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Gold/Mining/Energy : TVX Gold -- Ignore unavailable to you. Want to Upgrade?

To: jack BROSS who wrote (658)	4/27/1999 9:21:00 AM
From: Joe Gun	Read Replies (2) \| Respond to of 905

Analysts lukewarm on Normandy's grand plan PERTH, April 27 (Reuters) - Shares in Normandy Mining Ltd fell slightly on Tuesday after it said it would expand its annual gold output by 30 percent through a partnership with struggling Canadian miner Canadian miner TVX Gold Inc (TVX.TO - news). Local industry analysts said the deal was either neutral or possibly negative for Australia's largest gold miner which currently produces 1.4 million ounces each year. Senior gold analyst with CIBC Eyres Reed, John Macdonald, said his first impression was that the merger was similar to Normandy's acquisition of fellow Western Australian miner Great Central Mines Ltd . ''In both cases it seems there was a disinterested company with a disinterested management and Normandy has funded them out of their problems,'' Macdonald said. He agreed with criticism from some North American analysts that the deal was exceptionally complex. The terms include Normandy paying US$180 million in cash and providing US$150 million in credit for a slightly less than 50 percent stake in a new partnership, TVX North Americas. Normandy also acquired US$24 million in TVX treasury shares. The new partnership will control five operating mines in North and South America. Macdonald said Normandy had been talking for sometime about moving deeper in the Americas but ''the company has also said it wanted fewer but larger assets.'' ''This TVX deal seems to be more of the same, more assets and more liabilities with less clarity as to what's going on.'' Joe Walsh, a gold analyst with Hartley Poynton Ltd, was more enthusiastic though he rated the deal ''essentially neutral in the short term.'' ''It is a different sort of deal to Great Central Mines. It is more like Normandy's acquisition of the French mining house, La Source,'' Walsh said. "The La Source deal took five years to generate real benefits. The TVX partnership should be creating benefits in two-to-three years. Walsh said the complexity of the structure was largely so Normandy could keep the new partnership off its balance sheet. ''It is not ridiculously complex once you have time to study it. Normandy has been promising to make a major move in North America and in this way it achieves greater exposure to North and South America while keeping the structure off balance sheet in case anything goes wrong,'' Walsh said. Both Macdonald and Walsh said there was little doubt that Normandy would be the driving force in the new partnership and that Normandy would probably eventually move to take full control of the TVX assets.