Merlin Diamonds Limited ABN 86 009 153 119 Level 8, 580 St Kilda Road, Melbourne VIC 3004

PO Box 6315, St Kilda Road Central, Melbourne VIC 8008 T: +61 3 8532 2858 F: +61 3 8532 2805

W: www.merlindiamonds.com.au E: info@merlindiamonds.com.au

31 January 2013

ASX ANNOUNCEMENT

Merlin Diamonds Limited (ASX code: MED)

Recommended acquisition of Merlin Diamonds Limited by Innopac Holdings Limited

Merlin Diamonds Limited (Merlin Diamonds) has reached an agreement with Innopac Holdings Limited (Innopac) under which Innopac agrees to make a scrip-for-scrip off-market takeover to acquire all of the shares in Merlin Diamonds (the Transaction). Under the Transaction, Innopac will offer 1.67 Innopac shares for every one Merlin Diamonds share. This equates to $0.28 per Merlin Diamond share (based on S$0.2145 per Innopac share which is the weighted average price for trades of Innopac’s shares done on the SGX-ST Mainboard for 7 consecutive trading days prior to and including 30 January 2013, being the day on which the Takeover Bid Implementation Deed is executed, and at an exchange rate of A$1.00 to S$1.28) and represents a premium of approximately 36.59% over the closing price of $0.205 on 30 January 2013. The Transaction is unanimously recommended by the directors of Merlin Diamonds, in the absence of a superior proposal.

Subject to compliance with any law and regulatory approvals, Innopac has agreed to use best endeavours to establish a share sale facility for Merlin Diamonds shareholders who accept the offer but do not wish to hold Innopac shares, up to an agreed cap.

Innopac has been listed on the Singapore Stock Exchange mainboard since 1983, and is an investment holding and management company headquartered in Singapore. Its present investments are in telecommunications, investment properties and equities. Innopac is continually looking for new investments that will contribute to and increase its shareholders’ value. Explaining the rationale of Innopac’s bid, Managing Director and Chief Executive Officer of Innopac, Mr Wong Chin Yong, said, “Innopac has been constantly on the lookout for new businesses and investment opportunities which can enhance shareholders’ value. Merlin Diamonds, with its advanced exploration tenements and its Merlin Diamond Mine Project’s imminent production is the only diamond mine in the Northern Territory of Australia and eventually in Australia. Upon completion, Innopac will be the first and only diamond miner listed in Singapore and probably in Asia. We also believe that the acquisition of Merlin Diamonds will create many other opportunities in the highly exclusive diamond and gems industry.”

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Merlin Diamonds Limited ABN 86 009 153 119 Level 8, 580 St Kilda Road, Melbourne VIC 3004

PO Box 6315, St Kilda Road Central, Melbourne VIC 8008 T: +61 3 8532 2858 F: +61 3 8532 2805

W: www.merlindiamonds.com.au E: info@merlindiamonds.com.au

Executive Chairman, Managing Director and Chief Executive Officer of Merlin Diamonds, Mr Joseph Gutnick, said, “We are pleased that Innopac sees the value and potential of Merlin Diamonds. The Board is recommending our shareholders to accept Innopac’s offer, which will help unlock shareholder value. With Innopac’s financial backing, we believe the Merlin Project will gain traction more quickly.” “The Merlin Project has a high proportion of gem-quality diamonds 65% of production is gem-quality, compared to an average of just 20% gem-quality diamond production at diamond mines worldwide. The Company has made solid progress in developing a sustainable and profitable diamond mine at Merlin, underpinned by 2.9 million carats of the Company’s resource assets being classified as JORC compliant Probable Ore Reserves, indicating a higher level of certainty of economic potential. We are working on trial mining and ramping up trial production in 2Q 2013, with commercial production estimated to start in 3Q 2013. We are targeting to produce about 250,000 carats per year by the second year of commercial production,” added Mr Gutnick.

The Offer will be subject to a number of conditions which are contained in attachment 1 (defined terms have the meaning given to them in the Takeover Bid Implementation Deed).

The Takeover Bid Implementation Deed also contains:

no shop, no talk, notification and matching rights in favour of Innopac; and

a break fee payable by each of Innopac and Merlin Diamonds in certain circumstances.

The Takeover Bid Implementation Deed dated 30 January 2013, relating to the Transaction, is in

attachment 2.

Innopac and Merlin expect that the Bidder’s Statement and Target’s Statement in relation to the

Offer will be sent to Merlin Shareholders in March 2013.

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Merlin Diamonds Limited ABN 86 009 153 119 Level 8, 580 St Kilda Road, Melbourne VIC 3004

PO Box 6315, St Kilda Road Central, Melbourne VIC 8008 T: +61 3 8532 2858 F: +61 3 8532 2805

W: www.merlindiamonds.com.au E: info@merlindiamonds.com.au

Attachment 1 – Offer Conditions

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Merlin Diamonds Limited ABN 86 009 153 119 Level 8, 580 St Kilda Road, Melbourne VIC 3004

PO Box 6315, St Kilda Road Central, Melbourne VIC 8008 T: +61 3 8532 2858 F: +61 3 8532 2805

W: www.merlindiamonds.com.au E: info@merlindiamonds.com.au

Attachment 2 – Takeover Bid Implementation Deed

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