GFI Gold Fields Ltd

- Meeting Of Securityholders A Week Away - Rising Gold Prices Underscore Low Value In Offer - ISS Canada Valuation Clearly Flawed CUPERTINO, Calif., Jan. 4 /PRNewswire/ -- Scion Capital, LLC today reminded the securityholders of Bolivar Gold Corp. (TSX: BGC) (TSX: BGC.TO) of the many reasons they should oppose the offer from Gold Fields Limited (NYSE:GFI) and encouraged them to vote their proxies AGAINST the proposed plan of arrangement as soon as possible to ensure their votes are counted at the scheduled January 12 meeting. In a letter being sent to all Bolivar securityholders today, Scion Capital, the company's largest shareholder, says: AN IMPORTANT MESSAGE TO BOLIVAR GOLD SECURITYHOLDERS THE PROPOSED GOLD FIELDS PLAN OF ARRANGEMENT IS NOT IN YOUR BEST INTERESTS PLEASE VOTE AGAINST IT BY SUBMITTING YOUR PINK AND/OR GREY PROXY CARDS BY JANUARY 9, 2006 January 3, 2006 Dear Fellow Bolivar Gold Securityholders: Since it was announced, we have expressed our opposition to the proposed acquisition of Bolivar Gold Corp. by Gold Fields Limited, because we are convinced the Gold Fields' offer significantly undervalues Bolivar and the transaction is not in the best interests of Bolivar securityholders. We continue to urge Bolivar securityholders to vote AGAINST the plan of arrangement. As we have described in our Dissident Proxy Circular dated December 15, 2005 and other public statements, we believe Bolivar securityholders should reject Gold Fields' offer for the following reasons: -- Gold Fields' offer significantly undervalues the common shares and convertible securities of Bolivar; -- Gold Fields' offer does not recognize Bolivar's near-term prospects, and does not take into consideration Bolivar's expected and anticipated increase in gold resources; -- Gold Fields' offer is opportunistic, and does not include a true premium for control of Bolivar's substantial assets; -- The actions of Bolivar's officers and non-independent directors are rife with conflicts of interest; -- Bolivar's officers' and non-independent directors' endorsement and irrevocable agreement to vote in favor of this transaction are in contradiction to the best interests of Bolivar securityholders; -- Gold Fields' offer exploits the market's recent overreaction to perceived Venezuelan political risk; -- Gold Fields' offer does not reflect that gold prices have recently risen to a 25-year high; -- After the announcement of Gold Fields' offer, Bolivar's final exploitation permits were issued by the Venezuelan government; -- Bolivar's securityholders, not Gold Fields' shareholders, should reap the benefits of Bolivar's substantial assets and potential; -- Bolivar's prospects as an independent remain compelling and a sale of the company is not the only option available to securityholders; and -- Bolivar securityholders should be wary of the scare tactics being used by management of both Bolivar and Gold Fields to convince Bolivar securityholders to approve this transaction. Bolivar Shares are Not Participating in the Gold Market Rally Since our Dissident Proxy Circular was issued on December 15, 2005, gold prices have begun to rally again, recently reaching US$520 per ounce, and Bolivar securityholders are not participating in this upside. In an article in The Gold Report on December 28th, 2005, Frank Holmes, the Chief Investment Officer for U.S. Global Investors, whose investment funds hold Bolivar securities, stated that "We have a unique situation where all critical drivers for gold are pointing in the same direction." The article goes on to say in that "Holmes says a gold price of $600 to $650 over the next 12 months is a high possibility." In addition, as shown in the table below, since our Dissident Proxy Circular was issued, Bolivar shares have been flat to down, capped by the C$3.00 per share offered by Gold Fields. Meanwhile, shares of Crystallex International Corp. (TSX: KRY) have risen an additional 7.59% (a total of 37.84% since Gold Fields' offer for Bolivar was announced on November 18, 2005), and shares of Gold Reserve Corp (TSX: GRZ) have risen an additional 5.67% (a total of 47.5% since Gold Fields' offer for Bolivar was announced). Assuming that Bolivar's shares would have participated in the market rally, and had not been encumbered by Gold Fields' offer, Bolivar shares would be trading in excess of C$3.60 today. Closing Price(1) Company 11/18/2005 1/3/2006 Percentage Change Bolivar Gold (BGC) 2.53 2.91 15.02% Crystallex (KRY) 1.85 2.55 37.84% Gold Reserve (GRZ) 2.40 3.54 47.50% (1) Closing price on the Toronto Stock Exchange (C$) Securityholders Should Ignore Flawed ISS Report Unfortunately for Bolivar's securityholders, Institutional Shareholder Services Canada (ISS Canada) announced on December 29th 2005, that it recommended supporting Gold Fields' offer for Bolivar. While ISS Canada criticized the governance aspects of the deal, it decided to recommend the deal based on a flawed and internally inconsistent valuation analysis. ISS Canada (formerly Fairvest) has traditionally focused its opinions on its core competency in governance issues, but now seeks to provide investment advice. Unfortunately, ISS Canada does not yet have the depth to properly carry out a detailed analysis as it has only two analysts on its entire staff who are charged with covering all industries in Canada. As a result, it is not surprising that the analysis has several significant shortcomings. We highlight the following shortcomings in ISS Canada's Bolivar valuation analysis: -- ISS Canada's high case for Bolivar's total resource only has 4.2 million ounces of gold, and their base case has only 4.0 million ounces. This indicates that they are largely ignoring management's third quarter conference call comments when management said that there will be a 30% increase of gold across all categories, which would imply at least 4.4 million ounces of gold. A base case of 4.0 million ounces would give a zero probability of any increases in resources going forward, despite the highly encouraging geology and the fact that a majority of Bolivar's concession area remains largely unexplored. -- Along the same lines, ISS Canada comes out at a higher mining cost and a higher processing cost than Mine Development Associates Inc., the third-party geologists hired by Bolivar to assess and confirm gold reserves. This, despite commentary during Bolivar's third quarter conference call by two analysts, Chantal Gosselin of Haywood Securities and Terry Bell of Salida Capital, that, in the near-term, costs would approximate US$135 per ounce and US$123 per ounce, respectively. Bolivar management emphasized in the third quarter conference call that their higher cost estimates were not "engineered" numbers, and tacitly agreed with the two analysts' comments. -- ISS Canada's total expansion capital expenditure of US$135 million is inconsistent with their assumption that there are only about 4 million ounces of gold in the ground. There would be no need to increase the throughput of the mill to 15,000 tons per day unless there were significantly more gold in the ground. The entire resource would be exhausted in just nine years using ISS Canada's resource numbers and capital expenditure assumptions. There is absolutely no need to spend all that capital unless there is significantly more gold present than ISS Canada assumes. -- ISS Canada ignores the fact that Bolivar has significant tax shields going forward and will likely not pay taxes until after 2011. Further capital expenditure would only push that date out to the future. ISS Canada's valuation analysis taxes all earnings at a 34% rate, significantly depressing their calculation of Bolivar's NAV. -- ISS Canada's use of Desert Sun Mining as a comparable is inappropriate. Desert Sun's major mine has already driven one producer into bankruptcy due to worse than expected grades recovered from the mine. Desert Sun is a new team that has taken over the mine since then. However, the prior bankruptcy still casts a pall over the valuation of the company. Furthermore, most observers would agree that its exploration potential is not as bright as Bolivar's. -- The total resource of 3.58 million ounces used by ISS Canada in their comparables calculation is inexplicably inconsistent with ISS Canada's own base case number of 4.0 million ounces used in their NAV calculation. Correcting ISS Canada's internal error by using 4.0 million ounces in the comparables calculation yields a valuation of Gold Fields' offer for Bolivar of US$94.5 per ounce of total resource, not the higher US$107 per ounce as they report. While the ISS Canada valuation flaws are manifest, it is worth noting that correcting this small internal inconsistency alone increases Bolivar's value by 13%, or about US$40 million at Gold Fields' offer price. -- Regarding governance issues, ISS Canada notes the following concerns with respect to this offer: (i) there was a lack of formal sales process during which the board of directors should deliberate independently from management, (ii) the independent committee was established too late in the process given that a majority of the board of directors is not independent from management, (iii) that Bolivar's press release announcing the deal with Gold Fields inaccurately stated that its board of directors had unanimously approved the transaction, when in fact all independent directors had abstained from the vote, and (iv) the use of GMP Securities Ltd. by the board of directors as its financial adviser was not necessarily appropriate. These revelations only further bolster our case that this deal with Gold Fields is ill- conceived and is not in the best interests of Bolivar securityholders. Statements Made by Bolivar Management Have Been Misleading Securityholders should also be aware that, contrary to erroneous and misleading statements recently made by Bolivar management, all securityholders regardless of whether they vote against the deal or abstain from voting, will be entitled to receive compensation under the plan of arrangement, if approved. Rejecting Gold Fields Offer will Not Result in Payment of Termination Fee We also wish to emphasize that Bolivar securityholders have the opportunity to reject Gold Fields' unacceptable offer without penalty to Bolivar; Gold Fields will not be entitled to the $12 million termination fee if securityholders reject the proposed plan of arrangement. There is not much time left before the voting deadline. We hope that you will join us in opposing this plan of arrangement by signing, dating and returning the PINK (for common shareholders) and/or GREY (for warrant and option holders) proxy cards we sent you along with our Dissident Proxy Circular by no later than January 9, 2006. For your convenience we have enclosed an additional copy of the PINK and/or GREY proxy cards. If you need a copy of our Dissident Proxy Circular please go to http://www.scioncapital.com/ . Remember, you can still change your vote -- even if you have already voted management's proxy card -- by returning the PINK and/or GREY proxy card by January 9, 2006 -- only the latest dated proxy card you return will be counted. IMPORTANT: PASSAGE OF THE ARRANGEMENT RESOLUTIONS REQUIRES THE AFFIRMATIVE VOTE OF 66 2/3 % OF VOTES CAST BY HOLDERS VOTING AT THE MEETING SO IT IS IMPORTANT THAT YOU VOTE AND THAT YOU VOTE AGAINST THE ARRANGEMENT RESOLUTIONS TODAY If you have any questions, or need assistance completing the enclosed PINK and/or GREY proxy card, please call our proxy solicitors, Mackenzie Partners, Inc. toll-free at (800) 322-2885 or call collect at (212) 929-5500. Sincerely, Michael J. Burry President TIME IS SHORT! VOTE NOW! If you have any questions or require assistance in expediting your vote, please call Mackenzie Partners, Inc. Toll-Free (800) 322-2885 or Collect at (212) 929-5500 The Special Meeting of Bolivar securityholders to consider Gold Fields' offer is to be held on Thursday, January 12, 2006 at 10:00 a.m. (Toronto time) in the TSX Auditorium at The Exchange Tower, 130 King Street West, Toronto. About Scion Capital Based in Cupertino, California, Scion Capital, LLC is an investment advisory firm founded in 2000, with current assets under management in excess of US$750 million. Scion Capital seeks to make long-term investments in companies it identifies as having value that has not yet been recognized by the market. It employs a diversified investment strategy across many public and private industries, markets and investment opportunities. Scion Capital is Bolivar's largest shareholder with holdings of 21,676,400 shares representing approximately 19.14% of Bolivar's outstanding common shares. Scion Capital's Dissident Circular is available at http://www.sedar.com/ and at http://www.scioncapital.com/ . DATASOURCE: Scion Capital, LLC CONTACT: investors, Steven A. Druskin, Chief Legal Officer of Scion Capital, LLC, +1-408-441-8400; or Mackenzie Partners Inc., toll-free, 1-800-322-2885, or collect, +1-212-929-5500; or media, John Lute of Lute & Company, +1-416-929-5883 Web site: http://www.sedar.com/ Web site: http://www.scioncapital.com/

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