AZR Aztec Res.

RNS Number:8076M
Aztec Resources Limited
28 November 2006

Aztec Resources Limited ("Aztec" or "the Company")

28 November 2006

Update re takeover

Aztec has today posted an update letter to shareholders with a revised
recommendation in relation to the takeover offer from Mount Gibson Iron Limited
(Mount Gibson). The content of this letter is set out below.

Aztec has also today issued a joint announcement with Mount Gibson to the
Australian Stock Exchange. The content of this joint announcement is also set
out below.

Copies of the letter to shareholders and joint announcements are available on
the ASX website www.asx.com.au

For further information please contact:

Aztec Shareholder Information Line
Australian Callers: 1800 602 244
International Callers: +61 8 6218 4220

1) LETTER TO AZTEC SHAREHOLDERS

28 November 2006

Dear Aztec Shareholder

Shareholder Update - REVISED RECOMMENDATION

The Board of Aztec Resources Limited (Aztec) has revised its recommendation in
relation to the takeover offer from Mount Gibson Iron Limited (Mount Gibson).

Having seen Mount Gibson's ownership in Aztec increase to 54.14% and after
considering recent developments, on balance, the Aztec board believes that
shareholders should accept Mount Gibson's offer. It is noted that, while the
current market price of Aztec shares is less than the implied price under the
Mount Gibson offer, shareholders can elect to sell their shares on market while
the offer remains open after having regard to their individual circumstances.

Aztec directors have previously recommended to Aztec shareholders that they
should reject the Mount Gibson offer based on a number of factors which are set
out in Aztec's Target's Statement and Supplementary Target's Statements.
However, based on Mount Gibson's current level of ownership and changes in a
number of circumstances surrounding the bid, Aztec directors have considered the
benefits and risks to Aztec shareholders of remaining a minority shareholder in
Aztec as compared to the benefits and risks of accepting Mount Gibson's offer or
selling on market while the bid remains open.

Changed circumstances of which Aztec shareholders should be aware include the
following:

  * Following the acquisition of shares in Mount Gibson by Shanghai
    Merchants Holdings Limited and Metalloinvest at $0.85 per share and $0.90
    per share respectively, Mount Gibson's share price has increased such that
    the effective value of its offer to Aztec shareholders equates to 28.6 cents
    per share, based on the prior five day weighted average share price of Mount
    Gibson, as opposed to 26.3 cents per share when the offer was announced;
  * On the basis of its current level of shareholding, Mount Gibson is in a
    position to appoint and remove directors from the Aztec board and therefore
    dictate the future strategy of your company;
  * In recent discussions with Mount Gibson, the following update has been
    provided in respect of Mount Gibson's operations:

    * The operations at Tallering Peak achieved record ore production in
    the September 2006 quarter and Mount Gibson expects to achieve record ore
    shipments for the December 2006 quarter, equivalent to an annual shipping rate
    of 3 million tonnes per annum;The feasibility study for the development of the
    Extension Hill hematite project is on track for completion by 31 December 2006;
    and

    * Mount Gibson has entered into a further agreement with Sinom
    Investments Limited (Sinom) relating to the $52.5 million sale of its and Mount
    Gibson Mining Limited's 73% interest in Asia Iron Holdings Limited. Under the
    agreement, Sinom has agreed to immediately release to Mount Gibson the first
    $40 million being held in escrow, with the balance of $12.5 million to be
    released to Mount Gibson by no later than 31 May 2007. As a result of this
    agreement, the 30 November 2007 deadline for obtaining environmental approval is
    removed and Sinom will no longer be entitled to terminate the original agreement
    and return the sale shares if the environmental deadline is not met.

  * During the course of the offer, Aztec directors have pursued various
    initiatives to improve shareholder value, including seeking rival bids and
    exploring alternative transactions with third parties. These initiatives
    have not resulted in an alternative proposal being put forward to Aztec
    shareholders.
  * The Mount Gibson offer has been declared final as to price and free of
    all defeating conditions.

In reaching their decision to revise their recommendation, the directors of
Aztec were also cognisant of:

  * Capital gains tax rollover relief will be available for qualifying
    shareholders if Mount Gibson achieves acceptances for over 80% of shares on
    issue;
  * The level of Mount Gibson's final shareholding in Aztec will most likely
    result in a fall in the liquidity of Aztec shares given the likelihood of
    reduced trading volumes which may in turn lead to a possible fall in the
    Aztec share price; and
  * If Mount Gibson acquires 100% ownership of Aztec, any benefits of the
    merged group, as set out in the Mount Gibson Bidder's Statement, will be
    available to Aztec shareholders who receive Mount Gibson shares pursuant to
    the offer.

In addition, it has been agreed with Mount Gibson, that if Mount Gibson receives
90% or greater acceptances to its offer, Mr Ian Burston, the current Aztec
Chairman, and Mr Peter Bilbe, Aztec's managing director, will be invited to join
the Mount Gibson board.

During the period prior to the closing of the Mount Gibson offer the existing
Aztec board members will remain in place. It has been agreed that Mr Burston
will step down as non-executive Chairman of Aztec, to be replaced in that
capacity by Mr Arnett, currently a non-executive director of Aztec, but
Mr Burston will remain as a non-executive director. In addition, it has been
agreed that Luke Tonkin, Alan Rule and Craig Readhead, current directors of
Mount Gibson, will also be appointed to the Aztec board within the next week
giving the board a total of seven directors.

The directors of Aztec who hold shares in the company intend to accept the offer
for those shares.

Aztec shareholders should be aware that the Mount Gibson offer is currently
scheduled to close at 5pm on Wednesday, 6 December 2006.

Should you have any questions, please do not hesitate to contact the company on
the Aztec Shareholder Information Line.

Yours sincerely


Ian Burston
Chairman

For further information please contact:
Mr Peter Bilbe
Managing Director
Tel: +61 8 9423 0800

Aztec Shareholder Information Line
Australian Callers 1800 602 244
International Callers +61 8 6218 4220

Media Enquiries
Purple Communications
Warrick Hazeldine
Tel +61 8 9485 1254
Mob +61 (0)417 944 616
Email whazeldine@purplecom.com.au


2) Joint Aztec and Mount Gibson ASX & Media Release

28 November 2006

            AZTEC DIRECTORS UNANIMOUSLY RECOMMEND MOUNT GIBSON OFFER

                 MOUNT GIBSON DECLARES OFFER FINAL AS TO PRICE

Mount Gibson Iron Limited (Mount Gibson) (ASX Code: MGX) is pleased to announce
that the board of Aztec Resources Limited (Aztec) has today unanimously agreed
to recommend acceptance of Mount Gibson's offer for all the ordinary shares in
Aztec (Offer).

In addition, the Aztec directors have confirmed they will accept the Offer in
respect of their own Aztec shares.

The recommendation follows discussions between the boards of Mount Gibson and
Aztec and their advisers, subsequent to Mount Gibson's announcement last week
that it had secured acceptances in excess of 50% of Aztec.

In this regard, the directors of Aztec note a number of the concerns raised in
Aztec's Targets Statement have been addressed recently and in the course of
discussions. In particular:

  * Significant stakes in Mount Gibson have recently changed hands at prices
    equal to, or in excess of, recent trading levels, including approximately 61
    million shares purchased by Shanghai Merchants Group at 85 cents per share,
    and 109.7 million shares acquired by Metalloinvest at 90 cents per share;
  * Mount Gibson's share price has increased such that the effective value
    of its offer to Aztec shareholders equates to 28.6 cents per share, based on
    the prior five day weighted average share price of Mount Gibson, as opposed
    to 26.3 cents per share when the offer was announced;
  * Mount Gibson's Tallering Peak operations achieved record ore production
    in the September 2006 quarter and expects to achieve record ore shipments
    for the December 2006 quarter equivalent to an annual shipping rate of 3
    million tonnes per annum;
  * The feasibility study for the development of the Extension Hill hematite
    project is on track for completion by 31 December 2006;
  * Mount Gibson has entered into a further agreement with Sinom Investments
    Limited (Sinom) relating to the $52.5 million sale of its and Mount Gibson
    Mining Limited's 73% interest in Asia Iron Holdings Limited. Under the
    agreement, Sinom has released the first $40 million being held in escrow to
    Mount Gibson, with the balance of $12.5 million to be released to Mount
    Gibson by no later than 31 May 2007. As a result of this agreement, the
    30 November 2007 deadline for obtaining environmental approval is removed
    and Sinom will no longer be entitled to terminate the original agreement and
    return the sale shares if the environmental deadline is not met; and
  * Mount Gibson's offer is free of all defeating conditions.

It has also been agreed that in the event that Mount Gibson receives 90% or
greater acceptances to its offer, Mr Ian Burston, the current Aztec Chairman,
and Mr Peter Bilbe, Aztec's managing director, will be invited to join the
enlarged company's board.

During the period prior to the closing of the Mount Gibson offer the existing
Aztec board members will remain in place. It has been agreed that Mr Burston
will step down as non-executive Chairman of Aztec, to be replaced in that
capacity by Mr Arnett, currently a non-executive director of Aztec, but Mr
Burston will remain as a non-executive director. In addition, it has been agreed
that Luke Tonkin, Alan Rule and Craig Readhead, current directors of Mount
Gibson, will also be appointed to the Aztec board within the next week giving
the board a total of seven directors.

Mr Bilbe commented: "Having considered recent developments which have seen Mount
Gibson's ownership in Aztec increase to 54.14%, the Aztec board, on balance,
believes that shareholders should accept Mount Gibson's offer."

Luke Tonkin, Managing Director of Mount Gibson said: "We welcome the
recommendation from the Aztec board and look forward to welcoming Aztec
shareholders who accept the Offer onto the Mount Gibson register."

"The Offer represents good value to Aztec shareholders. I would also add that
Aztec shareholders who accept the Offer will continue to have potential upside
exposure to the development of, and commencement of production at, Aztec's
Koolan Island project through their holding in Mount Gibson, and the opportunity
to participate in the potential re-rating of the combined group."

Under the Offer, Aztec shareholders are being offered one Mount Gibson share for
every three Aztec shares held. Aztec shareholders who accept the Offer will be
issued with their Mount Gibson shares as consideration within three days of
their acceptance being processed.

Mount Gibson has also declared its offer final with respect to price. The offer
is scheduled to close at 5:00pm Perth Western Australia time on Wednesday 6th
December 2006.

Yours sincerely,

MOUNT GIBSON IRON LIMITED AZTEC RESOURCES LIMITED

Luke Tonkin Peter Bilbe
Managing Director Managing Director

Enquiries:  Mr Luke Tonkin / Alan Rule         Mr Peter Bilbe
            Telephone: +61-8-9426-7500         +61-8-9423-0800

            Peter Bacchus                      Robert Sennitt
            Managing Director                  Division Director
            Morgan Stanley                     Macquarie Bank Limited
            Telephone: +44-778-994-3482        Telephone: +61-2-8232-8286

            Chris Fraser
            Director
            Citigroup
            Telephone: +61-2-8225-4634





                      This information is provided by RNS
            The company news service from the London Stock Exchange

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