NEMI and Aviva to merge, creating a growth-oriented international coal and energy business.

    VANCOUVER, BC, and PERTH, Australia Oct. 21 /CNW/ - NEMI Northern Energy
& Mining Inc. ("NEMI") (TSX: NNE.a) and Aviva Corporation ("Aviva") (ASX: AVA,
BSE: AVIVA) announce that they have entered into a merger implementation
agreement ("Agreement") to combine the businesses of the two companies to
create a new growth-oriented international coal and energy group (the
"Merger"). The combined entity will provide investors with exposure to
operating and development stage assets across attractive metallurgical and
thermal coal projects.
    The Merger is expected to be completed by way of an Aviva scheme of
arrangement in Australia, with Aviva shareholders to receive 0.59 NEMI shares
(in the form of "CHESS Depository Interests" or "CDIs") for each Aviva share
they hold at completion. It is intended that upon the completion of the
Merger, NEMI will change its name to reflect the expanded scope of its
business. The merged group will maintain its primary listing on the Toronto
Stock Exchange and will apply for a listing on the Australian Securities
Exchange and the Botswana Stock Exchange. Existing shareholders of NEMI and
the former shareholders of Aviva will each hold approximately 50% of the
expanded share capital of the merged group at closing on a diluted basis
taking into account NEMI's outstanding convertible debentures. The key terms
of the Agreement (including conditions to completion) are summarised in the
Annexure to this announcement.
    The Merger will create a diversified coal and energy producer and
developer, with significant growth potential, that will benefit from:

    -   A complementary development pipeline providing for superior growth
        potential with:
          i. Peace River Coal (which NEMI has an interest in) having recently
             entered commercial production and its inherent expansion
         ii. Coolimba Power (which Aviva has an interest in) moving through
             engineering and regulatory approvals; and
        iii. Mmamantswe (which Aviva also has an interest in) providing for
             longer term power and coal production potential;

    -   Cash flow potential and a strong balance sheet with the ongoing ramp-
        up of the Peace River Coal operations and a combined cash balance of
        approximately C$25 million currently;

    -   Enhanced market positions with a diversity across geographies
        (Canada, Australia and Botswana), coal products (metallurgical and
        thermal) and capital markets (TSX and ASX listings);

    -   An expanded and experienced board and management team with a mix of
        operational, technical, corporate and financial skill sets from both
        the resource and power sectors; and

    -   A continued strategic focus on organic growth, pursuit of attractive
        opportunities, and beneficial partnering strategies, all as part of
        an over-riding drive to create shareholder value.

    Pat Devlin, President and CEO of NEMI, said "When we look at the
landscape of parties active in the coal development arena globally with whom
we could partner to grow our business and create value Aviva easily stands
apart from the rest in terms of complementary assets, management team and
overall fit. We believe we will be positioned as a leading growth-oriented
coal and energy producer with a global mandate, an outstanding inventory of
coal resources, key top-tier partners, and managerial and technical skills to
drive future growth. Despite the current market difficulties, I'm confident in
the fundamentals of the Merger and the capabilities of our combined team."
    Lindsay Reed, CEO of Aviva, added "The Merger represents a true win-win
situation for our companies as we are bringing together symbiotic assets,
people skills and shareholders. Through this combination we expect to
accelerate growth and capitalize on the strength of each business in the
development of both metallurgical and thermal coal deposits. I look forward to
what we can achieve in the short and long term."
    Each of the NEMI and Aviva board unanimously recommend their shareholders
vote in favour of all resolutions to be proposed at their respective
shareholder meetings to approve the Merger, subject to there being no superior
proposal, no material adverse changes, prescribed occurrences, warranty
breaches or breach of the conditions of the Agreement requiring the parties to
have a certain cash position, and in the case of Aviva, an independent expert
finding that the Merger is in the best interests of Aviva shareholders.

    Merger Ratio and Current Market Conditions

    NEMI and Aviva have considered and investigated the possibility of a
business combination for several months. The recent market turmoil has
negatively affected the share prices of both companies with significant and
volatile share price movements. Despite persistent market volatility, the
management teams and boards of NEMI and Aviva have affirmed their initial
assertion of the combination as being a true merger of equals. Throughout the
period of negotiations, relative values were assessed based on both market
values using trailing volume weighted average prices over various time
periods, and on asset reviews focused on the intrinsic value of projects.
    The agreed merger ratio of 0.59 NEMI shares per Aviva share is largely
in-line with the ratio of trailing 30-day volume weighted average prices as of
October 17, 2008, being C$0.43 for NEMI on the TSX and A$0.32 for Aviva on the
    The boards of both NEMI and Aviva remain very excited by the overall
prospects and improved financial strength for the merged group. Management's
view is that hard coking coal and energy market fundamentals are robust, and
that these markets are expected to continue to remain attractive over the
medium to long term.

    Production and Development Assets

    Upon completion of the Merger, the combined business will have an
attractive suite of projects in favourable jurisdictions with strong partners.
Management's near term objective will be to focus on generating value from
this portfolio through ongoing production optimization and concerted
development efforts:

        Peace River Coal (Canada) - Located in north-eastern British
        Columbia, the Peace River Coal Limited Partnership ("PRCLP") operates
        the Trend metallurgical coal mine, which was brought into commercial
        production in early 2008, and is ramping up towards a permitted
        mining rate of 2 million tonnes per year. A technical report on the
        Trend full mine feasibililty, dated November 16, 2005 and prepared by
        Norwest Corporation, is filed on The partnership also
        holds exploration licences over the neighbouring Roman deposit and
        nearby Horizon deposit as well as a 50% interest in the Belcourt
        Saxon joint venture. Under the terms of the partnership agreement and
        due to differing cash contributions of the PRCLP partners during the
        year, a final calculation of ownership interests will be undertaken
        after year end, however NEMI's current partnership interest in PRCLP
        is estimated at approximately 17%.

        Coolimba Power (Australia) - The project is a 400MW integrated energy
        development in the mid-west region of Western Australia,
        approximately 300km North of Perth, which will be fuelled by Aviva's
        coal deposit located 20km south of Eneabba where reserves of
        72 million tones of thermal coal have been defined. The location has
        the advantage of low cost fuel, available water and adjacent
        infrastructure. Coolimba is expected to be a base load generator
        employing leading emissions technology for water, sulphur and carbon
        dioxide. Aviva recently announced a joint development agreement with
        significant global independent power company, AES Corporation, as
        partner for Coolimba Power.

        Mmamantswe (Botswana) - Aviva is earning a 90% interest in the
        Mmamantswe project in Botswana where, earlier this year, it outlined
        an initial inferred resource estimate of 1.3 billion tonnes of low-
        sulfur coal. Drill programs are ongoing and Aviva has recently been
        qualified, in consortium with the GDF SUEZ group, a major player in
        global power solutions, to submit a proposal in respect of a baseload
        IPP program by South Africa's government owned utility, Eskom.

    Board and Management

    The board and management structure of the combined group will draw on the
expertise of both businesses. Senior management is expected to include the

        Pat Devlin (Executive Chairman) - Pat currently serves as President
        and Director of NEMI. He was a securities lawyer for 25 years and has
        been President of NEMI for the past five years.

        Lindsay Reed (President & CEO) - Lindsay has more than 20 years
        experience in the resource sector as a mining engineer, resources
        analyst and business development executive.

        Robert Kirtlan (Executive Director, Corporate Development) - Robert
        has 15 years company management experience and spent seven years in
        Australian and global mining investment banking in Perth, Sydney and
        New York working for major global investment banks with a specialist
        role in the mining and natural resources sector.

        Stephen Jones (CFO) - Stephen is a Chartered Accountant with over 15
        years experience. He worked as an auditor with Arthur Andersen in
        Australia and overseas in a diverse range of industries. Before
        joining Aviva, he was Finance Manager for Portman Ltd. responsible
        for project analysis, corporate reporting and treasury functions.

        Mark Chatfield (General Manager, Energy) - Mark was appointed to
        Aviva in May 2007 to drive the development of the Coolimba coal
        deposit and power station. He has more than 30 years experience in
        the energy industry, both in Australia and abroad.

        Richard Harris (General Manager, Energy Development) - Richard was
        appointed by Aviva in September 2007 to manage all licensing,
        commercial and external affairs aspects of the Coolimba Power
        project. Richard has nearly 30 years experience in the Western
        Australia energy and resources industries, both in private and public

    The board of the combined group will be reconstituted with three
representatives from each of NEMI and Aviva. The appointees are expected to be
Pat Devlin as Executive Chairman, Lindsay Reed as President and CEO, Robert
Kirtlan as Executive Director - Corporate Development, and non-executive
appointees, John Byrne, Durand Eppler, and Shaun McRobert. These individuals
provide a broad range of expertise, including broad resource sector and coal
industry experience, project management, financing, legal, commercial and
corporate governance skills.

    Development and Growth Strategies

    Although the PRC mine achieved commercial production at the beginning of
2008, and is currently generating an operating profit, the operation has not
yet achieved the permitted production rate of 2 million tonnes per year. The
PRCLP is currently undertaking a transition from contractor to an
owner-operated mining fleet which is targeting higher productivity and coal
recoveries. Similarly, efficiencies and upgrades are being undertaken in the
plant to achieve greater throughput and plant availability. The PRCLP
development area has several deposits under consideration for development
expansion with a longer term production goal of 4 million tonnes per year. A
significant advantage of the PRCLP site is its immediate access to rail and
port infrastructure and preliminary assessments of development options are
expected to be completed over the coming six months. Separately, the PRCLP's
50% interest in the Belcourt Saxon joint venture (with partner Western
Canadian Coal), is also undergoing early stage economic studies.
    The Coolimba Power project is advancing simultaneously through the
various engineering, customer off-take, financing and permitting activities.
The project was bolstered by the recent attraction of AES Corporation as the
development partner with a joint development agreement signed on September 15,
2008. Current timelines envisage a financial close on the project late in
    Mmamantswe, although early in project assessment, has the advantage of
being a large medium grade thermal project with capacity and proximity to
infrastructure to develop an export market for its coal together with a power
development. Aviva was recently approved by Eskom's pursuant to a Request for
Qualification for independent power projects. The accepted submission was
prepared in conjunction with a subsidiary of the GDF SUEZ group and focused on
a 1,000MW power plant development. It is expected that a request for proposals
will be issued by Eskom in the near future. Water drilling is currently
underway and ongoing resource evaluation will be undertaken in 2009 along with
preliminary economic studies.
    The directors of both NEMI and Aviva believe that as a merged group
additional attractive options will be assessed as opportunities for further
growth and value creation.

    Details of the Transaction

    The Merger is expected to be carried out by way of a scheme of
arrangement in Australia under Part 5.1 of the Corporations Act 2001, whereby
NEMI will acquire all of the issued shares of Aviva (the "Scheme"). Under the
Scheme, consideration received by the Aviva shareholders will comprise 0.59
CDIs (each representing 1 NEMI share) to be quoted by ASX for each issued and
outstanding Aviva share they hold at the transaction record date. The Scheme
will result in Aviva becoming a wholly-owned subsidiary of NEMI. Based on the
number of Aviva shares currently on issue, the Merger will involve the
issuance of approximately 70 million NEMI shares (and corresponding CDIs),
which equates to 55% of NEMI's shares outstanding (or 50% taking into account
the NEMI shares underlying NEMI's outstanding convertible debentures). The
Scheme will have no impact on NEMI's outstanding convertible debentures.
    Each of NEMI and Aviva has agreed to not solicit a competing offer to the
Merger and to use their best efforts to obtain necessary consents and
approvals to effect the Merger. Each company has also agreed to pay a break
fee amounting to C$1 million (reflecting an estimate of transaction costs) to
the other party under certain circumstances. In addition, each company has
granted the other party the opportunity to match (within a limited period of
time) any competing offer that may arise.
    The completion of the Merger will be subject to a number of conditions,
including the approval of Aviva shareholders at the Scheme meeting, and by the
NEMI shareholders in respect of the share issuance as consideration under the
Scheme and certain changes to its constating documents to allow for an ASX
listing. Both shareholder meetings are expected to be held late December 2008
and January 2009. The boards of both companies have unanimously agreed to
recommend the Merger to their respective shareholders in the absence of a
superior proposal. Other transaction conditions are customary, and include a
favourable report by an independent expert to the shareholders of Aviva, and
the approval of the TSX, ASX, ASIC and the relevant Australian Court. The key
terms and conditions of the Agreement are set out in the Annexure to this
    It is intended that Aviva's existing options be cancelled and replaced
with options issued by NEMI. The number of NEMI options to be issued in
replacement of the Aviva options will reflect the Merger share exchange ratio
described above or as otherwise agreed by both NEMI and Aviva, while the
exercise price will reflect the exercise price of the existing Aviva options,
adjusted in accordance with merger ratio and the foreign exchange rate between
the Canadian and Australian currencies, unless otherwise agreed. Additionally,
to properly incentivize and align the management and board of the combined
business, the companies have agreed that NEMI will provide an additional grant
of 3,247,000 NEMI options at completion to certain board members and
    Full details of the transaction will be included in the formal Scheme
Booklet and Management Information Circular to be filed with the regulatory
authorities and mailed to Aviva and NEMI shareholders, respectively.
    Canaccord Adams acted as financial advisor to NEMI and Borden Ladner
Gervais LLP and DLA Phillips Fox are providing NEMI with legal advice. Aviva
has retained RBC Capital Markets as financial advisor and has appointed BDO
Kendalls as independent expert to provide an opinion to Aviva shareholders.
Deacons and Lawson Lundell LLP are legal advisors to Aviva.

    Conference Calls

    NEMI and Aviva will hold conference calls at 8:00 am Vancouver time on
Wednesday October 22nd and at 8:00 am Perth time on Thursday October 23rd to
allow shareholders, securities analysts and investors the opportunity to hear
management discuss the Merger. A presentation in respect of the Merger will be
available from Aviva's website at in advance of the
calls. Conference call details are as follows:

    Canadian call:     8:00 am (Pacific Daylight Time)/11:00 am (Eastern
                       Daylight Time), Wednesday October 22nd
                       Dial in: 416-915-5763 or toll free on 1-800-595-8550

    Australian call:   11:00 am (Western Standard Time)/2:00 pm (Eastern
                       Summer Time), Thursday October 23rd
                       Dial in details will be provided in advance

    About NEMI

    NEMI is a mine development company focused on the exploration,
development and production of metallurgical coal assets in northeast British
Columbia. NEMI's assets as at June 30, 2008 consist of its interest in the
PRCLP, and working capital. As at the date of this release, NEMI has
57,869,745 shares outstanding, C$11,900,000 of convertible debentures with a
conversion price of C$0.90, and options and warrants outstanding over a total
of 1,500,000 shares.
    Additional information on NEMI and its projects can be obtained from the
SEDAR website,

    About Aviva

    Aviva is an integrated energy company listed on both the Australian
Securities Exchange and Botswana Stock Exchange with its head office in Perth.
The company is growing a portfolio of integrated energy assets. Aviva's most
advanced asset is the Coolimba Power project in Western Australia. Aviva is
continually reviewing integrated energy opportunities. As at the date of this
release, Aviva has 118,641,825 shares outstanding and has proposed, issued or
granted options over a total of 10,450,000 shares.
    Additional information on Aviva and its projects can be obtained on
Aviva's website at and

    Qualified/Competent Persons

    Technical information (including in relation to Mineral Resources and Ore
Reserves) contained in this press release relating to the Coolimba Power
project is based on information compiled by, has been verified by, and is the
responsibility of Mr Richard Hoskins and in respect of the Mmamantswe project
is based on information compiled by, has been verified by, and is the
responsibility of, Mrs Cecilia Hattingh, both of whom are Qualified Persons as
defined in NI 43-101 and Competent Persons under the JORC and SAMREC codes,
    Mr Richard Hoskins is employed by the Minserve Group Pty Ltd and Mrs
Cecilia Hattingh is employed by Rock and Stock Investments (Pty) Ltd.
    Mr Hoskins and Mrs Hattingh each have sufficient experience which is
relevant to the style of mineralization and type of deposit under
consideration and to the activity which they have undertaken to qualify as a
Competent Person under the JORC Code and SAMREC Code respectively. Each of Mr
Hoskins and Mrs Hattingh consents to the inclusion in this press release of
the matters based on their respective information in the form and context in
which it appears.

    Forward-Looking Statements

    This document may contain "forward-looking statements" within the meaning
of Canadian securities legislation and the United States Private Securities
Litigation Reform Act of 1995, and for the purposes of Australian laws. These
forward-looking statements are made as of the date of this document and NEMI
and Aviva (hereinafter referred to as the "Companies") do not intend, and do
not assume any obligation, to update these forward-looking statements.
    Forward-looking statements relate to future events or future performance
and reflect management of the Companies' expectations or beliefs regarding
future events and include, but are not limited to, statements with respect to
the estimation of mineral reserves and resources, the realization of mineral
reserve estimates, the timing and amount of estimated future production, costs
of production, capital expenditures, success of mining operations,
environmental risks, unanticipated reclamation expenses, title disputes or
claims and limitations on insurance coverage. In certain cases,
forward-looking statements can be identified by the use of words such as
"plans", "expects" or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not anticipate",
or "believes", or variations of such words and phrases or statements that
certain actions, events or results "may", "could", "would", "might" or "will
be taken", "occur" or "be achieved" or the negative of these terms or
comparable terminology. By their very nature forward-looking statements
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Companies to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such factors include,
among others, risks related to actual results of current exploration
activities; changes in project parameters as plans continue to be refined;
future prices of resources; possible variations in ore reserves, grade or
recovery rates; accidents, labour disputes and other risks of the mining
industry; delays in obtaining governmental approvals or financing or in the
completion of development or construction activities; as well as those factors
detailed from time to time in NEMI's annual information form interim and
annual financial statements and management's discussion and analysis of those
statements, all of which are filed and available for review on SEDAR at and in Aviva's financial statements, which are available for
review on Although the Companies have attempted to
identify important factors that could cause actual actions, events or results
to differ materially from those described in forward-looking statements, there
may be other factors that cause actions, events or results not to be as
anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such

    Annexure - Key terms of Agreement

    Conditions precedent to completion

    Completion of the Scheme under the Agreement is subject to satisfaction
(or, where applicable, waiver) of the following conditions:

    -   TSX, ASX, ASIC and the Government Agency of Botswana with authority
        to approve foreign investment issuing or providing any consents,
        waivers or approvals or doing other acts which the parties agree are
        reasonably necessary or desirable to implement the Merger;

    -   Aviva shareholders approving the Scheme by the requisite majorities
        required under section 411(4)(a)(ii) of the Corporations Act;

    -   NEMI shareholders approving the issuance of NEMI shares (and CDIs) to
        be issued to Aviva shareholders under the Scheme; the issue of
        replacement NEMI options to Aviva option holders (if required); and
        the amendments to NEMI's constating documents required for NEMI to
        achieve listing on ASX;

    -   ASX and TSX granting the requisite approval for quotation and listing
        of the NEMI CDIs and corresponding NEMI shares to be issued under the

    -   the relevant Australian Court granting the required approval of the
        Scheme in accordance with section 411(4)(b) of the Corporations Act;

    -   no temporary restraining order, preliminary or permanent injunction,
        decree or other order issued by any court of competent jurisdiction,
        TSX, ASX or ASIC, or other legal restraint or prohibition arising
        that prevents the Merger;

    -   no "material adverse change" occurring in respect of either NEMI or
        Aviva prior to closing (Material Adverse Change Condition);

    -   no "prescribed occurrence" occurring in respect of either NEMI or
        Aviva prior to closing (this restricts changes in the capital
        structure of either company) (Prescribed Occurrence Condition);

    -   no representation given by either NEMI or Aviva under the Agreement
        having become materially incorrect (Representation Condition);

    -   the independent expert appointed by Aviva concluding that the Scheme
        is in the best interests of Aviva shareholders;

    -   the net cash position of NEMI not falling below C$5,000,000 prior to

    -   the net cash position of Aviva not falling below A$10,000,000 prior
        to closing; and

    -   Aviva option holders agreeing to the cancellation of their Aviva
        options and issue of replacement NEMI options on the terms outlined
        in the announcement.

    Exclusivity obligations

    Both NEMI and Aviva have agreed to standard exclusivity obligations. These
obligations restrict each party from:

    -   soliciting, initiating or inviting (directly or indirectly) any
        enquiries, discussions or proposals in relation to, or which may
        reasonably be expected to lead to a competing proposal for that party
        to be made by a third party;

    -   subject to an exception in relation to the directors fiduciary duties
        (as specified below), participating in any discussions or
        negotiations, or providing to any other person any information in
        relation to, or which may reasonably be expected to lead to, a
        competing proposal for that party to be made by a third party (No-
        talk); or

    -   approving a third party proposal (Approval).

    Notwithstanding the No-talk and Approval obligations, the boards of both
companies may engage a third party in discussions or approve a superior
proposal if the directors, after having received independent professional
financial and legal advice, reasonably determine that failing to engage in
those discussions would likely constitute a breach of the directors' fiduciary
or statutory obligations.
    In the event that either party is approach by a third party in relation
to a potential competing proposal, the approached party:

    -   must notify the other party of the approach and provide details of
        that approach at least 5 business days prior to any recommendation of
        the competing proposal by the approached party; and

    -   must provide the other party with not less than 5 business days to
        consider the competing proposal; and

    -   must not agree to the competing proposal or recommend it, unless the
        directors, after having received independent professional financial
        and legal advice, reasonably determine that failing to do so would
        likely constitute a breach of the directors' fiduciary or statutory

    Where Aviva or NEMI or any of their respective representatives provides
any information relating to Aviva or NEMI (as applicable) to any third party
in connection with or for the purposes of a current or future competing
proposal, Aviva or NEMI (as applicable) must promptly provide to the other
party a complete copy of that information.
    The exclusivity period applicable to the Merger is 6 months from the date
of the Agreement.

    Break fee

    In the event that the Merger does not proceed, in respect of either NEMI
or Aviva due to any of the following occurring, the culpable party must pay to
the other a break fee (representing transaction costs, including advisory
fees) of C$1 million. The trigger events are:

    -   a competing proposal for one party being announced or made before
        that party's shareholder meeting, and that party's shareholders
        failing to approve the Merger by the requisite majorities;

    -   the board of that party publicly recommending a competing proposal or
        withdrawing their recommendation of the Merger;

    -   that party breaching its exclusivity obligations;

    -   a competing proposal being made for that party and the entity
        proposing the competing proposal has on or before the end of the
        exclusivity period:

           - acquired an interest in more than 20% of that party's shares; or

           - acquired voting power of more than 20% in that party's shares;

           - acquired directly or indirectly any interest (including legal,
             equitable or economic) in all or a material part of the business
             or assets (on a consolidated basis) of that party; or

           - otherwise acquired, or merged or amalgamated with that party; or

    -   completion not occurring due to non satisfaction of any of the
        following conditions by that party:

           - Material Adverse Change Condition;

           - Prescribed Occurrence Condition; or

           - Representation Condition,

        in circumstances where no other conditions were incapable of being
        satisfied; and

    -   either party recommending or undertaking a superior proposal.


    Each party has given various warranties (and a corresponding indemnity)
to the other regarding their businesses, their authority to enter into the
Agreement and the accuracy of information provided to the other party.

    Termination events

    Each party may terminate the Agreement in various circumstances

    -   where the other party is in material breach of any provision of the

    -   where a Court or government agency has taken any action permanently
        restraining or otherwise prohibiting the Merger;

    -   where the other party breaches their exclusivity obligations;

    -   if the other party or any of its related bodies corporate becomes

    -   if the Merger has not been implemented by 30 April 2009;

    -   if the other party recommends an alternative transaction to the

    -   if the board of the other party withdraws their unanimous
        recommendation of the Merger; or

    -   if NEMI becomes subject to a corporate transaction which Aviva
        considers would render the Scheme no longer in the best interests of,
        or fair and reasonable to Aviva shareholders.

For further information:

For further information: Contacts: NEMI, Pat Devlin, President and CEO,
(604) 684-1554; Aviva, Lindsay Reed, CEO, or Robert Kirtlan, Executive
Director, +61 (0)8 9367 2344

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