benjamin Hill, who is not associated with
Resolution 3, considers, having consulted with the Nominated Adviser, that the
terms of Resolution 3 are "not fair and not reasonable" insofar as the
Company's shareholders are concerned. Accordingly Mr Hill recommends that
Shareholders do not vote in favour of Resolution 3. Mr Hill in forming his
view as to his recommendation, has considered the advantages and disadvantages
in section 3.3. Mr Hill states his reasons as follows:
    "It is clear that given the current share price, a scrip offer of (pnds
stlg)2.20 would seem attractive. However, Shareholders at this point are
unable to know if a proposal, when made, will be attractive. If an offer is
made by scheme of arrangement, shareholders will be able to vote for or
against the proposal. However, if it is a takeover offer, it is possible that
no shareholders will accept the takeover offer. Nevertheless, if the takeover
offer is unconditional, just the making of the takeover offer will trigger the
issue of GPNL shares to Mr Palmer. This in my view is an unacceptable position
for shareholders and hence I recommend shareholders do not vote in favour of
Resolution 3."
    The Nominated Adviser concurs with the view of Mr Benjamin Hill that the
terms of Resolution 3 are "not fair and not reasonable" insofar as the
Company's shareholders are concerned. In addition to the basis for this view
articulated by Mr Hill in the paragraph above, the Nominated Adviser also
draws the Shareholders' attention to the fact that the alternative milestone
in Resolution 3, for which no additional consideration has been paid, would
grant Mr Palmer a controlling interest in GPNL without the achievement of a
binding contract for the financing and construction of the Project, which was
a necessary achievement of the milestones in the Subscription Agreement.
    Additional information regarding the resolutions is set out in the
Explanatory Memorandum.
    We look forward to welcoming you at this important General Meeting.

    Yours sincerely

    Mr John Downie, Director

    For and on behalf of the Board of
    Gladstone Pacific Nickel Limited

    22nd July 2008


    Appendix 2 - The Proposed Resolutions

    RESOLUTION 1 Approval of acquisition of Egidia and for issue of Shares
    ----------------------------------------------------------------------
    To consider and, if thought appropriate, pass the following Ordinary
Resolution:

    "That, for the purposes of clause 7 of the Company's constitution,
section 611, item 7 of the Corporations Act 2001 (Cth) and Chapter 2E of the
Corporations Act 2001 (Cth) and for all other purposes, approval be given for:

    
    a)  the Company's acquisition of the entire issued share capital of
        Egidia Pty Ltd ACN 097 333 554 from Clive Palmer, a related party of
        the Company, pursuant to the Egidia Share Sale Agreement between the
        Company and Clive Palmer, the terms of which are summarised in the
        Explanatory Memorandum accompanying the Notice of Meeting; and

    b)  the issue of 28,645,233 Shares in the Company to Clive Palmer as
        consideration for the acquisition."
    

    RESOLUTION 2 Approval of acquisition of Dasines and for issue of Shares
    -----------------------------------------------------------------------
    To consider and, if thought appropriate, pass the following Ordinary
Resolution:
    "That, for the purposes of clause 7 of the Company's constitution,
section 611, item 7 of the Corporations Act 2001 (Cth) and Chapter 2E of the
Corporations Act 2001 (Cth) and for all other purposes, approval be given for:

    
    a)  the Company's acquisition of the entire issued share capital of
        Dasines Pty Ltd ACN 097 333 545 from Clive Palmer, a related party of
        the Company, pursuant to the Dasines Share Sale Agreement between the
        Company and Clive Palmer, the terms of which are summarised in the
        Explanatory Memorandum accompanying the Notice of Meeting; and

    b)  the issue of 28,645,233 Shares in the Company to Clive Palmer as
        consideration for the acquisition after the conversion of Dasines'
        shares in MNPL to ordinary shares on satisfaction of the milestones
        as summarised in the Explanatory Memorandum accompanying the Notice
        of Meeting and the issue of further Shares to Clive Palmer in the
        amount determined under the Dasines Share Sale Agreement as further
        consideration."
    

    RESOLUTION 3 Amendments to Dasines Subscription Agreement
    ---------------------------------------------------------
    To consider and, if thought appropriate, pass the following Ordinary
Resolution:
    "That, for the purposes of Chapter 2E of the Corporations Act 2001 (Cth)
and for all other purposes, the Company approve amendments to the terms of the
Dasines Subscription Agreement to alter the milestones for conversion of the
converting shares in Marlborough Nickel Pty Ltd held by Dasines Pty Ltd, in
the form tabled at the meeting and described in the Explanatory Memorandum
accompanying the Notice of Meeting."

    Other business
    --------------
    To consider any other business that may lawfully be brought to the
meeting.

    Voting Exclusion Statement
    --------------------------
    The Company will disregard any votes cast on Resolution 3 by James
Henderson or any of his associates or by Domenic Martino or any of his
associates.
    The Company will disregard any votes cast on any of the Resolutions by
Clive Palmer or any of his associates.





For further information:

For further information: John Downie, Chief Executive Officer -
Gladstone Pacific Nickel Ltd: Tel: +61 7 3231 7100; Fiona Owen - Grant
Thornton UK LLP - Tel: +44 207 383 5100; Simon Rothschild/Keith Irons -
Bankside Consultants: Tel: +44 207 367 8888

Organization Profile

Gladstone Pacific Nickel Ltd.

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