Placing and Offer

City Natural Res High Yield Tst PLC
03 October 2003

City Natural Resources High Yield Trust PLC ('City Natural Resources' or the
'Company') Placing and Offer for Subscription of New Ordinary Shares



Introduction



At an extraordinary general meeting of the Company held on 26 June 2003,
Shareholders overwhelmingly voted in favour of continuing the Company with a new
investment objective of providing capital growth and income from a portfolio of
mining and resource equities and of mining, resource and industrial fixed
interest securities.  In line with these changes, the Company changed its name
to City Natural Resources High Yield Trust PLC.



The transition of the Company's portfolio to a portfolio consistent with its new
investment objective was completed in July 2003.  Since then, Midas, the
Company's new investment manager, and Intelli, the Company's financial adviser,
have been pro-active in promoting the Company to existing Shareholders and
Warrantholders and to potential new investors, with the aim of significantly
improving the price at which the Shares trade relative to their net asset value
and increasing the size of the Company through further issues of Shares



During the period from 26 June 2003 to 30 September 2003, the Shares have traded
at an average premium to their net asset value of 1 per cent.  This compares
with the average discount of 16 per cent. that the Shares traded relative to
their net asset value during the 12 months' ended 26 June 2003.  The Board
believes that, based on the response to the Manager's and Intelli's promotional
activities, there is significant demand for Shares as these provide exposure to
a sector offering good growth prospects through a fund managed by a manager with
proven investment credentials and strong institutional support.



In view of the above, your Board announced today proposals to increase
substantially the size of the Company through an issue of New Ordinary Shares by
means of a placing with institutional investors and public offer for
subscription.  The Company is seeking to raise gross proceeds of up to £30
million through the issue of New Ordinary Shares.    As at 3 October 2003,
Intelli had procured commitments to invest £11.7 million in New Ordinary Shares.
  As a result,  based on further anticipated demand and on the Company's
unaudited net assets of £12.6 million as at 30 September 2003, the Company is
expected to more than double its size following the Issue.



The Issue is conditional, amongst other things, on the approval by Shareholders
of a resolution to be proposed at an extraordinary general meeting of the
Company which has been convened for Wednesday, 29 October 2003.  The Board is
also taking this opportunity to seek authority for the Company to make market
purchases of its own Shares, to cancel the Company's share premium account in
order to create a special reserve which may be treated as distributable profits
and utilised for making such purchases, to adopt new Articles of Association and
to amend the Company's investment policy.  Such authorities, cancellation and
adoption are subject to the approval by Shareholders at the Extraordinary
General Meeting and the approval by Warrantholders of the resolution to be
proposed at a general meeting of Warrantholders which has also been convened for
Wednesday, 29 October 2003.



Investment Opportunity



Mining and resource equities provide financial exposure to the production of
base and precious metals, soft commodities (such as rubber, vegetable oils and
sugar) and resources (such as natural gas, oil and coal).  The prices of many
such products have been depressed but are now increasing, fuelled by growing
demand, particularly from emerging market economies such as China.  With an
increasingly affluent population of 1.2 billion, China is expected to become the
largest consumer in the world for most goods and services.  The economic
strength of China is an important demand factor for natural resources as China
has a structural shortage of commodities.  In addition, Asian countries now hold
70 per cent. of the world's foreign exchange reserves, which may provide a
stimulus for precious metal demand.



As a consequence, the Board believes that mining and resource equities represent
an attractive asset class with many offering growing dividend yields.  Besides a
requirement for equity capital, mining and resource companies often have an
appetite for other finance and may have in issue fixed income or convertible
securities that offer favourable terms.  Likewise, many industrial commercial
and financial corporates have in issue fixed interest securities that offer
yields that are often significantly higher than the yields on G7 Government
bonds.  The Board and Manager believe that many investors like to receive
quarterly dividends, and in the absence of unforeseen circumstances the Company
will aim to pay a first interim dividend of 0.5p per Share in February 2004 and
will aim to pay aggregate dividends of 2p per Share for the following three
dividends.



The Company offers diversified exposure to mining and resource equities and to
mining, resource and industrial fixed interest securities, which, when combined,
offer good capital growth prospects as well as an attractive yield.



Calculation of the Issue Price



The arrangements adopted for the purpose of the Issue, by which the number of
New Ordinary Shares will be determined, are intended to result in the allotment
of that total number of New Ordinary Shares which represents, as a proportion of
the Company's issued share capital as enlarged by the Issue, substantially the
same ratio as the aggregate amount subscribed for the New Shares (less the
estimated expenses of the Issue) bears to the net asset value of the Company
prior to the injection of new capital, calculated as nearly as is practicable
prior to the issue of the New Shares.  The Issue Price is expected to be
announced by the Company on Wednesday, 29 October 2003.



Expected Timetable


                                                                                                                   2003
Latest time and date for receipt of Letters of Direction for the                     12.31p.m. on Wednesday, 22 October
Extraordinary General Meeting
Latest time and date for receipt of Application Forms under the Offer                   3.00 p.m. on Monday, 27 October
Placing closes                                                                          5.00 p.m. on Monday, 27 October
Latest time and date for receipt of white forms of proxy for the                        12.31p.m. on Monday, 27 October
Extraordinary General Meeting
Latest time and date for receipt of green forms of proxy for the                       12.32 p.m. on Monday, 27 October
Warrantholders' Meeting
Issue Price calculated                                                                         as at Monday, 27 October
Annual General Meeting                                                              12.30 p.m. on Wednesday, 29 October
Extraordinary General Meeting                                                        12.31p.m. onWednesday, 29 October1
Warrantholders' Meeting                                                            12.32 p.m. on Wednesday, 29 October2
Issue Price and basis of allocation announced                                                     Wednesday, 29 October
Admission, dealings in New Ordinary Shares commence and CREST                                        Friday, 31 October
accounts credited in respect of New Ordinary Shares issued in
uncertificated form
Certificates despatched in respect of New Ordinary Shares issued in                               by Friday, 7 November
certificated form
1 Or, if later, immediately following the conclusion or adjournment of the Annual General Meeting.
2 Or, if later, immediately following the conclusion or adjournment of the Extraordinary General Meeting.




Definitions


'Annual General Meeting'          the annual general meeting of the Company convened for Wednesday,
                                  29 October 2003 at 12.30 p.m. (or any adjournment of such annual
                                  general meeting), notice of which is set out in the Company's
                                  annual report and accounts for the financial year ended 30 June
                                  2003
'Articles' or 'Articles of        the articles of association of the Company (as amended form time
Association'                      to time)
'Board''                          the board of directors of the Company (or any duly authorised
                                  committee thereof) from time to time
'Extraordinary General Meeting''  the extraordinary general meeting of the Company convened for
or 'EGM''                         Wednesday, 29 October 2003 at 12.31 p.m. (or, if later,
                                  immediately following the conclusion or adjournment of the Annual
                                  General Meeting) (or any adjournment of such extraordinary
                                  general meeting), notice of which is set out in Part 8 of this
                                  document
'FSA'                             Financial Services Authority
'Intelli'                         Intelli Corporate Finance Limited
'Issue'                           the issue of Shares pursuant to the Placing and the Offer for
                                  Subscription
'Issue Price'                     the price at which the New Ordinary Shares will be issued, which
                                  will be calculated in accordance with the formula (including the
                                  notes to that formula) set out in Part 6 of this document
'Manager', 'Investment Manager'   Midas Capital Partners Limited
or 'Midas'
'New Shares' or 'New Ordinary     new Ordinary Shares to be issued pursuant to the Placing and/or
Shares'                           the Offer for Subscription at the Issue Price
'Offer' or 'Offer for             the offer to the public to subscribe for New Ordinary Shares on
Subscription'                     the terms and conditions set out in this document
'Ordinary Shares'' or 'Shares''   ordinary shares of 25p each in the capital of the Company
'Placing'                         the arrangements put in place by Intelli for the conditional
                                  placing of Shares to the aggregate value of at least £30 million
                                  at the Issue Price described in this document
'Shareholders''                   holders of Ordinary Shares
'United Kingdom'                  the United Kingdom of Great Britain and Northern Ireland
'Warrantholders'                  holders of Warrants
Warrantholders' Meeting'          the general meeting of Warrantholders convened for Wednesday, 29
                                  October 2003 at 12.32 p.m. (or if later after the conclusion or
                                  adjournment of the EGM) (or any adjournment of such general
                                  meeting), notice of which is set out in Part 9 of this document
'Warrants'                        the outstanding warrants issued by the Company to subscribe for
                                  Ordinary Shares at 85p per Share on 31 October in any of the
                                  years up to, and including, 2009 pursuant to the Warrant
                                  Instrument



Enquiries:


Alan Borrows                  Midas Capital Partners Limited                    0151 906 2461


Gordon Neilly /               Intelli Corporate Finance Limited                 020 7653 6300

Darren Willis







Midas Capital Partners Limited is regulated by the Financial Services Authority.



Intelli Corporate Finance Limited which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting for City Natural
Resources and for no one else in connection with the Issue or any other matter
referred to herein and will not be responsible to anyone other than City Natural
Resources for providing the protections afforded to customers of Intelli
Corporate Finance Limited or for affording advise in relation to the Issue.



End


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