ASTRON LIMITED — Capital/Financing Update 2007

Aug 28, 2007

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ASTRON ANNOUNCES A$220m SALE OF ITS CHINESE

DOWNSTREAM ZIRCONIA MATERIALS BUSINESSS

Astron Limited (ASX: ATR, “Astron”) has entered into a share sale agreement for the sale of its Chinese based zirconia materials business to Imerys SA (NK: FP, “Imerys”), a French multi-national minerals processing company for a total cash payment of approximately A$220 million. This is comprised of a RMB 1.25 billion (A$201 million) purchase price plus an estimate of closing adjustments for cash, debt and working capital. The combined value of these sale proceeds and Astron’s existing A$13 million in cash and financial assets totals approximately A$233 million (or A$3.85 per Astron share).

In addition, Astron will be entitled to earn-out payments based on the performance of the divested zirconia materials business for the two financial years ending 30 June 2009. The earn-out will be calculated as 2 x (2009 EBITDA for the divested business minus RMB 150 million).

Importantly, the transaction values noted above exclude any value attributable to the businesses within Astron that will be retained following the proposed sale to Imerys.

On announcing the transaction, Managing Director of Astron, Mr Alex Brown said: “The price reflects the future value we could achieve from operating these businesses on a standalone basis. In addition the time is right for Astron to divest these assets and focus our strategy on the higher value and growth opportunities attainable from minerals production and in titanium dioxide”.

Completion of the transaction is expected in October/November, prior to which shareholders will be asked to vote on a resolution approving this sale at an extraordinary general meeting (“EGM”). Materials for the EGM will be distributed in due course and will include an explanatory memorandum setting out the terms and rationale for the transaction, as well as an independent expert’s report to be prepared by KPMG.

Registered Office : Level 19, 2 Market Street, Sydney NSW 2000, Australia Tel: 61 2 9286 5555 Fax: 61 2 9286 5599 www.astronchem.com

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The Astron Board of Directors views the proposed transaction as being in the best interests of shareholders and intend, in the absence of a superior proposal, to vote all shares held or controlled by them at the time of the EGM in favour of the proposed sale.

Astron Following the Sale

Following the completion of the sale, Astron will remain listed on the Australian Securities Exchange and will retain the mineral sands and titanium businesses which the Board considers have significant growth and development potential. Astron’s strategy moving forward will encompass both mineral sands mining and processing and the downstream production of chemicals and metals, and specifically will include:

Mineral Sands Mining

• § Astron’s wholly owned Donald Mineral Sands Project in Victoria, expected to commence production in 2009; and

• § Astron’s 50% joint venture with Carnegie Minerals (AIM: CME) in Gambian and Senegalese mining assets. The Gambian mine has been producing mineral sands since mid-2006.

Minerals Sands Processing

• § Mineral sands concentrate separation facilities (currently being assessed) in China for concentrate from Astron’s above mining projects as well as third parties’ projects including Matilda Mining (ASX: MAL) and others currently under discussion.

Downstream Production

• § Production facilities (currently being assessed) primarily for titanium products as well as a limited set of zirconium-based products in China.

As part of the proposed sale, offtake agreements will be provided by Imerys for the zirconium materials produced from the above mining projects and processing facilities.

The Board considers Astron is well placed to successfully pursue its downstream titanium based strategy in China given its unique position of success as a Western company operating in China for over a decade and its track record of developing niche mineral sands processing operations and

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delivering strong growth in that market. Further details on the Company’s strategic growth plan will be published in due course.

Funding and Shareholder Return

The Board is undertaking a review of the funding requirements for the retained Astron businesses. Currently, it is expected that the majority of the sale proceeds received by Astron will be allocated to the growth initiatives noted above. Consequently, there is no expectation of an immediate shareholder return beyond that of ordinary dividends. Assuming the proposed sale is approved, the dividend relating to the 2007 financial year is expected to be raised to A$0.20 per share, up from A$0.10 per share for the 2006 financial year.

Cooperation with Imerys

Imerys has a long established interest in zirconium materials through its Treibacher Schleifmittel operations in Austria and Germany and its recent acquisition of UCM in the United Kingdom. The combination of Astron’s Chinese based zirconia materials business with these Imerys operations will bring several benefits. In particular, Astron’s strong distribution network in China, extensive customer base, broad industry platform and market leadership will provide Imerys with significant synergies when combined with the existing Imerys operations.

Astron and Imerys have entered into a management assistance agreement as part of the proposed sale. In addition to a basic management fee, Astron will benefit from this arrangement through its entitlement to the earn-out payments noted above.

Additional Information

The share sale agreement between Astron and Imerys contains non-solicit provisions on the part of Astron, subject to customary “fiduciary out” provisions. Astron has agreed to pay Imerys a break fee in certain circumstances, as set out in Annexure A.

Annexure B contains an overview of Astron and Annexure C is the announcement released by Imerys in relation to the proposed sale.

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Goldman Sachs JBWere is acting as financial adviser to Astron in connection with the transaction. DLA Phillips Fox is legal adviser to Astron in relation to this transaction.

All enquiries in relation to this matter should be directed to Astron’s public relations consultant at Porter Novelli, Ann Nahajski, on +61 (0)8 9386 1233 or +61 (0)400 205 433..

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ANNEXURE A - SUMMARY OF KEY AGREEMENT TERMS

Share Sale Agreement
Interests sold	Shares in Yingkou Astron Chemical Co Ltd, Astron New Materials (Yingkou) Co Ltd, Taicang Astron Mining Products Co Ltd and Zibo Astron Advanced Materials Co Ltd.
Price	Initial basic purchase price ofRMB1.25 billion converted into A$, adjusted by adding net cash and subtracting working capital adjustments (if working capital is below an agreed amount) and the debt amount.
Earn-out formula	In addition to the purchase price, Imerys will pay an earn-out based on the increase in EBITDA for the first two years after completion, ending 30 June 2009, provided certain hurdles are met. The earn-out will be calculated as 2 x (2009 EBITDA for the divested business minus RMB 150 million). To receive any payments under the earn-out formula, the EBITDA must increase in both year 1 and year 2 after completion. There is provision for a partial ‘pre payment’ of the earn-out to be made following the 2008 financial year.
Conditions precedent	§ Approval by the shareholders of Astron Limited § Assignment of certain material contracts § Entry into a Management Assistance Agreement to provide services by two senior executives (Alex Brown and Kang Rong) § Approval of matters in China to permit the amendment of Articles of Association, the transfer of shares and foreign investment enterprise approval by the Ministry of Commerce for Imerys as buyer § Offtake Agreements being entered into for the Donald Mineral Sands Project, for the Gambian and Senegalese projects and for the current Matilda offtake § Other customary conditions precedent

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ANNEXURE A - SUMMARY OF KEY AGREEMENT TERMS (cont)

Non solicitation Astron has agreed not to solicit any competing proposal, and Astron has and break fee agreed not to provide any information in response to an approach by a third party, unless where a failure to provide that information would be a breach of the fiduciary duties of the directors of Astron. Astron has agreed to pay a break fee which, if it relates to a competing transaction for the shares in Astron Limited, is 1% of the basic purchase price, otherwise the break fee is 2% of the basic purchase price. Termination If there is a catastrophic event (excluding market events impacting the industry events as a whole) causing the business of the PRC Companies to cease for two months or more, Imerys has the right to terminate. Guarantee Imerys SA has guaranteed the obligations of its subsidiary, Mircal China, who is the purchaser under the Share Sale Agreement. Non competition Astron and its senior executives have entered into customary non-compete obligations for a period of five years regarding the core zirconia materials business. The non-compete provisions permit Astron to develop the Donald Mineral Sands Project including by selling product to Imerys under the Offtake Agreement.

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ANNEXURE A - SUMMARY OF KEY AGREEMENT TERMS (cont)

Management Assistance Agreement
Services	Certain senior executives (Alex Brown and Kang Rong) will provide such general assistance to allow Mircal China to take control of the zirconia materials business and integrate that in the Imerys Group, to maximise any potential synergies and cross-fertilisation opportunities.
Term	For a period of two years, during which Astron will use its reasonable endeavours to procure that Alex Brown is available for approximately 50% of his time to provide the services and Kang Rong is available for approximately 100% of her time. However, it is acknowledged that the executives remain directors of Astron Ltd and the obligations as directors override any obligations to provide the services under this Agreement.
Payment	The base management fee is a fixed fee calculated on the basis of recovering Astron's costs of employing Alex Brown and Kang Rong, and increases by 5% in the second year. Additionally, a variable fee of up to 100% of the fixed fee is payable if certain EBIT targets are met. Additionally, a bonus fee of up to 100% of Kang Rong's employment cost is payable if certain EBITDA targets are met.
Termination	This Agreement may be terminated if there is a breach or if Astron is not able to procure Alex Brown and Kang Rong's services. The fee is payable pro rata up until termination.

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ANNEXURE A - SUMMARY OF KEY AGREEMENT TERMS (cont)

Offtake Agreement – Donald
Broad principles	The heads of agreement is non-binding and sets a framework for cooperation, including broad price, quality and quantity principles. The aim of this agreement is to establish a market for a proportion of the offtake of zirconium products from the Donald Mineral Sands Project.
Term	The agreement will continue until the fifth anniversary of the commencement of the Donald project.
Purchase of product	It is expected Imerys will take between 50% and 75% of the annual requirements for the divested business under these offtake arrangements.
Prices	Prices will be determined at the lower of market price and the most favourable price offered to a third party.
Offtake Heads of Agreement – Gambia, Senegal and others
Broad principles	The heads of agreement is non-binding and sets a framework for cooperation, including broad price, quality and quantity principles. The aim of this agreement to deal with all offtake from Astron's Gambian joint venture, the current Matilda offtake and any offtake from Senegal once Astron's Senegalese joint venture is in production.
Term	The parties will enter into formal agreement which will continue until the fifth anniversary of the completion of the Share Sale Agreement.
Purchase of product	It is expected Imerys will purchase all zircon sands produced from zircon concentrate from Gambia and Matilda, with an option to buy any additional zircon sands produced by Astron or its affiliates.
Prices	Prices will be determined at an agreed discount to the market price, subject to potential negotiation between the parties.

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ANNEXURE B – Astron Overview

• § ASX-listed Astron, with approximately 580 employees, manufactures and trades zircon based products principally through a factory and distribution network in China. The Company has a high quality international customer base and is also involved in selling silica and titanium products.

• § Astron is headquartered in Shenyang (China) and has five separate production facilities. In addition, the Company operates a network of regional offices and warehouses, as well as a sophisticated research and development facility.

• § Astron became involved in the Chinese zirconium markets in 1988, and by the mid-1990’s had established a significant distribution network. Astron began processing zircon sands in 1996 and manufacturing zircon based chemicals in 1996.

• § The four broad categories of zircon based products that the Company produces are Fused Zirconia & Silica, Zirconium Chemicals & Chemical Oxides, Specialty Zircon Products and Optical Materials & Coatings:

• Fused Zirconia & Silica - Astron is one of the worlds’ largest producers of advanced zirconia materials for the refractory and ceramic industries. Fumed silica is a by-product of fused zirconia and has special applications for refractory and high strength concrete.

• Zirconium Chemicals & Chemical Oxides - The Company produces a wide range of chemical zirconias and other specialty zirconium chemicals used in the production of a variety of products including catalysts, deodorants, paper, paint, advanced ceramics and electronics.

• Specialty Zircon Products - Astron produces specialty zircon flour for use in ceramics, specialty casting and TV glass industries.

• Optical Materials & Coatings - Ultra high purity zirconium and rare earth fluorides and oxides are also manufactured for use in the production of single crystals for lasers and advanced optics and for the use as coating materials in vacuum coating applications.

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ANNEXURE B – Astron Overview (cont)

• § Astron holds a 50% joint venture interest with Carnegie Minerals in Gambian and Senegalese mineral sands operations. The Gambian operation has commenced production, having shipped its first cargo of mineral sands to China in mid-2006. Astron also wholly owns the Donald Mineral Sands Project in Australia, one of the world’s largest undeveloped zircon projects, which is due to commence production in 2009.

• § Plans to broaden Astron’s production base are advanced with a mineral sands concentrate separation facility and processing facilities for titanium products currently being assessed for development in China.

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PROJET AU 28/08/07 – 19H00

Paris, August 29, 2007

SIGNATURE OF TWO NEW ACQUISITION AGREEMENTS

Astron China

Imerys announces today it has signed a final agreement with the Australian group Astron Limited ("Astron") for the acquisition of all its operating Chinese subsidiaries (" Astron China ") for an enterprise value (debt and cash free) of Rmb 1.25 billion (€�121 million).

Based in Shenyang, Astron China has 4 plants (the major one being located in Bayuqan, Liaoning Province) and 8 distribution centers in China. With 580 employees and a strong management team, Astron China is a major player in the production, marketing, trading and sale world-wide of a large range of zircon-related products, primarily zircon sand and flour, fused zirconia and zirconium chemicals. It generated for its last financial year ending 30[th] June 2007 total revenues of Rmb 1.18 billion[(1)] (€�114 million), of which approximately 65% was sold into China, and an operating income of Rmb 123 million[(1)] (€�12 million).

This acquisition would allow Imerys to enlarge its Fused Minerals activities, while:

• expanding its product range in its key refractory, ceramics and investment casting markets;

• substantially deepening its production presence, distribution infrastructure, and sales penetration in China;

• having a global production base for fused zirconia, also including UCM facility in the US.

Closing of the acquisition remains subject, among others, to its approval by Astron’s Extraordinary General Shareholders’ Meeting and to appropriate regulatory authorisations in China. It is currently expected to take place in October/November.

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The world leader in adding value to minerals, Imerys is active in 45 countries through over 250 locations. The Group achieved €�3.3 billion in sales in 2006. Imerys mines and processes minerals from reserves with rare qualities in order to develop solutions that improve its customers’ product performance and manufacturing efficiency. The Group’s products have many applications in everyday life, including construction, personal care, paper, paint, plastic, ceramics, telecommunications and beverage filtration.

Investor Relations: Isabelle Biarnès - +33 (0)1 49 55 63 91 /66 55 Press Contacts: Isabelle Biarnès - +33 (0)1 49 55 63 91 /66 55 Matthieu Roquet-Montégon - +33 (0)6 16 92 80 65

(1) Provisional numbers subject to final completion of audit