MACMAHON HOLDINGS LIMITED — M&A Activity 2008

Sep 11, 2008

12 September 2008

Company Announcements Office ASX Limited Exchange Centre Level 4, 20 Bridge Street SYDNEY NSW 2000

LETTER TO SHAREHOLDERS

Please find attached a letter to shareholders which will be mailed shortly.

Yours faithfully

AUSDRILL LIMITED

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DOMENIC SANTINI Company Secretary

September 12, 2008

Dear fellow Shareholder,

Macmahon Conditional Takeover Offer Unlikely to Succeed

Managing Director Increases Ausdrill Shareholding

This week Macmahon extended its revised offer to 29 September 2008. Macmahon’s offer continues to struggle and at the date of this letter, only 0.68% of Ausdrill shareholders have formally accepted Macmahon’s offer. Macmahon has said it will not extend its offer unless it declares its offer free of defeating conditions or there is a competing proposal for Ausdrill.

Your Board of Directors reiterates its unanimous recommendation that you continue to REJECT Macmahon’s revised offer, however, it is keen to keep you informed of recent events.

On 11 September 2008, Macmahon CEO Nick Bowen was quoted in the media as saying that institutional shareholders thought Macmahon would struggle to win majority control of Ausdrill. Following these comments, a large number of Ausdrill shares were traded. Ausdrill believes that selling by hedge funds accounted for the majority of that trading.

As a sign of continuing commitment and confidence in Ausdrill as an independent company, Managing Director Ron Sayers has further increased his holding in Ausdrill, with the purchase of 8.3 million additional shares at an average price of $2.50 per share. To purchase these shares, Mr. Sayers has paid cash to sellers who chose to sell whilst aware of the Macmahon offer of its shares and the implied value of that offer. Mr. Sayers now holds 34.3 million Ausdrill shares, or approximately 19.95% of the company.

Mr. Sayers and other directors, together with shareholders who have confirmed on a “last and final” basis that they will not accept Macmahon’s Offer, now hold 33.2% of the Ausdrill shares.

This has significant implications for all Ausdrill shareholders, namely:

• Macmahon WILL NOT be able to acquire 100% of Ausdrill,

• Capital Gains Tax rollover relief WILL NOT be available,

• Macmahon’s 50.1% minimum acceptance condition is unlikely to be satisfied.

Macmahon has also suggested that it may waive its 50.1% condition, but has not informed shareholders at what point it might waive the condition and if it did accept less than 50.1%, what its intentions might be or the implications for the Macmahon shares being offered as consideration. This lack of information poses significant risks for Ausdrill shareholders, as outlined in the recent Second Supplementary Target’s Statement. In particular, accepting shareholders could lose their direct exposure to Ausdrill and be left holding Macmahon shares even though Macmahon has no control over Ausdrill.

Your Board unanimously recommends that you continue to REJECT the revised Macmahon Takeover Offer

• Macmahon’s Offer continues to undervalue Ausdrill’s earnings and net tangible assets contribution.

• Macmahon’s Offer would dilute equivalent earnings per share (EPS) and dividends per share (DPS).

• Macmahon’s Offer will expose you to significant risks and uncertainty.

• Ausdrill operates a superior margin business with strong growth prospects.

The fundamentals of the Ausdrill business remain strong. The Board believes the impact of hedge fund selling on Ausdrill’s share price is likely to be only short term, and does not reflect Ausdrill’s recent record earnings and excellent outlook. This positive outlook has been reaffirmed by two significant contracts which were announced this week – Ausdrill’s $300 million expansion with Fortescue Metals Group (FMG), and a US$70 million new underground production mining contract in Ghana for AUMS (Ausdrill’s 50/50 joint venture with leading underground contractor Barminco Limited). Our success with these contracts validates Ausdrill’s growth path both in Africa and Australia.

The two recent contracts form part of the $1 billion in contract extensions that Ausdrill is negotiating or tendering on in September and October. In Africa, Ausdrill has identified approximately $2.4 billion worth of work for tender in the 18 months to the end of 2009.

In short, Ausdrill is in its best ever financial and operational shape.

For those few shareholders who have accepted the Macmahon offer, you should note that you retain the right to withdraw your acceptance (assuming you accepted before 8 September 2008) for a period of one month following the receipt by you of the variation notice. Your Directors strongly encourage you to act on that right.

We now look forward to continuing to grow Ausdrill as an independent company and getting on with the job of driving value for our shareholders

If you have any further questions or concerns, please contact the Ausdrill Shareholder Information Line on 1800 104 758 or from outside Australia on +61 2 8268 3691 .

Yours sincerely

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Terence O’Connor AM QC Chairman