ASX Market Announcements
ASX Limited
20 Bridge Street
Sydney NSW 2000
23 June 2014

BY ELECTRONIC LODGEMENT

Dominic D Smith

Vice President & Company Secretary

Aurizon Holdings Limited

ABN 14 146 335 622

T +61 7 3019 9000

F +61 7 3019 2188

E CompanySecretary@aurizon.com.au

W aurizon.com.au

Level 17, 175 Eagle Street

Brisbane QLD 4000

GPO Box 456

Brisbane QLD 4001

Joint off-market bid for Aquila Resources Limited - Bidders' response to Target Statement


Please find attached announcement for immediate release to the market. Yours faithfully

Dominic D Smith

VP & Company Secretary

ASX and MEDIA RELEASE 23 June 2014 BAOSTEEL AND AURIZON WELCOME RELEASE OF TARGET'S STATEMENT RECOMMENDING SHAREHOLDERS ACCEPT THE OFFER

We refer to the joint takeover offer by Baosteel Resources Australia Pty Ltd (ABN 66 154 815 362) (Baosteel) and Aurizon Operations Limited (ABN 47 564 947 264) (Aurizon) (together, the Bidders) to acquire 100% of the ordinary shares in Aquila Resources Limited (Aquila) that they do not already own for A$3.40 per share (the Offer).
The Bidders welcome the release of Aquila's Target's Statement. The Target Statement includes the
Independent Expert report, which is available at www.asx.com.au

Aquila's Independent Directors have unanimously recommended that it is in the best interests of Aquila Shareholders to ACCEPT the Offer (in due course, in the absence of a superior proposal).

The Independent Directors stated the following reasons to ACCEPT the Offer:
1. While the Independent Expert concluded that the Offer is not fair, the Independent Expert also concluded that it is reasonable.
2. The trading price of Aquila Shares is likely to fall if the Offer is unsuccessful and in the absence of a superior proposal.
3. The Bidders are bound by their announced statement that they will not increase the Offer Price or extend the Offer Period (except in certain limited circumstances).
4. No superior proposal has emerged as at the date of the Target's Statement.
Section 2 of the Target's Statement discusses these reasons in more detail.
The Bidders also refer Aquila Shareholders to section 1 of the Bidders' Statement, which provides further reasons why the Bidders consider Aquila Shareholders should ACCEPT the Offer.

The Independent Expert appointed by Aquila's Independent Directors has concluded that the Offer is not fair but is reasonable and that, in the absence of an alternative superior proposal, Aquila Shareholders are likely to be better off if they ACCEPT the Offer.

The Independent Expert made the following comments in reaching its conclusion:
1. Aquila shares were trading at levels well below the Offer Price immediately before the Offer was announced. The Offer Price represents a significant premium.
2. Without the involvement of a major industry participant with substantial funding capacity, Aquila does not have a clear path forward to the financing and development of West Pilbara and does not have the financial and other resources to concurrently progress its other pre-development assets. In this context, given current market conditions, it is to be expected that the share market will not attribute meaningful value to Aquila's pre-development assets.
3. The Aquila share price fell sharply when the Bidders announced that they would not increase the Offer Price. The risk of a further fall in the share price in the absence of the Offer is exacerbated by the recent weakness in the iron ore market, with the benchmark iron ore price having fallen by around 15% since the announcement of the Offer.
4. Mr Tony Poli, Aquila's executive chairman, has flagged his intention to accept the Offer in respect of his
28.92% shareholding (in the absence of a superior proposal). Together with Baosteel's existing shareholding, this would give the Bidders a shareholding of almost 49% of Aquila and effective control.

The Bidders encourage Aquila shareholders to ACCEPT the Offer as soon as possible.

The Offer is open now for acceptance and the Bidders encourage you to ACCEPT now.
For professional investors1 that hold or beneficially own at least 147,0592 Aquila shares, the Bidders have established an institutional acceptance facility (IAF). Those shareholders may request the IAF participation forms from the facility operator by email to custodian@computershare.comor phone on 1800 095 862 (callers within Australia) and +61 3 9415 5401 (callers outside Australia), or from the Financial Advisers of the Bidders (details of which are below).

The Offer remains the only offer available for all Aquila shares today. The Bidders will not increase the Offer Price. The Bidders will not extend the Offer Period3, which is scheduled to close at 7.00pm (Sydney time) on 11 July 2014, unless all remaining Defeating Conditions of the Offer are fulfilled or waived by them prior to that time. Ms Yiming Wu

Director
Baosteel Resources Australia Pty Limited
ABN 66 154 815 362

Registered office

Level 20, Allendale Square

77 St Georges Terrace

Perth W A 6000

AUSTRALIA

Mr Dominic D Smith

Director
Aurizon Operations Limited
ABN 47 564 947 264

Registered office

Level 17

175 Eagle Street

Brisbane QLD 4001

AUSTRALIA

For further information regarding the Offer, please contact the Bidder's advisers: Financial adviser (Baosteel):

Damian Pearson, Deutsche Bank
Tel: +61 420 987 851

Financial adviser (Aurizon):

Paul Glasson. Satori Investments
Tel: +61 409 354 109

Media Enquiries:

Greg Baxter, Newgate Communications
Tel: +61 419 461 368
Mark Hairsine, Aurizon
Tel: + 61 418 877 574

Aquila Shareholder Enquiries:

Offer Information Line:
Within Australia (toll-free): 1300 309 589
Outside Australia: +61 2 8022 7902
Offer Website: www.aquilaoffer.com.au

1 As defined in the Corporations Act.

2 Being the number of Aquila shares with an aggregate value of at least A$500,000, assuming a share price of A$3.40.

3 Subject to any automatic extension under the Corporations Act.

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