| Mon 26 Nov 2001, 0:00 | | Anglogold Challenges Newmont's Offer For Normandy |
|
NEWS RELEASE
ANGLOGOLD CHALLENGES NEWMONT'S OFFER FOR NORMANDY
AngloGold Limited commented today on the Newmont Mining Corporation's
competing takeover offer for Normandy Mining Limited and announced that it
would commence action at the Australian Takeovers Panel to challenge certain
aspects of Newmont's proposed offer and arrangements with Franco Nevada.
AngloGold's Comments on the Newmont Offer
Commenting on Newmont's offer, AngloGold's Executive Director and CFO,
Jonathan Best, said: "AngloGold considers that Newmont's offer is a high-
risk proposition for Normandy shareholders. We consider that the
comparative analysis which Newmont has presented in selling its offer and
its characterisation of AngloGold are misleading in a number of ways." He
outlined these as follows:
AngloGold has a superior performance record
From both a financial and an operating perspective, AngloGold's recent
performance suggests that it is the preferred choice of investment between
the competing companies. Financially,
AngloGold's recent performance has been superior to that of Newmont. For
the nine months to 30 September 2001 AngloGold's headline earnings were
US$194 million compared with Newmont's operating loss of US$8.4 million.
Operationally, AngloGold has also produced superior results, with total
production costs per ounce of US$211 per ounce for the three months to 30
September 2001 compared with Newmont's total production costs of US$241 per
ounce for the same period.
Newmont has less potential for re-rating
Newmont's offer is predicated on offering Normandy shareholders its paper,
which trades at higher multiples than AngloGold, in anticipation of a
dramatic rise in the gold price. The risk for Normandy shareholders is a
fall in the Newmont share price as it is not supported by the company's
earnings and cashflow. In contrast, while AngloGold has positioned itself
so as to benefit from a substantial rise in the gold price, AngloGold is
confident that it can deliver attractive returns to shareholders at the
present gold price. AngloGold is offering Normandy shareholders a
compelling value proposition with significant upside potential, in terms of
both price and performance.
AngloGold is a high dividend payer
Acceptance of Newmont's offer is likely to result in a substantial reduction
in dividends for Normandy shareholders as Newmont has offered a very low
dividend yield in recent years. In contrast, AngloGold pays high dividends
and intends to maintain this practice. Normandy shareholders who accept the
AngloGold offer (and are on the AngloGold register by the record date) will
qualify for the final dividend payable by AngloGold for the financial year
ending 31 December 2001. It has been suggested that Newmont does not pay a
material dividend because it is a capital growth company. AngloGold has
demonstrated that profitable companies are able to grow and to pay healthy
dividends.
Newmont's offer will be value dilutive
AngloGold believes Newmont's offer will be dilutive for Normandy
shareholders in terms of earnings, cashflow and net present value per share.
Newmont carries substantial country risk
Newmont has claimed that AngloGold carries a higher risk than Newmont does
because of its operations in South Africa. In fact, in excess of 100% of
Newmont's profits for the nine months to
30 September 2001 were generated from operations in Bolivia, Indonesia, Peru
and Uzbekistan. Newmont's North American operations, which account for
approximately 59% of production, have a total production cost of US$270 per
ounce for the nine months to September 2001. Newmont's North American
operations could, at best, be described as high-cost and marginal. AngloGold
has a demonstrated track record of closing or selling high-cost marginal
operations wherever they might be. The most recent example of this is the
sale of AngloGold's Free State assets which will have the effect of reducing
AngloGold's cash operating costs for the nine months to 30 September from
US$184 per ounce to US$175 per ounce on a pro forma basis. This compares
with Newmont's cash operating costs for the same period of US$185 per ounce.
Contravention of Australian Law & Policy
Mr Best said that AngloGold considered that various aspects of the
arrangements between Newmont, Franco Nevada and Normandy and the terms of
Newmont's proposed takeover bid "contravened fundamental aspects" of
Australian takeover law and policy.
AngloGold's concerns relate to:
- the special benefits that are to be given to Franco Nevada, its associates
and shareholders, that are not being offered to other Normandy
shareholders (in particular, the merger proposal pitched at a significant
premium to the market price of Franco Nevada's shares and underlying value
of its assets);
- the proposed conditions of Newmont's takeover bid;
- the apparent breaches of the Foreign Acquisition and Takeovers Act; and
- the break fee arrangements between Newmont and Normandy.
AngloGold believes that these arrangements give rise to unacceptable
circumstances. It will be requesting the Takeovers Panel to make the
following orders:
- that the option agreement between Newmont and Franco Nevada over 19.9% of
Normandy's shares is set aside; and
- that Newmont must remove the condition of its offer for Franco Nevada
which requires Newmont to obtain 50.1% of Normandy and for the Franco
Nevada acquisition to be completed, prior to dispatching Newmont's offer
for Normandy.
Alternatively, AngloGold will be seeking an order that Newmont must offer
equivalent benefits to other shareholders (valued potentially at up to
A$2.25 to A$5.50 per Normandy share in addition to the announced exchange
ratio) in addition to the order to set aside the option agreement.
AngloGold considers that the break fee arrangements between Normandy and
Newmont contravene the policy of the Takeovers Panel and are unacceptable
and should be set aside.
AngloGold is reviewing the legality of these arrangements in other
jurisdictions, including Canada, and whether it will also commence legal
proceedings in those jurisdictions.
Ends
www.anglogold.com
Queries:
In South Africa
Steve Lenahan
+2711 637 6248 (tel)
+2711 637 6107 (fax)
+27 83 308 2200 (mobile)
slenahan@anglogold.com
Shelagh Blackman
+2711 637-6379 (tel)
+2711 637-6399 (fax)
+27 83 308 2471 (mobile)
sblackman@anglogold.com
In Australia
Andrea Maxey
+61 8 9425 4604 (tel)
+61 8 9625 4650 fax)
+61 438 001 393 (mobile)
amaxey@anglogold.com.au
Hamish Douglass
Deutsche Bank
+61 2 9258 2039 (tel)
+61 2 9258 2440 (fax)
+61 419 560 349 (mobile)
hamish.douglass@db.com
In the UK
Alex Buck
+44 20 7664 8712 (tel)
+44 20 7664 8711 (fax)
+44 7932 2740 452 (mobile)
abuck@anglogold.com
In the USA
Charles Carter
800 417 9255 toll free
+1 212 750 7999 (tel)
+1 212 750 5626 (fax)
ccarter@anglogold.com
