Neo's Board Unanimously Recommends Shareholders Reject the Amended Pala Partial Offer



    TORONTO, May 1 /CNW/ - Neo Material Technologies Inc. ("Neo" or the
"Company") (TSX: NEM) announced today that the board of directors of the
Company (the "Board") unanimously recommends that shareholders reject the
amended partial offer by Pala Investments Holdings Limited ("Pala") made on
April 27, 2009 (the "Amended Pala Partial Offer") and not tender their shares.
    Under the Amended Pala Partial Offer, Pala (i) decreased the maximum
number of shares it proposes to take up from 23,000,000 to 10,600,000, which
together with Pala's current holdings would represent 29.9% of the shares, and
(ii) increased the consideration payable for each share it would take up from
Cdn. $1.40 to Cdn. $1.70. Pala's revised offer price of Cdn.$1.70 per share
represents a 4.9% premium to the closing price of Cdn$1.62 on April 30, 2009.
    "The overwhelming approval of the new shareholder rights plan at the
April 24, 2009 annual and special meeting confirms that shareholders have
given the Board a strong mandate to reject the Amended Pala Partial Offer,"
said James J. Jackson, Chairman.
    In making its recommendation, the Board carefully reviewed the Amended
Pala Partial Offer and considered a number of factors, including the unanimous
recommendation of the Special Committee, the inadequacy opinion of GMP
Securities L.P., financial advisors to the Board and the Special Committee,
and advice from the Board and Special Committee's legal advisors.

    In concluding that the Amended Pala Partial Offer is inadequate from a
financial point of view and in determining to recommend rejection of the
Amended Pala Partial Offer, the Board considered, among other things:

    
    -   The approval by over 80% of shareholders (other than Pala) of the new
        shareholder rights plan confirming that shareholders wish to reject
        the Amended Pala Partial Offer

    -   An ownership position of 29.9% of the shares by Pala represents
        effective control of Neo given historical shareholder voting levels

    -   The Amended Pala Partial Offer does not provide Neo shareholders with
        an appropriate premium for relinquishing effective control to Pala

    -   The current trading price of Neo shares

    -   The Amended Pala Partial Offer fails to recognize the full value of
        Neo, and is coercive and opportunistic
    

    In addition to the above, the reasons for rejecting the Amended Pala
Partial Offer included in the Directors' Circular dated March 9, 2009 continue
to apply.
    A formal response of the Board in the form of a Notice of Change to the
Directors' Circular will be mailed to Neo Shareholders shortly and will be
available on the Company's website at www.neomaterials.com and on SEDAR at
www.sedar.com. Neo Shareholders are urged to read the Notice of Change to
Directors' Circular, together with the Directors' Circular in their entirety.
    The Board unanimously recommends that shareholders REJECT the Amended
Pala Partial Offer and NOT TENDER their shares to the Amended Pala Partial
Offer.

    About Neo Material Technologies

    Neo Material Technologies is a producer, processor and developer of
neodymium-iron-boron magnetic powders ("Neo Powders"), rare earths and
zirconium based engineered materials and applications through its Magnequench
and AMR Performance Materials business divisions. These innovative products
are essential in many of today's high technology products. Magnequench's Neo
Powders are used in the production of bonded magnets for micro motors,
precision motors, sensors and other applications requiring high levels of
magnetic strength, flexibility, small size and reduced weight. Rare earth and
zirconium applications include catalytic converters, computers, television
display panels, optical lenses, mobile phones and electronic chips. The
Company is headquartered in Toronto, Canada and has approximately 1,300
employees in 15 locations, across 10 countries.

    %SEDAR: 00002061E




For further information:

For further information: Questions may be directed to Neo's information
agent, Laurel Hill Advisory Group, toll-free at 1-888-812-9183

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