French mining group Eramet SA and Mineral Deposits Limited ("MDL") said Thursday they have signed the definitive agreements for the creation of a joint venture to combine Eramet Titanium & Iron and MDL's Grande Cote Mineral Sands project.

MAIN FACTS:

- As proposed in the terms of the Memorandum of Understanding announced on June 17, Eramet and MDL will both hold 50% of the shares of the newly created entity.

- Eramet will contribute to the joint venture its 100% shareholding in ETI and cash of $30 million, and MDL will contribute its 90% participation in the Grande Cote Mineral Sands project, the other 10% of the project being held by the Republic of Senegal.

- The transaction creates a new major player in the mineral sands industry which presents attractive growth prospects given the supply deficits forecast in the titanium dioxide and zircon markets in the short and medium term, and the low substitution risk of these two products.

- Titanium dioxide is mainly used for the production of pigments (91% of consumption) and of titanium metal - notably for the aeronautics industry - (5%). Zircon is used in the production of ceramics (55% of consumption), zirconia and chemicals (18%), refractory materials (11%) and foundry parts (11%).

- ETI owns the Tyssedal plant in Norway, which is the only facility in Europe producing titanium dioxide (TiO2) slag for use in the pigment sector. Current capacity is approximately 210 ktpa of TiO2 slag, and approximately 115 ktpa of high-purity pig iron as a very important co-product, which is sold to ductile iron foundries, notably for the production of parts for wind turbines. Ilmenite is the major feedstock of the plant.

- Located on the coast of Senegal in West Africa, the Grande Cote Mineral Sands Project, with an expected mine life of at least 20 years (based on identified reserves and resources), is anticipated to produce approximately 85 ktpa of zircon and 575 ktpa of ilmenite (and small amounts of rutile and leucoxene) when in full production.

- Construction of the Project will commence during the current quarter, and after a two year build, production is expected to commence late in 2013. The capital cost of the Project, estimated at $516 million, will be financed using Eramet's cash contribution of $30 million to the joint venture, a $45 million shareholder loan provided by Eramet to the joint venture, third party debt financing and equity contributions or shareholders loans set up at parity between the joint venture and the two parties. Grande Cote is one of only a few major new projects globally that is expected to be developed in the medium term.

- The combination of ETI and Grande Côte will provide ETI with the opportunity to benefit from a new source of high quality ilmenite, which provides for expansion and product diversification opportunities, while Grande Côte will be able to secure off-take for the majority of its ilmenite production. Grande Cote's zircon production will allow the joint venture to have a strong position in another attractive market.

- Finally, the joint venture will benefit from Eramet's broad expertise in mining, metallurgy, logistics, R&D and marketing, and from MDL's development expertise (having successfully commissioned the Sabodala gold project in Senegal in 2009) and mineral sands mining experience..

- By Paris Bureau, Dow Jones Newswires; +331-4017-1740; geraldine.amiel@dowjones.com

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