Recommended Merger of Katanga and Nikanor to Create a Leading African Copper and Cobalt Company

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The Boards of Katanga Mining Limited (TSX: KAT) and Nikanor PLC are pleased to announce today that they have reached agreement on the terms of a recommended Merger of the two companies. The Merger will create a company with a combined market capitalisation of approximately US$3.3 billion and the potential to become by 2011 Africa's largest copper producer and the world's largest cobalt producer.

Summary

- The Merger will bring together the adjacent properties in the Democratic Republic of Congo (DRC) owned by Katanga and Nikanor, which were previously part of the same mine complex, to create a major single-site operation.

- Substantial high-grade resources of both copper and cobalt will create an exceptional foundation for a large-scale, low-cost and long-life operation.

- Based on work completed to date, the Merged Company intends to develop a unified mine complex with annual output approaching 400,000 tonnes of copper and 40,000 tonnes of cobalt by 2011. It is believed that the combined operations will be the largest single-site project in the world producing both copper and cobalt.

- The Merger is expected to deliver significant value enhancement for shareholders of both companies resulting from capital savings, lower unit operating costs and increased production.

- More cost effective operations are expected to increase revenue to the DRC government. The coordination of the Merged Company's infrastructure spend and corporate social responsibility activities will also be more effective in producing positive change for the communities surrounding the operations.

- Officials in the DRC have been kept apprised of the potential Merger and have expressed their support.

- The Merger will be implemented by way of an offer by Katanga for Nikanor together with a Cash Return to Nikanor Shareholders of US$452 million.

- The Merged Company will be well-funded, with a pro forma cash balance of approximately US$745 million as at 30 September 2007, after taking account of the Cash Return.

- The Merged Company will follow Katanga and Nikanor's existing strategies of financing their projects through a mixture of debt and equity. The level of additional financing required will be determined as part of a combined business plan, but it is expected that production from Katanga and a phased approach to capital expenditure will result in a lower and delayed requirement for additional financing than for Nikanor standalone.

- Katanga has received irrevocable undertakings to support the Merger and accept the Offer from Glencore Finance, RP Capital Entities with interests in Nikanor Shares, Oakey Invest Holdings Inc. and Pitchley Properties Limited representing 78.4 per cent. of Nikanor Shares in issue.

- Nikanor has received irrevocable undertakings from Arthur Ditto, Tain Holdings Limited, George Forrest and RP Capital Entities with interests in Katanga Shares representing 48.1 per cent. of Katanga Shares in issue to support the Merger and not to accept any competing proposal.

- In addition, Arthur Ditto and Tain Holdings Limited have undertaken to vote in aggregate in respect of 6,843,000 Katanga Shares, representing 8.7 per cent. of Katanga Shares in issue, in favour of the Merger at the Katanga extraordinary general meeting.

- The Merged Company will be led by Arthur Ditto as President and CEO supported by executives to be drawn from both companies. An integration committee consisting of four members, two from Katanga and two from Nikanor, will be set up to oversee the integration of the two businesses.

- The Merged Company, which will retain the name Katanga Mining Limited, will make an application to obtain a primary listing on the Main Market of the London Stock Exchange within 5 months of the Effective Date. The Merged Company will therefore have primary listings on the TSX and the Main Market of the London Stock Exchange.

Arthur Ditto, proposed President and CEO of the Merged Company, stated: "Combining the assets of Katanga and Nikanor will create an industry leader in both copper and cobalt. We believe it offers the opportunity for a dramatic increase in value for shareholders of both companies and is a transaction where the whole is definitely greater than the sum of the parts. Transacting the deal now gives us the best opportunity to lower the overall capital spending and deliver maximum benefit from a consolidated suite of operations. We will have a much more efficient business model with greater benefits for all stakeholders including employees, shareholders, and the DRC".

Jonathan Leslie, Executive Chairman of Nikanor, said: "Individually, Nikanor and Katanga both present compelling copper and cobalt investment cases; combined, they transform into an African champion with phenomenal resources and potential. This merger is precisely the type of transaction we envisaged when we listed the company more than year ago, creating a premier publicly traded copper and cobalt company and generating significant operating and financial synergies. The combined company will create value for shareholders and other stakeholders alike and be even better placed to help play a positive role in the development of the Katanga Province and as a long-term partner to GTcamines and ultimately to the DRC".