Mr. Lewis Black reports

RECOMMENDED NEW TAKEOVER OFFER FOR ATC ALLOYS LIMITED BY ALMONTY INDUSTRIES INC.

ATC Alloys Ltd. and Almonty Industries Inc. previously announced on May 31, 2016, that ATC and Almonty had entered into a binding heads of agreement (HOA), pursuant to which Almonty agreed to make a recommended off-market takeover offer under the Australian Corporations Act 2001 (Cth) for all of the issued, and to be issued, shares of ATC. Under the original offer, ATC shareholders were to receive one new Almonty share in the form of CHESS Depository Interests (CDIs) to be listed on the Australian Securities Exchange (ASX) for every 10.38 ATC Alloys shares held.

ATC and Almonty have agreed that the original offer is abandoned and will no longer proceed and instead a new off-market takeover offer will be made by Almonty under the Corporations Act for the same ATC shares as were covered by the original offer.

The new offer is on similar terms to the original offer with the key amendments being as follows:

• Consideration for ATC will be in the form of one new fully paid common share in Almonty (to be listed on the TSX Venture Exchange without an ASX listing) for every 10.38 ATC Alloys shares held (1);
• The new offer is conditional upon, among other things, Almonty raising at least $5.5-million (U.S.) pursuant to equity, debt or hybrid capital raising, or any combination of those types of capital raising (instead of an additional listing on ASX);
• The new offer is not conditional on the underwritten capital raising of $5.25-million (Australian), which was a condition of the original offer.

The HOA has been terminated and the original offer has been abandoned due to the inability for Almonty to fulfill the defeating condition that ASX approval be obtained for the quotation of Almonty shares via CDIs on the ASX following completion of the original offer. Despite Almonty's best efforts, that defeating condition cannot be fulfilled under the terms of the original offer due to the anticipated inability for the merged group to satisfy ASX's working capital requirements forming part of the ASX admission tests.

The new offer involves significantly less preparation time than the original offer due to the removal of the ASX listing condition.

The full terms of the new offer are set out in a new binding heads of agreement signed between Almonty and ATC.

Directors' recommendation

The directors of ATC unanimously recommend that all ATC shareholders accept the new offer in the absence of a superior proposal. All of the ATC directors that hold ATC shares have entered into prebid acceptance agreements in relation to all ATC shares owned or controlled by them.

ATC shareholder support

ATC has entered into prebid acceptance agreements with a number of ATC shareholders, including all members of the ATC board of directors that hold shares in ATC, as well as other major shareholders, in respect of a total of 17.1 per cent of ATC's issued shares. Under the prebid acceptance agreements, these shareholders have agreed to accept the new offer within three business days of receiving the new offer, subject to receipt of a superior proposal.

New offer conditions

The new offer is subject to the following conditions as set out in the new HOA, none of which have been satisfied at the date of this announcement:

• 90-per-cent minimum acceptance condition;
• As mentioned above, Almonty receiving cleared funds to the value of at least $5.5-million (U.S.) pursuant to equity, debt or hybrid capital raising, or any combination of those types of capital raising;
• At least 75 per cent (by value) of the ATC five-Australian-cent convertible notes are converted into ATC Alloys shares prior to completion of the new offer and the remainder of such convertible notes are redeemed;
• At least 75 per cent (by value) of the ATC 25-Australian-cent convertible notes are cancelled in consideration for convertible notes in Almonty and the remainder of the ATC 25-Australian-cent convertible notes are redeemed;
• Consent of ATC's secured lender (Siderian Resource Capital Ltd.);
• Approval by the TSX-V for the quotation of the Almonty shares (comprising the new offer consideration) on the TSX-V following completion of the new offer;
• All regulatory approvals that are required, including but not limited to that of the TSX-V and Australian Securities and Investments Commission (ASIC);
• All other approvals necessary to allow the new offer to occur;
• No materially adverse change occurs to the assets, liabilities, financial position, performance, profitability or prospects of ATC;
• No change in the laws of Vietnam, Canada or Australia occurs which, acting reasonably, would have a materially adverse effect on ATC's material assets located in Vietnam;
• Prior to making the new offer, Almonty has received written confirmation from the holders of 19.3 per cent of the ATC shares on issue that they intend to accept into the bid;
• From the date of this announcement to the end of the new offer period, no prescribed occurrence (as is standard for a transaction of this nature) occurs in respect of ATC.

The new HOA contains customary deal protection and exclusivity arrangements, including no-shop and no-talk provisions and notification rights in the event of a competing proposal and break fees payable by ATC to Almonty if ATC or the majority of its directors accept or recommend a proposal superior to the new offer.

Further details of the new offer will be contained in Almonty's bidder statement, which will be dispatched to ATC shareholders in due course.

(1) If the number of ATC shares held by an ATC shareholder means that the shareholder's aggregate entitlement to Almonty shares is not a whole number, any fractional entitlement will be rounded up to the nearest whole number.

Advisers

Almonty is being advised by Norton Rose Fulbright as Australian legal adviser.

ATC Alloys is being advised by Somers and Partners Pty. Ltd. as financial adviser and Steinepreis Paganin as legal adviser.

We seek Safe Harbor.