No surprise!Announced by:AURIONGOLD LIMITED (AOR)Announced on:...

No surprise!

Announced by:AURIONGOLD LIMITED (AOR)
Announced on: 31/07/2002 20:35:36
Part: B 798 words

AURIONGOLD LIMITED 2002-07-31 ASX-SIGNAL-G

HOMEX - Sydney

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LETTER TO SHAREHOLDERS

You should be aware that Placer Dome has revised its takeover offer
for your shares. On Monday, 29 July, Placer Dome amended its offer by
adding a cash payment of A$0.35 per AurionGold share to the original
offer of 17.5 Placer Dome shares per 100 AurionGold shares. At the
time of writing this valued your shares at $3.10.

Placer Dome has declared that this is its final offer and the offer
is free of conditions and is scheduled to close at 7.00pm (AEST), 7
August 2002 (unless it is extended).

YOUR DIRECTORS HAVE CONSIDERED THE REVISED OFFER AND MAINTAIN THEIR
RECOMMENDATION THAT YOU REJECT THE PLACER DOME OFFER

The revised offer fails to address many of the shortcomings that were
brought to the attention of shareholders in AurionGold's Target's
Statement. The inadequacies of Placer Dome's offer are outlined
below, and in further detail in the attached booklet. The booklet
also details the various options available to shareholders.

Your board believes the offer represents unacceptable value for your
shares. It is over 10% below the $3.48 price at which AurionGold
shares were trading before the Placer Dome bid was announced. In
addition, the average purchase price for AurionGold shares since
completion of the Delta/Goldfields merger has been $3.35 per share.
At the close of trade on the NYSE on 30 July, Placer Dome's revised
offer represented a 7% discount to this volume weighted average
price. In the view of your directors, Placer Dome is offering an
unacceptable price for your company having regard to the quality of
AurionGold's assets and its future prospects.

We are concerned about the consequences for AurionGold shareholders
if they accept the offer (and receive shares in Placer Dome). Placer
Dome shares have shown considerable volatility and the share price
has collapsed by some 40% since the bid for AurionGold was announced.
This fall could be exacerbated by future selling pressure resulting
from accepting shareholders seeking to liquidate their Placer Dome
holdings. In addition, there may be tax issues for any accepting
shareholders (as outlined in the attached material).

A shareholding in Placer Dome brings with it new risks for AurionGold
shareholders. In particular, as at 31 December 2001, 65% of Placer
Dome's gold reserves were in South Africa. The South African
Government has initiated debate on the role of Black Economic
Empowerment groups in the ownership of mining assets in that country.
It has been reported that the South African Department of Minerals
and Energy has proposed in a discussion paper that local black
empowerment groups should, within 10 years, hold 51% equity in all
new mining projects, and up to 30% of existing mining operations.
This creates significant uncertainty, although it is not clear if, or
how, this will affect Placer Dome's operations.

In addition Placer Dome's recent June quarterly report confirmed
declining gold production and a fall in operating earnings and cash
flow.

You lose any potential benefit from AurionGold's franking credits. As
a Canadian company, Placer Dome is unable to attach franking credits
to dividends paid to Australian shareholders. If you accepted the
offer, you could also be subject to Canadian withholding taxes of 15%
on any dividends paid by Placer Dome. AurionGold has consistently
paid higher dividends than Placer Dome, as indicated in our Target's
Statement. Placer Dome has given no indication that it is going to
improve its dividend performance.

Most importantly, in considering whether to accept Placer Dome's
offer or retain your AurionGold shareholding you should take into
account AurionGold's strong future. As you are aware, the creation of
AurionGold has already delivered significant value for shareholders.
We have achieved cost savings and efficiencies in excess of those
forecast at the time of the merger, and have recently announced
initiatives to create further opportunities to unlock value.

Our strategic Kalgoorlie landholding, successful exploration
strategy, attractive earnings, strong balance sheet and historically
successful hedging program all combine to underpin our short and
medium term growth plans.

You should be aware that the AurionGold board is scheduled to meet
late on 12 August to finalise the accounts for the year ended 30 June
2002, and to consider the declaration of a fully franked dividend to
shareholders. Promptly after that meeting the board will announce the
amount of the dividend and the record date for determining
entitlements.

If you have any questions or comments, please call AurionGold's
shareholder information line on 1800 65 65 68 or check our website at
www.auriongold.com.au

Each of your directors who has an interest in AurionGold shares
intends to reject the offer, and does not intend to sell on market.
We believe Placer Dome's offer undervalues our AurionGold shares and
falls to compensate us for the strong future AurionGold offers.


R F E Warburton
CHAIRMAN