Game's Over Men!
Newmont to create world's largest gold producer with acquisitions of Normandy Mining and Franco-Nevada Mining
DENVER, ADELAIDE and TORONTO, Nov. 14 /CNW/ - Newmont Mining Corporation
(NYSE: NEM), Normandy Mining Limited (AUS: NDY) and Franco- Nevada Mining
Corporation Limited (TSE: FN) today announced transactions which provide for
Newmont to acquire Normandy and Franco-Nevada, creating the world's largest
gold producer. The resulting company will be:
- No. 1 in gold reserves (97 million ounces)
- No. 1 in gold production (8 million ounces per year)
- No. 1 in leverage to gold among majors
- No. 1 in trading liquidity
- No. 1 in EBITDA
Newmont intends to make a recommended offer of 0.0385 shares of Newmont
common stock for each Normandy common share. In addition, Newmont will pay
A$0.05 per Normandy common share in cash if the Newmont offer is accepted by
holders of at least 90% of the Normandy common shares, as described further
below. Newmont also agreed to acquire Franco-Nevada in a stock-for-stock
transaction, in which Franco-Nevada common shareholders will receive 0.8 of a
share of Newmont common stock (or exchangeable shares, exchangeable for
Newmont common stock) for each share of Franco-Nevada common stock pursuant to
a Canadian Plan of Arrangement. The respective transactions have been approved
and are recommended by the boards of directors of all three companies.
The offer for Normandy, including the conditional cash component assuming
90% acceptance, represents A$1.70 per share based on closing stock prices and
the exchange rate on Tuesday, November 13 and A$1.78 per share based on the
volume average weighted average price of Newmont over the previous five days.
The offer substantially represents a premium of 21% over the current value of
the offer for Normandy announced by AngloGold Ltd. on September 5, 2001.
Franco-Nevada, which owns 446 million shares (19.9%) of Normandy common stock,
has granted to Newmont the right to acquire its block of Normandy common
shares, exercisable at Newmont's discretion, at the exchange ratio in its bid
for Normandy.
Financial Strength, Leverage to Gold and Synergies
Wayne W. Murdy, President and Chief Executive Officer of Newmont, said,
"Newmont will become one of the best-capitalized companies in the gold mining
industry, with enhanced strength and flexibility to continue to explore,
develop new projects and make strategic investments as opportunities arise.
With a combined cash position of over US$700 million, Newmont will reduce its
net debt to net book capitalization ratio to 18% from 41%."
Consistent with its position as a largely unhedged producer, Newmont does
not intend to enter into new gold hedging positions. Going forward, Newmont
expects to deliver production into Normandy's existing hedge contracts, but
will seek to unwind the positions when economically attractive.
In consolidating the three companies, Newmont expects to realize
approximately US$70 million to $80 million in annual after-tax synergies after
the first full year, increasing to approximately US$80 million to $90 million
a year by the end of the second year. The acquisitions are expected to be
immediately accretive to Newmont's earnings, free cash flow and net asset
value.
The New Gold Standard
Mr. Murdy said, "Newmont's global operating and development skills,
Normandy's Australian and international mining portfolio and Franco-Nevada's
financial and dealmaking strength, together, create the new gold standard for
the 21st Century. Current Newmont shareholders will enjoy a more diversified
asset base and balanced risk profile, increased trading liquidity, a solid
capital structure and an excellent platform for future growth, all with the
industry's greatest leverage to a rising gold price."
Robert J. Champion de Crespigny, Chairman and Chief Executive Officer of
Normandy, said, "We are excited that Normandy shareholders and management will
participate in creating the leading gold company in the world. Normandy
shareholders are receiving a superior bid, which both the Board and I
enthusiastically endorse and recommend. Shareholders will own equity in a
liquid, North American company with the financial strength to advance our many
attractive development projects."
Pierre Lassonde, President and Co-Chief Executive Officer of Franco-
Nevada, said, "Along with Newmont management, we are optimistic about the
future price of gold. Franco-Nevada shareholders benefit from this transaction
by substantially increasing their leverage to gold in the number one gold
company in the world. I am looking forward to working alongside Wayne."
The exchange ratio of the stock component of the Newmont offer for
Normandy represents a 25% premium over the average exchange ratio between
Normandy's share price and Newmont's share price for the year prior to the
announcement of AngloGold Ltd.'s offer for Normandy (September 5, 2001). The
A$0.05 payment in cash, payable upon acceptance of the Newmont offer by 90% of
the outstanding shares on a fully-diluted basis, would represent an additional
premium to Normandy's shareholders. Assuming Franco-Nevada is acquired by
Newmont, it will be considered to have accepted the Newmont offer for this
purpose. In addition, the cash payment would be subject to the approval of
certain matters by the Australian Securities & Investment Commission (ASIC).
The exchange ratio in the Newmont/Franco-Nevada transaction implies a price
for Franco-Nevada of C$28.36, based on Tuesday's closing stock prices and
exchange rate. This ratio represents a premium of 23% over the average
exchange ratio between Franco-Nevada's share price and Newmont's share price
during the past year. Newmont shareholders will continue to own slightly more
than 50% of the combined company with the balance being owned approximately
32.5% by Franco-Nevada shareholders and approximately 17.5% by Normandy
shareholders. The transaction is intended to be tax free to the Franco-Nevada
shareholders in Canada and the United States and the exchangeable shares are
intended to qualify for investment by Canadian tax exempts outside of their
"foreign property" baskets.
Support for Transactions
Newmont has performed due diligence with regard to Normandy and Franco-
Nevada and has obtained:
- approval by the boards of directors of all three companies of their
respective transactions, as well as their recommendations that their
shareholders support the transactions;
- a commitment of Franco-Nevada 's 19.9% interest in Normandy to
Newmont's acquisition of Normandy;
- commitments from both the Chairman and the President of Franco-Nevada
to vote their shares in favor of Newmont's acquisition of Franco-
Nevada; and
- commitments from both the Chairman and the President of Franco-Nevada
to not dispose of certain of the Newmont or exchangeable shares
received by them for three years following the consummation of the
transactions.
The New Newmont
The combined company will have global reach and scale:
- 22 mines on 5 continents;
- interests or participations in another 8 gold operations;
- approximately 70% of its combined production and reserves from North
America and Australia;
- 12,500 employees; and
- preeminent land positions in world-class gold districts in Nevada,
Western Australia and Peru, and a portfolio of promising development
and exploration projects.
Leadership Roles
Mr. Murdy will be Chairman and Chief Executive Officer of Newmont,
effective January 1, 2002. Mr. Lassonde will be President of the combined
company. The board of directors of the combined company will have up to 17
members. Messrs. Lassonde and Seymour Schulich, Chairman and Co-Chief
Executive Officer of Franco-Nevada, will join the combined company's Board of
Directors. Mr. De Crespigny, along with two other individuals, one nominated
from among Normandy nominees and one chosen by Franco-Nevada, will be offered
positions on the expanded Newmont board.
Mr. Murdy said, "We are committed to expanding Franco-Nevada's precious
metals royalty business, building on the portfolio management capabilities of
Franco-Nevada in a newly created Newmont business unit. We expect this to
provide Newmont with a stable, high-margin income stream to complement its
strong leverage to gold. The combined company also will benefit from
Normandy's land package and abilities in advancing projects into reserves,
combined with Newmont's superior operating skills and the financial strength
of Franco-Nevada, to build the world's best gold company."
Transaction Highlights
The transactions are subject to customary regulatory approvals in the
United States, Australia and Canada, as well as to approval by the holders of
Newmont common shares. The Franco-Nevada acquisition is conditioned upon
shareholder and court approval as well as tenders by at least 50.1% of the
Normandy shares under the Newmont bid (which may include Franco-Nevada's 19.9%
stake). The transactions are expected to close in the first half of 2002.
Newmont intends to make an off-market takeover bid for all outstanding
Normandy common shares. This bid will include a minimum acceptance condition
of 50.1% of the Normandy common shares, calculated on a fully-diluted basis
(which may include the 19.9% stake that Franco-Nevada has committed to
Newmont). Details of the bid, including conditions, are set out in the
schedule to this announcement.
Newmont intends to acquire Franco-Nevada in a shareholder and court-
approved Plan of Arrangement.
The combined company will be US-incorporated, with headquarters in
Denver, Colorado. The common stock of the company will trade as "NEM" on the
New York Stock Exchange and Newmont will apply for listing of its securities
on the Australian Stock Exchange, as a company incorporated in the United
States. Newmont's exchangeable shares will trade in Toronto, on the Toronto
Stock Exchange.
If the transaction with Newmont do not occur under certain circumstances,
the agreements announced today provide for break-up fees of up to US$100
million, payable to Newmont by Franco-Nevada, and A$38.33 million payable to
Newmont by Normandy.
Newmont was advised by J.P. Morgan Securities Inc. and Goldman Sachs &
Co., and its legal advisors on the transactions were Wachtell, Lipton, Rosen &
Katz, Goodmans LLP and Gilbert + Tobin. Normandy was advised by Macquarie Bank
and the law firm of Allens Arthur Robinson. Franco-Nevada was advised by
National Bank Financial and CIBC World Markets and the law firm of Gowling
Lafleur Henderson LLP.
Newmont is a leading world gold producer with operations in 8 countries,
including: the United States, Canada, Mexico, Peru, Bolivia, Uzbekistan,
Australia and Indonesia.
Headquartered in Toronto, Canada, Franco-Nevada is the leading precious
minerals royalty company and, by market capitalization, ranks among the
largest gold companies in the world. Franco-Nevada is Normandy's largest
shareholder, with a holding of 446 million shares, or 19.9% of the outstanding
common shares, all of which have been committed to Newmont in the transaction.
Headquartered in Adelaide, Australia, Normandy is Australia's largest
gold company, producing over 2 million ounces of gold a year.
Newmont Contacts: Media, Doug Hock, +1-303-837-5812, or Investors, Wendy
Yang +1-303-837-6141
Normandy Mining Limited: David Constable, +1-416-596-1299, Investor
Relations
Franco-Nevada Mining Limited: David Harquail, +1-416-480-6497
A conference call is scheduled for today beginning at 10:00 a.m. Eastern,
9:00 a.m. Central, 8:00 a.m. Mountain and 7:00 a.m. Pacific and
2:00 a.m., Sydney time.
To participate dial: 719-457-2627 (International)
800-967-7137 (Domestic)
Password: 607670
The conference call will also be simultaneously carried on Newmont web
site under investor relations/presentations and will be archived there
for a limited time.
newmont.com
Replay number: 719-457-0820 (International)
888-203-1112
Password: 607670
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
The foregoing contains forward-looking information and statements about
Newmont Mining Corporation, Franco-Nevada Mining Corporation Limited, Normandy
Mining Limited and the combined company resulting from the transactions that
are intended to be covered by the safe harbor for "forward-looking statements"
provided by the Private Securities Litigation Reform Act of 1995. Forward-
looking statements are statements that are not historical facts. These
statements include financial projections and estimates and their underlying
assumptions; statements regarding plans, objectives and expectations with
respect to future operations, products and services; and statements regarding
future performance. Forward-looking statements are generally identified by the
words "expect," "anticipates," "believes," "intends," "estimates" and similar
expressions. The forward-looking information and statements in this press
release are subject to various risks and uncertainties, many of which are
difficult to predict and generally beyond the control of Newmont, Franco-
Nevada and Normandy, that could cause actual results to differ materially from
those expressed in, or implied or projected by, the forward-looking
information and statements. These risks and uncertainties include those
discussed or identified in the public filings with the U.S. Securities and
Exchange Commission made by Newmont and Normandy, and Franco-Nevada's filings
with the Ontario Securities Commission; risks and uncertainties with respect
to the parties' expectations regarding the timing, completion and accounting
and tax treatment of the transactions, the value of the transaction
consideration, production and development opportunities, conducting worldwide
operations, earnings accretion, cost savings, revenue enhancements, synergies
and other benefits anticipated from the transactions; and the effect of gold
price and foreign exchange rate fluctuations, and general economic conditions
(such as changes in interest rates and the performance of the financial
markets, changes in domestic and foreign laws, regulations and taxes, changes
in competition and pricing environments, the occurrence of significant natural
disasters, civil unrest and general market and industry conditions).
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with their proposed transactions, Newmont Mining
Corporation will file a proxy statement and a registration statement with a
prospectus with the U.S. Securities and Exchange Commission. Investors and
security holders are advised to read the proxy statement and the prospectus
when they become available, because they will contain important information.
Investors and security holders may obtain free copies of the proxy statement
and the prospectus (when available) and other documents filed by Newmont with
the Commission at the Commission's web site at sec.gov. Free copies
of the proxy statement and the prospectus, once available, and other filings
made by Newmont or Normandy with the Commission, may also be obtained from
Newmont. Free copies of Newmont's and Normandy's filings may be obtained by
directing a request to Newmont Mining Corporation, Attn: Investor Relations,
1700 Lincoln Street, Denver Colorado 80203, Telephone: (303) 863-7414. Copies
of Franco-Nevada's filings may be obtained at sedar.com.
PARTICIPANTS IN SOLICITATION
Newmont Mining Corporation and its directors, executive officers and
other members of its management and employees may be soliciting proxies from
its stockholders in connection with the transactions. Information concerning
Newmont's participants in the solicitation is set forth in Newmont's Current
Report on Form 8-K filed with the Commission on November 14, 2001.
CONDITIONS OF NEWMONT'S OFF-MARKET BID FOR NORMANDY
---------------------------------------------------
Australian Foreign Investment Review Board (FIRB)
-------------------------------------------------
The Treasurer of the Commonwealth of Australia advises Newmont in
writing, before the end of the offer period, (either unconditionally or
subject only to conditions that are acceptable to Newmont) that there is
no objection under the Federal Government's foreign investment policy or
under the Foreign Acquisitions and Takeovers Act 1975 (Cth) to the
acquisition of Normandy Shares by Newmont, such an acquisition otherwise
not being in breach of the Foreign Acquisitions and Takeovers Act 1975
(Cth) or the Treasurer ceases to be entitled to make an order under Part
II of the Foreign Acquisitions and Takeovers Act regarding the
acquisition of those Shares by Newmont.
Minimum acceptance condition
----------------------------
Before the end of the offer period, Newmont and its associates have
relevant interests in at least 50.1% of the Normandy shares calculated on
a fully diluted basis.
Newmont shareholder approval
----------------------------
The Newmont shareholders shall have taken all actions necessary to
approve the issuance of the Newmont Shares under the Bid and related
transactions.
No prescribed occurrences
-------------------------
None of the following prescribed occurrences happen after the date of the
announcement of Newmont's Bid and before the end of the offer period
under the Bid:
Normandy converting all or any of its shares into a larger or smaller
number of shares under section 254H of the Corporations Act;
Normandy or a subsidiary of Normandy resolving to reduce its share
capital in any way;
Normandy or a subsidiary of Normandy entering into a buyback
agreement or resolving to approve the terms of a buyback agreement
under sections 257C(1) or 257D(1) of the Corporations Act;
Normandy or a subsidiary of Normandy making an issue of its shares
(other than Normandy shares issued as a result of the exercise of
options issued under Normandy's employee share bonus plan and or
executive share incentive plan) or granting an option over its shares
or agreeing to make such an issue or grant such an option;
Normandy or a subsidiary of Normandy issuing, or agreeing to issue,
convertible notes;
Normandy or a subsidiary of Normandy disposing or agreeing to
dispose, of the whole, or a substantial part, of its business or
property;
Normandy or a subsidiary of Normandy charging or agreeing to charge,
the whole, or a substantial part, of its business or property;
Normandy or a subsidiary of Normandy resolving that it be wound up;
the appointment of a liquidator or provisional liquidator of Normandy
or of a subsidiary of Normandy;
the making of an order by a court for the winding up of Normandy or
of a subsidiary of Normandy;
an administrator of Normandy or a subsidiary of Normandy being
appointed under section 436A, 436B or 436C of the Corporations Act;
Normandy or a subsidiary of Normandy executing a deed of company
arrangement; or
the appointment of a receiver, receiver and manager, other controller
(as defined in the Corporations Act) or similar official in relation
to the whole, or a substantial part, of the property of Normandy or
of a subsidiary of Normandy.
Newmont will not treat the issue of shares by Normandy under its proposed
takeover of Otter Gold Mines Limited as breaching this condition.
Material Adverse Change
-----------------------
Before the end of the offer period no material adverse change occurs or
is announced in the business, financial or trading position or condition,
assets or liabilities, profitability or prospects of Normandy and its
Subsidiaries taken as a whole.
Misleading Announcement
-----------------------
Before the end of the offer period Normandy does not disclose any untrue
statement of, or omission to state, a fact that was required to be
stated, or necessary so as to make a statement not misleading, in any
document filed by or on behalf of Normandy with ASX or ASIC since 1
January 2001 where the untrue statement or omission of fact results in a
material adverse effect in relation to the business, financial or trading
position or condition, assets or liabilities, profitability or prospects
of Normandy and its Subsidiaries taken as a whole.
ASX Listing Condition
---------------------
Before the end of the offer period, ASX approves the listing of Newmont
and quotation of Newmont Shares to be issued pursuant to the Offer.
No Public Authority Interference
--------------------------------
During the period from the date of the announcement of Newmont's Bid to
the end of the offer period:
(A) there is not in effect any preliminary or final decision, order or
decree issued by a Public Authority;
(B) no action or investigation is instituted, or threatened by any Public
Authority with respect to Normandy; or
(C) no application is made to any Public Authority (other than by
Newmont),
in consequence or in connection with the Bid, which restrains or
prohibits or threatens to restrain or prohibit, or otherwise materially
adversely impacts upon, the making of Offers under the Bid or the
completion of any transaction contemplated by the Bid or the Normandy-
Newmont Deed of Undertaking or the rights of Newmont and its associates
in respect of Normandy and the Normandy Shares to be acquired under the
Bid or otherwise.
For the purpose of this condition:
"Public Authority" means any government or any governmental, semi-
governmental, statutory or judicial entity or authority (including
without limitation the Takeovers Panel), whether in Australia or
elsewhere. It also includes any self-regulatory organisation established
under statute or any stock exchange.
"Normandy-Newmont Deed of Undertakings" means the Deed dated the date of
this Announcement between Newmont and Normandy, a copy of which was
lodged by Normandy with ASX following this announcement.
Deed of Undertaking
-------------------
Before the end of the Offer Period under the Bid no breach of any
covenant, warranty or representation made by Normandy in the Normandy-
Newmont Deed of Undertaking occurs or is announced which has material
adverse effect on the business, financial or trading position or
condition, assets or liabilities, profitability or prospects of Normandy
and its Subsidiaries taken as a whole.
ASIC Modification
-----------------
ASIC grants modifications to the Corporations Act the effect of which
will be as follows:
- to permit Newmont to include the condition relating to Newmont
shareholder approval; and
- to enable Newmont to satisfy the 75% test for compulsory acquisition
in relation to all Normandy shares except those held by Franco-Nevada
group if, during the offer period, Franco-Nevada becomes a subsidiary
of Newmont.
Other Governmental or Regulatory Approvals
------------------------------------------
All necessary governmental or regulatory filings (including under the US
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
other competition and foreign investment approval filings or
notifications) having been made, all applicable waiting periods with
respect to any governmental or regulatory filings having expired or
having been terminated, no action having been taken to restrain this
offer by any governmental authority, and all necessary governmental or
regulatory approvals having been obtained to ensure that:
Newmont can vote and acquire all Normandy's shares under this offer;
and
Newmont shares can be issued under this offer and traded without
restriction, including, without limitation, under the US Securities
Act of 1933.
Australian Magnesium Corporation Limited commitments
----------------------------------------------------
Neither Normandy nor any subsidiary of Normandy is a party to any
agreement with Australian Magnesium Corporation Limited or other
obligation in respect of Australian Magnesium Corporation Limited for an
amount greater than A$20 million other than:
those agreements and obligations disclosed in the Australian
Magnesium Corporation Limited Prospectus dated 15 October 2001; or
if the public offering of Australian Magnesium Corporation Limited
shares proceeds, an obligation by Normandy to subscribe for
Australian Magnesium Corporation Limited shares in the manner and
subject to the conditions contained in the prospectus referred to in
paragraph.
Before the end of the Offer Period under the Bid there is no waiver of
any condition precedent to the commitment of either Normandy, any
subsidiary of Normandy, the syndicate of banks, the Australian Federal
Government or the State Government of Queensland to provide funds to
Australian Magnesium Corporation Limited being conditions precedent or
commitments disclosed or referred to in the Australian Magnesium
Corporation Limited Prospectus dated 15 October 2001.
-30-
For further information: Newmont Contacts: Media - Doug Hock,
(303) 837-5812, Investors - Wendy Yang (303) 837-6141; Normandy Mining
Limited: David Constable, (416) 596-1299, Investor Relations; Franco-Nevada
Mining Limited: David Harquail, (416) 480-6497
FRANCO-NEVADA MINING CORPORATION LIMITED has 30 releases in this database.
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