Franco-Nevada urges better offer for Normandy
Not official rejection
Drew Hasselback
Financial Post
Peter Redman, National Post
Pierre Lassonde, co-chairman of Franco-Nevada, left, expected his stake to grow to A$1.75 to A$2 a share.
Franco-Nevada Mining Corp. Ltd., has suggested AngloGold Ltd. sweeten its US$2.3-billion bid for Normandy Mining Ltd. of Australia.
Toronto-based Franco-Nevada, which bought a 19.9% stake in Normandy in May, said yesterday it wants AngloGold to raise its bid price as high as A$2 ($1.55), up from AngloGold's current proposal of A$1.44.
Pierre Lassonde, co-chief executive of Franco-Nevada, sought the sweetener during a presentation to mining analysts and investors at the Denver Gold Group's Mining Investment Forum, an annual gathering of the world's largest gold firms.
"Our original plan was that, after some restructuring, we could see our stake worth A$1.75 to A$2 a share in one year," Mr. Lassonde said.
AngloGold has yet to mail a formal offer to shareholders. That means Franco-Nevada's hope for a sweetener is not an official rejection of the AngloGold offer.
The plan was to use the Denver conference to drop a not so subtle hint about how much Franco-Nevada thinks its Normandy stake is really worth.
Gold prices rose to a 19-month high last week. Given other recent mergers, such as Barrick Gold Corp.'s proposed purchase in June of Homestake Mining Co. for about US$2.4-billion, AngloGold is under pressure to conclude a major deal.
"They're hoping that everyone will talk to everyone else and cause something to happen," said Sharon Dowdall, Franco-Nevada's general counsel.
Steve Lenahan, an AngloGold spokesman, said it would consider upping its offer only if there were "material changes to circumstances."
"As things stand we continue to believe that the offer to Normandy's shareholders is full and fair."
Franco-Nevada has identified the gold sector as ripe for industry consolidation.
The company's stated strategy is to acquire significant investments in a variety of gold mining companies. The idea is not to buy a controlling stake in companies, but rather hold enough stock to influence the direction of a company either by winning seats on its board or holding enough votes to support or kill takeover offers.
The Normandy deal puts this "king maker" role to the test.
Mr. Lassonde used the mining conference to put the best spin on the company in hopes of attracting alternative bids.
"Whoever ends up getting Normandy is going to be the premier gold company in the world for the next 10 years simply because of the reserves, the production and the political risk balance that Normandy provides," he said.
Franco-Nevada acquired its 19.9% stake in Normandy when it sold the Ken Snyder mine to Normandy in exchange for US$48-million and 446.1 million Normandy shares.
Even at the A$1.44 price, the AngloGold bid means Franco-Nevada has already made a paper profit of $185-million on its four-month investment.
John Ing, president of Maison Placements Canada Inc, said he estimates Franco-Nevada's stake in Normandy should be worth about A$1.75.
"It was well expected Franco-Nevada would be looking for a sweetener," he said.
"There's a lot of room for some bartering, some swapping of assets, and some dealing here. I think the announcement by Franco at the Denver Gold Show is just the beginning of the game." |
