Adastra Rejects FQM Bid

RNS Number:5689Y
Adastra Minerals Inc
17 February 2006



NEWS RELEASE



    Adastra Board of Directors Unanimously Recommends Shareholders REJECT First
     Quantum's Hostile Takeover Bid and Announces Agreement in Principle with
                             Mitsubishi

Trading: TSX and AIM: AAA



London, UK (February 17, 2006) - The Board of Directors of Adastra Minerals Inc.
("Adastra", or the "Company") announced today that it has unanimously
recommended that Adastra shareholders REJECT First Quantum Minerals Ltd.'s 
("First Quantum") hostile takeover bid and NOT TENDER their shares to the First
Quantum Offer.  The Board's recommendation is contained in a Directors' Circular
being filed and mailed to Adastra shareholders today.



The Directors' Circular includes the Board's recommendation as well as a
discussion of the reasons for recommending shareholders reject the First Quantum
Offer.  Shareholders are urged to read the Directors' Circular in its entirety.



In reaching its conclusions, the Board carefully reviewed and considered the
First Quantum Offer, with the benefit of advice from its financial and legal
advisers and the report and recommendation of a Special Committee of Adastra
directors (the "Special Committee") who are independent of Adastra management.
The Board and the Special Committee have received an opinion from N M Rothschild
& Sons Limited ("Rothschild") that, as of the date of the opinion, the
consideration which First Quantum has offered to Adastra shareholders is
inadequate from a financial point of view.  The Board's assessment of the First
Quantum Offer and the reasons for the recommendation that shareholders reject
the First Quantum Offer are set out in the Directors' Circular.



In the Directors' Circular, the Board recommends rejecting First Quantum's Offer
based on a number of factors, including:



*         Adastra's principal asset, a tailings project in the Democratic
Republic of Congo (the "DRC") (the "Kolwezi Project"), contains the world's
third largest cobalt resource and is poised to benefit from anticipated future
robust conditions in the cobalt market.



*         Adastra shareholders are being offered only 7% of the combined Adastra
/First Quantum group's equity, which is insufficient compensation for the
Kolwezi Project. Management believes the Kolwezi Project would contribute
approximately 21% to the combined group's copper equivalent production in 2009
and would account for approximately 45% of the combined group's copper
equivalent recoverable resources.



*         Mitsubishi Corporation ("Mitsubishi") has reached agreement with
Adastra (subject to confirmatory due diligence, negotiation of definitive
documentation and approval of both companies' boards of directors) for
Mitsubishi to purchase a 14.9% stake in the Kolwezi Project, in return, among
other things, for payment to Adastra of US$37.5 million in cash, provision of
US$12.5 million of shareholder loans to the Kolwezi Project on Adastra's behalf
and extension of completion guarantees to project lenders.  The terms of the
Mitsubishi transaction, when adjusted for management's estimate of the value of
Adastra's other assets (in which Mitsubishi is not acquiring an interest),
impute a value to Adastra that exceeds the value implied by the First Quantum
Offer based on First Quantum's closing price on the TSX on February 15, 2006,
which was Cdn.$37.50, and the closing price on January 18, 2006, the date that
First Quantum announced its intention to make an offer, which was Cdn.$37.65.
Instead of offering a premium for control, First Quantum is offering less value
for Adastra than is implied by Mitsubishi's proposed purchase of a minority
interest in the Kolwezi Project.



*         The Board believes that completion by management of the financing,
development and commissioning of the Kolwezi Project will result in better value
for Adastra shareholders than the First Quantum Offer.



*         The First Quantum Offer has come shortly before a period of expected
significant risk reduction and associated value enhancement for the Company.
The definitive feasibility study for the Kolwezi Project is expected to be
completed in early March 2006, the Company is successfully advancing the
financing of the Kolwezi Project and is on schedule to sign project loan
agreements and start construction of the tailings re-treatment facility before
the end of 2006.  If the First Quantum Offer is completed, Adastra shareholders
would be denied the opportunity to benefit fully from Adastra's development
plans and the anticipated value enhancement associated with the reduction in
project risk.



*         Since the date of the First Quantum Offer, Adastra Shares have
consistently traded above the implied value of the First Quantum Offer.



*         The value of the First Quantum Offer is entirely dependent on the
value of First Quantum's shares, which are subject to considerable share price
volatility.  There is no cash alternative or other underpinning of the value of
the First Quantum Offer.



*         M&G Investment Management, Adastra's largest shareholder (14.8%),
together with Mr. Jean-Raymond Boulle, the founder of Adastra and its largest
non-institutional shareholder (beneficial shareholding 7.7%), Merrill Lynch
Investment Managers (5.2%) and other major shareholders, which in aggregate hold
more than 50% of Adastra's issued share capital have advised the Board that they
do not find the First Quantum Offer attractive and would support the Board in
rejecting the First Quantum Offer.



Tim Read, President and CEO, said: "Adastra believes First Quantum's Offer is
financially inadequate, opportunistic, and fails to recognise the value of the
Kolwezi Project.  First Quantum wants Adastra shareholders to contribute 45% of
a combined group's copper equivalent resources and accept only 7% of the
combined group's equity.  These terms are unacceptable and should be rejected.
Adastra believes that the Mitsubishi transaction would value Adastra more highly
than First Quantum's Offer.  Equally importantly, it would provide Adastra with
sufficient cash to cover most or all of its anticipated equity requirement for
the Kolwezi Project."



The Directors' Circular may be viewed on www.sedar.com and on Adastra's website
www.adastramin.com.



How to withdraw your Adastra Shares from the First Quantum Offer

Shareholders who have deposited Adastra Shares under the First Quantum Offer and
who wish to obtain advice or assistance in withdrawing their Adastra Shares are
urged to contact The Equicom Group (in North America) toll free at
1-800-385-5451 or Adastra (in Europe and elsewhere) at +44 (0)20 7257 2040.





About Adastra

Adastra is an international mining company listed on the Toronto Stock Exchange
and on AIM, in London, under the symbol "AAA".  It is currently developing
mineral assets in Central Africa, including the Kolwezi Project, and the
possible rehabilitation of the Kipushi zinc mine in the DRC.  Adastra's growth
strategy emphasizes the creation of shareholder value through the development of
world-class resources in stable or stabilizing political environments.



Background and ownership of the Kolwezi Project

The Kolwezi Project is located approximately 25 kilometres outside of the town
of Kolwezi in the copper belt region of the Katanga province of the DRC and will
involve processing 112.8 million tonnes of oxide tailings which were produced by
the nearby copper and cobalt mineral concentrator facility in Kolwezi owned by
Gecamines, the state-owned mining company of the DRC.  This concentrator
facility has processed high-grade sulphide and oxide ores from nearby mines from
1952 onwards.  Due to the poor recoveries from the oxide material by
conventional concentrating techniques, valuable amounts of cobalt and copper
have been discharged into two tailings dams, the Kingamyambo tailings dam and
the Musonoi tailings dam, both of which form part of, and contribute the
feedstock for, the Kolwezi Project.



On June 15, 2004, Kingamyambo Musonoi Tailings S.A.R.L. ("KMT"), of which
Adastra, through its wholly-owned subsidiaries, currently has an 82.5%
shareholding, with the remainder owned by Gecamines (12.5%) and the Government
of the DRC (5%), secured unequivocal title over 100% of the Kolwezi Project site
area and obtained the relevant tailings exploitation permit under the DRC Mining
Code.  In October and November 2005, the International Finance Corporation (the
"IFC") and the Industrial Development Corporation of South Africa Limited (the "
IDC") signed a series of definitive agreements with Adastra to exercise
pre-existing options and acquire 7.5% and 10% shareholdings, respectively, in
KMT (the "IFI Agreements").  The completion of the exercise of these options
will occur upon the amendment of KMT's articles of association, an
administrative procedure to be completed by the government of the DRC, which
management expects to be completed shortly, and at which time Adastra's interest
in KMT accordingly will fall to 65%.  Under the IFI Agreements, upon the
acquisition by one or more persons (acting in concert) of more than 50% of the
Adastra Shares, the IFC and the IDC each has the right (but not the obligation)
to convert its shareholding in KMT into Adastra Shares based on a conversion
ratio determined by dividing the fair market value of its share of the Kolwezi
Project (less any cash payment therefore made by Adastra) by the trade weighted
average of Adastra Shares on the TSX during the 20 trading days immediately
preceding the date of conversion, provided that the number of Adastra Shares
held by each of the IFC and IDC shall not exceed 20% of Adastra's issued share
capital on a fully-diluted basis.



Contact us:

London
Adastra
Tim Read, President and Chief Executive Officer
Tel.: +44 (0)20 7257 2040



Rothschild
Charles Mercey / Stuart Vincent
Tel.: +44 (0)20 7280 5000



Parkgreen Communications
Justine Howarth / Annabel Leather
Tel.: +44 (0)20 7493 3713

North America
Equicom
Martti Kangas
Tel.: +1 (416) 815 0700





This News Release contains forward-looking statements within the meaning of the
United States Private Securities Litigation Reform Act of 1995 and
forward-looking information within the meaning of the Securities Act (Ontario)
(together, "forward-looking statements").  Such forward-looking statements,
include but are not limited to the Company's plans for its Kolwezi Project in
the Democratic Republic of Congo ("DRC"), the Kolwezi Project's resource size,
production capacity, net present value, its overall economic potential and the
availability of project financing, and involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements expressed or implied by such forward-looking statements to be
materially different. Such factors include, among others, risks and
uncertainties relating to political risks involving the Company's operations in
the DRC and the policies of other nations and organizations towards companies
doing business in such jurisdictions, the inherent uncertainty of production and
cost estimates and the potential for unexpected costs and expenses, fluctuations
in the price of copper and cobalt, conclusions of economic evaluations, changes
in project parameters as plans continue to be refined, the inability or failure
to obtain adequate financing on a timely basis and other risks and
uncertainties, including those described in the Company's Annual Report on Form
20-F for the year ended October 31, 2005 and Reports on Form 6-K filed with the
Securities and Exchange Commission and the Canadian Securities Administrators
and available at www.sedar.com.



N M Rothschild & Sons Limited ("Rothschild"), which is authorised and regulated
by the Financial Services Authority in the United Kingdom, is acting for Adastra
in relation to the matters referred to in this announcement and no one else and
will not be responsible to anyone other than Adastra for providing the
protections offered to clients of Rothschild nor for providing advice in
relation to the matters referred to in this announcement.




                      This information is provided by RNS
            The company news service from the London Stock Exchange
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