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Maui Gas Proposed Sale

31 March 2006

Maui Gas Proposed Sale

Contact has received advice from Maui Developments Limited (MDL) as agent of the Maui Mining Companies that it intends to offer further gas for sale from within the Maui licence area.

The proposed sale will be subject to the Right of First Refusal (ROFR) arrangements contained within the revised Maui gas contracting arrangements signed in 2004. Under these arrangements, MDL can offer gas to the market for sale on commercial terms, and Contact has the right to acquire up to 61.63% of any gas offered on such terms.

MDL has advised that as at 1 January 2006, the further gas available for sale is assessed to be in excess of 200 PJ. MDL has advised an intention to undertake a ROFR sales process in 2006 in respect of this gas.

Contact’s Chief Executive David Hunt said “Contact has always expected that further gas would become available from within the Maui licence area, and it is pleasing that the Maui Mining Companies are now commencing steps to market additional gas.”

“While we welcome this development, it is important to emphasise that 200PJ of gas is equivalent to less than two years of New Zealand’s gas demand.”

“Contact will carefully evaluate the opportunity to acquire additional gas offered under the proposed ROFR sale. Contact’s ability to effectively use ROFR gas offered will be heavily dependent on the profile under which it will be delivered, and the terms of supply. At this point, MDL has not advised the likely terms that will apply for this gas.”

“We are also conscious that Contact’s existing firm gas entitlements can largely meet the company’s core needs until 2010 based on present estimates of gas use. However, Contact’s firm gas entitlements fall sharply from that date.”

“While the potential to acquire additional gas through this ROFR process is positive, it will not of itself address the longer term fuel challenges faced by Contact”.

ENDS

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