Straits in $80m capital raising

Straits Resources will raise nearly $80 million through a convertible notes issue to the Standard Chartered Bank and has been granted an 18-month, $25 million senior debt facility by the bank.

The announcement is below:

Straits Resources Limited (ASX: SRL) is pleased to announce that it has agreed to issue Convertible Unsecured Notes to Standard Chartered Private Equity Limited (SCPEL). SCPEL is the wholly owned direct equity arm of Standard Chartered Bank. The issue comprises a first tranche of A$48.6m and a second tranche of $31.2m. The second tranche will be subject to SRL shareholder approval (under ASX Listing Rule 7.1) and FIRB approval. A notice of meeting of SRL shareholders to consider and if thought fit approve the issue of the second tranche will be despatched shortly.

The four year term Notes have a face value of A$1.45 each, which represents a 53% premium to the closing price for SRL shares on 29 January 2009 and a coupon rate of 4% payable annually in arrears. The key terms of the Note issue are detailed in the appendix to this announcement.

An alliance with SCPEL at this time is seen as extremely positive for Straits and brings a number of benefits to the company including:

- Further strengthening of the balance sheet that allows Straits to continue with its key development plans whilst working through a volatile phase in the market cycle.

- The addition of a supportive, cornerstone investor on the share register.

- Additional input from a highly experienced and internationally active private equity team through Board representation. The global co-head of SCPEL, Alastair Morrison, will join the Board of SRL.

Alastair has worked in private equity for over 25 years in the UK and Asia, and has broad experience of growing companies across a range of industrial sectors.

Further to these benefits, the investment by SCPEL is also an important step in the Company s efforts to close the discount between the see through value of its holding in Straits Asia Resources Limited (SARL) and the prevailing share price. This discount has largely evolved after the planned demerger of the coal assets was called off in September 2008 and the onset of financial market distress that resulted in large scale redemptions affecting an extensive part of the global institutional shareholder community.

This is a unique and powerful relationship with SCPEL, which is one of the most well respected private equity groups internationally and has a complementary culture to Straits. SCPEL is active across Asia and Africa, and has the ability to assist in our growth and strategy in emerging markets says CEO Milan Jerkovic.

The issue of the Notes introduces a stakeholder that understands and supports the Company s growth oriented outlook and strategy to continue to develop and realise value from resource assets. SRL and SCPEL are fundamentally aligned in respect of pursuing a strategy to maximise total shareholder returns over the medium to longer term.

The key issues for Straits to address in the short/medium term include:

- Completion of the strategic review regarding its investment and holding structure in SARL.

- Successful completion of the ramp up in production at the Hillgrove antimony/gold mine.

- Decision over the future of the Tritton copper mine in NSW.

- Potential disposal of non core assets.

- Progression of very attractive coal projects in Madagascar & Brunei, the Yannarie Solar project in WA and major copper/gold exploration projects in NSW and South Australia.

Refinancing

As part of the company s review and planning of its debt requirements going forward, SRL has also executed a credit approved Terms Sheet with Standard Chartered Bank for an 18 month, US$25m (~A$40m) senior debt facility. In parallel, SRL continues discussions with its incumbent, senior debt providers in respect of the existing A$50m senior debt facility that matures on 31 March 2009.