A proposed alliance with
The South African miner is now offering A30 per share plus the original 2.15 AngloGold shares for every 100 Normandy shares. The cash component is A10 more than a previous offer but still shy, by the same amount, of the cash offered by rival suitor
The revised offer places a value of A$1.84 on each Normandy share, or A3 less than Newmont’s offer, based on each company’s closing price on the day preceeding AngloGold’s announcement. Arbitrage activity has since caused each company’s market value to fluctuate.
AngloGold, which remains adamant about the superiority of its bid, expects the additional cost to be more than offset by synergistic savings arising from the Barrick partnership. Although details are sketchy, the two would essentially co-operate wherever their operations overlapped, especially in Australia and Tanzania.
States AngloGold Chairman Bobby Godsell: “Through our discussions with Barrick to realize further value-enhancing opportunities and our increased offer, AngloGold is providing Normandy shareholders with a value package that is not only compelling in current terms, but more importantly, in terms of prospects for all AngloGold shareholders going forward.”
At the heart of the proposed partnership is operational control over the Kalgoorlie Super Pit in Western Australia — the country’s single-largest gold producer. Barrick (through its recent merger with Homestake Mining) and Normandy each own a half-stake in the mine and hence share managerial responsibilities.
AngloGold says it will give Barrick sole control of the mine in return for an appropriate level of compensation. The equity structure remains unchanged.
AngloGold has invited Barrick to participate in a proposed resumption of operations at the suspended Boddington mine, also in Western Australia. The project is shared among AngloGold, with 33.33%, Normandy, with 44.4%, and Australian-based
Boddington operated as an open pit until last fall and still hosts a primary resource of 726 million tonnes grading 0.84 gram gold per tonne. The underground resource also carries significant credits of copper.
An ongoing study is determining the feasibility of processing 22 million tonnes of primary material per year to produce more than 500,000 oz. annually. Cash costs are estimated at less than A$300 per oz.
Reflecting the revision, AngloGold has extended the closing date of its offer to Jan. 11. The deal remains unconditional and has received all regulatory approvals and the consent of AngloGold shareholders.
Newmont, recently given the green light from the U.S. Federal Trade Commission for the Normandy takeover and subsequent merger with
So far, Normandy management has advised its shareholders to sit tight while it reviews AngloGold’s latest bid. Curiously, so has Newmont.
In related news, the Canadian exploration arm of AngloGold and
Rubicon owns more than 300 sq. km in the Red Lake camp, making it the single largest landholder in the region. AngloGold can earn a 70% interest in more than 70% of that area by spending $5.1 million on exploration over five years, paying US$250,000 and, if asked, financing Rubicon’s share of the cost to complete a feasibility study on any deposit outlined.
Historical drilling at the Adams Lake property returned up to 95 grams gold per tonne over 1.5 metres.
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