Offer Q&A

Who is the issuer of the Prospectus?

PrimeAg Australia Limited, ACN 127 984 123.

What is being offered?

Shares in PrimeAg. PrimeAg will own and operate Australian agricultural land and water entitlements to produce income and long term capital growth through the production of soft commodities.

What are soft commodities?

Commodities that are grown rather than mined and include (but are not limited to) wheat, barley, chickpeas, sorghum and cotton. PrimeAg plans also to produce some livestock products (beef cattle and sheepmeat/wool).

What is the Offer Price?

The Offer Price is $2.00 per Share.

What is the size of the Offer?

150 million Shares.

What are the gross proceeds of the Offer?

The total Offer size is $300 million.

What is the Offer Structure?

The Offer will comprise a Broker Firm Offer and an Institutional Offer. There is no general public offer.

How will the proceeds of the Offer be used?

The proceeds of the Offer will be used to:

  • acquire Seeded Properties $37.9 million;
  • acquire Optioned Properties $45.3 million;
  • pay for the incidental costs of acquiring the Seeded Properties and Optioned Properties $3.5 million;
  • pay for the costs of the Offer $12.2 million;
  • acquisitions identified and/or under negotiation $130.0 million;
  • acquisitions yet to be identified $60.1 million; and
  • working capital $11.0 million.

Where are the Seeded Properties located?

The Seeded Properties are located at Emerald (Central Qld), Condamine (Southern Qld) and Warialda (Northern NSW) with a combined value of $37.9 million.

Where are the Optioned Properties located?

The Optioned Properties are located at North Star (Northern NSW), Garah (Northern NSW), and Crooble (Northern NSW) with a combined acquisition value of $45.3 million.

What are the investment highlights?

  • Exposure to the growing global demand for soft commodities.
  • Economies of scale and innovative "Hub" structure, makes PrimeAg a globally competitive low cost producer of agricultural commodities.
  • Geographic spread of properties over 1,200 km mitigates climatic risk.
  • Production is further secured through the ownership of irrigation water entitlements.
  • Price risk is mitigated through the production of a diverse range of commodities and having the ability to switch between these commodities in response to price movements or climatic changes.
  • An experienced Board and management team with the skills and vision to build a great Australian agricultural company.
  • Agricultural commodity prices are not strongly correlated with Australian share prices on the ASX.
  • Quantitative and qualitative selection criteria, including return on investment, are used to evaluate and prioritise properties for purchase.
  • Sustainability focus on efficient water use, efficient chemical use, reduced carbon emissions, efficient nitrogen use and increased carbon sequestration.

What are the key risks of the Offer?

The key risks of the Offer include but are not limited to:

Risks associated with the business:

  • soft commodity price fluctuations;
  • drought, flood, hail, bush fires and other extreme weather conditions;
  • change in water regulations;
  • lack of operating history;
  • availability, cost and timing of acquisition of further agricultural properties;
  • reliance on key personnel and ability to attract personnel;
  • pests and diseases;
  • water sustainability;
  • regulation and legislation;
  • interest rates;
  • exchange rates; and
  • asset liquidity.

Risks associated with investing in Shares:

  • stock market fluctuations;
  • general economic conditions;
  • liquidity; and
  • taxation issues.

What will be PrimeAg's net debt?

At the time of listing, PrimeAg will have no debt. Further acquisitions may be funded by long term debt and seasonal working capital requirements may be funded by short term debt. Major plant and equipment may be funded by leasing arrangements.

What are the key dates of the Broker Firm Offer?

The Broker Firm Offer opens on 3 December 2007 and closes on 19 December 2007. Shares are expected to commence trading on 21 December 2007 (initially on a deferred settlement basis) quoted under the symbol "PAG". These dates are indicative only and PrimeAg or the Joint Lead Managers have the right to vary the dates including closing offers early.

What is the minimum /maximum Application under the Offer?

The minimum Application must be for 1,000 Shares, i.e. $2,000. Applications in excess must be in multiples of 250 Shares i.e. $500.

Is the Offer underwritten?

The Offer is fully underwritten by the Joint Lead Managers, being ABN Amro Morgans Corporate Limited, Grange Securities Limited and Southern Cross Equities Limited.

What is the allocation policy of the issuer?

The Joint Lead Managers reserve the right to reject any Application or to allocate any Applicant other than a Broker Firm Offer Applicant a lesser number of Shares than they applied for but no less than the minimum application amount as set out in Section 2.8 of the Prospectus and in the case of a Broker Firm Offer Applicant, no less than the number of Shares applied for up to the amount of firm allocation to the Broker Firm Applicant. There is no general public offer.

What will the market capitalisation of PrimeAg be at the Offer Price?

The market capitalisation is expected to be $301 million based on the Offer Price (including the value of the Shares to be issued by PrimeAg to Saltbush shareholders pursuant to the Share Sale Agreement referred to in Section 13.4 of the Prospectus).

What are the costs of the Offer and who is paying them?

Fees for the Offer will be approximately $12.2 million (including underwriting, legal and accounting costs, vendor fees, ASIC and ASX fees). PrimeAg is paying these costs.

What relationship do the Seeded Property owners have with PrimeAg?

The Seeded Property owners are parties associated with two of the Directors. These properties will be purchased at market value based on third party independent valuations.

What are the taxation implications of investing in PrimeAg?

The taxation implications of investing in PrimeAg Shares will depend on each investor's individual circumstances. Applicants should seek their own tax advice prior to applying for Shares under the Offer.

When will I receive dividends?

The intention is to pay franked dividends as early as possible, actual timing will depend on crop yields and commodity prices. It is the Board's intention to pay a dividend of approximately 40% of net profit after tax every six months in arrears, subject to general business and financial conditions, working capital requirements, PrimeAg's taxation position, future capital expenditure requirements, the availability of sufficient franking credits and any other factors the Board considers relevant.

How do I apply for Shares?

Application for Shares can be made as set out in Section 2.7 of the Prospectus. Application Forms can be found at the end of the Prospectus.

When can I trade the Shares?

PrimeAg will apply for quotation on the ASX within seven days of lodging the Prospectus. Trading of Shares is expected to commence on 21 December 2007 (initially on a deferred settlement basis). Holding statements are expected to be despatched on or about 27 December 2007 and the Shares are expected to commence trading on a normal basis on 3 January 2008.

Is there a cooling off period?

There is no cooling-off period in the Offer of the Shares. In most circumstances, this means you may not withdraw your Application once it has been submitted. However, PrimeAg Shares may be sold on the ASX upon listing.

How can I obtain further information?

To obtain further information, speak to your accountant, stockbroker, financial advisor or other professional advisor. If you require assistance or additional copies of this Prospectus, you should contact your advisor.