IMIC/Afferro -- summary under Canadian Buyco

Overview

Under a B.C. plan of arrangement, shareholders of Afferro will receive, for each Afferro share, £0.80 in cash and a 2-year unsecured convertible note of IMIC (the "Convertible Note") bearing simple interest of 8% on the principal of £0.40 (collectively, the "Consideration"). The Afferro shares will be acquired by Subco (a newly-incorporated B.C. direct subsidiary of IMIC) prior to IMIC and Subco amalgamating, with Amalco being a wholly-owned subsidiary of IMIC. Simultaneously with the Subco acquisition of Afferro, a Seychelles subsidiary of Afferro will lend US$70M to IMIC.

Afferro

A TSXV-listed B.C. corporation with a development-stage iron project in Cameroon. The Cameroon subsidiaries are grandchild subsidiaries of a direct Seychelles subsidiary of Afferro (Mano River), which holds substantial cash from a recent sale of Liberian mining assets.

IMIC

A U.K. company listed on the AIM Market.

Convertible Note terms

Upon maturity in 2 years they will be paid in cash, or converted to the equivalent market value in IMIC shares at the time of conversion, at IMIC's discretion. They are anticipated to be listed on the Irish Stock Exchange.

Plan of Arrangement

Under the Plan of Arrangement:

• IMIC will subscribe cash for common shares of Subco (to be issued "concurrently" with the acquisition of the Afferro shares by Subco below), and a further amount, equal to the amount of the Convertible Note consideration to be delivered by Subco, as the subscription amount for further Subco common shares also to be issued at such "concurrent" time
• Each common share of a dissenter will be transferred for its fair value to Subco
• Each Afferro stock option will be cash-surrendered
• Each common share of Afferro, other than of a dissenter, will be transferred to Subco in consideration for the (cash and Convertible Note) Consideration, which IMIC is directed to deliver on Subco's behalf
• Concurrently with the above step, Mano River will make the IMIC Loan to IMIC in the amount of US$70M
• Each Afferro share held by IMIC will be transferred to Subco in consideration for a common shares of Subco
• Afferro will file an election with CRA to cease to be a public corporation
• Afferro and Subco will amalgamate to form one corporate entity ("Amalco") under s. 269 of the BC Business Corporations Act under the name Afferro Mining Inc., with each Subco share continuing as an Amalco share; "the stated capital of the common shares of Amalco will be an amount equal to the paid-up capital, as that term is defined in the Tax Act, attributable to the common shares of Subco immediately prior to the amalgamation"

U.K. Securities Laws

The issuance of the Convertible Notes will not require a prospectus.

Canadian tax consequences

The acquisition will occur on a taxable basis. Discussion of consequences if the Convertible Notes are considered to be issued at a discount. Standard taxable Canadian property disclosure.

UK tax consequences

A disposal of Afferro shares by a UK resident may, depending on the circumstances, give rise to a chargeable gain or an allowable loss . No UK stamp duty.