When WMC Limited demerged in December 2002, eligible WMC Limited shareholders received one WMC Resources Ltd share for each WMC Limited share held and also retained their existing WMC Limited share (WMC Limited being renamed Alumina Limited). For example:

Capital gains tax implications

For capital gains tax (CGT) purposes, shareholders are required to allocate the cost base of their post-CGT WMC Limited shares held immediately before the demerger, between the Alumina Limited shares and WMC Resources Ltd shares held immediately after the demerger and which are taken to have a post-CGT status. The proportionate allocation must be determined based on the respective post demerger market values of the Alumina Limited shares and WMC Resources Ltd shares, or on the shareholders’ reasonable anticipation of those values.

As a guide, Australian shareholders may wish to use the volume weighted average price of Alumina Limited shares and WMC Resources Ltd shares sold on the Australian Stock Exchange over the first 5 days of trading to determine the percentage allocation of their WMC Limited cost base.

Cost base calculation guide

To assist shareholders, and as mentioned on page 150 of the Scheme Booklet and in Australian Taxation Office Class ruling CR 2002/81 which was provided for WMC shareholders, the following is the percentage split between the two companies based on the respective volume weighted average prices of the Alumina Limited shares and WMC Resources Ltd shares over this 5 day period:

Alumina Limited 53.7%

WMC Resources Ltd 46.3%

For example:

Post-CGT WMC Limited share has an average cost of: $8.20

For CGT purposes

Alumina Limited shares ($8.20 * 53.7%) = $4.40
WMC Resources Ltd shares ($8.20 * 46.3%) = $3.80

The above is intended as a general guide only. Shareholders should obtain their own independent taxation and financial advice.

More information regarding demergers can be obtained by clicking to the following link to an Australian Taxation Office website:

• Australian Tax Office