-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H+DCVAlcZ3lbPWejtVj40o1EPPeSiebH79kVohNYS+1psncQh09KGwYub+uv/bSM WbstRJVzBQxe4DHAAb+BTw== 0000898822-02-000381.txt : 20020415 0000898822-02-000381.hdr.sgml : 20020415 ACCESSION NUMBER: 0000898822-02-000381 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20020215 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEWMONT MINING CORP /DE/ CENTRAL INDEX KEY: 0001164727 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 841611629 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31240 FILM NUMBER: 02564982 BUSINESS ADDRESS: STREET 1: 1700 LINCOLN STREET STREET 2: 28TH FLOOR CITY: DENVER STATE: CO ZIP: 80203 BUSINESS PHONE: 303-863-7414 MAIL ADDRESS: STREET 1: 1700 LINCOLN STREET STREET 2: 28TH FLOOR CITY: DENVER STATE: CO ZIP: 80203 FORMER COMPANY: FORMER CONFORMED NAME: DELTA HOLDCO CORP DATE OF NAME CHANGE: 20020109 8-K 1 feb28form8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): February 15, 2002 NEWMONT MINING CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 1-31240 84-1611629 (Commission File No.) (IRS Employer Identification No.) 1700 Lincoln Street Denver, Colorado 80203 (Address of principal executive offices, including zip code) (303) 863-7414 (Registrant's telephone number, including area code) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On February 16, 2002, Newmont Mining Corporation, a Delaware corporation ("Newmont"), completed its acquisition of Franco-Nevada Mining Corporation Limited, a Canadian corporation ("Franco-Nevada"), pursuant to an Arrangement Agreement, dated as of November 14, 2001 (the "Arrangement Agreement"), by and between what was then called Newmont Mining Corporation (now called "Newmont USA Limited"), a Delaware corporation ("Old Newmont"), and Franco-Nevada. Pursuant to the Arrangement Agreement, each Franco-Nevada common shareholder is entitled to receive in exchange for each Franco-Nevada common share either: (i) 0.80 of an exchangeable share (exchangeable for Newmont common stock) or (ii) 0.80 of a share of Newmont common stock. The Arrangement Agreement, which is filed as Exhibit 2.1 to this report, is incorporated by reference. On February 20, 2002, Newmont, through an direct, wholly owned limited liability company, acquired control of Normandy Mining Limited, an Australian corporation ("Normandy"), pursuant to an off-market bid for all of the outstanding ordinary shares (including shares represented by Normandy ADSs) in the capital of Normandy. Subject to the terms of the offer, each Normandy ordinary shareholder who tendered shares received 0.0385 of a share of Newmont common stock and A$0.50 in exchange for each Normandy ordinary share. In connection with the offer, Old Newmont entered into three Deeds of Undertaking with Normandy, two of which are dated as of November 14, 2001 and one of which is dated as of December 10, 2001 (the "Deeds of Undertaking"). The Deeds of Undertaking, which are filed as Exhibit 2.2 to this report, are incorporated by reference. Old Newmont mailed a bidder's statement to each Normandy shareholder with a registered address outside the United States and Canada. Old Newmont mailed an offer document to each Normandy shareholder with a registered address in the United States or Canada on or about January 11, 2002. Old Newmont also mailed a definitive proxy statement/prospectus to its stockholders (who, as described in Item 5 below, became stockholders of Newmont on February 15, 2002) on or about January 11, 2002. The offer document and definitive proxy statement/prospectus set forth certain information regarding Newmont's proposed acquisition of Franco-Nevada and Normandy, including, but not limited to, the manner of Newmont's acquisition of Franco-Nevada and Normandy; the nature and amount of consideration offered by Newmont; the nature of any material relationship between Franco-Nevada or Normandy, on the one hand, and Newmont or any of Newmont's affiliates, any director or officer of Newmont, or any associate of any such director or officer, on the other; the sources of the funds to be used by Newmont; the nature of Franco-Nevada's and Normandy's businesses; and Newmont's intended use of the Franco-Nevada and Normandy assets acquired. Excerpts from pages 2, 7-9, 12-14, 48-63, 100-115 and 159-160 of the offer document, which are filed as Exhibit 20.1 to this report, are incorporated by reference. Excerpts from pages 1-2, 7-9, 48-49 and 54-71 of the definitive proxy statement/prospectus, which are filed as Exhibit 20.2 to this report, are incorporated by reference. -2- ITEM 5. OTHER EVENTS. On February 15, 2002, Delta Acquisitionco Corp., a Delaware corporation ("Acquisitionco"), merged with and into Old Newmont (the "Reorganization"), with Old Newmont as the surviving corporation, pursuant to an Agreement and Plan of Merger, dated as of January 8, 2002 (the "Merger Agreement"), by and among Old Newmont, Delta Holdco Corp. (now called "Newmont Mining Corporation"), a Delaware corporation and, prior to the Reorganization, a direct, wholly owned subsidiary of Old Newmont ("New Newmont"), and Acquisitionco, which was a direct, wholly owned subsidiary of New Newmont prior to the Reorganization. As a result of the Reorganization, Old Newmont became a direct, wholly owned subsidiary of New Newmont. Pursuant to the Merger Agreement, (1) each issued and outstanding share of Old Newmont common stock was converted into one share of New Newmont common stock, (2) each issued and outstanding share of Old Newmont $3.25 convertible preferred stock was converted into one share of New Newmont $3.25 voting convertible preferred stock, (3) each share of New Newmont common stock issued and held by Old Newmont ceased to be outstanding and was cancelled and retired and (4) each issued and outstanding share of Acquisitionco common stock was converted into one share of Old Newmont common stock. The Merger Agreement, which is filed as Exhibit 2.3 to this report, is incorporated by reference. Upon completion of the Reorganization, New Newmont became the successor registrant for U.S. securities law purposes to Old Newmont. New Newmont common stock commenced trading on the New York Stock Exchange (the "NYSE") on February 19, 2002, while Old Newmont common stock ceased to trade on the NYSE on February 15, 2002. In addition, in connection with the Reorganization, New Newmont was renamed "Newmont Mining Corporation" and Old Newmont was renamed "Newmont USA Limited". ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Franco-Nevada Mining Corporation Limited ---------------------------------------- The (i) audited consolidated balance sheets of Franco-Nevada as at March 31, 2001 and 2000; (ii) audited consolidated statements of earnings, retained earnings and cash flows of Franco-Nevada for the years ended March 31, 2001, 2000 and 1999; (iii) unaudited consolidated balance sheets of Franco-Nevada as at September 30, 2001; (iv) unaudited consolidated statements of earnings, retained earnings and cash flows of Franco-Nevada for the six months ended September 30, 2001 and 2000; and (v) accompanying notes to the consolidated financial statements of Franco-Nevada, are filed as Exhibit 20.3 to this report and are incorporated by reference. -3- Normandy Mining Limited ----------------------- The (i) audited consolidated statements of financial performance of Normandy for the years ended June 30, 2001 and 2000; (ii) audited consolidated statements of financial position of Normandy as at June 30, 2001 and 2000; (iii) audited consolidated statements of cash flows of Normandy for the years ended June 30, 2001 and 2000; and (iv) accompanying notes to the consolidated financial statements of Normandy, are filed as Exhibit 20.4 to this report and are incorporated by reference. The half-yearly report of Normandy for the half-year ended December 31, 2001 is filed as Exhibit 20.5 to this report and is incorporated by reference. (b) PRO FORMA FINANCIAL INFORMATION. Pursuant to the instructions to Item 7(b)(2) of Form 8-K, pro forma financial information relative to the acquired Franco-Nevada and Normandy businesses has not been included in this report, but will be filed by amendment not later than 60 days after the date that this report was required to be filed. (c) EXHIBITS. 2.1 Arrangement Agreement, dated as of November 14, 2001, by and between Franco-Nevada Mining Corporation Limited and Newmont Mining Corporation (now called "Newmont USA Limited"). 2.2 Deeds of Undertaking, dated as of November 14, 2001, November 14, 2001 and December 10, 2001, by and between Newmont Mining Corporation (now called "Newmont USA Limited") and Normandy Mining Limited. 2.3 Agreement and Plan of Merger, dated as of January 8, 2002, by and among Newmont Mining Corporation (now called "Newmont USA Limited"), Delta Holdco Corp. (now called "Newmont Mining Corporation") and Delta Acquisitionco Corp. 20.1 Excerpts from pages 2, 7-9, 12-14, 48-63, 100-115 and 159-160 of the offer document, which was first mailed to shareholders of Normandy Mining Limited on January 11, 2002. 20.2 Excerpts from pages 1-2, 7-9, 48-49 and 54-71 of the definitive proxy statement/prospectus, which was first mailed to stockholders of Newmont Mining Corporation on January 11, 2002. -4- 20.3 Audited annual financial statements and unaudited interim financial statements of Franco-Nevada Mining Corporation Limited, excerpted from pages E-8 through E-27 of Annex E to the definitive proxy statement/prospectus, which was first mailed to stockholders of Newmont Mining Corporation on January 11, 2002. 20.4 Audited annual financial statements of Normandy Mining Limited, excerpted from pages D-12 through D-67 of Annex D to the definitive proxy statement/prospectus, which was first mailed to stockholders of Newmont Mining Corporation on January 11, 2002, and Independent Audit Report. 20.5 Half-yearly report of Normandy Mining Limited for the half-year ended December 31, 2001. 23.1 Consent of PricewaterhouseCoopers LLP, dated March 1, 2002. 23.2 Consent of Deloitte Touche Tohmatsu, dated March 1, 2002. -5- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: February 28, 2002 NEWMONT MINING CORPORATION By: /s/ Britt D. Banks -------------------------------------- Name: Britt D. Banks Title: Vice President, General Counsel and Secretary -6- EXHIBIT LIST Exhibit Description No. ----------- --- 2.1 Arrangement Agreement, dated as of November 14, 2001, by and between Franco-Nevada Mining Corporation Limited and Newmont Mining Corporation (now called "Newmont USA Limited"). 2.2 Deeds of Undertaking, dated as of November 14, 2001, November 14, 2001 and December 10, 2001, by and between Newmont Mining Corporation (now called "Newmont USA Limited") and Normandy Mining Limited. 2.3 Agreement and Plan of Merger, dated as of January 8, 2002, by and among Newmont Mining Corporation (now called "Newmont USA Limited"), Delta Holdco Corp. (now called "Newmont Mining Corporation") and Delta Acquisitionco Corp. 20.1 Excerpts from pages 2, 7-9, 12-14, 48-63, 100-115 and 159-160 of the offer document, which was first mailed to shareholders of Normandy Mining Limited on January 11, 2002. 20.2 Excerpts from pages 1-2, 7-9, 48-49 and 54-71 of the definitive proxy statement/prospectus, which was first mailed to stockholders of Newmont Mining Corporation on January 11, 2002. 20.3 Audited annual financial statements and unaudited interim financial statements of Franco-Nevada Mining Corporation Limited, excerpted from pages E-8 through E-27 of Annex E to the definitive proxy statement/prospectus, which was first mailed to stockholders of Newmont Mining Corporation on January 11, 2002. 20.4 Audited annual financial statements of Normandy Mining Limited, excerpted from pages D-12 through D-67 of Annex D to the definitive proxy statement/prospectus, which was first mailed to stockholders of Newmont Mining Corporation on January 11, 2002, and Independent Audit Report. 20.5 Half-yearly report of Normandy Mining Limited for the half-year ended December 31, 2001. 23.1 Consent of PricewaterhouseCoopers LLP, dated March 1, 2002. 23.2 Consent of Deloitte Touche Tohmatsu, dated March 1, 2002. -7- EX-2 3 feb25ex21.txt EXHIBIT 2.1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT 2.1 ARRANGEMENT AGREEMENT BETWEEN FRANCO-NEVADA MINING CORPORATION LIMITED AND NEWMONT MINING CORPORATION NOVEMBER 14, 2001 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE NO. ---- 1. THE ARRANGEMENT AND ITS ANNOUNCEMENT..................... 1 A. Process Regarding Franco-Nevada...................... 1 B. Process Regarding Newmont............................ 2 C. Circulars............................................ 2 D. Public Announcement.................................. 3 2. CONDITIONS TO THE ARRANGEMENT............................ 3 A. Mutual Conditions.................................... 3 B. Conditions in Favour of Franco-Nevada................ 3 C. Conditions in Favour of Newmont...................... 3 D. Satisfaction, Waiver and Release of Conditions....... 3 3. REPRESENTATIONS AND WARRANTIES........................... 3 A. Representations and Warranties of Franco-Nevada...... 3 B. Representations and Warranties of Newmont............ 4 C. Survival of Representations, Warranties and Covenants 4 D. Exchangeable Shares Held by New Newmont.............. 4 4. IMPLEMENTATION........................................... 4 A. General.............................................. 4 B. Options.............................................. 5 C. Defence of Proceedings............................... 5 D. Waiver of Shareholder Rights Plan.................... 6 E. Securities Law Compliance and Related Covenants...... 6 F. Registrar and Transfer Agent......................... 6 G. Access to Information; Confidentiality............... 7 H. Duty to Inform....................................... 7 I. Governance........................................... 7 J. Board Recommendations................................ 7 K. Affiliate Letters.................................... 8 5. CONDUCT OF BUSINESS...................................... 8 A. Conduct of Business by Franco-Nevada................. 8 B. Conduct of Business by Newmont....................... 10 6. ALTERNATIVE TRANSACTIONS................................. 12 A. Non-Solicitation; Adverse Acts....................... 12 B. Permitted Actions.................................... 12 C. Notification of Acquisition Proposal................. 12 D. Access to Information................................ 13 E. Implementation of Superior Proposal.................. 13 F. Response by Newmont.................................. 13 G. General.............................................. 14 7. TERMINATION AND AMENDMENT OF AGREEMENT................... 14 A. Termination.......................................... 14 B. Amendment............................................ 15 C. Mutual Understanding Regarding Amendments............ 16 D. Approval of Amendments............................... 16 8. TERMINATION PAYMENTS..................................... 16 A. Payment to Newmont................................... 16 B. Payment to Franco-Nevada............................. 16
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PAGE NO. ---- 9. CONFIDENTIALITY AND PUBLIC DISCLOSURE 16 10. GENERAL.............................. 17 A. Definitions................... 17 B. Assignment.................... 17 C. Binding Effect................ 17 D. Representatives............... 17 E. Responsibility for Expenses... 17 F. Time.......................... 17 G. Notices....................... 17 H. Governing Law................. 18 I. Injunctive Relief............. 19 J. Currency...................... 19 K. Accounting Matters............ 19 L. Knowledge..................... 19 M. Entire Agreement.............. 19 N. Further Assurances............ 19 O. Waivers and Modifications..... 19 P. Schedules..................... 19 Q. Counterparts.................. 20 R. Date For Any Action........... 20 S. Interpretation................ 20 T. Severability.................. 20
ii ARRANGEMENT AGREEMENT THIS AGREEMENT made this 14th day of November, 2001. BETWEEN: FRANCO-NEVADA MINING CORPORATION LIMITED, a corporation incorporated under the laws of Canada, ("FRANCO-NEVADA"), --AND-- NEWMONT MINING CORPORATION, a corporation incorporated under the laws of Delaware, ("NEWMONT") WHEREAS: A. The authorized capital of Franco-Nevada consists of an unlimited number of common shares and an unlimited number of First Preference Shares issuable in series, of which 158,920,430 common shares and no First Preference Shares are issued and outstanding as fully paid and non-assessable; B. There are no options, warrants or other securities outstanding that require the issue or sale of any securities of Franco-Nevada, other than the Franco-Nevada Stock Options to acquire an aggregate of 5,040,356 common shares, Franco-Nevada Class A Warrants to acquire an aggregate of 8,985,344 common shares and Franco-Nevada Class B Warrants to acquire an aggregate of 6,571,953 common shares; C. Newmont proposes to acquire, through related entities (to be formed by Newmont), all of the Franco-Nevada Shares pursuant to the Arrangement as provided for in this agreement; D. Newmont proposes to acquire, through a related entity (to be formed by Newmont), all of the issued and outstanding shares in the capital of Normandy; E. The board of directors of Franco-Nevada, after receiving the Fairness Opinion and legal advice and after considering other factors, has determined that it would be advisable and in the best interests of Franco-Nevada and the Franco-Nevada Shareholders for it to enter into this agreement, to support and implement the Transactions and to recommend that Franco-Nevada Shareholders vote in favour of the Arrangement; and F. The parties intend that the Transactions shall qualify as reorganizations within the meaning of Section 368(a) of the Code and/or as exchanges that, taken together with the contemplated acquisition of Normandy, are described in Section 351 of the Code. NOW THEREFORE in consideration of the mutual covenants set out in this agreement and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Franco-Nevada and Newmont agree that: 1. THE ARRANGEMENT AND ITS ANNOUNCEMENT A. PROCESS REGARDING FRANCO-NEVADA. Subject to the terms and conditions of this agreement: (a) as soon as practicable after the execution of this agreement, and in any event before January 15, 2002, Franco-Nevada shall, in a manner acceptable to Newmont, apply to the Court pursuant to (S)192 of the Act for the Interim Order; (b) provided the Interim Order has been obtained, Franco-Nevada shall, in a manner acceptable to Newmont, call and hold the Franco-Nevada Special Meeting as soon as reasonably practicable after the Interim Order has been obtained, and in any event before February 28, 2002, and, in connection with the Franco-Nevada Special Meeting, ensure that the Franco-Nevada Circular contains all information necessary to permit Franco-Nevada Shareholders to make an informed judgement about the Arrangement; 1 (c) after having called the Franco-Nevada Special Meeting, Franco-Nevada shall not, without the prior written consent of Newmont, adjourn, postpone or cancel the Franco-Nevada Special Meeting; (d) Franco-Nevada shall, subject to the prior review and written approval of Newmont, prepare, file and distribute the Franco-Nevada Circular and such other documents (including documents required by the TSE and the OSC or applicable Law) as may be necessary or desirable to permit Franco-Nevada Shareholders to vote on the Arrangement; (e) provided the Arrangement is approved at the Franco-Nevada Special Meeting as set out in the Interim Order, as soon as reasonably practicable thereafter at a time determined with Newmont, Franco-Nevada shall forthwith, in a manner acceptable to Newmont, take the necessary steps to submit the Arrangement to the Court and apply for the Final Order in such manner as the Court may direct; (f) provided the Final Order is obtained and the conditions set out in (S)2 have been satisfied or waived, Franco-Nevada shall send to the Director, for endorsement and filing by the Director, articles of arrangement and such other documents as may be required under the CBCA to give effect to the Arrangement; and (g) provided the Final Order is obtained and the conditions set out in (S)2 have been satisfied or waived, the Support Agreement and the Voting and Exchange Trust Agreement shall be executed. B. PROCESS REGARDING NEWMONT. Newmont shall take all action necessary to cause a meeting of its shareholders to be duly called and held for the purposes of voting on all matters required by the Delaware General Corporation Law and the rules of the NYSE in order to consummate the transactions contemplated by this agreement. Such shareholders meeting shall be held at the earliest practicable time following the Franco-Nevada Special Meeting, subject to compliance with all applicable Law. In connection with its shareholders meeting, Newmont shall (i) mail all necessary documents to its shareholders as promptly as practicable, including the Newmont Circular, (ii) use all reasonable efforts to obtain the necessary approvals to consummate the transactions contemplated by this agreement and (iii) otherwise comply with all applicable legal requirements to hold the Newmont shareholder meeting and consummate the transactions contemplated by this agreement. C. CIRCULARS. Franco-Nevada shall, subject to the prior review and written approval of Newmont, prepare the Franco-Nevada Circular (including supplements or amendments thereto) and cause the Franco-Nevada Circular (including supplements or amendments thereto) to be distributed in accordance with applicable Law. Newmont shall furnish to Franco-Nevada all information regarding itself, its Subsidiaries and its directors, officers and shareholders as may reasonably be required to be included in the Franco-Nevada Circular pursuant to applicable Laws. Each of Franco-Nevada and Newmont shall: (a) ensure that all information provided by it or on its behalf that is contained in the Franco-Nevada Circular does not contain any misrepresentation or any untrue statement of a material fact or omit to state a material fact required to be stated in the Franco-Nevada Circular that is necessary to make any statement that it contains not misleading in light of the circumstances in which it is made; and (b) promptly notify the other if, at any time before the Effective Time, it becomes aware that the Franco-Nevada Circular, any document delivered to the Court in connection with the application for the Interim Order or Final Order or delivered to Franco-Nevada Shareholders in connection with the Franco-Nevada Special Meeting or any other document contemplated by (S)1.A contains a misrepresentation, an untrue statement of material fact, omits to state a material fact required to be stated in those documents that is necessary to make any statement it contains not misleading in light of the circumstances in which it is made or that otherwise requires an amendment or a supplement to those documents. Franco-Nevada shall furnish to Newmont all information regarding itself, its Subsidiaries and its directors, officers and shareholders as may reasonably be required to be included in the Newmont Circular pursuant to applicable Laws. Newmont shall provide Franco-Nevada with the opportunity to review the Newmont Circular prior to its submission to the SEC and its dissemination. Each of Newmont and Franco-Nevada shall: 2 (a) ensure that the information provided by it or on its behalf that is contained in the Newmont Circular does not contain any untrue statements of a material fact or omit to state a material fact required to be stated in the Newmont Circular or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; and (b) promptly notify the other if, at any time before the Effective Time, it becomes aware that the Newmont Circular, any document delivered to Newmont Shareholders in connection with the Newmont Special Meeting or any other document contemplated by (S)1.B contains any untrue statements of a material fact or omits to state a material fact required to be stated in those documents or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, or otherwise requires an amendment or supplement. D. PUBLIC ANNOUNCEMENT. Immediately after the execution of this agreement, Franco-Nevada and Newmont shall issue a joint public announcement, announcing the entering into of this agreement and the Transactions, which announcement shall be in form and substance acceptable to each of them. 2. CONDITIONS TO THE ARRANGEMENT A. MUTUAL CONDITIONS. The respective obligations of Franco-Nevada and Newmont to complete the Arrangement shall be subject to the fulfilment, or the waiver by each of Franco-Nevada and Newmont, on or before the Outside Date, of the conditions set forth in Schedule C, each of which may be waived by mutual consent of Franco-Nevada and Newmont, in whole or in part. For greater certainty, the conditions set forth in Schedule C are inserted for the benefit of each of the parties to this agreement and may be waived by mutual consent of Franco-Nevada and Newmont, in whole or in part, in their sole discretion. B. CONDITIONS IN FAVOUR OF FRANCO-NEVADA. The obligations of Franco-Nevada to complete the Arrangement shall be subject to the fulfilment, or the waiver by Franco-Nevada, on or before the Outside Date, of the conditions set forth in Schedule D, each of which is for the exclusive benefit of Franco-Nevada and may be waived by Franco-Nevada alone, at any time, in whole or in part, in its sole discretion. C. CONDITIONS IN FAVOUR OF NEWMONT. The obligations of Newmont to complete the Arrangement shall be subject to the fulfilment, or the waiver by Newmont, on or before the Outside Date, of the conditions set out in Schedule E, each of which is for the exclusive benefit of Newmont and may be waived by Newmont alone, at any time, in whole or in part, in its sole discretion. D. SATISFACTION, WAIVER AND RELEASE OF CONDITIONS. Upon the issuance of a certificate of arrangement in respect of the Arrangement by the Director in accordance with the Final Order and the CBCA, the conditions provided for in this section shall be deemed conclusively to have been satisfied, waived or released. 3. REPRESENTATIONS AND WARRANTIES A. REPRESENTATIONS AND WARRANTIES OF FRANCO-NEVADA. Franco-Nevada represents and warrants to Newmont as to those matters set forth in Schedule F (and acknowledges that Newmont is relying on such representations and warranties in entering into this agreement and completing the Transactions). 3 B. REPRESENTATIONS AND WARRANTIES OF NEWMONT. Newmont represents and warrants to Franco-Nevada as to those matters set forth in Schedule G (and acknowledges that Franco-Nevada is relying on such representations and warranties in entering into this agreement and completing the Transactions). C. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations, warranties and covenants of Franco-Nevada and Newmont contained in this agreement or in any instrument delivered pursuant to this agreement shall merge upon, and shall not survive, the Effective Date; provided that this (S)3.C shall not limit any covenant or agreement of the parties, which by its terms contemplates performance after the Effective Time. D. EXCHANGEABLE SHARES HELD BY NEW NEWMONT. If New Newmont (or a successor thereto) is a "specified financial institution" for purposes of the ITA, any Exchangeable Shares held by New Newmont, or a corporation related to New Newmont, will not be redeemed or cancelled if such redemption or cancellation would result in any holder of an Exchangeable Share (other than a Newmont corporation) holding more than 10% of the issued and outstanding Exchangeable Shares. 4. IMPLEMENTATION A. GENERAL. The Transactions are intended, subject to the terms and conditions hereof and thereof, to result in: . in respect of any Franco-Nevada Shareholder who elects pursuant to the terms of Section 2.3 of the Plan of Arrangement, the acquisition by NSULC and Acquisitionco of all of the issued shares of a Holdco in consideration of, at the option of the holder of such Holdco Shares, either: (i) if the Holdco Shares are sold to Acquisitionco, 0.80 Exchangeable Shares per Franco-Nevada Share owned by the Holdco, or (ii) if the Holdco Shares are sold to NSULC, 0.80 Newmont Shares per Franco-Nevada Share owned by the Holdco; . in any other case, the acquisition by NSULC and Acquisitionco of all of the issued and outstanding Franco-Nevada Shares from the holders of those shares (other than Franco-Nevada Shares owned by Holdcos) in consideration of, at the option of the holder, either: (i) 0.80 Exchangeable Shares per Franco-Nevada Share acquired by Acquisitionco, or (ii) 0.80 Newmont Shares per Franco-Nevada Share acquired by NSULC, and cash in lieu of fractional shares; and . condition (f) of Schedule C being satisfied as soon as reasonably practicable. Subject to the provisions of the Plan of Arrangement, Acquisitionco agrees to execute joint elections under subsection 85(1) or 85(2) of the ITA or any equivalent provincial legislation in respect of the acquisition of Franco-Nevada Shares or Holdco Shares by Acquisitionco. In addition, each of Franco-Nevada and Newmont shall (and shall cause its Subsidiaries to) use all efforts to satisfy each of the conditions precedent to be satisfied by it, as soon as practical and in any event before the Effective Date, and to take, or cause to be taken, all other action and to do, or cause to be done, all other things necessary, proper or advisable to permit the completion of the Transactions in accordance with the Arrangement, this agreement, the agreements that it contemplates and applicable Law, and to cooperate with each other in connection therewith (provided, however, that, with respect to Canadian provincial or territorial qualifications, neither Newmont nor New Newmont shall be required to register or qualify as a foreign corporation or to take any action that would subject it to service of process in any 4 jurisdiction where it is not now so subject, except as to matters and transactions arising solely from the issuance of the Exchangeable Shares and the Newmont Shares), including using all efforts to: (a) provide notice to, and obtain all waivers, consents, permits, licenses, authorizations, orders, approvals and releases necessary or desirable to complete the Transactions from, Agencies and other persons, including parties to agreements, understandings or other documents to which each of Franco-Nevada and Newmont (and its respective Subsidiaries) is a party or by which it or its properties is bound or affected (including loan agreements, shareholder agreements, leases, pledges, guarantees and security), the failure of which to provide or obtain would prevent the completion of the Arrangement or which, individually or in the aggregate, could reasonably be expected to be Materially Adverse to either Franco-Nevada or Newmont and their respective Subsidiaries, in each case taken as a whole; (b) obtain the Interim Order and the approval of Franco-Nevada Shareholders at the Franco-Nevada Special Meeting at the earliest practicable date, as specified in the Interim Order and the Final Order; (c) effect or cause to be effected all registrations and filings and submissions of information necessary or desirable to complete the Transactions or requested of it by Agencies, the failure of which to obtain could reasonably be expected to prevent the completion of the Transactions or could reasonably be expected to be Materially Adverse to either Franco-Nevada or Newmont and their respective Subsidiaries, in each case taken as a whole; and (d) keep the other reasonably informed as to the status of the proceedings related to obtaining the Regulatory Approvals, including providing the other with copies of all related applications and notifications. B. OPTIONS. (a) Franco-Nevada shall take all necessary actions and do all things necessary to ensure that, in accordance with the terms of the Franco-Nevada Options, each holder of a Franco-Nevada Option shall be entitled to receive after the Effective Time upon the subsequent exercise of such holder's Franco-Nevada Option, in accordance with its terms, and shall accept in lieu of the number of Franco-Nevada Shares to which such holder was theretofore entitled upon such exercise but for the same aggregate consideration payable therefor, the aggregate number of Newmont Shares that such holder would have been entitled to receive as a result of the Transactions if, on the Effective Date, such holder had been the registered holder of the number of Franco-Nevada Shares to which such holder was theretofore entitled upon such exercise. For example, a holder of ten Franco-Nevada Class A Warrants would be entitled to receive new warrants bearing the same terms and conditions, except that such warrants would be exercisable for 32 (i.e., 10 x 4 x 0.80) Newmont Shares for a total exercise price of $200. (b) As soon as practicable following the Effective Date, but it no event later than 20 days after the Effective Date, Newmont shall, to the extent required, file with the SEC a registration statement on Form S-8 (or other appropriate form) under the Securities Act with respect to the Newmont Shares issued pursuant to Section 4.B(a) with respect to Franco-Nevada Options. Newmont shall take all necessary action to ensure that a sufficient number of Newmont Shares are reserved for issuance upon the exercise of Franco-Nevada Options as contemplated by Section 4.B(a). In addition, Newmont shall take all necessary action to cause Newmont equity securities issued in connection with the Arrangement to the holders of Franco-Nevada Options who become executive officers or directors of Newmont to be exempt from Section 16(b) of the Securities Exchange Act pursuant to Rule 16b-3 promulgated thereunder. C. DEFENCE OF PROCEEDINGS. Each of Franco-Nevada and Newmont shall vigorously defend, or shall cause to be vigorously defended, any lawsuits or other legal proceeding brought against it or any of its Subsidiaries or their respective directors, officers or shareholders challenging this agreement or the completion of the Transactions. Neither Franco-Nevada nor Newmont shall settle or compromise (or permit any of their respective Subsidiaries to compromise or settle) any claim brought in connection with the Transactions, without the prior written consent of the other. 5 D. WAIVER OF SHAREHOLDER RIGHTS PLAN. Franco-Nevada hereby confirms, acknowledges and agrees that the board of directors of Franco-Nevada has approved the Transactions and has, acting in good faith, determined it to be necessary and desirable to extend the Separation Time (as defined therein) under the Franco-Nevada Rights Agreement until after the vote by the Franco-Nevada Shareholders on the Arrangement at the Franco-Nevada Special Meeting and to obtain the consent of Franco-Nevada Shareholders to waive the Franco-Nevada Rights Agreement so that neither the entering into nor delivery of this agreement, the Arrangement or the other agreements contemplated hereby nor the consummation of all or any part of the Transactions shall constitute a Flip-in Event (as defined in the Franco-Nevada Rights Agreement), and Franco-Nevada has done all such acts and executed and delivered all such documents and instruments that are required in order to extend the Separation Time, including providing the Rights Agent (as defined in the Franco-Nevada Rights Agreement) with notice in writing of such extension. E. SECURITIES LAW COMPLIANCE AND RELATED COVENANTS. Newmont shall use its best efforts (which, for greater certainty, shall not require Newmont to consent to a term or condition of an approval or consent which Newmont reasonably determines could have a Materially Adverse effect on Newmont or its Subsidiaries): (a) to obtain all orders required from the applicable Canadian securities regulatory Agencies to permit the first resale of: (i) the Exchangeable Shares issued pursuant to the Arrangement; and (ii) the Newmont Shares issued from time to time upon exchange of the Exchangeable Shares, in each case without qualification with or approval of or the filing of any prospectus, or the taking of any proceeding with, or the obtaining of any further order, ruling or consent from, any securities regulatory Agency in any of the provinces of Canada (other than, with respect to such first resales, any restrictions on transfer by reason of, among other things, a holder being a "control person" of Newmont or Acquisitionco or Callco (as defined in the provisions attaching to the Exchangeable Shares) for purposes of Canadian federal, provincial or territorial securities Laws or equivalent Laws of the United States or any of its states); (b) to cause the Exchangeable Shares to be listed and posted for trading on the TSE by the Effective Time and to take reasonable steps to maintain such listings for so long as there are Exchangeable Shares outstanding (other than those securities held by Newmont or any of its affiliates); (c) take reasonable steps to ensure that Acquisitionco has, at the Effective Time and for so long as there are Exchangeable Shares outstanding (other than those Exchangeable Shares held by Newmont or any of its affiliates), a "substantial Canadian presence" within the meaning of subsection 206(1.1) of the ITA; (d) take reasonable steps to cause the listing and admission to trading on NYSE of the Newmont Shares to be issued at the Effective Time and from time to time (i) upon exchange of the Exchangeable Shares, and (ii) upon the exercise of the Franco-Nevada Options; and (e) take reasonable steps to ensure that Acquisitionco is, at the Effective Time and for so long as there are Exchangeable Shares outstanding (other than those Exchangeable Shares held by Newmont or any of its affiliates), a "taxable Canadian corporation" and not a "mutual fund corporation," each within the meaning of the ITA. F. REGISTRAR AND TRANSFER AGENT. Franco-Nevada shall permit the registrar and transfer agent for Franco-Nevada Shares and Franco-Nevada Warrants to act as depositary in connection with the Arrangement and instruct that transfer agent to furnish to Newmont (and such persons as it may designate) at such times as it may request such information and provide to Newmont (and such persons as it may designate) such other assistance as it may request in connection with the implementation and completion of the Transactions. 6 G. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) Franco-Nevada shall, and shall cause its Subsidiaries to, afford to Newmont and to its Representatives, reasonable access during normal business hours during the period prior to the Effective Time to all of the properties, books, contracts, commitments, personnel and records of Franco-Nevada and its Subsidiaries and, during such period, Franco-Nevada shall, and shall cause each of its Subsidiaries to, furnish promptly to Newmont (i) a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of federal, provincial or state securities Laws and (ii) all other information concerning its business, properties and personnel as Newmont may reasonably request, including any information with respect to shareholder approval at the Franco-Nevada Special Meeting and the status of the efforts to obtain such approval. Such information shall be held in confidence to the extent required by, and in accordance with, the provisions of the Confidentiality Agreement. (b) During the period prior to the Effective Time of the Arrangement, Newmont shall, and shall cause its Subsidiaries to, furnish promptly to Franco-Nevada information concerning its business and properties as Franco-Nevada may reasonably request. Such information shall be held in confidence to the extent required by, and in accordance with, the provisions of the Confidentiality Agreement. H. DUTY TO INFORM. Each of Franco-Nevada and Newmont shall keep the other apprised of the status of matters relating to the completion of the Transactions and work cooperatively in connection with obtaining the requisite approvals and consents or governmental orders, including: (a) promptly notifying the other of, and if in writing promptly furnishing the other with copies of, any communications from or with any Agency with respect to the Transactions; (b) permitting the other party to review in advance, and considering in good faith the view of one another in connection with, any proposed communication with any Agency in connection with proceedings under or relating to any applicable Law; and (c) not agreeing to participate in any meeting or discussion with any Agency in connection with proceedings under or relating to any applicable Law unless it consults with the other party in advance, and, to the extent permitted by such Agency, give the other party the opportunity to attend and participate. I. GOVERNANCE. At the time of completion of the Transactions: (a) the board of directors of Newmont (or its direct or indirect parent corporation that issues the shares into which all or substantially all of the Original Newmont Share are converted or for which they are exchanged on or before the Effective Date in connection with the transactions contemplated by the Plan of Arrangement ("NEW NEWMONT")) shall be constituted with a maximum of 17 directors, including Mr. Seymour Schulich, Mr. Pierre Lassonde, and one member of the current Franco-Nevada board of directors who shall be recommended by Franco-Nevada and subject to Newmont's approval; and (b) the Chief Executive Officer of Newmont immediately prior to the Effective Time shall be the Chief Executive Officer of Newmont or New Newmont, as applicable, the President and Co-Chief Executive Officer of Franco-Nevada immediately prior to the Effective Time shall be the President of Newmont or New Newmont, as applicable, and the Chairman of the Board of Directors and Co-Chief Executive Officer of Franco-Nevada shall be the Chairman of Newmont's or New Newmont's, as applicable, new merchant banking Subsidiary. J. BOARD RECOMMENDATIONS. The board of directors of Franco-Nevada shall, subject to (S)6.E, recommend that Franco-Nevada Shareholders approve the Arrangement. The board of directors of Newmont shall recommend that Newmont Shareholders approve all matters necessary to consummate the Transactions, subject to applicable Law. 7 K. AFFILIATE LETTERS. Franco-Nevada shall cause each such person who may be at the Effective Time or was on the date hereof an "affiliate" of Franco-Nevada for purposes of Rule 145 under the Securities Act, to execute and deliver to Newmont no less than 30 days prior to the date of the Franco-Nevada Special Meeting, the written undertakings in the form attached hereto as Schedule I. No later than 45 days prior to such date, Franco-Nevada, after consultation with its outside counsel, shall provide Newmont with a letter (reasonably satisfactory to outside counsel to Newmont) specifying all of the persons or entities who, in Franco-Nevada's opinion, may be deemed to be "affiliates" of Franco-Nevada under the preceding sentence. The foregoing notwithstanding, Newmont shall be entitled to place legends as specified in Schedule I on the certificates evidencing any of the Newmont Shares and, to the extent applicable, Exchangeable Shares to be received by (i) any such "affiliate" of Franco-Nevada specified in such letter or (ii) any person Newmont reasonably identifies (by written notice to Franco-Nevada) as being a person who may be deemed an "affiliate" for purposes of Rule 145 under the Securities Act, pursuant to the terms of this agreement, and to issue appropriate stop transfer instructions to the transfer agent for the Newmont Shares and, to the extent applicable, Exchangeable Shares, consistent with the terms of the affiliate letter in the form of Schedule I, regardless of whether such person has executed such letter and regardless of whether such person's name appears on the letter to be delivered pursuant to the preceding sentence. The limitations on the amount of securities that may be sold by an "affiliate" pursuant to Rule 144(e) under the Securities Act, as of the date of this agreement, are set forth on Schedule J. 5. CONDUCT OF BUSINESS A. CONDUCT OF BUSINESS BY FRANCO-NEVADA. Prior to the Effective Time, unless Newmont otherwise agrees in writing or as otherwise expressly contemplated or permitted by this agreement, Franco-Nevada shall, and shall cause each of its Subsidiaries to, (i) conduct its business only in, not take any action except in, and maintain its facilities in, the ordinary course of business consistent with past practice, (ii) maintain and preserve its business organization and its material rights and franchises, (iii) retain the services of its officers and key employees, (iv) maintain relationships with customers, suppliers, lessees, joint venture partners, licensees, lessors, licensors and other third parties, and (v) maintain all of its operational assets in their current condition (normal wear and tear excepted) to the end that the goodwill and ongoing business of Franco-Nevada and its Subsidiaries shall not be impaired in any material respect. Without limiting the generality of the foregoing, Franco-Nevada shall (unless Newmont otherwise agrees in writing or as otherwise expressly contemplated or permitted by this agreement): (a) not do, permit any of its Subsidiaries to do or permit to occur any of the following (directly or indirectly), (i) issue, grant, sell, transfer, pledge, lease, dispose of, encumber or agree to issue, grant, sell, pledge, lease, dispose of or encumber, (A) any Franco-Nevada Shares or other securities entitling the holder to rights in respect of the securities or assets of Franco-Nevada or its Subsidiaries, other than pursuant to rights to acquire such securities existing at the date of this agreement as disclosed in the Disclosure statement, or (B) any property or assets of Franco-Nevada or any of its Subsidiaries, except in the ordinary course of business consistent with past practice, (ii) amend or propose to amend the constitutional documents (including articles or other organizational documents or by-laws) of it or any of its Subsidiaries, (iii) declare or make any dividend or other distribution (in cash, securities or other property) in respect of any securities of it or any of its Subsidiaries, 8 (iv) redeem, purchase or offer to purchase any securities of its capital stock, or enter into any agreement, understanding or arrangement with respect to the voting, registration or repurchase of its capital stock, (v) adjust, split, combine or reclassify its capital stock or merge, consolidate or enter into a joint venture with any person, (vi) except in accordance with executed agreements of purchase and sale provided to Newmont before the date of this agreement or as contemplated in (S)5.A(a)(vii), acquire or agree to acquire (by purchase, amalgamation, merger or otherwise) any person or assets that individually exceeds $5 million or, in the aggregate, exceed $10 million, (vii) make, or commit to make, any capital expenditures that individually exceeds $10 million or, in the aggregate, exceed $25 million, (viii) amend or modify, or propose to amend or modify, the Franco-Nevada Rights Plan, as amended as of the date hereof, (ix) incur, create, assume, commit to incur, guarantee or otherwise become liable or responsible for indebtedness for borrowed money, other than: (A) advances from Subsidiaries of Franco-Nevada made in the ordinary course of business consistent with past practice, (B) advances from Subsidiaries of Franco-Nevada made to fund expenditures permitted by this agreement, and (C) pursuant to existing operating lines of credit with third party lenders as disclosed in the Disclosure Statement, (x) settle or compromise any suit, claim, action, proceeding, hearing, notice of violation, demand letter or investigation involving the possible payment or receipt of amounts that exceed, in the aggregate, $250,000, (xi) enter into, adopt or amend any Employee Benefit Plan or Employment Agreement, except as may be required by applicable Law, (xii) modify, amend or terminate, or waive, release or assign any material rights or claims with respect to any confidentiality agreement to which Franco-Nevada is a party, (xiii) other than as a result of the Transactions, take any action that could give rise to a right to severance benefits pursuant to any employment, severance, termination, change in control or similar agreements or arrangements, (xiv) adopt or amend, or increase or accelerate the timing, payment or vesting of benefits under or funding of, any bonus, profit sharing compensation, stock option, pension, retirement, deferred compensation, employment or other employee benefit plan, agreement, trust, fund or arrangement for the benefit or welfare of any current or former employee, director or consultant, (xv) enter into any confidentiality agreements or arrangements other than in the ordinary course of business consistent with past practice, (xvi) except as otherwise required by Law, make any material Tax election, settle or compromise any material Tax claim, file any Tax Return (other than in a manner consistent with past practice) or change any method of Tax accounting, (xvii) take any action to exempt or make not subject to the provisions of any take-over Law or other Law, which purports to limit or restrict business combinations or the ability to acquire or vote shares, any person (other than Newmont or its Subsidiaries) or any action taken thereby, which person or action would have otherwise been subject to the restrictive provisions thereof and not exempt therefrom, 9 (xviii) make any changes to existing accounting practices, except as the regular, independent auditors of Franco-Nevada advise in writing are required by applicable Law or generally accepted accounting principles, or write up, write down or write off the book value of any assets in amount that, in aggregate, exceed $500,000, except for depreciation and amortization in accordance with generally accepted accounting principles, or (xix) enter into or modify any employment, severance, collective bargaining or similar agreements or arrangements with, or take any action with respect to or grant any salary increases, bonuses, benefits, severance or termination pay to, any current or former officers, directors or other employees or consultants; (b) use its best efforts to cause the current insurance (or re-insurance) policies of it and its Subsidiaries not to be cancelled or terminated or any other coverage under those policies to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance and re-insurance companies of nationally recognized standing providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect; (c) not do or permit any action that would, or could reasonably be expected to, render any representation or warranty made by it in this agreement untrue or inaccurate in a manner that would, or could reasonably be expected to, be Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole; (d) promptly notify Newmont orally and in writing of any change in the ordinary course of the business, operations or properties of Franco-Nevada or its Subsidiaries and of any material complaints, investigations or hearings (or communications indicating that the same may be contemplated) that, individually is or in the aggregate are, or could reasonably be expected to be, Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole; (e) not implement any other change in the business, affairs, capitalization or dividend policy of Franco-Nevada or its Subsidiaries that is, or in the aggregate are, or could reasonably be expected to be, Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole; and (f) not enter into or modify any contract, agreement, commitment or arrangement with respect to any of the matters set forth in this (S)5.A. B. CONDUCT OF BUSINESS BY NEWMONT. (a) Prior to the Effective Time, unless Franco-Nevada otherwise agrees in writing or as otherwise expressly contemplated or permitted by this agreement, Newmont shall, and shall cause each of its Subsidiaries to, (i) conduct its business and maintain its facilities in the ordinary course of business consistent with past practice, (ii) maintain and preserve its business organization and its material rights and franchises, (iii) retain the services of its officers and key employees, (iv) maintain relationships with customers, suppliers, lessees, joint venture partners, licensees, lessors, licensors and other third parties, and (v) maintain all of its operational assets in their current condition (normal wear and tear excepted) to the end that the goodwill and ongoing business of Newmont and its Subsidiaries shall not be impaired in any material respect. Without limiting the generality of the foregoing, Newmont shall (unless Franco-Nevada otherwise agrees in writing or as otherwise expressly contemplated or permitted by this agreement): (i) not, nor permit any of its Subsidiaries to, redeem, purchase or offer to purchase any securities of its capital stock, or enter into any agreement, understanding or arrangement with respect to the repurchase of its capital stock (except for transactions among Newmont and its presently existing or future direct or indirect wholly-owned Subsidiaries); (ii) not make any amendment to its Articles of Incorporation that changes the fundamental attributes of Newmont Shares; 10 (iii) not make, declare or pay any dividend (other than quarterly dividends not in excess of $0.03 per share of common stock and $0.8125 per share of preferred stock, with record and payment dates consistent with past practice); (iv) not adjust, split, combine or reclassify its capital stock or, except in connection with the Transactions, merge or consolidate with any person (except for transactions among Newmont, New Newmont and their direct or indirect wholly-owned Subsidiaries); (v) not incur, create, assume, commit to incur, guarantee or otherwise become liable or responsible for indebtedness for borrowed money that, in the aggregate, exceed $200 million, except in the ordinary course of business consistent with past practice and other than: (A) advances from Subsidiaries of Newmont made to fund expenditures permitted by this agreement, and (B) pursuant to existing operating or replacement lines of credit with third party lenders; (vi) not do or permit any action that would, or could reasonably be expected to, render any representation or warranty made by it in this agreement untrue or inaccurate in a manner that would, or could reasonably be expected to be, Materially Adverse to Newmont and its Subsidiaries, taken as a whole; (vii) promptly notify Franco-Nevada orally and in writing of any change in the ordinary course of the business, operations or properties of Newmont or its Subsidiaries and of any material complaints, investigations or hearings (or communications indicating that the same may be contemplated) that, individually is or in the aggregate are, or could reasonably be expected to be, Materially Adverse to Newmont and its Subsidiaries, taken as a whole; (viii) not enter into or modify any contract, agreement, commitment or arrangement with respect to any of the matters set forth in this (S)5.B; and (ix) not implement any other change in the business, affairs, capitalization or dividend policy of Newmont or its Subsidiaries that is, or in the aggregate are, or could reasonably be expected to be, Materially Adverse to Newmont and its Subsidiaries, taken as a whole. (b) In addition, Newmont shall not (unless Newmont first consults with Franco-Nevada or as otherwise expressly contemplated or permitted by this agreement) do, permit any of its Subsidiaries to do or permit to occur any of the following (directly or indirectly), except for transactions among Newmont, New Newmont and their direct or indirect wholly-owned Subsidiaries: (i) issue, grant, sell, transfer, pledge, lease, dispose of, encumber or agree to issue, grant, sell, pledge, lease, dispose of or encumber; (A) any Newmont Shares or other securities entitling the holder to rights in respect of the securities or assets of Newmont or its Subsidiaries, other than pursuant to rights to acquire such securities existing at the date of this agreement, or (B) any property or assets of Newmont or any of its Subsidiaries, except in the ordinary course of business consistent with past practice; (ii) except in accordance with executed agreements of purchase and sale provided to Franco-Nevada before the date of this agreement or as contemplated in (S)5.B(iii) below, acquire or agree to acquire (by purchase, amalgamation, merger or otherwise) any person or assets that individually exceeds $50 million or, in the aggregate, exceed $100 million; or (iii) except as provided in Newmont's regular budget, make, or commit to make, any capital expenditures that individually exceeds $50 million. 11 6. ALTERNATIVE TRANSACTIONS A. NON-SOLICITATION; ADVERSE ACTS. Franco-Nevada shall not (and shall not permit any of its Subsidiaries to), directly or indirectly, through any of its or its Subsidiaries' Representatives or otherwise, take any action that may in any way adversely affect or reduce the likelihood of the successful completion of the Transactions. Without limiting the foregoing, Franco-Nevada shall not (and shall not permit any of its Subsidiaries to), directly or indirectly, through any of its or its Subsidiaries' Representatives or otherwise: (a) solicit, initiate, encourage, or facilitate (including by way of furnishing non-public information) any inquiries or proposals regarding an Alternative Transaction; (b) participate in any discussions or negotiations regarding any Alternative Transaction; (c) approve or recommend any Alternative Transaction; or (d) accept or enter any agreement, arrangement or understanding related to any Alternative Transaction. Additionally, Franco-Nevada shall: (a) immediately cease and cause to be terminated any existing discussions or negotiations, directly or indirectly, with any person with respect to any Alternative Transaction; and (b) not, directly or indirectly, waive or vary any terms or conditions of any confidentiality or standstill agreement that it has, as of the date hereof, entered into with any person considering any Alternative Transaction and shall immediately request the return (or the deletion from retrieval systems and data bases or the destruction) of all information. B. PERMITTED ACTIONS. Notwithstanding anything in this agreement, nothing shall prevent the board of directors of Franco-Nevada from: (a) complying with its obligations under applicable securities Law to prepare and deliver a directors' circular in response to a take-over bid; and (b) considering, participating in discussions or negotiations and entering into confidentiality agreements and providing information, in each case pursuant to (S)6, regarding an unsolicited BONA FIDE written Acquisition Proposal that (i) did not result from a breach of (S)6, and (ii) the board of directors of Franco-Nevada has determined by formal resolution, in good faith and after consultation with its financial advisors and outside legal counsel, is a Superior Proposal, but only to the extent that the board of directors of Franco-Nevada also has determined by formal resolution, in good faith after consultation with its outside counsel, that the failure to take such action would reasonably be expected to constitute a breach of its fiduciary duties. The board of directors of Franco-Nevada shall not, except in compliance with (S)6.E and F, approve, recommend, accept, support or enter into any other agreement, arrangement or understanding in respect of any such Acquisition Proposal. C. NOTIFICATION OF ACQUISITION PROPOSAL. Franco-Nevada shall immediately notify Newmont, at first orally and then promptly in writing, of any Acquisition Proposal and any inquiry that could lead to any Alternative Transaction, or any amendments to the foregoing, or any request for information relating to Franco-Nevada or any of its Subsidiaries in connection with 12 any Alternative Transaction or for access to the properties, books, or records of Franco-Nevada or any of its Subsidiaries by any person that may be proposing to make, or has made, any Alternative Transaction. Such notice shall include a description of the material terms and conditions of any proposal, the identity of the person making such proposal, inquiry or contact and such other details of the proposal, inquiry, contact, discussions or negotiations as Newmont may, in its sole discretion request, and shall attach copies of all letters, agreements and other documentation (whether executed or in draft) in respect of such Alternative Transaction. Franco-Nevada shall keep Newmont informed by way of further such notices of the status including any change to the material terms of any such Alternative Transaction or inquiry. D. ACCESS TO INFORMATION. If Franco-Nevada receives a request for information from a person that has made an unsolicited BONA FIDE written Acquisition Proposal that complies with (S)6.B(b)(i) and (ii), then, and only in such case, the board of directors of Franco-Nevada may, subject to the execution by such person of a confidentiality agreement containing terms at least as favourable to Franco-Nevada as those contained in this agreement and the Confidentiality Agreement, provide such person with access to information regarding Franco-Nevada and its Subsidiaries that then has been provided to Newmont; provided that Franco-Nevada sends a copy of any such confidentiality agreement to Newmont promptly upon its execution and Franco-Nevada provides Newmont with copies of the information provided to such person and immediately provides Newmont with access to all information to which such person was provided access. E. IMPLEMENTATION OF SUPERIOR PROPOSAL. Subject to Newmont's rights under (S)6.F, Franco-Nevada may accept, approve or recommend or enter into an agreement, understanding or arrangement to implement a Superior Proposal in respect of which there has been no breach of (S)6 only if: (a) Franco-Nevada has complied with its obligations under this (S)6 and has provided Newmont with a copy of all documentation (including unexecuted draft documentation) relating to the Superior Proposal; (b) a period (the "RESPONSE PERIOD") of five business days shall have elapsed from the later of the date on which Newmont received written notice from the board of directors of Franco-Nevada it has resolved, subject only to compliance with this (S)6.E, to accept, approve, recommend or enter into a binding agreement to implement the Superior Proposal and the date Newmont received all of the documentation described in (S)6.E(a); and (c) the board of directors of Franco-Nevada has considered any amendment to the terms of this agreement proposed by Newmont (or on its behalf) before the end of the Response Period and determined in good faith, after consultation with its financial advisors and outside legal counsel, that the Superior Proposal is more favourable to Franco-Nevada Shareholders from a financial point of view than the Arrangement and the other Transactions (with the amendments, if any, proposed by Newmont) and that it would be a breach of its fiduciary duties not to enter into a binding agreement in respect of the Superior Proposal. Franco-Nevada shall provide to Newmont the basis for the above determination of the board of directors of Franco-Nevada in reasonable detail (including copies of evidence, if any, of financing of any Superior Proposal) promptly upon the board of directors of Franco-Nevada determining that any Superior Proposal is more favourable to Franco-Nevada Shareholders from a financial point of view than the Arrangement and the other Transactions. If the Response Period would not terminate before the Franco-Nevada Special Meeting, at the request of Newmont, Franco-Nevada shall adjourn the Franco-Nevada Special Meeting to a date that is no less than two and no more than five business days after the Response Period. F. RESPONSE BY NEWMONT. During the Response Period, Newmont shall have the right, but not the obligation, to offer to amend the terms of this agreement. The board of directors of Franco-Nevada shall review any such offer by Newmont to 13 amend this agreement in good faith, in consultation with its financial advisors and outside legal counsel, to determine whether the Acquisition Proposal to which Newmont is responding would be a Superior Proposal when assessed against Newmont's proposal. If the board of directors of Franco-Nevada does not so determine by formal resolution, it shall enter into an amended agreement with Newmont reflecting Newmont's amended proposal. If the board of directors of Franco-Nevada does so determine and Franco-Nevada has paid (or has caused to be paid) to Newmont $100 million in immediately available funds to an account designated by Newmont, Franco-Nevada may approve, recommend, accept or enter into an agreement, understanding or arrangement to implement the Superior Proposal; provided that in no event shall the board of directors of Franco-Nevada take any action that may obligate Franco-Nevada or any other person to seek to interfere with the completion of the Transactions, or impose any "break-up," "hello" or other fees or options or rights to acquire assets or securities, or any other obligations that would survive completion of the Transactions, on Franco-Nevada or any of its Subsidiaries, property or assets. Franco-Nevada shall provide to Newmont the basis for the above determinations of the board of directors of Franco-Nevada in reasonable detail (including copies of evidence, if any, of financing of any Acquisition Proposal) promptly upon the board of directors of Franco-Nevada determining that the Acquisition Proposal remains a Superior Proposal. G. GENERAL. Nothing in this (S)6 shall limit the obligation of Franco-Nevada to convene and hold the Franco-Nevada Special Meeting to consider the Arrangement as contemplated in (S)1.A. Each successive amendment to any Acquisition Proposal shall constitute a new Acquisition Proposal for the purposes of (S)6.E and F and Newmont shall be afforded a new Response Period in respect of each such Acquisition Proposal. 7. TERMINATION AND AMENDMENT OF AGREEMENT A. TERMINATION. The rights and obligations of the parties pursuant to this agreement, other than pursuant to (S)(S)4.G (as it relates to the confidentiality of information), 7, 8, 9 and 10, may be terminated at any time before the Effective Time: (a) by mutual agreement in writing executed by Franco-Nevada and Newmont (for greater certainty, without further action on the part of Franco-Nevada Shareholders if termination occurs after the holding of the Franco-Nevada Special Meeting); (b) by Franco-Nevada, (i) after the Outside Date, if the conditions provided in (S)2.A and B have not been satisfied or waived by Franco-Nevada on or before the Outside Date and provided that Franco-Nevada has not failed to perform any covenant required to be performed by it pursuant to this agreement (or such failure is not Materially Adverse to Newmont and its Subsidiaries, taken as a whole) and no representation or warranty made by Franco-Nevada is untrue in any material respect; or (ii) at any time, if Newmont Shareholders do not cast (or do not cause to be cast) sufficient votes at the Newmont Special Meeting to approve all matters necessary to consummate the transactions contemplated by this agreement; or (iii) at any time, if a person other than Newmont or a related entity of Newmont unconditionally acquires not less than 50.1% of the Normandy shares, calculated on a fully diluted basis; and (c) by Newmont, (i) after the Outside Date, if the conditions provided in (S)2.A and C have not been satisfied or waived by Newmont on or before the Outside Date, provided that Newmont has not failed to perform any covenant required to be performed by it pursuant to this agreement (or such failure is not 14 Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole) and no representation or warranty made by Newmont is untrue in any material respect; or (ii) at any time if the board of directors of Franco-Nevada (A) does not recommend, or withdraws or modifies in a manner adverse to Newmont or refuses to affirm (within 5 days of a written request) its recommendation, that Franco-Nevada Shareholders vote in favour of the Transactions, or (B) approves, recommends, accepts or enters into any agreement, undertaking or arrangement in respect of an Alternative Transaction; or (iii) at any time if the Franco-Nevada Special Meeting is cancelled, adjourned or delayed except as expressly contemplated by this agreement or agreed to by Newmont in writing; (iv) at any time, if Franco-Nevada Shareholders do not cast (or do not cause to be cast) sufficient votes at the Franco-Nevada Special Meeting to permit completion of the Arrangement; or (v) at any time, if a person other than Newmont or an affiliate of Newmont unconditionally acquires not less than 50.1% of the Normandy shares, calculated on a fully diluted basis. Neither Franco-Nevada nor Newmont may seek to rely upon any conditions precedent in (S)2.A, B or C or exercise any termination right arising therefrom, unless forthwith and in any event prior to the filing of the articles of arrangement for acceptance by the Director, Franco-Nevada or Newmont, as the case may be, has delivered a written notice to the other specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which Franco-Nevada or Newmont, as the case may be, are asserting as the basis for the non-fulfilment of the applicable condition precedent or the exercise of the termination right, as the case may be. If any such notice is delivered, provided that Franco-Nevada or Newmont, as the case may be, is proceeding diligently to cure such matter, if such matter is susceptible of being cured (for greater certainty, except by way of disclosure in the case of representations and warranties), the other may not terminate this agreement as a result thereof until the later of the Outside Date and the expiration of a period of 15 days from such notice (the "TERMINATION PERIOD"). If such notice has been delivered prior to the date of the Franco-Nevada Special Meeting, such meeting shall, unless the parties agree otherwise, be postponed or adjourned until the expiry of such period. If such notice has been delivered prior to the making of the application for the Final Order or the filing of the articles of arrangement with the Director, such application and such filing shall be postponed until the expiry of such period. For greater certainty, if such matter is cured within the Termination Period without being Materially Adverse to the curing party and its Subsidiaries, taken as a whole, this agreement may not be terminated as a result of the cured breach. B. AMENDMENT This agreement, including the Plan of Arrangement, may be amended by written agreement of the parties at any time before and after the Franco-Nevada Special Meeting, but not later than the Effective Date and any such amendment may, subject to applicable Law or the Interim Order, without limitation: (a) change the time for performance of any of the obligations or acts of the parties; (b) waive any inaccuracies in or modify any representation contained in this agreement or any document to be delivered pursuant to this agreement; (c) waive compliance with or modify any of the covenants contained in this agreement or waive or modify performance of any of the obligations of the parties; and/or (d) waive compliance with or modify any condition precedent contained in this agreement. 15 C. MUTUAL UNDERSTANDING REGARDING AMENDMENTS If Franco-Nevada or Newmont, as the case may be, shall propose any amendment or amendments to this agreement or the Plan of Arrangement, the other shall consider such amendment and if it and its security holders are not prejudiced by reason of any such amendment, it will cooperate so that such amendment can be effected subject to applicable Law and the rights of the security holders. D. APPROVAL OF AMENDMENTS. Franco-Nevada and Newmont will use all efforts to obtain the approvals of the Court and Franco-Nevada Shareholders in respect of any amendments to this agreement, including the Plan of Arrangement, to the extent required by applicable Law. 8. TERMINATION PAYMENTS A. PAYMENT TO NEWMONT. Provided that Newmont has not failed to perform any covenant required to be performed by it pursuant to this agreement (or such failure is not Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole) and no representation or warranty made by Newmont in Schedule G is untrue in any material respect, if Newmont exercises its right of termination pursuant to: (a) (S)7.A(c)(ii), (iii) or (iv) (where, in the case of (S)7.A(c)(iv), at the time of the Franco-Nevada Special Meeting, a BONA FIDE Acquisition Proposal that has been made has not been withdrawn) Franco-Nevada shall immediately pay (or cause to be paid) to Newmont $100 million in immediately available funds to an account designated by Newmont; or (b) pursuant to (S)7.A(c)(iv) (where, at the time of the Franco-Nevada Special Meeting, any BONA FIDE Acquisition Proposal that has been made has been withdrawn or no such proposal has been made), Franco-Nevada shall immediately pay (or cause to be paid) to Newmont $20 million in immediately available funds to an account designated by Newmont. If, at any time within twelve months after the date of such payment, Franco-Nevada approves, recommends, accepts, enters into or consummates an Acquisition Proposal, Franco-Nevada shall pay (or cause to be paid) to Newmont $80 million in immediately available funds to an account designated by Newmont upon consummation of that Acquisition Proposal. The fees payable pursuant to this (S)8.A shall in no event exceed $100 million. B. PAYMENT TO FRANCO-NEVADA. If, after the Franco-Nevada Shareholder Approval is obtained, Newmont's shareholders do not approve the Transactions (or that part of the Transactions for which their approval is sought), provided that Franco-Nevada has not failed to perform any covenant required to be performed by it pursuant to this agreement (or such failure is not Materially Adverse to Franco-Nevada and its Subsidiaries or Newmont and its Subsidiaries, in each case taken as a whole) and no representation or warranty made by Franco-Nevada is untrue in any material respect, if Franco-Nevada exercises its right of termination pursuant to (S)7.A(b)(ii), Newmont shall pay to Franco-Nevada $10 million in immediately available funds to an account designated by Franco-Nevada, for Franco-Nevada's out-of-pocket expenses. 9. CONFIDENTIALITY AND PUBLIC DISCLOSURE Franco-Nevada and Newmont shall consult with each other as to the general nature of any news releases or public statements with respect to this agreement or the Transactions, and shall use their respective efforts not to issue any news releases or public statements inconsistent with the results of such consultations. Subject to applicable law, each party shall use its efforts to enable the other party to review and comment on all such news 16 releases and public statements prior to the release thereof. The parties agree to issue jointly the news release in the agreed form with respect to this agreement and the Transactions following the execution of this agreement in accordance with (S)1.D. Franco-Nevada and Newmont shall consult with each other in preparing and making any filings and communications in connection with any Regulatory Approvals and in seeking any third-party consents contemplated in (S)4.A. 10. GENERAL A. DEFINITIONS. For the purposes of this agreement, those terms defined in Schedule A and Schedule B shall have the meanings attributed to them in those Schedules. B. ASSIGNMENT. This agreement, including (for greater certainty) the Plan of Arrangement, shall not be assignable by any party except that Newmont may assign any or all of its rights or obligations (without reducing its own obligations under this agreement) to one or more of its Subsidiaries or to New Newmont. C. BINDING EFFECT. This agreement, including (for greater certainty) the Plan of Arrangement, shall be binding upon and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns. No third party shall have any rights under this agreement. D. REPRESENTATIVES. Each of Franco-Nevada and Newmont shall ensure that its and its Subsidiaries' Representatives (other than persons who are insiders only as a result of their shareholdings) are aware of the provisions of this agreement, and each of Franco-Nevada and Newmont shall be responsible for any breach of those provisions by any of those persons, respectively. E. RESPONSIBILITY FOR EXPENSES. Each party to this agreement shall pay its own expenses incurred in connection with this agreement and the completion of the transactions that it contemplates, except as expressly provided in this agreement. F. TIME. Time shall be of the essence of this agreement in each and every matter or thing herein provided. G. NOTICES. (a) Each party shall give prompt notice to the other of: (i) the occurrence or failure to occur of any event that causes, or could reasonably be expected to cause, any representation or warranty on its part contained in this agreement to be untrue or inaccurate or, in the case of Franco-Nevada, that is Materially Adverse to any of Franco-Nevada and its Subsidiaries; and (ii) any material breach of its obligations under this agreement, provided that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this agreement. 17 (b) Each of Franco-Nevada and Newmont shall give prompt notice to the other of any previously undisclosed fact of which it becomes aware after the date of this agreement that is, in the case of Franco-Nevada Materially Adverse to Franco-Nevada or its Subsidiaries, taken as a whole or, in the case of Newmont, is Materially Adverse to the ability of Newmont to perform its obligations under this agreement. (c) Any notice or other communications required or permitted to be given under this agreement shall be sufficiently given if delivered in person, by overnight courier, or if sent by facsimile transmission (provided such transmission is recorded as being transmitted successfully): (i) in the case of Franco-Nevada, to the following address: Franco-Nevada Mining Corporation Limited Attn: Sharon E. Dowdall 20 Eglinton Avenue West Suite 1900, P.O. Box 2005 Toronto, Ontario M4R 1K8 Canada Tel: (416) 480-6491 Fax: (416) 488-6598 (ii) in the case of Newmont, to the following address: Newmont Mining Corporation Attn: Britt D. Banks 1700 Lincoln Street Denver, Colorado 80203 United States of America Tel: (303) 837-5998 Fax: (303) 837-5810 with a copy to: Wachtell, Lipton, Rosen & Katz Attn: David A. Katz 51 West 52nd Street New York, New York 10019 United States of America Tel: (212) 403-1000 Fax: (212) 403-2000 and: Goodmans, LLP Attn: Jonathan Lampe 250 Yonge Street Suite 2400 Toronto, Ontario Canada Tel: (416) 979-2211 Fax: (416) 979-1234 or at such other address as the party to which such notice or other communication is to be given has last notified the party giving the same in the manner provided in this section, and if so given the same shall be deemed to have been received on the date of such delivery or sending. H. GOVERNING LAW. This agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable herein. Each party hereto irrevocably submits to the non-exclusive jurisdiction of the courts of the Province of Ontario with respect to any matter arising hereunder or related hereto. 18 I. INJUNCTIVE RELIEF. The parties agree that the remedy at law for any breach of the provisions of this agreement will be inadequate and that the party that is not in breach, on any application to a court, shall be entitled to temporary and permanent injunctive relief, specific performance and any other equitable relief against the party or parties in breach of the provisions of this agreement. J. CURRENCY. Except as expressly indicated otherwise, all sums of money referred to in this agreement are expressed and shall be payable in United States dollars. K. ACCOUNTING MATTERS. All accounting terms used in this agreement shall have the meanings attributable thereto under GAAP and all determinations of an accounting nature required to be made in respect of Franco-Nevada shall be made in a manner consistent with GAAP. L. KNOWLEDGE. Where a statement is made "TO THE KNOWLEDGE OF" a party or refers to information "KNOWN TO" a party it is based on information available to any of the directors or senior officers of that party after due enquiry. M. ENTIRE AGREEMENT. This agreement, including the Plan of Arrangement, constitutes the entire agreement of the parties with respect to the Transactions, as of the date of this agreement, and shall supersede all agreements, understanding, negotiations and discussions whether oral or written, between the parties with respect to the Transactions on or prior to the date of this agreement, other than the Confidentiality Agreement. N. FURTHER ASSURANCES. Each party shall, from time to time, and at all times hereafter, at the request of the other party hereto, but without further consideration, do all such further acts and execute and deliver all such further documents and instruments as shall be reasonably required in order to fully perform and carry out the terms and intent hereof. The parties shall act in a commercially reasonable manner in exercising their rights and performing their duties under this agreement. O. WAIVERS AND MODIFICATIONS. Franco-Nevada and Newmont may waive or consent to the modification of, in whole or in part, any inaccuracy of any representation or warranty made to it under this agreement or in any document to be delivered pursuant to this agreement and may waive or consent to the modification of any or the obligations contained in this agreement for its benefit or waive or consent to the modification of any of the obligations of the other party. Any waiver or consent to the modification of any of the provisions of this agreement, to be effective, must be in writing executed by the party granting such waiver or consent. P. SCHEDULES. The following are the Schedules to this agreement, which form an integral part hereof: Schedule A -- Definitions Schedule B -- Plan of Arrangement, including Provisions Attaching to the Exchangeable Shares Schedule C -- Mutual Conditions Schedule D -- Conditions in Favour of Franco-Nevada Schedule E -- Conditions in Favour of Newmont Schedule F -- Representations and Warranties of Franco-Nevada Schedule G -- Representations and Warranties of Newmont Schedule H -- Regulatory Approvals Schedule I -- Form of Franco-Nevada Affiliate Letter Schedule J -- Securities Act Rule 144(e) Schedule K -- Support Agreement Schedule L -- Voting and Exchange Trust Agreement
19 Q. COUNTERPARTS. This agreement may be signed in any number of counterparts (by facsimile or otherwise), each of which shall be deemed to be original and all of which, when taken together, shall be deemed to constitute one and the same instrument. It shall not be necessary in making proof of this agreement to produce more than one counterpart. R. DATE FOR ANY ACTION. In the event that any date on which any action is required to be taken under this agreement by either of the parties hereto is not a business day, such actions shall be required to be taken on by succeeding day which is a business day at the place where the action is to be taken. S. INTERPRETATION. When a reference is made in this agreement to a Section, (S), Exhibit or Schedule, such reference shall be to a Section or (S) of, or an Exhibit or Schedule to, this agreement unless otherwise indicated. The table of contents and headings contained in this agreement are for reference purposes only and shall not affect in any way the meaning, construction or interpretation of this agreement. T. SEVERABILITY. If any term or other provision of this agreement is invalid, illegal or incapable of being enforced by any rule or Law, or public policy, all other conditions and provisions of this agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner Materially Adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the Transactions are fulfilled to the maximum extent possible. IN WITNESS WHEREOF, each of the parties hereto has executed this agreement as of the date first written above. FRANCO-NEVADA MINING CORPORATION LIMITED /S/ SEYMOUR SCHULICH By: ___________________________________ Name: Seymour Schulich Title: Chairman and Co-Chief Executive Officer NEWMONT MINING CORPORATION /S/ WAYNE W. MURDY By: ___________________________________ Name: Wayne W. Murdy Title: President and Chief Executive Officer 20 SCHEDULE A DEFINITIONS "ACQUISITION PROPOSAL" means any proposal or offer with respect to any transaction (by purchase, merger, amalgamation, arrangement, business combination, liquidation, dissolution, recapitalization, take-over bid or otherwise) that would result in any person (or group of persons) other than Newmont and its Subsidiaries acquiring (a) assets of Franco-Nevada and/or its Subsidiaries that are, individually or in the aggregate, material to Franco-Nevada or any of its Subsidiaries or (b) 20% or more the equity (or rights thereto) of Franco-Nevada or any of its Subsidiaries. "ACQUISITIONCO" means the corporation incorporated under the laws of Canada that issues the Exchangeable Shares pursuant to the Arrangement and, following the amalgamation of Acquisitionco, Franco-Nevada and others as contemplated in the Plan of Arrangement, the corporation continuing as a result of that amalgamation. "ACT" or the "CBCA" means the CANADA BUSINESS CORPORATIONS ACT, as amended. "AFFILIATE" has the meaning corresponding to "affiliated companies" in the SECURITIES ACT (Ontario), as amended. "AGENCY" means any domestic or foreign court, tribunal, federal, state, provincial or local government or governmental agency or authority or other regulatory authority (including the TSE and NYSE) or administrative agency or commission (including the Ontario Securities Commission and the SEC) or any elected or appointed public official. "ALTERNATIVE TRANSACTION" means any Acquisition Proposal or other transaction that may adversely affect or reduce the likelihood of the successful completion of any of the Transactions. "ARRANGEMENT" means an arrangement under (S)192 of the CBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with this agreement (including the Plan of Arrangement) or made at the direction of the Court. "AUTHORIZED CAPITAL" has the meaning set out in (S)(c) of Schedule F. "BUSINESS DAY" means any day other than a Saturday, Sunday, a public holiday or a day on which commercial banks are not open for business in Toronto, Ontario or New York, New York under applicable Law. "BUSINESS PERSONNEL" has the meaning set out in (S)(o) of Schedule F. "CALLCO" means Newmont or a subsidiary of Newmont to be incorporated under the laws of Nova Scotia or such other jurisdiction as Newmont may determine prior to the Effective Date, and may, in Newmont's sole discretion, be NSULC. "CCRA" means the Canada Customs and Revenue Agency. "CODE" means the United States INTERNAL REVENUE CODE OF 1986, as amended. "COMPANY PROPERTIES" has the meaning set out in (S)(m) of Schedule F. "CONFIDENTIALITY AGREEMENT" means the confidentiality agreement dated September 25, 2001 between Franco-Nevada and Newmont. 21 "CONTRACT" has the meaning set out in (S)(d) of Schedule F. "COURT" means the Superior Court of Justice of the Province of Ontario. "DIRECTOR" means the Director appointed pursuant to (S)260 of the CBCA. "DISCLOSURE STATEMENT" means the statement delivered by Franco-Nevada to Newmont concurrently with the execution of this agreement. "EFFECTIVE DATE" means the date on or before the Outside Date on which the Arrangement becomes effective in accordance with the CBCA and the Final Order. "EFFECTIVE TIME" means the time on the Effective Date that the Arrangement becomes effective in accordance with its terms. "EMPLOYEE BENEFIT PLAN" means any employee benefit plan, program, policy, practices or other arrangement providing benefits to any current or former employee, officer, consultant or director of Franco-Nevada or any of its Subsidiaries or any beneficiary or dependent thereof that is sponsored or maintained by Franco-Nevada or any of its Subsidiaries or to which Franco-Nevada or any of its Subsidiaries contributes or is obligated to contribute or with respect to which Franco-Nevada or any of its Subsidiaries may have liabilities, whether or not written, including any employee welfare benefit plan within the meaning of (S)3(1) of ERISA, any employee pension benefit plan within the meaning of (S)3(2) of ERISA (whether or not such plan is subject to ERISA) and any bonus, incentive, deferred compensation, vacation, stock purchase, stock option, severance, employment, change of control or fringe benefit plan, program or agreement. "EMPLOYMENT AGREEMENT" means a contract, offer, letter or agreement of Franco-Nevada or of any of its Subsidiaries with or addressed to any individual who is rendering or has rendered services thereto as an employee or consultant pursuant to which Franco-Nevada or any of its Subsidiaries has any actual or contingent liability or obligation to provide compensation and/or benefits in consideration for past, present or future services. "ENVIRONMENTAL LAWS" has the meaning set out in (S)(m) of Schedule F. "ERISA" means the UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, as amended, and the rules promulgated thereunder. "EXCHANGE ACT" means the U.S. SECURITIES EXCHANGE ACT OF 1934, as amended. "EXCHANGEABLE SHARES" means the exchangeable shares in the capital of Acquisitionco as more particularly described in Appendix 1 to Schedule B. "EXCHANGE RATIO" means 0.80 Exchangeable Shares or Newmont Shares, as the case may be, to be paid in consideration of each Franco-Nevada Share pursuant to the terms of this agreement. "EXISTING DATA" has the meaning set out in (S)(m) of Schedule F. "FAIRNESS OPINION" means the opinion of the Financial Advisor to the board of directors of Franco-Nevada to the effect that, as of the date of the opinion, the consideration to be received by Franco-Nevada Shareholders pursuant to the Arrangement is fair to Franco-Nevada Shareholders from a financial point of view. "FILED FRANCO-NEVADA PUBLIC DISCLOSURE DOCUMENTS" has the meaning set out in (S)(g) of Schedule F. 22 "FILED NEWMONT PUBLIC DISCLOSURE DOCUMENTS" has the meaning set out in (S)(g) of Schedule G. "FINAL ORDER" means the final order of the Court approving the Arrangement, as such order may be amended by the Court at any time before the Effective Time, or if appealed, unless that appeal is withdrawn or denied, as affirmed or as amended on appeal. "FINANCIAL ADVISOR" means National Bank Financial Inc. "FIRPTA" means the FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT, as amended. "FRANCO-NEVADA" means Franco-Nevada Mining Corporation Limited, a corporation incorporated under the laws of Canada. "FRANCO-NEVADA CIRCULAR" means the notice of special meeting and accompanying management information circular of Franco-Nevada, including all appendices thereto, to be sent to Franco-Nevada Shareholders in connection with the Franco-Nevada Special Meeting. "FRANCO-NEVADA CLASS A WARRANTS" means the Class A Warrants issued by Franco-Nevada expiring September 15, 2003, of which warrants entitling holders to purchase 8,985,344 Franco-Nevada Shares (each warrant being exercisable for 4 Franco-Nevada Shares at a price of $50 per share) are issued and outstanding. "FRANCO-NEVADA CLASS B WARRANTS" means the Class B Warrants issued by Franco-Nevada expiring November 12, 2003, of which warrants entitling holders to purchase 6,571,953 Franco-Nevada Shares (each warrant being exercisable for 3.08 Franco-Nevada Shares at a price of $32.47 per share) are issued and outstanding. "FRANCO-NEVADA DISCLOSURE DOCUMENTS" means the annual report of Franco-Nevada for the year ended March 31, 2001, the renewal annual information form of Franco-Nevada dated March 31, 2001, the notice of annual meeting and information circular of Franco-Nevada dated May 7, 2001 and all interim financial statements and reports to shareholders, news releases and other reports or materials filed by Franco-Nevada with the Ontario Securities Commission through SEDAR on a non-confidential basis since March 31, 2000 pursuant to applicable Law. "FRANCO-NEVADA OPTIONS" means collectively, Franco-Nevada Stock Options, Franco-Nevada Class A Warrants and Franco-Nevada Class B Warrants. "FRANCO-NEVADA OWNED PROPERTIES" has the meaning set out in (S)(m) of Schedule F. "FRANCO-NEVADA PLANS" has the meaning set out in (S)(p) of Schedule F. "FRANCO-NEVADA PROPERTY" has the meaning set out in (S)(z) of Schedule F. "FRANCO-NEVADA RIGHTS" means the rights provided for under the Franco-Nevada Rights Plan. "FRANCO-NEVADA RIGHTS AGREEMENT" means the shareholder rights agreement entered into between Franco-Nevada and Montreal Trust Company of Canada and approved by the Franco-Nevada Shareholders on September 21, 2000. "FRANCO-NEVADA RIGHTS PLAN" means the shareholder rights plan provided for in the Franco-Nevada Rights Agreement. "FRANCO-NEVADA SHAREHOLDER APPROVAL" means approval of the Arrangement by the affirmative vote of 66 2/3% of the votes cast at a special meeting of the Franco-Nevada Shareholders called for such purpose. 23 "FRANCO-NEVADA SHAREHOLDERS" means the holders at the relevant time of Franco-Nevada Shares. "FRANCO-NEVADA SHARES" means the common shares in the capital of Franco-Nevada. "FRANCO-NEVADA SPECIAL MEETING" means the special meeting of Franco-Nevada Shareholders, including any adjournment thereof, to be called and held in accordance with the Interim Order to consider the Arrangement. "FRANCO-NEVADA STOCK OPTIONS" means all options to purchase Franco-Nevada Shares issued pursuant to the Franco-Nevada employee stock option plan, of which options entitling holders to purchase a total of 5,040,356 Franco-Nevada Shares are issued and outstanding. "FRANCO-NEVADA WARRANTS" means, collectively, the Franco-Nevada Class A Warrants and the Franco-Nevada Class B Warrants. "GAAP" or "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means (a) with respect to Franco-Nevada and its Subsidiaries, Canadian generally accepted accounting principles as set forth in the Handbook of the Canadian Institute of Chartered Accountants, as amended from time to time; and (b) with respect to Newmont and its Subsidiaries, United States generally accepted accounting principles. "HOLDCO" has the meaning ascribed in (S)2.4 of the Plan of Arrangement; "HOLDCO SHARES" means all issued and outstanding shares of any particular Holdco; "INCLUDING" means "including without limitation" and "INCLUDES" means "includes without limitation." "INTERIM ORDER" means an interim order of the Court, as may be amended, providing for, among other things, the calling and holding of the Franco-Nevada Special Meeting. "ITA" means the INCOME TAX ACT (Canada), as now in effect and as it may be amended before the Effective Time. "LAW" means all laws, statutes, by-laws, rules, regulations, orders, decrees, ordinances, protocols, codes, guidelines, policies, notices, directions and judgements or other requirements of any Agency. "LIENS" has the meaning set out in (S)(b) of Schedule F. "MATERIAL EMPLOYMENT AGREEMENT" means an Employment Agreement pursuant to which Franco-Nevada or any of its Subsidiaries has or could have an obligation to provide compensation and/or benefits (including, without limitation, severance pay or benefits) in an amount or having a value in excess of $100,000 per year or $250,000 in the aggregate. "MATERIALLY ADVERSE" means, with respect to a person, a fact, circumstance, change, effect, occurrence, event or term that is or could reasonably be expected to (i) materially and adversely affect the financial condition, operations, results of operations, business, assets, capital or prospects of that person, or (ii) prevent such person from performing its obligations under this agreement, the Transactions or any other agreement contemplated hereby or thereby. "MULTIEMPLOYER PLAN" means any "MULTIEMPLOYER PLAN" within the meaning of ((S)4001(a)(3) of ERISA. "MULTIPLE EMPLOYER PLAN" has the meaning set out in (S)(p) of Schedule F. 24 "NEWMONT CIRCULAR" means the Schedule 14A proxy statement of Newmont, including all appendices thereto, to be sent to Newmont Shareholders in connection with the Newmont Special Meeting. "NEWMONT CONVERTIBLE PREFERRED STOCK" means Newmont Preferred Stock designated as "$3.25 Convertible Preferred Stock," par value $5.00 per share. "NEWMONT FILINGS" has the meaning set out in (S)(f) of Schedule F. "NEWMONT PREFERRED STOCK" means the preferred stock, par value $5.00 per share, in the capital of Newmont. "NEWMONT PUBLIC DISCLOSURE DOCUMENTS" has the meaning set out in (S)(e) of Schedule G. "NEWMONT RIGHTS" means the rights to purchase shares of Newmont Series A Preferred Stock. "NEWMONT RIGHTS AGREEMENT" means the Rights Agreement, dated as of August 31, 2000, by and between Newmont and Mellon Investor Services LLC, as amended from time to time. "NEWMONT SERIES A PREFERRED STOCK" means Newmont Preferred Stock designated as the "Series A Junior Participating Preferred Stock," par value $5.00 per share. "NEWMONT SHAREHOLDERS" means the holders at the relevant time of Newmont Shares. "NEWMONT SHARES" means the Original Newmont Shares or the common stock of the corporation into which all or substantially all of the Original Newmont Shares are converted or for which they are exchanged on or before the Effective Date in connection with the transactions contemplated by the Plan of Arrangement, and any other securities into which such shares may be changed. "NEWMONT SPECIAL MEETING" means the meeting of Newmont Shareholders, including any adjournment thereof, to be called and held to consider all actions necessary to consummate the transactions contemplated by this agreement. "NEW NEWMONT" has the meaning set out in (S)4.I. "NORMANDY" means Normandy Mining Limited, a corporation incorporated under the laws of Australia. "NYSE" means The New York Stock Exchange or its successor. "NSULC" means a Nova Scotia Unlimited Liability Company and direct wholly-owned Subsidiary of New Newmont (or direct or indirect wholly-owned Subsidiary of Newmont) to be formed under the laws of the Province of Nova Scotia. "ORIGINAL NEWMONT SHARES" means the common stock, par value $1.60 per share, in the capital of Newmont. "OSC" means the Ontario Securities Commission. "OUTSIDE DATE" means October 31, 2002 or such later date to which each of Franco-Nevada and Newmont may agree in writing. "PBGC" has the meaning set out in (S)(p) of Schedule F. 25 "PERMITS" has the meaning set out in (S)(d) of Schedule F. "PERSON" includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Agency, syndicate or other entity, whether or not having legal status. "PLAN" means any Employee Benefit Plan other than a Multiemployer Plan. "PLAN OF ARRANGEMENT" means the plan of arrangement substantially in the form and content of Schedule B annexed to the Arrangement Agreement, and any amendments or variations thereto made in accordance with (S)7.B of the Arrangement Agreement or (S)6 of the Plan of Arrangement or made at the direction of the Court. "PROXY STATEMENT" has the meaning set out in (S)(d) of Schedule F. "PUBLIC DISCLOSURE DOCUMENTS" has the meaning set out in (S)(e) of Schedule F. "REGULATORY APPROVALS" means those sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the lapse, without objection, of a prescribed time under a statute or regulation that states that a transaction may be implemented if a time lapses following the giving of notice of an objection being made by an Agency), including those set out on Schedule H. "REPRESENTATIVES" of a person means, collectively, the directors, officers, employees, insiders, professional advisors, agents or other authorized representatives of such person. "SAFETY ACTS" has the meaning set out in (S)(x) of Schedule F. "SEC" means the U.S. Securities and Exchange Commission. "SECURITIES ACT" means the U.S. SECURITIES ACT OF 1933, as amended. "SECURITIES EXCHANGE ACT" means the U.S. SECURITIES EXCHANGE ACT OF 1934, as amended. "SUBSIDIARIES" means in respect of a person, each of the corporate entities, partnerships and other entities over which it exercises direction or control. "SUPERIOR PROPOSAL" means a written, unsolicited BONA FIDE Alternative Transaction for the acquisition of all or substantially all of the assets of Franco-Nevada and its Subsidiaries or more than 50% of the Franco-Nevada Shares (calculated on a fully-diluted basis) and in respect of which the board of directors of Franco-Nevada has: (i) received evidence satisfactory to it, and in good faith and after consultation with its financial advisors, that the proposal is fully financed, and (ii) determined by formal resolution, in good faith and after consultation with its financial advisors and outside legal counsel, (A) is reasonably capable of being completed (taking into account all legal, financial, regulatory and other aspects of such proposal and the party making such proposal), and (B) would, if consummated in accordance with its terms, result in a transaction more favourable to Franco-Nevada Shareholders from a financial point of view than the Arrangement and the other Transactions. 26 "TAX" and "TAXES" has the meaning set out in (S)(1) of Schedule F. "TAX RETURN" has the meaning set out in (S)(1) of Schedule F. "TRANSACTIONS" means the Arrangement and the other transactions related to the acquisition of Franco-Nevada by Newmont contemplated by this agreement and the other agreements contemplated hereby. "TSE" means The Toronto Stock Exchange or its successor. "WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as those terms are defined in Part I of Subtitle E of Title IV of ERISA. 27 SCHEDULE B PLAN OF ARRANGEMENT SECTION 1--INTERPRETATION 1.1 DEFINITIONS. In this Plan of Arrangement: "ACQUISITIONCO" means the corporation incorporated under the laws of Canada that issues the Exchangeable Shares pursuant to the Arrangement and, following the amalgamation of Acquisitionco, Franco-Nevada and others as contemplated herein, the corporation continuing as a result of that amalgamation. "AFFILIATE" has the meaning corresponding to "affiliated companies" in the SECURITIES ACT (Ontario), as amended. "AGENCY" means any domestic or foreign court, tribunal, federal, state, provincial or local government or governmental agency or authority or other regulatory authority (including The Toronto Stock Exchange and the New York Stock Exchange) or administrative agency or commission (including the Ontario Securities Commission and the U.S. Securities and Exchange Commission) or any elected or appointed public official. "ANCILLARY RIGHTS" means the voting rights and any other rights of the holders of Exchangeable Shares under the Voting and Exchange Trust Agreement and the Support Agreement. "ARRANGEMENT" means an arrangement under (S)192 of the CBCA on the terms and subject to the conditions set out in this Plan of Arrangement, subject to any amendments or variations thereto made in accordance with this Plan of Arrangement or made at the direction of the Court. "ARRANGEMENT AGREEMENT" means the arrangement agreement made as of the 14/th/ day of November, 2001 between Franco-Nevada and Newmont to which this Schedule B is attached and forms a part. "BUSINESS DAY" means any day other than a Saturday, Sunday, a public holiday or a day on which commercial banks are not open for business in Toronto, Ontario or New York, New York under applicable Law. "CALLCO" means Newmont or a subsidiary of Newmont to be incorporated under the laws of Nova Scotia or such other jurisdiction as Newmont may determine prior to the Effective Date, and may, in Newmont's sole discretion, be NSULC. "CBCA" means the CANADA BUSINESS CORPORATIONS ACT, as amended. "CCRA" means the Canada Customs and Revenue Agency. "COURT" means the Superior Court of Justice of the Province of Ontario. "CURRENT MARKET PRICE" has the meaning set out in the Exchangeable Share Provisions. "DISSENTING SHAREHOLDER" means holders of Franco-Nevada Shares that have exercised Dissent Rights. "DISSENT RIGHTS" has the meaning set out in (S)3.1. 28 "DIVIDEND AMOUNT" means an amount equal to, and in full satisfaction of, all declared and unpaid dividends on an Exchangeable Share held by a holder on any dividend record date which occurred prior to the date of purchase, redemption or other acquisition of such share by Callco or Newmont from such holder. "EFFECTIVE DATE" means the date on or before the Outside Date on which the Arrangement becomes effective in accordance with the CBCA and the Final Order. "EFFECTIVE TIME" means the time on the Effective Date that the Arrangement becomes effective in accordance with its terms. "ELECTION DEADLINE" means 5:00 p.m. (Toronto time) at the place of deposit on the date which is two business days prior to the date of the Franco-Nevada Special Meeting. "ELIGIBLE HOLDER" means a Franco-Nevada Shareholder or Holdco Shareholder who is (i) a resident of Canada for the purposes of the ITA, (ii) a non-resident of Canada and for whom the Franco-Nevada Shares or Holdco Shares, as the case may be, constitute "taxable Canadian property," all for the purposes of the ITA, or (iii) a partnership if one or more of the partners would otherwise be an Eligible Holder. In addition, in order to be an Eligible Holder, a Franco-Nevada Shareholder or Holdco Shareholder, as the case may be, must forward a Tax Election Package to the Transfer Agent on or before the date which is 90 days following the Effective Date. "EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions and conditions attaching to the Exchangeable Shares, which rights, privileges, restrictions and conditions shall be as set out in Appendix 1. "EXCHANGEABLE SHARES" means the exchangeable shares in the capital of Acquisitionco as more particularly described in Appendix 1 to Schedule B. "FINAL ORDER" means the final order of the Court approving the Arrangement, as such order may be amended by the Court at any time before the Effective Time, or if appealed, unless that appeal is withdrawn or denied, as affirmed or as amended on appeal. "FRANCO-NEVADA" means Franco-Nevada Mining Corporation Limited, a corporation incorporated under the laws of Canada. "FRANCO-NEVADA CIRCULAR" means the notice of special meeting and accompanying management information circular of Franco-Nevada, including all appendices thereto, to be sent to Franco-Nevada Shareholders in connection with the Franco-Nevada Special Meeting. "FRANCO-NEVADA CLASS A WARRANTS" means the Class A Warrants issued by Franco-Nevada expiring September 15, 2003, of which warrants entitling holders to purchase 8,985,344 Franco-Nevada Shares (each warrant being exercisable for 4 Franco-Nevada Shares at a price of $50 per share) are issued and outstanding. "FRANCO-NEVADA CLASS B WARRANTS" means the Class B Warrants issued by Franco-Nevada expiring November 12, 2003, of which warrants entitling holders to purchase 6,571,953 Franco-Nevada Shares (each warrant being exercisable for 3.08 Franco-Nevada Shares at a price of $32.47 per share) are issued and outstanding. "FRANCO-NEVADA OPTIONS" means collectively, the Franco-Nevada Stock Options, the Franco-Nevada Class A Warrants and the Franco-Nevada Class B Warrants. 29 "FRANCO-NEVADA SHAREHOLDERS" means the holders at the relevant time of Franco-Nevada Shares. "FRANCO-NEVADA SHARES" means common shares in the capital of Franco-Nevada. "FRANCO-NEVADA SPECIAL MEETING" means the special meeting of Franco-Nevada Shareholders, including any adjournment thereof, to be called and held in accordance with the Interim Order to consider the Arrangement. "FRANCO-NEVADA STOCK OPTIONS" means all options to purchase Franco-Nevada Shares issued pursuant to the Franco-Nevada employee stock option plan, of which options entitling holders to purchase a total of 5,040,356 Franco-Nevada Shares are issued and outstanding. "HOLDCO" has the meaning ascribed in (S)2.4. "HOLDCO LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of transmittal and election form for use by holders of Holdco Shares, in the form accompanying the Franco-Nevada Circular. "HOLDCO SHAREHOLDERS" means the holders at the relevant time of Holdco Shares. "HOLDCO SHARES" means all issued and outstanding shares of any particular Holdco. "INCLUDING" means "including without limitation" and "INCLUDES" means "includes without limitation". "INTERIM ORDER" means an interim order of the Court, as may be amended, providing for, among other things, the calling and holding of the Franco-Nevada Special Meeting. "ITA" means the INCOME TAX ACT (Canada), as now in effect and as it may be amended before the Effective Time. "LAW" means all laws, statutes, by-laws, rules, regulations, orders, decrees, ordinances, protocols, codes, guidelines, policies, notices, directions and judgements or other requirements of any Agency. "LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of transmittal and election form for use by holders of Franco-Nevada Shares (other than Holdcos), in the form accompanying the Franco-Nevada Circular. "LIQUIDATION AMOUNT" has the meaning set out in the Exchangeable Share Provisions. "LIQUIDATION DATE" has the meaning set out in the Exchangeable Share Provisions. "NEWMONT" means Newmont Mining Company, a corporation existing under the laws of Delaware, or its new, direct or indirect, parent corporation that issues the shares into which the Original Newmont Shares are converted or for which they are exchanged on or before the Effective Date in connection with the transactions contemplated by the Plan of Arrangement, or such other corporation that at the time is the issuer of the Newmont Shares. "NEWMONT CIRCULAR" means the proxy statement of Newmont, including all appendices thereto, to be sent to Newmont Shareholders in connection with the Newmont Special Meeting. "NEWMONT SHAREHOLDERS" means the holders at the relevant time of Newmont Shares. "NEWMONT SHARES" means the Original Newmont Shares or the common stock of the corporation into which all or substantially all of the Original Newmont Shares are converted or for which they are exchanged 30 on or before the Effective Date in connection with the transactions contemplated herein, and any other securities into which such shares may be changed. "NEWMONT SPECIAL MEETING" means the meeting of Newmont Shareholders, including any adjournment thereof, to be called and held to consider all actions necessary to consummate the transactions contemplated by the Arrangement Agreement. "NSULC" means a Nova Scotia Unlimited Liability Company and a direct or indirect subsidiary of Newmont to be formed under the laws of the Province of Nova Scotia. "ORIGINAL NEWMONT SHARES" means the common stock, par value U.S.$1.60 per share, in the capital of Newmont. "OUTSIDE DATE" means October 31, 2002 or such later date to which each of Franco-Nevada and Newmont may agree in writing. "PERSON" includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Agency, syndicate or other entity, whether or not having legal status. "PLAN OF ARRANGEMENT" means this plan of arrangement. "REDEMPTION DATE" has the meaning set out in the Exchangeable Share Provisions. "SPECIAL SHARES" means the special shares in the capital of Acquisitionco. "SPECIAL VOTING SHARE" means the special voting share in the capital of Newmont having substantially the rights, privileges, restrictions and conditions described in the Voting and Exchange Trust Agreement. "SUPPORT AGREEMENT" means an agreement to be made among Newmont, Callco and Acquisitionco in connection with this Plan of Arrangement substantially in the form and substance of Schedule K to the Arrangement Agreement. "TAX ELECTION PACKAGE" means two copies of CCRA form T-2057, or, if the Franco-Nevada Shareholder or Holdco Shareholder (as the case may be) is a partnership, two copies of CCRA form T-2058 and two copies of any applicable equivalent provincial or territorial election form, which forms have been duly and properly completed and executed by the Franco-Nevada Shareholder or Holdco Shareholder, as the case may be, in accordance with the rules contained in the ITA or the relevant provincial legislation. At the option of the Franco-Nevada Shareholder or Holdco Shareholder, as the case may be, the Tax Election Package may also contain two copies of an election pursuant to section 57.9 of the CORPORATIONS TAX ACT (Ontario) or analagous provincial or territorial legislation. "TRANSFER AGENT" means Computershare Trust Company of Canada or such other person as may from time to time be appointed by Acquisitionco as the registrar and transfer agent for the Exchangeable Shares. "VOTING AND EXCHANGE TRUST AGREEMENT" means an agreement to be made among Newmont, Acquisitionco and the Trustee (as defined in the Exchangeable Share Provisions) in connection with this Plan of Arrangement substantially in the form of Schedule L to the Arrangement Agreement. 1.2 HEADINGS AND REFERENCES. The division of this Plan of Arrangement into Sections and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this Plan of Arrangement. Unless otherwise specified, references to Sections are to Sections of this Plan of Arrangement. 31 1.3 CURRENCY. Except as expressly indicated otherwise, all sums of money referred to in this Plan of Arrangement are expressed and shall be payable in Canadian dollars. 1.4 TIME. Time shall be of the essence in each and every matter or thing herein provided. Unless otherwise indicated, all times expressed herein are local time at, Toronto, Ontario. SECTION 2--THE ARRANGEMENT 2.1 BINDING EFFECT. Subject to the terms of the Arrangement Agreement, the Arrangement will become effective at, and be binding at and after, the Effective Time, on Franco-Nevada and Newmont and all holders and beneficial holders of Franco-Nevada Shares. 2.2 PRE-ARRANGEMENT TRANSACTIONS. Subject to such amendments, deletions, modifications or additions as Newmont deems necessary or advisable, the following transactions (among others) shall occur prior to the Effective Time but in connection with the Arrangement: (a) a corporation ("NEW NEWMONT") shall be incorporated as a subsidiary of Newmont. An additional new U.S. corporation ("NEWMONT ACQUISITIONCO") shall be incorporated as a subsidiary of New Newmont; and (b) Newmont shall merge with Newmont Acquisitionco, with Newmont being the surviving corporation, upon which merger, all common shares in the capital of Newmont shall be exchanged for common shares in the capital of New Newmont (subject to the rights of dissenting shareholders, if any). 2.3 THE ARRANGEMENT. Commencing at the Effective Time on the Effective Date, subject to the terms and conditions of the Arrangement Agreement, the following shall occur as part of the Arrangement and shall be deemed to occur in the following order without any further act or formality: (a) each Holdco Share shall be acquired, at the option of the holder thereof (provided that the Holdco Shares of a particular Holdco must be all acquired by Acquisitionco or all acquired by NSULC, and shall not be acquired by a combination of Acquisitionco and NSULC), by either Acquisitionco or NSULC (and failing such choice by NSULC) and the holder (or, in the case of (i) below, holders) of such Holdco Shares shall be entitled to receive in consideration therefor, (in the case of (i) below, pro rata to the number of Holdco Shares held by the holder if more than one holder), (i) if the Holdco Shares are sold to Acquisitionco, 0.80 Exchangeable Shares (plus the Ancillary Rights granted in connection therewith) per Franco-Nevada Share owned by the Holdco, or (ii) if the Holdco Shares are sold to NSULC, 0.80 Newmont Shares per Franco-Nevada Share owned by the Holdco; (b) each issued and outstanding Franco-Nevada Share (other than Franco-Nevada Shares owned by Holdcos in respect of which (S)2.3(a) applies) shall be acquired, at the option of the holder thereof, by (except as provided below) either Acquisitionco or NSULC (and failing such choice by NSULC) and each Franco-Nevada Shareholder shall be entitled to receive in consideration therefor, (i) in the case of a Dissenting Shareholder, the fair value of each Franco-Nevada Share in respect of which he or she dissents in accordance and upon compliance with (S)3, and (ii) in the case of every other Franco-Nevada Shareholder, either (A) 0.80 Exchangeable Shares (plus the Ancillary Rights granted in connection therewith) per Franco-Nevada Share acquired by Acquisitionco, or (B) 0.80 Newmont Shares per Franco-Nevada Share acquired by NSULC; (c) Newmont shall issue to and deposit with the Transfer Agent the Special Voting Share, in consideration of the payment to Newmont by Franco-Nevada on behalf of the Franco-Nevada Shareholders 32 of one dollar ($1.00), to be thereafter held of record by the Transfer Agent as trustee for and on behalf of, and for the use and benefit of, the holders of the Exchangeable Shares in accordance with the Voting and Exchange Trust Agreement; (d) in accordance with the terms of the Franco-Nevada Options, each holder of a Franco-Nevada Option shall be entitled to receive upon the subsequent exercise of such holder's Franco-Nevada Option, in accordance with its terms, and shall accept in lieu of the number of Franco-Nevada Shares to which such holder was theretofore entitled upon such exercise but for the same aggregate consideration payable therefor, the aggregate number of Newmont Shares, that such holder would have been entitled to receive as a result of the transactions contemplated by this Plan of Arrangement, if, on the Effective Date, such holder had been the registered holder of the number of Franco-Nevada Shares to which such holder was theretofore entitled upon such exercise. For example, a holder of ten Franco-Nevada Class A Warrants would be entitled to receive new warrants bearing the same terms and conditions except that such warrants would be exercisable for 32 (i.e., 10 x 4 x 0.80) Newmont Shares for a total exercise price of $200. If the foregoing results in the issuance of a fraction of a Newmont Share, then the number of Newmont Shares otherwise issued shall be rounded down to the next whole Newmont Share and the total exercise price for the Newmont Shares will be reduced by the exercise price of such fractional Newmont Share (rounded up to the nearest cent); (e) each issued and outstanding Franco-Nevada Share and Holdco Share acquired by NSULC will be transferred by NSULC to Acquisitionco in consideration for the issuance of 1000 Special Shares; and (f) following the transactions set out in (S)2.3(a) to (S)2.3(e), Acquisitionco, each Holdco and Franco-Nevada shall amalgamate pursuant to the provisions of the CBCA, as more fully described below. 2.4 HOLDCO ALTERNATIVE. Each Franco-Nevada Shareholder shall be entitled to transfer its Franco-Nevada Shares to a newly-incorporated corporation (a "HOLDCO") and sell the Holdco Shares to either NSULC or Acquisitionco as provided in (S)2.3(a) provided that each of the following conditions are satisfied on or prior to and as of the Effective Date: (a) the Franco-Nevada Shareholder is a resident of Canada for the purposes of the ITA; (b) Holdco is incorporated no earlier than 60 days prior to the Effective Date, under the CBCA; (c) the Franco-Nevada Shareholder transfers its Franco-Nevada Shares to Holdco solely in consideration for the Holdco Shares; (d) Holdco has no indebtedness or liabilities and owns no assets other than the Franco-Nevada Shares; (e) the Franco-Nevada Shareholder indemnifies Newmont, Franco-Nevada, NSULC and Acquisitionco for any and all liabilities of Holdco (other than tax liabilities of Holdco that arise solely as a result of the tax status of Newmont, NSULC or Acquisitionco as a "financial institution" for purposes of the ITA) in a form satisfactory to Newmont in its sole discretion, and such Franco-Nevada Shareholder either has net assets as reflected on its audited financial statements for its most recently ended fiscal year which are satisfactory to Newmont or provides Newmont with security satisfactory to Newmont in respect of such shareholder's indemnification obligations as set out above; (f) prior to the Effective Date, Holdco (i) declares one or more stock dividends which (if the Holdco Shares are to be acquired by Acquisitionco) may be in the form of preferred shares of Holdco that are converted into common shares of Holdco prior to the Effective Date, (ii) increases the stated capital of the Holdco Shares or (iii) (if the Holdco Shares are to be acquired by Acquisitionco) declares one or more cash dividends, provided that such cash is used to subscribe, directly or indirectly, for shares of Holdco; (g) on the Effective Date, Holdco has no issued shares outstanding other than the shares described above and such shares will be owned by the Franco-Nevada Shareholder (and, if the Holdco Shares are to be acquired by Acquisitionco, one or more of its wholly-owned subsidiaries); 33 (h) on or prior to the Effective Date, Holdco has never entered into any transaction (or conducted any business or operations or engaged in any activity) other than those described herein; (i) other than as provided (f) above, Holdco will not declare or pay any dividends or other distributions; (j) the Franco-Nevada Shareholder shall prepare and file all income tax returns of its Holdco in respect of the taxation year-end of such Holdco ending immediately prior to the acquisition of such Holdco Shares by Acquisitionco or NSULC, as the case may be, subject to Newmont's right to approve all such returns as to form and substance; (k) the Franco-Nevada Shareholder provides Franco-Nevada and Newmont with copies of all documents necessary to effect the transactions contemplated in this (S)2.4 at least ten days prior to the Effective Date, which documents must be approved by both Franco-Nevada and Newmont in their sole discretion; and (l) the Franco-Nevada Shareholder and its Holdco execute a share purchase agreement, in the form required by Newmont, acting reasonably, providing for, among other things the sale of the Holdco Shares to either NSULC or Acquisitionco, and containing the terms and conditions, among others, set out in (S)2.4(a) - (k). 2.5 AMALGAMATION OF HOLDCOS, ACQUISITIONCO AND FRANCO-NEVADA. Franco-Nevada, Acquisitionco and all of the Holdcos shall amalgamate and continue as one corporation (Franco-Nevada) under the CBCA, with the effect described below unless and until otherwise determined in the manner required by Law or by Acquisitionco, its directors or shareholders, and the following shall apply: (a) NAME. The name of the amalgamated corporation shall be Franco-Nevada Mining Corporation Limited. (b) REGISTERED OFFICE. The registered office of the amalgamated corporation shall be located in the City of Toronto in the Province of Ontario. The address of the registered office of the amalgamated corporation shall be . . (c) BUSINESS AND POWERS. There shall be no restrictions on the business that the amalgamated corporation may carry on or on the powers it may exercise. (d) AUTHORIZED SHARE CAPITAL. The amalgamated corporation shall be authorized to issue an unlimited number of common shares, an unlimited number of Special Shares and an unlimited number of Exchangeable Shares. (e) SHARES. Each common share in the capital of Acquisitionco shall become one common share in the capital of the amalgamated corporation. Each Special Share in the capital of Acquisitionco shall become one Special Share in the capital of the amalgamated corporation. Each Exchangeable Share in the capital of Acquisitionco shall become one Exchangeable Share in the capital of the amalgamated corporation. Each share in the capital of Franco-Nevada, and each share in the capital of each Holdco, shall be cancelled. (f) NUMBER OF DIRECTORS. The number of directors of the amalgamated corporation shall be not less than one (1) and not more than ten (10) as the shareholders of the amalgamated corporation may from time to time determine by special resolution or, if empowered to do so by special resolution, as the directors of the amalgamated corporation may from time to time determine. (g) INITIAL DIRECTORS. The initial directors of the amalgamated corporation shall be . , . , and . . (h) BY-LAWS. The by-laws of the amalgamated corporation shall be the same as the by-laws of Acquisitionco. (i) STATED CAPITAL. For the purposes of the CBCA, there shall be added to the stated capital of the amalgamated corporation in respect of the common shares of the amalgamated corporation, the aggregate 34 amount of the stated capital of the common shares of Acquisitionco. There shall be added to the stated capital of the amalgamated corporation in respect of the Special Shares the aggregate amount of the stated capital of the Special Shares of Acquisitionco. There shall be added to the stated capital of the amalgamated corporation in respect of the Exchangeable Shares of the amalgamated corporation, the aggregate amount of the stated capital of the Exchangeable Shares of Acquisitionco. The amalgamated corporation shall elect in its return of income for its first taxation year to have the provisions of subsection 87(3.1) of the ITA apply. 2.6 ELECTIONS. (a) Each person who, at or prior to the Election Deadline, is a holder of record of Franco-Nevada Shares or Holdco Shares will be entitled, with respect to their shares, to make an election to receive either (i) Exchangeable Shares, or (ii) Newmont Shares, in exchange for such person's Franco-Nevada Shares or Holdco Shares, as the case may be, all on the basis set forth herein (including the provisions of (S)2.3) and in the Letter of Transmittal and Election Form or the Holdco Letter of Transmittal and Election Form, as the case may be. (b) Franco-Nevada Shareholders and Holdco Shareholders who are Eligible Holders, other than any such person who is exempt under the provisions of the ITA from tax under the ITA, who are entitled to receive Exchangeable Shares under the Arrangement shall be entitled to make an income tax election pursuant to subsection 85(1) of the ITA or, if the person is a partnership, subsection 85(2) of the ITA (and in each case, where applicable, the analogous provisions of provincial income tax Law) with respect to the transfer of their Franco-Nevada Shares or their Holdco Shares, as the case may be, to Acquisitionco, by providing the Tax Election Package to the Transfer Agent within 90 days following the Effective Date, duly completed with the details of the number of Franco-Nevada Shares or Holdco Shares transferred and the applicable agreed amounts. Thereafter, subject to the Tax Election Package being correct and complete and complying with the provisions of the ITA (or applicable provincial income or corporate tax Law), the relevant forms will be signed by Acquisitionco and returned to such persons within 30 days after the receipt thereof by the Transfer Agent for filing with the CCRA (or the applicable provincial taxing Agency). Acquisitionco will not be responsible for the proper completion of the Tax Election Package and, except for Acquisitionco's obligation to return duly completed Tax Election Packages which are received by the Transfer Agent within 90 days of the Effective Date, within 30 days after the receipt thereof by the Transfer Agent, Acquisitionco will not be responsible for any taxes, interest or penalties resulting from the failure by a Franco-Nevada Shareholder or by a Holdco Shareholder to properly complete or file the necessary election forms in the form and manner and within the time prescribed by the ITA (or any applicable provincial legislation). In its sole discretion, Acquisitionco may choose to sign and return Tax Election Packages received more than 90 days following the Effective Date, but Acquisitionco will have no obligation to do so. 2.7 SHARE REGISTERS. Every person from whom a Franco-Nevada Share is acquired pursuant to the Arrangement shall be removed from the register of holders of Franco-Nevada Shares at the time of that acquisition pursuant to the Arrangement and shall cease to have any rights in respect of such Franco-Nevada Shares, and the person that acquires those shares pursuant to the Arrangement will be added to that register at that time and shall be entitled as of the Effective Time to all of the rights and privileges attached to the Franco-Nevada Shares. Every person who acquires Exchangeable Shares or Newmont Shares pursuant to the Arrangement shall be added to the register of holders of Exchangeable Shares and Newmont Shares, respectively, and shall be entitled as of the Effective Time to all of the rights and privileges attached to the Exchangeable Shares or Newmont Shares, as the case may be. 2.8 ADJUSTMENTS TO CONSIDERATION. The consideration to be paid pursuant to (S)2.3 shall be adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Newmont Shares or Franco-Nevada Shares, other than stock dividends paid in lieu of ordinary course dividends), reorganization, recapitalization or other like change with respect to Newmont Shares or Franco-Nevada Shares occurring after the date of the Arrangement Agreement and prior to the Effective Time. 35 2.9 AFFILIATE LETTERS. Notwithstanding (S)2.3, no Franco-Nevada Shareholder that is an "affiliate" of Franco-Nevada for the purposes of Rule 145(c) under the U.S. SECURITIES ACT OF 1933, as amended, shall receive the consideration provided in (S)2.3 until Newmont has received written undertakings from that Franco-Nevada Shareholder in the form attached as Schedule J to the Arrangement Agreement. SECTION 3--DISSENT RIGHTS 3.1 Holders of Franco-Nevada Shares may exercise rights of dissent with respect to those Franco-Nevada Shares pursuant to, and, except as expressly indicated to the contrary in this (S)3.1, in the manner set forth in, (S)190 of the CBCA and this (S)3.1 (the "DISSENT RIGHTS") in connection with the Arrangement; provided that, notwithstanding (S)190(5) of the CBCA, the written objection to the resolution approving the Arrangement referred to in (S)190(5) of the CBCA must be received by Franco-Nevada not later than 5:00 p.m. (Toronto time) on the business day before the Special Meeting; and provided further that, notwithstanding the provisions of (S)190 of the CBCA, Franco-Nevada Shareholders who duly exercise Dissent Rights and who: (a) ultimately are determined to be entitled to be paid fair value for their Franco-Nevada Shares, which fair value, notwithstanding anything to the contrary contained in (S)190, shall be determined as of the Effective Time, shall be deemed to have transferred those Franco-Nevada Shares as of the Effective Time at the fair value of the Franco-Nevada Shares determined as of the Effective Time, without any further act or formality and free and clear of all liens and claims, to Acquisitionco; or (b) ultimately are determined not to be entitled, for any reason, to be paid fair value for their Franco-Nevada Shares, shall be deemed to have participated in the Arrangement on the same basis as a non-dissenting holder of Franco-Nevada Shares and shall be deemed to have elected to receive, and shall receive, the consideration provided in (S)2.3(b)(ii)(B), but in no case shall Franco-Nevada, Newmont, the Transfer Agent or any other person be required to recognize such Dissenting Shareholders as holders of Franco-Nevada Shares after the Effective Time, and the names of those Dissenting Shareholders shall be deleted from the register of holders of Franco-Nevada Shares at the Effective Time. SECTION 4--CERTIFICATES AND FRACTIONAL SHARES 4.1 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES. At or promptly after the Effective Time, Acquisitionco shall deposit with the Transfer Agent, for the benefit of the holders of Franco-Nevada Shares and of the Holdco Shareholders, certificates representing that number of whole Exchangeable Shares issuable under the Arrangement. Upon surrender to the Transfer Agent for cancellation of a certificate which immediately prior to the Effective Time represented Franco-Nevada Shares or Holdco Shares that were transferred for Exchangeable Shares under the Arrangement, together with a duly completed Letter of Transmittal and Election Form or a Holdco Letter of Transmittal and Election Form, as the case may be, and such other documents and instruments as the Transfer Agent may reasonably require, the holder of such surrendered certificate shall be entitled to receive, and after the Effective Time the Transfer Agent shall deliver to such person, certificates registered in the name of such person representing that number of Exchangeable Shares which such person is entitled to receive (together with any cash in lieu of Exchangeable Shares pursuant to (S)4.4, less any amounts withheld pursuant to (S)4.7), and any certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of such Franco-Nevada Shares which was not registered in the transfer records of Franco-Nevada, certificates representing the number of Exchangeable Shares issuable in exchange for such Franco-Nevada Shares may be registered in the name of and issued to the transferee if the certificate representing such Franco-Nevada Shares is presented to the Transfer Agent, accompanied by a duly completed Letter of Transmittal and Election Form or Holdco Letter of Transmittal and Election Form, as the case may be, and all documents required to evidence and effect such transfer. Without limiting the provisions of (S)2.7 and 4.6, until surrendered as contemplated by this (S)4.1, each certificate, which immediately prior to the Effective Time represented one or more outstanding Franco-Nevada Shares that, under the Arrangement, were exchanged for 36 Exchangeable Shares pursuant to (S)2.3, shall be deemed at all times after the Effective Time to represent only the right to receive upon such surrender (i) a certificate representing the Exchangeable Shares as contemplated by this (S)4.1, (ii) a cash payment in lieu of any fractional Exchangeable Shares as contemplated under (S)4.4 and (iii) any dividends or distributions with a record date after the Effective Time theretofore paid or payable with respect to the Exchangeable Shares as contemplated by (S)4.3, in each case less any amounts withheld pursuant to (S)4.7. 4.2 EXCHANGE OF CERTIFICATES FOR NEWMONT SHARES. At or promptly after the Effective Time, NSULC shall deposit or cause to be deposited with the Transfer Agent, for the benefit of the holders of Franco-Nevada Shares and of the Holdco Shareholders, certificates representing that whole number of Newmont Shares issuable under the Arrangement. Upon surrender (on or prior to the Election Deadline) to the Transfer Agent for cancellation of a certificate which immediately prior to the Effective Time represented outstanding Franco-Nevada Shares or Holdco Shares that were transferred for Newmont Shares under the Arrangement, together with a duly completed Letter of Transmittal and Election Form or a Holdco Letter of Transmittal and Election Form, as the case may be, and such other documents and instruments as the Transfer Agent may reasonably require, the holder of such surrendered certificate shall be entitled to receive, and after the Effective Time the Transfer Agent shall deliver to such person, a certificate representing that number of Newmont Shares which such person is entitled to receive (together with any dividends or distributions with respect thereto pursuant to (S)4.3 and any cash in lieu of fractional Newmont Shares pursuant to (S)4.4, less any amounts withheld pursuant to (S)4.7), and any certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of such Franco-Nevada Shares which was not registered in the transfer records of Franco-Nevada, the certificates representing the number of Newmont Shares issuable in exchange for such Franco-Nevada Shares may be registered in the name of and issued to the transferee if the certificate representing such Franco-Nevada Shares is presented to the Transfer Agent on or prior to the Election Deadline, accompanied by a duly completed Letter of Transmittal and Election Form or Holdco Letter of Transmittal and Election Form, as the case may be, and all documents required to evidence and effect such transfer. Without limiting the provisions of (S)2.7 and 4.6, until surrendered as contemplated by this (S)4.1, each certificate, which immediately prior to the Effective Time represented one or more outstanding Franco-Nevada Shares that, under the Arrangement, were exchanged for Newmont Shares pursuant to (S)2.3, shall be deemed at all times after the Effective Time to represent only the right to receive upon such surrender (i) a certificate representing the Newmont Shares as contemplated by this (S)4.1, (ii) a cash payment in lieu of any fractional Newmont Shares as contemplated under (S)4.4 and (iii) any dividends or distributions with a record date after the Effective Time theretofore paid or payable with respect to the Newmont Shares as contemplated by (S)4.3, in each case less any amounts withheld pursuant to (S)4.7. 4.3 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No dividends or other distributions paid, declared or made with respect to (i) Exchangeable Shares or (ii) Newmont Shares, in each case with a record date after the Effective Time, shall be paid to the holder of any unsurrendered certificate which immediately prior to the Effective Time represented outstanding Franco-Nevada Shares or outstanding Holdco Shares or in lieu of fractional Exchangeable Shares or Newmont Shares shall be paid to any such person pursuant to (S)4.4, unless and until such person shall have complied with the provisions of (S)4.1 or 4.2, as applicable. Subject to applicable Law, and to the provisions of (S)4.6, at the time such person shall have complied with the provisions of such sections (or, in the case of clause (z) below, at the appropriate payment date), there shall be paid to such person, without interest (x) the amount of any cash payable in lieu of a fractional Exchangeable Share or Newmont Share to which such person is entitled pursuant to (S)4.4, (y) the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to the Exchangeable Share or the Newmont Share, as the case may be, to which such person is entitled pursuant hereto, and (z) on the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to the date of compliance by such person with the provisions of (S)4.1 or 4.2 and a payment date subsequent to the date of such compliance and payable with respect to such Exchangeable Shares or Newmont Shares, as the case may be. 4.4 NO FRACTIONAL SHARES. No certificates representing fractional Exchangeable Shares or fractional Newmont Shares shall be issued upon compliance with the provisions of (S)4.1 or 4.2 and no dividend, stock split 37 or other change in the capital structure of Acquisitionco or Newmont shall relate to any such fractional security and such fractional interests shall not entitle the owner thereof to exercise any rights as a security holder of Acquisitionco or Newmont. Acquisitionco will make arrangements with the Transfer Agent for the issuance to the Transfer Agent of Newmont Shares in respect of any such fractional security and shall instruct the Transfer Agent to aggregate and, as soon as is reasonably practicable following the Effective Date, sell such Newmont Shares. The proceeds (net of any commissions in respect of the sale but excluding any deduction for the fees of the Transfer Agent, which fees shall be paid by Acquisitionco) (the "Net Proceeds") received by the Transfer Agent from such sale shall, as soon as is reasonably practicable be distributed to each person otherwise entitled to a fractional interest in an Exchangeable Share or Newmont Share on a PRO RATA basis. The Transfer Agent shall be entitled to retain such brokers and advisors as may be necessary in connection with the sale of the Newmont Shares and shall not be liable for any action taken or omitted to be taken in connection with the sale of the Newmont Shares or the distribution of the Net Proceeds referred to in this (S)4.4. Under no circumstances shall interest accrue or be paid by Acquisitionco, Newmont or the Transfer Agent to persons depositing Franco-Nevada Shares pursuant to (S)2.3, regardless of any delay in selling the Newmont Shares or making any delivery or payment in respect of such shares. 4.5 LOST CERTIFICATES. In the event any certificate which immediately prior to the Effective Time represented one or more outstanding Franco-Nevada Shares that were exchanged pursuant to (S)2.3 shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such certificate to be lost, stolen or destroyed, the Transfer Agent will issue in exchange for such lost, stolen or destroyed certificate, any cash and/or certificates representing Exchangeable Shares or Newmont Shares (and any dividends or distributions with respect thereto) deliverable in accordance with (S)2.3 and such holder's Letter of Transmittal and Election Form or Holdco Letter of Transmittal and Election Form, as the case may be. When authorizing such payment in exchange for any lost, stolen or destroyed certificate, the person to whom cash (if any) and/or certificates representing Exchangeable Shares or Newmont Shares are to be issued shall, as a condition precedent to the issuance thereof, give a bond satisfactory to Franco-Nevada, Acquisitionco, Newmont and their respective transfer agents in such amount as Franco-Nevada, Acquisitionco or Newmont may direct or otherwise indemnify Franco-Nevada, Acquisitionco and Newmont in a manner satisfactory to Franco-Nevada, Acquisitionco and Newmont against any claim that may be made against Franco-Nevada, Acquisitionco or Newmont with respect to the certificate alleged to have been lost, stolen or destroyed. 4.6 EXTINCTION OF RIGHTS. Any certificate which immediately prior to the Effective Time represented outstanding Franco-Nevada Shares that were exchanged pursuant to (S)2.3 that is not deposited with all other instruments required by (S)4.1 or 4.2 on or prior to the date of the notice referred to in (S)7(2) of the Exchangeable Share Provisions shall cease to represent a claim or interest of any kind or nature as a securityholder of Acquisitionco or Newmont. On such date, the cash and/or Exchangeable Shares and/or Newmont Shares to which the former holder of the certificate referred to in the preceding sentence was ultimately entitled shall be deemed to have been surrendered for no consideration to Acquisitionco. None of Newmont, Franco-Nevada, Acquisitionco, Callco or the Transfer Agent shall be liable to any person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. 4.7 WITHHOLDING RIGHTS. Franco-Nevada, Acquisitionco, Callco, Newmont and the Transfer Agent shall be entitled to deduct and withhold from any dividend or consideration otherwise payable to any holder of Franco-Nevada Shares, Holdco Shares, Newmont Shares or Exchangeable Shares such amounts as Franco-Nevada, Acquisitionco, Callco, Newmont or the Transfer Agent is required to deduct and withhold with respect to such payment under the ITA, United States tax laws or any other applicable Law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the holder of the securities in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing Agency. 38 SECTION 5--RIGHTS OF CALLCO TO ACQUIRE EXCHANGEABLE SHARES 5.1 CALLCO LIQUIDATION CALL RIGHT (a) Callco shall have the overriding right (the "LIQUIDATION CALL RIGHT"), in the event of and notwithstanding the proposed liquidation, dissolution or winding-up of Acquisitionco or any other distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs, pursuant to (S)5 of the Exchangeable Share Provisions, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is Newmont or an affiliate of Newmont) on the Liquidation Date all but not less than all of the Exchangeable Shares held by each such holder on payment by Callco of an amount per share (the "LIQUIDATION CALL PURCHASE PRICE") equal to the Current Market Price of Newmont Shares on the last business day prior to the Liquidation Date, which shall be satisfied in full by Callco delivering or causing to be delivered to such holder one Newmont Share, which on issue will be admitted to listing and traded on the NYSE (subject to official notice of issuance), plus any Dividend Amount. In the event of the exercise of the Liquidation Call Right by Callco, each holder shall be obligated to sell all the Exchangeable Shares held by the holder to Callco on the Liquidation Date on payment by Callco to the holder of the Liquidation Call Purchase Price for each such share, and Acquisitionco shall have no obligation to pay any Liquidation Amount or Dividend Amount to the holders of such shares so purchased by Callco. (b) To exercise the Liquidation Call Right, Callco must notify the Transfer Agent, as agent for the holders of Exchangeable Shares and Acquisitionco of Callco's intention to exercise such right at least 45 days before the Liquidation Date in the case of a voluntary liquidation, dissolution or winding-up of Acquisitionco or any other voluntary distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs, and at least five business days before the Liquidation Date in the case of an involuntary liquidation, dissolution or winding-up of Acquisitionco or any other involuntary distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs. The Transfer Agent will notify the holders of Exchangeable Shares as to whether or not Callco has exercised the Liquidation Call Right forthwith after the expiry of the period during which the same may be exercised by Callco. If Callco exercises the Liquidation Call Right, then on the Liquidation Date, Callco will purchase and the holders will sell all of the Exchangeable Shares then outstanding for a price per share equal to the Liquidation Call Purchase Price. (c) For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Liquidation Call Right, Callco shall deposit or cause to be deposited with the Transfer Agent, on or before the Liquidation Date, certificates representing the aggregate number of Newmont Shares which Callco shall deliver or cause to be delivered pursuant to (S)5.1(a) and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco representing the aggregate Dividend Amount, if any, in payment of the total Liquidation Call Purchase Price, in each case less any amounts withheld pursuant to (S)4.7. Provided that Callco has complied with the immediately preceding sentence, on and after the Liquidation Date the holders of the Exchangeable Shares shall cease to be holders of the Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive their proportionate part of the aggregate Liquidation Call Purchase Price, unless payment of the aggregate Liquidation Call Purchase Price for the Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the following provisions of this (S)5.1(c), in which case the rights of the holders shall remain unaffected until the aggregate Liquidation Call Purchase Price has been paid in the manner herein provided. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and articles of Acquisitionco and such additional documents, instruments and payments as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of Callco shall transfer to such holder, the Newmont Shares to which such holder is entitled and as soon as reasonably practicable thereafter the Transfer Agent shall deliver to such holder certificates representing the Newmont Shares to which the 39 holder is entitled and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco representing the Dividend Amount, if any, and when received by the Transfer Agent, all dividends and other distributions with respect to such Newmont Shares with a record date after the Liquidation Date and before the date of the transfer of such Newmont Shares to such holder, less any amounts withheld pursuant to (S)4.7. If Callco does not exercise the Liquidation Call Right in the manner described above, on the Liquidation Date, the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the Liquidation Amount otherwise payable by Acquisitionco in connection with the liquidation, dissolution or winding-up of Acquisitionco or any distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs pursuant to Article (S)5 of the Exchangeable Share Provisions. 5.2 CALLCO REDEMPTION CALL RIGHT In addition to Callco's rights contained in the Exchangeable Share Provisions, including the Retraction Call Right (as defined in the Exchangeable Share Provisions), Callco shall have the following rights in respect of the Exchangeable Shares: (a) Callco shall have the overriding right (the "REDEMPTION CALL RIGHT"), notwithstanding the proposed redemption of the Exchangeable Shares by Acquisitionco pursuant to Article (S)7 of the Exchangeable Share Provisions, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is Newmont or an affiliate of Newmont) on the Redemption Date all but not less than all of the Exchangeable Shares held by each such holder on payment by Callco to each holder of an amount per Exchangeable Share (the "REDEMPTION CALL PURCHASE PRICE") equal to the Current Market Price of a Newmont Share on the last business day prior to the Redemption Date, which shall be satisfied in full by Callco delivering or causing to be delivered to such holder one Newmont Share, which on issue will be admitted to listing and traded on the NYSE (subject to official notice of issuance), plus any Dividend Amount. In the event of the exercise of the Redemption Call Right by Callco, each holder shall be obligated to sell all the Exchangeable Shares held by the holder to Callco on the Redemption Date on payment by Callco to the holder of the Redemption Call Purchase Price for each such share, and Acquisitionco shall have no obligation to redeem, or to pay any Dividend Amount in respect of, such shares so purchased by Callco. (b) To exercise the Redemption Call Right, Callco must notify the Transfer Agent, as agent for the holders of Exchangeable Shares and Acquisitionco of Callco's intention to exercise such right at least 60 days before the Redemption Date, except in the case of a redemption occurring as a result of a Newmont Control Transaction (as defined in the Exchangeable Share Provisions) or an Exchangeable Share Voting Event, in which case Callco shall so notify the Transfer Agent and Acquisitionco on or before the Redemption Date. The Transfer Agent will notify the holders of the Exchangeable Shares as to whether or not Callco has exercised the Redemption Call Right forthwith after the expiry of the period during which the same may be exercised by Callco. If Callco exercises the Redemption Call Right, on the Redemption Date Callco will purchase and the holders will sell all of the Exchangeable Shares then outstanding for a price per share equal to the Redemption Call Purchase Price. (c) For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Redemption Call Right, Callco shall deposit or cause to be deposited with the Transfer Agent, on or before the Redemption Date, certificates representing the aggregate number of Newmont Shares which Callco shall deliver or cause to be delivered pursuant to (S)5.2(a) and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco representing the aggregate Dividend Amount, if any, in payment of the aggregate Redemption Call Purchase Price, in each case less any amounts withheld pursuant to (S)4.7. Provided that Callco has complied with the immediately preceding sentence, on and after the Redemption Date the holders of the Exchangeable Shares shall cease to be holders of the Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive their proportionate part of the aggregate Redemption Call Purchase Price, unless payment of the aggregate Redemption Call Purchase Price for the Exchangeable Shares shall not be made upon presentation and surrender of share certificates in 40 accordance with the following provisions of this (S)5.2(c), in which case the rights of the holders shall remain unaffected until the aggregate Redemption Call Purchase Price has been paid in the manner herein provided. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and articles of Acquisitionco and such additional documents, instruments and payments as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of Callco shall transfer to such holder, the Newmont Shares to which such holder is entitled and as soon as reasonably practicable thereafter the Transfer Agent shall deliver to such holder certificates representing the Newmont Shares to which the holder is entitled and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco representing the Dividend Amount, if any, and when received by the Transfer Agent, all dividends and other distributions with respect to such Newmont Shares with a record date after the Redemption Date and before the date of the transfer of such Newmont Shares to such holder, less any amounts withheld pursuant to (S)4.7. If Callco does not exercise the Redemption Call Right in the manner described above, on the Redemption Date the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the redemption price otherwise payable by Acquisitionco in connection with the redemption of the Exchangeable Shares pursuant to Article (S)7 of the Exchangeable Share Provisions. 5.3 CONTINUATION OF RIGHTS. For greater certainty, the amalgamation of Acquisitionco pursuant to (S)2.3(f) shall not impair the Liquidation Call Right or the Redemption Call Right, which thereafter may continue to be exercised by Callco. 5.4 DESIGNATION. Notwithstanding anything to the contrary contained in this (S)5, the Voting and Exchange Trust Agreement, the Support Agreement or in the provisions attaching to the Exchangeable Shares, the Liquidation Call Right and/or the Redemption Call Right may be exercised by, and the related obligations thereunder performed by, Newmont, Newmont Subco or an affiliate of Newmont, either alone or together with Callco. 5.5 SHAREHOLDER RIGHTS PLAN. The rights ("NEWMONT RIGHTS") issued under Newmont's shareholder rights plan, dated as of August 31, 2000, shall attach to all Newmont Shares issued in exchange for Franco-Nevada Shares and Holdco Shares, as the case may be, pursuant to the Arrangement and upon the exercise of Franco-Nevada Options. The Newmont Rights shall not attach to any Exchangeable Shares issued under the Plan of Arrangement. SECTION 6--AMENDMENT 6.1 PLAN OF ARRANGEMENT AMENDMENT. (a) Franco-Nevada reserves the right to amend, modify and/or supplement this Plan of Arrangement at any time and from time to time (with the prior written consent of Newmont), provided that any such amendment, modification and/or supplement must be contained in a written document that is filed with the Court and, if made after the Special Meeting, approved by the Court and communicated to shareholders in the manner required by the Court (if so required). (b) Any amendment, modification or supplement to this Plan of Arrangement may be proposed by Franco-Nevada (with the prior written consent of Newmont) at any time before or at the Special Meeting with or without any other prior notice or communication and, if so proposed and accepted by the persons voting at the Special Meeting, shall become part of this Plan of Arrangement for all purposes. (c) Any amendment, modification or supplement to this Plan of Arrangement that is approved or directed by the Court following the Special Meeting shall be effective only if it is consented to in writing by Franco-Nevada and Newmont and, if required by the Court, is consented to by Franco-Nevada Shareholders voting in the manner directed by the Court. 41 (d) Any amendment, modification or supplement to this Plan of Arrangement may be made prior to the Effective Date unilaterally by Newmont, provided that it concerns a matter which, in the reasonable opinion of Newmont, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse to the financial or economic interests of any Franco-Nevada Shareholder. SECTION 7--FURTHER ASSURANCES Franco-Nevada and Newmont shall make, do and execute, or cause to be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by either of them to document or evidence any of the transactions or events set out in this Plan of Arrangement. SECTION 8--NOTICE Any notice to be given by Newmont pursuant to the Arrangement will be deemed to have been properly given if it is mailed by first class mail, postage prepaid, to registered Franco-Nevada Shareholders at their addresses as shown on the register of Shareholders maintained by Franco-Nevada and will be deemed to have been received on the first day following the date of mailing which is a business day. The provisions of this Plan of Arrangement, the Arrangement Agreement, the Letter of Transmittal and Election Form and the Holdco Letter of Transmittal and Election Form apply notwithstanding any accidental omission to give notice to any one or more Shareholders and notwithstanding any interruption of mail services in Canada or, the United States or elsewhere following mailing. In the event of any interruption of mail service following mailing, Newmont intends to make reasonable efforts to disseminate any notice by other means, such as publication. Except as otherwise required or permitted by law, if post offices in Canada are not open for the deposit of mail, any notice which Newmont or the Transfer Agent may give or cause to be given under the Arrangement will be deemed to have been properly given and to have been received by Franco-Nevada Shareholders if (i) it is given to the TSE for dissemination or (ii) it is published once in the National Edition of The Globe and Mail and in the daily newspapers of general circulation in each of the French and English languages in the City of Montreal, provided that if the National Edition of The Globe and Mail is not being generally circulated, publication thereof will be made in The Financial Post or any other daily newspaper of general circulation published in the City of Toronto. Notwithstanding the provisions of the Arrangement Agreement, this Plan of Arrangement, the Letter of Transmittal and Election Form and the Holdco Letter of Transmittal and Election Form, certificates for Newmont Shares and cheques in payment for Newmont Shares exchanged pursuant to the Arrangement need not be mailed if Newmont determines that delivery thereof by mail may be delayed. Persons entitled to cheques and certificates which are not mailed for the foregoing reason may take delivery thereof at the office of the Transfer Agent to which the deposited certificates for Newmont Shares in respect of which the cheque and certificates being issued were deposited, upon application to the Transfer Agent, until such time as Newmont has determined that delivery by mail will not longer be delayed. Newmont will provide notice of any such determination not to mail made hereunder as soon as reasonably practicable after the making of such determination and in accordance with this (S)8. Notwithstanding the provisions of the Arrangement Agreement, this Plan of Arrangement, the Letter of Transmittal and Election Form and the Holdco Letter of Transmittal and Election Form, the deposit of cheques and certificates with the Transfer Agent in such circumstances will constitute delivery to the persons entitled thereto and the Newmont Shares will be deemed to have been paid for immediately upon such deposit. 42 APPENDIX 1 TO THE PLAN OF ARRANGEMENT PROVISIONS ATTACHING TO THE EXCHANGEABLE SHARES The Exchangeable Shares shall have the following rights, privileges, restrictions and conditions: 1. INTERPRETATION (1) For the purposes of these share provisions: "ACQUISITIONCO" means the corporation incorporated under the laws of Canada that issues the Exchangeable Shares pursuant to the Arrangement and, following the amalgamation of Acquisitionco, Franco-Nevada and others as contemplated in the Plan of Arrangement, the corporation continuing as a result of that amalgamation. "AFFILIATE" has the meaning corresponding to "affiliated companies" in the SECURITIES ACT (Ontario), as amended. "AGENCY" means any domestic or foreign court, tribunal, federal, state, provincial or local government or governmental agency or authority or other regulatory authority (including the TSE and the NYSE) or administrative agency or commission (including the Ontario Securities Commission and the SEC) or any elected or appointed public official. "AGENT" means any chartered bank or trust company in Canada selected by Acquisitionco for the purposes of holding some or all of the Liquidation Amount or Redemption Price in accordance with (S)5 or (S)7, respectively. "ARRANGEMENT" means an arrangement under (S)192 of the CBCA on the terms and subject to the conditions set out in the Plan of Arrangement, to which plan these share provisions are attached as Appendix 1. "ARRANGEMENT AGREEMENT" means the arrangement agreement made as of the 14/th/ day of November, 2001 between Franco-Nevada and Newmont, as further amended, supplemented and/or restated in accordance with its terms, providing for, among other things, the Arrangement. "BOARD OF DIRECTORS" means the board of directors of Acquisitionco. "BUSINESS DAY" means any day other than a Saturday, Sunday, a public holiday or a day on which commercial banks are not open for business in Toronto, Ontario or New York, New York under applicable law. "CALLCO" means a (i) subsidiary of Newmont existing under the laws of Nova Scotia or such other jurisdiction as Newmont may determine prior to the Effective Date, or (ii) in Newmont's sole discretion, such other company which exercises the Liquidation Call Right or Redemption Call Right, including Newmont or NSULC. "CALLCO CALL NOTICE" has the meaning ascribed thereto in (S)6(3) of these share provisions. "CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a currency other than Canadian dollars (the "FOREIGN CURRENCY AMOUNT") at any date the product obtained by multiplying: (a) the Foreign Currency Amount; by (b) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such spot exchange rate on such date for such foreign currency expressed in Canadian dollars as may be deemed by the Board of Directors to be appropriate for such purpose, which determination shall be conclusive and binding. 43 "CBCA" means the CANADA BUSINESS CORPORATIONS ACT, as amended. "COMMON SHARES" means the common shares in the capital of Acquisitionco. "CURRENT MARKET PRICE" means, in respect of a Newmont Share on any date, the quotient obtained by dividing (a) the aggregate of the Daily Value of Trades for each day during the period of 20 consecutive trading days ending not more than three trading days before such date; by (b) the aggregate volume of Newmont Shares used to calculate such Daily Value of Trades. "DAILY VALUE OF TRADES" means, in respect of the Newmont Shares on any trading day, the Canadian Dollar Equivalent of the product of (a) the volume weighted average price of Newmont Shares on the NYSE (or, if the Newmont Shares are not listed on the NYSE, on such other stock exchange or automated quotation system on which the Newmont Shares are listed or quoted, as the case may be, as may be selected by the board of directors of Newmont for such purpose) on such date, as determined by Bloomberg L.P. or other reputable, third party information source selected by the board of directors of Newmont; and (b) the aggregate volume of Newmont Shares traded on such day on the NYSE or such other stock exchange or automated quotation system and used to calculate such volume weighted average price; provided that any such selections by the board of directors of Newmont shall be conclusive and binding. "DIRECTOR" means the Director appointed pursuant to (S)260 of the CBCA. "DIVIDEND AMOUNT" means an amount equal to, and in full satisfaction of, all declared and unpaid dividends on an Exchangeable Share held by a holder on any dividend record date which occurred prior to the date of purchase, redemption or other acquisition of such share by Callco or Newmont from such holder pursuant to (S)5.1, (S)6.1 or (S)7.1. "EFFECTIVE DATE" means the date on or before the Outside Date on which the Arrangement becomes effective in accordance with the CBCA and the Final Order. "EXCHANGEABLE SHARES" means the non-voting, exchangeable shares in the capital of Acquisitionco, having the rights, privileges, restrictions and conditions set forth herein. "EXCHANGEABLE SHARE VOTING EVENT" means any matter in respect of which holders of Exchangeable Shares are entitled to vote as shareholders of Acquisitionco and in respect of which the Board of Directors determines in good faith that after giving effect to such matter the economic equivalence of the Exchangeable Shares and the Newmont Shares is maintained for the holders of Exchangeable Shares (other than Newmont and its affiliates). "EXEMPT EXCHANGEABLE SHARE VOTING EVENT" means an Exchangeable Share Voting Event in order to approve or disapprove, as applicable, any change to, or in the rights of the holders of, the Exchangeable Shares, where the approval or disapproval, as applicable, of such change would be required to maintain the economic equivalence of the Exchangeable Shares and the Newmont Shares. "FRANCO-NEVADA" means Franco-Nevada Mining Corporation Limited, a corporation incorporated under the laws of Canada. "HOLDER" means, when used with reference to the Exchangeable Shares, a holder of Exchangeable Shares shown from time to time in the register maintained by or on behalf of Acquisitionco in respect of the Exchangeable Shares. "INCLUDING" means "including without limitation" and "INCLUDES" means "includes without limitation". "LIQUIDATION AMOUNT" has the meaning ascribed thereto in (S)5(1) of these share provisions. "LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in the Voting and Exchange Trust Agreement. 44 "LIQUIDATION DATE" has the meaning ascribed thereto in (S)5(1) of these share provisions. "NEWMONT" means Newmont Mining Company, a corporation existing under the laws of Delaware, or its new, direct or indirect, parent corporation that issues the shares into which the Original Newmont Shares are converted or for which they are exchanged on or before the Effective Date in connection with the transactions contemplated by the Plan of Arrangement, or such other corporation that at the time is the issuer of the Newmont Shares. "NEWMONT CONTROL TRANSACTION" means any merger, amalgamation, arrangement, take-over bid or tender offer, material sale of shares or rights or interests therein or thereto or similar transactions involving Newmont, or any proposal to do so. "NEWMONT DIVIDEND DECLARATION DATE" means the date on which the board of directors of Newmont declares any dividend or other distribution on the Newmont Shares that would require a corresponding payment to be made in respect of the Exchangeable Shares. "NEWMONT SHARES" means the Original Newmont Shares or the common stock of the corporation into which all or substantially all of the Original Newmont Shares are converted or for which they are exchanged on or before the Effective Date in connection with the transactions contemplated by the Plan of Arrangement, and any other securities into which such shares may be changed. "NYSE" means the New York Stock Exchange or its successor. "ORIGINAL NEWMONT SHARES" means the common stock, par value U.S.$1.60 per share, in the capital of Newmont. "PERSON" includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Agency, syndicate or other entity, whether or not having legal status. "PLAN OF ARRANGEMENT" means the plan of arrangement substantially in the form and content of Schedule B annexed to the Arrangement Agreement, and any amendments or variations thereto made in accordance with (S)7.B of the Arrangement Agreement or (S)6 of the Plan of Arrangement or made at the direction of the Court. "PURCHASE PRICE" has the meaning ascribed thereto in (S)6(3) of these share provisions. "REDEMPTION CALL PURCHASE PRICE" has the meaning ascribed thereto in the Plan of Arrangement. "REDEMPTION CALL RIGHT" has the meaning ascribed thereto in the Plan of Arrangement. "REDEMPTION DATE" means the date, if any, established by the Board of Directors for the redemption by Acquisitionco of all but not less than all of the outstanding Exchangeable Shares pursuant to (S)7 of these share provisions, which date shall be no earlier than the seventh anniversary of the date on which Exchangeable Shares first are issued, unless: (a) there are fewer than 1,000,000 Exchangeable Shares outstanding (other than Exchangeable Shares held by Newmont and its affiliates, and as such number of shares may be adjusted as deemed appropriate by the Board of Directors to give effect to any subdivision or consolidation of or stock dividend on the Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable Shares or securities exchangeable for or convertible into Exchangeable Shares, any issue or distribution of other securities or rights or evidences of indebtedness or assets, or any other capital reorganization or other transaction affecting the Exchangeable Shares), in which case the Board of Directors may accelerate such redemption date to such date prior to the seventh anniversary of the date on which Exchangeable Shares first are issued as they may determine, upon at least 60 days' prior written notice to the holders of the Exchangeable Shares and the Trustee; 45 (b) a Newmont Control Transaction occurs, in which case, provided that the Board of Directors determines, in good faith and in its sole discretion, that it is not reasonably practicable to substantially replicate the terms and conditions of the Exchangeable Shares in connection with such Newmont Control Transaction and that the redemption of all but not less than all of the outstanding Exchangeable Shares is necessary to enable the completion of such Newmont Control Transaction in accordance with its terms, the Board of Directors may accelerate such redemption date to such date prior to the seventh anniversary of the date on which Exchangeable Shares first are issued as it may determine, upon such number of days' prior written notice to the holders of the Exchangeable Shares and the Trustee as the Board of Directors may determine to be reasonably practicable in such circumstances; (c) an Exchangeable Share Voting Event that is not an Exempt Exchangeable Share Voting Event is proposed and (i) the holders of the Exchangeable Shares fail to take the necessary action, at a meeting or other vote of holders of Exchangeable Shares, to approve or disapprove, as applicable, the Exchangeable Share Voting Event or the holders of the Exchangeable Shares do take the necessary action but, in connection therewith, the holders of more than 2% of the outstanding Exchangeable Shares (other than those held by Newmont and its affiliates) exercise rights of dissent under the CBCA, and (ii) the Board of Directors determines in good faith that it is not reasonably practicable to accomplish the business purpose (which business purpose must be bona fide and not for the primary purpose of causing the occurrence of the Redemption Date) intended by the Exchangeable Share Voting Event in a commercially reasonable manner that does not result in an Exchangeable Share Voting Event, in which case the Redemption Date shall be the business day following the day on which the later of the events described in (i) and (ii) above occur; (d) an Exempt Exchangeable Share Voting Event is proposed and holders of the Exchangeable Shares fail to take the necessary action at a meeting or other vote of holders of Exchangeable Shares to approve or disapprove, as applicable, the Exempt Exchangeable Share Voting Event in which case the Redemption Date shall be the business day following the day on which the holders of the Exchangeable Shares failed to take such action; or (e) the Canadian tax legislation is amended and becomes effective such that substantially all Canadian resident holders of Exchangeable Shares may exchange their Exchangeable Shares for Newmont Shares on a tax deferred basis for Canadian income tax purposes, in which case the Board of Directors may accelerate such Redemption Date to such date prior to the seventh anniversary of the date on which Exchangeable Shares are issued as they may determine, upon at least 60 days' prior written notice to the holders of the Exchangeable Shares and the Trustee, provided, however, that the accidental failure or omission to give any notice of redemption under clauses (a), (b), (c), (d) or (e) above to any of the holders of Exchangeable Shares shall not affect the validity of any such redemption. "REDEMPTION PRICE" has the meaning ascribed thereto in (S)7(1) of these share provisions. "RETRACTED SHARES" has the meaning ascribed thereto in (S)6(1)(a) of these share provisions. "RETRACTION CALL RIGHT" has the meaning ascribed thereto in (S)6(1)(c) of these share provisions. "RETRACTION DATE" has the meaning ascribed thereto in (S)6(1)(b) of these share provisions. "RETRACTION PRICE" has the meaning ascribed thereto in (S)6(1) of these share provisions. "RETRACTION REQUEST" has the meaning ascribed thereto in (S)6(1) of these share provisions. "SEC" means the U.S. Securities and Exchange Commission. "SECURITIES ACT" means the SECURITIES ACT (Ontario) and the rules, regulations and policies made thereunder, as amended. "SPECIAL SHARES" means the special shares in the capital of Acquisitionco. 46 "SUPPORT AGREEMENT" means the agreement made between Newmont, Callco and Acquisitionco substantially in the form and content of Schedule K to the Arrangement Agreement. "TRANSFER AGENT" means Computershare Trust Company of Canada or such other person as may from time to time be appointed by Acquisitionco as the registrar and transfer agent for the Exchangeable Shares. "TRUSTEE" means the trustee chosen by Newmont to act as trustee under the Voting and Exchange Trust Agreement, being a corporation organized and existing under the laws of Canada or any Province thereof and authorized to carry on the business of a trust company in all the provinces of Canada, and any successor trustee appointed under the Voting and Exchange Trust Agreement. "TSE" means The Toronto Stock Exchange or its successor. "VOTING AND EXCHANGE TRUST AGREEMENT" means an agreement to be made among Newmont, Acquisitionco and the Trustee in connection with the Plan of Arrangement substantially in the form of Schedule L to the Arrangement Agreement. 2. RANKING OF EXCHANGEABLE SHARES The Exchangeable Shares shall be entitled to a preference over the Common Shares, the Special Shares and any other shares ranking junior to the Exchangeable Shares with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding-up of Acquisitionco, whether voluntary or involuntary, or any other distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs. 3. DIVIDENDS (1) A holder of an Exchangeable Share shall be entitled to receive and the Board of Directors shall, subject to applicable law, on each Newmont Dividend Declaration Date, declare a dividend on each Exchangeable Share: (a) in the case of a cash dividend declared on the Newmont Shares, in an amount in cash for each Exchangeable Share equal to the Canadian Dollar Equivalent of the cash dividend declared on each Newmont Share on the Newmont Dividend Declaration Date; (b) in the case of a stock dividend declared on the Newmont Shares to be paid in Newmont Shares, by the issue or transfer by Acquisitionco of such number of Exchangeable Shares for each Exchangeable Share as is equal to the number of Newmont Shares to be paid on each Newmont Share unless in lieu of such stock dividend Acquisitionco elects to effect a corresponding and contemporaneous and economically equivalent (as determined by the Board of Directors in accordance with (S)3.5 hereof) subdivision of the outstanding Exchangeable Shares; or (c) in the case of a dividend declared on the Newmont Shares in property other than cash or Newmont Shares, in such type and amount of property for each Exchangeable Share as is the same as or economically equivalent (to be determined by the Board of Directors as contemplated by (S)3(5) hereof) to the type and amount of property declared as a dividend on each Newmont Share. Such dividends shall be paid out of money, assets or property of Acquisitionco properly applicable to the payment of dividends, or out of authorized but unissued shares of Acquisitionco, as applicable. The holders of Exchangeable Shares shall not be entitled to any dividends other than or in excess of the dividends referred to in this (S)3(1). (2) Cheques of Acquisitionco payable at par at any branch of the bankers of Acquisitionco shall be issued in respect of any cash dividends contemplated by (S)3(1)(a) hereof and the sending of such cheque to each holder of an Exchangeable Share shall satisfy the cash dividend represented thereby unless the cheque is not paid on presentation. Certificates registered in the name of the registered holder of Exchangeable Shares shall be issued 47 or transferred in respect of any stock dividends contemplated by (S)3(1)(b) hereof and the sending of such a certificate to each holder of an Exchangeable Share shall satisfy the stock dividend represented thereby. Such other type and amount of property in respect of any dividends contemplated by (S)3(1)(c) hereof shall be issued, distributed or transferred by Acquisitionco in such manner as it shall determine and the issuance, distribution or transfer thereof by Acquisitionco to each holder of an Exchangeable Share shall satisfy the dividend represented thereby. No holder of an Exchangeable Share shall be entitled to recover by action or other legal process against Acquisitionco any dividend that is represented by a cheque that has not been duly presented to Acquisitionco's bankers for payment or that otherwise remains unclaimed for a period of six years from the date on which such dividend was payable. (3) The record date for the determination of the holders of Exchangeable Shares entitled to receive payment of, and the payment date for, any dividend declared on the Exchangeable Shares under (S)3(1) hereof shall be the same dates as the record date and payment date, respectively, for the corresponding dividend declared on the Newmont Shares. The record date for the determination of the holders of Exchangeable Shares entitled to receive Exchangeable Shares in connection with any subdivision, redivision or change of the Exchangeable Shares under (S)3(1)(b) hereof and the effective date of such subdivision shall be the same dates as the record and payment date, respectively, for the corresponding stock dividend declared on the Newmont Shares. (4) If on any payment date for any dividends declared on the Exchangeable Shares under (S)3(1) hereof the dividends are not paid in full on all of the Exchangeable Shares then outstanding, any such dividends that remain unpaid shall be paid on a subsequent date or dates determined by the Board of Directors on which Acquisitionco shall have sufficient moneys, assets or property properly applicable to the payment of such dividends. (5) The Board of Directors shall determine, in good faith and in its sole discretion, economic equivalence for the purposes of these share provisions, including (S)3(1) hereof, and each such determination shall be conclusive and binding on Acquisitionco and its shareholders. In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors to be relevant, be considered by the Board of Directors: (a) in the case of any stock dividend or other distribution payable in Newmont Shares, the number of such shares issued in proportion to the number of Newmont Shares previously outstanding; (b) in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase Newmont Shares (or securities exchangeable for or convertible into or carrying rights to acquire Newmont Shares), the relationship between the exercise price of each such right, option or warrant and the Current Market Price; (c) in the case of the issuance or distribution of any other form of property (including any shares or securities of Newmont of any class other than Newmont Shares, any rights, options or warrants other than those referred to in (S)3(5)(b) hereof, any evidences of indebtedness of Newmont or any assets of Newmont), the relationship between the fair market value (as determined by the Board of Directors in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding Newmont Share and the Current Market Price of a Newmont Share; and (d) in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of Newmont Shares as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares). 4. CERTAIN RESTRICTIONS So long as any of the Exchangeable Shares are outstanding, Acquisitionco shall not at any time without, but may at any time with, the approval of the holders of the Exchangeable Shares given as specified in (S)10(2) of these share provisions: (a) pay any dividends on the Common Shares, Special Shares or any other shares ranking junior to the Exchangeable Shares, other than stock dividends payable in Common Shares, Special Shares or any such other shares ranking junior to the Exchangeable Shares, as the case may be; 48 (b) redeem or purchase or make any capital distribution in respect of Common Shares, Special Shares or any other shares ranking junior to the Exchangeable Shares; (c) redeem or purchase any other shares of Acquisitionco ranking equally with the Exchangeable Shares with respect to the payment of dividends or the distribution of assets in the event of the liquidation, dissolution or winding-up of Acquisitionco, whether voluntary or involuntary, or any other distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs; or (d) issue any Exchangeable Shares or any other shares of Acquisitionco ranking equally with the Exchangeable Shares other than by way of stock dividends to the holders of such Exchangeable Shares; and (e) issue any shares of Acquisitionco ranking superior to the Exchangeable Shares. The restrictions in (S)4(a), (b), (c) and (d) hereof shall not apply if: (i) all dividends on the outstanding Exchangeable Shares corresponding to dividends declared and paid to date on the Newmont Shares shall have been declared and paid on the Exchangeable Shares; and (ii) in the case of an issuance of any Exchangeable Shares as contemplated in (S)4(d), the members of the board of directors of Newmont that vote on the matter shall have unanimously approved the issuance of the additional Exchangeable Shares. 5. DISTRIBUTION ON LIQUIDATION (1) In the event of the liquidation, dissolution or winding-up of Acquisitionco or any other distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs, subject to the exercise by Callco of the Liquidation Call Right, a holder of Exchangeable Shares shall be entitled, subject to applicable law, to receive from the assets of Acquisitionco in respect of each Exchangeable Share held by such holder on the effective date (the "LIQUIDATION DATE") of such liquidation, dissolution, winding-up or other distribution, before any distribution of any part of the assets of Acquisitionco among the holders of the Common Shares, Special Shares or any other shares ranking junior to the Exchangeable Shares, an amount per share (the "LIQUIDATION AMOUNT") equal to the Current Market Price of a Newmont Share on the last business day prior to the Liquidation Date, which shall be satisfied in full by Acquisitionco delivering or causing to be delivered to such holder one Newmont Share, plus an amount equal the Dividend Amount. (2) On or promptly after the Liquidation Date, and provided the Liquidation Call Right has not been exercised by Callco, Acquisitionco shall pay or cause to be paid to the holders of the Exchangeable Shares the Liquidation Amount for each such Exchangeable Share upon presentation and surrender of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and the Articles of Acquisitionco and such additional documents, instruments and payments as the Transfer Agent and Acquisitionco may reasonably require, at the registered office of Acquisitionco or at any office of the Transfer Agent as may be specified by Acquisitionco by notice to the holders of the Exchangeable Shares. Payment of the Liquidation Amount for such Exchangeable Shares shall be made by transferring or causing to be transferred to each holder the Newmont Shares to which such holder is entitled and by delivering to such holder, at the address of such holder recorded in the register of shareholders of Acquisitionco for the Exchangeable Shares or by holding for pick-up by such holder at the registered office of Acquisitionco or at any office of the Transfer Agent as may be specified by Acquisitionco by notice to the holders of Exchangeable Shares, on behalf of Acquisitionco certificates representing Newmont Shares (which shares shall be fully paid and shall be free and clear of any lien, claim or encumbrance) and a cheque of Acquisitionco payable at par at any branch of the bankers of Acquisitionco in respect of the Dividend Amount, in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom. On and after the Liquidation Date, the holders of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive the Liquidation Amount, unless payment of the total Liquidation Amount for such Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the foregoing 49 provisions, in which case the rights of the holders shall remain unaffected until the Liquidation Amount has been paid in the manner hereinbefore provided. Acquisitionco shall have the right at any time after the Liquidation Date to transfer or cause to be issued or transferred to, and deposited with, the Agent the Liquidation Amount in respect of the Exchangeable Shares represented by certificates that have not at the Liquidation Date been surrendered by the holders thereof, such Liquidation Amount to be held by the Agent as trustee for and on behalf of, and for the use and benefit of, such holders. Upon such deposit being made, the rights of a holder of Exchangeable Shares after such deposit shall be limited to receiving its proportionate part of the Liquidation Amount for such Exchangeable Shares so deposited, without interest, and when received by the Agent, all dividends and other distributions with respect to the Newmont Shares to which such holder is entitled with a record date after the date of such deposit and before the date of transfer of such Newmont Shares to such holder (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom) against presentation and surrender of the certificates for the Exchangeable Shares held by them in accordance with the foregoing provisions. (3) After Acquisitionco has satisfied its obligations to pay the holders of the Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant to (S)5(1) of these share provisions, such holders shall not be entitled to share in any further distribution of the assets of Acquisitionco. 6. RETRACTION OF EXCHANGEABLE SHARES BY HOLDER (1) A holder of Exchangeable Shares shall be entitled at any time, subject to the exercise by Callco of the Retraction Call Right and otherwise upon compliance with, and subject to, the provisions of this (S)6, to require Acquisitionco to redeem any or all of the Exchangeable Shares registered in the name of such holder for an amount per share equal to the Current Market Price of a Newmont Share on the last business day prior to the Retraction Date (the "RETRACTION PRICE"), which shall be satisfied in full by Acquisitionco delivering or causing to be delivered to such holder one Newmont Share (which on issue will be admitted to listing and trading by the NYSE (subject to official notice of issuance)) for each Exchangeable Share presented and surrendered by the holder together with, on the designated payment date therefor, the Dividend Amount. To effect such redemption, the holder shall present and surrender at the registered office of Acquisitionco or at any office of the Transfer Agent as may be specified by Acquisitionco by notice to the holders of Exchangeable Shares the certificate or certificates representing the Exchangeable Shares which the holder desires to have Acquisitionco redeem, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and the Articles of Acquisitionco and such additional documents, instruments and payments as the Transfer Agent and Acquisitionco may reasonably require, and together with a duly executed statement (the "RETRACTION REQUEST") in the form of Schedule A hereto or in such other form as may be acceptable to Acquisitionco: (a) specifying that the holder desires to have all or any number specified therein of the Exchangeable Shares represented by such certificate or certificates (the "RETRACTED SHARES") redeemed by Acquisitionco; (b) stating the business day on which the holder desires to have Acquisitionco redeem the Retracted Shares (the "RETRACTION DATE"), provided that the Retraction Date shall be not less than 10 business days nor more than 15 business days after the date on which the Retraction Request is received by Acquisitionco and further provided that, in the event that no such business day is specified by the holder in the Retraction Request, the Retraction Date shall be deemed to be the 15th business day after the date on which the Retraction Request is received by Acquisitionco and subject also to (S)6(8); and (c) acknowledging the overriding right (the "RETRACTION CALL RIGHT") of Callco to purchase all but not less than all the Retracted Shares directly from the holder and that the Retraction Request shall be deemed to be a revocable offer by the holder to sell the Retracted Shares to Callco in accordance with the Retraction Call Right on the terms and conditions set out in (S)6(3) hereof. 50 (2) Provided that Callco has not exercised the Retraction Call Right, upon receipt by Acquisitionco or the Transfer Agent in the manner specified in (S)6(1) of a certificate or certificates representing the number of Retracted Shares, together with a Retraction Request, and provided that the Retraction Request is not revoked by the holder in the manner specified in (S)6(7), Acquisitionco shall redeem the Retracted Shares effective at the close of business on the Retraction Date and shall transfer or cause to be issued or transferred to such holder the Newmont Shares to which such holder is entitled and shall comply with (S)6(4) hereof. If only a part of the Exchangeable Shares represented by any certificate is redeemed (or purchased by Callco pursuant to the Retraction Call Right), a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of Acquisitionco. (3) Subject to the provisions of this (S)6, upon receipt by Acquisitionco of a Retraction Request, Acquisitionco shall immediately notify Callco thereof and shall provide to Callco a copy of the Retraction Request. In order to exercise the Retraction Call Right, Callco must notify Acquisitionco of its determination to do so (the "CALLCO CALL NOTICE") within five business days of notification to Callco by Acquisitionco of the receipt by Acquisitionco of the Retraction Request. If Callco does not so notify Acquisitionco within such five business day period, Acquisitionco will notify the holder as soon as possible thereafter that Callco will not exercise the Retraction Call Right. If Callco delivers the Callco Call Notice within such five business day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in (S)6(7), the Retraction Request shall thereupon be considered only to be an offer by the holder to sell the Retracted Shares to Callco in accordance with the Retraction Call Right. In such event, Acquisitionco shall not redeem the Retracted Shares and Callco shall purchase from such holder and such holder shall sell to Callco on the Retraction Date the Retracted Shares for a purchase price (the "PURCHASE PRICE") per share equal to the Retraction Price per share, plus, on the designated payment date therefor, to the extent not paid by Acquisitionco on the designated payment date therefor, any Dividend Amount. To the extent that Callco pays the Dividend Amount in respect of the Retracted Shares, Acquisitionco shall no longer be obligated to pay any declared and unpaid dividends on such Retracted Shares. For the purpose of completing a purchase pursuant to the Retraction Call Right, on the Retraction Date, Callco shall transfer or cause to be issued or transferred to the holder of the Retracted Shares the Newmont Shares to which such holder is entitled. Provided that Callco has complied with the immediately preceding sentence and (S)6(4) hereof, the closing of the purchase and sale of the Retracted Shares pursuant to the Retraction Call Right shall be deemed to have occurred as at the close of business on the Retraction Date and, for greater certainty, no redemption by Acquisitionco of such Retracted Shares shall take place on the Retraction Date. In the event that Callco does not deliver a Callco Call Notice within such five business day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in (S)6(7), Acquisitionco shall redeem the Retracted Shares on the Retraction Date and in the manner otherwise contemplated in this (S)6. (4) Acquisitionco or Callco, as the case may be, shall deliver or cause the Transfer Agent to deliver to the relevant holder, at the address of the holder recorded in the register of shareholders of Acquisitionco for the Exchangeable Shares or at the address specified in the holder's Retraction Request or by holding for pick-up by the holder at the registered office of Acquisitionco or at any office of the Transfer Agent as may be specified by Acquisitionco by notice to the holders of Exchangeable Shares, certificates representing the Newmont Shares (which shares shall be fully paid and shall be free and clear of any lien, claim or encumbrance and which on issue will be admitted to listing and trading by the NYSE (subject to official notice of issuance)) registered in the name of the holder or in such other name as the holder may request, and, if applicable and on or before the payment date therefor, a cheque payable at par at any branch of the bankers of Acquisitionco or Callco, as applicable, representing the aggregate Dividend Amount, in payment of the Retraction Price or the Purchase Price, as the case may be, in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom, and such delivery of such certificates and cheques on behalf of Acquisitionco or by Callco, as the case may be, or by the Transfer Agent shall be deemed to be payment of and shall satisfy and discharge all liability for the Retraction Price or Purchase Price, as the case may be, to the extent that the same is represented by such share certificates and cheques (plus any tax deducted and withheld therefrom and remitted to the proper tax authority). 51 (5) On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive the Retraction Price or Purchase Price, as the case may be, unless upon presentation and surrender of certificates in accordance with the foregoing provisions, payment of the Retraction Price or the Purchase Price, as the case may be, shall not be made as provided in (S)6(4) hereof, in which case the rights of such holder shall remain unaffected until the Retraction Price or the Purchase Price, as the case may be, has been paid in the manner hereinbefore provided. On and after the close of business on the Retraction Date, provided that presentation and surrender of certificates and payment of the Retraction Price or the Purchase Price, as the case may be, has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so redeemed by Acquisitionco or purchased by Callco shall thereafter be a holder of the Newmont Shares delivered to it. (6) Notwithstanding any other provision of this (S)6, Acquisitionco shall not be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent that such redemption of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law. If Acquisitionco believes that on any Retraction Date it would not be permitted by any of such provisions to redeem the Retracted Shares tendered for redemption on such date, and provided that Callco shall not have exercised the Retraction Call Right with respect to the Retracted Shares, Acquisitionco shall only be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent of the maximum number that may be so redeemed (rounded down to a whole number of shares) as would not be contrary to such provisions and shall notify the holder and the Trustee at least two business days prior to the Retraction Date as to the number of Retracted Shares which will not be redeemed by Acquisitionco. In any case in which the redemption by Acquisitionco of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law, Acquisitionco shall redeem Retracted Shares in accordance with (S)6(2) of these share provisions on a pro rata basis and shall issue to each holder of Retracted Shares a new certificate, at the expense of Acquisitionco, representing the Retracted Shares not redeemed by Acquisitionco pursuant to (S)6(2) hereof. If Acquisitionco would otherwise be obligated to redeem the Retracted Shares pursuant to (S)6(2) of these share provisions but is not obligated to do so as a result of solvency requirements or other provisions of applicable law, Newmont shall, subject to applicable law, purchase such Retracted Shares from such holder on the Retraction Date or as soon as practicable thereafter on payment by Newmont to such holder of the Purchase Price for each such Retracted Share, all as more specifically provided for in the Voting and Exchange Trust Agreement. (7) A holder of Retracted Shares may, by notice in writing given by the holder to Acquisitionco before the close of business on the business day immediately preceding the Retraction Date, withdraw its Retraction Request, in which event such Retraction Request shall be null and void and, for greater certainty, the revocable offer constituted by the Retraction Request to sell the Retracted Shares to Callco shall be deemed to have been revoked. (8) Notwithstanding any other provision of this (S)6, if: (a) exercise of the rights of the holders of the Exchangeable Shares, or any of them, to require Acquisitionco to redeem any Exchangeable Shares pursuant to this (S)6 on any Retraction Date would require listing particulars or any similar document to be issued in order to obtain the approval of NYSE to the listing and trading (subject to official notice of issuance) of, the Newmont Shares that would be required to be delivered to such holders of Exchangeable Shares in connection with the exercise of such rights; and (b) as a result of (a) above, it would not be practicable (notwithstanding the reasonable endeavours of Newmont) to obtain such approvals in time to enable all or any of such Newmont Shares to be admitted to listing and trading by NYSE (subject to official notice of issuance) when so delivered, that Retraction Date shall, notwithstanding any other date specified or otherwise deemed to be specified in any relevant Retraction Request, be deemed for all purposes to be the earlier of (i) the second business day immediately following the date the approvals referred to in (S)6(8)(a) are obtained, and (ii) the date which is 30 business days after the date on which the relevant Retraction Request is received by Acquisitionco, and references in these share provisions to such Retraction Date shall be construed accordingly. 52 7. REDEMPTION OF EXCHANGEABLE SHARES BY ACQUISITIONCO (1) Subject to applicable law, and provided Callco has not exercised the Redemption Call Right, Acquisitionco shall on the Redemption Date redeem all but not less than all of the then outstanding Exchangeable Shares for an amount per share (the "REDEMPTION PRICE") equal to the Current Market Price of a Newmont Share on the last business day prior to the Redemption Date, which shall be satisfied in full by Acquisitionco causing to be delivered to each holder of Exchangeable Shares one Newmont Share for each Exchangeable Share held by such holder, together with an amount equal to the Dividend Amount. (2) In any case of a redemption of Exchangeable Shares under this (S)7, Acquisitionco shall, at least 60 days before the Redemption Date (other than a Redemption Date established in connection with a Newmont Control Transaction or an Exchangeable Share Voting Event), send or cause to be sent to each holder of Exchangeable Shares a notice in writing of the redemption by Acquisitionco or the purchase by Callco under the Redemption Call Right, as the case may be, of the Exchangeable Shares held by such holder. In the case of a Redemption Date established in connection with a Newmont Control Transaction or an Exchangeable Share Voting Event, the written notice of the redemption by Acquisitionco or the purchase by Callco under the Redemption Call Right will be sent on or before the Redemption Date, on as many days prior written notice as may be determined by the Board of Directors to be reasonably practicable in the circumstances. In any such case, such notice shall set out the formula for determining the Redemption Price or the Redemption Call Purchase Price, as the case may be, the Redemption Date and, if applicable, particulars of the Redemption Call Right. (3) On or after the Redemption Date and provided that the Redemption Call Right has not been exercised by Callco, Acquisitionco shall pay or cause to be paid to the holders of the Exchangeable Shares to be redeemed the Redemption Price for each such Exchangeable Share, upon presentation and surrender at the registered office of Acquisitionco or at any office of the Transfer Agent as may be specified by Acquisitionco in such notice of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and the Articles of Acquisitionco and such additional documents, instruments and payments as the Transfer Agent and Acquisitionco may reasonably require. Payment of the Redemption Price for such Exchangeable Shares shall be made by transferring or causing to be issued or transferred to each holder the Newmont Shares to which such holder is entitled and by delivering to such holder, at the address of such holder recorded in the register of shareholders of Acquisitionco for the Exchangeable Shares or by holding for pick-up by such holder at the registered office of Acquisitionco or at any office of the Transfer Agent as may be specified by Acquisitionco in such notice, on behalf of Acquisitionco certificates representing Newmont Shares (which shares shall be fully paid and shall be free and clear of any lien, claim or encumbrance), and, if applicable, a cheque of Acquisitionco payable at par at any branch of the bankers of Acquisitionco in payment of the Dividend Amount, in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom. On and after the Redemption Date, the holders of the Exchangeable Shares called for redemption shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive the Redemption Price, unless payment of the Redemption Price for such Exchangeable Shares shall not be made upon presentation and surrender of certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the Redemption Price has been paid in the manner hereinbefore provided. Acquisitionco shall have the right at any time after the sending of notice of its intention to redeem the Exchangeable Shares as aforesaid to transfer or cause to be issued or transferred to, and deposited with, the Agent named in such notice the Redemption Price for the Exchangeable Shares (except as otherwise provided in this (S)7(3) so called for redemption, or of such of the said Exchangeable Shares represented by certificates that have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, less any amounts withheld on account of tax required to be deducted and withheld therefrom, such aggregate Redemption Price to be held by the Agent as trustee for and on behalf of, and for the use and benefit of, such holders. Upon the later of such deposit being made and the Redemption Date, the Exchangeable Shares in respect whereof such deposit shall have been made shall be redeemed and the rights of the holders thereof after such deposit or Redemption 53 Date, as the case may be, shall be limited to receiving their proportionate part of the aggregate Redemption Price for such Exchangeable Shares, without interest, and when received by the Agent, all dividends and other distributions with respect to the Newmont Shares to which such holder is entitled with a record date after the later of the date of such deposit and the Redemption Date and before the date of transfer of such Newmont Shares to such holder (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom), against presentation and surrender of the certificates for the Exchangeable Shares held by them in accordance with the foregoing provisions. 8. PURCHASE FOR CANCELLATION Subject to applicable law, Acquisitionco may at any time and from time to time purchase for cancellation all or any part of the Exchangeable Shares. 9. VOTING RIGHTS Except as required by applicable law and by (S)10 hereof, the holders of the Exchangeable Shares shall not be entitled as such to receive notice of or to attend any meeting of the shareholders of Acquisitionco or to vote at any such meeting. Without limiting the generality of the foregoing, the holders of the Exchangeable Shares shall not have class votes except as required by applicable law. 10. AMENDMENT AND APPROVAL (1) The rights, privileges, restrictions and conditions attaching to the Exchangeable Shares may be added to, changed or removed only with the approval of the holders of the Exchangeable Shares given as hereinafter specified. (2) Any approval given by the holders of the Exchangeable Shares to add to, change or remove any right, privilege, restriction or condition attaching to the Exchangeable Shares or any other matter requiring the approval or consent of the holders of the Exchangeable Shares in accordance with applicable law shall be deemed to have been sufficiently given if it shall have been given in accordance with applicable law, subject to a minimum requirement that such approval be evidenced by resolution passed by not less than two-thirds of the votes cast on such resolution at a meeting of holders of Exchangeable Shares duly called and held at which the holders of at least 10% of the outstanding Exchangeable Shares at that time are present or represented by proxy; provided that if at any such meeting the holders of at least 10% of the outstanding Exchangeable Shares at that time are not present or represented by proxy within one-half hour after the time appointed for such meeting, then the meeting shall be adjourned to such date not less than five days thereafter and to such time and place as may be designated by the Chairman of such meeting. At such adjourned meeting the holders of Exchangeable Shares present or represented by proxy thereat may transact the business for which the meeting was originally called and a resolution passed thereat by the affirmative vote of not less than two-thirds of the votes cast on such resolution at such meeting shall constitute the approval or consent of the holders of the Exchangeable Shares. 11. RECIPROCAL CHANGES, ETC. IN RESPECT OF NEWMONT SHARES (1) Each holder of an Exchangeable Share acknowledges that the Support Agreement provides, in part, that so long as any Exchangeable Shares not owned by Newmont or its affiliates are outstanding, Newmont will not without the prior approval of Acquisitionco and the prior approval of the holders of the Exchangeable Shares given in accordance with (S)10(2) of these share provisions: (a) issue or distribute Newmont Shares (or securities exchangeable for or convertible into Newmont Shares) to the holders of all or substantially all of the then outstanding Newmont Shares by way of stock dividend or other distribution, other than an issue of Newmont Shares (or securities exchangeable for or convertible into Newmont Shares) to holders of Newmont Shares (i) who exercise an option to receive dividends in Newmont Shares (or securities exchangeable for or convertible into Newmont Shares) in lieu of receiving cash dividends, or (ii) pursuant to any dividend reinvestment plan or similar arrangement; 54 (b) issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding Newmont Shares entitling them to subscribe for or to purchase Newmont Shares (or securities exchangeable for or convertible into Newmont Shares); or (c) issue or distribute to the holders of all or substantially all of the then outstanding Newmont Shares: (i) shares or securities of Newmont of any class other than Newmont Shares (other than shares convertible into or exchangeable for Newmont Shares); (ii) rights, options or warrants other than those referred to in (S)11(1)(b) above; (iii) evidence of indebtedness of Newmont; or (iv) assets of Newmont, unless the economic equivalent on a per share basis of such rights, options, securities, shares, evidences of indebtedness or other assets is issued or distributed simultaneously to holders of the Exchangeable Shares and at least 7 days prior written notice thereof is given to the holders of Exchangeable Shares; provided that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed by Newmont in order to give effect to and consummate the transactions contemplated by, and in accordance with, the Plan of Arrangement. (2) Each holder of an Exchangeable Share acknowledges that the Support Agreement further provides, in part, that so long as any Exchangeable Shares not owned by Newmont or its affiliates are outstanding, Newmont will not without the prior approval of Acquisitionco and the prior approval of the holders of the Exchangeable Shares given in accordance with (S)10(2) of these share provisions: (a) subdivide, redivide or change the then outstanding Newmont Shares into a greater number of Newmont Shares; (b) reduce, combine, consolidate or change the then outstanding Newmont Shares into a lesser number of Newmont Shares; or (c) reclassify or otherwise change the Newmont Shares or effect an amalgamation, merger, reorganization or other transaction affecting the Newmont Shares, unless the same or an economically equivalent change shall simultaneously be made to, or in, the rights of the holders of the Exchangeable Shares and at least 7 days prior written notice is given to the holders of Exchangeable Shares. The Support Agreement further provides, in part, that the aforesaid provisions of the Support Agreement shall not be changed without the approval of the holders of the Exchangeable Shares given in accordance with (S)10(2) of these share provisions. 12. ACTIONS BY ACQUISITIONCO UNDER SUPPORT AGREEMENT (1) Acquisitionco will take all such actions and do all such things as shall be necessary to perform and comply with and to ensure performance and compliance by Newmont, Callco and Acquisitionco with all provisions of the Support Agreement applicable to Newmont, Callco and Acquisitionco, respectively, in accordance with the terms thereof including taking all such actions and doing all such things as shall be necessary to enforce for the direct benefit of Acquisitionco all rights and benefits in favour of Acquisitionco under or pursuant to such agreement. (2) Acquisitionco shall not propose, agree to or otherwise give effect to any amendment to, or waiver or forgiveness of its rights or obligations under, the Support Agreement without the approval of the holders of the Exchangeable Shares given in accordance with (S)10(2) of these share provisions other than such amendments, waivers and/or forgiveness as may be necessary or advisable for the purposes of: (a) adding to the covenants of the other parties to such agreement for the protection of Acquisitionco or the holders of the Exchangeable Shares thereunder; 55 (b) making such provisions or modifications not inconsistent with such agreement as may be necessary or desirable with respect to matters or questions arising thereunder which, in the good faith opinion of the Board of Directors, it may be expedient to make, provided that the Board of Directors shall be of the good faith opinion, after consultation with counsel, that such provisions and modifications will not be prejudicial to the interests of the holders of the Exchangeable Shares; or (c) making such changes in or corrections to such agreement which, on the advice of counsel to Acquisitionco, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error contained therein. 13. LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS (1) The certificates evidencing the Exchangeable Shares shall contain or have affixed thereto a legend in form and on terms approved by the Board of Directors, with respect to the Support Agreement, the provisions of the Plan of Arrangement relating to the Liquidation Call Right and the Redemption Call Right, the Voting and Exchange Trust Agreement (including the provisions with respect to the voting rights and automatic exchange thereunder) and the Retraction Call Right. (2) Each holder of an Exchangeable Share, whether of record or beneficial, by virtue of becoming and being such a holder shall be deemed to acknowledge each of the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right, in each case, in favour of Callco, and the overriding nature thereof in connection with the liquidation, dissolution or winding-up of Acquisitionco or any other distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs, or the retraction or redemption of Exchangeable Shares, as the case may be, and to be bound thereby in favour of Callco as therein provided. (3) Acquisitionco, Callco, Newmont and the Transfer Agent shall be entitled to deduct and withhold from any dividend or consideration otherwise payable to any holder of Exchangeable Shares such amounts as Acquisitionco, Callco, Newmont or the Transfer Agent is required to deduct and withhold with respect to such payment under the INCOME TAX ACT (Canada) or United States tax laws or any provision of provincial, territorial, state, local or foreign tax law, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the holder of the Exchangeable Shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing Agency. To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, Acquisitionco, Callco, Newmont and the Transfer Agent are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to Acquisitionco, Callco, Newmont or the Transfer Agent, as the case may be, to enable it to comply with such deduction or withholding requirement and Acquisitionco, Callco, Newmont or the Transfer Agent shall notify the holder thereof and remit any unapplied balance of the net proceeds of such sale. 14. NOTICES (1) Any notice, request or other communication to be given to Acquisitionco by a holder of Exchangeable Shares shall be in writing and shall be valid and effective if given by first class mail (postage prepaid) or by telecopy or by delivery to the registered office of Acquisitionco and addressed to the attention of the Secretary of Acquisitionco. Any such notice, request or other communication, if given by mail, telecopy or delivery, shall only be deemed to have been given and received upon actual receipt thereof by Acquisitionco. (2) Any presentation and surrender by a holder of Exchangeable Shares to Acquisitionco or the Transfer Agent of certificates representing Exchangeable Shares in connection with the liquidation, dissolution or winding-up of Acquisitionco or the retraction or redemption of Exchangeable Shares shall be made by first class mail (postage prepaid) or by delivery to the registered office of Acquisitionco or to such office of the Transfer 56 Agent as may be specified by Acquisitionco, in each case, addressed to the attention of the Secretary of Acquisitionco. Any such presentation and surrender of certificates shall only be deemed to have been made and to be effective upon actual receipt thereof by Acquisitionco or the Transfer Agent, as the case may be. Any such presentation and surrender of certificates made by first class mail (postage prepaid) shall be at the sole risk of the holder mailing the same. (3) Any notice, request or other communication to be given to a holder of Exchangeable Shares by or on behalf of Acquisitionco shall be in writing and shall be valid and effective if given by first class mail (postage prepaid) or by delivery to the address of the holder recorded in the register of shareholders of Acquisitionco or, in the event of the address of any such holder not being so recorded, then at the last known address of such holder. Any such notice, request or other communication, if given by mail, shall be deemed to have been given and received on the third business day following the date of mailing and, if given by delivery, shall be deemed to have been given and received on the date of delivery. Accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares shall not invalidate or otherwise alter or affect any action or proceeding to be taken by Acquisitionco pursuant thereto. (4) In the event of any interruption of mail service immediately prior to a scheduled mailing or in the period following a mailing during which delivery normally would be expected to occur, Newmont intends to make reasonable efforts to disseminate any notice by other means, such as publication. Except as otherwise required or permitted by law, if post offices in Canada or the United States are not open for the deposit of mail, any notice which Newmont or the Transfer Agent may give or cause to be given under the Arrangement will be deemed to have been properly given and to have been received by holders of Exchangeable Shares if (i) it is given to the TSE for dissemination or (ii) it is published once in the National Edition of The Globe and Mail and in the daily newspapers of general circulation in each of the French and English languages in the City of Montreal, provided that if the National Edition of The Globe and Mail is not being generally circulated, publication thereof will be made in any other daily newspaper of general circulation published in the City of Toronto. Notwithstanding any other provisions of these share provisions, notices, other communications and deliveries need not be mailed if Newmont determines that delivery thereof by mail may be delayed. Persons entitled to any deliveries (including certificates and cheques) which are not mailed for the foregoing reason may take delivery thereof at the office of the Transfer Agent to which the deliveries were made, upon application to the Transfer Agent, until such time as Newmont has determined that delivery by mail will not longer be delayed. Newmont will provide notice of any such determination not to mail made hereunder as soon as reasonably practicable after the making of such determination and in accordance with this (S)14(4). Such deliveries in such circumstances will constitute delivery to the persons entitled thereto. 15. DISCLOSURE OF INTERESTS IN EXCHANGEABLE SHARES Acquisitionco shall be entitled to require any holder of an Exchangeable Share or any person who Acquisitionco knows or has reasonable cause to believe holds any interest whatsoever in an Exchangeable Share to confirm that fact or to give such details as to whom has an interest in such Exchangeable Share as would be required (if the Exchangeable Shares were a class of "equity shares" of Acquisitionco) under (S)101 of the Securities Act or as would be required under the Articles of Newmont or any laws or regulations, or pursuant to the rules or regulations of any regulatory Agency if the Exchangeable Shares were Newmont Shares. 57 SCHEDULE A RETRACTION REQUEST [TO BE PRINTED ON EXCHANGEABLE SHARE CERTIFICATES] To: . ("ACQUISITIONCO") and . ("CALLCO") and Newmont Mining Corporation ("NEWMONT") This notice is given pursuant to (S)6 of the provisions (the "SHARE PROVISIONS") attaching to the Exchangeable Shares of Acquisitionco represented by this certificate and all capitalized words and expressions used in this notice that are defined in the Share Provisions have the meanings ascribed to such words and expressions in such Share Provisions. The undersigned hereby notifies Acquisitionco that, provided that the Retraction Call Right referred to below has not been exercised, the undersigned desires to have Acquisitionco redeem in accordance with (S)6 of the Share Provisions: [_] all share(s) represented by this certificate; or [_] share(s) only represented by this certificate. ----- The undersigned hereby notifies Acquisitionco that the Retraction Date shall be . NOTE: The Retraction Date must be a business day and must not be less than 10 business days nor more than 15 business days after the date upon which this notice is received by Acquisitionco. If no such business day is specified above, the Retraction Date shall be deemed to be the 15th business day after the date on which this notice is received by Acquisitionco. The undersigned acknowledges the overriding Retraction Call Right of Callco or Newmont to purchase all but not less than all the Retracted Shares from the undersigned and that this notice is and shall be deemed to be a revocable offer by the undersigned to sell the Retracted Shares to Callco or Newmont in accordance with the Retraction Call Right on the Retraction Date for the Purchase Price and on the other terms and conditions set out in (S)6(3) of the Share Provisions. This Retraction Request, and this offer to sell the Retracted Shares to Callco, may be revoked and withdrawn by the undersigned only by notice in writing given to Acquisitionco at any time before the close of business on the business day immediately preceding the Retraction Date. The undersigned acknowledges that if, as a result of solvency provisions of applicable law, Acquisitionco is unable to redeem all Retracted Shares, the Retracted Shares will be automatically exchanged pursuant to the Voting and Exchange Trust Agreement so as to require Newmont to purchase the unredeemed Retracted Shares. The undersigned hereby represents and warrants to Callco, Newmont and Acquisitionco that the undersigned: [_] is (select one) [_] is not a non-resident of Canada for purposes of the INCOME TAX ACT (Canada). THE UNDERSIGNED ACKNOWLEDGES THAT IN THE ABSENCE OF AN INDICATION THAT THE UNDERSIGNED IS NOT A NON-RESIDENT OF CANADA, WITHHOLDING ON ACCOUNT OF CANADIAN TAX MAY BE MADE FROM AMOUNTS PAYABLE TO THE UNDERSIGNED ON THE REDEMPTION OR PURCHASE OF THE RETRACTED SHARES. [_] The undersigned hereby represents and warrants to Callco, Newmont and Acquisitionco that the undersigned is not a person within the United States of America, its territories or possessions or any state thereof, or the 58 District of Columbia (collectively, the "United States") or a U.S. person (within the meaning of Regulation S under the United States SECURITIES ACT OF 1933, as amended) and is not making this Retraction Request for the account or benefit of a person within the United States or such a U.S. person. The undersigned hereby represents and warrants to Callco, Newmont and Acquisitionco that the undersigned has good title to, and owns, the share(s) represented by this certificate to be acquired by Callco, Newmont or Acquisitionco, as the case may be, free and clear of all liens, claims and encumbrances. - ------------------------ -------------------------- ------------------------ (Date) (Signature of Shareholder) (Guarantee of Signature) [_] Please check box if the certificates for Newmont Shares and any cheque(s) resulting from the retraction or purchase of the Retracted Shares are to be held for pick-up by the shareholder from the Transfer Agent, failing which such certificates and cheque(s) will be mailed to the last address of the shareholder as it appears on the register. NOTE: This panel must be completed and this certificate, together with such additional documents and payments (including, without limitation, any applicable Stamp Taxes) as the Transfer Agent may require, must be deposited with the Transfer Agent. The securities and any cheque(s) resulting from the retraction or purchase of the Retracted Shares will be issued and registered in, and made payable to, respectively, the name of the shareholder as it appears on the register of Acquisitionco and the certificates for Newmont Shares and any cheque(s) resulting from such retraction or purchase will be delivered to such shareholder as indicated above, unless the form appearing immediately below is duly completed. Date: _________________________________________________________________________ Name of Person in Whose Name Securities or Cheque(s) Are to be Registered, Issued or Delivered (please print): Street Address or P.O. Box: Signature of Shareholder: City, Province and Postal Code: Signature Guaranteed by: NOTE: If this Retraction Request is for less than all of the shares represented by this certificate, a certificate representing the remaining share(s) of Acquisitionco represented by this certificate will be issued and registered in the name of the shareholder as it appears on the register of Acquisitionco, unless the Share Transfer Power on the share certificate is duly completed in respect of such share(s). 59 SCHEDULE C MUTUAL CONDITIONS The respective obligations of Franco-Nevada and Newmont to complete the Arrangement shall be subject to the satisfaction, on or before the Outside Date, of the following conditions, each of which may be waived only by the written mutual consent of Franco-Nevada and Newmont: (a) the Arrangement, with or without amendment, shall have been approved at the Franco-Nevada Special Meeting in accordance with the Interim Order; (b) the shareholders of Newmont shall have approved, in accordance with applicable Law, the issuance of Newmont Shares pursuant to the Arrangement, the acquisition of Normandy and the exchange of the Exchangeable Shares and the consummation of the Arrangement and the acquisition of Normandy; (c) the Final Order shall have been obtained in form and substance satisfactory to each of Franco-Nevada and Newmont; (d) the Newmont Shares and Exchangeable Shares, issuable to the Franco-Nevada Shareholders pursuant to the Arrangement, shall have been approved for listing on the NYSE, subject to official notice of issuance, and conditionally approved for listing on the TSE, respectively; (e) there shall not be in force any injunction, order, judgement or decree restraining or enjoining the consummation of the Transactions and there shall be no: (i) proceeding, of a judicial or administrative nature or otherwise, brought by or before an Agency in progress, that, if successful, or (ii) Law proposed, enacted, promulgated or applied, that would result in an order or ruling that, in either case, would reasonably be expected to preclude completion of, or materially impair the benefits to be realized from, the Transactions in accordance with the terms hereof or be Materially Adverse to either Franco-Nevada and its Subsidiaries or Newmont and its Subsidiaries, in each case taken as a whole; (f) Newmont and its associates shall have a "relevant interest" in at least 50.1% of the shares in the capital of Normandy, calculated on a fully diluted basis; and (g) all necessary regulatory approvals, including, without limitation, the approval of all securities regulatory authorities having jurisdiction over the exchange of Franco-Nevada Shares for the Newmont Shares and Exchangeable Shares as provided in the Arrangement, and all other approvals necessary to permit the first trade of the Newmont Share and Exchangeable Shares, shall have been obtained, in each case without any condition unacceptable to Newmont and Franco-Nevada. 60 SCHEDULE D CONDITIONS IN FAVOUR OF FRANCO-NEVADA The obligations of Franco-Nevada to complete the Transactions shall also be subject to the satisfaction, on or before the Outside Date, of the following conditions, each of which is for the exclusive benefit of Franco-Nevada and may be waived, in whole or in part, by Franco-Nevada in its sole discretion: (a) all necessary corporate action shall have been taken by Newmont to authorize the execution and delivery of this agreement and the consummation of the Arrangement and the performance of its other obligations under this agreement; (b) Newmont shall not have failed to perform any of the obligations to be performed by it under this agreement on or prior to the Effective Date or such failure is not Materially Adverse to Newmont and its Subsidiaries, taken as a whole; (c) all waivers, consents, permits, orders and approvals of any Agency (including the Regulatory Approvals), and the expiry of any waiting periods (whether regulatory or contractual), in connection with, or required to permit, the consummation of the Arrangement, shall have been obtained or received or, in the case of such waiting periods, shall have expired, on terms that are not Materially Adverse to Newmont and its Subsidiaries, in each case taken as a whole; (d) the representations and warranties of Newmont under this agreement shall be true and correct in all material respects (except where already qualified as to materiality or the absence of a Materially Adverse effect), on and as of the Effective Date as if made on and as of such date (except to the extent such representations and warranties refer solely as of an earlier date, in which event such representations and warranties shall be true and correct to such extent as of such earlier date, or except as affected by the Transactions), and Franco-Nevada shall have received a certificate of Newmont addressed to Franco-Nevada and dated the Effective Date, signed on behalf of Newmont by a senior officer of Newmont (on Newmont's behalf and without personal liability) confirming the same as at the Effective Date; and (e) there shall not have occurred, since the date of this agreement, any event, change, effect or development that individually or in the aggregate, has had or is reasonably likely to have, a Materially Adverse effect on Newmont and its Subsidiaries, taken as a whole. 61 SCHEDULE E CONDITIONS IN FAVOUR OF NEWMONT The obligations of Newmont to complete the Transactions shall also be subject to the satisfaction, on or before the Outside Date, of the following conditions, each of which is for the exclusive benefit of Newmont and may be waived, in whole or in part, by Newmont in its sole discretion: (a) the board of directors of Franco-Nevada shall have adopted all necessary resolutions, and all other necessary corporate action shall have been taken by Franco-Nevada to authorize the execution and delivery of this agreement and the consummation of the Arrangement and the performance of its provisions; (b) Franco-Nevada shall not have failed to perform any of the obligations to be performed by it under this agreement on or prior to the Effective Date or such failure is not Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole; (c) the representations and warranties of Franco-Nevada under this agreement shall be true and correct in all material respects (except where already qualified as to materiality or the absence of a Materially Adverse effect), on and as of the Effective Date as if made on and as of such date (except to the extent such representations and warranties refer solely as of an earlier date, in which event such representations and warranties shall be true and correct to such extent as of such earlier date, or except as affected by the Transactions), and Newmont shall have received a certificate of Franco-Nevada addressed to Newmont and dated the Effective Date, signed on behalf of Franco-Nevada by a senior officer of Franco-Nevada (on Franco-Nevada's behalf and without personal liability) confirming the same as at the Effective Date; (d) there shall not have been delivered and not withdrawn notices of dissent with respect to the Arrangement in respect of more than 4 million Franco-Nevada Shares; (e) there shall not have occurred, since the date of this agreement, any event, change, effect or development that individually or in the aggregate, has had or is reasonably likely to have, a Materially Adverse effect on Franco-Nevada and its Subsidiaries, taken as a whole; (f) Newmont shall have received a FIRPTA certificate in form and content reasonably acceptable to Newmont and its counsel signed on behalf of Franco-Nevada by a duly authorized officer of Franco-Nevada; (g) there shall not be pending or threatened any suit, action or proceeding by or before any Agency (i) seeking to prohibit or restrict the acquisition by Newmont or any of its direct or indirect Subsidiaries of any Franco-Nevada Shares, or (ii) seeking to restrain or prohibit the consummation of the Transactions, or (iii) seeking to impose limitations on the ability of Newmont or any of its direct or indirect Subsidiaries to acquire or hold, or exercise full rights of ownership of any Franco-Nevada Shares; and (h) all waivers, consents, permits, orders and approvals of any Agency or other third party (including the Regulatory Approvals), and the expiry of any waiting periods (whether regulatory or contractual), in connection with, or required to permit, the consummation of the Arrangement, shall have been obtained or received or, in the case of such waiting periods, shall have expired, on terms that are not Materially Adverse to either Franco-Nevada or Newmont and their respective Subsidiaries, in each case taken as a whole. 62 SCHEDULE F REPRESENTATIONS AND WARRANTIES OF FRANCO-NEVADA Franco-Nevada represents and warrants to Newmont as follows (and acknowledges that Newmont is relying on such representations and warranties in entering into this agreement and completing the Transactions): (a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Franco-Nevada and each of its Subsidiaries is a corporation, partnership or other legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the requisite power and authority to own its assets and conduct its business as currently owned and conducted. Each of Franco-Nevada and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary. Franco-Nevada has made available for review by Newmont complete and correct copies of its Articles of Incorporation and By-Laws and the certificates of incorporation and by-laws or comparable organization documents of the Subsidiaries of Franco-Nevada, in each case as amended to the date of this agreement. Franco-Nevada is not in violation of any provision of its Articles of Incorporation or By-Laws, and no Subsidiary of Franco-Nevada is in violation of any provisions of its certificate of incorporation, by-laws or comparable organizational documents. (b) FRANCO-NEVADA SUBSIDIARIES. (S)(b) of the Disclosure Statement lists each Subsidiary of Franco-Nevada and the ownership or interest therein of Franco-Nevada. All the outstanding shares of capital stock of each such Subsidiary have been validly issued and are fully paid and non-assessable and, except as set forth in (S)(b) of the Disclosure Statement, are owned by Franco-Nevada, by another Subsidiary of Franco-Nevada or by Franco-Nevada and another Subsidiary of Franco-Nevada, free and clear of all pledges, claims, liens, charges, mortgages, deeds of trust, net profit interests, net smelter returns, royalties, overriding royalty interests, other payments out of production, other burdens, security interests and other encumbrances of any kind or nature whatsoever held by third parties (collectively, "LIENS"). Except for the capital stock of the Subsidiaries of Franco-Nevada and except for the ownership interests set forth in (S)(b) of the Disclosure Statement, Franco-Nevada does not own, directly or indirectly, any capital stock or other ownership interest, with a fair market value as of the date of this agreement greater than $100,000 in any person. (c) CAPITALIZATION. The authorized capital (the "AUTHORIZED CAPITAL") and issued capital of Franco-Nevada is as set out in the recitals to this agreement. Except as set forth above, there are no shares of capital stock or other voting securities of Franco-Nevada issued, reserved for issuance or outstanding. Except as set forth in (S)(c) of the Disclosure Statement, there are not any bonds, debentures, notes or other indebtedness of Franco-Nevada having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which shareholders of Franco-Nevada must vote. Except as set forth above and except as set forth in (S)(c) of the Disclosure Statement, as of the date of this agreement, there are not any options, warrants, puts, calls, rights, commitments, agreements, arrangements or undertakings of any kind (collectively, "OPTIONS") to which Franco-Nevada or any of its Subsidiaries is a party or by which any of them is bound relating to the issued or unissued capital stock of Franco-Nevada or any of its Subsidiaries, or obligating Franco-Nevada or any of its Subsidiaries to issue, transfer, grant, sell or pay for or repurchase any shares of capital stock or other equity interests in, or securities convertible or exchangeable for any capital stock or other equity interests in, Franco-Nevada or any of its Subsidiaries or obligating Franco-Nevada or any of its Subsidiaries to issue, grant, extend or enter into any such Options. All shares of Franco-Nevada's capital stock that are subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instrument pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable. The issuance and sale of all of the shares of capital stock described in this (S)(c) of Schedule F have been in compliance with all Laws. Franco-Nevada has previously provided Newmont with a schedule setting forth the names of, and the number of shares of each class (including the number of shares issuable upon exercise of Franco-Nevada Stock Options and the exercise price and vesting schedule with respect thereto) and the number of options held by, all holders of Franco-Nevada Stock Options. (S)(c) of the 63 Disclosure Statement sets forth the average exercise price for outstanding Franco-Nevada Stock Options. Except as set forth in (S)(c) of the Disclosure Statement, Franco-Nevada has not agreed to register any securities under any securities Laws or granted registration rights to any person or entity; copies of all such agreements have previously been made available to Newmont. Except as set forth above and in (S)(c) of the Disclosure Statement, as of the date of this agreement, there are not any outstanding contractual obligations or other requirements of Franco-Nevada or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of Franco-Nevada or any of its Subsidiaries, or provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary of Franco-Nevada or any other person. Without limiting the generality of the foregoing, there are no stock appreciation rights, phantom equity or similar rights, agreements, arrangements or commitments based upon the book value, income or any other attribute of Franco-Nevada or any of its Subsidiaries. (d) AUTHORITY; NON-CONTRAVENTION. Franco-Nevada has all requisite corporate power and corporate authority to enter into this agreement and, subject to the Franco-Nevada Shareholder Approval, to consummate the Transactions and to perform its obligations under this agreement. The Board of Directors of Franco-Nevada, by the unanimous vote of its outside directors, has approved this agreement and the Transactions and has resolved to recommend to Franco-Nevada Shareholders that Franco-Nevada Shareholders give the Franco-Nevada Shareholder Approval. The execution and delivery of this agreement by Franco-Nevada and the consummation by Franco-Nevada of the Transactions have been duly authorized by all necessary corporate action on the part of Franco-Nevada, subject to the Franco-Nevada Shareholder Approval. No other corporate proceedings on the part of Franco-Nevada or any of its Subsidiaries are necessary to authorize this agreement and, subject to the Franco-Nevada Shareholder Approval, the Transactions. This agreement has been duly executed and delivered by Franco-Nevada and constitutes a valid and binding obligation of Franco-Nevada, enforceable by Newmont against Franco-Nevada and each of its Subsidiaries in accordance with its terms, subject to the availability of equitable remedies and the enforcement of creditors' rights generally. The execution and delivery of this agreement does not, and the consummation of the Transactions and compliance with the provisions of this agreement will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of consent, termination, purchase, cancellation or acceleration of any obligation or to loss of any property, rights or benefits under, or result in the imposition of any additional obligation under, or result in the creation of any Lien upon any of the properties or assets of Franco-Nevada or any of its Subsidiaries under, (i) the Articles of Arrangement or By-laws of Franco-Nevada or the comparable organization documents of any of its Subsidiaries; (ii) any contract, instrument, permit, concession, franchise, license, loan or credit agreement, note, bond, mortgage, indenture, lease or other property agreement, partnership or joint venture agreement or other legally binding agreement, arrangement or understanding whether oral or written (a "CONTRACT"), to which Franco-Nevada or any of its Subsidiaries is a party or by which any of them or their respective properties or assets is bound or affected, or (iii) subject to the governmental filings and other matters referred to in the following sentence, any Law applicable to Franco-Nevada or any of its Subsidiaries or their respective properties or assets. No consent, approval, order or authorization of, or registration, declaration or filing with, any Agency, is required by or with respect to Franco-Nevada or any of its Subsidiaries in connection with the execution and delivery of this agreement by Franco-Nevada or the consummation by Franco-Nevada of the Transactions, except for (i) the filing with the applicable securities regulatory Agencies of a proxy statement relating to the Franco-Nevada Special Meeting (as amended or supplemented from time to time, the "PROXY STATEMENT"), (ii) any approvals required by the Interim Order and the Final Order, (iii) filings with the Director under the CBCA, and filings under the INVESTMENT CANADA ACT (Canada), as amended, the COMPETITION ACT (Canada), as amended, and the HART-SCOTT-RODINO ANTI-TRUST IMPROVEMENTS ACT OF 1976, as amended, and (iv) such other consents, approvals, orders, authorizations, registrations, declarations and filings as are set forth in (S)(d) of the Disclosure Statement. Each of Franco-Nevada and its Subsidiaries possesses all certificates, franchises, licenses, permits, grants, easements, covenants, certificates, orders, authorizations and approvals issued to or granted by Agencies or other third parties (collectively, "PERMITS"), including pursuant to any Environmental Law, necessary to own, lease and/or operate its properties and to conduct its business as such business is currently conducted or is 64 expected to be conducted following completion of the Transaction. Except as set forth in (S)(d) of the Disclosure Statement, (i) all such Permits are validly held by Franco-Nevada or its Subsidiaries, and Franco-Nevada and its Subsidiaries have complied in all respects with all terms and conditions thereof, (ii) none of such Permits will be subject to suspension, modification, revocation or non-renewal as a result of the execution and delivery of this agreement or the consummation of the Transactions, and (iii) since March 31, 2001, neither Franco-Nevada nor any of its Subsidiaries has received any written notice, notice of violation or probable violation, notice of revocation, or other written communication from or on behalf of any Agency, alleging (A) any violation of such Permit, or (B) that Franco-Nevada or any of its Subsidiaries requires any Permit required for its business as such business is currently conducted, that is not currently held by it. (e) PUBLICLY FILED DOCUMENTS; UNDISCLOSED LIABILITIES. Franco-Nevada has filed all required reports, schedules, forms, statements and other documents (including documents incorporated by reference) with the applicable security regulatory Agencies since March 31, 1998 (the "PUBLIC DISCLOSURE DOCUMENTS"). As of its date, each Public Disclosure Document complied in all material respects with the requirements of all applicable securities Laws. None of the Public Disclosure Documents, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent that such statements have been modified or superseded by a later-filed Public Disclosure Document. The consolidated financial statements of Franco-Nevada included in the Public Disclosure Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the applicable securities regulatory Agencies with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Franco-Nevada as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except (i) as and to the extent disclosed, reflected or reserved against on the balance sheet or the notes thereto of Franco-Nevada as of March 31, 2001 included in the Filed Franco-Nevada Public Disclosure Documents, (ii) as incurred after the date thereof in the ordinary course of business consistent with past practice and not prohibited by this agreement, or (iii) as set forth in (S)(e) of the Disclosure Statement, Franco-Nevada does not have any liabilities or obligations of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due, that, individually or in the aggregate, have had or would reasonably be expected to have a Materially Adverse effect on Franco-Nevada and its Subsidiaries, taken as a whole. Except as set forth in (S)(e) of the Disclosure Statement, none of Franco-Nevada or its Subsidiaries is subject to the informational reporting requirements of, or required to file any form or other document with, any securities regulatory Agency (including any stock exchange). (f) INFORMATION SUPPLIED. None of the information supplied or to be supplied by Franco-Nevada or its Subsidiaries for inclusion or incorporation by reference in the Proxy Statement or any other filings relating to the Transactions made by Newmont pursuant to the Securities Act, the Securities Exchange Act or Australian Law (collectively, the "NEWMONT FILINGS") will, at the date the Proxy Statement is first mailed to Franco-Nevada Shareholders or the Newmont Filing is filed, as the case may be, or at the time of the Franco-Nevada Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of circumstances under which they are made, not misleading. The Proxy Statement and Newmont Filings will comply as to form in all material respects with the requirements of applicable securities Laws, except that no representation or warranty is made by Franco-Nevada with respect to statements made or incorporated by reference therein based on information supplied by Newmont for inclusion or incorporation by reference in the Proxy Statement or the Newmont Filings. (g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the Public Disclosure Documents filed and publicly available prior to the date of this agreement (the "FILED FRANCO-NEVADA 65 PUBLIC DISCLOSURE DOCUMENTS"), since March 31, 2001, Franco-Nevada has conducted, and caused each of its Subsidiaries to conduct, its business only in the ordinary course and: (i) there has not been any event, change, effect or development (including any decision to implement such a change made by the board of directors of Franco-Nevada or any of its Subsidiaries in respect of which senior management believes that confirmation of the board of directors is probable), which, individually or in the aggregate, has had, or would reasonably be expected to have, a Materially Adverse effect on Franco-Nevada and its Subsidiaries, taken as a whole; (ii) there has not been, except for regular annual dividends not in excess of Cdn$0.45 per Franco-Nevada Share, with customary record and payment dates, any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any Franco-Nevada Shares; (iii) there has not been, except as provided for in this agreement, any split, combination or reclassification of any Authorized Capital of Franco-Nevada or any issuance or the authorization of any issuance of any other securities in exchange or in substitution for shares of Authorized Capital of Franco-Nevada; (iv) there has not been, except as disclosed in (S)(g) of the Disclosure Statement, (A) any granting by Franco-Nevada or any of its Subsidiaries to any officer of Franco-Nevada or any of its Subsidiaries of any increase in or acceleration of compensation, except as was required under employment agreements in effect as of the date of the most recent audited financial statements included in the Filed Franco-Nevada Public Disclosure Documents, (B) any granting by Franco-Nevada or any of its Subsidiaries to any such officer of any increase in severance or termination pay, except as was required under any employment, severance or termination agreements in effect as of the date of the most recent audited financial statements included in the Filed Franco-Nevada Public Disclosure Documents, or (C) any entry by Franco-Nevada or any of its Subsidiaries into any employment, severance of termination agreement with any such officer; (v) there has not been any change in accounting methods, principles or practices by Franco-Nevada or any of its Subsidiaries materially affecting its assets, liabilities or business, except insofar as may have been required by a change in GAAP or as set forth in (S)(g) of the Disclosure Statement; (vi) neither Franco-Nevada nor any of its Subsidiaries has engaged in any action which, if done after the date of this agreement, would violate (S)(g) of this agreement, except as set forth in (S)(g) of the Disclosure Statement; and (vii) no liability or obligation of any nature (whether absolute, accrued, contingent or otherwise) that is Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole, has been incurred other than in the ordinary course of business consistent with past practice, except as set forth in (S)(g) of the Disclosure Statement. (h) DISCLOSURE. Franco-Nevada has not failed to disclose to Newmont in writing any information known to Franco-Nevada regarding any event, circumstance or action taken or failed to be taken that is Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole. Without limiting the generality of the foregoing: (i) there are no severance and employment agreements with respect to current or former employees of Franco-Nevada or any of its Subsidiaries or any bonus or incentive arrangements with respect to such employees that may require payments as a result of the Transactions; (ii) except as disclosed in the financial statements contained in the Filed Franco-Nevada Public Disclosure Documents, Franco-Nevada and its Subsidiaries do not have liabilities or obligations in excess of the liabilities or obligations reflected or reserved against in those financial statements that, either individually or in the aggregate, are Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole; 66 (iii) none of Franco-Nevada or any of its Subsidiaries or any of their properties is the subject to a judgement, order or decree that is Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole; and (iv) the data or information made available to Newmont in respect of Franco-Nevada and its Subsidiaries, was complete and, to the knowledge of Franco-Nevada, correct in all material respects and, did not, at the time it was made available and for the period of and matter to which it relates, and to the knowledge of Franco-Nevada, contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in the circumstances. (i) COMPLIANCE. Except for any conflicts, defaults or violations that could not, individually or in the aggregate (taking into account the impact of any cross-defaults), reasonably be expected to result in a Materially Adverse effect on Franco-Nevada and its Subsidiaries, taken as a whole, each of Franco-Nevada and its Subsidiaries has complied with, and is not in conflict with, or in default (including cross defaults) under or in violation of: (i) its articles or other organizational documents or by-laws; (ii) any Law or Permit applicable to it, its business or operations or by which any of its properties or assets is bound or affected; or (iii) any agreement, arrangement or understanding to which it, its business or operations or by which any of its properties or assets is bound or affected. As of the Effective Date, each of Franco-Nevada and its Subsidiaries has or will have complied with each of its covenants and obligations under this agreement. (j) RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement, judgement, injunction, order or decree binding upon Franco-Nevada or any of its Subsidiaries that has, or could reasonably be expected to have, the effect of prohibiting, restricting or impairing any business practice of Franco-Nevada or any of its Subsidiaries, any acquisition of property by Franco-Nevada or any of its Subsidiaries or the conduct of business by any of them as currently conducted (including following the Arrangement) other than such agreements, judgements, injunctions, orders or decrees which are not, individually or in the aggregate, Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole. (k) CONTRACTS. (S)(k) of the Disclosure Statement lists all Contracts to which Franco-Nevada or any of its Subsidiaries is a party and which fall within any of the following categories: (a) Contracts not entered into in the ordinary course of Franco-Nevada's business; (b) joint venture, partnership and similar agreements; (c) Contracts containing covenants purporting to limit the freedom of Franco-Nevada or any of its Subsidiaries to compete in any line of business in any geographic area, to hire any individual or group of individuals or to acquire any business, entity or the assets thereof; (d) Contracts which after the Effective Time of the Transactions would have the effect of limiting the freedom of Newmont or its Subsidiaries (other than Franco-Nevada and its Subsidiaries) to compete in any line of business in any geographic area, to hire any individual or group of individuals or to acquire any business, entity or the assets thereof; (e) Contracts which contain minimum purchase conditions or requirements or other terms that restrict or limit the purchasing relationships of Franco-Nevada of any of its Subsidiaries other than in the ordinary course of business; (f) Contracts relating to any outstanding commitment for capital expenditures in excess of $5 million in the aggregate; (g) Contracts involving annual revenues or expenditures to the business of Franco-Nevada or any of its Subsidiaries in excess of 7.5% of Franco-Nevada's annual revenues; and (h) Contracts containing any rights on the part of any party, including joint venture partners or entities, to acquire mining or other property rights from Franco-Nevada or any of the Subsidiaries. All Contracts are valid and binding obligations of Franco-Nevada or any of its Subsidiaries and, to the knowledge of Franco-Nevada, the valid and binding obligation of each other party thereto except for such Contracts which if not so valid and binding would not, individually or in the aggregate, have a Materially Adverse effect on Franco-Nevada and 67 its Subsidiaries, taken as a whole. Neither Franco-Nevada nor, to the knowledge of Franco-Nevada, any other party thereto is in violation of or in default in respect of, nor has there occurred an event or condition which with the passage of time or giving of notice (or both) would constitute a default under or entitle any party to terminate, accelerate, modify or call a default under, or trigger any pre-emptive rights or rights of first refusal under, any such Contract except such violations or defaults under such Contracts, which, individually or in the aggregate, would not have a Materially Adverse effect on Franco-Nevada and its Subsidiaries, taken as a whole. No approval or consent of any person is needed in order that such Contracts continue in full force and effect following the consummation of the Transactions. (l) TAX MATTERS. (i) Franco-Nevada and each of its subsidiaries have timely filed, or caused to be timely filed, all Tax Returns required to be filed by them, and have timely paid, or caused to be timely paid, all material amounts of Taxes due and payable by them, except for any such failure to file or failure to pay which would not individually or in the aggregate, have a Materially Adverse effect on Franco-Nevada. All such Tax Returns are true, correct and complete in all material respects. To the best of Franco-Nevada's knowledge, no such Tax Return contains any misstatement or omits any statement that should have been included therein. No Tax Return has been amended. (ii) Reserves and provisions for Taxes accrued but not yet due on or before the Effective Date as reflected in Franco-Nevada's Financial Statements are adequate as of the date of Franco-Nevada's Financial Statements, in accordance with GAAP. No deficiencies for Taxes have been proposed, asserted or assessed against Franco-Nevada that are not adequately reserved against. (iii) Neither Franco-Nevada nor any of its subsidiaries has received any written notification that any issues involving a material amount of Taxes have been raised (and are currently pending) by the CCRA, the United States Internal Revenue Service or any other taxing authority, including, without limitation, any sales tax authority, in connection with any of the Tax Returns filed or required to be filed, which would, individually or in the aggregate, have a Materially Adverse effect on Franco-Nevada. Neither Franco-Nevada nor any of its subsidiaries has taken any action, or failed to take any action, or has knowledge of any fact, agreement, plan or other circumstance that is reasonably likely to prevent the Arrangement and the Transactions from constituting a transaction described in Section 351 of the Code. (iv) No unresolved assessments, reassessments, audits, claims, actions, suits, proceedings, or investigations exist or have been initiated with regard to any Taxes or Tax Returns of Franco-Nevada or its subsidiaries. To the knowledge of Franco-Nevada, no assessment, reassessment, audit or investigation by any Agency is underway, threatened or imminent with respect to Taxes for which Franco-Nevada or any of its subsidiaries may be liable, in whole or in part. (v) Other than an application to the Internal Revenue Service for an extension to file corporate income tax returns otherwise due December 15, 2001 (in respect of taxation years ended March 30, 2001), no election, consent for extension, nor any waiver that extends any applicable statute of limitations relating to the determination of a Tax liability of Franco-Nevada or any of its subsidiaries has been filed or entered into and is still effective. (vi) Franco-Nevada and each of its subsidiaries have properly withheld and remitted all amounts required to be withheld and/or remitted (including income tax, non-resident withholding tax, Canada Pension Plan contributions, Employment Insurance and Worker's Compensation premiums) and have paid such amounts due to the appropriate authority on a timely basis and in the form required under the appropriate legislation. (vii) The Franco-Nevada Shares do not constitute "foreign property" for the purposes of the ITA. (viii) The paid-up capital of the Franco-Nevada Shares is at least Cdn$1 billion. 68 (ix) "TAX" and "TAXES" means, with respect to any entity, all income taxes (including any tax on or based upon net income, gross income, income as specially defined, earnings profits or selected items of income, earnings or profits) and all capital taxes, gross receipts taxes, environmental taxes, sales taxes, use taxes, ad valorem taxes, value added taxes, transfer taxes, franchise taxes, license taxes, withholding taxes or other withholding obligations, payroll taxes, employment taxes, Canada or Quebec Pension Plan premiums, excise, severance, social security premiums, workers' compensation premiums, unemployment insurance or compensation premiums, stamp taxes, occupation taxes, premium taxes, property taxes, windfall profits taxes, alternative or add-on minimum taxes, goods and services tax, customs duties or other taxes of any kind whatsoever, together with any interest and any penalties or additional amounts imposed by any taxing authority (domestic or foreign) on such entity or for which such entity is responsible, and any interest, penalties, additional taxes, additions to tax or other amounts imposed with respect to the foregoing. "TAX RETURNS" means returns, reports and forms (including schedules thereto) required to be filed with any Agency of Canada or the United States or any provincial, state or local Agency therein or any other jurisdiction responsible for the imposition or collection of Taxes. (x) For purposes of this Section (l), the term "MATERIAL AMOUNT OF TAXES" shall mean an amount of Taxes that is material to Franco-Nevada and its subsidiaries taken as a whole. (m) TITLE AND ENVIRONMENTAL MATTERS. (i) With respect to all Company Properties that are owned by Franco-Nevada or any of its Subsidiaries in fee simple (collectively, the "FRANCO-NEVADA OWNED PROPERTIES"), Franco-Nevada and its Subsidiaries are in exclusive possession thereof and have good, sufficient and marketable title to the real property interests, including fee simple estate of and in real property, leases, easements, rights of way, permits or licences from land owners or authorities permitting the use of land by it necessary to permit the operation of its business as presently owned and conducted, except for failures of title that would individually or in the aggregate not be Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole. The term "COMPANY PROPERTIES" means all real property owned, leased or controlled by Franco-Nevada or any of its Subsidiaries. (ii) With respect to any Company Properties: (i) Franco-Nevada, together with its Subsidiaries, is in exclusive possession of such properties, subject to the paramount title of the United States with respect to unpatented mining claims in the U.S.; (ii) Franco-Nevada, together with its Subsidiaries, has not received any notice of default of any of the terms or provisions of such leases or other contracts; (iii) the execution, delivery and performance of this agreement by Franco-Nevada, and the consummation of the Transactions will not cause a default or termination, or give rise to the right of termination, or rights of first refusal or other pre-emptive rights under any such leases or contracts; (iv) such leases and other contracts are valid and are in good standing; (v) Franco-Nevada has no knowledge of any act or omission or any condition on such properties which could be considered or construed as a default under any such lease or other contract; (vi) none of Franco-Nevada and its Subsidiaries is a party to, or under any agreement to become a party to, any lease with respect to real property, which, if terminated, could reasonably be expected to be Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole; and (vii) such property covered thereby is free and clear of all Liens or material defects in title except the paramount title of the United States with respect to unpatented mining claims in the U.S. (iii) Franco-Nevada has delivered to or made available for inspection by Newmont all Existing Data in its possession or control, and true and correct copies of all material leases or other contracts relating to any real property owned, leased or used by Franco-Nevada or any of its Subsidiaries or in which Franco-Nevada or any of its Subsidiaries otherwise has an interest. (iv) With respect to unpatented mining claims and millsites, and any other exploration or mining concessions or like interest granted by any Agency, located by Franco-Nevada or any of its Subsidiaries that are included within any real property owned, leased or used by Franco-Nevada or any 69 of its Subsidiaries or in which Franco-Nevada or any of its Subsidiaries otherwise has an interest subject to the paramount title of Canada, the United States or any other applicable Agency, and subject to the paramount title of the United States with respect to unpatented mining claims in the U.S.: i. Franco-Nevada has valid title, and has maintained valid title, to such unpatented mining claims and millsites and any other exploration or mining concessions or like interest granted by any Agency; ii. the claims are free and clear of Liens or defects in title; and iii. Franco-Nevada has no knowledge of conflicting mining claims that would constitute a material defect in Franco-Nevada's title to any of its mining claims that contains known valuable minerals. (v) With respect to any real property owned, leased or used by Franco-Nevada or any of its Subsidiaries or in which Franco-Nevada or any of its Subsidiaries otherwise has an interest there are no pending or, to Franco-Nevada's knowledge, threatened suits, claims, actions, proceedings or investigations. (vi) Except as to matters otherwise specifically disclosed in (S)(m) of the Disclosure Statement, Franco-Nevada has not received inquiry from or notice of a pending investigation from any Agency or of any administrative or judicial proceeding concerning the violation of any applicable Laws or any Environmental Liabilities. (vii) Franco-Nevada has furnished or made available to Newmont, copies of all third party and internal environmental or other reports prepared by or for Franco-Nevada or any of its Subsidiaries with respect to any real property owned, leased or used by Franco-Nevada or any of its Subsidiaries or in which Franco-Nevada or any of its Subsidiaries otherwise has an interest. (viii) As used in this agreement, the following terms shall have the meanings specified: "ENVIRONMENTAL LAWS" means applicable Laws aimed at reclamation or restoration of the real properties owned, leased or used by Franco-Nevada or any of its Subsidiaries in which Franco-Nevada or any of its Subsidiaries otherwise has an interest, abatement of pollution; protection of the environment; protection of wildlife, including endangered species; ensuring public safety from environmental hazards; protection of cultural or historic resources; management, storage or control of hazardous materials and substances; releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances as wastes into the environment, including ambient air, surface water and groundwater; and all other applicable Laws relating to the manufacturing, processing, distribution, use, treatment, storage, disposal, handling or transport of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes. "ENVIRONMENTAL LIABILITIES" means any and all claims, actions, causes of action, damages, losses, liabilities, obligations, penalties, judgements, amounts paid in settlement, assessments, costs, disbursements, or expenses (including attorney's fees and costs, experts' fees and costs, and consultants' fees and costs) of any kind or of any nature whatsoever that are asserted by any person or entity (including any Agency) other than Franco-Nevada, alleging liability (including liability for studies, testing or investigatory costs, cleanup costs, response costs, removal costs, remediation costs, containment costs, restoration costs, corrective action costs, closure costs, reclamation costs, natural resource damages, property damages, business losses, personal injuries, penalties or fines) arising out of, based on or resulting from (i) the presence, release, threatened release, discharge or emission into the environment of any hazardous materials or substances existing or arising on, beneath or above the real properties owned, leased or used by Franco-Nevada or any of its Subsidiaries or in which Franco-Nevada or any of its Subsidiaries otherwise has an interest and/or emanating or migrating and/or threatening to emanate or migrate from such 70 properties to off-site properties, (ii) physical disturbance of the environment, or (iii) the violation or alleged violation or any Environmental Laws. "EXISTING DATA" means maps, drill logs and other drilling data, core tests, pulps, reports, surveys, assays, analyses, production reports, operations, technical, accounting and financial records, and other material information developed in operations on the real properties owned, leased or used by Franco-Nevada or any of its Subsidiaries or in which Franco-Nevada or any of its Subsidiaries otherwise has or had an interest prior to the date of this agreement. (n) INTELLECTUAL PROPERTY. Franco-Nevada and its Subsidiaries own all right, title and interest in, or possesses the lawful right to use or has a currently pending application for all patents, patent applications, registered and common law trademarks (including applications therefor), service marks, trade names, copyright applications, copyrights, trade secrets, know-how, computer software, production technology, proprietary technology and other intellectual property and proprietary rights used in or necessary to conduct the business. Additionally: (i) Franco-Nevada is not aware of any infringement of any such intellectual property by any third party; and (ii) the conduct of the business of Franco-Nevada and its Subsidiaries has not, and will not, cause Franco-Nevada or any of its Subsidiaries to infringe or violate any of the patents, trademarks, service marks, trade names, copyrights, trade secrets, proprietary rights, computer software rights or licences or other intellectual property of any other person and neither Franco-Nevada nor any of its Subsidiaries has received any written or oral claim or notice of infringement or potential infringement of the intellectual property of any other person arising out of the conduct of Franco-Nevada and its Subsidiaries and, in particular Franco-Nevada or the applicable Subsidiary has complied with any licence respecting intellectual property held by Franco-Nevada and its Subsidiaries. (o) EMPLOYMENT MATTERS. (i) Except as to matters otherwise specifically disclosed in (S)(o) of the Disclosure Statement, none of Franco-Nevada or its Subsidiaries is a party to any agreement, obligation or understanding providing for severance or termination payments to, or any employment agreement with, any director, consultant, employee or officer, other than any common law obligations of reasonable notice of termination or pay in lieu thereof and any statutory obligations. (ii) None of Franco-Nevada or any of its Subsidiaries had or has any labour contracts, collective bargaining agreements or employment or consulting agreements with any persons employed by Franco-Nevada or any persons otherwise performing services primarily for Franco-Nevada or any of its Subsidiaries (the "BUSINESS PERSONNEL"). Neither Franco-Nevada nor any of its Subsidiaries has engaged in any unfair labour practice with respect to the Business Personnel since March 31, 1999 and there is no unfair labour practice complaint pending or, to the knowledge of Franco-Nevada, threatened, against Franco-Nevada or any of its Subsidiaries with respect to the Business Personnel. There is no labour strike, dispute, slowdown or stoppage pending or, to the knowledge of Franco-Nevada, threatened against Franco-Nevada or any of its Subsidiaries, and neither Franco-Nevada nor any of its Subsidiaries has experienced any labour strike, dispute, slowdown or stoppage or other labour difficulty involving the Business Personnel since March 31, 1999. (iii) None of Franco-Nevada or its Subsidiaries is subject to any litigation, actual or, to the knowledge of Franco-Nevada, threatened, relating to employment or termination of employment of employees or independent contractors, other than those claims or litigation as would, individually or in the aggregate, not be Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole. (iv) Franco-Nevada and each of its Subsidiaries has operated in accordance with all applicable Laws with respect to employment and labour, including employment and labour standards, occupational health and safety, employment equity, pay equity, workers' compensation, human rights 71 and labour relations and there are no current, pending or, to the knowledge of Franco-Nevada, threatened proceedings before any Agency with respect to any of the above. (p) PENSION AND EMPLOYEE BENEFITS. (i) (S)(p) of the Disclosure Statement includes a complete list of all employee benefit, health, welfare, supplemental unemployment benefit, bonus, pension, profit sharing, deferred compensation, stock option, stock compensation, stock purchase, retirement, hospitalization insurance, medical, dental, legal, disability and similar plans or arrangements or practices, whether written or oral, which are maintained by Franco-Nevada or any of its Subsidiaries, including all Employee Benefit Plans and Material Employment Agreements (collectively, the "FRANCO-NEVADA PLANS"). (ii) To Franco-Nevada's knowledge, no step has been taken, no event has occurred and no condition or circumstance exists that has resulted, or could reasonably be expected to result, in any Franco-Nevada Plan being ordered or required to be terminated or wound up in whole or in part or having its registration under applicable Laws refused or revoked, or being placed under the administration of any trustee or receiver or Agency or being required to pay any material Taxes, penalties or levies under applicable Laws. To Franco-Nevada's knowledge, there are no actions, suits, claims (other than routine claims for payment of benefits in the ordinary course), trials, demands, investigations, arbitrations or other proceedings which are pending or threatened in respect of any of the Franco-Nevada Plans or their assets which, individually or in the aggregate, are Materially Adverse to Franco-Nevada and its Subsidiaries, taken as a whole. (iii) All of the Franco-Nevada Plans are in compliance in all material respects with all applicable Laws and their terms, and all of the Franco-Nevada Plans are fully insured or fully funded on a projected benefit obligation basis. (iv) None of the Franco-Nevada Plans is a Multiemployer Plan nor has Franco-Nevada or any of its Subsidiaries been obligated to contribute to any Multiemployer Plan at any time within the past five years. (v) Without limiting the generality of the foregoing with respect to each Franco-Nevada Plan: (A) Franco-Nevada has delivered or made available to Newmont a true, correct and complete copy of: (i) each writing constituting a part of such Plan, including all plan documents, employee communications, benefit schedules, trust agreements, and insurance contracts and other funding vehicles; (ii) the most recent Annual Report (Form 5500 Series) and accompanying schedule, if any, (iii) the current summary plan description and any material modifications thereto, if any (in each case, whether or not required to be furnished under ERISA); (iv) the most recent annual financial report, if any; (v) the most recent actuarial report, if applicable; and (vi) the most recent determination letter from the Internal Revenue Service, if any. Franco-Nevada has delivered or made available to Newmont a true, complete and correct copy of each Material Employment Agreement. Except as specifically provided in the foregoing documents delivered or made available to Newmont, there are no amendments to any Plan or Material Employment Agreement that have been adopted or approved nor has Franco-Nevada or any of its Subsidiaries undertaken to make any such amendments or to adopt or approve any new Plan or Material Employment Agreement. (B) (S)(p) of the Disclosure Statement identifies each Plan that is intended to be a "qualified plan" within the meaning of (S)401(a) of the Code ("QUALIFIED PLANS"). The Internal Revenue Service has issued a favorable determination letter with respect to each Qualified Plan and the related trust that has not been revoked, and there are no circumstances and no events have occurred that could adversely affect the qualified status of any Qualified Plan or the related trust. (S)(p) of the Disclosure Statement identifies each Plan which is intended to meet the requirements of (S)501(c)(9) of the Code, and each such plan meets such requirements and provides no disqualified benefits (as such term is defined in Code (S)4976(b)). 72 (C) (S)(p) of the Disclosure Statement sets forth a list of all Employee Benefit Plans or Employment Agreements under which the execution and delivery of this agreement, shareholders approval of the Transactions or the consummation of the Transactions could (either alone or in conjunction with any other event) (i) result in, cause the accelerated vesting, funding or delivery of, or increase the amount of value of, any payment or benefit to any employee, consultant, officer or director of Franco-Nevada or any of its Subsidiaries, or could limit the right of Franco-Nevada or any of its Subsidiaries to amend, merge, terminate or receive a reversion of assets from any Employee Benefit Plan or related trust or any Material Employment Agreement or related trust, or (ii) result in an "excess parachute payments" within the meaning of (S)280G of the Code. (D) There are no pending or threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations which have been asserted or instituted, and to Franco-Nevada's knowledge, no set of circumstances exists which may reasonably give rise to a claim or lawsuit, against the Plans, any fiduciaries thereof with respect to their duties to the Plans or the assets of any of the trusts under any of the Plans which could reasonably be expected to result in any material liability of Franco-Nevada or any of its Subsidiaries to the PBGC, the Department of Treasury, the Department of Labor, any Multiemployer Plan, any Plan or any participant in a Plan. (E) Franco-Nevada, its Subsidiaries and each member of their respective business enterprises has complied with the WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT and all similar state, local and foreign Laws, so as not to incur any liabilities thereunder. (F) All Employee Benefit Plans subject to the Laws of any jurisdiction outside of the United States (i) have been maintained in accordance with all applicable requirements, (ii) if they are intended to qualify for special Tax treatment, meet all requirements for such treatment, and (iii) if they are intended to be funded and/or book-reserved, are fully funded and/or book-reserved on a projected obligation basis, as appropriate, based upon reasonable actuarial assumptions. (G) Each individual who renders services to Franco-Nevada or any of its Subsidiaries who is classified by Franco-Nevada or such Subsidiary, as applicable, as having the status of an independent contractor or other non-employee status for any purpose (including for purposes of taxation and Tax reporting and under Employee Benefit Plans) is properly so characterized. (H) On or before the date hereof, Franco-Nevada has caused each grantor trust providing for funding of amounts payable pursuant to any Plans and/or Employment Agreements to be amended to ensure that no amounts are required to be contributed thereto as a result of the execution and delivery of this agreement, the announcement hereof, and/or the announcement or consummation of the Transactions, and to ensure that such trusts are at all times revocable, in whole or in part, without the consent of the trustees or beneficiaries thereof or any third party. (q) BOOKS AND RECORDS. The financial books, records and accounts of Franco-Nevada and its Subsidiaries in all material respects, (i) have been maintained in accordance with Canadian generally accepted accounting principles on a basis consistent with prior years, (ii) are stated in reasonable detail and accurately and fairly reflect the transactions and dispositions of the assets of Franco-Nevada and its Subsidiaries and (iii) accurately and fairly reflect the basis for Franco-Nevada consolidated financial statements. The corporate minute books of Franco-Nevada and its Subsidiaries contain minutes of all meetings and resolutions of the directors and shareholders held, and full access thereto has been provided to Newmont. (r) INSURANCE. Franco-Nevada has made available to Newmont true, correct and complete copies of all material policies of insurance to which each of Franco-Nevada and its Subsidiaries are a party or are a beneficiary or named insured. Franco-Nevada and its Subsidiaries maintain insurance coverage with reputable insurers in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in businesses similar to that of Franco-Nevada and its Subsidiaries. 73 (s) NEWMONT REPRESENTATIONS. Franco-Nevada has no knowledge that any representation and warranty of Newmont set forth in this agreement is not true and correct in all material respects, or is untrue in a manner that is Materially Adverse to Newmont and its Subsidiaries, taken as a whole, on and as of the date of this agreement. (t) LITIGATION. Except as specifically disclosed in (S)(t) of the Disclosure Statement, there is no suit, action or proceeding pending or, to the knowledge of Franco-Nevada, threatened against Franco-Nevada or any of its Subsidiaries that, individually or in the aggregate, if adversely determined, would reasonably be expected to have a Materially Adverse effect on Franco-Nevada and its Subsidiaries, taken as a whole, and there is not any judgement, decree, injunction, rule or order of any Agency or arbitrator outstanding against Franco-Nevada or any of its Subsidiaries having, or which would reasonably be expected to have, any Materially Adverse effect on Franco-Nevada and its Subsidiaries, taken as a whole. As of the date of this agreement, except as specifically disclosed in (S)(t) of the Disclosure Statement, there is no suit, action, proceeding pending or, to the knowledge of Franco-Nevada, threatened, against Franco-Nevada or any of its Subsidiaries that, individually or in the aggregate, if adversely determined, would reasonably be expected to prevent or delay in any material respect the consummation of the Transactions. (u) DETERMINATION BY THE BOARD AND VOTING REQUIREMENTS. The board of directors of Franco-Nevada (after receiving financial advice including the Fairness Opinion, legal advice and after considering other factors), by the unanimous vote of its outside directors, has determined and resolved at its meeting held on November 12, 2001: (i) that the entering into of this agreement, the performance by Franco-Nevada of its obligations hereunder and the Transactions are in the best interests of Franco-Nevada and its shareholders; (ii) the Arrangement is fair to Franco-Nevada Shareholders; (iii) to approve the Transactions and this agreement; (iv) to extend the Separation Time (as defined therein), including providing the Rights Agent (as defined in the Franco-Nevada Rights Agreement) with notice in writing of such extension, under the Franco-Nevada Rights Agreement until after the vote by the Franco-Nevada Shareholders on the Arrangement at the Franco-Nevada Special Meeting; (v) to recommend that Franco-Nevada Shareholders approve the Arrangement; and (vi) to recommend that Franco-Nevada Shareholders waive the Franco-Nevada Rights Agreement so that neither the entering into nor delivery of this agreement, the Arrangement or the other agreements contemplated hereby nor the consummation of all or any part of the Transactions shall constitute a Flip-in Event (as defined in the Franco-Nevada Rights Agreement). To the knowledge of Franco-Nevada, after consultation with outside legal counsel, no provincial or state take-over statute or similar statute or regulation (including Rule 61-501 of the Ontario Securities Commission) applies or purports to apply to this agreement or any of the Transactions. The approval and adoption of this agreement by the affirmative vote of 66 2/3% of the votes, attaching to the Franco-Nevada Shares, cast at the Franco-Nevada Special Meeting (the "SHAREHOLDER APPROVAL") is the only vote of the holders of any class or series of Authorized Capital of Franco-Nevada necessary to approve this agreement and the Transactions. For purposes of the Shareholder Approval, each outstanding Franco-Nevada Share is entitled to one vote. (v) BROKERS; SCHEDULE OF FEES AND EXPENSES. Except as set forth in (S)(v) of the Disclosure Statement, no broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Franco-Nevada. Franco-Nevada has made available to Newmont true and complete copies of all agreements that are referred to in (S)(v) of the Disclosure Statement and all indemnification and other agreements related to the engagement of the persons so listed. 74 (w) OPINION OF FINANCIAL ADVISOR. Franco-Nevada has received the opinion of the Financial Advisor dated the date of this agreement, to the effect that, as of such date, the consideration to be received pursuant to the Transactions by Franco-Nevada Shareholders is fair to the Franco-Nevada Shareholders from a financial point of view, a copy of which opinion will be promptly delivered to Newmont. (x) MSHA, OSHA MATTERS. Franco-Nevada and each of its Subsidiaries is in compliance with the requirements of each of the FEDERAL MINE SAFETY AND HEALTH ACT OF 1977, as amended, and the regulations promulgated thereunder, the OCCUPATIONAL SAFETY AND HEALTH ACT OF 1970, as amended, and the regulations promulgated thereunder and any similar Laws of any foreign, state, provincial or local jurisdiction (collectively, the "SAFETY ACTS"), except for any non-compliance which could not reasonably be expected to have, individually or in the aggregate, a Materially Adverse effect on Franco-Nevada and its Subsidiaries, taken as a whole. Neither Franco-Nevada nor any of its Subsidiaries has received any citation from the Mine Safety and Health Administration, the Occupational Safety and Health Administration or any other Agency or any inspector setting forth any respect in which the facilities or operations of Franco-Nevada and any of its Subsidiaries are not in compliance with the Safety Acts, or the regulations under such acts which non-compliance has not been corrected or remedied to the satisfaction of such Agency or inspector, except in all such cases for any non-compliance that could not reasonably be expected to have, individually or in the aggregate, a Materially Adverse effect on Franco-Nevada and its Subsidiaries, taken as a whole. Since March 31, 2000, Franco-Nevada has had no citations issued to it under the Safety Acts. (y) RIGHTS AGREEMENT. Franco-Nevada has taken all necessary action and executed and delivered all such documents and instruments that are required to extend the Separation Time (as defined therein), including providing the Rights Agent (as defined in the Franco-Nevada Rights Agreement) with notice in writing of such extension, under the Franco-Nevada Rights Agreement until after the vote by the Franco-Nevada Shareholders on the Arrangement at the Franco-Nevada Special Meeting. (z) DISPOSITIONS OF COMPANY PROPERTY. Except as described in the Filed Franco-Nevada Public Disclosure Documents or in (S)(z) of the Disclosure Statement, since March 31, 2001 neither Franco-Nevada nor any of its Subsidiaries has sold or disposed of or ceased to hold or own any personal property, real property, any interest or rights with respect to real property (including exploration or production rights), any interest in a joint venture or other assets of properties of Franco-Nevada or any of its Subsidiaries ("FRANCO-NEVADA PROPERTY"), other than sales and dispositions of raw materials, obsolete equipment, mine output and other inventories, and any interest or rights with respect to real property having an individual fair market value of less than $5 million in the aggregate, in each case in the ordinary course of business, consistent with past practice. Except as set forth in (S)(z) of the Disclosure Statement, no Franco-Nevada Property, the fair market value of which on the date of this agreement is greater than $5 million in the aggregate, is subject to any pending sale or disposition transaction. (aa) ABSENCE OF REDUCTION IN RESERVES AND MINERALIZED MATERIAL. There has been no material reduction in the aggregate amount of reserves or in the aggregate amount of mineralized material of Franco-Nevada and its Subsidiaries from the amounts set forth in Franco-Nevada's Annual Report for the fiscal year ended March 31, 2001, except for (i) such reductions in reserves that have resulted from production in the ordinary course of business and (ii) such reductions in mineralized material that have resulted from reclassifications of mineralized material as reserves. 75 SCHEDULE G REPRESENTATIONS AND WARRANTIES OF NEWMONT Newmont represents and warrants to Franco-Nevada as follows (and acknowledges that Franco-Nevada is relying on such representations and warranties in entering this agreement and completing the Transactions): (a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Newmont and each of its Subsidiaries is a corporation, partnership or other legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the requisite power and authority to own its assets and conduct its business as currently owned and conducted. Each of Newmont and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary. Newmont has made available for review to Franco-Nevada complete and correct copies of its Certificate of Incorporation and the certificates of incorporation or comparable organization documents of the Subsidiaries of Newmont, in each case as amended to the date of this agreement. Newmont is not in violation of any provision of its Certificate of Incorporation or By-Laws, and no Subsidiary of Newmont is in violation of any provisions of its certificate of incorporation, by-laws or comparable organizational documents. (b) NEWMONT SUBSIDIARIES. All the outstanding shares of capital stock of each Subsidiary of Newmont have been validly issued and are fully paid and non-assessable. (c) CAPITALIZATION. The authorized and issued capital of Newmont consists of 250,000,000 shares of Original Newmont Shares and 5,000,000 shares of Newmont Preferred Stock. Pursuant to a Certificate of Designations of $3.25 Convertible Preferred Stock, the Board of Directors of Newmont created a series of 2,300,000 shares of Newmont Convertible Preferred Stock. Pursuant to a Certificate of Designations of Series A Junior Participating Preferred Stock, the Board of Directors of Newmont created a series of 500,000 shares of Newmont Series A Preferred Stock. The shares of Newmont Series A Preferred Stock are issuable in connection with the Newmont Rights that were issued pursuant to the Newmont Rights Agreement. At the close of business on November 9, 2001: (i) 196,087,962 shares of Original Newmont Shares were outstanding and 2,299,980 shares of Newmont Convertible Preferred Stock were outstanding, all of which were validly issued, fully paid and nonassessable, and no shares of Newmont Series A Preferred Stock, or of any other series of Newmont Preferred Stock, were outstanding; (ii) 176,950 Original Newmont Shares were held by Newmont in its treasury; (iii) 16,967,453 Original Newmont Shares were reserved for issuance upon the exercise of outstanding employee or non-employee director stock options that were granted, in each case, pursuant to the Newmont's employee stock plans set forth in (S)(c) of Newmont's disclosure statement; (iv) 398,704 Original Newmont Shares were reserved for issuance under Newmont's Non-Employee Directors Stock Plan; (v) 874,751 Original Newmont Shares were reserved for issuance under Newmont's Retirement Savings Plan (401K); (v) 1,150,000 Original Newmont Shares were issuable upon conversion of the outstanding shares of Newmont Convertible Preferred Stock; (vi) 508,988 Original Newmont Shares were reserved for issuance under the 6% Convertible Subordinated Debentures of Newmont; and (vii) 500,000 shares of Newmont Series A Preferred Stock were reserved for issuance in connection with the Newmont Rights and none was outstanding. Except as set forth above, there are no shares of capital stock or other voting securities of Newmont issued, reserved for issuance or outstanding. Except as set forth in (S)(c) of Newmont's disclosure statement, there are not any bonds, debentures, notes or other indebtedness of Newmont having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which shareholders of Newmont must vote. Except as set forth above and except as set forth in (S)(c) of Newmont's disclosure statement, as of the date of this agreement, there are not any Options to which Newmont or any of its Subsidiaries is a party or by which any of them is bound relating to the issued or unissued capital stock of Newmont or any of its Subsidiaries, or obligating 76 Newmont or any of its Subsidiaries to issue, transfer, grant, sell or pay for or repurchase any shares of capital stock or other equity interests in, or securities convertible or exchangeable for any capital stock or other equity interests in, Newmont or any of its Subsidiaries or obligating Newmont or any of its Subsidiaries to issue, grant, extend or enter into any such Options. All shares of Newmont's capital stock that are subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instrument pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable. The issuance and sale of all of the shares of capital stock described in this (S)(c) of Schedule G have been in compliance with all Laws. Newmont has previously provided Franco-Nevada with a schedule setting forth the names of, and the number of shares of each class (including the number of shares issuable upon exercise of Newmont stock options and the exercise price and vesting schedule with respect thereto) and the number of options held by, all holders of Newmont stock options. (S)(c) of Newmont's disclosure statement sets forth the average exercise price for outstanding Newmont stock options, other than options into which options of Battle Mountain Gold Company were converted, for which (S)(c) of Newmont's disclosure statement sets forth the approximate options outstanding and the option price ranges. Except as set forth in (S)(c) of its disclosure statement, Newmont has not agreed to register any securities under any securities Laws or granted registration rights to any person or entity; copies of all such agreements have previously been made available to Franco-Nevada. Except as set forth above and in (S)(c) of Newmont's disclosure statement, as of the date of this agreement, there are not any outstanding contractual obligations or other requirements of Newmont or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of Newmont or any of its Subsidiaries, or provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary of Newmont or any other person. Without limiting the generality of the foregoing, there are no stock appreciation rights, phantom equity or similar rights, agreements, arrangements or commitments based upon the book value, income or any other attribute of Newmont or any of its Subsidiaries. (d) AUTHORITY; NON-CONTRAVENTION. Newmont has all requisite corporate power and corporate authority to enter into this agreement and to consummate the Transactions and to perform its obligations under this agreement. The Board of Directors of Newmont has unanimously approved this agreement and the Transactions. The execution and delivery of this agreement by Newmont and the consummation by Newmont of the Transactions have been duly authorized by all necessary corporate action on the part of Newmont. No other corporate proceedings on the part of Newmont or any of its Subsidiaries are necessary to authorize this agreement and the Transactions. This agreement has been duly executed and delivered by Newmont and constitutes a valid and binding obligation of Newmont, enforceable by Franco-Nevada against Newmont in accordance with its terms, subject to the availability of equitable remedies and the enforcement of creditors' rights generally. The execution and delivery of this agreement does not, and the consummation of the Transactions and compliance with the provisions of this agreement will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of consent, termination, purchase, cancellation or acceleration of any obligation or to loss of any property, rights or benefits under, or result in the imposition of any additional obligation under, or result in the creation of any Lien upon any of the properties or assets of Newmont or any of its Subsidiaries under, (i) the Certificate of Incorporation or By-laws of Newmont or the comparable organization documents of any of its Subsidiaries; (ii) any Contract to which Newmont or any of its Subsidiaries is a party or by which any of them or their respective properties or assets is bound or affected, or (iii) subject to the governmental filings and other matters referred to in the following sentence, any Law applicable to Newmont or any of its Subsidiaries or their respective properties or assets. No consent, approval, order or authorization of, or registration, declaration or filing with, any Agency, is required by or with respect to Newmont or any of its Subsidiaries in connection with the execution and delivery of this agreement by Newmont or the consummation by Newmont of the Transactions, except for (i) any approvals required by the Interim Order or the Final Order, and (ii) the approvals listed on Schedule H. (e) PUBLICLY FILED DOCUMENTS; UNDISCLOSED LIABILITIES. Newmont has filed all required reports, schedules, forms, statements and other documents (including documents incorporated by reference) with the applicable security regulatory Agencies since December 31, 1998 (the "NEWMONT PUBLIC DISCLOSURE 77 DOCUMENTS"). As of its date, each Newmont Public Disclosure Document complied in all material respects with the requirements of the Securities Act or the Securities Exchange Act, as applicable, and the rules and regulations thereunder applicable to such Newmont Public Disclosure Document. None of the Newmont Public Disclosure Documents, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent that such statements have been modified or superseded by a later-filed Newmont Public Disclosure Document. The consolidated financial statements of Newmont included in the Newmont Public Disclosure Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Newmont as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except (i) as and to the extent disclosed, reflected or reserved against on the balance sheet or the notes thereto of Newmont as of December 31, 2000 included in the Filed Newmont Public Disclosure Documents, (ii) as incurred after the date thereof in the ordinary course of business consistent with past practice and not prohibited by this agreement, or (iii) as set forth in (S)(e) of its disclosure statement, Newmont does not have any liabilities or obligations of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due, that, individually or in the aggregate, have had or would reasonably be expected to have a Materially Adverse effect on Newmont and its Subsidiaries, taken as a whole. (f) INFORMATION SUPPLIED. None of the information supplied or to be supplied by Newmont or its Subsidiaries for inclusion or incorporation by reference in the Proxy Statement or any Newmont Filings will, at the date the Proxy Statement is first mailed to Franco-Nevada Shareholders or the Newmont Filing is filed, as the case may be, or at the time of the Franco-Nevada Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of circumstances under which they are made, not misleading. The Newmont Filings will comply as to form in all material respects with the requirements of applicable securities Laws, except that no representation or warranty is made by Newmont with respect to statements made or incorporated by reference therein based on information supplied by Franco-Nevada or Normandy for inclusion or incorporation by reference in the Proxy Statement or the Newmont Filings. (g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the Newmont Public Disclosure Documents filed and publicly available prior to the date of this agreement (the "FILED NEWMONT PUBLIC DISCLOSURE DOCUMENTS"), since December 31, 2000, Newmont has conducted, and caused each of its Subsidiaries to conduct, its business only in the ordinary course, and: (i) there has not been any event, change, effect or development (including any decision to implement such a change made by the board of directors of Newmont or any of its Subsidiaries in respect of which senior management believes that confirmation of the board of directors is probable), which, individually or in the aggregate, has had or would reasonably be expected to have a Materially Adverse effect on Newmont and its Subsidiaries, taken as a whole; (ii) there has not been, except for regular annual dividends not in excess of $0.12 per Newmont Share, with customary record and payment dates, any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any Newmont Shares; (iii) there has not been, except as provided for in this agreement, any split, combination or reclassification of any Newmont Shares or any issuance or the authorization of any issuance of any other securities in exchange or in substitution for Newmont Shares; (iv) there has not been any change in accounting methods, principles or practices by Newmont or any of its Subsidiaries materially affecting its assets, liabilities or business, except insofar as may have been required by a change in GAAP; 78 (v) neither Newmont nor any of its Subsidiaries has engaged in any action which, if done after the date of this agreement, would violate (S)5.B(a) of this agreement, except as set forth in (S)(g) of Newmont's disclosure statement. (h) RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement, judgement, injunction, order or decree binding upon Newmont or any of its Subsidiaries that has, or could reasonably be expected to have, the effect of prohibiting, restricting or impairing any business practice of Newmont or any of its Subsidiaries, any acquisition of property by Newmont or any of its Subsidiaries or the conduct of business by any of them as currently conducted (including following the Arrangement) other than such agreements, judgements, injunctions, orders or decrees which are not, individually or in the aggregate, Materially Adverse to Newmont and its Subsidiaries, taken as a whole. (i) TITLE. To the knowledge of Newmont, Newmont has good, sufficient and marketable title to its real property interests, except for failures of title that would individually or in the aggregate not be Materially Adverse to Newmont and its Subsidiaries, taken as a whole. (j) INSURANCE. Except as set forth in (S)(j) of its disclosure statement, Newmont and its Subsidiaries maintain insurance coverage with reputable insurers in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in businesses similar to that of Newmont and its Subsidiaries. (k) LITIGATION. Except as disclosed in the Filed Newmont Public Disclosure Documents and except as set forth in (S)(k) of its disclosure statement, there is no suit, action or proceeding pending or, to the knowledge of Newmont, threatened against Newmont or any of its Subsidiaries that, individually or in the aggregate, would reasonably be expected to have a Materially Adverse effect on Newmont and its Subsidiaries, taken as a whole, and there is not any judgement, decree, injunction, rule or order of any Agency or arbitrator outstanding against Newmont or any of its Subsidiaries having, or which would reasonably be expected to have, a Materially Adverse effect on Newmont and its Subsidiaries, taken as a whole. As of the date of this agreement, except as disclosed in the Filed Newmont Public Disclosure Documents and except as set forth in (S)(k) of its disclosure statement, there is no suit, action or proceeding pending, or, to the knowledge of Newmont, threatened, against Newmont or any of its Subsidiaries that, individually or in the aggregate, would reasonably be expected to prevent or delay in any material respect the consummation of the Transactions. (l) DETERMINATION BY THE BOARD. The board of directors of Newmont has unanimously determined and resolved at its meeting held on November 13, 2001: (i) that the entering into of this agreement and the performance by Newmont of its obligations hereunder and the Transactions are in the best interests of Newmont and its shareholders; (ii) to approve the Transactions and this agreement; and (iii) to recommend that Newmont Shareholders take all actions necessary to consummate the transactions contemplated by this agreement. (m) BROKERS. Except as set forth in (S)(m) of its disclosure statement, no broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Newmont. (n) COMPLIANCE. Except for any conflicts, defaults or violations that could not, individually or in the aggregate (taking into account the impact of any cross-defaults), reasonably be expected to result in a Materially Adverse effect on Newmont and its Subsidiaries, taken as a whole, Newmont has complied with, and is not in conflict with, or in default (including cross defaults) under or in violation of any Law applicable to its business or operations. As of the Effective Date, each of Newmont and its Subsidiaries has or will have complied with each of its covenants and obligations under this agreement. 79 SCHEDULE H REGULATORY APPROVALS CANADA . expiration or earlier termination of the waiting period under Part IX of the COMPETITION ACT (Canada) and receipt of an advance ruling certificate ("ARC") pursuant to the COMPETITION ACT (Canada) or, in the alternative to an ARC, a no-action letter from the Commissioner of Competition . if applicable, a determination by the Minister responsible for Investment Canada under the INVESTMENT CANADA ACT (Canada) that the Arrangement is of "net benefit to Canada" for purposes of such Act on terms and conditions satisfactory to Newmont . exemption orders from the Canadian securities Agencies from the registration and prospectus requirements with respect to the first trade in Exchangeable Shares . relief from the Canadian Securities Administrators from certain U.S. GAAP reporting requirements . approval of the TSE regarding the conditional listing of the Exchangeable Shares UNITED STATES . expiration or earlier termination of the waiting period under the HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 . other filings required under the Securities Act and Securities Exchange Act, and other actions required by the SEC pursuant thereto 80 SCHEDULE I FORM OF FRANCO-NEVADA AFFILIATE LETTER November , 2001 Newmont [ ] [ ] Ladies and Gentlemen: The undersigned, a holder of common shares (the "FRANCO-NEVADA SHARES") of Franco-Nevada, a corporation incorporated under the laws of Canada ("FRANCO-NEVADA"), has been advised that as of the date hereof, the undersigned may be deemed to be an "affiliate" of Franco-Nevada, as the term "affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and Regulations of the Securities and Exchange Commission. The undersigned has been further advised that, pursuant to the terms of the Arrangement Agreement, dated as of November 14, 2001 (the "ARRANGEMENT AGREEMENT"), by and between Newmont, a Delaware corporation ("NEWMONT"), and Franco-Nevada, Newmont would acquire indirectly all of the Franco-Nevada Common Shares and as a result of the Arrangement (as that term is defined in the Arrangement Agreement), the undersigned would receive Newmont Shares (as defined in the Arrangement Agreement) or Exchangeable Shares (as defined in the Arrangement Agreement and, collectively with the Newmont Shares, the "NEWMONT SECURITIES") in exchange for Franco-Nevada Shares owned by the undersigned. 1. The undersigned represents, warrants and covenants that the undersigned: A. Has read carefully this letter and discussed applicable limitations upon the ability of the undersigned to sell, transfer or otherwise dispose of Newmont Securities to the extent the undersigned believes necessary with counsel of the undersigned or counsel for Franco-Nevada. B. However, the undersigned has also been advised that, because the undersigned may be deemed to have been an affiliate of Franco-Nevada at the time the Arrangement was submitted for a vote of the stockholders of Franco-Nevada and because the distribution by the undersigned of Newmont Securities has not been registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"), the undersigned may not sell, transfer or otherwise dispose of Newmont Shares and, to the extent applicable, Exchangeable Shares issued to the undersigned under the Arrangement unless (i) such sale, transfer or other disposition has been registered under the Securities Act, (ii) such sale, transfer or other disposition is made in conformity with the volume and other limitations of Rule 145 promulgated by the Commission under the Securities Act, or (iii) the undersigned delivers an opinion of counsel reasonably acceptable to Newmont, or a "no-action" or interpretive letter of the Commission is furnished to Newmont, stating that, such sale, transfer or other disposition is otherwise exempt from registration under the Securities Act. C. Understands that Newmont is under no obligation to register the sale, transfer or other disposition of Newmont Securities by the undersigned or on behalf of the undersigned under the Securities Act or to take any other action necessary in order to make compliance with an exemption from such registration available. D. Also understands that Newmont may give stop-transfer instructions to its transfer agent with respect to Newmont Securities to enforce the restrictions on the undersigned set forth herein and that it reserves the right to place on the certificates for Newmont Securities issued to the undersigned, or any substitutions therefor, a legend stating in substance: The securities represented by this certificate have been issued in a transaction to which Rule 145 promulgated under the Securities Act of 1933 applies and may be sold or otherwise transferred only in compliance with the requirements of Rule 145 or pursuant to a registration statement under said Act or an exemption from such registration. 81 E. Also understands that unless the transfer by the undersigned of Newmont Securities of the undersigned has been registered under the Act or is a sale made in conformity with the provisions of Rule 145, Newmont reserves the right to put the following legend on the certificates issued to transferees of the undersigned: The securities represented by this certificate have not been registered under the Securities Act of 1933 and were acquired from a person who received such shares in a transaction to which Rule 145 promulgated under the Securities Act of 1933 applies. The securities have been acquired by the holder not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act of 1933 and may not be sold, pledged or otherwise transferred except in accordance with an exemption from the registration requirements of the Securities Act of 1933. F. Neither the execution of this letter nor any provisions set forth herein shall be construed as an admission on the part of the undersigned that the undersigned is an affiliate of Franco-Nevada as described in the first paragraph of this letter, or as a waiver of any rights the undersigned may have to object to any claim that the undersigned is such an affiliate on or after the date of this letter. 2. By Newmont's acceptance of this letter, Newmont hereby agrees with the undersigned to the extent applicable as follows: A. For so long as and to the extent necessary to permit the undersigned to sell Newmont Shares and, to the extent applicable, Exchangeable Shares pursuant to Rule 145 and, to the extent applicable, Rule 144 under the Act, Newmont shall (a) use its reasonable efforts to (i) file, on a timely basis, all reports and data required to be filed with the Commission by it pursuant to Section 13 of the Securities Exchange Act, and (ii) furnish to the undersigned upon request a written statement as to whether Newmont has complied with such reporting requirements during the 12 months preceding any proposed sale of Newmont Shares and, to the extent applicable, Exchangeable Shares by the undersigned under Rule 145, and (b) otherwise use its reasonable efforts to permit such sales pursuant to Rule 145 and Rule 144. Newmont and Franco-Nevada have filed all reports required to be filed with the Commission under Section 13 of the Securities Exchange Act during the preceding 12 months. B. It is understood and agreed that certificates with the legend set forth in paragraphs 1.D and 1.E above will be substituted by delivery of certificates without such legend if (i) one year shall have elapsed from the date the undersigned received Newmont Securities under the Arrangement and the provisions of Rule 145(d)(2) are then available to the undersigned, (ii) two years shall have elapsed from the date the undersigned received Newmont Securities under the Arrangement and the provisions of Rule 145(d)(3) are then applicable to the undersigned, or (iii) Newmont has received either an opinion of counsel, which opinion and counsel shall be reasonably satisfactory to it, or a "no-action" or interpretive letter obtained by the undersigned from the staff of the Commission, to the effect that the restrictions imposed by Rule 144 and Rule 145 under the Securities Act no longer apply to the undersigned. Very truly yours, _____________________________________ Signature _____________________________________ Print Name ACCEPTED: Dated: NEWMONT By: ___________________________________________________________________________ Name: Title: Dated: 82 SCHEDULE J SECURITIES ACT RULE 144(E) (e) LIMITATION ON AMOUNT OF SECURITIES SOLD. Except as hereinafter provided, the amount of securities which may be sold in reliance upon this rule shall be determined as follows: (1) SALES BY AFFILIATES. If restricted or other securities are sold for the account of an affiliate of the issuer, the amount of securities sold, together with all sales of restricted and other securities of the same class for the account of such person within the preceding three months, shall not exceed the greater of: (i) one percent of the shares or other units of the class outstanding as shown by the most recent report or statement published by the issuer; or (ii) the average weekly reported volume of trading in such securities on all national securities exchanges and/or reported through the automated quotation system of a registered securities association during the four calendar weeks preceding the filing of notice required by paragraph (h), or if no such notice is required the date of receipt of the order to execute the transaction by the broker or the date of execution of the transaction directly with a market maker; or (iii) the average weekly volume of trading in such securities reported through the consolidated transaction reporting system contemplated by Rule 11Aa3-1 under the Securities Exchange Act of 1934 during the four-week period specified in subdivision (ii) of this paragraph. (2) SALES BY PERSONS OTHER THAN AFFILIATES. The amount of restricted securities sold for the account of any person other than an affiliate of the issuer, together with all other sales of restricted securities of the same class for the account of such person within the preceding three months, shall not exceed the amount specified in paragraph (e)(1)(i), (1)(ii) or (1)(iii) of this section, whichever is applicable, unless the conditions in paragraph (k) of this rule are satisfied. (3) DETERMINATION OF AMOUNT. For the purpose of determining the amount of securities specified in paragraphs (e)(1) and (2) of this rule, the following provisions shall apply: (i) Where both convertible securities and securities of the class into which they are convertible are sold, the amount of convertible securities sold shall be deemed to be the amount of securities of the class into which they are convertible for the purpose of determining the aggregate amount of securities of both classes sold; (ii) The amount of securities sold for the account of a pledgee thereof, or for the account of a purchaser of the pledged securities, during any period of three months within one year after a default in the obligation secured by the pledge, and the amount of securities sold during the same three-month period for the account of the pledgor shall not exceed, in the aggregate, the amount specified in paragraph (e)(1) or (2) of this section, whichever is applicable; (iii) The amount of securities sold for the account of a donee thereof during any period of three months within one year after the donation, and the amount of securities sold during the same three-month period for the account of the donor, shall not exceed, in the aggregate, the amount specified in paragraph (e)(1) or (2) of this section, whichever is applicable; (iv) Where securities were acquired by a trust from the settlor of the trust, the amount of such securities sold for the account of the trust during any period of three months within one year after the acquisition of the securities by the trust, and the amount of securities sold during the same three-month period for the account of the settlor, shall not exceed, in the aggregate, the amount specified in paragraph (e)(1) or (2) of this section, whichever is applicable; (v) The amount of securities sold for the account of the estate of a deceased person, or for the account of a beneficiary of such estate, during any period of three months and the amount of securities sold during the same period for the account of the deceased person prior to his death shall not exceed, in the aggregate, the amount specified in subparagraph (1) or (2) of this paragraph, whichever is applicable; PROVIDED, that in no limitation on amount shall apply if the estate or beneficiary thereof is not an affiliate of the issuer; 83 (vi) When two or more affiliates or other persons agree to act in concert for the purpose of selling securities of an issuer, all securities of the same class sold for the account of all such persons during any period of three months shall be aggregated for the purpose of determining the limitation on the amount of securities sold; (vii) The following sales of securities need not be included in determining the amount of securities sold in reliance upon this section: securities sold pursuant to an effective registration statement under the Act; securities sold pursuant to an exemption provided by Regulation A under the Act; securities sold in a transaction exempt pursuant to Section 4 of the Act and not involving any public offering; and securities sold offshore pursuant to Regulation S under the Act. 84 SCHEDULE K SUPPORT AGREEMENT MEMORANDUM OF AGREEMENT made as of the . day of . , 2002, between Newmont Mining Company, a corporation existing under the laws of Delaware, [CALLCO], a company existing under the laws of . (hereinafter referred to as "CALLCO") and Acquisitionco, a corporation existing under the laws of Canada (hereinafter referred to, together with the continuing corporation from the amalgamation of Acquisitionco, Franco-Nevada ("FRANCO-NEVADA") and others ("ACQUISITIONCO"). RECITALS: (a) in connection with an arrangement agreement (the "ARRANGEMENT AGREEMENT") made as of November 14, 2001 between Newmont and Franco-Nevada, the Exchangeable Shares are to be issued to certain holders of securities of Franco-Nevada pursuant to the Plan of Arrangement contemplated by the Arrangement Agreement; and (b) pursuant to the Arrangement Agreement, Newmont, Acquisitionco and Callco are required to execute a support agreement substantially in the form of this agreement. In consideration of the foregoing and the mutual agreements contained herein (the receipt and sufficiency of which are acknowledged), the parties agree as follows: ARTICLE 1 DEFINITIONS AND INTERPRETATION SECTION 1.1 DEFINED TERMS Each initially capitalized term used and not otherwise defined herein shall have the meaning ascribed thereto in the rights, privileges, restrictions and conditions (collectively, the "SHARE PROVISIONS") attaching to the Exchangeable Shares as set out in the articles of Acquisitionco. In this agreement, "INCLUDING" means "including without limitation" and "INCLUDES" means "includes without limitation". SECTION 1.2 INTERPRETATION NOT AFFECTED BY HEADINGS The division of this agreement into Articles, section, (S) and other portions and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this agreement. Unless otherwise specified, references to an "Article" or "(S)" refer to the specified Article or (S) of this agreement. SECTION 1.3 NUMBER, GENDER Words importing the singular number only shall include the plural and vice versa. Words importing any gender shall include all genders. SECTION 1.4 DATE FOR ANY ACTION If any date on which any action is required to be taken under this agreement is not a business day, such action shall be required to be taken on the next succeeding business day. For the purposes of this agreement, a "BUSINESS DAY" means any day other than a Saturday, Sunday, a public holiday or a day on which commercial banks are not open for business in Toronto, Ontario or New York, New York under applicable law. 85 ARTICLE 2 COVENANTS OF NEWMONT AND ACQUISITIONCO SECTION 2.1 COVENANTS REGARDING EXCHANGEABLE SHARES So long as any Exchangeable Shares not owned by Newmont or its affiliates are outstanding, Newmont will: (a) not declare or pay any dividend on the Newmont Shares unless (i) Acquisitionco shall (A) on the same day declare or pay, as the case may be, an equivalent dividend (as provided for in the Share Provisions) on the Exchangeable Shares (an "EQUIVALENT DIVIDEND"), and (B) have sufficient money or other assets or authorized but unissued securities available to enable the due declaration and the due and punctual payment, in accordance with applicable law, of any such Equivalent Dividend, or (ii) Acquisitionco shall (A) subdivide the Exchangeable Shares in lieu of a stock dividend thereon (as provided for in the Share Provisions) (an "EQUIVALENT STOCK SUBDIVISION"), and (B) have sufficient authorized but unissued securities available to enable the Equivalent Stock Subdivision; (b) advise Acquisitionco sufficiently in advance of the declaration by Newmont of any dividend on the Newmont Shares and take all such other actions as are reasonably necessary, in co-operation with Acquisitionco, to ensure that (i) the respective declaration date, record date and payment date for an Equivalent Dividend on the Exchangeable Shares shall be the same as the declaration date, record date and payment date for the corresponding dividend on the Newmont Shares, or (ii) the record date and effective date for an Equivalent Stock Subdivision shall be the same as the record date and payment date for the corresponding stock dividend on the Newmont Shares; (c) ensure that the record date for any dividend declared on the Newmont Shares is not less than 7 days after the declaration date of such dividend; (d) take all such actions and do all such things as are reasonably necessary to enable and permit Acquisitionco, in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the Liquidation Amount, the Retraction Price or the Redemption Price in respect of each issued and outstanding Exchangeable Share (other than Exchangeable Shares owned by Newmont or its affiliates) upon the liquidation, dissolution or winding-up of Acquisitionco or any other distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs, the delivery of a Retraction Request by a holder of Exchangeable Shares or a redemption of Exchangeable Shares by Acquisitionco, as the case may be, including all such actions and all such things as are necessary or desirable to enable and permit Acquisitionco to cause to be delivered Newmont Shares to the holders of Exchangeable Shares in accordance with the provisions of (S)5, 6 or 7, as the case may be, of the Share Provisions; (e) take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Callco or Newmont, in accordance with applicable law, to perform its obligations arising upon the exercise by it of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, including all such actions and all such things as are necessary or desirable to enable and permit Callco or Newmont to cause to be delivered Newmont Shares to the holders of Exchangeable Shares in accordance with the provisions of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, as the case may be; and (f) except in connection with any event, circumstance or action which causes or could cause the occurrence of a Redemption Date, not exercise its vote as a shareholder to initiate the voluntary liquidation, dissolution or winding-up of Acquisitionco or any other distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs, nor take any action or omit to take any action that is designed to result in the liquidation, dissolution or winding-up of Acquisitionco or any other distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs. 86 SECTION 2.2 SEGREGATION OF FUNDS Newmont will cause Acquisitionco to deposit a sufficient amount of funds in a separate account of Acquisitionco and segregate a sufficient amount of such other assets and property as is necessary to enable Acquisitionco to pay dividends when due and to pay or otherwise satisfy its respective obligations under (S)5, 6 and 7 of the Share Provisions, as applicable. SECTION 2.3 RESERVATION OF NEWMONT SHARES Newmont hereby represents, warrants and covenants in favour of Acquisitionco and Callco that Newmont has reserved for issuance and will, at all times while any Exchangeable Shares (other than Exchangeable Shares held by Newmont or its affiliates) are outstanding, keep available, free from pre-emptive and other rights, out of its authorized and unissued capital stock such number of Newmont Shares (or other shares or securities into which Newmont Shares may be reclassified or changed as contemplated by Section 2.7): (a) as is equal to the sum of (i) the number of Exchangeable Shares issued and outstanding from time to time and (ii) the number of Exchangeable Shares issuable upon the exercise of all rights to acquire Exchangeable Shares outstanding from time to time; and (b) as are now and may hereafter be required to enable and permit Newmont to meet its obligations under the Voting and Exchange Trust Agreement and under any other security or commitment pursuant to which Newmont may now or hereafter be required to issue Newmont Ordinary Shares, to enable and permit Callco or Newmont to meet its obligations under each of the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right and to enable and permit Acquisitionco to meet its obligations hereunder and under the Share Provisions. SECTION 2.4 NOTIFICATION OF CERTAIN EVENTS In order to assist Newmont to comply with its obligations hereunder and to permit Callco or Newmont to exercise the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right, Acquisitionco will notify Newmont and Callco of each of the following events at the time set forth below: (a) in the event of any determination by the Board of Directors of Acquisitionco to institute voluntary liquidation, dissolution or winding-up proceedings with respect to Acquisitionco or to effect any other distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution; (b) promptly, upon the earlier of receipt by Acquisitionco of notice of and Acquisitionco otherwise becoming aware of any threatened or instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of Acquisitionco or to effect any other distribution of the assets of Acquisitionco among its shareholders for the purpose of winding up its affairs; (c) immediately, upon receipt by Acquisitionco of a Retraction Request; (d) on the same date on which notice of redemption is given to holders of Exchangeable Shares, upon the determination of a Redemption Date in accordance with the Share Provisions; and (e) as soon as practicable upon the issuance by Acquisitionco of any Exchangeable Shares or rights to acquire Exchangeable Shares (other than the issuance of Exchangeable Shares and rights to acquire Exchangeable Shares pursuant to the Arrangement). SECTION 2.5 DELIVERY OF NEWMONT SHARES TO ACQUISITIONCO AND CALLCO In furtherance of its obligations under Section 2.1(d) and Section 2.1(e), upon notice from Acquisitionco or Callco of any event that requires Acquisitionco or Callco to cause to be delivered Newmont Shares to any holder of Exchangeable Shares, Newmont shall forthwith allot, issue and deliver or cause to be delivered to the relevant holder of Exchangeable Shares as directed by Acquisitionco or Callco the requisite number of Newmont Shares 87 to be allotted to, received by, and issued to or to the order of, the former holder of the surrendered Exchangeable Shares (but, for the avoidance of doubt, not to Acquisitionco or Callco). All such Newmont Shares shall be duly authorized and validly issued as fully paid and shall be free and clear of any lien, claim or encumbrance. In consideration of the issuance and delivery of each such Newmont Share, Acquisitionco or Callco, as the case may be, shall subscribe a cash amount or pay a purchase price equal to the fair market value of such Newmont Shares. SECTION 2.6 QUALIFICATION OF NEWMONT SHARES If any Newmont Shares (or other shares or securities into which Newmont Shares may be reclassified or changed as contemplated by Section 2.7) to be issued and delivered hereunder require registration or qualification with or approval of or the filing of any document, including any prospectus or similar document or the taking of any proceeding with or the obtaining of any order, ruling or consent from any governmental or regulatory authority under any United States or Canadian federal, state, provincial or territorial securities or other law or regulation or pursuant to the rules and regulations of any securities or other regulatory authority in the United States or Canada or the fulfillment of any other United States or Canadian legal requirement before such shares (or such other shares or securities) may be issued by Newmont and delivered by Newmont at the direction of Callco or Acquisitionco, if applicable, to the holder of surrendered Exchangeable Shares or in order that such shares (or such other shares or securities) may be freely traded thereafter (other than any restrictions of general application on transfer by reason of a holder being a "CONTROL PERSON" for purposes of Canadian federal, provincial or territorial securities Law or the equivalent thereof under any United States Laws), Newmont will in good faith expeditiously take all such actions and do all such things as are reasonably necessary or desirable to cause such Newmont Shares (or such other shares or securities) to be and remain duly registered, qualified or approved under United States and/or Canadian law. Newmont will in good faith expeditiously take all such actions and do all such things as are reasonably necessary or desirable to cause all Newmont Shares (or such other shares or securities) to be delivered hereunder to be listed, quoted or posted for trading on all stock exchanges and quotation systems on which outstanding Newmont Shares (or such other shares or securities) have been listed by Newmont and remain listed and are quoted or posted for trading at such time. SECTION 2.7 ECONOMIC EQUIVALENCE So long as any Exchangeable Shares not owned by Newmont or its affiliates are outstanding: (a) Newmont will not without prior approval of Acquisitionco and the prior approval of the holders of the Exchangeable Shares given in accordance with (S)10(2) of the Share Provisions: (i) issue or distribute Newmont Shares (or securities exchangeable for or convertible into or carrying rights to acquire Newmont Shares) to the holders of all or substantially all of the then outstanding Newmont Shares by way of stock dividend or other distribution, other than an issue of Newmont Shares (or securities exchangeable for or convertible into or carrying rights to acquire Newmont Shares) to holders of Newmont Shares (i) who exercise an option to receive dividends in Newmont Shares (or securities exchangeable for or convertible into or carrying rights to acquire Newmont Shares) in lieu of receiving cash dividends, or (ii) pursuant to any dividend reinvestment plan or similar arrangement; or (ii) issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding Newmont Shares entitling them to subscribe for or to purchase Newmont Shares (or securities exchangeable for or convertible into or carrying rights to acquire Newmont Shares); or (iii) issue or distribute to the holders of all or substantially all of the then outstanding Newmont Shares (A) shares or securities (including evidence of indebtedness) of Newmont of any class (other than Newmont Shares or securities convertible into or exchangeable for or carrying rights to acquire Newmont Shares), or (B) rights, options, warrants or other assets other than those referred to in Section 2.7(a)(ii), 88 unless in each case the economic equivalent on a per share basis of such rights, options, securities, shares, evidences of indebtedness or other assets is issued or distributed simultaneously to holders of the Exchangeable Shares and at least 7 days prior written notice thereof is given to the holders of Exchangeable Shares; provided that, for greater certainty, the above restrictions shall not apply to any securities issued or distributed by Newmont in order to give effect to and to consummate, is in furtherance of or is otherwise in connection with the transactions contemplated by, and in accordance with, the Plan of Arrangement. (b) Newmont will not without the prior approval of Acquisitionco and the prior approval of the holders of the Exchangeable Shares given in accordance with (S)10(2) of the Share Provisions: (i) subdivide, redivide or change the then outstanding Newmont Shares into a greater number of Newmont Shares; or (ii) reduce, combine, consolidate or change the then outstanding Newmont Shares into a lesser number of Newmont Shares; or (iii) reclassify or otherwise change Newmont Shares or effect an amalgamation, merger, reorganization or other transaction affecting Newmont Shares; unless the same or an economically equivalent change shall simultaneously be made to, or in the rights of the holders of, the Exchangeable Shares and at least seven days prior written notice is given to the holders of Exchangeable Shares. (c) Newmont will ensure that the record date for any event referred to in Section 2.7(a) or Section 2.7(b), or (if no record date is applicable for such event) the effective date for any such event, is not less than five business days after the date on which such event is declared or announced by Newmont (with contemporaneous notification thereof by Newmont to Acquisitionco). (d) The Board of Directors of Acquisitionco shall determine, acting in good faith and in its sole discretion, economic equivalence for the purposes of any event referred to in Section 2.7(a) or Section 2.7(b) and each such determination shall be conclusive and binding on Newmont. In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors of Acquisitionco to be relevant, be considered by the Board of Directors of Acquisitionco: (i) in the case of any stock dividend or other distribution payable in Newmont Shares, the number of such shares issued in proportion to the number of Newmont Shares previously outstanding; (ii) in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase Newmont Shares (or securities exchangeable for or convertible into or carrying rights to acquire Newmont Shares), the relationship between the exercise price of each such right, option or warrant and the Current Market Price of a Newmont Share; (iii) in the case of the issuance or distribution of any other form of property (including any shares or securities of Newmont of any class other than Newmont Shares, any rights, options or warrants other than those referred to in Section 2.7(d)(ii), any evidences of indebtedness of Newmont or any assets of Newmont), the relationship between the fair market value (as determined by the Board of Directors of Acquisitionco in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding Newmont Share and the Current Market Price of a Newmont Share; (iv) in the case of any subdivision, redivision or change of the then outstanding Newmont Shares into a greater number of Newmont Shares or the reduction, combination, consolidation or change of the then outstanding Newmont Shares into a lesser number of Newmont Shares or any amalgamation, merger, reorganization or other transaction affecting Newmont Shares, the effect thereof upon the then outstanding Newmont Shares; and (v) in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of Newmont Shares as a result of differences between taxation laws of Canada and the 89 United States (except for any differing consequences arising as a result of differing marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares). (e) Acquisitionco agrees that, to the extent required, upon due notice from Newmont, Acquisitionco will use its best efforts to take or cause to be taken such steps as may be necessary for the purposes of ensuring that appropriate dividends are paid or other distributions are made by Acquisitionco, or subdivisions, redivisions or changes are made to the Exchangeable Shares, in order to implement the required economic equivalence with respect to the Newmont Shares and Exchangeable Shares as provided for in this Section 2.7. SECTION 2.8 TENDER OFFERS In the event that a tender offer, share exchange offer, issuer bid, take-over bid or similar transaction with respect to Newmont Shares (an "OFFER") is proposed by Newmont or is proposed to Newmont or its shareholders and is recommended by the Board of Directors of Newmont, or is otherwise effected or to be effected with the consent or approval of the Board of Directors of Newmont, and the Exchangeable Shares are not redeemed by Acquisitionco or purchased by Callco or Newmont pursuant to the Redemption Call Right, Newmont will expeditiously and in good faith take all such actions and do all such things as are reasonably necessary or desirable to enable and permit holders of Exchangeable Shares (other than Newmont and its affiliates) to participate in such Offer to the same extent and on an economically equivalent basis as the holders of Newmont Shares, without discrimination. Without limiting the generality of the foregoing, Newmont will expeditiously and in good faith take all such actions and do all such things as are reasonably necessary or desirable to ensure that holders of Exchangeable Shares may participate in each such Offer without being required to retract Exchangeable Shares as against Acquisitionco (or, if so required, to ensure that any such retraction, shall be effective only upon, and shall be conditional upon, the closing of such Offer and only to the extent necessary to tender or deposit to the Offer). Nothing herein shall affect the rights of Acquisitionco to redeem (or Callco or Newmont to purchase pursuant to the Redemption Call Right) Exchangeable Shares, as applicable, in the event of a Newmont Control Transaction. SECTION 2.9 OWNERSHIP OF OUTSTANDING SHARES Without the prior approval of Acquisitionco and the prior approval of the holders of the Exchangeable Shares given in accordance with (S)10(2) of the Share Provisions, Newmont covenants and agrees in favour of Acquisitionco that, as long as any outstanding Exchangeable Shares are owned by any person other than Newmont or any of its affiliates, Newmont will be and remain the direct or indirect beneficial owner of all issued and outstanding voting shares in the capital of Acquisitionco and Callco. SECTION 2.10 NEWMONT AND AFFILIATES NOT TO VOTE EXCHANGEABLE SHARES Newmont covenants and agrees that it will appoint and cause to be appointed proxyholders with respect to all Exchangeable Shares held by it and its affiliates for the sole purpose of attending each meeting of holders of Exchangeable Shares in order to be counted as part of the quorum for each such meeting. Newmont further covenants and agrees that it will not, and will cause its affiliates not to, exercise any voting rights which may be exercisable by holders of Exchangeable Shares from time to time pursuant to the Share Provisions or pursuant to the provisions of the CBCA (or any successor or other corporate statute by which Acquisitionco may in the future be governed) with respect to any Exchangeable Shares held by it or by its affiliates in respect of any matter considered at any meeting of holders of Exchangeable Shares. SECTION 2.11 ORDINARY MARKET PURCHASES For certainty, nothing contained in this agreement, including the obligations of Newmont contained in Section 2.8, shall limit the ability of Newmont (or any of its subsidiaries including, without limitation, Callco or 90 Acquisitionco) to make ordinary market purchases of Newmont Shares in accordance with applicable laws and regulatory or stock exchange requirements. SECTION 2.12 STOCK EXCHANGE LISTING Newmont covenants and agrees in favour of Acquisitionco that, as long as any outstanding Exchangeable Shares are owned by any person other than Newmont or any of its affiliates, Newmont will use its best efforts to maintain a listing for such Exchangeable Shares on The Toronto Stock Exchange. ARTICLE 3 NEWMONT SUCCESSORS SECTION 3.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. As long as any outstanding Exchangeable Shares are owned by any person other than Newmont or any of its affiliates, Newmont shall not consummate any transaction (whether by way of reconstruction, reorganization, consolidation, arrangement, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other person or, in the case of a merger, of the continuing corporation resulting therefrom unless, but may do so if: (a) such other person or continuing corporation (the "NEWMONT SUCCESSOR") by operation of law, becomes, without more, bound by the terms and provisions of this agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, an agreement supplemental hereto and such other instruments (if any) as are reasonably necessary or advisable to evidence the assumption by the Newmont Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such Newmont Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of Newmont under this agreement; and (b) such transaction shall be upon such terms and conditions as substantially to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the other parties hereunder or the holders of the Exchangeable Shares. SECTION 3.2 VESTING OF POWERS IN SUCCESSOR Whenever the conditions of Section 3.1 have been duly observed and performed, the parties, if required by Section 3.1, shall execute and deliver the supplemental agreement provided for in Section 3.1(a) and thereupon the Newmont Successor and such other person that may then be the issuer of the Newmont Shares shall possess and from time to time may exercise each and every right and power of Newmont under this agreement in the name of Newmont or otherwise and any act or proceeding by any provision of this agreement required to be done or performed by the Board of Directors of Newmont or any officers of Newmont may be done and performed with like force and effect by the directors or officers of such Newmont Successor. SECTION 3.3 WHOLLY-OWNED SUBSIDIARIES Nothing herein shall be construed as preventing (i) the amalgamation or merger of any wholly-owned direct or indirect subsidiary of Newmont with or into Newmont, (ii) the winding-up, liquidation or dissolution of any wholly-owned direct or indirect subsidiary of Newmont, provided that all of the assets of such subsidiary are transferred to Newmont or another wholly-owned direct or indirect subsidiary of Newmont, or (iii) any other distribution of the assets of any wholly-owned direct or indirect subsidiary of Newmont among the shareholders of such subsidiary for the purpose of winding up its affairs, and any such transactions are expressly permitted by this Article 3. 91 ARTICLE 4 GENERAL SECTION 4.1 TERM This agreement shall come into force and be effective as of the date hereof and shall terminate and be of no further force and effect at such time as no Exchangeable Shares (or securities or rights convertible into or exchangeable for or carrying rights to acquire Exchangeable Shares) are held by any person other than Newmont and any of its affiliates. SECTION 4.2 CHANGES IN CAPITAL OF NEWMONT AND ACQUISITIONCO At all times after the occurrence of any event contemplated pursuant to Section 2.7 and Section 2.8 or otherwise, as a result of which either Newmont Shares or the Exchangeable Shares or both are in any way changed, this agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, MUTATIS MUTANDIS, to all new securities into which Newmont Shares or the Exchangeable Shares or both are so changed and the parties hereto shall execute and deliver an agreement in writing giving effect to and evidencing such necessary amendments and modifications. SECTION 4.3 SEVERABILITY If any term or other provision of this agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. SECTION 4.4 AMENDMENTS, MODIFICATIONS (a) Subject to Section 4.2, Section 4.3 and Section 4.5 this agreement may not be amended or modified except by an agreement in writing executed by Acquisitionco, Callco and Newmont and approved by the holders of the Exchangeable Shares in accordance with (S)10(2) of the Share Provisions. (b) No amendment or modification or waiver of any of the provisions of this agreement otherwise permitted hereunder shall be effective unless made in writing and signed by all of the parties hereto. SECTION 4.5 MINISTERIAL AMENDMENTS Notwithstanding the provisions of Section 4.4, the parties to this agreement may in writing at any time and from time to time, without the approval of the holders of the Exchangeable Shares, amend or modify this agreement for the purposes of: (a) adding to the covenants of any or all parties provided that the Board of Directors of each of Acquisitionco, Callco and Newmont shall be of the good faith opinion that such additions will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares; (b) making such amendments or modifications not inconsistent with this agreement as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the Board of Directors of each of Acquisitionco, Callco and Newmont, it may be expedient to make, provided that each such Board of Directors shall be of the good faith opinion that such amendments or modifications will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares; or 92 (c) making such changes or corrections which, on the advice of counsel to Acquisitionco, Callco and Newmont, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error, provided that the Boards of Directors of each of Acquisitionco, Callco and Newmont shall be of the good faith opinion that such changes or corrections will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares. SECTION 4.6 MEETING TO CONSIDER AMENDMENTS Acquisitionco, at the request of Newmont, shall call a meeting or meetings of the holders of the Exchangeable Shares for the purpose of considering any proposed amendment or modification requiring approval pursuant to Section 4.4. Any such meeting or meetings shall be called and held in accordance with the bylaws of Acquisitionco, the Share Provisions and all applicable laws. SECTION 4.7 ENUREMENT This agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and assigns. SECTION 4.8 NOTICES TO PARTIES Any notice and other communications required or permitted to be given pursuant to this agreement shall be sufficiently given if delivered in person or if sent by facsimile transmission (provided such transmission is recorded as being transmitted successfully) to the parties at the following addresses: . or at such other address as the party to which such notice or other communication is to be given has last notified the party given the same in the manner provided in this section, and if not given the same shall be deemed to have been received on the date of such delivery or sending. SECTION 4.9 COUNTERPARTS This agreement may be executed in counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. SECTION 4.10 JURISDICTION This agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. Each party hereto irrevocably submits to the non-exclusive jurisdiction of the courts of the Province of Ontario with respect to any matter arising hereunder or related hereto. 93 IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly executed as of the date first above written. NEWMONT By: ----------------------------------- Name: Title: [CALLCO] By: ----------------------------------- Name: Title: ACQUISITIONCO By: ----------------------------------- Name: Title: 94 SCHEDULE L VOTING AND EXCHANGE TRUST AGREEMENT MEMORANDUM OF AGREEMENT made as of the . day of . , 2002, between New Newmont, a corporation existing under the laws of [DELAWARE] ("NEWMONT"), Acquisitionco, a corporation existing under the laws of Canada (together with the continuing corporation from the amalgamation of Acquisitionco, Franco-Nevada and others, hereinafter referred to as "ACQUISITIONCO") and . , a trust company incorporated under the laws of Canada (hereinafter referred to as "TRUSTEE"). RECITALS: A In connection with an arrangement agreement (as further amended, supplemented and/or restated, the "ARRANGEMENT AGREEMENT") made as of November 14, 2001 between Newmont and Franco-Nevada ("FRANCO-NEVADA"), the Exchangeable Shares are to be issued to certain holders of securities of Franco-Nevada pursuant to the Plan of Arrangement contemplated in the Arrangement Agreement; B Pursuant to the Arrangement Agreement, Newmont and Acquisitionco are required to execute a voting and exchange trust agreement substantially in the form of this agreement. In consideration of the foregoing and the mutual agreements contained herein (the receipt and sufficiency of which are acknowledged), the parties agree as follows: ARTICLE 1 DEFINITIONS AND INTERPRETATION 1.1 DEFINITIONS In this agreement, each initially capitalized term used and not otherwise defined herein shall have the meaning ascribed thereto in the rights, privileges, restrictions and conditions (collectively, the "SHARE PROVISIONS") attaching to the Exchangeable Shares as set out in the articles of Acquisitionco and the following terms shall have the following meanings: "AUTHORIZED INVESTMENTS" means short term interest bearing or discount debt obligations issued or guaranteed by the Government of Canada or any province thereof or a Canadian chartered bank (which may include an affiliate or related party of the Trustee), maturing not more than one year from the date of investment, provided that each such obligation is rated at least R1 (middle) by DBRS Inc. or any equivalent rating by Canadian Bond Rating Service. "AUTOMATIC EXCHANGE RIGHT" means the benefit of the obligation of Newmont under (S)5.1 pursuant to which Newmont is required to purchase all or any part of the Exchangeable Shares from the holders thereof in exchange for Newmont Shares upon the occurrence and during the continuance of an Insolvency Event. "AUTOMATIC EXCHANGE RIGHTS ON LIQUIDATION" means the benefit of the obligation of Newmont to effect the automatic exchange of Exchangeable Shares for Newmont Shares pursuant to (S)5.8. "BENEFICIARIES" means the registered holders from time to time of Exchangeable Shares, other than Newmont's affiliates. "BENEFICIARY VOTES" has the meaning ascribed thereto in (S)4.2. "BOARD OF DIRECTORS" means the Board of Directors of Acquisitionco. "EXCHANGEABLE SHARES" means the exchangeable shares in the capital of Acquisitionco as more particularly described in Appendix 1 to Schedule B. 95 "INCLUDING" means "including without limitation" and "INCLUDES" means "includes without limitation". "INDEMNIFIED PARTIES" has the meaning ascribed thereto in (S)9.1. "INSOLVENCY EVENT" means (i) the institution by Acquisitionco of any proceeding to be adjudicated a bankrupt or insolvent or to be wound up, or the consent of Acquisitionco to the institution of bankruptcy, insolvency or winding-up proceedings against it, or (ii) the filing of a petition, answer or consent seeking dissolution or winding-up under any bankruptcy, insolvency or analogous laws, including the COMPANIES CREDITORS' ARRANGEMENT ACT (Canada) and the BANKRUPTCY AND INSOLVENCY ACT (Canada), and the failure by Acquisitionco to contest in good faith any such proceedings commenced in respect of Acquisitionco within 30 days of becoming aware thereof, or the consent by Acquisitionco to the filing of any such petition or to the appointment of a receiver, or (iii) the making by Acquisitionco of a general assignment for the benefit of creditors, or the admission in writing by Acquisitionco of its inability to pay its debts generally as they become due, or (iv) Acquisitionco not being permitted, pursuant to solvency requirements of applicable law, to redeem any Retracted Shares pursuant to (S)6(6) of the Share Provisions. "LIQUIDATION EVENT" has the meaning ascribed thereto in (S)5.8(2). "LIQUIDATION EVENT EFFECTIVE DATE" has the meaning ascribed thereto in (S)5.8(3). "LIST" has the meaning ascribed thereto in (S)4.6. "NEWMONT MEETING" has the meaning ascribed thereto in (S)4.2. "NEWMONT SPECIAL VOTING SHARE" means the special voting share in the capital of Newmont which entitles the holder of record to a number of votes at meetings of holders of Newmont Shares equal to the number of Exchangeable Shares outstanding from time to time (other than Exchangeable Shares held by Newmont and affiliates of Newmont), subject to a maximum aggregate number of votes equal to 10% of the aggregate number of votes attached to the Newmont Shares that are issued and outstanding at the relevant time, which share is to be issued to and voted by, the Trustee as described herein. "NEWMONT SUCCESSOR" has the meaning ascribed thereto in (S)11.1(a). "OFFICER'S CERTIFICATE" means, with respect to Newmont or Acquisitionco, as the case may be, a certificate signed by any officer or director of Newmont or Acquisitionco, as the case may be. "SUPPORT AGREEMENT" means that certain support agreement of even date between Acquisitionco, Callco and Newmont in the form of Schedule D to the Arrangement Agreement, as amended in accordance with the terms of the Support Agreement. "TRUST" means the trust created by this agreement. "TRUST ESTATE" means the Newmont Special Voting Share, any other securities, the Automatic Exchange Right, the Automatic Exchange Rights on Liquidation and any money or other property which may be held by the Trustee from time to time pursuant to this agreement. "TRUSTEE" means [COMPUTERSHARE TRUST COMPANY OF CANADA] and, subject to the provisions of Article 10, includes any successor trustee. "VOTING RIGHTS" means the voting rights attached to the Newmont Special Voting Share. 1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this agreement into Articles, sections and other portions and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this agreement. Unless otherwise specified, references to an "Article" or "section" refer to the specified Article or section of this agreement. 96 1.3 NUMBER, GENDER, ETC. Words importing the singular number only shall include the plural and VICE VERSA. Words importing any gender shall include all genders. 1.4 DATE FOR ANY ACTION If any date on which any action is required to be taken under this agreement is not a business day, such action shall be required to be taken on the next succeeding business day. ARTICLE 2 PURPOSE OF AGREEMENT 2.1 ESTABLISHMENT OF TRUST The purpose of this agreement is to create the Trust for the benefit of the Beneficiaries, as herein provided. The Trustee will hold the Newmont Special Voting Share in order to enable the Trustee to exercise the Voting Rights and will hold the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation in order to enable the Trustee to exercise such rights, in each case as trustee for and on behalf of the Beneficiaries as provided in this agreement. ARTICLE 3 NEWMONT SPECIAL VOTING SHARE 3.1 ISSUE AND OWNERSHIP OF THE NEWMONT SPECIAL VOTING SHARE Immediately following execution of this agreement, Newmont shall issue to the Trustee the Newmont Special Voting Share (and shall deliver the certificate representing such share to the Trustee) to be hereafter held of record by the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries and in accordance with the provisions of this agreement. Newmont hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of good and valuable consideration (and the adequacy thereof) for the issuance of the Newmont Special Voting Share by Newmont to the Trustee. During the term of the Trust and subject to the terms and conditions of this agreement, the Trustee shall possess and be vested with full legal ownership of the Newmont Special Voting Share and shall be entitled to exercise all of the rights and powers of an owner with respect to the Newmont Special Voting Share provided that the Trustee shall: (a) hold the Newmont Special Voting Share and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this agreement; and (b) except as specifically authorized by this agreement, have no power or authority to sell, transfer, vote or otherwise deal in or with the Newmont Special Voting Share and the Newmont Special Voting Share shall not be used or disposed of by the Trustee for any purpose other than the purposes for which this Trust is created pursuant to this agreement. 3.2 LEGENDED SHARE CERTIFICATES Acquisitionco will cause each certificate representing Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries of their right to instruct the Trustee with respect to the exercise of the Voting Rights in respect of the Exchangeable Shares of the Beneficiaries. 3.3 SAFE KEEPING OF CERTIFICATE The certificate representing the Newmont Special Voting Share shall at all times be held in safe keeping by the Trustee or its duly authorized agent. 97 ARTICLE 4 EXERCISE OF VOTING RIGHTS 4.1 VOTING RIGHTS The Trustee, as the holder of record of the Newmont Special Voting Share, shall be entitled to all of the Voting Rights, including the right to vote in person or by proxy attaching to the Newmont Special Voting Share on any matters, questions, proposals or propositions whatsoever that may properly come before the shareholders of Newmont at a Newmont Meeting. The Voting Rights shall be and remain vested in and exercised by the Trustee subject to the terms of this agreement. Subject to (S)7.15: (a) the Trustee shall exercise the Voting Rights only on the basis of instructions received pursuant to this Article 4 from Beneficiaries on the record date established by Newmont or by applicable law for such Newmont Meeting who are entitled to instruct the Trustee as to the voting thereof; and (b) to the extent that no instructions are received from a Beneficiary with respect to the Voting Rights to which such Beneficiary is entitled, the Trustee shall not exercise or permit the exercise of such Voting Rights. 4.2 NUMBER OF VOTES (1) With respect to all meetings of shareholders of Newmont at which holders of Newmont Shares are entitled to vote (each, a "NEWMONT MEETING"), each Beneficiary shall be entitled to instruct the Trustee to cast and exercise for each Exchangeable Share owned of record by a Beneficiary on the record date established by Newmont or by applicable law for such Newmont Meeting (the "BENEFICIARY VOTES"), in respect of each matter, question, proposal or proposition to be voted on at such Newmont Meeting, a pro rata number of Voting Rights determined by reference to the total number of outstanding Exchangeable Shares not owned by Newmont and its affiliates. (2) The aggregate Voting Rights on a poll at a Newmont Meeting shall consist of a number of votes equal to the lesser of: (a) one vote per outstanding Exchangeable Share from time to time not owned by Newmont and its affiliates, and (b) one vote for every 10 votes attaching to outstanding Newmont Shares, and for which the Trustee has received voting instructions from the Beneficiary. Pursuant to the terms of the Special Voting Share, the Trustee or its proxy is entitled on a vote on a show of hands to one vote in addition to any votes which may be cast by a Beneficiary (or its nominee) on a show of hands as proxy for the Trustee. Any Beneficiary who chooses to attend a Newmont Meeting in person, and who is entitled to vote in accordance with (S)4.8(2) shall be entitled to one vote on a show of hands. 4.3 MAILINGS TO SHAREHOLDERS (1) With respect to each Newmont Meeting, the Trustee will use its reasonable efforts promptly to mail or cause to be mailed (or otherwise communicate in the same manner as Newmont utilizes in communications to holders of Newmont Shares subject to applicable regulatory requirements and provided that such manner of communications is reasonably available to the Trustee) to each of the Beneficiaries named in the List, such mailing or communication to commence wherever practicable on the same day as the mailing or notice (or other communication) with respect thereto is commenced by Newmont to its shareholders: (a) a copy of such notice, together with any related materials, including any circular or information statement or listing particulars, to be provided to shareholders of Newmont; (b) a statement that such Beneficiary is entitled to instruct the Trustee as to the exercise of the Beneficiary Votes with respect to such Newmont Meeting or, pursuant to (S)4.7, to attend such Newmont Meeting and to exercise personally the Beneficiary Votes thereat; 98 (c) a statement as to the manner in which such instructions may be given to the Trustee, including an express indication that instructions may be given to the Trustee to give: (i) a proxy to such Beneficiary or his, her or its designee to exercise personally the Beneficiary Votes; or (ii) a proxy to a designated agent or other representative of Newmont to exercise such Beneficiary Votes; (d) a statement that if no such instructions are received from the Beneficiary, the Beneficiary Votes to which such Beneficiary is entitled will not be exercised; (e) a form of direction whereby the Beneficiary may so direct and instruct the Trustee as contemplated herein; and (f) a statement of the time and date by which such instructions must be received by the Trustee in order to be binding upon it, which in the case of a Newmont Meeting shall not be earlier than the close of business on the fourth business day prior to such meeting, and of the method for revoking or amending such instructions. (2) The materials referred to in this (S)4.3 are to be provided to the Trustee by Newmont, and the materials referred to in (S)4.3(1)(c), (S)4.3(1)(e) and (S)4.3(1)(f) shall (if reasonably practicable to do so) be subject to reasonable comment by the Trustee in a timely manner. Subject to the foregoing, Newmont shall ensure that the materials to be provided to the Trustee are provided in sufficient time to permit the Trustee to comment as aforesaid and to send all materials to each Beneficiary at the same time as such materials are first sent to holders of Newmont Shares. Newmont agrees not to communicate with holders of Newmont Shares with respect to the materials referred to in this (S)4.3 otherwise than by mail unless such method of communication is also reasonably available to the Trustee for communication with the Beneficiaries. (3) For the purpose of determining Beneficiary Votes to which a Beneficiary is entitled in respect of any Newmont Meeting, the number of Exchangeable Shares owned of record by the Beneficiary shall be determined at the close of business on the record date established by Newmont or by applicable law for purposes of determining shareholders entitled to vote at such Newmont Meeting. Newmont will notify the Trustee of any decision of the board of directors of Newmont with respect to the calling of any Newmont Meeting and shall provide all necessary information and materials to the Trustee in each case promptly and in any event in sufficient time to enable the Trustee to perform its obligations contemplated by this (S)4.3. 4.4 COPIES OF SHAREHOLDER INFORMATION Newmont will deliver to the Trustee copies of all proxy materials (including notices of Newmont Meetings but excluding proxies to vote Newmont Shares), information statements, reports (including all interim and annual financial statements) and other written communications that, in each case, are to be distributed by Newmont from time to time to holders of Newmont Shares in sufficient quantities and in sufficient time so as to enable the Trustee to send those materials to each Beneficiary at the same time as such materials are first sent to holders of Newmont Shares. The Trustee will mail or otherwise send to each Beneficiary, at the expense of Newmont, copies of all such materials (and all materials specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by Newmont) received by the Trustee from Newmont contemporaneously with the sending of such materials to holders of Newmont Shares. The Trustee will also make available for inspection by any Beneficiary at the Trustee's principal office in Toronto all proxy materials, information statements, reports and other written communications that are: (a) received by the Trustee as the registered holder of the Newmont Special Voting Share and made available by Newmont generally to the holders of Newmont Shares; or (b) specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by Newmont. 99 4.5 OTHER MATERIALS As soon as reasonably practicable after receipt by Newmont or shareholders of Newmont (if such receipt is known by Newmont) of any material sent or given by or on behalf of a third party to holders of Newmont Shares generally, including dissident proxy and information circulars (and related information and material) and take-over bid and securities exchange take-over bid circulars (and related information and material), provided such material has not been sent to the Beneficiaries by or on behalf of such third party, Newmont shall use its reasonable efforts to obtain and deliver to the Trustee copies thereof in sufficient quantities so as to enable the Trustee to forward such material (unless the same has been provided directly to Beneficiaries by such third party) to each Beneficiary as soon as possible thereafter. As soon as reasonably practicable after receipt thereof, the Trustee will mail or otherwise send to each Beneficiary, at the expense of Newmont, copies of all such materials received by the Trustee from Newmont. The Trustee will also make available for inspection by any Beneficiary at the Trustee's principal office in Toronto copies of all such materials. 4.6 LIST OF PERSONS ENTITLED TO VOTE Acquisitionco shall, (a) prior to each annual, general and extraordinary Newmont Meeting and (b) forthwith upon each request made at any time by the Trustee in writing, prepare or cause to be prepared a list (a "LIST") of the names and addresses of the Beneficiaries arranged in alphabetical order and showing the number of Exchangeable Shares held of record by each such Beneficiary, in each case at the close of business on the date specified by the Trustee in such request or, in the case of a List prepared in connection with a Newmont Meeting, at the close of business on the record date established by Newmont or pursuant to applicable law for determining the holders of Newmont Shares entitled to receive notice of and/or to vote at such Newmont Meeting. Each such List shall be delivered to the Trustee promptly after receipt by Acquisitionco of such request or the record date for such meeting and in any event within sufficient time as to permit the Trustee to perform its obligations under this agreement. Newmont agrees to give Acquisitionco notice (with a copy to the Trustee) of the calling of any Newmont Meeting, together with the record date therefor, sufficiently prior to the date of the calling of such meeting so as to enable Acquisitionco to perform its obligations under this (S)4.6. 4.7 ENTITLEMENT TO DIRECT VOTES Subject to (S)4.8 and (S)4.11, any Beneficiary named in a List prepared in connection with any Newmont Meeting will be entitled (a) to instruct the Trustee in the manner described in (S)4.3 with respect to the exercise of the Beneficiary Votes to which such Beneficiary is entitled or (b) to attend such meeting and personally exercise thereat, as the proxy of the Trustee, the Beneficiary Votes to which such Beneficiary is entitled. 4.8 VOTING BY TRUSTEE AND ATTENDANCE OF TRUSTEE REPRESENTATIVE AT MEETING (1) In connection with each Newmont Meeting, the Trustee shall exercise, either in person or by proxy, in accordance with the instructions received from a Beneficiary pursuant to (S)4.3, the Beneficiary Votes as to which such Beneficiary is entitled to direct the vote (or any lesser number thereof as may be set forth in the instructions) other than any Beneficiary Votes that are the subject of (S)4.8(2); provided, however, that such written instructions are received by the Trustee from the Beneficiary prior to the time and date fixed by the Trustee for receipt of such instruction in the notice given by the Trustee to the Beneficiary pursuant to (S)4.3. (2) The Trustee shall cause a representative who is empowered by it to sign and deliver, on behalf of the Trustee, proxies for Voting Rights to attend each Newmont Meeting. Upon submission by a Beneficiary (or its designee) named in the List prepared in connection with the relevant meeting of identification satisfactory to the Trustee's representative, and at the Beneficiary's request, such representative shall sign and deliver to such Beneficiary (or its designee) a proxy to exercise personally the Beneficiary Votes as to which such Beneficiary is otherwise entitled hereunder to direct the vote, if such Beneficiary either (i) has not previously given the Trustee instructions pursuant to (S)4.3 in respect of such meeting or (ii) submits to such representative written revocation of any such previous instructions. At such meeting, the Beneficiary (or its designee) exercising such Beneficiary Votes in accordance with such proxy shall have the same rights in respect of such Beneficiary Votes as the Trustee to speak at the meeting in favour of any matter, question, proposal or proposition, to vote by way of ballot at the meeting in respect of any matter, question, proposal or proposition, and to vote at such meeting by way of a show of hands in respect of any matter, question or proposition. 100 4.9 DISTRIBUTION OF WRITTEN MATERIALS Any written materials distributed by the Trustee pursuant to this agreement shall be sent by mail (or otherwise communicated in the same manner as Newmont utilizes in communications to holders of Newmont Shares subject to applicable regulatory requirements and provided such manner of communications is reasonably available to the Trustee) to each Beneficiary at its address as shown on the books of Acquisitionco. Newmont agrees not to communicate with holders of Newmont Shares with respect to such written materials otherwise than by mail unless such method of communication is also reasonably available to the Trustee for communication with the Beneficiaries. Acquisitionco shall provide or cause to be provided to the Trustee for purposes of communication, on a timely basis and without charge or other expense: (a) a current List; and (b) upon the request of the Trustee, mailing labels to enable the Trustee to carry out its duties under this agreement. 4.10 TERMINATION OF VOTING RIGHTS All of the rights of a Beneficiary with respect to the Beneficiary Votes exercisable in respect of the Exchangeable Shares held by such Beneficiary, including the right to instruct the Trustee as to the voting of or to vote personally such Beneficiary Votes, shall be deemed to be surrendered by the Beneficiary to Newmont or Callco, as the case may be, and such Beneficiary Votes and the Voting Rights represented thereby shall cease immediately upon (i) the delivery by such holder to the Trustee of the certificates representing such Exchangeable Shares in connection with the occurrence of the automatic exchange of Exchangeable Shares for Newmont Shares, as specified in Article 5 (unless Newmont shall not have delivered the requisite Newmont Shares issuable in exchange therefor to the Trustee pending delivery to the Beneficiaries), or (ii) the retraction or redemption of Exchangeable Shares pursuant to (S)6 or 7 of the Share Provisions, or (iii) the effective date of the liquidation, dissolution or winding-up of Acquisitionco pursuant to (S)5 of the Share Provisions, or (iv) the purchase of Exchangeable Shares from the holder thereof by Callco or Newmont pursuant to the exercise by Callco or Newmont of the Retraction Call Right, the Redemption Call Right or the Liquidation Call Right. 4.11 DISCLOSURE OF INTEREST IN EXCHANGEABLE SHARES The Trustee and/or Acquisitionco shall be entitled to require any Beneficiary or any person who the Trustee and/or Acquisitionco know or have reasonable cause to believe to hold any interest whatsoever in an Exchangeable Share to confirm that fact or to give such details as to whom has an interest in such Exchangeable Share as would be required (if the Exchangeable Shares were a class of "equity shares" of Acquisitionco) under (S)101 of the SECURITIES ACT (Ontario), as amended from time to time, or as would be required under the articles of Newmont or any laws or regulations, or pursuant to the rules or regulations of any Agency, if the Exchangeable Shares were Newmont Shares. If a Beneficiary does not provide the information required to be provided by such Beneficiary pursuant to this (S)4.11, the board of directors of Newmont may take any action permitted under the articles of Newmont or any laws or regulations, or pursuant to the rules or regulations of any Agency, with respect to the Voting Rights relating to the Exchangeable Shares held by such Beneficiary. ARTICLE 5 AUTOMATIC EXCHANGE 5.1 AUTOMATIC EXCHANGE (1) Newmont hereby agrees with the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries that the Trustee shall have (i) the Automatic Exchange Right, and (ii) the Automatic Exchange Rights on Liquidation, all in accordance with the provisions of this agreement. The Automatic Exchange Right shall represent an agreement on the terms set out herein between Newmont and the Trustee (acting on behalf of 101 the Beneficiaries) that upon the occurrence of an Insolvency Event, Newmont will purchase from each and every Beneficiary all of the Exchangeable Shares held by such Beneficiary. The Automatic Exchange Rights on Liquidation shall represent an agreement on the terms set out herein between Newmont and the Trustee (acting on behalf of the Beneficiaries) that Newmont will purchase from each and every Beneficiary all of the outstanding Exchangeable Shares held by such Beneficiary on the fifth business day prior to the Liquidation Event Effective Date. Newmont hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of good and valuable consideration (and the adequacy thereof) for agreeing with the Trustee (acting on behalf of the Beneficiaries) to be bound by the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation. (2) During the term of the Trust and subject to the terms and conditions of this agreement, the Trustee shall possess and be vested with full legal ownership of the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation and shall be entitled to exercise all of the rights and powers of an owner with respect to the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation, provided that the Trustee shall: (a) hold the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this agreement; and (b) except as specifically authorized by this agreement, have no power or authority to exercise or otherwise deal in or with the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation, and the Trustee shall not exercise any such rights for any purpose other than the purposes for which the Trust is created pursuant to this agreement. (3) The obligations of Newmont to issue Newmont Shares pursuant to the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation are subject to all applicable laws and regulatory or stock exchange requirements. 5.2 LEGENDED SHARE CERTIFICATES Acquisitionco will cause each certificate representing Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries of the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation. 5.3 AUTOMATIC EXCHANGE RIGHT (1) The purchase price payable by Newmont for each Exchangeable Share to be purchased by Newmont under the Automatic Exchange Right shall be an amount per share equal to (i) the Current Market Price of a Newmont Share on the last business day prior to the day of closing of the purchase and sale of such Exchangeable Share under the Automatic Exchange Right, which shall be satisfied in full by Newmont causing to be delivered to such holder one Newmont Share, plus (ii) to the extent not paid by Acquisitionco on the designated payment date therefor, an additional amount equal to and in full satisfaction of the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the closing of the purchase and sale. In connection with each exercise of the Automatic Exchange Right, Newmont shall provide to the Trustee an Officer's Certificate setting forth the calculation of the purchase price for each Exchangeable Share. The purchase price for each such Exchangeable Share so purchased may be satisfied only by Newmont issuing and delivering or causing to be delivered to the Trustee, on behalf of the relevant Beneficiary, one Newmont Share and on the applicable payment date a cheque for the balance, if any, of the purchase price, in each case less any amounts withheld pursuant to (S)5.9. Upon payment by Newmont of such purchase price the relevant Beneficiary shall cease to have any right to be paid by Acquisitionco any amount in respect of declared and unpaid dividends on each such Exchangeable Share. (2) Immediately upon the occurrence of an Insolvency Event, the closing of the transaction of purchase and sale contemplated by the Automatic Exchange Right shall be deemed to have occurred, and each Beneficiary shall be deemed to have transferred to Newmont all of the Beneficiary's right, title and interest in and to such 102 Beneficiary's Exchangeable Shares free and clear of any lien, claim or encumbrance and the related interest in the Trust Estate, any right of each such Beneficiary to receive declared and unpaid dividends from Acquisitionco shall be deemed to be satisfied and discharged and each such Beneficiary shall cease to be a holder of such Exchangeable Shares and Newmont shall issue to the Beneficiary the Newmont Shares issuable upon the automatic exchange of Exchangeable Shares for Newmont Shares and on the applicable payment date shall deliver to the Trustee for delivery to the Beneficiary a cheque for the balance, if any, of the purchase price for such Exchangeable Shares, without interest, in each case less any amounts withheld pursuant to (S)5.9. Concurrently with such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary shall become the holder of the Newmont Shares issued pursuant to the automatic exchange of such Beneficiary's Exchangeable Shares for Newmont Shares and the certificates held by the Beneficiary previously representing the Exchangeable Shares exchanged by the Beneficiary with Newmont pursuant to such automatic exchange shall thereafter be deemed to represent Newmont Shares issued to the Beneficiary by Newmont pursuant to such automatic exchange. Upon the request of a Beneficiary and the surrender by the Beneficiary of Exchangeable Share certificates deemed to represent Newmont Shares, duly endorsed in blank and accompanied by such instruments of transfer as Newmont may reasonably require, Newmont shall deliver or cause to be delivered to the Beneficiary certificates representing the Newmont Shares of which the Beneficiary is the holder. 5.4 FAILURE TO RETRACT Upon the occurrence of an event referred to in paragraph (iv) of the definition of Insolvency Event, Acquisitionco hereby agrees with the Trustee and in favour of the Beneficiary promptly to forward or cause to be forwarded to the Trustee all relevant materials delivered by the Beneficiary to Acquisitionco or to the transfer agent of the Exchangeable Shares (including a copy of the retraction request delivered pursuant to (S)6(1) of the Share Provisions) in connection with such proposed redemption of the Retracted Shares. 5.5 NOTICE OF INSOLVENCY EVENT As soon as practicable following the occurrence of an Insolvency Event or any event that with the giving of notice or the passage of time or both would be an Insolvency Event, Acquisitionco and Newmont shall give written notice thereof to the Trustee. As soon as practicable following the receipt of notice from Acquisitionco and Newmont of the occurrence of an Insolvency Event, or upon the Trustee becoming aware of an Insolvency Event, the Trustee will mail to each Beneficiary, at the expense of Newmont (such funds to be received in advance), a notice of such Insolvency Event in the form provided by Newmont, which notice shall contain a brief statement of the rights of the Beneficiaries with respect to the Automatic Exchange Right. 5.6 LISTING OF NEWMONT SHARES Newmont covenants that if any Newmont Shares to be issued and delivered pursuant to the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation require registration or qualification with or approval of or the filing of any document, including any prospectus or similar document, or the taking of any proceeding with or the obtaining of any order, ruling or consent from any Agency under any United States or Canadian federal, provincial or territorial law or regulation or pursuant to the rules and regulations of any Agency or the fulfillment of any other United States or Canadian legal requirement before such shares may be issued and delivered by Newmont to the initial holder thereof or in order that such shares may be freely traded thereafter (other than any restrictions of general application on transfer by reason of a holder being a "control person" or the equivalent of Newmont for purposes of Canadian securities Law or any United States equivalent), Newmont will expeditiously and in good faith take all such actions and do all such things as are reasonably necessary or desirable to cause such Newmont Shares to be and remain duly registered, qualified or approved. Newmont will expeditiously and in good faith take all such actions and do all such things as are reasonably necessary or desirable to cause all Newmont Shares to be delivered pursuant to the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation to be listed, quoted or posted for trading on all stock exchanges and quotation systems on which issued Newmont Shares have been listed by Newmont and remain listed and are quoted or posted for trading at such time. 103 5.7 NEWMONT SHARES Newmont hereby represents, warrants and covenants that the Newmont Shares issuable as described herein will be duly authorized and validly issued as fully paid and shall be free and clear of any lien, claim or encumbrance. 5.8 AUTOMATIC EXCHANGE ON LIQUIDATION OF NEWMONT (1) Newmont will give the Trustee written notice of each of the following events at the time set forth below: (a) in the event of any determination by the board of directors of Newmont to institute voluntary liquidation, dissolution or winding-up proceedings with respect to Newmont or to effect any other distribution of assets of Newmont among its shareholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution; and (b) as soon as practicable following the earlier of (A) receipt by Newmont of notice of, and (B) Newmont otherwise becoming aware of any instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of Newmont or to effect any other distribution of assets of Newmont among its shareholders for the purpose of winding up its affairs, in each case where Newmont has failed to contest in good faith any such proceeding commenced in respect of Newmont within 30 days of becoming aware thereof. (2) As soon as practicable following receipt by the Trustee from Newmont of notice of any event (a "LIQUIDATION EVENT") contemplated by (S)5.8(1)(a) or (S)5.8(1)(b), the Trustee will give notice thereof to the Beneficiaries. Such notice shall be provided to the Trustee by Newmont and shall include a brief description of the automatic exchange of Exchangeable Shares for Newmont Shares provided for in (S)5.8(3). (3) In order that the Beneficiaries will be able to participate on a pro rata basis with the holders of Newmont Shares in the distribution of assets of Newmont in connection with a Liquidation Event, on the fifth business day prior to the effective date (the "LIQUIDATION EVENT EFFECTIVE DATE") of a Liquidation Event, all of the then outstanding Exchangeable Shares shall be automatically exchanged for Newmont Shares. To effect such automatic exchange, Newmont shall purchase on the fifth business day prior to the Liquidation Event Effective Date each Exchangeable Share then outstanding and held by Beneficiaries, and each Beneficiary shall sell the Exchangeable Shares held by it at such time, free and clear of any lien, claim or encumbrance, for a purchase price per share equal to (i) the Current Market Price of a Newmont Share on the fifth business day prior to the Liquidation Event Effective Date, which shall be satisfied in full by Newmont issuing to the Beneficiary one Newmont Share, plus (ii) to the extent not paid by Acquisitionco on the designated payment date therefor, an additional amount equal to and in full satisfaction of the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the date of the exchange. Newmont shall provide the Trustee with an Officer's Certificate in connection with each automatic exchange setting forth the calculation of the purchase price for each Exchangeable Share. (4) On the fifth business day prior to the Liquidation Event Effective Date, the closing of the transaction of purchase and sale contemplated by the automatic exchange of Exchangeable Shares for Newmont Shares shall be deemed to have occurred, and each Beneficiary shall be deemed to have transferred to Newmont all of the Beneficiary's right, title and interest in and to such Beneficiary's Exchangeable Shares free and clear of any lien, claim or encumbrance and the related interest in the Trust Estate, any right of each such Beneficiary to receive declared and unpaid dividends from Acquisitionco shall be deemed to be satisfied and discharged, and each such Beneficiary shall cease to be a holder of such Exchangeable Shares and Newmont shall issue to the Beneficiary the Newmont Shares issuable upon the automatic exchange of Exchangeable Shares for Newmont Shares and on the applicable payment date shall deliver to the Trustee for delivery to the Beneficiary a cheque for the balance, 104 if any, of the purchase price for such Exchangeable Shares, without interest, in each case less any amounts withheld pursuant to (S)5.9. Concurrently with such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary shall become the holder of the Newmont Shares issued pursuant to the automatic exchange of such Beneficiary's Exchangeable Shares for Newmont Shares and the certificates held by the Beneficiary previously representing the Exchangeable Shares exchanged by the Beneficiary with Newmont pursuant to such automatic exchange shall thereafter be deemed to represent Newmont Shares issued to the Beneficiary by Newmont pursuant to such automatic exchange. Upon the request of a Beneficiary and the surrender by the Beneficiary of Exchangeable Share certificates deemed to represent Newmont Shares, duly endorsed in blank and accompanied by such instruments of transfer as Newmont may reasonably require, Newmont shall deliver or cause to be delivered to the Beneficiary certificates representing the Newmont Shares of which the Beneficiary is the holder. 5.9 WITHHOLDING RIGHTS Newmont, Acquisitionco and the Trustee shall be entitled to deduct and withhold from any consideration otherwise payable under this agreement to any holder of Exchangeable Shares or Newmont Shares such amounts as Newmont, Acquisitionco or the Trustee is required to deduct and withhold with respect to such payment under the INCOME TAX ACT (Canada) or United States tax Laws or any provision of provincial, state, local or foreign tax Law, in each case as amended or succeeded. The Trustee may act and rely on the advice of counsel with respect to such matters. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder of the shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing Agency. To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, Newmont, Acquisitionco and the Trustee are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to Newmont, Acquisitionco or the Trustee, as the case may be, to enable it to comply with such deduction or withholding requirement and Newmont, Acquisitionco or the Trustee shall notify the holder thereof and remit to such holder any unapplied balance of the net proceeds of such sale. Newmont represents and warrants that, based upon facts currently known to it, it has no current intention, as at the date of this agreement, to deduct or withhold from any dividend paid to holders of Exchangeable Shares any amounts under the United States tax laws. ARTICLE 6 RESTRICTIONS ON ISSUE OF NEWMONT SPECIAL VOTING SHARES 6.1 ISSUE OF ADDITIONAL SHARES During the term of this agreement, Newmont will not, without the consent of the holders at the relevant time of Exchangeable Shares, given in accordance with (S)10(2) of the Share Provisions, issue any additional Newmont Special Voting Shares. ARTICLE 7 CONCERNING THE TRUSTEE 7.1 POWERS AND DUTIES OF THE TRUSTEE (1) The rights, powers, duties and authorities of the Trustee under this agreement, in its capacity as Trustee of the Trust, shall include: (a) receipt and deposit of the Newmont Special Voting Share from Newmont as Trustee for and on behalf of the Beneficiaries in accordance with the provisions of this agreement; 105 (b) granting proxies and distributing materials to Beneficiaries as provided in this agreement; (c) voting the Beneficiary Votes in accordance with the provisions of this agreement; (d) receiving the grant of the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation from Newmont as Trustee for and on behalf of the Beneficiaries in accordance with the provisions of this agreement; (e) enforcing the benefit of the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation, in each case in accordance with the provisions of this agreement, and in connection therewith receiving from Beneficiaries Exchangeable Shares and other requisite documents and distributing to such Beneficiaries Newmont Shares and cheques, if any, to which such Beneficiaries are entitled pursuant to the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation, as the case may be; (f) holding title to the Trust Estate; (g) investing any moneys forming, from time to time, a part of the Trust Estate as provided in this agreement; (h) taking action at the direction of a Beneficiary or Beneficiaries to enforce the obligations of Newmont and Acquisitionco under this agreement; and (i) taking such other actions and doing such other things as are specifically provided in this agreement to be carried out by the Trustee whether alone, jointly or in the alternative. (2) In the exercise of such rights, powers, duties and authorities the Trustee shall have (and is granted) such incidental and additional rights, powers, duties and authority not in conflict with any of the provisions of this agreement as the Trustee, acting in good faith and in the reasonable exercise of its discretion, may deem necessary, appropriate or desirable to effect the purpose of the Trust. Any exercise of such discretionary rights, powers, duties and authorities by the Trustee shall be final, conclusive and binding upon all persons. (3) The Trustee in exercising its rights, powers, duties and authorities hereunder shall act honestly and in good faith and with a view to the best interests of the Beneficiaries and shall exercise the care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances. (4) The Trustee shall not be bound to give notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless and until it shall be specifically required to do so under the terms hereof; nor shall the Trustee be required to take any notice of, or to do, or to take any act, action or proceeding as a result of any default or breach of any provision hereunder, unless and until notified in writing of such default or breach, which notices shall distinctly specify the default or breach desired to be brought to the attention of the Trustee, and in the absence of such notice the Trustee may for all purposes of this agreement conclusively assume that no default or breach has been made in the observance or performance of any of the representations, warranties, covenants, agreements or conditions contained herein. 7.2 NO CONFLICT OF INTEREST The Trustee represents to Newmont and Acquisitionco that at the date of execution and delivery of this agreement there exists no material conflict of interest in the role of the Trustee as a fiduciary hereunder and the role of the Trustee in any other capacity. The Trustee shall, within 90 days after it becomes aware that such material conflict of interest exists, either eliminate such material conflict of interest or resign in the manner and with the effect specified in Article 10. If, notwithstanding the foregoing provisions of this (S)7.2, the Trustee has such a material conflict of interest, the validity and enforceability of this agreement shall not be affected in any manner whatsoever by reason only of the existence of such material conflict of interest. If the Trustee contravenes the foregoing provisions of this (S)7.2, any interested party may apply to the Superior Court of Justice (Ontario) for an order that the Trustee be replaced as Trustee hereunder. 106 7.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC. (1) Each of Newmont and Acquisitionco irrevocably authorizes the Trustee, from time to time, to: (a) consult, communicate and otherwise deal with the respective registrars and transfer agents, and with any such subsequent registrar or transfer agent, of the Exchangeable Shares and Newmont Shares; and (b) requisition, from time to time, (i) from any such registrar or transfer agent any information readily available from the records maintained by it which the Trustee may reasonably require for the discharge of its duties and responsibilities under this agreement and (ii) from the transfer agent of Newmont Shares, and any subsequent transfer agent of such shares, the share certificates issuable upon the exercise from time to time of the Automatic Exchange Right and pursuant to the Automatic Exchange Rights on Liquidation. (2) Newmont and Acquisitionco shall irrevocably authorize their respective registrars and transfer agents to comply with all such requests. Newmont covenants that it will supply its transfer agent with duly executed share certificates for the purpose of completing the exercise from time to time of the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation, in each case pursuant to Article 5. 7.4 BOOKS AND RECORDS The Trustee shall keep available for inspection by Newmont and Acquisitionco at the Trustee's principal office in Toronto correct and complete books and records of account relating to the Trust created by this agreement, including all relevant data relating to mailings and instructions to and from Beneficiaries and all transactions pursuant to the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation. On or before [JANUARY 15], 2003, and on or before January 15th in every year thereafter, so long as the Newmont Special Voting Share is registered in the name of the Trustee, the Trustee shall transmit to Newmont and Acquisitionco a brief report, dated as of the preceding December 31st, with respect to: (a) the property and funds comprising the Trust Estate as of that date; (b) the number of exercises of the Automatic Exchange Right, if any, and the aggregate number of Exchangeable Shares received by the Trustee on behalf of Beneficiaries in consideration of the issuance by Newmont of Newmont Shares in connection with the Automatic Exchange Right, during the calendar year ended on such December 31st; and (c) any action taken by the Trustee in the performance of its duties under this agreement which it had not previously reported. 7.5 INCOME TAX RETURNS AND REPORTS The Trustee shall, to the extent necessary, prepare and file, or cause to be prepared and filed, on behalf of the Trust appropriate United States and Canadian income tax returns and any other returns or reports as may be required by applicable law or pursuant to the rules and regulations of any other Agency, including any securities exchange or other trading system through which the Exchangeable Shares are traded. In connection therewith, the Trustee may obtain the advice and assistance of such experts or advisors as the Trustee considers necessary or advisable (who may be experts or advisors to Newmont or Acquisitionco). If requested by the Trustee, Newmont or Acquisitionco shall retain qualified experts or advisors for the purpose of providing such tax advice or assistance. 7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE (1) The Trustee shall exercise any or all of the rights, duties, powers or authorities vested in it by this agreement at the request, order or direction of any Beneficiary upon such Beneficiary furnishing to the Trustee 107 reasonable funding, security or indemnity against the costs, expenses and liabilities which may be incurred by the Trustee therein or thereby, provided that no Beneficiary shall be obligated to furnish to the Trustee any such funding, security or indemnity in connection with the exercise by the Trustee of any of its rights, duties, powers and authorities with respect to the Newmont Special Voting Share pursuant to Article 4, subject to (S)7.15, and with respect to the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation pursuant to Article 5. (2) None of the provisions contained in this agreement shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the exercise of any of its rights, powers, duties, or authorities unless funded, given security and indemnified as aforesaid. 7.7 ACTION OF BENEFICIARIES No Beneficiary shall have the right to institute any action, suit or proceeding or to exercise any other remedy authorized by this agreement for the purpose of enforcing any of its rights or for the execution of any trust or power hereunder unless the Beneficiary has requested the Trustee to take or institute such action, suit or proceeding and furnished the Trustee with the funding, security or indemnity referred to in (S)7.6 and the Trustee shall have failed to act within a reasonable time thereafter. In such case, but not otherwise, the Beneficiary shall be entitled to take proceedings in any court of competent jurisdiction such as the Trustee might have taken; it being understood and intended that no one or more Beneficiaries shall have any right in any manner whatsoever to affect, disturb or prejudice the rights hereby created by any such action, or to enforce any right hereunder or the Voting Rights, the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation except subject to the conditions and in the manner herein provided, and that all powers and trusts hereunder shall be exercised and all proceedings at law shall be instituted, had and maintained by the Trustee, except only as herein provided, and in any event for the equal benefit of all Beneficiaries. 7.8 RELIANCE UPON DECLARATIONS The Trustee shall not be considered to be in contravention of any of its rights, powers, duties and authorities hereunder if, when required, it acts and relies in good faith upon statutory declarations, certificates, opinions or reports furnished pursuant to the provisions hereof or required by the Trustee to be furnished to it in the exercise of its rights, powers, duties and authorities hereunder if such statutory declarations, certificates, opinions or reports comply with the provisions of (S)7.9, if applicable, and with any other applicable provisions of this agreement. 7.9 EVIDENCE AND AUTHORITY TO TRUSTEE (1) Newmont and/or Acquisitionco shall furnish to the Trustee evidence of compliance with the conditions provided for in this agreement relating to any action or step required or permitted to be taken by Newmont and/or Acquisitionco or the Trustee under this agreement or as a result of any obligation imposed under this agreement, including in respect of the Voting Rights or the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation and the taking of any other action to be taken by the Trustee at the request of or on the application of Newmont and/or Acquisitionco promptly if and when: (a) such evidence is required by any other section of this agreement to be furnished to the Trustee in accordance with the terms of this (S)7.9; or (b) the Trustee, in the exercise of its rights, powers, duties and authorities under this agreement, gives Newmont and/or Acquisitionco written notice requiring it to furnish such evidence in relation to any particular action or obligation specified in such notice. (2) Such evidence shall consist of an Officer's Certificate of Newmont and/or Acquisitionco or a statutory declaration or a certificate made by persons entitled to sign an Officer's Certificate stating that any such condition has been complied with in accordance with the terms of this agreement. 108 (3) Whenever such evidence relates to a matter other than the Voting Rights or the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation or the taking of any other action to be taken by the Trustee at the request or on the application of Newmont and/or Acquisitionco, and except as otherwise specifically provided herein, such evidence may consist of a report or opinion of any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert or any other person whose qualifications give authority to a statement made by him, provided that if such report or opinion is furnished by a director, officer or employee of Newmont and/or Acquisitionco it shall be in the form of an Officer's Certificate or a statutory declaration. (4) Each statutory declaration, Officer's Certificate, opinion or report furnished to the Trustee as evidence of compliance with a condition provided for in this agreement shall include a statement by the person giving the evidence: (a) declaring that he has read and understands the provisions of this agreement relating to the condition in question; (b) describing the nature and scope of the examination or investigation upon which he based the statutory declaration, certificate, statement or opinion; and (c) declaring that he has made such examination or investigation as he believes is necessary to enable him to make the statements or give the opinions contained or expressed therein. 7.10 EXPERTS, ADVISERS AND AGENTS The Trustee may: (a) in relation to these presents act and rely on the opinion or advice of or information obtained from any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert, whether retained by the Trustee or by Newmont and/or Acquisitionco or otherwise, and may retain or employ such assistants as may be necessary to the proper discharge of its powers and duties and determination of its rights hereunder and may pay proper and reasonable compensation for all such legal and other advice or assistance as aforesaid; (b) employ such agents and other assistants as it may reasonably require for the proper determination and discharge of its powers and duties hereunder; and (c) pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all reasonable disbursements, costs and expenses made or incurred by it in the discharge of its duties hereunder and in the management of the Trust. 7.11 INVESTMENT OF MONEYS HELD BY TRUSTEE Unless otherwise provided in this agreement, any moneys held by or on behalf of the Trustee which under the terms of this agreement may or ought to be invested or which may be on deposit with the Trustee or which may be in the hands of the Trustee shall, upon the receipt by the Trustee of the written direction of Acquisitionco, be invested or reinvested in the name or under the control of the Trustee in securities in which, under the laws of the Province of Ontario, trustees are authorized to invest trust moneys, provided that such securities are stated to mature within two years after their purchase by the Trustee, or in Authorized Investments. Any direction of Acquisitionco to the Trustee as to investment or reinvestment of funds shall be in writing and shall be provided to the Trustee no later than 9:00 a.m. (local time) or if received on a non-business day, shall be deemed to have been given prior to 9:00 a.m. (local time) on the immediately following business day. If no such direction is received, the Trustee shall not have any obligation to invest the monies and pending receipt of such a direction all interest or other income and such moneys may be deposited in the name of the Trustee in any chartered bank in Canada or, with the consent of Acquisitionco, in the deposit department of the Trustee or any other specified loan or trust company authorized to accept deposits under the laws of Canada or any province thereof at the rate of interest then current on similar deposits. The Trustee shall not be held liable for any losses incurred in the investment of any funds as herein provided. 109 7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY The Trustee shall not be required to give any bond or security in respect of the execution of the trusts, rights, duties, powers and authorities of this agreement or otherwise in respect of the premises. 7.13 TRUSTEE NOT BOUND TO ACT ON REQUEST Except as in this agreement otherwise specifically provided, the Trustee shall not be bound to act in accordance with any direction or request of Newmont and/or Acquisitionco or of the directors thereof until a duly authenticated copy of the instrument or resolution containing such direction or request shall have been delivered to the Trustee, and the Trustee shall be empowered to act upon any such copy purporting to be authenticated and believed by the Trustee to be genuine. 7.14 AUTHORITY TO CARRY ON BUSINESS The Trustee represents to Newmont and Acquisitionco that at the date of execution and delivery by it of this agreement it is authorized to carry on the business of a trust company in each of the provinces of Canada but if, notwithstanding the provisions of this (S)7.14, it ceases to be so authorized to carry on business, the validity and enforceability of this agreement and the Voting Rights, the Automatic Exchange Right and the Automatic Exchange Rights on Liquidation shall not be affected in any manner whatsoever by reason only of such event but the Trustee shall, within 90 days after ceasing to be authorized to carry on the business of a trust company in any province of Canada, either become so authorized or resign in the manner and with the effect specified in Article 10. 7.15 CONFLICTING CLAIMS (1) If conflicting claims or demands are made or asserted with respect to any interest of any Beneficiary in any Exchangeable Shares, including any disagreement between the heirs, representatives, successors or assigns succeeding to all or any part of the interest of any Beneficiary in any Exchangeable Shares, resulting in conflicting claims or demands being made in connection with such interest, then the Trustee shall be entitled, in its sole discretion, to refuse to recognize or to comply with any such claims or demands. In so refusing, the Trustee may elect not to exercise any Voting Rights, Automatic Exchange Right or Automatic Exchange Rights on Liquidation subject to such conflicting claims or demands and, in so doing, the Trustee shall not be or become liable to any person on account of such election or its failure or refusal to comply with any such conflicting claims or demands. The Trustee shall be entitled to continue to refrain from acting and to refuse to act until: (a) the rights of all adverse claimants with respect to the Voting Rights, Automatic Exchange Right or Automatic Exchange Rights on Liquidation subject to such conflicting claims or demands have been adjudicated by a final judgement of a court of competent jurisdiction; or (b) all differences with respect to the Voting Rights, Automatic Exchange Right or Automatic Exchange Rights on Liquidation subject to such conflicting claims or demands have been conclusively settled by a valid written agreement binding on all such adverse claimants, and the Trustee shall have been furnished with an executed copy of such agreement certified to be in full force and effect. (2) If the Trustee elects to recognize any claim or comply with any demand made by any such adverse claimant, it may in its discretion require such claimant to furnish such surety bond or other security satisfactory to the Trustee as it shall deem appropriate to fully indemnify it as between all conflicting claims or demands. 7.16 ACCEPTANCE OF TRUST The Trustee hereby accepts the Trust created and provided for, by and in this agreement and agrees to perform the same upon the terms and conditions herein set forth and to hold all rights, privileges and benefits conferred hereby and by law in trust for the various persons who shall from time to time be Beneficiaries, subject to all the terms and conditions herein set forth. 110 ARTICLE 8 COMPENSATION 8.1 FEES AND EXPENSES OF THE TRUSTEE Newmont and Acquisitionco jointly and severally agree to pay the Trustee reasonable compensation for all of the services rendered by it under this agreement and will reimburse the Trustee for all reasonable expenses (including, but not limited to, taxes other than taxes based on the net income or capital of the Trustee, fees paid to legal counsel and other experts and advisors and travel expenses) and disbursements, including the cost and expense of any suit or litigation of any character and any proceedings before any governmental Agency, reasonably incurred by the Trustee in connection with its duties under this agreement; provided that Newmont and Acquisitionco shall have no obligation to reimburse the Trustee for any expenses or disbursements paid, incurred or suffered by the Trustee in any suit or litigation or any such proceedings in which the Trustee is determined to have acted in bad faith or with fraud, negligence, recklessness or wilful misconduct. ARTICLE 9 INDEMNIFICATION AND LIMITATION OF LIABILITY 9.1 INDEMNIFICATION OF THE TRUSTEE (1) Newmont and Acquisitionco jointly and severally agree to indemnify and hold harmless the Trustee and each of its directors, officers, employees and agents appointed and acting in accordance with this agreement (collectively, the "INDEMNIFIED PARTIES") against all claims, losses, damages, reasonable costs, penalties, fines and reasonable expenses (including reasonable expenses of the Trustee's legal counsel) which, without fraud, negligence, recklessness, wilful misconduct or bad faith on the part of such Indemnified Party, may be paid, incurred or suffered by the Indemnified Party by reason or as a result of the Trustee's acceptance or administration of the Trust, its compliance with its duties set forth in this agreement, or any written or oral instruction delivered to the Trustee by Newmont or Acquisitionco pursuant hereto. (2) In no case shall Newmont or Acquisitionco be liable under this indemnity for any claim against any of the Indemnified Parties unless Newmont and Acquisitionco shall be notified by the Trustee of the written assertion of a claim or of any action commenced against the Indemnified Parties, promptly after any of the Indemnified Parties shall have received any such written assertion of a claim or shall have been served with a summons or other first legal process giving information as to the nature and basis of the claim. Subject to (ii) below, Newmont and Acquisitionco shall be entitled to participate at their own expense in the defence and, if Newmont and Acquisitionco so elect at any time after receipt of such notice, either of them may assume the defence of any suit brought to enforce any such claim. The Trustee shall have the right to employ separate counsel in any such suit and participate in the defence thereof, but the fees and expenses of such counsel shall be at the expense of the Trustee unless: (i) the employment of such counsel has been authorized by Newmont or Acquisitionco; or (ii) the named parties to any such suit include both the Trustee and Newmont or Acquisitionco and the Trustee shall have been advised by counsel acceptable to Newmont or Acquisitionco that there may be one or more legal defences available to the Trustee that are different from or in addition to those available to Newmont or Acquisitionco and that, in the judgement of such counsel, would present a conflict of interest were a joint representation to be undertaken (in which case Newmont and Acquisitionco shall not have the right to assume the defence of such suit on behalf of the Trustee but shall be liable to pay the reasonable fees and expenses of counsel for the Trustee). This indemnity shall survive the termination of the Trust and the resignation or removal of the Trustee. 9.2 LIMITATION OF LIABILITY The Trustee shall not be held liable for any loss which may occur by reason of depreciation of the value of any part of the Trust Estate or any loss incurred on any investment of funds pursuant to this agreement, except to the extent that such loss is attributable to the fraud, negligence, recklessness, wilful misconduct or bad faith on the part of the Trustee. 111 ARTICLE 10 CHANGE OF TRUSTEE 10.1 RESIGNATION The Trustee, or any trustee hereafter appointed, may at any time resign by giving written notice of such resignation to Newmont and Acquisitionco specifying the date on which it desires to resign, provided that such notice shall not be given less than thirty (30) days before such desired resignation date unless Newmont and Acquisitionco otherwise agree and provided further that such resignation shall not take effect until the date of the appointment of a successor trustee and the acceptance of such appointment by the successor trustee. Upon receiving such notice of resignation, Newmont and Acquisitionco shall promptly appoint a successor trustee, which shall be a corporation organized and existing under the laws of Canada and authorized to carry on the business of a trust company in all provinces of Canada, by written instrument in duplicate, one copy of which shall be delivered to the resigning trustee and one copy to the successor trustee. Failing the appointment and acceptance of a successor trustee, a successor trustee may be appointed by order of a court of competent jurisdiction upon application of one or more of the parties to this agreement. If the retiring trustee is the party initiating an application for the appointment of a successor trustee by order of a court of competent jurisdiction, Newmont and Acquisitionco shall be jointly and severally liable to reimburse the retiring trustee for its legal costs and expenses in connection with same. 10.2 REMOVAL The Trustee, or any trustee hereafter appointed, may (provided a successor trustee is appointed) be removed at any time on not less than 30 days' prior notice by written instrument executed by Newmont and Acquisitionco, in duplicate, one copy of which shall be delivered to the trustee so removed and one copy to the successor trustee. 10.3 SUCCESSOR TRUSTEE Any successor trustee appointed as provided under this agreement shall execute, acknowledge and deliver to Newmont and Acquisitionco and to its predecessor trustee an instrument accepting such appointment. Thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor under this agreement, with the like effect as if originally named as trustee in this agreement. However, on the written request of Newmont and Acquisitionco or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due to it pursuant to the provisions of this agreement, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon the request of any such successor trustee, Newmont, Acquisitionco and such predecessor trustee shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. 10.4 NOTICE OF SUCCESSOR TRUSTEE Upon acceptance of appointment by a successor trustee as provided herein, Newmont and Acquisitionco shall cause to be mailed notice of the succession of such trustee hereunder to each Beneficiary specified in a List. If Newmont or Acquisitionco shall fail to cause such notice to be mailed within 10 days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of Newmont and Acquisitionco. ARTICLE 11 NEWMONT SUCCESSORS 11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. As long as any outstanding Exchangeable Shares are owned by any person other than Newmont or any of its affiliates, Newmont shall not consummate any transaction (whether by way of reconstruction, reorganization, consolidation, arrangement, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other person or, in the case of a merger, of the continuing corporation resulting therefrom unless, but may do so if: 112 (a) such other person or continuing corporation (the "Newmont Successor"), by operation of law, becomes, without more, bound by the terms and provisions of this agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, a trust agreement supplemental hereto and such other instruments (if any) as are satisfactory to the Trustee, acting reasonably, and in the opinion of legal counsel to the Trustee are reasonably necessary or advisable to evidence the assumption by the Newmont Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such Newmont Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of Newmont under this agreement; and (b) such transaction shall, to the satisfaction of the Trustee, acting reasonably, and in the opinion of legal counsel to the Trustee, be upon such terms and conditions as substantially to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the Trustee or of the Beneficiaries hereunder. 11.2 VESTING OF POWERS IN SUCCESSOR Whenever the conditions of (S)11.1 have been duly observed and performed, the Trustee, Newmont Successor and Acquisitionco shall, if required by (S)11.1, execute and deliver the supplemental trust agreement provided for in Article 12 and thereupon Newmont Successor and such other person that may then be the issuer of the Newmont Shares shall possess and from time to time may exercise each and every right and power of Newmont under this agreement in the name of Newmont or otherwise and any act or proceeding by any provision of this agreement required to be done or performed by the board of directors of Newmont or any officers of Newmont may be done and performed with like force and effect by the directors or officers of such Newmont Successor. 11.3 WHOLLY-OWNED SUBSIDIARIES Nothing herein shall be construed as preventing (i) the amalgamation or merger of any wholly-owned direct or indirect subsidiary of Newmont with or into Newmont, (ii) the winding-up, liquidation or dissolution of any wholly-owned direct or indirect subsidiary of Newmont (other than Acquisitionco or Callco), provided that all of the assets of such subsidiary are transferred to Newmont or another wholly-owned direct or indirect subsidiary of Newmont, or (iii) any other distribution of the assets of any wholly-owned direct or indirect subsidiary of Newmont (other than Acquisitionco or Callco) among the shareholders of such subsidiary for the purpose of winding up its affairs, and any such transactions are expressly permitted by this Article 11. ARTICLE 12 AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS 12.1 AMENDMENTS, MODIFICATIONS, ETC. Subject to (S)12.2, (S)12.4 and (S)14.1, this agreement may not be amended or modified except by an agreement in writing executed by Newmont, Acquisitionco and the Trustee and approved by the Beneficiaries in accordance with (S)10(2) of the Share Provisions. 12.2 MINISTERIAL AMENDMENTS Notwithstanding the provisions of (S)12.1, the parties to this agreement may in writing, at any time and from time to time, without the approval of the Beneficiaries, amend or modify this agreement for the purposes of: (a) adding to the covenants of any or all parties hereto for the protection of the Beneficiaries hereunder provided that the board of directors of each of Acquisitionco and Newmont shall be of the good faith opinion that such additions will not be prejudicial to the rights or interests of the Beneficiaries; 113 (b) making such amendments or modifications not inconsistent with this agreement as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the board of directors of each of Newmont and Acquisitionco and in the opinion of the Trustee, having in mind the best interests of the Beneficiaries, it may be expedient to make, provided that such boards of directors and the Trustee, acting on the advice of counsel, shall be of the opinion that such amendments and modifications will not be prejudicial to the interests of the Beneficiaries; or (c) making such changes or corrections which, on the advice of counsel to Newmont, Acquisitionco and the Trustee, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error. 12.3 MEETING TO CONSIDER AMENDMENTS Acquisitionco, at the request of Newmont, shall call a meeting or meetings of the Beneficiaries for the purpose of considering any proposed amendment or modification requiring approval pursuant hereto. Any such meeting or meetings shall be called and held in accordance with the by-laws of Acquisitionco, the Share Provisions and all applicable laws. 12.4 CHANGES IN CAPITAL OF NEWMONT AND ACQUISITIONCO At all times after the occurrence of any event contemplated pursuant to (S)2.7 or 2.8 of the Support Agreement or otherwise, as a result of which either Newmont Shares or the Exchangeable Shares or both are in any way changed, this agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis, to all new securities into which Newmont Shares or the Exchangeable Shares or both are so changed and the parties hereto shall execute and deliver a supplemental trust agreement giving effect to and evidencing such necessary amendments and modifications. For greater certainty, this agreement, which is entered into in connection with the issuance of the Exchangeable Shares to shareholders of Franco-Nevada as part of the acquisition of the shares of Franco-Nevada by Acquisitionco, shall continue to apply with full force and effect following the amalgamation of Acquisitionco, Franco-Nevada and others pursuant to the Plan of Agreement. 12.5 EXECUTION OF SUPPLEMENTAL TRUST AGREEMENTS From time to time Acquisitionco (when authorized by a resolution of its Board of Directors), Newmont (when authorized by a resolution of its board of directors) and the Trustee may, subject to the provisions of these presents, and they shall, when so directed by these presents, execute and deliver by their proper officers, trust agreements or other instruments supplemental hereto, which thereafter shall form part hereof, for any one or more of the following purposes: (a) evidencing the succession of Newmont Successors and the covenants of and obligations assumed by each such Newmont Successor in accordance with the provisions of Article 10 and the successors of the Trustee or any successor trustee in accordance with the provisions of Article 10; (b) making any additions to, deletions from or alterations of the provisions of this agreement or the Voting Rights, the Automatic Exchange Right or the Automatic Exchange Rights on Liquidation which, in the opinion of the Trustee, will not be prejudicial to the interests of the Beneficiaries or are, in the opinion of counsel to the Trustee, necessary or advisable in order to incorporate, reflect or comply with any legislation the provisions of which apply to Newmont, Acquisitionco, the Trustee or this agreement; and (c) for any other purposes not inconsistent with the provisions of this agreement, including to make or evidence any amendment or modification to this agreement as contemplated hereby; provided that, in the opinion of the Trustee, the rights of the Trustee and Beneficiaries will not be prejudiced thereby. 114 ARTICLE 13 TERMINATION 13.1 TERM The Trust created by this agreement shall continue until the earliest to occur of the following events: (a) no outstanding Exchangeable Shares are held by a Beneficiary; (b) each of Newmont and Acquisitionco elects in writing to terminate the Trust and such termination is approved by the Beneficiaries in accordance with (S)10(2) of the Share Provisions; and (c) 21 years after the death of the last survivor of the descendants of His Majesty King George VI of Canada and the United Kingdom of Great Britain and Northern Ireland living on the date of the creation of the Trust. 13.2 SURVIVAL OF AGREEMENT This agreement shall survive any termination of the Trust and shall continue until there are no Exchangeable Shares outstanding held by a Beneficiary; provided, however, that the provisions of Article 8 and Article 9 shall survive any such termination of this agreement. ARTICLE 14 GENERAL 14.1 SEVERABILITY If any term or other provision of this agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible. 14.2 ENUREMENT This agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and assigns and, subject to the terms hereof, to the benefit of the Beneficiaries. 14.3 NOTICES TO PARTIES Any notice and other communications required or permitted to be given pursuant to this agreement shall be sufficiently given if delivered in person or if sent by facsimile transmission (provided such transmission is recorded as being transmitted successfully) to the parties at the following addresses: . or at such other address as the party to which such notice or other communication is to be given has last notified the party given the same in the manner provided in this section, and if not given the same shall be deemed to have been received on the date of such delivery or sending. 115 14.4 NOTICE TO BENEFICIARIES Any and all notices to be given and any documents to be sent to any Beneficiaries may be given or sent to the address of such Beneficiary shown on the register of holders of Exchangeable Shares in any manner permitted by the by-laws of Acquisitionco from time to time in force in respect of notices to shareholders and shall be deemed to be received (if given or sent in such manner) at the time specified in such by-laws, the provisions of which by-laws shall apply mutatis mutandis to notices or documents as aforesaid sent to such Beneficiaries. 14.5 COUNTERPARTS This agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. 14.6 JURISDICTION This agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. 14.7 ATTORNMENT Each of the Trustee, Newmont and Acquisitionco agrees that any action or proceeding arising out of or relating to this agreement may be instituted in the courts of Ontario, waives any objection which it may have now or hereafter to the venue of any such action or proceeding, irrevocably submits to the non-exclusive jurisdiction of the said courts in any such action or proceeding, agrees to be bound by any judgement of the said courts and not to seek, and hereby waives, any review of the merits of any such judgement by the courts of any other jurisdiction, and Newmont hereby appoints Acquisitionco at its registered office in the Province of Ontario as attorney for service of process. IN WITNESS WHEREOF the parties hereto have caused this agreement to be duly executed as of the date first above written. ACQUISITIONCO By: _________________________________ Name: . Title: . [TRUST COMPANY] By: _________________________________ Name: . Title: . NEW NEWMONT By: _________________________________ Name: . Title: . 116 EX-2 4 feb25ex22.txt EXHIBIT 2.2 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT 2.2 DEED OF UNDERTAKING NEWMONT MINING CORPORATION NORMANDY MINING LIMITED ABN 86 009 295 765 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CONTENTS
PAGE ---- 1. DEFINITIONS AND INTERPRETATION...................... 2 1.1 Definitions.................................... 2 1.2 Interpretation................................. 4 2. CONDITION PRECEDENT................................. 4 3. NON SOLICITATION.................................... 4 4. NORMANDY UNDERTAKING................................ 6 4.1 Background..................................... 6 4.2 Undertaking.................................... 6 4.3 Limitation on Payment.......................... 6 4.4 Cap............................................ 7 4.5 Demand for Payment............................. 7 4.6 Security Bond.................................. 7 5. FACILITATION OF OFFER............................... 7 5.1 Abridgement of Time............................ 7 5.2 Consultation................................... 8 6. REPRESENTATIONS AND WARRANTIES...................... 8 6.1 Warranties by Normandy......................... 8 6.2 Indemnity...................................... 8 6.3 Disclosure..................................... 8 6.4 Reliance....................................... 8 6.5 Warranty Breach Notification................... 8 6.6 Proceedings for Warranty Claim................. 9 6.7 Liability Limitations.......................... 9 6.8 Certification of Representations and Warranties 9 6.9 No Assignment.................................. 9 7. CONDUCT OF BUSINESS BY NORMANDY..................... 9 8. NEWMONT'S WARRANTIES................................ 10 8.1 Warranties..................................... 10 8.2 Indemnity...................................... 10 9. PUBLIC ANNOUNCEMENT................................. 10 10. NOTICES............................................. 11 10.1 When Notices are Given......................... 11 10.2 Addresses for Notices.......................... 11 11. AMENDMENT AND ASSIGNMENT............................ 12 11.1 Amendment..................................... 12 11.2 Assignment.................................... 12 12. GENERAL............................................. 12 12.1 Governing Law................................. 12 12.2 Liability for Expenses........................ 12 12.3 Counterparts.................................. 12 12.4 Attorneys..................................... 12 12.5 Severability.................................. 12 12.6 Entire Agreement.............................. 12 12.7 Normandy Board Resolution..................... 12 12.8 Obligation to Enforce......................... 13 SCHEDULE 1--AGREED ANNOUNCEMENTS........................ 14 SCHEDULE 2--NORMANDY WARRANTIES......................... 15
i DEED OF UNDERTAKING DATED 14 NOVEMBER 2001 PARTIES 1. NEWMONT MINING CORPORATION of 1700 Lincoln Street, 28th Floor, Denver, Colorado 80203, United States of America (NEWMONT) 2. NORMANDY MINING LIMITED ABN 86 009 295 765 of 100 Hutt Street, Adelaide, South Australia, 5000, Australia (NORMANDY) RECITALS A. Normandy is the subject of a takeover bid by AngloGold Limited (ANGLOGOLD) under which AngloGold has offered 2.15 AngloGold shares for every 100 Normandy Shares. B. The offer price under AngloGold's Bid represents a premium of 29% to the market price of Normandy shares immediately before the AngloGold Bid was announced. C. Newmont is considering making or procuring a related body corporate or limited liability company (which is part of the Newmont group of companies) to make an off-market bid to acquire all the Normandy Shares upon the terms and conditions contained in the Agreed Announcements (BID). D. The value of the offer under the Bid to acquire all Normandy securities represents a 20.92% premium to the value of AngloGold's Bid immediately before the Bid was announced. E. Newmont has represented to Normandy that it is a pre-requisite to Newmont making or procuring the making of the Bid that Normandy enters in to this Deed. F. Normandy and its directors believe that significant benefits will flow to Normandy and its shareholders if the Bid is made. 1 THE PARTIES AGREE 1. DEFINITIONS AND INTERPRETATION 1.1 DEFINITIONS In this document, unless the context otherwise requires: AGREED ANNOUNCEMENTS means the announcements of Newmont and Normandy in the terms set out in Schedule 1 to this Deed or in such other terms as the parties may jointly approve which, in relation to the announcement of Normandy, includes the recommendation of the Normandy Board of the Bid in terms acceptable to Newmont. ANGLOGOLD'S BID means the off market bid of AngloGold constituted by the Bidder's Statement dated 16 October 2001 and the Supplementary Bidder's Statement dated 1 November 2001. ASIC means the Australian Securities and Investments Commission. ASX means the Australian Stock Exchange Limited. BIDDER means Newmont or the related body corporate or the limited liability company (which is a part of the Newmont group of companies) identified in the Agreed Announcements as being the company making the Bid. BUSINESS DAY means a day that is not a public holiday in Sydney or Adelaide, Australia or New York, New York, United States of America or a Saturday or Sunday. COMPETING TAKEOVER PROPOSAL means any proposal or offer (not including AngloGold's Bid but including any increase or proposed increased by AngloGold of the consideration offered under AngloGold's Bid) with respect to any transaction (by purchase, merger, amalgamation, arrangement, business combination, liquidation, dissolution, recapitalisation, take-over bid or otherwise) that would, if completed substantially in accordance with its terms, result in any person (or group of persons) other than Newmont and its Subsidiaries acquiring: (a) assets of Normandy and/or its Subsidiaries that have, individually or in the aggregate, a market value exceeding 15% of the market value of all the assets of Normandy and its Subsidiaries (taken as a whole); or (b) 25% or more of the voting shares of Normandy. CONFIDENTIALITY AGREEMENT means the agreement dated 18 October 2001 between Normandy and Newmont. COSTS DISPUTE means any dispute between the parties concerning any payment or reimbursement which Normandy has to make to Newmont in accordance with clause 4.1(b)(2). GOVERNMENTAL AGENCY means any: (a) government or governmental, semi-governmental or judicial entity or authority; or (b) minister, department, office, commission, delegate, instrumentality, agency, board, authority or organisation of any government. It also includes any regulatory organisation established under statute or any stock exchange. MATERIAL ADVERSE EFFECT WHEN USED IN RELATION TO AN ENTITY means a change, effect, event or development that has had, is or is reasonably expected to have, a material adverse effect on the business, financial or trading position or condition, results of operations, assets or liabilities, profitability or prospects of that entity and its related bodies corporate, taken as a whole, the value or financial effect of which (taken together with all other adverse effects which have occurred and after deducting the value or financial effect of all positive effects which 2 have occurred) is not less than an amount equal to 7.5% of the value of the total assets of the entity or where the effect is on revenue account 7.5% of the total revenue of the entity in each case on a consolidated basis as per its most recently published audited accounts. Adverse and positive effects solely due to fluctuations in the price of gold or other commodities or rates of inflation shall be ignored. NEWMONT'S TAKEOVER BID or BID means a takeover bid publicly proposed by Newmont or Bidder that satisfies the condition precedent in clause 2. NORMANDY BOARD means the board of directors of Normandy. NORMANDY BOARD RESOLUTION means the the resolution of the Normandy Board which is referred to in clause 12.7 of this Deed. NORMANDY DUE DILIGENCE MATERIAL means material provided by Normandy to Newmont or its financial or legal advisors as recorded in Exhibit 1 to this Deed and all other written information provided since 1 October 2001 by or on behalf of Normandy to Newmont or any of its financial and legal advisors or employees, agents or contractors concerning Normandy. NORMANDY SENIOR MANAGEMENT means the Normandy Group Legal Counsel and the Normandy Group Executives of Finance, Operations, E-Business, Exploration, Corporate and Development. NORMANDY SHARE means an ordinary share in the capital of Normandy. SECURITY BOND means in unconditional guarantee given by Australia and New Zealand banking Group Limited and provided by Normandy to Newmont in accordance with the terms of this Deed. SUBSIDIARIES OR SUBSIDIARIES means in respect of a person, each of the corporate entities, partnerships and other entities over which it exercises direction or control. SUPERIOR TAKEOVER PROPOSAL means a BONA FIDE Competing Takeover Proposal in respect of which the Normandy Board has determined, acting reasonably and in good faith, would, it consummated in accordance with its terms, be reasonably likely to result in a transaction more favorable to the holders of Normandy Shares than the Newmont Takeover Bid, such determination having been made in good faith by the Normandy Board: (i) after consultation with its financial and legal advisors; and (ii) after taking into account all material legal, financial, regulatory and other aspects of such proposal and the party making such proposal (including the prospects that the proposal will complete) WARRANTY means the representations and warranties given by Normandy to Newmont pursuant to this Deed, as set out in Schedule 2 or by Newmont to Normandy in accordance with clause 7. $ means Australian dollars. 3 1.2 INTERPRETATION Headings are for convenience only and do not affect interpretation. The following rules also apply in interpreting this document except where the context makes it clear that a rule is not intended to apply: (a) A reference to a person includes any type of entity or body of persons, whether or not it is incorporated or has a separate legal identity, and any executor, administrator or successor in law of the person. (b) A singular word includes the plural and vice versa. (c) A word which suggests one gender includes the other genders. (d) If a word is defined, another part of speech has a corresponding meaning. (e) Words or expressions which are defined in the Corporations Act have the same meanings in this Deed. 2. CONDITION PRECEDENT (a) Normandy shall have no obligation of any kind unless on the date this Deed is executed by both parties, Newmont publicly proposes, by means of an announcement to the Australian Stock Exchange, to make or cause Bidder to make the Bid in accordance with the Agreed Announcements. (b) Newmont shall have no obligation of any kind under this Deed until this Deed is executed by Normandy and Normandy provides Newmont with a certified copy of the Normandy Board Resolution. 3. NON SOLICITATION (a) Normandy shall not, nor shall it permit any of its subsidiaries to, nor shall it authorise or permit any officer, director or employee of, or require any investment banker, attorney or other advisor, agent or representative of Normandy or any of its subsidiaries to: 4 (i) directly or indirectly solicit, initiate or encourage the making of (including by way of furnishing non-public information) any inquiries or proposals regarding any Competing Takeover Proposal; or (ii) accept or enter into any agreement, arrangement or understanding with respect to any Competing Takeover Proposal or directly or indirectly participate in any discussions or negotiations regarding or furnish to any person any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, a Competing Takeover Proposal; or (iii) approve or recommend any Competing Takeover Proposal. (b) Paragraphs (a) (ii) and (iii) do not restrict Normandy or the Normandy Board from taking or refusing to take any action with respect to a BONA FIDE Competing Takeover Proposal provided that the Normandy Board has determined in good faith and acting reasonably after consultation with its financial advisors and outside legal counsel, that such BONA FIDE Competing Takeover Proposal, that was not solicited, initiated or encouraged by Normandy in contravention of clause 3(a)(i) and did not otherwise result from a breach or deemed breach of paragraph (a)(i) or (ii), is a Superior Takeover Proposal. (c) Normandy shall upon the execution of this Deed: (i) immediately cease and cause to be terminated any existing discussions or negotiations, directly or indirectly, with any person with respect to (i) any Competing Takeover Proposal, or (ii) any transaction (which, for greater certainty, includes any Competing Takeover Proposal) that may adversely affect or reduce the likelihood of the successful completion of the Newmont Takeover Bid; and (ii) not, directly or indirectly, waive or vary any terms or conditions of any confidentiality or standstill agreement that it has, as of the date hereof, entered into with any person considering a Competing Takeover Proposal and shall immediately request the return (or the deletion from retrieval systems and data bases or the destruction) of all information. (d) The obligations of Normandy under paragraphs (a)(ii) and (iii) and (c) do not restrict Normandy or the Normandy Board from taking or failing to take any action where to do so would, in the determination of the Normandy Board, made in good faith and acting reasonably after consultation with its financial advisors and outside legal advisors, constitute or would be likely to constitute a breach of a fiduciary or statutory duty or obligation imposed on the members of the Normandy Board. (e) Normandy has no obligation under clause 3 in any of the following circumstances: (i) Newmont has not by 1 January 2002 (or such extended time as may be permitted by the Corporations Act or the Australian Securities and Investments Commission) served on Normandy a Bidder's Statement relating to the Bid; (ii) offers pursuant to Newmont's Bid are not dispatched to Normandy shareholders on or before 16 January 2002 (or such extended time as may be permitted by the Corporations Act or the Australian Securities and Investments Commission); (iii) Newmont withdraws its Bid, after the Bid is made; or (iv) Newmont's Bid closes, unless the circumstances in (i) or (ii) arise because the certificate contemplated by clause 6.8 has not been provided by Normandy. (f) Without limiting the foregoing, it is understood that any breach of the restrictions in paragraph (a) or (c) by any officer or director of Normandy or any of its subsidiaries or investment bankers, attorneys or other advisors or representatives shall be deemed to be a breach by Normandy of paragraph (a) or (c). 5 4. NORMANDY UNDERTAKING 4.1 BACKGROUND (a) Newmont has represented to Normandy that its reasonable estimate of its reasonable opportunity costs connected with the proposed Bid together with other out of pocket expenses and costs exceeds 1% of the transaction value of the Bid determined on the date on which the Bid is announced and Normandy has no basis to question such estimate and accordingly has relied on such estimate. (b) Newmont is induced to make the Agreed Announcement on the basis that, in the circumstances provided for by clause 4, Normandy shall pay to Newmont its costs and expenses connected with the Bid and its reasonable opportunity costs, subject to the cap in clause 4.4. 4.2 UNDERTAKING Normandy undertakes to Newmont that if: (a) a Competing Takeover Proposal is announced or open for acceptance and, pursuant to that Competing Takeover Proposal, the bidder acquires a relevant interest in more than 50% of all Normandy's Shares and the Competing Takeover Proposal becomes free from any defeating conditions either before or after the end of the applicable offer period; or (b) the Normandy Board fails to recommend Newmont's Takeover Bid in Normandy's target's statement in response to Newmont's Takeover Bid or withdraws or modifies in a manner adverse to Newmont a recommendation previously made in respect of the Bid (or proposed Bid) or enters into any agreement, arrangement or understanding to recommend or support a Competing Takeover Proposal or recommends a Competing Takeover Proposal, then subject to this clause 4, Normandy must pay Newmont the Compensating Amount. (c) The Compensating Amount means $38.33 million, being 1% of the Bid value determined on the date the Bid is announced, to compensate Newmont for the following: (i) advisory costs, legal costs (on a solicitor own client basis), costs of management and directors' time and costs of convening and holding any necessary Newmont stockholders meetings; (ii) out of pocket expenses incurred after 1 August 2001 including, without limitation, airfares, hotel accommodation, meals and associated expenses incurred by Newmont employees, advisors and agents; (iii) costs incurred by Newmont in negotiating, planning and implementing the Bid; (iv) reasonable opportunity costs incurred by Newmont in pursuing the Bid or in not pursuing other alternative acquisitions or strategic initiatives; and (v) any reputational damages associated with a failed transaction and the implications of those damages in the event Newmont seeks to execute alternative acquisitions or financings in the future, in each case, incurred or suffered by Newmont as a result of Newmont having entered into this Deed or making an Agreed Announcement or pursuing Newmont's Takeover Bid and related transactions, including all preparatory investigations and due diligence undertaken in connection therewith since 1 August 2001. 4.3 LIMITATION ON PAYMENT Normandy will not have any obligation under clause 4.2(b) in any of the following circumstances: (a) the terms and conditions of the Bid when made are materially less favourable to Normandy shareholders than the terms and conditions thereof specified in the Agreed Announcement; (b) Newmont shareholders vote against the resolution to approve the issue of Newmont securities under the Bid; or (c) the Treasurer of the Commonwealth of Australia determines not given an approval to the Bid, under the Foreign Acquisitions and Takeovers Act (Cth) on terms acceptable to Newmont, unless another person, including AngloGold, makes a Competing Takeover Proposal which becomes free from any defeating conditions either before or after the end of the applicable offer period. 6 4.4 CAP The maximum aggregate liability of Normandy under clause 4.2 is the Compensating Amount. 4.5 DEMAND FOR PAYMENT Any demand for payment of the Compensating Amount must: (a) be in writing; and (b) certify the amount and provide reasonable supporting details thereof except for opportunity costs in respect of which Normandy will rely on the representation provided by Newmont which is referred to in clause 4.1(a). Payment must, subject to clause 4.4, be made by Normandy within 3 Business Days of receipt of the demand therefor by Newmont. 4.6 SECURITY BOND (a) As security for its obligation under clause 4.2, Normandy must as soon as reasonably practicable but in any event by no later than 28 November 2001 provide a Security Bond to Newmont. (b) Newmont shall have the right, without prejudice to any other remedy available to Newmont, to call upon the Security Bond if Normandy fails to comply with clause 4.2. Newmont agrees to return the Security Bond to Normandy when Normandy's obligations under clause 4.2 have been observed and complied with to the satisfaction of Newmont or otherwise have terminated in accordance with this Deed. (c) Normandy shall not take any steps whatsoever to: (i) injunct the payment of the amount secured by the Security Bond in respect of any claim that may be made under the Security Bond by Newmont; or (ii) restrain Newmont from exercising its rights under the Security Bond in accordance with this clause. (d) The Security Bond shall be in such form as Normandy and Newmont reasonably agree. (e) (i) Subject to paragraph (ii), the term of the Security Bond must be 18 months from the date of this Deed; (ii) Normandy must extend the term of the Security Bond, in the event that there is a dispute between Normandy and Newmont concerning the payment pursuant to clause 4 until a date which is 10 Business Days after the date the dispute is finally resolved. 5. FACILITATION OF OFFER 5.1 ABRIDGEMENT OF TIME (a) For the purposes of item 6 in section 633(1) of the Corporations Act, subject to: (i) Newmont providing Normandy with an advanced draft of its Bidder's Statement for review when prepared and a final draft of its Bidder's Statement not less than three Business Days before it is lodged with the Australian Securities and Investments Commission under item 2 of section 633(1) of the Corporations Act; (ii) Newmont taking account of all reasonable comments provided to it by Normandy prior to finalising its Bidder's Statement; and 7 (iii) Newmont's Bidder's Statement complying with applicable law, Normandy will agree that the offers under Newmont's Takeover Bid may be sent to Normandy shareholders, at the option of Newmont, on the day on which the Bidder's Statement relating to Newmont's Takeover Bid is sent to Normandy or within 5 Business Days after that day. (b) Normandy will use its best endeavours to distribute a Target's Statement in relation to Newmont's Takeover Bid as soon as practicable after Newmont's Bidder's Statement has been sent to Normandy. 5.2 CONSULTATION Normandy will consult with Newmont a reasonable time in advance of any action which may cause a non-fulfilment of any of the conditions of Newmont's Takeover Bid and Newmont will act reasonably in relation to the waiving of any of those conditions in respect of facts or circumstances which have an immaterial effect on Normandy and its subsidiaries taken as a whole. 6. REPRESENTTIONS AND WARRANTIES 6.1 WARRANTIES BY NORMANDY Normandy represents and warrants to Newmont in the terms set out in Schedule 2. 6.2 INDEMNITY Normandy indemnifies Newmont against any claim, loss, liability, cost or expense, direct or indirect, which Newmont is liable for arising from a breach by Normandy of this Deed including a breach of Warranty. 6.3 DISCLOSURE Each Warranty is qualified by and subject to: (a) any matter which is disclosed in the Normandy Due Diligence Material in sufficient detail to enable Newmont to have a reasonable understanding of the nature and the import of the matter which is disclosed; and (b) any announcement that Normandy has made either to ASX or ASIC between 1 July 2001 and the date of this Deed; and (c) any information which, at the date of this Deed, is publicly available or which, upon inspection of any register maintained by any Governmental Agency and available to the public (whether with or without the payment of a fee) would be ascertainable by Newmont. 6.4 RELIANCE Normandy acknowledges that Newmont has relied on the Warranties for the purpose of executing this Deed and making the Agreed Announcements and pursuing the Bid. 6.5 WARRANTY BREACH NOTIFICATION If prior to the end of the offer period under the Bid, Normandy becomes aware of any breach or potential breach of a Warranty, Normandy must notify Newmont of this and provide reasonable particulars of the breach or potential breach. 8 6.6 PROCEEDINGS FOR WARRANTY CLAIM Any claim by Newmont for a breach of any Warranty will be taken to be waived or withdrawn and will be barred and unenforceable unless: (a) reasonable details of the claim are notified in writing to Normandy within six months of the date of this Deed; and (b) within six months after the date the claim is first notified to Normandy proceedings against Normandy in respect of the claim have been commenced by Newmont and initiating process served on Normandy. 6.7 LIABILITY LIMITATIONS (a) Despite any other provisions of this Deed the representations and warranties given by Normandy do not survive the consummation of the Newmont Bid; that is when the Newmont Bid conditions have either been satisfied or waived. (b) In no event shall Normandy be liable for loss of profit, loss of revenue, loss of opportunity or any other kind of indirect or consequential loss or damage in connection with a breach of Warranty claim. (c) A claim for a breach of Warranty cannot be made unless that claim and all other claims for breach of Warranty, in the aggregate, exceed the amount paid to Newmont under clause 4 at the time the claim is made and then only in respect of the excess. (d) Normandy's liability under this clause 6 shall be limited to an amount in the aggregate not exceeding $100 million. 6.8 CERTIFICATION OF REPRESENTATIONS AND WARRANTIES The obligations of Newmont to consummate the Bid shall be subject to the representations and warranties of Normandy under this Deed being true and correct in all material respects (except where already qualified as to materiality or the absence of a Material Adverse Effect), on and as of the date of consummation as if made on and as of such date (except to the extent such representations and warranties refer solely as of an earlier date, in which event such representations and warranties shall be true and correct to such extent as of such earlier date), and Newmont shall have received a certificate of Normandy addressed to Newmont and dated the date of consummation, signed on behalf of Normandy by a senior officer of Normandy (on Normandy's behalf and without personal liability), confirming the same as at the date of consummation. 6.9 NO ASSIGNMENT The rights of Newmont under this clause 6, including the benefit of the Warranties given by Normandy, are personal to Newmont. They cannot be assigned, transferred, charged, made the subject of any trust or otherwise dealt with (except to or for the benefit of Bidder) without the written consent of Normandy which consent may be withheld in Normandy's absolute discretion. 7. CONDUCT OF BUSINESS BY NORMANDY (a) Prior to the consummation of Newmont's Takeover Bid, unless Newmont otherwise agrees in writing or as otherwise expressly contemplated or permitted by this Deed, Normandy shall, and cause each of its Subsidiaries to, (i) in all material respects conduct its business only in, not take any action except in, and maintain its facilities in, the ordinary course of business consistent with past practice, and 9 (ii) maintain and preserve its business organisation and its material rights and franchises and use all commercially reasonable endeavours to retain the services of its officers and key employees and use all commercially reasonable endeavours to maintain relationships with customers, suppliers, lessees, joint venture partners, licensees, lessors, licensors and other third parties, and maintain all of its material operations assets in their current condition (normal wear and tear excepted) to the end that the goodwill and ongoing business of Normandy and its Subsidiaries shall not be impaired in any material respect. 8. NEWMONT'S WARRANTIES 8.1 WARRANTIES (a) Newmont represents and warrants to Normandy that, at the date of this Deed: (i) it is duly incorporated under the laws of the place of its incorporation; (ii) it has the power and authority to execute and exchange this Deed and perform and observe all its terms; (iii) this Deed has been duly executed by Newmont and is a legal, valid and binding agreement of Newmont enforceable against it in accordance with its terms; (iv) Newmont is not bound by any contract which may restrict Newmont's right or ability to enter into or perform this Deed; (v) no resolutions have been passed nor has any other step been taken or legal proceedings commenced or threatened against it for its winding up or dissolution or for the appointment of a liquidator, receiver, administrator or similar officer over any or all of its assets, and no regulatory action of any nature has been taken, which would prevent, inhibit or otherwise have a material adverse effect on its ability to fulfil its obligations under this Deed. (b) LIABILITY LIMITED Despite any other provision of this Deed, the representations and warranties given by Newmont do not survive consummation of the Newmont Bid; that is when Newmont has acquired a relevant interest in at least 50.1% of Normandy voting shares and the Newmont Bid conditions have either been satisfied or waived. 8.2 INDEMNITY Newmont indemnifies Normandy against any claim, loss, liability, cost or expense, direct or indirect, which Normandy pays or is liable for arising from a breach by Newmont of this Deed including a breach of a warranty given by Newmont provided that in no event shall Newmont be liable for loss of profit, loss of revenue, loss of opportunity or other kind of indirect or consequential loss or damage in connection with a breach of Warranty claim. 9. PUBLIC ANNOUNCEMENT (a) The parties will immediately after execution of this Deed make the Agreed Announcements to Australian Stock Exchange Limited. (b) The parties shall, as far as practicable, consult with one another as to the terms of all press releases and other public announcements and presentations by Newmont or Normandy relating to the Newmont Bid while the Normandy Board recommends the Newmont Bid, provided, however, that the foregoing shall not preclude communications or disclosures, after reasonable prior consultation with the other party: (i) by Newmont relating to offerings of Newmont securities; or 10 (ii) necessary to implement the provisions of this Deed or to comply with applicable law or the requirements of any governmental agency (including the Australian Stock Exchange Limited and the Securities Exchange Commission). (c) Normandy will lodge a copy of this Deed with the Australian Stock Exchange Limited at the same time as the Agreed Announcements are made. 10. NOTICES 10.1 WHEN NOTICES ARE GIVEN A notice, demand or other communication under this document is only effective if it is in writing, signed and either left at the addressee's address or sent to the addressee by mail or fax. If it is sent by mail from an address within Australia, it is taken to have been received 3 working days after it is posted. If it is sent by mail from an address outside Australia, it is taken to have been received when the addressee actually receives it in full and in legible form. If it is sent by fax, it is taken to have been received on the date of delivery, upon confirmation of receipt. 10.2 ADDRESSES FOR NOTICES A person's address and fax number are those set out below, or as the person notifies the sender: NORMANDY MINING LIMITED Address: 100 Hutt Street Adelaide SA 5000 Fax no: 08 8303 1900 Attention: Company Secretary With copy to: General Counsel (Normandy Mining Limited) at Address: 100 Hutt Street Adelaide SA 5000 Fax no: 08 8303 1904 NEWMONT MINING CORPORATION Address: 1700 Lincoln Street 28th Floor Denver CO 80203 United States of America Fax no: 1 303 837 5810 Attention: General Counsel With copy to: David A Katz Esq Address: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street 27th Floor New York, New York 10019-6150 United States of America Fax no: 1 212 403 2309
11 11. AMENDMENT AND ASSIGNMENT 11.1 AMENDMENT This document can only be amended, supplemented, replaced or novated by another document signed by the parties. 11.2 ASSIGNMENT Subject to clause 6.9 a party may only dispose of, declare a trust over or otherwise create an interest in its rights under this document with the consent of the other party. 12. GENERAL 12.1 GOVERNING LAW (a) This document is governed by the law in force in New South Wales, Australia. (b) Each party submits to the non-exclusive jurisdiction of the Courts exercising jurisdiction in New South Wales, Australia and any Court that may hear appeals from any of those Courts, for any proceedings in connection with this document and waives any right it might have to claim that those Courts are an inconvenient forum. 12.2 LIABILITY FOR EXPENSES Subject to this document, each party must pay its own expenses incurred in negotiating, executing, stamping and registering this document. 12.3 COUNTERPARTS This document may be executed in counterparts. 12.4 ATTORNEYS Each person who executes this document on behalf of a party under a power of attorney declares that he or she is not aware of any fact or circumstance that might affect his or her authority to do so under that power of attorney. 12.5 SEVERABILITY If the whole or any part of a provision of this Deed is void, unenforceable or illegal in a jurisdiction, it is severed for that jurisdiction. The remainder of this Deed has full force and effect and the validity or enforceability of that provision in any other jurisdiction is not affected. This clause has no effect if the severance alters the basic nature of this Deed or is contrary to public policy. 12.6 ENTIRE AGREEMENT This Deed constitutes the entire agreement of the parties about its subject matter and supersedes all previous agreements, understandings and negotiations on that subject matter, other than the Confidentiality Agreement. 12.7 NORMANDY BOARD RESOLUTION (a) Normandy will provide to Newmont a certified copy of a resolution of the Normandy Board, which has been unanimously passed at a meeting of the Normandy Board at which each director of Normandy was present, confirming that the Normandy Board approves the execution of this Deed and the provisions of clause 4, and recommends Newmont's Takeover Bid, as being in the best interests of Normandy and its shareholders. (b) Newmont agrees that it will not commence any legal action against the Normandy Board or any member thereof in relation to the resolution of the Normandy Board to approve and commit Normandy to enter into this Deed. 12 12.8 OBLIGATION TO ENFORCE In the event that a third party seeks in relation to this Deed either from a Court, the Takeovers Panel or a regulatory authority any orders, judgment or other action the effect of which if granted would be to diminish, restrict, modify, waive or vary any obligation imposed on Normandy under this Deed, including the obligation under this clause 12.8, then Normandy will: (a) vigorously defend such action or proceeding before a Court, the Takeovers Panel or regulatory authority; and (b) at Newmont's cost permit Newmont to participate with Normandy in such action or proceeding. 13 SCHEDULE 1 AGREED ANNOUNCEMENTS 14 SCHEDULE 2 NORMANDY WARRANTIES 1. SHARE CAPITAL (a) ISSUED CAPITAL: As at 9 November 2001 there are 2,231,693,599 ordinary shares issued in the capital of Normandy and 22,902,765 options over unissued shares. Each such share is fully paid. These shares are the only shares issued in the capital of Normandy as at 9 November 2001. (b) ISSUE OF OTHER SECURITIES: Normandy is not obliged to issue or allot any shares or other securities of Normandy and Normandy has not granted any person the right to call for the issue or allotment of any shares or other securities of Normandy other than as disclosed publicly or in the Normandy Due Diligence Material. (c) SUBSIDIARIES: All the issued shares in the capital of each wholly owned Subsidiary of Normandy have been validly issued and are fully paid, and are owned free and clear of all pledges, claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever. 2. AUTHORITY OF NORMANDY (a) ORGANISATION AND STANDING: Each of Normandy and each of its Subsidiaries is a corporation, partnership or other legal entity duly organised and validly existing under the laws of the jurisdiction in which it is organised and has the requisite power and authority to carry on its business as now being conducted. Each of Normandy and each of its Subsidiaries is duly qualified or licensed to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than where the failure to be so qualified or licensed, either individually or in the aggregate, would not result in a Material Adverse Effect upon Normandy. (b) AUTHORITY: Normandy has taken all necessary action to authorise the signing, delivery and performance of this Deed and the documents required under this Deed in accordance with their respective terms. (c) POWER TO AGREE: Normandy has power to enter into this Deed and perform its obligations under it and can do so without the consent or approval of any other person including, without limitation, the shareholders of Normandy. (d) NO BREACH: The signing and delivery of this Deed and the performance by Normandy of its obligations under it complies with Normandy's Constitution and will not conflict with, or result in any breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of consent, termination, purchase, cancellation or acceleration of any obligation or to loss of any property, rights or benefits under, or result in the imposition of any additional obligation under, or result in the creation of any lien upon any of the properties or assets of Normandy or a Subsidiary under any contract, instrument, permit, concession, franchise, licence, loan or credit agreement, note, bond, mortgage, indenture, lease or other property agreement, partnership or joint venture agreement or other legally binding agreement, whether oral or written (CONTRACT), to which either Normandy or a Subsidiary is subject except where any such conflicts, breaches, defaults, rights or liens individually, or in the aggregate, would not result in a Material Adverse Effect. (e) BOARD APPROVAL: The Normandy Board has unanimously approved this Deed and the transactions and obligations imposed on Normandy under this Deed including the recommendation of the Normandy Board which is contained in the Agreed Announcements. 3. ACCURACY OF INFORMATION (a) So far as the Normandy Board and Normandy Senior Management are aware, the Normandy Due Diligence Material together with any information about Normandy which is in the public domain at the date of this Deed comprises all information that investors and their professional advisers would reasonably require to make an informed assessment of the assets and liabilities, financial position and performance, profits and losses and prospects of Normandy and the Subsidiaries taken as a whole as at the date of this Deed. (b) So far as the Normandy Board and Normandy Senior Management are aware, the information contained in the Normandy Due Diligence Material is accurate in all material respects. None of that information is misleading in any material particular whether by inclusion of misleading information or the omission of material information or both. 15 (c) Normandy has complied with ASX listing rule 3.1 in relation to continuous disclosure and has (to the extent necessary to date) and will continue to comply with Division 4 of Part 6.5 and Chapter 6B of the Corporations Act. (d) The Normandy Board and the Normandy Senior Management are not aware of any information being information otherwise liable to be disclosed under ASX listing rule 3.1 which has not been publicly disclosed by Normandy in reliance on the carve out from disclosure which is contained in ASX listing rule 3.1 which has not been provided to the expert for review in connection with the preparation of the independent expert's report which is to accompany the Normandy Target's Statement which will be given in response to the AngloGold Bidder's Statement dated 16 October 2001 and AngloGold's F-4 Registration Statement dated 9 November 2001. (e) Without limiting the generality of paragraph (c), as far as the Normandy Board and the Normandy Senior Management are aware, none of the disclosures Normandy has lodged with either ASIC or ASX since 30 June 2001, including without limitation the audited financial statements of Normandy and its Subsidiaries as at 30 June 2001, as of their respective dates, contained any untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, except to the extent that such statements have been modified or superseded by later lodgements on behalf of Normandy or a Subsidiary with either ASIC or ASX. (f) As at the date of this Deed, the Normandy Board and Normandy Senior Management are not aware of: (i) any material change in its financial position or the financial position of Normandy and its Subsidiaries which change would constitute a Material Adverse Effect upon Normandy when compared with the financial position of Normandy and Normandy and its subsidiaries as disclosed in the audited financial statements of Normandy and Normandy and its Subsidiaries as at 30 June 2001; or (ii) any event, change, effect or development that individually or in the aggregate would result in a Material Adverse Effect upon Normandy. 4. CONDUCT OF BUSINESS (a) As far as the Normandy Board and the Normandy Senior Management are aware, Normandy holds all material authorisations which are necessary or required to enable it to conduct its business as it has been conducted at the date of this Deed and as the Normandy Board expects that business to continue to be conducted, other than those authorisations the failure to so hold, either individually or in the aggregate, would not result in a Material Adverse Effect upon Normandy. The Normandy Board and the Normandy Senior Management are not aware of any fact, matter or circumstance existing as at the date of this Deed which has not been the subject of public disclosure which may have a Material Adverse Effect upon Normandy in terms of its ability to continue to conduct its business. (b) Since 30 June 2001 there has not been any granting by Normandy or a Subsidiary to any member of the Normandy Board or the Normandy Senior Management of any increase in compensation, severance or termination pay, except: (i) in the ordinary course of business consistent with past practice; or (ii) as was required under any employment agreement, severance or termination agreement in effect as of 30 June 2001. 5. LITIGATION (a) There is no suit, action, proceedings, prosecution, litigation, arbitration proceeding or administrative or governmental investigation or challenge pending or, to the knowledge of Normandy, threatened against Normandy or a Subsidiary that, individually or in the aggregate, would: (i) if adversely determined against Normandy would result in a Material Adverse Effect; or (ii) reasonably be expected to prevent or delay in any material respect the consummation of Newmont's Takeover Bid. 16 (b) There is no judgment, decree, injunction, rule or order outstanding against Normandy or a Subsidiary that, individually or in the aggregate, would result in a Material Adverse Effect. (c) All contracts material to the business of Normandy are valid and binding obligations of Normandy or a Subsidiary and, to the knowledge, neither Normandy nor a Subsidiary nor any other person which is a party to a contract referred to in paragraph (a) in breach of or in default in respect of, nor has there occurred an event or condition which with the passage of time or giving of notice (or both) would constitute a default under or entitle any party to terminate, accelerate, modify or call a default under, or trigger any pre-emptive rights or rights of first refusal under, any such contract except such breaches or defaults that, individually or in the aggregate, would not have a Material Adverse Effect. 6. RESERVES/RESOURCES As far as the Normandy Board and the Normandy Senior Management are aware, there has been no material reduction in the aggregate amount of reserves or resources of Normandy and its Subsidiaries, taken as a whole, from the amounts set forth in Normandy's 2001 Annual Report except for such reductions in reserves that have resulted from production in the ordinary course of business or such reductions in resources that have resulted from reclassifications of resources as reserves. 7. COMPLIANCE WITH LAWS Neither Normandy nor a Subsidiary has, to the best of the knowledge and belief of the Normandy Board and the Normandy Senior Management, breached or failed to comply with any of its articles or other organisational documents or by laws, or any statute, law, ordinance, regulation, rule, judgment, decree or order applicable to its business or operations, except for: (a) breaches and failures to comply therewith that, individually or in the aggregate, would not result in a Material Adverse Effect; or (b) breaches and failures to comply which have been publicly disclosed. 8. DISPOSITIONS OF COMPANY PROPERTY Since 1 July 2001, neither Normandy nor a Subsidiary of Normandy has sold or disposed of or ceased to hold or own any personal property, real property, any interest or rights with respect to real property (including exploration or production rights), any interest in a joint venture or other assets or properties of Normandy or a Subsidiary of Normandy (COMPANY PROPERTY), other than sales and dispositions of raw materials, obsolete equipment, mine output and other inventories, and any interests or rights with respect to real property having an individual fair market value of less than $250 million. No Company Property whose fair market value on the date hereof is greater than $250 million is subject to any pending sale or disposition transaction. 17 EXECUTED as a Deed. SIGNED by NORMANDY MINING LIMITED by: /S/ ROBERT J CHAMPION DE CRESPIGNY /S/ MICHAEL S HANSON - ------------------------------------- ---------------------------------- Signature of Director Signature of Director/Secretary Robert J Champion de Crespigny Michael S Hanson - ------------------------------------- ---------------------------------- Name of Director (print) Name of Director/Secretary (print) SIGNED by NEWMONT MINING CORPORATION by: /S/ BRUCE D. HANSEN - ------------------------------------- Bruce D. Hansen - ------------------------------------- Name Senior Vice President & CFO - ------------------------------------- Title 18 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECOND DEED OF UNDERTAKING NEWMONT MINING CORPORATION NORMANDY MINING LIMITED ABN 86 009 295 765 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 19 CONTENTS PAGE ---- 1. DEFINITIONS AND INTERPRETATION..................................... 21 1.1 Definitions.................................................... 21 1.2 Interpretation................................................. 21 2. NEWMONT AGREEMENT.................................................. 22 3. CLAUSE 4.2 PAYMENT................................................. 22 4. RECOVERY OF PAYMENTS ALREADY MADE.................................. 22 5. DEED OF UNDERTAKING................................................ 22 20 SECOND DEED OF UNDERTAKING DATED 14 NOVEMBER 2001 PARTIES 1. NEWMONT MINING CORPORATION of 1700 Lincoln Street, 28th Floor, Denver, Colorado 80203, United States of America (NEWMONT) 2. NORMANDY MINING LIMITED ABN 86 009 295 765 of 100 Hutt Street, Adelaide, South Australia 5000, Australia (NORMANDY) RECITALS A. Normandy and Newmont propose to enter into the Deed of Undertaking relating to the proposal by Newmont to make an off-market takeover bid for all the Normandy shares. B. Newmont and Normandy have agreed to record in this Second Deed of Undertaking the circumstances in which Newmont will not be entitled to receive or, if it has already received, will be required to repay certain payments under the Deed of Undertaking and a number of associated matters. THE PARTIES AGREE 1. DEFINITIONS AND INTERPRETATION 1.1 DEFINITIONS In this document, unless the context otherwise requires: APPEAL RIGHTS means all rights of appeals and challenges available to a party from a Court to a Court, from the Takeovers Panel to the Takeovers Panel or from the Takeovers Panel to a Court, as Newmont in its absolute discretion determines. DEED OF UNDERTAKING means the document between Normandy and Newmont which is dated on the same date as the date of this Deed and which is referred to in Recital A to this Deed. FINALLY DETERMINED or FINAL DETERMINATION means the final decision, order, judgment or determination in relation to a Challenge after all appeals and challenges to jurisdiction have been exercised or availed of, as deemed appropriate by Newmont in its absolute discretion. PAYMENT means any payment which Normandy is required to make to Newmont in accordance with clause 4.2 of the Deed of Undertaking. PROVISO means Normandy in consultation with Newmont taking all necessary actions to vigorously defend any application or proceeding for orders, judgments, determinations or declarations made under a Challenge before a Court or the Takeovers Panel which, if granted, made or allowed would in any way interfere with Normandy making the Payment in accordance with the terms of the Deed of Undertaking; and Normandy, at Newmont's cost, seeking to join Newmont as a party to such application and proceedings in which the Challenge is made or brought; and Normandy, at Newmont's direction, initiating all Appeal Rights from a decision of a Court or the Takeovers Panel which has the effect or result of preventing the Payment from being made to Newmont. 1.2 INTERPRETATION Headings are for convenience only and do not affect interpretation. The following rules also apply in interpreting this document except where the context makes it clear that a rule is not intended to apply: 21 (a) A reference to a person includes any type of entity or body of persons, whether or not it is incorporated or has a separate legal identity, and any executor, administrator or successor in law of the person. (b) A singular word includes the plural and vice versa. (c) A word which suggests one gender includes the other genders. (d) If a word is defined, another part of speech has a corresponding meaning. (e) Words or expressions which are defined in the Corporations Act have the same meanings in this Deed. (f) Words or expressions which are defined in the Deed of Undertaking have the same meanings in this Deed. 2. NEWMONT AGREEMENT Each covenant or agreement on the part of Newmont, which is contained in this Deed, is given by Newmont to Normandy for the benefit of Normandy and also to be held by Normandy for and on behalf of and to operate for the benefit of each director and relevant officer of Normandy. 3. CLAUSE 4.2 PAYMENT In the event that, at any time prior to a Payment becoming due to be made to Newmont in accordance with clause 4.2 of the Deed of Undertaking, there is a challenge to Normandy making the Payment which challenge is instituted or brought before a Court or the Takeovers Panel (CHALLENGE), then: (a) subject to the Proviso, Newmont will not enforce or seek to enforce Normandy's obligation to make the Payment, nor will Newmont seek recovery of the Payment under the Security Bond, until such time as the Challenge is Finally Determined; (b) if upon the Final Determination of the Challenge, Normandy is restrained from making the Payment (or any part thereof) or the making of the Payment is prevented by reason of a determination that it is illegal or unlawful (other than for any purpose on the part of the directors or any officer of Normandy to obtain improper personal pecuniary benefits, not including any benefit directly or indirectly as a holder of securities of Normandy in common with other holders of securities of Normandy) then, subject to the Proviso, Newmont will not seek to recover the Payment (or part thereof as the case may be) or damages in lieu thereof either against Normandy or any director or any officer of Normandy nor will Newmont seek to exercise its rights under the Security Bond. 4. RECOVERY OF PAYMENTS ALREADY MADE In the event that, at any time after a Payment has been made by Normandy to Newmont in accordance with clause 4.2 of the Deed of Undertaking, there is a challenge in respect of the Payment having been made which challenge is instituted or brought before a Court or the Takeovers Panel (POST-PAYMENT CHALLENGE) then, subject to the Proviso, Newmont will promptly refund the Payment (or any part thereof) upon a Final Determination of the Post-Payment Challenge if it is determined or decided that the making of the Payment (or the part thereof) was illegal or unlawful (other than for any purpose on the part of the directors or any officer of Normandy to obtain improper personal pecuniary benefits, not including any benefit directly or indirectly as a holder of securities of Normandy in common with other holders of securities of Normandy) and Newmont will not in such circumstances seek to recover the Payment (or part thereof as the case may be) or damages in lieu thereof either against Normandy or any director or officer of Normandy who authorised the making of such Payment, nor will Newmont seek to exercise any rights under the Security Bond. 5. DEED OF UNDERTAKING To the extent of any inconsistency between the provisions of this Deed and clause 4.6(c) of the Deed of Undertaking, the provisions of this Deed prevail. 22 EXECUTED as a Deed. SIGNED by NORMANDY MINING LIMITED by: /S/ ROBERT J CHAMPION DE CRESPIGNY /S/ MICHAEL S HANSON - ------------------------------------- ---------------------------------- Signature of Director Signature of Director/Secretary Robert J Champion de Crespigny Michael S Hanson - ------------------------------------- ---------------------------------- Name of Director (print) Name of Director/Secretary (print) SIGNED by NEWMONT MINING CORPORATION by: /S/ BRUCE D. HANSEN - ------------------------------------- Bruce D. Hansen - ------------------------------------- Name Senior Vice President & CFO - ------------------------------------- Title 23 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THIRD DEED OF UNDERTAKING NEWMONT MINING CORPORATION NORMANDY MINING LIMITED ABN 86 009 295 765 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 24 CONTENTS
PAGE ---- 1. DEFINITIONS AND INTERPRETATION.................................. 26 1.1 Definitions................................................. 26 1.2 Interpretation.............................................. 26 2. AMENDMENT OF DEED OF UNDERTAKING................................ 27 3. ACKNOWLEDGEMENT AND CONFIRMATION................................ 27 3.1 Normandy Acknowledgements................................... 27 3.2 Newmont Acknowledgements.................................... 27 4. REPRESENTATION AND WARRANTIES................................... 27 5. OTHER PROVISIONS CONTINUE....................................... 27 6. GENERAL......................................................... 28 7. AMENDMENT AND ASSIGNMENT........................................ 28 7.1 Amendment................................................... 28 7.2 Assignment.................................................. 28 8. GENERAL......................................................... 28 8.1 Governing Law............................................... 28 8.2 Liability for Expenses...................................... 28 8.3 Counterparts................................................ 28 8.4 Attorneys................................................... 28 8.5 Severability................................................ 28 8.6 Entire Agreement............................................ 29 8.7 Normandy Board Resolution................................... 29
25 THIRD DEED OF UNDERTAKING DATED 10 DECEMBER 2001 PARTIES 1. NEWMONT MINING CORPORATION of 1700 Lincoln Street, 28/th/ Floor, Denver, Colorado 80203, United States of America (NEWMONT) 2. NORMANDY MINING LIMITED ABN 86 009 295 765 of 100 Hutt Street, Adelaide, South Australia, 5000, Australia (NORMANDY) RECITALS A. Newmont and Normandy are parties to a Deed of Undertaking dated 14 November 2001 (DEED OF UNDERTAKING) and a Second Deed of Undertaking dated the same date (SECOND DEED) in respect of the Bid (as defined in the Deed of Undertaking). B. Since the date of the Deed of Undertaking, AngloGold has amended the AngloGold Bid, as announced by AngloGold on 29 November 2001. C. Newmont is prepared to amend the Newmont Takeover Bid, as disclosed in the form of agreed announcements contained in Schedule 1 (SECOND AGREED ANNOUNCEMENTS) to this Third Deed of Undertaking (THIRD DEED), subject to Normandy entering into this Third Deed. D. Normandy and its directors believe that significant benefits will flow to Normandy and its shareholders if the Newmont Takeover Bid is so amended. THE PARTIES AGREE 1. DEFINITIONS AND INTERPRETATION 1.1 DEFINITIONS In this Third Deed, except as otherwise expressly provided, all terms that are defined in the Deed of Undertaking shall have the same meanings in this Third Deed. "AGREED NEWMONT ANNOUNCEMENT" means that announcement contained in the Second Agreed Announcements to be made by Newmont. "AGREED NORMANDY ANNOUNCEMENT" means that announcement contained in the Second Agreed Announcements to be made by Normandy. 1.2 INTERPRETATION Headings are for convenience only and do not affect interpretation. The following rules also apply in interpreting this document, except where the context makes it clear that a rule is not intended to apply: (a) A reference to a person includes any type of entity or body of persons, whether or not it is incorporated or has a separate legal identity, and any executor, administrator or successor in law of the person. (b) A singular word includes the plural and vice versa. (c) A word which suggests one gender includes the other genders. (d) If a word is defined, another part of speech has a corresponding meaning. (e) Words or expressions which are defined in the Corporations Act have the same meanings in this Third Deed. 26 2. AMENDMENT OF DEED OF UNDERTAKING The Deed of Undertaking is amended as and from the date of this Third Deed in the following respects: (a) The definition of "Competing Takeover Proposal" in clause 1.1 shall be amended to add after the words "but including" in the second line: "the amendment of AngloGold's Bid announced on 29 November 2001 and" (b) The definition of "Newmont's Takeover Bid or Bid" shall be deleted and replaced by the following: "NEWMONT'S TAKEOVER BID OR BID" means the takeover bid announced by Newmont on 14 November 2001, as amended in accordance with the Agreed Newmont Announcement (as defined in the Third Deed of Undertaking dated 10 December 2001 between the parties). (c) Clause 4.2(c) is amended by deleting the words ", being 1% of the Bid value determined on the date the Bid is announced,". 3. ACKNOWLEDGEMENT AND CONFIRMATION 3.1 NORMANDY ACKNOWLEDGEMENTS Normandy expressly acknowledges that: (a) the conditions precedent in section 2 of the Deed of Undertaking have been satisfied and that the Deed of Undertaking is binding on Normandy; and (b) the AngloGold Bid, as amended by the announcement dated 29 November 2001, constitutes a Competing Takeover Proposal for the purposes of section 4.3 of the Deed of Undertaking. 3.2 NEWMONT ACKNOWLEDGEMENTS Newmont is not aware of any event that has been publicly disclosed as of the date of this Third Deed (other than the applications by AngloGold to the Takeovers Panel) that constitutes a breach of any condition to the Newmont Takeover Bid. Newmont agrees that it will not assert that the filing of any application to the Takeovers Panel by AngloGold prior to the date of this Third Deed constitutes a breach of any condition to the Newmont Takeover Bid. 4. REPRESENTATION AND WARRANTIES Normandy has taken all necessary action to authorise the signing, delivery and performance of this Third Deed and the documents required under this Third Deed in accordance with their respective terms. 5. OTHER PROVISIONS CONTINUE (a) All other provisions of the Deed of Undertaking shall, except as expressly provided in this Third Deed, continue with full force and effect. (b) The Second Deed: (i) continues to apply to the Deed of Undertaking; (ii) applies to the Deed of Undertaking as amended by this Third Deed; and (iii) applies to this Third Deed. 27 6. GENERAL (a) Newmont will immediately after execution of this Third Deed make the Agreed Newmont Announcement to the Australian Stock Exchange Limited. (b) Normandy will promptly after Newmont makes the Agreed Newmont Announcement make the Agreed Normandy Announcement to the Australian Stock Exchange. (c) Normandy will lodge a copy of this Third Deed with the Australian Stock Exchange Limited on the day that the Second Agreed Announcements are made. 7. AMENDMENT AND ASSIGNMENT 7.1 AMENDMENT This document can only be amended, supplemented, replaced or novated by another document signed by the parties. 7.2 ASSIGNMENT Subject to clause 6.9 of the Deed of Undertaking, a party may only dispose of, declare a trust over or otherwise create an interest in its rights under this document with the consent of the other party. 8. GENERAL 8.1 GOVERNING LAW (a) This document is governed by the law in force in New South Wales, Australia. (b) Each party submits to the non-exclusive jurisdiction of the Courts exercising jurisdiction in New South Wales, Australia and any Court that may hear appeals from any of those Courts, for any proceedings in connection with this document and waives any right it might have to claim that those Courts are an inconvenient forum. 8.2 LIABILITY FOR EXPENSES Subject to this document, each party must pay its own expenses incurred in negotiating, executing, stamping and registering this document. 8.3 COUNTERPARTS This document may be executed in counterparts. 8.4 ATTORNEYS Each person who executes this document on behalf of a party under a power of attorney declares that he or she is not aware of any fact or circumstance that might affect his or her authority to do so under that power of attorney. 8.5 SEVERABILITY If the whole or any part of a provision of this Third Deed is void, unenforceable or illegal in a jurisdiction, it is severed for that jurisdiction. The remainder of this Third Deed has full force and effect and the validity or enforceability of that provision in any other jurisdiction is not affected. This clause has no effect if the severance alters the basic nature of this Third Deed or is contrary to public policy. 28 8.6 ENTIRE AGREEMENT This Third Deed, together with the Deed of Undertaking and the Second Deed constitutes the entire agreement of the parties about its subject matter and supersedes all previous agreements, understandings and negotiations on that subject matter, other than the Confidentiality Agreement. 8.7 NORMANDY BOARD RESOLUTION (a) Normandy has provided to Newmont a certified copy of a resolution of the Normandy Board, which has been unanimously passed at a meeting of the Normandy Board at which each director of Normandy was present (other than Pierre Lassonde), confirming that the Normandy Board approves the execution of this Third Deed, as being in the best interests of Normandy and its shareholders, and approves the Agreed Normandy Announcement and the revised Newmont Takeover Bid. (b) Newmont agrees that it will not commence any legal action against the Normandy Board or any member thereof in relation to the resolution of the Normandy Board to approve and commit Normandy to enter into this Third Deed. 29 SCHEDULE 1 (AGREED ANNOUNCEMENTS--RECITAL C) 30 EXECUTED as a Deed. SIGNED by NORMANDY MINING LIMITED by: /S/ ROBERT J CHAMPION DE CRESPIGNY /S/ PAULINE F CLARK -------------------------------------- ---------------------------------- Signature of Director Signature of Director/Secretary Robert J Champion de Crespigny Pauline F Clark -------------------------------------- ---------------------------------- Name of Director (print) Name of Director/Secretary (print) SIGNED by NEWMONT MINING CORPORATION by: /S/ WAYNE W. MURDY -------------------------------------- Wayne W. Murdy -------------------------------------- Name President and Chief Executive Officer -------------------------------------- Title 31 EX-2 5 feb25ex23.txt EXHIBIT 2.3 EXHIBIT 2.3 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of January 8, 2002 (the "AGREEMENT"), by and among Newmont Mining Corporation, a Delaware corporation ("NEWMONT"), Delta Holdco Corp., a Delaware corporation and a wholly owned subsidiary of Newmont ("HOLDCO"), and Delta Acquisitionco Corp., a Delaware corporation and a wholly owned subsidiary of Holdco ("ACQUISITIONCO"). WITNESSETH: WHEREAS, the Board of Directors of Newmont (the "BOARD") has determined that it is advisable and in the best interests of Newmont and its stockholders for Newmont to effect a restructuring through the merger of Acquisitionco with and into Newmont, with Newmont as the surviving corporation (the "MERGER"), upon the terms and subject to the condition set forth in this Agreement, whereby (1) each issued and outstanding share of common stock, par value $1.60 per share, of Newmont ("NEWMONT COMMON STOCK") will be converted into one share of common stock, par value $1.60 per share, of Holdco ("HOLDCO COMMON STOCK"), and (2) unless the Board resolves otherwise pursuant to Section 2.1(b) hereof (in which case the "PROVIDED, HOWEVER," clause of that subsection shall govern), each issued and outstanding share of $3.25 Convertible Preferred Stock, par value $5.00 per share, of Newmont ("NEWMONT CONVERTIBLE PREFERRED STOCK") will be converted into one share of $3.25 Convertible Preferred Stock, par value $5.00 per share, of Holdco ("HOLDCO CONVERTIBLE PREFERRED STOCK"); WHEREAS, upon consummation of the Merger, Newmont will become a wholly owned subsidiary of Holdco; WHEREAS, the Board of Directors of Acquisitionco has determined that the Merger is advisable and in the best interests of Acquisitionco and Holdco as its sole stockholder; and WHEREAS, for U.S. federal income tax purposes, it is intended that the Merger will qualify as a reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"), and that the Merger, taken together with the share exchange contemplated by the Arrangement Agreement, dated as of November 14, 2001, by and between Newmont and Franco-Nevada Mining Corporation Limited, and the off-market bid by Newmont for the ordinary shares in the capital of Normandy Mining Limited, shall qualify as an exchange described in Section 351 of the Code. NOW, THEREFORE, in consideration of the mutual promises herein contained and intending to be legally bound, the parties hereto agree as follows: 1. MERGER 1.1 THE MERGER. Upon the terms and subject to the condition set forth in this agreement, and in accordance with the Delaware General Corporation Law (the "DGCL"), Acquisitionco shall be merged with and into Newmont at the Effective Time. Following the Merger, the separate corporate existence of Acquisitionco shall cease and Newmont shall continue its corporate existence under the laws of the State of Delaware as the surviving corporation. Newmont, in such capacity, is hereinafter sometimes referred to as the "Surviving Corporation." 1.2 CLOSING. The closing of the Merger (the "CLOSING") will take place on a date that is mutually acceptable to the parties hereto after satisfaction of the condition set forth in Article 3 (the actual time and date of the Closing being referred to herein as the "CLOSING DATE"). The Closing shall be held at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, NY 10019, unless another place is agreed to by the parties hereto. 1.3 EFFECTIVE TIME. As soon as practicable following the satisfaction of the condition set forth in Article 3, at the Closing the parties shall (i) file a certificate of merger (the "CERTIFICATE OF MERGER") in such form as is required by and executed in accordance with the relevant provisions of the DGCL and (ii) make all other filings or recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Delaware Secretary of State or at such subsequent time as the parties hereto shall 1 agree and as shall be specified in the Certificate of Merger (the date and time the Merger becomes effective being the "EFFECTIVE TIME"). 1.4 EFFECTS OF THE MERGER. a. GENERALLY. At and after the Effective Time, the Merger shall have the effects set forth in the DGCL and other applicable law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of Newmont and Acquisitionco shall be vested in the Surviving Corporation, and all debts, liabilities and duties of Newmont and Acquisitionco shall become the debts, liabilities and duties of the Surviving Corporation. b. CERTIFICATE OF INCORPORATION AND BY-LAWS. If the Board adopts the resolution contemplated by Section 2.1(b) hereof, the provisions of the certificate of incorporation, as amended prior to the Effective Time, of Newmont as the Surviving Corporation, other than the terms of the Newmont Convertible Preferred Stock, shall be amended to read as set forth in Exhibit A attached hereto and the terms of the Newmont Convertible Preferred Stock shall be amended, if such amendment is necessary, to provide, in addition to the terms of such shares at the Effective Time, that holders of Remaining Convertible Preferred Stock shall have the voting rights set forth in the final two sentences of Section 2.1(b) hereof. If the Board does not adopt the resolution contemplated by Section 2.1(b) hereof, the provisions of the Restated Certificate of Incorporation, as amended to date, of Newmont as the Surviving Corporation shall be amended in its entirety to read as set forth in Exhibit A attached hereto, PROVIDED that all references to Preferred Stock shall be deleted from Section 1 of Article IV thereof (and the number of authorized shares of capital stock reduced accordingly) and Section 2 and 3 shall be deleted from Article IV thereof. The by-laws of Acquisitionco as in effect immediately prior to the Effective Time shall be the by-laws of the Surviving Corporation, until thereafter changed or amended as provided therein or by applicable law. c. OFFICERS AND DIRECTORS. The officers of Acquisitionco as of the Effective Time shall be the officers of the Surviving Corporation, until the earlier of their resignation or removal or otherwise ceasing to be an officer or until their respective successors are duly appointed and qualified. The directors of Acquisitionco as of the Effective Time shall become the directors of the Surviving Corporation, which individuals will serve as directors of the Surviving Corporation until the earlier of their resignation or removal or otherwise ceasing to be a director or until their respective successors are duly elected and qualified. d. Upon completion of the merger, Holdco shall change its name to "Newmont Mining Corporation." 2. CONVERSION OF STOCK 2.1 EFFECT ON CAPITAL STOCK. a. At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, each share of Newmont Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into one share of Holdco Common Stock. b. At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, each share of Newmont Convertible Preferred Stock issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive one share of Holdco Convertible Preferred Stock; PROVIDED, HOWEVER, that if at any time prior to the Effective Time, the Board adopts a resolution so providing, the shares of Newmont Convertible Preferred Stock shall not be converted into shares of Holdco Convertible Preferred Stock but shall remain outstanding as shares of Newmont Convertible Preferred Stock, the terms of which shall be amended to the extent provided for in Section 1.4(b) hereof (in such event, such shares prior to, at and after the Effective Time hereinafter referred to as the "REMAINING CONVERTIBLE PREFERRED STOCK"); PROVIDED, FURTHER, HOWEVER, that if the Board adopts such a resolution, it shall take all action permitted by applicable law to provide that the holders of such shares shall have (at the Effective Time (or such earlier time as is determined by the Board prior to the Effective Time) and thereafter) the voting rights in Newmont set forth below. Any holder of Newmont Convertible Preferred Stock or Newmont Common Stock shall have the right to receive a copy of such resolution without charge upon written request therefor. Prior to the Effective Time, the Holdco Board shall take all necessary action to provide that Holdco shall be authorized to issue a sufficient number of shares of Holdco Convertible 2 Preferred Stock and to provide that Holdco Convertible Preferred Stock when issued shall have, MUTATIS MUTANDIS, exactly the same voting powers, preferences and relative, participating, optional or other special rights, if any, and exactly the same qualifications, limitations or restrictions as the Newmont Convertible Preferred Stock outstanding as of the date hereof; except that the certificate of designation authorizing such shares shall provide that the holders of Holdco Convertible Preferred Stock shall be entitled to vote together as a single class with the holders of common stock on all matters submitted to the stockholders of Holdco. If the resolution provided for above is adopted, the holders of the Remaining Convertible Preferred Stock shall be entitled to vote together as a single class with the holders of Newmont Common Stock on all matters submitted to the stockholders of Newmont. In either case, the aggregate voting power of the Holdco Convertible Preferred Stock, as a class, or, if such a resolution is adopted, the Remaining Convertible Preferred Stock, as a class, shall be commensurate (as determined by the Board) with the proportionate economic interest in Newmont held by the holders of Newmont Convertible Preferred Stock, as a class, immediately prior to the Effective Time (or such earlier time as is determined by the Board prior to the Effective Time). c. Each share of Holdco Common Stock issued and held by Newmont at the Effective Time shall cease to be outstanding and shall be cancelled and retired and no consideration shall be delivered in exchange therefor. d. Each share of common stock, par value $0.01 per share, of Acquisitionco ("ACQUISITIONCO COMMON STOCK") issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock of the Surviving Corporation as of the Effective Time. e. At the Effective Time: (A) each certificate theretofore representing shares of Newmont Common Stock shall, without any action on the part of Newmont, Holdco or the holder thereof, represent, and shall be deemed to represent from and after the Effective Time, the number of shares of Holdco Common Stock as determined in accordance with Section 2.1(a) and shall cease to represent any rights in any shares of capital stock of Newmont; (B) each holder of a certificate which, prior to the Effective Time, represented shares of Newmont Common Stock shall cease to have any rights with respect to any shares of Newmont Common Stock and (C) former holders of Newmont Common Stock shall, from and after the Effective Time, be deemed to be holders of the shares of Holdco Common Stock into which such shares of Newmont Common Stock have been converted pursuant to Section 2.1 hereof. f. At the Effective Time, unless the Board resolves pursuant to Section 2.1(b) hereof that the shares of Newmont Convertible Preferred Stock shall not be converted into shares of Holdco Convertible Preferred Stock but shall remain outstanding as shares of Convertible Preferred Stock of the Surviving Corporation: (A) each certificate theretofore representing shares of Newmont Convertible Preferred Stock shall, without any action on the part of Newmont, Holdco or the holder thereof, represent, and shall be deemed to represent from and after the Effective Time, the number of shares of Holdco Convertible Preferred Stock as determined in accordance with Section 2.1(b) and shall cease to represent any rights in any shares of capital stock of Newmont; (B) each holder of a certificate which, prior to the Effective Time, represented shares of Newmont Convertible Preferred Stock shall cease to have any rights with respect to any shares of Newmont Convertible Preferred Stock and (C) such former holders of Newmont Convertible Preferred Stock shall, from and after the Effective Time, be deemed to be holders of the shares of Holdco Convertible Preferred Stock into which such shares of Newmont Convertible Preferred Stock have been converted pursuant to Section 2.1 hereof. 2.2 TREATMENT OF OPTIONS AND OTHER STOCK COMPENSATION a. OPTIONS TO PURCHASE COMMON STOCK. At the Effective Time, each option to purchase or deferred stock award with respect to a number of shares of Newmont Common Stock (a "NEWMONT STOCK OPTION" or "NEWMONT DEFERRED STOCK AWARD," as the case may be) that is then outstanding and unexercised shall cease to represent a right with respect to shares of Newmont Common Stock and shall be converted automatically into an option to purchase or a deferred stock award with respect to the same number of shares of Holdco Common Stock (a "HOLDCO STOCK OPTION" or "HOLDCO DEFERRED STOCK AWARD," as the case may be), and 3 Holdco shall assume each such Holdco Stock Option and Holdco Deferred Stock Award, subject to the terms of the plan and agreement under which each such Newmont Stock Option or Newco Deferred Stock Award was issued. Effective as of the Effective Time, Holdco shall assume each plan, program or arrangement pursuant to which Newmont grants options, equity or equity-based awards to its employees (the "EQUITY PLANS") and may modify the Equity Plans to provide that awards with respect to shares of Holdco Common Stock may be granted by Holdco pursuant to the terms thereof. 3. CONDITION. The obligations of the parties hereto to consummate the Merger and the other transactions contemplated hereby are conditioned upon the adoption of Newmont's stockholders of this Agreement by the requisite vote of the holders of Newmont Common Stock (the "NEWMONT STOCKHOLDER APPROVAL"). 4. TERMINATION OF AGREEMENT. This Agreement may be terminated before the Effective Time for any reason by any of the parties hereto, notwithstanding the adoption thereof by the stockholders of Newmont, by written notice to the non-terminating parties. Upon the giving of such notice, this Agreement shall be terminated and there shall be no liability hereunder or on account of such termination on the part of Newmont, Acquisitionco, Holdco or the directors, officers, employees, agents or stockholders of any of them. 5. MISCELLANEOUS 5.1 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of laws or principles thereof. 5.2 AMENDMENT. This Agreement may be amended by the parties hereto, by action taken or authorized by their respective Boards of Directors, at any time before or after the Newmont Stockholder Approval, but, after any such approval, no amendment shall be made which by law or in accordance with the rules of any relevant stock exchange requires further approval by such stockholders without such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above. NEWMONT MINING CORPORATION By: /S/ BRITT D. BANKS ----------------------------------- Name: Britt D. Banks Title: Vice President, General Counsel and Secretary DELTA ACQUISITIONCO CORP. By: /S/ BRITT D. BANKS ----------------------------------- Name: Britt D. Banks Title: Vice President and Secretary DELTA HOLDCO CORP. By: /S/ BRITT D. BANKS ----------------------------------- Name: Britt D. Banks Title: Vice President, General Counsel and Secretary 4 EXHIBIT A RESTATED CERTIFICATE OF INCORPORATION OF NEWMONT GOLD COMPANY -------------------------------------- ARTICLE I The name of the corporation (which is hereinafter referred to as the "Corporation") is: "NEWMONT GOLD COMPANY" ARTICLE II The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801. The name of the Corporation's registered agent at such address is THE CORPORATION TRUST COMPANY. ARTICLE III The purpose of the Corporation shall be to engage in any lawful act or activity for which corporations may be organized and incorporated under the General Corporation Law of the State of Delaware. ARTICLE IV SECTION 1. The Corporation shall be authorized to issue 2,301,000 shares of capital stock, of which 1000 shares shall be shares of Common Stock, $0.01 par value ("Common Stock"), and 2,300,000 shares shall be shares of Preferred Stock, $5.00 par value ("Preferred Stock"). SECTION 2. Except as otherwise provided by law or by resolution or resolutions adopted by the Board of Directors designating the voting powers, preferences and relative, participating, optional and other special rights, if any, of any series of Preferred Stock, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes. Each share of Common Stock shall have one vote, and the Common Stock shall vote together as a single class. SECTION 3. The Board of Directors is hereby expressly authorized, by resolution or resolutions, to provide, out of the unissued shares of Preferred Stock, for series of Preferred Stock and, with respect to each such series, to fix the number of shares constituting such series and the designation of such series, and the voting powers, preferences and relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, of the shares of such series. The voting powers, preferences and relative, participating, optional and other special rights, if any, of each series of Preferred Stock, and any qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. ARTICLE V Unless and except to the extent that the By-Laws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot. 5 ARTICLE VI In furtherance and not in limitation of the powers conferred by law, the Board of Directors of the Corporation (the "Board") is expressly authorized and empowered to make, alter and repeal the By-Laws of the Corporation by a majority vote at any regular or special meeting of the Board or by written consent, subject to the power of the stockholders of the Corporation to alter or repeal any By-Laws made by the Board. ARTICLE VII The Corporation reserves the right at any time from time to time to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the right reserved in this Article. ARTICLE VIII SECTION 1. ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended. Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification. SECTION 2. INDEMNIFICATION AND INSURANCE. (A) RIGHT TO INDEMNIFICATION. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment, to the fullest extent permitted by law, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, amounts paid or to be paid in settlement, and excise taxes or penalties arising under the Employee Retirement Income Security Act of 1974) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; PROVIDED, HOWEVER, that, except as provided in paragraph (b) hereof, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, 6 if the General Corporation Law of the State of Delaware requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The Corporation may, by action of the Board, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers. (B) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under paragraph (a) of this Section is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the General Corporation Law of the State of Delaware for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including its Board, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. (C) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-law, agreement, vote of stockholders or disinterested directors or otherwise. (D) INSURANCE. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware. 7 EX-20 6 feb25ex201.txt EXHIBIT 20.1 EXHIBIT 20.1 1.2 COMPANIES NEWMONT MINING CORPORATION Newmont Mining Corporation is a company incorporated in Delaware with its shares listed on the New York Stock Exchange (NYSE) under the symbol "NEM" and a supplemental listing application has been submitted to list the shares to be issued in connection with the transaction. We have filed an application to list our common stock on the Australian Stock Exchange (ASX) as Clearing House Electronic Subregister System depositary interests (CDIs). We anticipate that ten Newmont CDIs will represent one share of our common stock. Because of the contemplated reorganization described in section 1.1, our ASX listing application covered the possibility that either Newmont or New Newmont will be the listed company. We are a leading world gold producer, with operations in the United States, Canada, Mexico, Peru, Bolivia, Uzbekistan, Australia and Indonesia. We are engaged in the production of and exploration for gold and the acquisition and development of gold properties worldwide. We expect to produce 5.4 million ounces of gold in 2001 and have extensive gold reserves, totalling more than 66 million ounces at December 31, 2000. We are also a producer of copper concentrates, and a recognized research and development leader in exploration and metal extraction. Our principal executive offices are located at 1700 Lincoln Street, Denver, Colorado 80203 (United States). Our telephone number is (303) 863-7414. NORMANDY MINING LIMITED Normandy Mining Limited is a company incorporated in Australia with its ordinary shares listed on the ASX under the symbol "NDY" and its American depositary shares (ADSs) listed on The Toronto Stock Exchange (TSE) under the symbol "NDY". One Normandy ADS is equivalent to ten ordinary shares of Normandy. Normandy is Australia's largest gold producer, producing over 2 million ounces of gold annually. Normandy has extensive production and exploration interests, with operations in Australia, the United States, New Zealand, Greece, Turkey, Chile, Brazil, Canada, Ghana and Uganda. Normandy is also a producer of zinc concentrates (from its Golden Grove operations in Western Australia), cobalt (from Kasese Cobalt Company Limited in Uganda) and magnesium (from its interest in Australian Magnesium Corporation Limited). Normandy's principal executive offices are located at 100 Hutt Street, Adelaide, 5000, South Australia (Australia). Normandy's telephone number is +61-8-8303-1700. FRANCO-NEVADA MINING CORPORATION LIMITED Franco-Nevada Mining Corporation Limited is a company incorporated under the laws of Canada. Its common shares are listed on the TSE under the symbol "FN", its class A warrants are listed on the TSE under the symbol "FN.WT" and its class B warrants are listed on the Canadian Venture Exchange (CDNX) under the symbol "YFN.WT.B". Franco-Nevada is the leading precious minerals royalty company and, by market capitalization, ranks among the largest gold companies in the world. Franco-Nevada continues to deliver superior returns to investors through its high-quality, high-margin assets in gold, platinum group metals, diamonds and oil and gas located in politically secure countries. Franco-Nevada, which is debt-free, has a very strong track record of successful investments. Franco-Nevada's key assets include its Goldstrike gold royalty in Nevada, its Stillwater platinum group metal royalty in Montana and oil and gas royalties in western Canada. Franco-Nevada is also Normandy's largest shareholder, holding 446.1 million ordinary shares of Normandy, which represents a 19.79% interest in Normandy, calculated on a fully-diluted basis. Franco-Nevada's principal executive offices are located at Suite 1900, 20 Eglington Avenue West, Toronto, Ontario (Canada) M4R 1K8. Franco-Nevada's telephone number is (416) 480-6480. 2 2 OVERVIEW AND SELECTED INFORMATION THE INFORMATION IN THIS SECTION SUMMARIZES INFORMATION AND STATEMENTS ELSEWHERE IN THIS OFFER DOCUMENT. IT SHOULD BE READ IN CONJUNCTION WITH THE WHOLE OFFER DOCUMENT. 2.1 QUESTIONS AND ANSWERS ABOUT THIS OFFER Q: WHAT WILL HAPPEN IN THE OVERALL TRANSACTION? A: In the proposed transactions, we intend to acquire both Normandy Mining Limited and Franco-Nevada Mining Corporation Limited to create the world's largest gold producer. It is also possible that we will acquire less than all of the shares of Normandy, either together with or separately from an acquisition of Franco-Nevada. We refer to the combined company that will result from these transactions as "New Newmont." To acquire Normandy, we are making an off-market bid for all of the outstanding ordinary shares in the capital of Normandy in exchange for 3.85 shares of Newmont common stock plus A$50.00 for every 100 Normandy shares. To acquire Franco-Nevada, we have entered into an arrangement agreement with Franco-Nevada, pursuant to which we will acquire all of the shares of Franco-Nevada for 0.8 of a share of Newmont common stock (or exchangeable shares, exchangeable for our common stock) for each Franco-Nevada common share. OUR BID FOR NORMANDY IS NOT CONDITIONED ON COMPLETION OF THE FRANCO-NEVADA TRANSACTION. However, completion of the Franco-Nevada transaction is conditioned on, among other things, Newmont and its associates achieving a relevant interest in at least 50.1% of the ordinary shares in the capital of Normandy, calculated on a fully-diluted basis. Q: WHAT WOULD I RECEIVE IN EXCHANGE FOR MY ORDINARY SHARES OF NORMANDY? A: The consideration offered is 3.85 shares of our common stock and A$50.00 for every 100 ordinary shares of Normandy (including shares represented by Normandy ADSs), or the U.S. dollar equivalent thereof for holders outside Australia. See section 5.1 on page 48 of this offer document for additional information. Q: WHAT WILL NEW NEWMONT LOOK LIKE FOLLOWING THE TRANSACTIONS? A: If the transactions are consummated in their entirety, New Newmont will become the world's leading gold company in terms of gold reserves, gold production and leverage to gold and will derive more than 70% of its production from politically and economically stable locations. The combination of Newmont, Normandy and Franco-Nevada will create one of the financially strongest companies in the gold industry. The transactions will strengthen our balance sheet and decrease our net-debt to net-book capitalization (after transaction costs) from 41% to an estimated 24%. Although we currently expect to consummate both transactions, there is a possibility that we will acquire Normandy while being unable to acquire Franco-Nevada. If we only acquire Normandy, New Newmont would still be the world's leading gold company in terms of reserves, gold production and leverage to gold and would still derive approximately 70% of its production from politically stable locations. However, our net-debt to net-book capitalization (after transaction costs) after the acquisition of Normandy only would be an estimated 40%. Q: WHY DOES NEWMONT WANT TO ACQUIRE CONTROL OF NORMANDY AND FRANCO-NEVADA? A: We believe that the acquisition of Normandy and Franco-Nevada will provide us with a number of benefits and allow us to pursue our strategy to deliver superior stockholder value, including: 7 . SCALE AND BALANCED POLITICAL RISK PROFILE. New Newmont will be the leader in gold production and gold reserves. New Newmont will have interests in 22 mines on five continents, including preeminent land positions in world-class gold districts in Nevada, Australia and Peru and a unique and diversified portfolio of development and exploration projects. Approximately 70% of the production (41% in the United States, 25% in Australia and 5% in Canada) will be in countries rated "AAA" by Standard & Poor's local currency credit rating. Approximately 60% of New Newmont's reserves (39% in the United States, 18% in Australia and 4% in Canada) will be in countries rated "AAA" by Standard & Poor's local currency credit rating. The size and diversification of these world-class assets and their balanced political risk profile will better position New Newmont to develop its attractive exploration properties around the world and will serve as an excellent platform for future growth. . EXPLORATION AND DEVELOPMENT. New Newmont will have several advanced gold projects in its portfolio of assets and will have the flexibility to optimize the development of these projects based on project economics, political risk and and free cash flow profiles. . POTENTIAL COST SAVINGS AND SYNERGIES. New Newmont expects to realize from the combination of Newmont, Normandy and Franco-Nevada approximately US$70 million to US$80 million in after-tax synergies in the first full year, increasing to approximately US$80 million to US$90 million a year by the end of the second full year. Newmont has a strong track record of delivering on synergy expectations based on previous acquisition experience. The synergies will arise from rationalization of corporate overhead and exploration and development budgets, rationalization of operating efficiencies, and reductions in procurement costs, interest savings and tax benefits. . FINANCIAL STRENGTH AND FLEXIBILITY. New Newmont's net-debt to net-book capitalization will be an estimated 24%, compared to approximately 41% for Newmont on a stand-alone basis. New Newmont will benefit from the free cash flow generated by Franco-Nevada's royalty stream and low cash cost operations that, together with an improved balance sheet, will provide the combined company with the ability to pursue growth while continuing to reduce overall debt. New Newmont will help manage financial risk by preserving and growing Franco-Nevada's royalty business, which will serve as a natural hedge in the event of a low gold price environment. New Newmont will also capitalize on the investment skill and expertise of Franco-Nevada's management through a merchant banking unit, which is expected to have the opportunity for growth by taking advantage of Newmont's processing technologies and the combined company's vast land package. The size and scope of New Newmont's holdings and the strength of management will afford a significant opportunity for strategic industry rationalization. If 100% of Normandy is acquired the combined company will review opportunities to further rationalize its asset base through the consolidation of separately held and managed assets and the sale or disposal of lower margin or non-core operations. . LEVERAGE TO GOLD PRICE. We have a strong belief in the long-term value of gold. We intend to continue Newmont's "no-hedging" philosophy, creating the gold industry's largest unhedged, uncommitted reserve base of approximately 85 million ounces. The largely unhedged reserve base will offer shareholders the opportunity to benefit from New Newmont's substantial leverage to gold, although this strategy also increases the exposure to a fall in the gold price. New Newmont's annual pre-tax cash flow is estimated to increase US$162 million for every US$25 per ounce increase in the price of gold (this is the largest exposure in the industry by approximately 80%). Over time, New Newmont plans to opportunistically unwind Normandy's hedge book (currently at 10.4 million ounces, 8 exclusive of TVX Normandy) to further its upside potential from increases in the price of gold. . SUPERIOR MANAGEMENT. The management of New Newmont will employ best practices and personnel, focusing on core mining operations, reducing costs and applying the latest innovations and technology to increase cash flows from operations and effectively develop new opportunities. The combined management of the three companies will bring an array of expertise and skills to New Newmont, such as Newmont's and Normandy's strength in global operations, mine development and exploration, Franco-Nevada's corporate development skills and expertise in the management of royalty assets and investments and Newmont's proven ability to integrate acquisitions successfully by delivering synergies on schedule. . GROWTH. New Newmont intends to use its experience in the discovery, evaluation, development and operation of large, sophisticated mining projects to continually optimize returns from existing core operations, pursue rational and effective development of Normandy's portfolio of development projects, enhance and grow its operations and project pipeline through strategic and opportunistic high-quality asset and equity acquisitions and maintain a geographically and politically diverse group of mining operations. . MARKET LIQUIDITY. New Newmont will have significant capital market scale, providing global trading liquidity to investors. With an expected equity value of approximately US$8 billion and listings on the NYSE, ASX and TSE, investors in New Newmont will benefit from enhanced volume expected to be the largest in the gold sector with approximately US$62 million in average daily trading volume (based on historic trading of Newmont, Normandy and Franco-Nevada) and increased stockholder diversity. New Newmont will also be a member of the S&P 500 index, one of the world's leading trading indices and will pursue inclusion in key ASX indices as well. Q: WOULD THE FAILURE TO ACQUIRE FRANCO-NEVADA PREVENT NEWMONT FROM ACHIEVING THESE BENEFITS? A: If we do not acquire Franco-Nevada, the expected benefits of the transaction and their magnitude will be reduced; however, there would still be significant benefits realized from a combination of Newmont and Normandy. See section 4.2 on page 38 of this offer document for additional information. Q: WHAT IS THE PREMIUM IMPLIED BY THIS OFFER? A: Based on the closing price of our common stock on the NYSE on January 2, 2002, the last trading day in the United States prior to our announcement of our intention to make this offer for all of the outstanding ordinary shares of Normandy, and the relevant exchange rate on that date of A$1.00=US$0.5148 as quoted by Bloomberg, the consideration currently being offered by us, including the cash consideration, represents a 5% premium over the closing price of ordinary shares of Normandy on the ASX on that date. Based on the 30 trading day weighted average share prices prior to January 2, 2002 of Newmont and Normandy on the NYSE and ASX, respectively, and the exchange rate on January 2, 2002 of A$1.00=US$0.5148 as quoted by Bloomberg, this offer, including the cash consideration, represents a premium of 16%. Our current offer values each ordinary share of Normandy at A$1.93, based on the closing price of our common stock on the NYSE on January 2, 2002 and the relevant exchange rate on that date of A$1.00=US$0.5148 as quoted by Bloomberg. 9 information to Newmont that would generally be required to be included in this offer document under rules promulgated by the SEC. Normandy has declined to assist in gathering this information and has not provided Newmont access to Normandy's detailed accounting records, nor has Normandy assisted in preparing reconciliations to US GAAP. Normandy has also refused to permit or direct its auditors to provide information necessary for such US GAAP reconciliation, including an auditor's consent. Therefore, no such US GAAP reconciliation is provided nor is any pro forma financial information provided in this offer document. See "Risk factors--Risks related to the offer--We have not verified the reliability of the Normandy information included in, or which may have been omitted from, this offer document" on page 27. We have received Franco-Nevada's unanimous board recommendation for our acquisition of Franco-Nevada and full support for the Franco-Nevada/Newmont transaction. Q: WHAT WILL BE THE FORM OF THE CONSIDERATION TO BE PAID TO ME IF I ACCEPT THIS OFFER? A: If you have a registered address in the United States or have a registered address in Canada, you will receive your share consideration in the form of our common stock (traded on the NYSE). If you have a registered address outside the United States or outside Canada, you will receive your share consideration in the form of Newmont CDIs (traded on the ASX). We anticipate that ten Newmont CDIs will represent one share of our common stock. If you have a registered address outside Australia and its external territories, and Newmont has not determined that the making or accepting of the offer would be in compliance with the laws of that jurisdiction, you will not receive or be entitled to receive Newmont CDIs. Instead, you are offered and you will receive the cash proceeds of a sale, on Newmont's behalf, on the open market of Newmont CDIs to which you otherwise would have been entitled. Whatever form of share consideration you receive, it will be equivalent to 3.85 shares of our common stock for every 100 ordinary shares of Normandy (including shares represented by Normandy ADSs). In addition, whatever form of share consideration you receive, you will also receive in cash A$0.50 per ordinary share of Normandy (including shares represented by Normandy ADSs), or the U.S. dollar equivalent thereof for holders outside Australia. If your registered address on the Normandy shareholder register or Normandy ADS register maintained by Normandy's depositary is within Australia, you will receive your cash consideration in Australian dollars. If your registered address on the Normandy shareholder register or Normandy ADS register maintained by Normandy's depositary is within any other jurisdiction (including the United States and Canada), you will receive your cash consideration in U.S. dollars. If you are to receive payment in U.S. dollars, we will convert the Australian dollar sum into U.S. dollars using the noon buying rate, as published by the Federal Reserve Bank of New York, on the date your acceptance is received. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON YOUR CASH CONSIDERATION, REGARDLESS OF ANY DELAY IN REMITTING SUCH CONSIDERATION TO YOU. See section 5.1 on page 48 of this offer document for more information. 12 Q: MAY I RECEIVE A COMBINATION OF NEWMONT SHARES AND NEWMONT CDIS? A: No. You may receive only one form of share consideration with respect to your ordinary shares of Normandy (including shares represented by Normandy ADSs) as to which the offer has been accepted. Q: CAN I ACCEPT THE OFFER IF I HOLD A NUMBER OF ORDINARY SHARES OF NORMANDY THAT IS NOT EXACTLY DIVISIBLE BY 100? A: Yes. If you hold ordinary shares of Normandy other than in multiples of 100 ordinary shares of Normandy (or the equivalent represented by Normandy ADSs), you can still accept the offer and you will be entitled to (1) a pro rata entitlement to our shares (in the form of shares of our common stock or Newmont CDIs) based on the ratio of 3.85 of our shares for every 100 of your ordinary shares of Normandy (including shares represented by Normandy ADSs) and (2) cash of A$0.50 per ordinary share of Normandy (including shares represented by Normandy ADSs), or the U.S. dollar equivalent thereof for holders outside Australia. In either case, you will be subject to the provisions of this offer document with respect to the treatment of fractional shares of our common stock and fractional Newmont CDIs, regardless of the form of consideration you receive. See section 5.1 on page 48 of this offer document for more information. Q: HOW WILL FRACTIONAL NEWMONT SHARES AND NEWMONT CDIS BE TREATED? A: If under the offer you become entitled to a fraction of a share of our common stock or a fraction of a Newmont CDI, your entitlement to that fraction will be aggregated with the fractional shares of our common stock or fractional Newmont CDIs, as the case may be, of other persons (so as to obtain whole shares of our common stock or whole Newmont CDIs, as the case may be) and sold on the open market, and you will receive your proportionate share of the net sale proceeds of your fractional shares of our common stock or fractional Newmont CDIs, as the case may be. See section 5.1 on page 48 of this offer document for more information. Q: HAS THE NORMANDY BOARD OF DIRECTORS MADE ANY RECOMMENDATION REGARDING THE OFFER TO NORMANDY SHAREHOLDERS AND HOLDERS OF NORMANDY ADSS? A: Yes. Subject to its fiduciary duties, the Normandy board of directors has agreed to recommend our offer to Normandy shareholders and holders of Normandy ADSs. However, despite providing its recommendation of Newmont's offer, the Normandy board of directors, despite repeated requests from Newmont, has declined to supply certain information to Newmont (including its auditor's consent) that would generally be required to be included in this offer document under rules promulgated by the SEC. See "Risk factors--Risks related to the offer--We have not verified the reliability of the Normandy information included in, or which may have been omitted from, this offer document" on page 27. Q: HAS THE FRANCO-NEVADA BOARD OF DIRECTORS MADE ANY RECOMMENDATION REGARDING NEWMONT'S PROPOSED ACQUISITION OF ALL OF THE OUTSTANDING FRANCO-NEVADA COMMON SHARES? A: Yes. Other than Mr. Seymour Schulich, Mr. Pierre Lassonde and Mr. M. Craig Haase, who are members of the management of Franco-Nevada and recused themselves from voting, each member of the Franco-Nevada board of directors has voted to approve Newmont's proposed acquisition of all of the outstanding Franco-Nevada common shares pursuant to the arrangement 13 agreement between the two parties, and recommends that Franco-Nevada shareholders vote to approve the arrangement. Messrs. Schulich and Lassonde recused themselves from voting due to their interests in the transaction, but have independently agreed with Newmont to escrow a significant portion of their Franco-Nevada common shares that will be exchanged for shares of our common stock as a demonstration of their commitment to the success of New Newmont. Q: HOW MANY ORDINARY SHARES OF NORMANDY OR NORMANDY ADSS DOES NEWMONT CURRENTLY OWN? A: We do not directly own any ordinary shares of Normandy or Normandy ADSs. However, Franco-Nevada and one of its subsidiaries, which together own 446.1 million ordinary shares of Normandy, representing 19.79% of the ordinary shares of Normandy (calculated on a fully diluted basis), have granted to us the right, exercisable at our discretion (but subject to obtaining Foreign Investment and Review Board (FIRB) approval in respect of 4.99% of the ordinary shares in Normandy), to acquire their block of ordinary shares of Normandy for the price of 3.85 of our shares for every 100 Normandy shares. See section 14.2 on page 148 of this offer document for more information. Q: HOW LONG DO I HAVE TO ACCEPT THIS OFFER? A: Unless the offer is extended, you will have until 7:00 p.m., Sydney time, 3:00 a.m., New York City time, on February 15, 2002, to accept the offer. See section 5.2 on page 49 of this offer document for more information. Q: CAN NEWMONT EXTEND THE OFFER PERIOD? A: Yes. We reserve the right, exercisable at our sole discretion, to extend the offer period. In addition, if we vary (that is, amend) the offer to increase the consideration offered, we will extend the offer period to the extent required by the Corporations Act and U.S. federal securities laws. In the event that the offer period is extended, we will be obliged under the Corporations Act to give Normandy and every Normandy shareholder (including every Normandy ADS holder) written notice of such extension, so long as the extension is not an extension of the offer period subsequent to the offer period being declared unconditional in all respects, in which case such notice will only be given to Normandy shareholders (including Normandy ADS holders) who have not previously accepted the offer. See section 5.2 on page 49 of this offer document for more information. Q: I HOLD ORDINARY SHARES OF NORMANDY IN MY NAME ON NORMANDY'S ISSUER SPONSORED SUBREGISTER. HOW DO I PARTICIPATE IN THIS OFFER? A: To accept the offer for ordinary shares of Normandy held in your name on Normandy's issuer-sponsored subregister, you should: . complete and sign the accompanying Acceptance Form in accordance with the terms of the offer and the instructions on the Acceptance Form, and . ensure that the Acceptance Form and any documents required by the terms of the offer are received in accordance with section 5.4(b) of this offer document before 7:00 p.m., Sydney time, 3:00 a.m., New York City time, on February 15, 2002 (or any later date to which the period of the offer is extended) at an address or facsimile number specified in section 5.4(b) on page 50 of this offer document. See section 5.4 on page 50 of this offer document for more information. 14 5 TERMS OF THE OFFER 5.1 OUR OFFER (a) We offer, upon the terms and subject to the conditions of the offer, to acquire all of your ordinary shares of Normandy (including shares represented by Normandy ADSs). The consideration offered is 3.85 shares of our common stock for every 100 ordinary shares of Normandy (including shares represented by Normandy ADSs). In addition, we will pay in cash an additional A$0.50 for each of your ordinary shares of Normandy (including shares represented by Normandy ADSs), or the U.S. dollar equivalent thereof for holders outside Australia. (b) If you have a registered address in the Normandy shareholder register in the United States or Canada, you will receive your share consideration in the form of our common stock (to be traded primarily on the NYSE). If you have a registered address in the Normandy shareholder register outside the United States and Canada, you will be offered your share consideration in the form of Newmont CDIs (to be traded on the ASX). We anticipate that ten Newmont CDIs will represent one share of Newmont common stock. If you have a registered address in the Normandy shareholder register outside Australia and its external territories, and Newmont has not determined that the making or accepting of the offer would be in compliance with the laws of that jurisdiction, you will not receive or be entitled to receive Newmont CDIs. Instead, you are offered and you will receive the cash proceeds of a sale, on Newmont's behalf, on the open market of Newmont CDIs to which you otherwise would have been entitled. Whatever form of share consideration you receive, it will be equivalent to 3.85 shares of our common stock for every 100 of your ordinary shares of Normandy (including shares represented by Normandy ADSs). In addition, whatever form of share consideration you receive, you will also receive in cash A$0.50 for each of your ordinary shares of Normandy (including shares represented by Normandy ADSs), or the U.S. dollar equivalent thereof for holders outside Australia. If your registered address on the Normandy shareholder register or Normandy ADS register maintained by Normandy's depositary is within Australia, you will receive your cash consideration in Australian dollars. If your registered address on the Normandy shareholder register or Normandy ADS register maintained by Normandy's depositary is within any other jurisdiction (including the United States and Canada), you will receive your cash consideration in U.S. dollars. If you are to receive payment in U.S. dollars, we will convert the Australian dollar sum into U.S. dollars using the noon buying rate, as published by the Federal Reserve Bank of New York, on the date payment is made to you. Payment of the cash consideration will be made by check posted to you at your risk by ordinary mail at the address provided on your Acceptance Form or ADS Letter of Transmittal. You may receive only one form of share consideration with respect to your ordinary shares of Normandy (including shares represented by Normandy ADSs) as to which the offer has been accepted. Under no circumstances will interest be paid on your cash consideration, regardless of any delay in remitting such consideration to you. Further details about this can be found in section 5.11, "--Payment of consideration" on page 61. (c) If you hold ordinary shares of Normandy other than in multiples of 100 ordinary shares of Normandy (or the equivalent represented by Normandy ADSs), you can still accept the offer and you will be 48 entitled to (1) a pro rata entitlement to Newmont shares (in the form of shares of our common stock or Newmont CDIs) based on the ratio of 3.85 shares of our common stock for every 100 of your ordinary shares of Normandy (or the equivalent represented by Normandy ADSs) and (2) cash of A$0.50 for each of your ordinary shares of Normandy (including shares represented by Normandy ADSs), or the U.S. dollar equivalent thereof for holders outside Australia. In either case, you will be subject to section 5.1(d) below with respect to the treatment of fractional shares of our common stock or fractional Newmont CDIs. (d) We will not issue fractional shares of our common stock or fractional Newmont CDIs to you, regardless of the form of consideration you receive. If under the offer you become entitled to a fraction of a share of our common stock or a fraction of a Newmont CDI, (after aggregating all of your holdings of ordinary shares of Normandy, or ordinary shares of Normandy represented by Normandy ADSs) your entitlement to that fraction will be aggregated with the fractional shares of our common stock or fractional Newmont CDIs, as the case may be, of other persons (so as to obtain whole shares of our common stock or whole Newmont CDIs, as the case may be) and sold on the open market in accordance with section 5.11, and you will receive your proportionate share of the net sale proceeds of your fractional shares of our common stock or fractional Newmont CDIs, as the case may be. Further details about this sale and cash payment can be found in section 5.11, "--Payment of consideration" on page 61. (e) The offer extends to all ordinary shares of Normandy which may be issued before the end of the offer period pursuant to the exercise of options to subscribe for ordinary shares of Normandy issued by Normandy under its employee share bonus plan and executive share incentive plan. (f) The offer document is dated January 10, 2002. 5.2 OFFER PERIOD (a) Unless the offer period is extended or the offer is withdrawn, in either case in accordance with the requirements of the Corporations Act, the offer will remain open for acceptance by you during the period commencing on the date of the offer and ending at 7:00 p.m., Sydney time, 3:00 a.m., New York City time, on February 15, 2002. (b) Subject to the Corporations Act, we may extend the offer period. (c) In addition, if, within the last seven days of the offer period: . the offer is varied (i.e., amended) to increase the consideration offered; or . our voting power in Normandy increases to more than 50%, then, in accordance with the Corporations Act, the offer period will be mandatorily extended so that it ends 14 days after this event. In addition, to the extent the offer period is not extended pursuant to the previous paragraph, in accordance with U.S. federal securities laws, we will extend the offer period if we vary the offer to increase or decrease the consideration offered within ten business days of the then scheduled expiration of the offer period, so that the offer period ends ten business days after the publication of this event. However, in accordance with the Corporations Act, we will not decrease the consideration offered. In the event that the offer period is extended, we will be obliged under the Corporations Act to give Normandy and every Normandy shareholder (including every Normandy ADS holder) written notice of such extension, so long as the extension is not an extension of the offer period subsequent to the offer being 49 declared unconditional in all respects, in which case such notice will only be given to Normandy shareholders (including Normandy ADS holders) who have not previously accepted the offer. 5.3 OFFEREES (a) The offer is being made: (1) to all the Normandy shareholders (including Normandy ADS holders) who have a registered address, as shown in Normandy's register of members, either in the United States or Canada and are registered as such at 7:00 a.m., Sydney time, on December 20, 2001 (which corresponds to 3:00 p.m., New York City time, on the previous day); and (2) to any person who becomes registered or entitled to be registered as the holder of any ordinary shares of Normandy by virtue of an allotment of ordinary shares of Normandy under Normandy's employee share bonus plan or executive share incentive plan during the offer period. (b) If you are a holder of options to subscribe for ordinary shares of Normandy issued by Normandy under its employee share bonus plan or executive share incentive plan, you may accept the offer for the ordinary shares of Normandy underlying such options if you exercise your options prior to the expiration of the offer in accordance with their terms. You may then accept the offer in relation to ordinary shares of Normandy issued upon exercise of your Normandy options during the offer period before the holding statement for those ordinary shares of Normandy is received by you, provided that: (1) you have validly exercised your Normandy options; (2) you have completed the payments required upon the exercise of your Normandy options; and (3) in all other respects you comply with section 5.4 of this offer document and the instructions on the Acceptance Form; and, if this section applies to you, you must deliver the relevant holding statements to us at one of the addresses set forth in section 5.4 of this offer document as soon as possible after they are received by you and, in any event, prior to the expiration of the offer. 5.4 HOW TO ACCEPT THE OFFER IF YOU HOLD ORDINARY SHARES OF NORMANDY (a) You may accept the offer at any time during the offer period. (b) ORDINARY SHARES OF NORMANDY HELD IN YOUR NAME ON NORMANDY'S ISSUER-SPONSORED SUBREGISTER To accept the offer for ordinary shares of Normandy held in your name on Normandy's issuer-sponsored subregister, you must: (1) complete and sign the accompanying Acceptance Form (which forms part of this offer document) in accordance with the terms of the offer and the instructions on the Acceptance Form; and (2) ensure that the Acceptance Form and any documents required by the terms of the offer and the instructions on the Acceptance Form are received before 7:00 p.m., Sydney time, 3:00 a.m., New York City time, on February 15, 2002 (or any later date to which the period of the offer is extended), at the following address or facsimile number: Newmont Mining Corporation c/o Computershare Trust Company of New York Wall Street Station P.O. Box 1010 New York, NY 10268-1010 50 Facsimile number: 212-701-7636 To confirm receipt of facsimile: 212-701-7624 or, if by hand delivery, delivered to the following address: Newmont Mining Corporation c/o Computershare Trust Company of New York Wall Street Plaza 88 Pine Street, 19th Floor New York, NY 10005 If your Acceptance Form (including any documents required by the terms of the offer and the instructions on the Acceptance Form) is returned by facsimile, it will be deemed to be received in time if the facsimile transmission is received (evidenced by a confirmation of successful transmission) before 7:00 p.m., Sydney time, 3:00 a.m., New York City time, on February 15, 2002 (or any later date to which the period of the offer is extended), but you will not be entitled to receive the consideration under this offer to which you are entitled until your original Acceptance Form (including any documents required by the terms of the offer and the instructions on the Acceptance Form) is received at an address specified above. (c) ORDINARY SHARES OF NORMANDY HELD IN A CHESS HOLDING To accept the offer for ordinary shares of Normandy held in a CHESS Holding (as defined in the Securities Clearing House Business Rules), you must: (1) instruct your broker or controlling participant (for non-institutional Normandy shareholders, this is normally the stockbroker either through whom you bought your ordinary shares of Normandy or through whom you ordinarily acquire ordinary shares of Normandy on the ASX) to initiate acceptance of the offer in accordance with Rule 16.3 of the Securities Clearing House Business Rules before 7:00 p.m., Sydney time, 3:00 a.m., New York City time, on February 15, 2002 (or any later date to which the period of the offer is extended); or (2) if you are a CHESS participant who is not a broker (such as an institution, custodian, trustee and the like), initiate acceptance of the offer in accordance with Rule 16.3 of the Securities Clearing House Business Rules before 7:00 p.m., Sydney time, 3:00 a.m., New York City time, on February 15, 2002 (or any later date to which the period of the offer is extended). Although you are not required to, you may also sign and complete the accompanying Acceptance Form in accordance with the terms of the offer and the instructions on the Acceptance Form relating to shares in a CHESS Holding and ensure that it (including any documents required by the terms of the offer and the instructions on the Acceptance Form) is received by 7:00 p.m., Sydney time, 3:00 a.m., New York City time, on February 15, 2002 (or any later date to which the period of the offer is extended), at an address or facsimile number specified in section 5.4(b) of this offer document. (d) To accept the offer in respect of ordinary shares of Normandy in respect of which, at the time of acceptance, you are entitled to be registered but are not registered you must complete and sign the Acceptance Form enclosed with the offer in accordance with the instructions on it and return it together with all other documents required by those instructions to one of the addresses referred to in section 5.4(b) so that it is received not later than the end of the offer period. (e) An acceptance of the offer under section 5.4(b) and section 5.4(d) shall not be complete until the Acceptance Form, completed and signed in accordance with the instructions on it and all other documents required by those instructions have been received (including receipt by facsimile transmission in accordance with section 5.4(b)) at one of the addresses set out in section 5.4(b). Notwithstanding the foregoing 51 provisions of this paragraph, we may, in our absolute discretion, waive at any time prior to the end of the offer period all or any of the requirements specified in the Acceptance Form but payment of the consideration in accordance with the offer will not be made until any irregularity has been resolved and such other documents as may be necessary to procure registration of the shares have been lodged with us. (f) If you hold Normandy options on the date of the offer and if you are entitled to and wish to exercise Normandy options during the offer period and accept the offer, you may also return the completed Acceptance Form together with your option certificates, a signed notice of exercise of your Normandy options and a bank check in the sum of the exercise price for your Normandy options made payable to "Normandy Mining Limited." (g) Your acceptance of the offer must be in respect of all the ordinary shares of Normandy registered in your name. 5.5 HOW TO ACCEPT THE OFFER IF YOU HOLD NORMANDY ADSS (a) You may accept the offer at any time during the offer period, but only in respect of all of your Normandy ADSs. (b) HOLDERS OF NORMANDY ADRS EVIDENCING NORMANDY ADSS If you hold Normandy ADRs evidencing Normandy ADSs and wish to accept the offer, you may accept the offer by delivering, prior to the expiration of the offer, the following materials together, and at the same time, to the ADS exchange agent at one of its addresses set forth below: . your Normandy ADRs; . a properly completed and duly executed ADS Letter of Transmittal; and . any other documents required by the ADS Letter of Transmittal. The addresses for the ADS exchange agent are:
BY MAIL: BY COURIER: BY HAND: -------- ----------- -------- Computershare Trust Computershare Trust Computershare Trust Company of New York Company of New York Company of New York Wall Street Station Wall Street Plaza Wall Street Plaza P.O. Box 1010 88 Pine Street, 19th Floor 88 Pine Street, 19th Floor New York, NY 10268-1010 New York, NY 10005 New York, NY 10005
(c) HOLDERS OF NORMANDY ADSS IN BOOK-ENTRY FORM If you hold Normandy ADSs in book-entry form with a bank, broker or other nominee and wish to accept the offer, you may accept the offer by following the procedure for book-entry transfer described below. To accept the offer, you must deliver, prior to the expiration of the offer, the following materials to the ADS exchange agent at any of the addresses set forth in section 5.5(b): . a timely confirmation of a book-entry transfer of your Normandy ADSs into the ADS exchange agent's account at DTC; . an agent's message (instead of an ADS Letter of Transmittal); and . any other documents required by the ADS Letter of Transmittal. 52 In this discussion, the term "agent's message" means a message that is transmitted by DTC to and received by the ADS exchange agent and that forms a part of a book-entry confirmation. This message must state that: . DTC has received an express acknowledgment from a participant in DTC's system that the participant is accepting the offer with respect to Normandy ADSs that are the subject of a confirmation of a book-entry transfer; . the participant has received and agrees to be bound by the ADS Letter of Transmittal; and . either we or the ADS exchange agent may enforce the agreement against the participant. In this discussion, the term "book-entry confirmation" means the confirmation of a book-entry transfer of Normandy ADSs into the ADS exchange agent's account at DTC. Any financial institution that is a participant in the book-entry transfer facility of DTC may make book-entry delivery of Normandy ADSs by causing DTC to transfer the ADSs into the ADS exchange agent's account at DTC. This must be done in accordance with DTC's procedures for the transfer. If you hold your Normandy ADSs in book-entry form other than through a broker or other DTC participant, you must first have your Normandy ADSs transferred to an account at DTC, after which time you may follow the procedure for book-entry transfer described above. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE ADS EXCHANGE AGENT. (d) BENEFICIAL OWNERS OF NORMANDY ADSS REGISTERED IN THE NAME OF FINANCIAL INSTITUTIONS If you are a beneficial owner of Normandy ADSs that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and wish to accept the offer, you must contact this institution promptly and instruct it to accept the offer on your behalf before the expiration of the offer. If you are a beneficial owner of Normandy ADSs and you wish to accept the offer directly and not through an institution, you must either make appropriate arrangements to register ownership of your Normandy ADSs in your name or obtain a properly completed stock power from the registered holder. This transfer of registered ownership may take considerable time, which you should keep in mind in deciding when to accept the offer. (e) Guaranteed delivery procedures cannot be used to accept the offer. (f) Your signature on the ADS Letter of Transmittal with respect to Normandy ADSs must be guaranteed by an eligible institution, as defined below, unless: . you are the registered holder of the Normandy ADSs; or . you are accepting the offer with respect to Normandy ADSs for the account of an eligible institution. The term "eligible institution" means a financial institution that is a participant in the Security Transfer Agents Medallion Program or the Stock Exchange Medallion Program. Eligible institutions include commercial banks, savings and loan associations and brokerage houses. (g) Under the U.S. federal income tax laws, the ADS exchange agent may be required to withhold 30% of any payments made to certain Normandy ADS holders. In general, to prevent backup U.S. federal income tax withholding with respect to any such payments made pursuant to the offer, if you hold Normandy ADSs, you must provide the ADS exchange agent with your correct taxpayer identification number and certify 53 whether you are subject to backup withholding of U.S. federal income tax by completing the substitute form W-9 included in the ADS Letter of Transmittal. Some Normandy ADS holders (including, among others, all corporations and some non-U.S. individuals) are not subject to these backup withholding and reporting requirements. 5.6 VALIDITY OF ACCEPTANCES (a) Your acceptance will not be valid unless it is made in accordance with the procedures set forth in section 5.4 or section 5.5 of this offer document and the instructions on the Acceptance Form or the ADS Letter of Transmittal, as appropriate. (b) You must choose the method of delivery you will use to deliver your Acceptance Form and/or your Normandy ADRs evidencing Normandy ADSs and your ADS Letter of Transmittal and all other required documents as set forth in sections 5.4 and 5.5. That delivery is at your risk. For Normandy shareholders, we recommend that you use the postage pre-paid envelope included with this offer document. For Normandy ADS holders, we recommend that you use overnight or hand delivery service, properly insured, instead of mail, and if delivery is by mail, we recommend that you use registered mail, with return receipt requested, properly insured. IN ALL CASES ADS HOLDERS SHOULD ALLOW SUFFICIENT TIME TO ASSURE DELIVERY TO THE ADS EXCHANGE AGENT. Persons holding Normandy securities through brokers, dealers, commercial banks, trust companies or nominees may request these persons to effect the above deliveries on their behalf. (c) We will determine, in our sole discretion, all questions as to the form of documents, including the validity, eligibility, including time of receipt, and acceptance of your ordinary shares of Normandy and Normandy ADSs. Our determination will be final and binding on all parties. (d) We may, in our sole discretion, at any time deem any Acceptance Form or ADS Letter of Transmittal we receive to be a valid acceptance in respect of your ordinary shares of Normandy or Normandy ADSs, as appropriate, even if a requirement for acceptance has not been complied with. (e) If any ordinary shares of Normandy or Normandy ADSs delivered by you are not exchanged for any reason pursuant to the terms and conditions of the offer, they will be returned with no cost to you at your risk promptly following the expiration or termination of the offer. In such case, we will dispatch at your risk your Acceptance Form or ADS Letter of Transmittal, as appropriate, together with all other documents forwarded by you to your address as shown on the Acceptance Form or ADS Letter of Transmittal, as appropriate, or such other address as you may notify us in writing by prepaid post. 5.7 ENTITLEMENT TO OFFER (a) If at the time the offer is made to you, or at any time during the offer period and before you accept the offer, another person is, or is entitled to be, registered as the holder of, or is able to give good title to, some or all of your ordinary shares of Normandy (such shares in this paragraph being called "Transferred Shares") then, in accordance with section 653B(1)(a) of the Corporations Act: (1) a corresponding offer shall be deemed to have been made at that time to that other person relating to the Transferred Shares; (2) a corresponding offer shall be deemed to have been made at that time to you relating to your ordinary shares of Normandy other than the Transferred Shares; and (3) the offer shall be deemed immediately after that time to have been withdrawn. (b) If at any time during the offer period and before the offer is accepted you hold ordinary shares of Normandy on trust for, as nominee for or on account of another person or persons, then a separate offer shall be deemed, in accordance with Section 653B of the Corporations Act, to have been made to you in relation 54 to each parcel of ordinary shares of Normandy within your holding of ordinary shares of Normandy. An acceptance by you of the offer in respect of any such distinct portion of your ordinary shares of Normandy will be ineffective unless you have given us notice stating that your ordinary shares of Normandy consist of separate parcels and your acceptance specifies the number of ordinary shares of Normandy in the distinct portions to which the acceptance relates. If your ordinary shares of Normandy are in a CHESS Holding, such notice may be transmitted in an electronic form approved by the Securities Clearing House Business Rules. Otherwise, such notice must be given to us in writing. 5.8 THE EFFECT OF ACCEPTANCE (a) Once you have accepted the offer, you will be unable to revoke your acceptance, the contract resulting from your acceptance will be binding on you and you will be unable to withdraw the ordinary shares of Normandy or Normandy ADSs with respect to which your acceptance was made, except as follows: (1) if the offer remains conditional at the expiration of the time that it may be freed of the conditions under section 5.10(b), the offer will automatically terminate and your ordinary shares of Normandy or Normandy ADSs will be returned to you; or (2) if the offer period is extended for more than one month and, at the time, the offer is subject to a defeating condition (which means that a condition to the offer has not been satisfied or waived at that time), you will be able to withdraw your acceptance and your ordinary shares of Normandy or Normandy ADSs, as appropriate. A notice will be sent to you at the time explaining your rights in this regard. (b) By completing, signing and returning the Acceptance Form, the ADS Letter of Transmittal or otherwise accepting the offer pursuant to section 5.4 or 5.5, you will be deemed to have: (1) accepted the offer, subject to section 5.7, (and any variation of it) in respect of all of your ordinary shares of Normandy; (2) subject to the offer being declared free of the conditions in section 5.10(a) and 5.10(c) or such conditions being fulfilled, agreed to transfer to us all the ordinary shares of Normandy registered in your name, regardless of the number of ordinary shares of Normandy specified in the Acceptance Form; (3) represented and warranted to us, as a fundamental condition going to the root of the contract resulting from your acceptance of the offer, that all your ordinary shares of Normandy or Normandy ADSs are and will upon registration in our name be fully paid up and free from all mortgages, charges, liens and other adverse interests and encumbrances of any kind and restrictions on transfer of any kind, and that you have full power and capacity to accept the offer and to sell and transfer the legal and beneficial ownership in those ordinary shares of Normandy or Normandy ADSs, as appropriate, to us, and that you have paid to Normandy all amounts which at the time of acceptance have fallen due for payment to Normandy in respect of those ordinary shares of Normandy or Normandy ADSs; (4) if you accepted the offer pursuant to section 5.4(b), irrevocably authorized us (by any of our authorized officers), if necessary, to complete on the Acceptance Form correct details of your ordinary shares of Normandy, fill in any blanks remaining on the form and rectify any errors or omissions from the form as may be necessary to make the form an effective acceptance of the offer; (5) appointed us and our authorized officers from time to time jointly and each of them severally as your true and lawful attorney, with effect from the date that any contract resulting from the acceptance of the offer is declared free from all its conditions or those conditions are satisfied, with power to exercise all powers and rights which you could lawfully exercise as the registered holder of such shares including, without limitation, requesting Normandy to register your ordinary shares of Normandy in our name, attending and voting at any meeting of Normandy, demanding a poll for any 55 vote taken at or proposing or seconding any resolutions to be considered at any meeting of Normandy, requisitioning any meeting of Normandy, signing any forms, notices or instruments relating to your ordinary shares of Normandy and doing all things incidental and ancillary to any of the foregoing and it is acknowledged and agreed that in exercising such powers the attorney may act in our interests as the intended registered holder of those shares; (6) subject to the offer being declared free of the conditions in section 5.10(a) and 5.10(c) or such conditions being fulfilled, irrevocably authorized and directed Normandy to pay to us or to account to us for all rights in respect of ordinary shares of Normandy (including shares represented by Normandy ADSs) including without limitation all rights to receive dividends, to subscribe for shares, notes, options or other securities and all other distributions or entitlements declared, paid, made or issued by Normandy in respect of ordinary shares of Normandy (including shares represented by ADSs after November 14, 2001 ("Rights"), subject however to any such Rights received by us being accounted to you in the event the offer is withdrawn or the contract resulting from your acceptance of the offer being avoided; (7) except where Rights have been paid or accounted for under section 5.8(b)(6), irrevocably authorized us to deduct from the consideration payable in respect of your ordinary shares of Normandy, the cash amount of any Rights paid to you or, where the Rights take a non-cash form, an amount equal to the value of the Rights as reasonably assessed by the Chairman of ASX or his or her nominee; (8) if at the time of acceptance of the offer, your ordinary shares of Normandy are in CHESS holding, have, with effect from the date that either the offer or any contract resulting from the acceptance of the offer is declared free from all its conditions or those conditions are satisfied, authorized us to cause a message to be transmitted to Securities Clearing House in accordance with Securities Clearing House Business Rule 16.6.1 so as to transfer your ordinary shares of Normandy to our Takeover Transferee Holding. We shall be so authorized even though, at the time of such transfer, we have not paid the consideration due to you under the offer; (9) irrevocably authorized us to apply for the issue to your account of that number of shares of our common stock in the form of our shares of common stock or Newmont CDIs corresponding to your entitlement under the offer at the date of application; (10) agreed to accept Newmont shares (in the form of our common stock or Newmont CDIs) to which you become entitled by acceptance of the offer, subject to the terms of the offer, our charter and by-laws and the provisions relating to the holding of shares of our common stock in the form of Newmont CDIs, and authorized appropriate entries to be placed in the relevant register of holders (including CDN being entered in the depository register and our share register in relation to those shares of our common stock); (11) agreed to indemnify us in respect of any claim or action against us or any loss, damage or liability whatsoever incurred by us as a result of you not producing your holder identification number or in consequence of the transfer of your ordinary shares of Normandy being registered by Normandy without production of your holder identification number for your ordinary shares of Normandy; (12) represented and warranted to us that unless you have notified us in accordance with section 5.7(b), your ordinary shares of Normandy do not consist of several parcels of ordinary shares of Normandy; and (13) agreed to execute all such documents, transfers and assurances that may be necessary or desirable to convey your ordinary shares of Normandy and any Rights to us, subject to the offer being declared free of the conditions in section 5.10(a) and 5.10(c) or such conditions being fulfilled. The representations and warranties referred to in this section 5.8(b) shall survive completion of the contract resulting from acceptance of the offer. 56 (c) If your ordinary shares of Normandy are in a CHESS Holding and you complete, sign and return the Acceptance Form in accordance with section 5.4(c) (which you are not bound, but are requested, to do) you will be deemed to have irrevocably authorized us and any of our authorized officers: (A) to instruct your controlling participant to initiate acceptance of the offer in respect of those ordinary shares of Normandy which are in a CHESS Holding in accordance with the Securities Clearing House Business Rules (if you have not already done so); and (B) to give any other instructions in relation to such ordinary shares of Normandy to your controlling participant on your behalf under the sponsorship agreement between you and the controlling participant; (d) The undertakings and authorities referred to in section 5.8(b) will remain in force after you receive the consideration for your ordinary shares of Normandy (including shares represented by Normandy ADSs) acquired by us and after we become registered as the holder of them. 5.9 DIVIDENDS AND OTHER ENTITLEMENTS (a) We will be entitled to all Rights which arise or accrue after November 14, 2001 in respect of the ordinary shares of Normandy (including shares represented by Normandy ADSs) which we acquire pursuant to the offer. (b) If any Rights are declared, paid or made or arise or accrue in cash after November 14, 2001 in respect of the ordinary shares of Normandy (including shares represented by Normandy ADSs), we will (provided the same has not been paid to us) be entitled to reduce the consideration specified in section 5.1 and payable by us to accepting holders of ordinary shares of Normandy by an amount equal to the cash amount of such Rights. (c) If any non-cash Rights are issued or made or arise or accrue after November 14, 2001 in respect of the ordinary shares of Normandy (including shares represented by Normandy ADSs), then we will (provided the same has not been transferred to us) be entitled to reduce the consideration specified in section 5.1 and payable by us to accepting holders of ordinary shares of Normandy by an amount equal to the value (as reasonably assessed by the Chairman of ASX or his or her nominee) of such non-cash Rights. 5.10 CONDITIONS OF THIS OFFER (a) Subject to section 5.10(b), this offer and any contract resulting from your acceptance of the offer, and each other offer and each contract resulting from the acceptance thereof, are subject to the satisfaction or waiver by us of the following conditions: (1) AUSTRALIAN FOREIGN INVESTMENT REVIEW BOARD The Treasurer of the Commonwealth of Australia advises us in writing, before the expiration date of the offer that there is no objection under the Australian Federal Government's foreign investment policy or under the Foreign Acquisitions and Takeovers Act 1975 (Cth) of Australia to the acquisition of ordinary shares of Normandy (including shares represented by Normandy ADSs) by us, such an acquisition otherwise not being in breach of that legislation or the Treasurer ceases to be entitled to make an order under Part II of that legislation regarding the acquisition of such ordinary shares by us; (2) MINIMUM ACCEPTANCE CONDITION Before the end of the offer period, we and our associates have relevant interests in at least 50.1% of the ordinary shares of Normandy (including shares represented by Normandy ADSs), calculated on a fully diluted basis; 57 (3) NEWMONT STOCKHOLDER APPROVAL Before the end of the offer period, our stockholders shall have taken all actions necessary to approve the issuance of the shares of Newmont common stock under the offer; (4) NO PRESCRIBED OCCURRENCES None of the following prescribed occurrences happen after November 14, 2001 and before the expiration of the offer: (A) Normandy converting all or any of its shares into a larger or smaller number of shares under section 254H of the Corporations Act; (B) Normandy or a subsidiary of Normandy resolving to reduce its share capital in any way; (C) 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; (D) Normandy or a subsidiary of Normandy making an issue of its shares (other than ordinary shares of Normandy issued as a result of the exercise of options issued under Normandy's employee share bonus plan or executive share incentive plan or the issue of shares by Normandy NFM Limited, a subsidiary of Normandy, as consideration for the takeover bid for Otter Gold Mines Limited) or granting an option over its shares or agreeing to make such an issue or grant such an option; (E) Normandy or a subsidiary of Normandy issuing, or agreeing to issue, convertible notes; (F) Normandy or a subsidiary of Normandy disposing, or agreeing to dispose, of the whole, or a substantial part, of its business or property; (G) Normandy or a subsidiary of Normandy charging, or agreeing to charge, the whole, or a substantial part, of its business or property; (H) Normandy or a subsidiary of Normandy resolving that it be wound up; (I) the appointment of a liquidator or provisional liquidator of Normandy or of a subsidiary of Normandy; (J) the making of an order by a court for the winding up of Normandy or of a subsidiary of Normandy; (K) an administrator of Normandy or of a subsidiary of Normandy being appointed under section 436A, 436B or 436C of the Corporations Act; (L) Normandy or a subsidiary of Normandy executing a deed of company arrangement; or (M) 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; (5) NO 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; (6) 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 58 misleading, in any document filed by or on behalf of Normandy with ASX or ASIC since January 1, 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; (7) NO PUBLIC AUTHORITY INTERFERENCE During the period from November 14, 2001 to the expiration of the offer: (A) there is not in effect any preliminary or final decision, order or decree issued by any government or governmental, semi-governmental, statutory or judicial entity or authority, whether in Australia or elsewhere, including without limitation any self-regulatory organization established under statute or any stock exchange (a ''Public Authority''), or (B) no application is made to any Public Authority (other than by us), or commenced by a Public Authority against either Newmont, Normandy or Delta Acquisition LLC, in consequence or in connection with the offer, which restrains or prohibits or otherwise materially adversely impacts upon, the making of the offer or the completion of any transaction contemplated by the offer or the deeds of undertaking entered into by us and Normandy or the rights of us or our associates in respect of Normandy and the ordinary shares of Normandy to be acquired under the offer or otherwise; (8) DEEDS OF UNDERTAKING Before the end of the offer period, no breach of any covenant, warranty or representation made by Normandy or in the deeds of undertaking entered into by us and Normandy occurs or is announced which has a 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; (9) OTHER GOVERNMENTAL OR REGULATORY APPROVALS All necessary governmental or regulatory filings (including under the U.S. 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 the offer by any governmental authority, and all necessary governmental or regulatory approvals having been obtained to ensure that: (A) we can vote and acquire all ordinary shares of Normandy (including shares represented by Normandy ADSs) under the offer; and (B) our shares of common stock and Newmont CDIs can be issued under the offer and traded without restriction, including, without limitation, under the U.S. Securities Act of 1933, as amended; (10) AUSTRALIAN MAGNESIUM CORPORATION LIMITED COMMITMENTS (A) neither Normandy nor any subsidiary of Normandy is a party to any agreement with Australian Magnesium Corporation Limited or is subject to any other obligation in respect of Australian Magnesium Corporation Limited for an amount greater than A$20 million other than: (i) those agreements and obligations disclosed in the Australian Magnesium Corporation Limited prospectus dated October 15, 2001; or (ii) an obligation by Normandy to subscribe for Australian Magnesium Corporation Limited shares in the manner and subject to the conditions contained in the Australian Magnesium Corporation Limited prospectus dated October 15, 2001; and (B) before the end of the offer period, there is no waiver of any condition precedent to the commitment of either Normandy, any subsidiary of Normandy, the syndicate of banks, the 59 Australian Federal Government or the State Government of Queensland to provide funds to Australian Magnesium Corporation Limited being conditions precedent to commitments disclosed or referred to in the Australian Magnesium Corporation Limited prospectus dated October 15, 2001. (b) It is a term of the offer that we may, subject to section 650F of the Corporations Act, declare the offer and all other offers and all contracts resulting from the acceptance of offers to be free from the conditions (or any one or more of them or any part thereof) set out in section 5.10(a). Any declaration made under this section 5.10(b) shall be made by us by notice in writing to Normandy. (c) In accordance with section 625(3) of the Corporations Act, the offer and all other offers and all contracts that result from the acceptance of offers are subject to the condition that: (1) an application for admission to quotation of Newmont on ASX and of the shares of Newmont common stock on the NYSE will be made within seven days after the date when the bidder's statement is given to Normandy; and (2) permission for admission to quotation of Newmont CDIs on ASX and for quotation of the shares of Newmont common stock on the NYSE will be granted no later than seven days after the end of the offer period. We will apply for the necessary quotations as soon as practicable in order to satisfy this condition. The offer may not be declared free of this condition. (d) The condition in section 5.10(a)(1) above is a condition precedent to our acquisition of an interest (within the meaning of those terms in the Foreign Acquisitions and Takeovers Act) in your ordinary shares of Normandy (including shares represented by Normandy ADSs). The other conditions in section 5.10(a) are conditions subsequent. The non-fulfillment of any condition subsequent does not prevent a contract to sell your ordinary shares of Normandy (including shares represented by Normandy ADSs) resulting from your acceptance of the offer, but entitles us by written notice to you, to rescind the contract resulting from your acceptance of the offer. (e) Subject to the provisions of the Corporations Act, we alone have the benefit of the conditions in section 5.10(a) above and any breach or non-fulfillment of any such conditions may be relied on only by us. (f) The date specified for giving the notice referred to in section 630(3) of the Corporations Act is February 7, 2002, subject to extension in accordance with section 630(2) of the Corporations Act if the offer period is extended in accordance with the Corporations Act. (g) If at the end of the offer period in respect of the conditions specified in section 5.10(a) above: (1) we have not declared the offer and all other offers made by us and all contracts resulting from the acceptance of offers to be free from the conditions; and (2) the conditions have not been fulfilled, then all contracts resulting from the acceptance of offers and all offers that have been accepted and from whose acceptance binding contracts have not yet resulted are void. In that event, we will, if you have accepted the offer: (1) return at your risk your Acceptance Form together with all documents forwarded by you with that form to your address as shown in the Acceptance Form; or (2) if your ordinary shares of Normandy are in a CHESS Holding, notify Securities Clearing House under the Securities Clearing House Business Rules that the contract resulting from your acceptance of the offer is avoided. 60 5.11 PAYMENT OF CONSIDERATION (a) Subject to this section 5.11 and the Corporations Act, we will provide the consideration for your ordinary shares of Normandy (including shares represented by Normandy ADSs) as follows: (i) within five business days after the date of your acceptance of the offer if the offer is unconditional at that time; or (ii) if the offer is conditional when you accept it, within five business days after the date upon which all the conditions (including the condition in section 5.10(c)) are satisfied or waived. Under no circumstance will interest be paid on the consideration payable to you under the offer, regardless of any delay in making the exchange or any extension of the offer. (b) Where the Acceptance Form requires an additional document to be given with your acceptance (such as a power of attorney): (1) if that document is delivered with your acceptance, we will provide the consideration in accordance with section 5.11(a); (2) if that document is delivered after acceptance and before the end of the offer period while the offer is subject to a condition, we will provide the consideration within 5 business days after the offer becomes unconditional. (3) if that document is delivered after your acceptance and before the end of the offer period while the offer is not subject to any condition, we will provide the consideration within 5 business days after the document is delivered; or (4) if that document is delivered after the end of the offer period, we will provide the consideration within 5 business days after that document is delivered. (c) If you are resident in any place specified by the Reserve Bank of Australia as being a place for which a resident is not entitled to receive the cash component of the consideration specified above, in the absence of any necessary authority of the Reserve Bank of Australia and the Australian Taxation Office, acceptance of the offer will not create or transfer to you any right (contractual or contingent) to receive the consideration specified in the offer unless and until any necessary authority of the Reserve Bank of Australia and the Australian Taxation Office has been obtained. Such authority is currently required only in respect of Libya, Iraq, the Taliban (Islamic Emirate of Afghanistan) and any undertaking owned or controlled by the Taliban, certain persons associated with the former government and governmental authorities of the Federal Republic of Yugoslavia (Serbia and Montenegro) and the National Union for the Total Independence of Angola (UNITA), including its senior officials and their immediate families AND IN RESPECT OF ANY PERSON OR ENTITY NAMED IN AN ANNEX TO THE INSTRUMENTS OF OCTOBER 3 OR 17 AND NOVEMBER 19, 2001 ISSUED UNDER THE AUSTRALIAN BANKING (FOREIGN EXCHANGE) REGULATIONS. (d) If you accept the offer and are entitled to payment of a cash amount instead of shares of our common stock or Newmont CDIs under section 5.1(b) or (d), we will: (1) arrange for the allotment to a nominee approved by ASIC of the number of shares or fractional entitlements of our common stock or Newmont CDIs to which you and all other shareholders would have been entitled but for this paragraph (d); (2) cause those shares of our common stock or Newmont CDIs issued to the nominee to be offered for sale within 5 business days after the end of the offer period in such manner, at such price and on such other terms and conditions as are determined by the nominee; and (3) pay to you the amount ascertained in accordance with the formula: Net Proceeds of Sale x Newmont Shares ------------------------------------- TSA 61 where: "Net Proceeds of Sale" means the amount (if any) remaining after deducting the expenses of the sale from the proceeds of the sale of shares of our common stock (including shares underlying Newmont CDIs) on the open market; "Newmont Shares" means the number of shares of our common stock (including the fractional number of a share of our common stock underlying Newmont CDIs) which would but for section 5.1(d) otherwise have been allotted to you; and "TSA" means the total number of shares of our common stock (including shares underlying Newmont CDIs) allotted to the nominee under section 5.1(b) or (d) in respect of the shares of our common stock (including shares underlying Newmont CDIs) held by shareholders and ADS holders affected by these sections. If your registered address on the Normandy shareholder register or Normandy ADS register maintained by Normandy's depositary is within Australia, you will receive your share of the proceeds of this sale in Australian dollars. If your registered address on the Normandy shareholder register or Normandy ADS register maintained by Normandy's depositary is within any other jurisdiction (including the United States and Canada), you will receive your share of the proceeds of this sale in U.S. dollars. If you are to receive payment in U.S. dollars, we will convert the Australian dollar sum into U.S. dollars using the noon buying rate on the date of the sale by the nominee, as published by the Federal Reserve Bank of New York. Payment will be made by check posted to you at your risk by ordinary mail at the address provided on your Acceptance Form or ADS Letter of Transmittal. Under no circumstances will interest be paid on your share of the proceeds of this sale, regardless of any delay in remitting these proceeds to you. (e) Where the ADS Letter of Transmittal requires an additional document to be delivered with your ADS Letter of Transmittal (such as your Normandy ADRs), such document must be delivered with, and at the same time as, your ADS Letter of Transmittal. 5.12 WITHDRAWAL OR TERMINATION OF THIS OFFER We may withdraw unaccepted offers with the written consent of ASIC, which consent may be given subject to such conditions (if any) as are specified in the consent. Notice of any withdrawal will be given to ASX, Normandy and to each person to whom an offer has been made. 5.13 VARIATION OF THIS OFFER We may at any time, and from time to time, vary the offer in accordance with the Corporations Act. In the event that we vary the offer, we are obliged under the Corporations Act to notify Normandy, the ASX and every Normandy shareholder (including Normandy ADS holders) of such variation, so long as the variation is not an extension of the offer period subsequent to the offer being declared unconditional in all respects, in which case such notice will only go to Normandy shareholders (including Normandy ADS holders) who have not previously accepted the offer. Under Australian law, all Normandy shareholders and Normandy ADS holders who accept the offer will be entitled to the benefit of any variation of the offer which improves the consideration offered, even if that occurs after the Normandy shareholder's or Normandy ADS holder's acceptance is received. Under the Corporations Act, we are not permitted to vary the offer to decrease the number of ordinary shares of Normandy (including in the form of Normandy ADSs) that are being sought in the offer. 62 5.14 STAMP DUTY AND BROKERAGE FEES If your ordinary shares of Normandy or Normandy ADSs are registered in your name and you deliver them directly to us or the ADS exchange agent, as appropriate, you will not incur any brokerage or other transaction fees in connection with your acceptance of the offer. If you hold your ordinary shares of Normandy or Normandy ADSs through a bank, broker or other nominee, you should ask your bank, broker or other nominee whether it will charge any transaction fees or service charges in connection with your acceptance of this offer. Any stamp duty payable in respect of transfers of ordinary shares of Normandy and Normandy ADSs to us pursuant to the offer will be paid by us. 5.15 COSTS AND TAXES All costs and expenses of the preparation of this offer document and of the preparation and circulation of the offer will be paid by us. No Australian goods and services tax is payable as a consequence of the offer. 5.16 NOTICES (a) Any notices to be given by us to Normandy may be given to Normandy by leaving them at, or sending them by prepaid ordinary post to, the registered office of Normandy or by sending them by facsimile transmission to Normandy at its registered office. (b) Any notices to be given to us by you or by Normandy under the bid may be given to us by leaving them at or sending them by prepaid ordinary post to us at one of the addresses referred to in section 5.4(b). (c) Any notices to be given by us to you may be given to you by leaving them at or sending them by prepaid ordinary post or if your address is outside Australia, by airmail, to your address as shown in the register of members of Normandy. 63 9 INFORMATION ABOUT NORMANDY 9.1 DISCLAIMER INFORMATION IN RELATION TO NORMANDY We conducted a due diligence review of limited information and documents made available by Normandy to us before announcing our offer. Information included in this offer document relating to Normandy and its business is based on publicly available information about Normandy, including Normandy's 2001 annual report and quarterly activities report for the quarter ended September 30, 2001 and Normandy's target statement. Pursuant to Rule 409 promulgated under the U.S. Securities Act of 1933, on December 17, 2001, we requested that Normandy and its independent public accountants provide to us all material information required to be included in this offer document or required to make statements made herein not misleading. On December 11, 2001, we requested that Normandy's independent public accountants consent in a customary manner to the inclusion of its audit reports with respect to the financial statements of Normandy included in this offer document. On December 14, 2001, Normandy's independent public accountants responded in writing to our December 11, 2001 letter stating that they were reluctant to give consent for the inclusion of its audit report where consent has not been given for the financial statements themselves, and believed it was appropriate that its consent be given concurrently with Normandy's consent. On December 19, 2001, Normandy, on its own behalf and on behalf of its accountants, responded in writing to our December 17, 2001 letter and stated that it was not appropriate for Normandy to bear any burden as to what the offer document should contain and whether or not such document was misleading. Normandy further stated that if there were specifics which Newmont wished to refer to Normandy for review and comment, Normandy would consider whether it could be of assistance and to what extent, on a case by case basis. In addition, Normandy stated that its accountants were not in a position to provide assistance to us, that work on US GAAP reconciliation of its financial statements had not been completed to Normandy's satisfaction and that Normandy had not yet determined whether it would allow US GAAP reconciliation of its financial statements to be made public at this time. On December 31, 2001, we reiterated our requests previously made to Normandy to provide the information required for inclusion in our United States filings, including the consent of Normandy's independent accountants and the information necessary to permit Normandy's financial statements to be reconciled to US GAAP. On January 2, 2002, Normandy responded to Newmont's reiterated request stating that Normandy had carefully considered our requests and determined that it must maintain Normandy's stance as expressed in Normandy's letter dated December 19, 2001. Normandy stated that in its opinion it was not appropriate that Normandy or its directors should have any legal responsibility for the content of Newmont's registration statement. Normandy noted that the issue was deliberately not covered in the pre-bid documentation because Normandy was not prepared to take responsibility for the content of Newmont's offer document or registration statement and that, in Normandy's opinion, responsibility for the content of the Newmont registration statement must remain with Newmont. Normandy also noted that its own work on US GAAP reconciliation was still not complete and, therefore, Normandy's directors were not prepared to permit the publication of US GAAP reconciliations of Normandy's accounts. Normandy also noted that it did not know whether its work on US GAAP reconciliation would ever be completed, in view of the two competing bids and their announced timeframes. See Section 4.3 "Reasons for and background to the transactions--Background to the transactions" on page 40. For further information, see section 9.3, "--Presentation of Normandy accounting information" on page 106. We will provide any and all information that we receive from Normandy or its independent accountants prior to the expiration of the offer that we deem material, reliable and appropriate in a subsequently prepared amendment or supplement hereto. While we have included information in this offer document concerning Normandy that is known to us based on publicly available information, other than as described above, we have not had access to material non-public information regarding Normandy and could not use any such information for the purpose of preparing this offer document. Although we have no knowledge that would indicate that statements relating to Normandy contained in this offer document are inaccurate or incomplete, we are not in a position to verify information concerning Normandy. We and our respective directors and officers are not aware of any errors in such information. 100 The due diligence was conducted pursuant to a Confidentiality Agreement, a term of which is as follows: "NORMANDY IS NOT AWARE OF ANY MATERIAL INFORMATION IN RELATION TO NORMANDY WHICH HAS NOT BEEN PROVIDED OR OTHERWISE MADE AVAILABLE TO THE INDEPENDENT EXPERT WHICH HAS BEEN RETAINED BY NORMANDY FOR THE PURPOSE OF PROVIDING A REPORT TO BE INCLUDED IN NORMANDY'S TARGET STATEMENT, OR OTHERWISE INCLUDED IN NORMANDY'S TARGET STATEMENT, WHICH WILL BE ISSUED IN RESPONSE TO THE OFF-MARKET BID FOR ANGLOGOLD LIMITED IN RESPECT OF WHICH A BIDDER'S STATEMENT DATED OCTOBER 17, 2001 WAS SERVED ON NORMANDY." Subsequent to the completion of the due diligence, and prior to the announcement of our bid, we and Normandy entered into the deeds of undertaking described in section 14.1, "Certain relationships and transactions with respect to Newmont, Normandy and Franco-Nevada--Deeds of Undertaking" on page 146. Normandy gave a number of warranties to us in the deed of undertaking, including a warranty that: "The Normandy Board and the Normandy Senior Management are not aware of any information being information otherwise liable to be disclosed under ASX listing rule 3.1 which has not been publicly disclosed by Normandy in reliance on the carve out from disclosure which is contained in ASX listing rule 3.1 which has not been provided to the expert for review in connection with the preparation of the independent expert's report which is to accompany the Normandy Target's Statement which will be given in response to the AngloGold Bidder's Statement dated 16 October 2001 and AngloGold's F-4 Registration Statement dated 9 November 2001." We are not aware of any non-public information of Normandy, of which we became aware in the course of the due diligence referred to above, being information which: . is not set out or referred to in this offer document, in Normandy's target statement or being information which has not otherwise been made available publicly by Normandy; and . is material to a decision by a Normandy shareholder whether or not to accept our offer. We are not able to verify the information provided by Normandy. Normandy shareholders and Normandy ADS holders should form their own views concerning Normandy from the full range of public information available concerning Normandy. In particular, Normandy shareholders and Normandy ADS holders should carefully consider the disclosures made by Normandy and its directors concerning Normandy in response to the offer. 9.2 GENERAL DESCRIPTION OF NORMANDY'S OPERATIONS Normandy is a gold company with extensive production and exploration interests. Normandy has operations in Australia, the United States, New Zealand, Turkey, Chile, Brazil and Canada. Normandy is also a producer of zinc concentrate (from Golden Grove), cobalt (from Kasese) and magnesium (from Australian Magnesium Corporation Limited). A detailed description of Normandy's operations and investments has been included in section 7, "Information about New Newmont" on page 66. GOLD OPERATIONS During the financial year ended June 30, 2001, Normandy had attributable gold production of 2.2 million ounces. In addition to its directly owned gold assets, Normandy has major interests in two ASX listed gold companies, Normandy NFM Limited (87.5%) and Normandy Mt. Leyshon Limited (13.7%). 101 In May 2001, Normandy acquired 100% ownership of the Midas gold mine and 105 square kilometers of highly prospective adjoining tenements. This transaction positions Normandy in the Carlin Trend of northern Nevada, in the United States. A strategic alliance with TVX Gold Inc. in May 1999 formed TVX Normandy Americas (Normandy 49.9%), delivering attributable gold production to Normandy of approximately 250,000 ounces from five mines in North and South America. AUSTRALIA KALGOORLIE OPERATIONS (50%). The Kalgoorlie operations comprise the Super Pit and Mt. Charlotte underground mine at Kalgoorlie-Boulder, 600 km east of Perth in the Eastern Goldfields. BODDINGTON MINE (44.4%). Boddington, a large-scale open pit mining operation, is located 120 km southeast of Perth. YANDAL OPERATIONS (100%). Yandal operations comprise the Bronzewing, Jundee and Wiluna mines, situated in the prospective Yandal Goldfield of Western Australia. TANAMI OPERATIONS (87.5%). The Tanami operations comprise The Granites, located approximately 550 km by road northwest of Alice Springs, and Dead Bullock Soak, about 40 km west of The Granites, and are owned by Normandy NFM Limited, a publicly listed, 87.5% owned, subsidiary of Normandy. Dead Bullock Soak operations comprise Callie underground and Villa, Triumph Hill and Colliwobble open pits. The Tanami operations include the Goldrush deposit. Ore from this deposit will be processed at the Tanami plant (owned by Otter Gold Mining Limited and Newmont) under a lease arrangement. Mining of this deposit commenced in mid-September 2001 and gold production will commence in mid-December 2001. MT. LEYSHON (13.7%). The Mt. Leyshon mine, 24 km south of Charters Towers, Queensland, is owned by Normandy Mt. Leyshon Limited, a publicly listed company 13.7% owned by Normandy. This large-scale open pit ceased mining operations in February 2001. A comprehensive mine closure and rehabilitation plan covering remaining operations, closure, rehabilitation, decommissioning and post-closure monitoring has been implemented. PAJINGO OPERATIONS (50%). The Vera-Nancy mine, on the Pajingo Joint Venture tenements, is located 50 km southeast of Charters Towers in North Queensland. UNITED STATES OF AMERICA MIDAS MINE (100%). The Midas mine is approximately 100 km northwest of the regional center of Winnemucca in northern Nevada, United States. Normandy acquired its 100% interest in the mine and 105 square kilometers of adjoining tenements in May 2001. NEW ZEALAND MARTHA MINE (67.06%). The Martha gold mine is located within the town of Waihi. TURKEY OVACIK (100%). Construction of the Ovacik gold mine in Turkey was completed in December 1997. Commencement of production was delayed. Production has now commenced with the first gold produced in May 2001. The mine, however, is the subject of a regulatory action which could result in its closure. 102 TVX NORMANDY AMERICAS Normandy formed a strategic alliance with Canadian-based TVX Gold Inc., creating a new company, TVX Normandy Americas (owned 49.9% by Normandy and 50.1% by TVX Gold Inc.). The principal assets of the company are five operating gold mines in the Americas, as follows: . Paracatu (Brazil, 49%), . La Coipa (Chile, 50%), . New Britannia (Canada, 50%), and . Musselwhite (Canada, 32%). In addition, TVX and Normandy each own a 25% interest in the Crixas property in Brazil. ADDITIONAL GOLD PROJECTS YAMFO-SEFWI (90%). Yamfo-Sefwi is a new gold belt in western Ghana, with Normandy holding licenses covering 95 strike km. PERAMA (80%). The Perama gold deposit is located 25 km northwest of Alexandroupolis in northeastern Greece. Normandy and its joint venture partners hold a strong tenement position covering about 450 square kilometers. The area is considered prospective for the occurrence of gold deposits. MASTRA (100%). The Mastra gold deposit is located in the Black Sea region of northeastern Turkey. NON-GOLD METALS OPERATIONS Normandy is also a base metals producer. Production from the Golden Grove operations in Western Australia for the financial year ended June 30, 2001 totaled 182,655 tonnes of zinc concentrate and 52,807 tonnes of copper concentrate, plus significant lead and silver. Normandy also has an effective 53.9% interest in the Kasese cobalt project, located in western Uganda. GOLDEN GROVE OPERATIONS (100%). Golden Grove operations are located in Western Australia, 230 km east of the port of Geraldton and 50 km southeast of Yalgoo, and comprise the Scuddles mine and treatment plant, the Gossan Hill mine and exploration tenements covering the 35 kilometer-long host horizon, a sequence of acid-volcanogenic rocks of Archaean age. KASESE COBALT (BANFF RESOURCES 63%). Banff Resources Limited, a company listed on the Canadian Venture Exchange, has a 63% interest in the Kasese cobalt project in Uganda, Africa. Normandy presently holds a controlling 86% interest in Banff Resources. AUSTRALIAN MAGNESIUM CORPORATION LIMITED Normandy currently has a 22.8% voting interest (and a 13.9% equity interest) in Australian Magnesium Corporation Limited, one of the world's largest integrated magnesia and magnesium companies. Major activities of Australian Magnesium Corporation Limited are QMag, Enviromag and the development of a A$1.6 billion Stanwell Magnesium Project. Australian Magnesium Corporation Limited is an Australian publicly listed company based in Brisbane which developed and is now seeking to commercialize the Australian Magnesium process technology to produce magnesium metal. The AM process is expected to produce magnesium metal at the lowest cost in the world. This is done through a number of chemical processes. The process aims to minimize all effluents and, where possible, recycle them for other purposes. 103 Following development of the technology of the AM process, Australian Magnesium Corporation Limited entered into an agreement in January 1997 with Ford Motor Company of America, Commonwealth Scientific and Industrial Research Organisation and Fluor Daniel Pty Ltd to construct a 1,500 tpa demonstration plant and to complete a full feasibility study. The viability of the AM process was confirmed following successful production of magnesium metal ingots from the operational demonstration plant in August 1999. In March 2000, Australian Magnesium Corporation Limited announced a positive feasibility recommendation for the proposed commercial plant, located at Stanwell, near Rockhampton in Queensland. Australian Magnesium Corporation Limited has also committed to selling 45,000 tpa of magnesium alloy to Ford under a long-term contract. RESOURCE. In January 1997, Australian Magnesium Corporation Limited acquired the freehold title to an area within the Kunwarara magnesite deposit to source sufficient magnesite to run the commercial plant at its planned initial capacity. The Kunwarara magnesite deposit which covers an area of 63 square kilometers, is located 70 km and 160 km northwest of Rockhampton and Gladstone, respectively. QMAG. Australian Magnesium Corporation Limited produces a range of dead-burned and electrofused magnesia products sold to the world's refractory industry as a raw material for high-quality basic refractory bricks RECENT DEVELOPMENTS In May 2001, Normandy acquired 100% ownership in the Midas gold mine and 105 square kilometers of highly prospective adjoining tenements. This transaction positions Normandy in the prolific gold-producing Carlin Trend of northern Nevada in the United States. On June 5, 2001, Australian Magnesium Corporation Limited announced the finalization of a A$932 million underwritten debt financing for the development of its Stanwell Magnesium Project. On July 20, 2001, Australian Magnesium Corporation Limited announced that it had withdrawn the A$680 million equity offering to complete funding development for its Stanwell Magnesium Project. On August 14, 2001, Normandy Mt Leyshon Limited announced that, due to the scheduled closure of the Mt Leyshon mine in February 2002, the directors of Normandy Mt Leyshon Limited had proposed a cash distribution of A$0.33 per share and a restructuring of the company as an alternative to orderly liquidation. The new company would have a specific strategic focus on exploration and would hold tenements in the Mt Leyshon district as well as a portfolio of exploration properties, including tenements in the Musgrave region of Western Australia and in the Kidston, Agate Creek and Cloncurry regions of Queensland, Australia. As part of the transfer of the tenement package, Normandy would be issued with shares representing 12% of the new company. In the announcement of August 14, 2001, Normandy Mt. Leyshon Limited stated that if these proposals are not approved by its shareholders, Normandy Mt Leyshon Limited intends to make an interim distribution of A$0.25 per share with the prospect of a final distribution of between A$0.10 and A$0.15 per share. On September 5, 2001, AngloGold announced its intention to offer to acquire all the outstanding shares of Normandy for 2.15 AngloGold shares in exchange for every 100 ordinary shares of Normandy. On that same day, Normandy responded to AngloGold's offer by announcing that it had appointed Macquarie Bank to assist Normandy's board of directors in assessing AngloGold's offer and in preparing a formal recommendation to Normandy shareholders and Normandy ADS holders with respect to AngloGold's offer. On September 27, 2001, Australian Magnesium Corporation Limited announced that, due to unstable conditions in equity and capital markets, it is reviewing the timing of its equity raising to fund the development of the Stanwell Magnesium Project. On September 28, 2001, Normandy published its annual shareholder report including audited consolidated financial statements for the financial year ended June 30, 2001. Excerpts from the annual shareholder report are included under Annex B to this offer document. 104 On October 11, 2001, Normandy NFM Limited announced its intention to launch an offer for Otter Gold Mines Limited, whereby 1.9 Normandy NFM Limited shares will be offered for every 100 Otter shares. Normandy NFM Limited also agreed on that date to purchase 7,798,000 Otter shares (9.9% of the outstanding Otter shares) from the Guiness Peat Group at the same exchange ratio being offered to other Otter shareholders. Otter's primary assets are a 60% interest in the Tanami Joint Venture (the other 40% is held by AngloGold), owner of the Tanami mill, significant exploration properties held 100% in the Tanami region of Central Australia and a 33% interest in the Waihi Operations in New Zealand, held through Martha Hill and Union Hill joint ventures, the remaining 67% interest in which is held by Normandy. According to publicly available information published by Normandy NFM Limited, as at October 9, 2001, Normandy is the largest shareholder of Normandy NFM Limited with an 87.45% interest. On October 15, 2001, Australian Magnesium Corporation Limited announced revised arrangements for a capital raising of up to A$525 million for the development of the Stanwell Magnesium Project. On the same date, Normandy announced that, as part of and conditional on these capital raising plans, it has agreed to subscribe for A$100 million of shares in Australian Magnesium Corporation Limited between October 31, 2002 and January 31, 2003 and that it has increased its loan facilities available to Australian Magnesium Corporation Limited by A$10.6 million to fund expenses of the Stanwell Magnesium Project until completion of the capital raising. On October 25, 2001, Normandy published its first quarter report to shareholders including unaudited condensed financial information for the three months ended September 30, 2001. Excerpts from the first quarter report to shareholders are included under Annex B to this offer document. On November 14, 2000, Normandy, Newmont and Franco-Nevada announced that Newmont intended to make a recommended offer of 0.0385 shares of Newmont common stock for each Normandy share. In addition, Newmont offered to pay A$0.05 per Normandy share in cash if the Newmont offer was accepted by holders of at least 90% of the Normandy shares. Newmont also agreed to acquire Franco-Nevada in a stock-for-stock transaction, in which Franco-Nevada common shareholders will receive 0.8 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. On November 19, 2001, Normandy published its response document in which the Normandy board of directors recommended that holders of Normandy shares and Normandy ADSs not accept AngloGold's previous offer to acquire all of the outstanding Normandy shares for 2.15 AngloGold shares in exchange for every 100 Normandy shares. The board of directors of Normandy has not yet made a recommendation to the Normandy shareholders and Normandy ADS holders regarding the revised terms of the AngloGold offer. On November 19, 2001, Australian Magnesium Corporation Limited announced that it had closed its previously announced A$500 million public offer capital raising and would accept $25 million in oversubscriptions. On November 22, 2001, Normandy Mt. Leyshon Limited announced that the restructure of the company had been completed. The company changed its name to Leyshon Resources Limited and will operate with a new board and management and with an initial focus on exploration of tenements acquired from Normandy. On November 23, 2001, Australian Magnesium Corporation Limited confirmed that it had completed the allotment of 660,258,713 Distribution Entitled Securities on November 22, 2001. On November 28, 2001, AngloGold raised its offer for ordinary shares of Normandy to 2.15 AngloGold shares for every 100 ordinary shares of Normandy, plus A$0.20 per share. On December 6, 2001, Normandy NFM Limited announced that it had lodged its offer document regarding the Otter Gold Mines takeover offer with the NZSE and ASX. On December 6, 2001, AngloGold withdrew arrangements to pay higher fees to brokers who solicit acceptances to its offer in light of Newmont's application for a restraining order. 105 On December 9, 2001, Newmont increased the cash component of its November 14, 2001 offer to A$0.40 per ordinary share of Normandy and removed the condition that Newmont pay the cash component only if its offer was accepted by holders of at least 90% of the Normandy shares. On December 12, 2001, the Australian Takeover Panel refused AngloGold's application to block this offer. On December 13, 2001 AngloGold announced that it would appeal a ruling by Australia's Takeover Panel. On December 20, 2001, the Takeover Panel declined AngloGold's appeal. On December 21, the Takeover Panel announced that it had declined to make a declaration of unacceptable circumstances in the application for review. On December 27, 2001, AngloGold announced that it had increased its offer for Normandy by and additional A$0.10 in cash per Normandy share following discussions regarding "possible patterns of cooperation" with Barrick. See Section 4.3 "Reasons for and background to the transactions--Background to the transactions" on page 40. On January 2, 2002, Newmont announced that it was increasing the cash consideration of its offer for Normandy by A$0.10 to A$0.50 per share. On the same date, the Normandy board of directors, subject to its fiduciary duties, re-affirmed its recommendation of the Newmont offer, as revised, and its recommendation that Normandy shareholders reject the AngloGold offer. See Section 4.3 "Reasons for and background to the transactions--Background to the transactions" on page 40. Normandy La Source has accepted an offer of US$10.7 million plus a royalty for its interest in the Ity goldmine, as disclosed in Normandy's supplementary target statement. 9.3 PRESENTATION OF NORMANDY ACCOUNTING INFORMATION Normandy prepares and publishes its consolidated financial statements in accordance with Australian GAAP. Except where expressly stated otherwise, all financial information relating to Normandy presented in this offer document has been prepared in accordance with Australian GAAP. Normandy's financial data is presented in accordance with Australian GAAP, which differs in certain significant respects from US GAAP. These differences as they relate to Normandy cannot be fully quantified due to the limited disclosure provided in publicly available financial information. Pursuant to Rule 409 promulgated under the U.S. Securities Act of 1933, on December 17, 2001, we requested that Normandy and its independent public accountants provide to us all material information required to be included in this offer document or required to make statements made herein not misleading. On December 11, 2001, we requested that Normandy's independent public accountants consent in a customary manner to the inclusion of its audit reports with respect to the financial statements of Normandy included in this offer document. On December 14, 2001, Normandy's independent public accountants responded in writing to our December 11, 2001 letter stating that they were reluctant to give consent for the inclusion of its audit report where consent has not been given for the financial statements themselves, and believed it was appropriate that its consent be given concurrently with Normandy's consent. On December 19, 2001, Normandy, on its own behalf and on behalf of its accountants, responded in writing to our December 17, 2001 letter and stated that it was not appropriate for Normandy to bear any burden as to what the offer document should contain and whether or not such document was misleading. Normandy further stated that if there were specifics which Newmont wished to refer to Normandy for review and comment, Normandy would consider whether it could be of assistance and to what extent, on a case by case basis. In addition, Normandy stated that its accountants were not in a position to provide assistance to us, that work on US GAAP reconciliation of its financial statements had not been completed to Normandy's satisfaction and that Normandy had not yet determined whether it would allow US GAAP reconciliation of its financial statements to be made public at this time. On December 31, 2001, we reiterated our requests previously made to Normandy to provide the information required for inclusion in our United States filings, including the consent of Normandy's independent accountants and the information necessary to permit Normandy's financial statements to be reconciled to US GAAP. On 106 January 2, 2002, Normandy responded to Newmont's reiterated request stating that Normandy had carefully considered our requests and determined that it must maintain Normandy's stance as expressed in Normandy's letter dated December 19, 2001. Normandy stated that in its opinion it was not appropriate that Normandy or its directors should have any legal responsibility for the content of Newmont's registration statement. Normandy noted that the issue was deliberately not covered in the pre-bid documentation because Normandy was not prepared to take responsibility for the content of Newmont's offer document or registration statement and that, in Normandy's opinion responsibility for the content of the Newmont registration statement must remain with Newmont. Normandy also noted that its own work on US GAAP reconciliation was still not complete and, therefore, Normandy's directors were not prepared to permit the publication of US GAAP reconciliations of Normandy's accounts. Normandy also noted that it did not know whether its work on US GAAP reconciliation would ever be completed, in view of the two competing bids and their announced timeframes. See Section 4.3 "Reasons for and background to the transactions--Background to the transactions" on page 40. KEY DIFFERENCES BETWEEN AUSTRALIAN GAAP AND US GAAP Certain historical financial information for Normandy is included in this offer document and Annex B to this offer document. This historical information for Normandy is presented in accordance with accounting principles generally accepted in Australia ("Australian GAAP"), which differs in certain significant respects from US GAAP. These differences as they relate to Normandy cannot be quantified due to the limited disclosures provided in publicly available financial information. See Section 3.1, "Risk factors--Risks related to the offer--We have not verified the reliability of the Normandy information included in, or which may have been omitted from, this offer document" on page 27. The key differences between Australian GAAP and US GAAP are as follows: . EXPLORATION COSTS. US GAAP requires that all costs associated with ongoing exploration efforts be expensed until development of an ore-body commences or a bankable feasibility study on proven and probable reserves exists. Australian GAAP allows for the capitalization of exploration costs provided the rights to the exploration area are current and provided that at least one of the following conditions are met: . Such costs are expected to be recouped through successful development and exploitation or alternatively by sale of the area of interest, or . Exploration activities in the area of interest have not reached a stage at the balance sheet date which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. . REVENUE RECOGNITION. US GAAP requires that specific criteria be met including final delivery to the purchaser having occurred. Australian GAAP requires that revenue be recognized when control passes to the purchaser, which is determined by a combination of factors, one of which would include delivery. . INVENTORY. US GAAP requires inventory to be recorded at the lower of net realizable value or cost. Australian GAAP allows gold bullion in its final saleable form to be recorded at specific hedge contract amounts. . CAPITALIZED INTEREST. US GAAP requires interest to be capitalized for all assets in construction to the extent outstanding borrowings exist. Australian GAAP only allows interest on specific project related indebtedness to be capitalized. . DERIVATIVE INSTRUMENTS. US GAAP requires all derivatives to be recorded at fair value. Qualifying derivatives may qualify for special hedge accounting allowing for the deferral of recognition of the change in the effective portion of the derivative instrument. Australian GAAP does not require derivatives to be recorded at fair value and hedge accounting may be applied in specified circumstances. Disclosure of fair value is required. . GOODWILL. US GAAP does not allow for amortization of goodwill. Australian GAAP limits the amortization period to 20 years, subject to recoverability tests. 107 . MINORITY INTEREST. US GAAP requires minority interest to be a separate component of the balance sheet outside of equity. Australian GAAP requires minority interest to be classified as a component of shareholders equity. Additionally, US GAAP reports minority interest at book value while Australian GAAP measures minority interest at fair value on the date the entity becomes a subsidiary. . DIVIDENDS PAYABLE. US GAAP classifies dividends payable in equity. Australian GAAP presents dividends payable as a liability. . PENSIONS AND EMPLOYEE BENEFITS. US GAAP measures such amounts at nominal amounts. Australian GAAP measures the non-current portion at the present value of expected future cash outflows. . START-UP COSTS. US GAAP requires that all start-up costs be expensed as incurred. There are no provisions for capitalizing start up costs under Australian GAAP. In accordance with the 'matching' principle, start up costs may be deferred and amortized provided the start-up costs meet the definition of an asset. . DEFERRED TAXES. US GAAP provides for netting of deferred tax assets and liabilities arising in the same taxing jurisdiction within each current and non-current category. Under Australian GAAP, there is no provision for netting deferred tax assets and liabilities of different companies within a group in a consolidated set of accounts. Under US GAAP, deferred tax assets for temporary differences and carryforward losses are recognized, but reduced by a valuation allowance to the extent it is more likely than not that the asset will be realized. Under Australian GAAP, there is recognition of deferred tax assets on temporary differences if realization is beyond reasonable doubt, and there is recognition of deferred tax assets on carryforward losses if realization is virtually certain. 9.4 SELECTED FINANCIAL INFORMATION FOR NORMANDY The following table sets forth selected historical financial data of Normandy for each of the five years ended and as at June 30, 2001 and the three-month periods ended September 30, 2000 and 2001. The selected historical financial data for the five-year period ended June 30, 2001 has been extracted from, and should be read in conjunction with, Normandy's audited annual consolidated financial statements for the five-year period ended June 30, 2001, including the notes thereto, included in Normandy's annual shareholder reports prepared for those financial years. The selected historical financial data for the three months ended September 30, 2000 and 2001 has been extracted from, and should be read in conjunction with, Normandy's unaudited simplified financial statements for these periods, including the notes thereto, included in Normandy's reports on activities to shareholders for each of the three-month periods ended September 30, 2000 and 2001. Normandy's audited annual consolidated financial statements for each of the three years ended June 30, 2001, including the notes thereto, as extracted from Normandy's annual shareholder reports, as well as Normandy's unaudited simplified financial statements for the three months ended and as at September 30, 2001, including the notes thereto, as extracted from Normandy's report on activities to shareholders, have been reproduced in Annex B to this offer document. Under U.S. securities laws, pro forma financial information for Normandy would generally be required to be provided in this offer document. However, Normandy has declined to assist in gathering this information and has not provided Newmont access to Normandy's detailed accounting records, nor has Normandy assisted in preparing reconciliations to US GAAP. Normandy has also refused to permit or direct its auditors to provide information necessary for such US GAAP reconciliation, including an auditor's consent. Therefore, no such US GAAP reconciliation is provided, nor is any pro forma financial information provided in this offer document. See Section 3.1, "Risk factors--Risks related to the offer--We have not verified the reliability of the Normandy information included in, or which may have been omitted from, this offer document" on page 27. We note that Normandy's historical financial data is presented in this offer document in accordance with Australian GAAP, which differs in certain significant respects from US GAAP. See Section 9.3, "Information about Normandy--Presentation of Normandy accounting information--Key Differences between Australian GAAP and US GAAP" on page 107. These differences as they relate to Normandy cannot be quantified due to the limited disclosures provided in Normandy's publicly available financial information. 108 The selected historical financial data for the five years ended and as at June 30, 2001 were prepared in Australian dollars as prescribed by Australian law and in accordance with Australian Accounting Standards. Except where expressly stated otherwise, the financial information presented in this offer document relating to Normandy is expressed in Australian dollars. For information on the exchange rates between Australian dollars and U.S. dollars, and Canadian dollars and U.S. dollars, see section 15.8, "Additional Information--Selected exchange rate data" on page 163.
THREE MONTHS ENDED SEPTEMBER 30, YEARS ENDED JUNE 30, ------------ --------------------------------- 2001 2000 2001 2000 1999 1998 1997 ----- ---- ----- ----- ----- ----- ----- A$M A$M A$M A$M A$M A$M A$M CONSOLIDATED STATEMENT OF INCOME Sales revenue......................................... 430 * 1,544 1,324 1,356 1,484 1,334 Total depreciation and amortization................... (72) (62) (287) (141) (160) (191) (166) Profit/(loss) from ordinary activities(1)............. 52 39 (103) (285) 113 140 206 Income tax (expense) benefit relating to ordinary activities........................................... (12) (8) (20) 9 (32) (33) (61) Net profit/(loss) attributable to members of the parent entity........................................ 35 31 (155) (282) 104 119 124 OTHER FINANCIAL DATA Basic earnings/(loss) per share (in Australian cents per share)(2)........................................ * * (8.6) (16.2) 6.1 7.2 7.8 Dividends per share (in Australian cents per share)... -- -- 2.5 6.0 6.0 6.0 6.0 Total cash costs (A$/ounce)(3)........................ 310 298 300 304 335 321 336 CONSOLIDATED BALANCE SHEET DATA (AS AT END OF PERIOD) Current assets........................................ 870 800 672 838 570 595 Non-current assets.................................... 3,088 3,047 2,954 2,560 2,506 2,020 Total assets.......................................... 3,958 3,847 3,626 3,397 3,076 2,615 Current liabilities................................... 622 603 523 907 366 507 Non-current liabilities............................... 1,899 1,846 2,117 1,117 1,212 731 Total liabilities..................................... 2,521 2,449 2,640 2,024 1,578 1,238 Net assets............................................ 1,437 1,398 986 1,373 1,498 1,377 Stockholders equity................................... 1,437 1,398 986 1,373 1,498 1,377 SHARES IN ISSUE (IN MILLIONS)......................... 2,231 2,231 1,752 1,717 1,671 1,632
- -------- * This information has not been publicly disclosed by Normandy. (1) Prior to the year ended June 30, 2001, information disclosed as operating profit/(loss) before income tax. (2) Prior to the year ended June 30, 2001, information disclosed as basic earnings per share after abnormal items. (3) A consolidated group cash cost (A$/ounce) is not presented, only cash cost (A$/ounce) for gold operations is available. See Annex B for more detailed information on Normandy's historical financial information. 9.5 WHERE YOU CAN FIND MORE INFORMATION ON NORMANDY As a reporting issuer in the Province of Ontario, Normandy is required to file with the Ontario Securities Commission its periodic disclosure documents, such as its annual audited financial statements, unaudited interim financial statements, proxy materials and material change reports. These documents are available through the internet on the System for Electronic Document Analysis and Retrieval (SEDAR), which can be accessed at http://www.sedar.com. Ordinary shares of Normandy are listed on the ASX under the symbol "NDY" and Normandy ADSs are listed on the TSE under the symbol "NDY". You may consult reports and other information about Normandy that it files pursuant to the rules of the ASX and the TSE at the offices of the ASX, ASIC and the TSE. For selected excerpts from Normandy's publicly available documents, see Annex B. You may also find additional information on Normandy on its website at http://www.normandy.com.au. 109 10 INFORMATION ABOUT FRANCO-NEVADA 10.1 GENERAL DESCRIPTION OF FRANCO-NEVADA'S OPERATIONS ABOUT FRANCO-NEVADA Franco-Nevada was originally incorporated under the Canada Business Corporations Act on October 5, 1982. It amalgamated by plan of arrangement with Euro-Nevada Mining Corporation Limited effective September 20, 1999, and its incorporating documents are articles of arrangement dated September 20, 1999. The primary business of Franco-Nevada is the acquisition of: (1) direct interests in mineral properties and, when appropriate, developing those properties; (2) royalty interests in producing precious metals mines and precious metals properties in the development or advanced exploration stage; (3) direct interests in mineral properties with a view to exploring and selling, leasing or joint venturing the properties to established mine operators and retaining royalty interests; and (4) indirect interests in mineral deposits through strategic interests in companies that own interests in mineral deposits. Franco-Nevada has a portfolio of royalty interests covering producing and non-producing mineral properties located in the United States, Canada, Australia, South Africa, Indonesia and various Latin American countries. A detailed description of Franco-Nevada's royalty interests and investments has been included in section 7, "Information about New Newmont" on page 66. Franco-Nevada has a portfolio of oil and gas interests in Alberta, Saskatchewan, Manitoba and the Canadian Arctic and also has various direct and indirect interests in resource properties located in Nevada, Ontario, Saskatchewan, Central and South America, the Dominican Republic, Australia, Indonesia, and South Africa. Franco-Nevada currently has 25 employees in total: 14 in Canada, and 11 in the United States. RECENT TRANSACTIONS On September 20, 1999, Franco-Nevada and Euro-Nevada Mining Corporation Limited merged. The name of the amalgamated corporation is Franco-Nevada Mining Corporation Limited. The merger of Franco-Nevada and Euro-Nevada was accounted for as a pooling of interests. Euro-Nevada shareholders received 0.77 Franco-Nevada shares for each Euro-Nevada share. At the time of the merger, Franco-Nevada and Euro-Nevada were two of only four public companies in North America actively pursuing NSRs and NPIs in mineral properties. Franco-Nevada and Euro-Nevada shared four executive officers and three directors who collectively owned 9% and 10% of the common shares of the two companies, respectively. Management now owns 10% of Franco-Nevada. During fiscal year 2001, Franco-Nevada: (1) tendered its 9,576,173 Inco Limited Class VBN Shares to Inco in exchange for 4,309,277 warrants of Inco and cash proceeds of C$72 million per VBN share. Each warrant plus $30 is exchangeable for an Inco common share; and (2) sold its 2.5% interest in San Juan Basin Royalty Trust, an oil and gas royalty trust listed on the NYSE. Franco-Nevada held 2,000,000 units. 110 NORMANDY TRANSACTION On April 2, 2001, Franco-Nevada announced that it had entered into an agreement with Normandy. On May 30, 2001, the transaction pursuant to this agreement was completed. Under the terms of the agreement, Franco-Nevada transferred to Normandy 100% ownership of its Ken Snyder Mine and Midas exploration properties in Nevada and its Australian interests as well as subscribe for $48 million in Normandy shares. In return, Franco-Nevada received 446.1 million new ordinary shares of Normandy representing a 19.99% interest (currently 19.79%, calculated on a fully diluted basis) in Normandy, calculated on a fully diluted basis. Franco-Nevada also retained a minimum 5% net smelter return royalty on the Ken Snyder Mine and Midas exploration properties which escalates at gold prices over $300 per ounce to a maximum 10% net smelter return royalty at gold prices over US$400 per ounce. Both companies granted each other preferential rights on future asset transactions. STOCK EXCHANGES Franco-Nevada's common shares are listed on the TSE under the symbol "FN", its class A warrants are listed on the TSE under the symbol "FN.WT" and its class B warrants are listed on the CDNX under the symbol "YFN.WT.B". ADDRESS The registered and principal executive office of Franco-Nevada is at Suite 1900, 20 Eglinton Avenue West, Toronto, Ontario M4R 1 K8. 10.2 SELECTED FINANCIAL INFORMATION FOR FRANCO-NEVADA The table below shows selected historical financial information for Franco-Nevada as of and for the years ended March 31, 2001, 2000, 1999, 1998 and 1997 and has been prepared using the audited consolidated financial statements of Franco-Nevada. The information as of and for the six months ended September 30, 2001 and 2000 has been prepared using the unaudited consolidated financial statements of Franco-Nevada. This information is only summary, and you should read it in conjunction with Franco-Nevada's historical financial statements and related notes and Management's Discussion and Analysis contained in Annex C of this document.
SIX MONTHS SEPTEMBER 30 YEARS ENDED MARCH 31 ------------------- ----------------------------------------------- 2001 2000 2001 2000 1999 1998 1997 --------- --------- --------- --------- --------- --------- ------- CDN$, CDN GAAP INCOME STATEMENT Revenue.......................... 85,440 80,102 177,631 120,577 116,107 124,209 131,479 Income from continuing operations 55,115 44,186 79,872 63,995 63,454 72,628 77,839 Discontinued operations.......... 21,902 16,931 33,573 33,641 5,075 1,074 790 Net Income....................... 77,017 61,117 113,445 97,636 68,529 73,702 78,629 PER SHARE DATA Income from continuing operations 0.35 0.28 0.51 0.41 0.42 0.49 0.55 Discontinued operations.......... 0.14 0.11 0.21 0.21 0.03 0.01 0.01 Net Income....................... 0.49 0.39 0.72 0.62 0.45 0.50 0.56 Dividend per share............... -- -- 0.35 0.30 0.21 0.19 0.23 BALANCE SHEET DATA Cash and short term investments.. 864,053 730,099 939,011 705,714 707,507 766,004 636,819 Working capital.................. 932,359 829,992 941,193 739,489 720,467 782,833 637,624 Total assets..................... 1,607,126 1,514,516 1,547,750 1,420,891 1,389,525 1,146,256 932,625 Long term debt................... -- -- -- -- -- -- -- Net assets....................... 1,521,700 1,419,052 1,435,456 1,346,187 1,318,094 1,096,654 888,207 Minority interest................ -- -- -- -- -- -- -- Shareholders' equity............. 1,521,700 1,419,052 1,435,456 1,346,187 1,318,094 1,096,654 888,207 Common shares outstanding (000s). 158,920 158,631 158,631 158,631 158,357 152,293 145,781
See Annex C for more detailed information on Franco-Nevada's historical financial information. 111 10.3 WHERE YOU CAN FIND MORE INFORMATION ON FRANCO-NEVADA As a reporting issuer (or its equivalent) in each of the provinces of Canada, Franco-Nevada is required to file with the various securities commissions or similar authorities its periodic disclosure documents, such as its annual audited financial statements, unaudited interim financial statements, annual reports, annual information forms, proxy materials and material change reports. These documents are available through the internet on the System for Electronic Document Analysis and Retrieval (SEDAR), which can be accessed at http://www.sedar.com. Securities of Franco-Nevada are listed on the TSE and the CDNX. You may consult reports and other information about Franco-Nevada that it files pursuant to the rules of the TSE and CDNX at the offices of the TSE and the CDNX or you can access their websites at http://www.tse.com and http://www.cdnx.com. You may also find additional information on Franco-Nevada on its website at http://www.franco-nevada.com. 112 11 INTENTIONS 11.1 INTRODUCTION This section sets out our intentions concerning: (a) the continuation of the business of Normandy; (b) any major changes to be made to the business of Normandy, including any redeployment of the fixed assets of Normandy; and (c) the future employment of the present employees of Normandy. You should read this section in conjunction with section 7, "Information about New Newmont" on page 66. Our intentions are based on our review of publicly available information about Normandy and a review of selected non-public information about Normandy, which is referred to in section 9.1. Prior to implementing the intentions set out in this section, we will seek to undertake a thorough review of Normandy's operations and any other internal confidential information and consideration of any other relevant facts and circumstances to confirm our intentions. Accordingly, the statements set out in this section are statements of current intentions only and are based on limited information, which may vary as circumstances and further information require. 11.2 INTENTIONS IF COMPULSORY ACQUISITION IS ACHIEVED We have the following intentions if we become entitled to proceed to acquire compulsorily the remaining Normandy shares (including shares represented by Normandy ADSs) following completion of the offer: (a) CORPORATE MATTERS We intend to: (1) acquire compulsorily the remaining Normandy shares (including shares represented by Normandy ADSs) in accordance with the provisions of the Corporations Act; (2) seek to acquire compulsorily under the Corporations Act: (A) Normandy options which have not been exercised prior to the expiration of the offer, and (B) any ordinary shares of Normandy issued after the expiration of the offer as a result of the exercise of Normandy options; (3) procure that Normandy's shares are removed from the official list of the ASX and that Normandy applies to the Ontario Securities Commission to cease to be a reporting issuer in the Province of Ontario and to the TSE to delist the Normandy ADSs from that exchange; (4) replace some or all of the members of the board of directors of Normandy. Our representatives have not yet been identified and their identity will depend on the circumstances at the relevant time; and (5) reconstitute our board as outlined in section 7.1. (b) INTEGRATION OF NEWMONT AND NORMANDY Newmont and Normandy conduct exploration programs in many of the same regions around the world. We intend to consolidate these programs and prioritize exploration projects and expenditures in an optimized and efficient manner. We intend that exploration activities within Australia will be conducted on an ongoing basis, although the level of activity in any year will vary, depending on, among other things, the prevailing gold price and prior results. We expect to realize certain synergies with respect to this consolidation effort that may include reduction or redeployment of existing employees as well as the closure of certain exploration offices. 113 We do not have significant operations in Australia and intend to maintain a regional office in Australia as a management platform for our Australasian properties. We intend to maximize both companies' managerial and technical expertise within New Newmont's worldwide operations and to realize cost savings from the elimination of selected, redundant administrative functions. We also intend to realize cost savings from the elimination of selected, redundant administrative and mine operation functions at Normandy's Midas mine, which is located near Newmont's mines in Nevada. In addition, we expect to realize synergies from the application of Newmont's global procurement systems to Normandy's operations. (c) NON-CORE ASSETS (1) GOLD While we have no immediate intentions of making any major changes to Normandy's business, we will review Normandy's gold assets over time and make assessments regarding whether certain of these assets continue to fit into the longer-term strategy of the combined company. (2) NON-GOLD In relation to Normandy's non-gold assets, our intentions are: (A) GOLDEN GROVE. To continue to operate and maintain capital support for Golden Grove until zinc and copper commodity prices materially increase, when consideration will be given to whether a disposal of the assets can be achieved on appropriate terms; (B) AUSTRALIAN MAGNESIUM CORPORATION. To honor all of Normandy's obligations and commitments known to us at the date of announcement of this offer (being those referred to in the condition in section 5.10(a)(10) above), including those regarding the development of the Stanwell Magnesium Project. As a gold company, Newmont might, in the future, consider a possible exit from AMC, but we would not intend to do so in a manner that would compromise the benefit AMC enjoys as a result of Normandy's obligations and commitments. (C) OTHER ASSETS. To dispose of other non-core, non-gold assets of Normandy, provided appropriate prices can be obtained and appropriate contractual terms can be negotiated. 11.3 INTENTIONS UPON GAINING CONTROL BUT LESS THAN 90% OF NORMANDY If we gain control of Normandy but are not entitled to acquire compulsorily the outstanding ordinary shares of Normandy (including shares represented by Normandy ADSs), then we currently intend to: (a) subject to the Corporations Act and the constitution of Normandy, reconstitute the board of directors of Normandy to reflect our majority ownership interest in Normandy. Replacement board members have not yet been identified and their number and identity will depend on the circumstances at the relevant time; (b) subject to the ASX Listing Rules and the TSE Listing Rules, request that the board of directors of Normandy review whether ordinary shares of Normandy should continue to be listed on the ASX and whether the Normandy ADSs should continue to be listed on the TSE; and (c) to the extent possible, implement the intentions outlined above, which are consistent with Newmont gaining control of Normandy. We would only make decisions on these courses of action following receipt of legal, taxation and financial advice and our intentions must be read as subject to the legal obligation of the Normandy board of directors to comply with all legal and regulatory requirements and their fiduciary and statutory duties. 114 11.4 EFFECTS OF THE OFFER ON THE MARKET FOR ORDINARY SHARES OF NORMANDY AND NORMANDY ADSS After the completion of the offer, in addition to the possible effects outlined in sections 11.2 and 11.3, the number of Normandy shareholders or Normandy ADS holders and the number of ordinary shares of Normandy or Normandy ADSs remaining in public circulation may be reduced to a level that there will be a less active trading market for ordinary shares of Normandy or Normandy ADSs. This may adversely affect the market price of remaining ordinary shares of Normandy or Normandy ADSs. 11.5 BUSINESS, ASSETS AND EMPLOYEES Other than as set out in this section 11, it is our present intention: (a) to continue the business of Normandy; (b) not to make any major changes to the business of Normandy and not to re-deploy any of the fixed assets of Normandy; and (c) to maintain the employment of substantially all of Normandy's existing employees. 115 15 ADDITIONAL INFORMATION 15.1 SECURITY STRUCTURE OF NORMANDY To our knowledge, as at November 30, 2001, Normandy has on issue the following securities: . 2,232,768,401 ordinary shares of Normandy; and . 21,544,057 Normandy options. Franco-Nevada and one of its subsidiaries, which together own 446,100,000 ordinary shares of Normandy, representing 19.79% of the ordinary shares of Normandy, calculated on a fully-diluted basis, have granted to us the right, exercisable at our discretion, to acquire their block of ordinary shares of Normandy at the exchange ratio of our bid for Normandy. Consequently, immediately before the lodgment of this offer document with ASIC on December 20, 2001, we had a relevant interest in 446,100,000 ordinary shares of Normandy. Details of that relevant interest are set out in section 14.2. Delta Acquisition LLC is an associate of Newmont, and thus has voting power in the 446,100,000 Normandy shares. Subject thereto, we did not have a relevant interest in any other ordinary shares of Normandy or Normandy options at that time. Our voting power in Normandy is 19.99% (represented by the 446,100,000 ordinary shares of Normandy referred to above) as at the date of this offer document and immediately before the offer will be sent to Normandy shareholders. 15.2 NORMANDY OPTIONS As at November 30, 2001, there were 21,544,057 Normandy options, convertible into 21,597,982 shares, all of which were issued pursuant to the Normandy Executive Share Incentive Plan or the Employee Share Bonus Plan. The offer extends to all ordinary shares of Normandy which are issued prior to the end of the offer period as a result of Normandy options being exercised. If at the end of the offer period there are Normandy options which have not been exercised, then, subject to us being permitted to do so under the Corporations Act, we intend to seek to acquire compulsorily, under the provisions of the Corporations Act, any Normandy options which have not been exercised. 15.3 NORMANDY SECURITIES COVERED BY BID Offers will be made under the Australian offer document to all holders of Normandy shares other than those who at the offer date have registered addresses recorded in the Normandy register of members in either the United States or Canada. Offers will also extend to Normandy shares which are issued during the period commencing on the offer date and ending at the end of the offer period as a result of the exercise of Normandy options in accordance with their terms. Offers will be made under the United States offer document to holders of Normandy shares who, at the offer date, have registered addresses recorded in Normandy's register of members in either the United States or Canada. Details of the structure of the offers are provided in section 5. 15.4 SOURCES OF CONSIDERATION (a) Cash Consideration The consideration for the acquisition of the Normandy shares to which the offers relate will be satisfied in part by the payment of cash. 159 Assuming that all Normandy options are exercised prior to the commencement of or during the offer period, and acceptances are received in respect of such Normandy shares, the total amount of cash that we may become obliged to pay to offerees under the offers is approximately A$1,127,440,000. The cash consideration for the offers referred to above and funds to satisfy our other obligations relating to the offers will be provided under a loan facility which Delta Acquisition LLC has entered into with Newmont (the "Delta Facility"). Delta Acquisition LLC is an indirect wholly owned subsidiary of Newmont. The terms of the Delta Facility are set out in a letter of offer from Newmont dated December 18, 2001 (varied on January 2, 2002) which has been accepted by Delta Acquisition LLC. The terms of the Delta Facility are as follows: . the amount of the Delta Facility is A$1,127,440,000; . the funds provided under the Delta Facility are for the purpose of acquiring the Normandy shares under the offer and paying transaction costs associated with the offer; . the basic terms (such as events of default and interest payable) of the Delta Facility are identical to the terms of the Revolving Credit Facilities described below; . the Delta Facility is unsecured; and . there are no conditions precedent which need to be satisfied by Delta Acquisition LLC to draw-down under the Delta Facility. The funds which are to be advanced by Newmont under the Delta Facility will be provided under banking facilities (the "Revolving Credit Facilities") which Newmont has entered into with the Chase Manhattan Bank, as agent. The terms of the Revolving Credit Facilities are set out in two agreements, dated as of October 10, 2001. The terms of the Revolving Credit Facilities are as follows: . The amount of the Revolving Credit Facility is US$600,000,000 (US$400,000,000 under the 5 year revolving credit facility and US$200,000,000 under a 364 Day Facility). . The funds provided under the Revolving Credit Facilities are for general corporate purposes. . Interest rates under the facility are variable, can be fixed for up to six months at Newmont's option and are subject to adjustment if changes in Newmont's long term credit rating occur. . The Revolving Credit Facilities are unsecured. Under the terms of the Revolving Credit Facilities, there is a negative pledge of the assets of Newmont as well as two financial covenants: Net debt/capitalization may not exceed 62.5% and the ratio of Net debt/EBITDA may not exceed 4.0 to 1.0. There are also limitations on Newmont undergoing fundamental business changes and incurring liens. . There are no conditions precedent that need to be satisfied by Newmont for it to draw-down under the Revolving Credit Facilities. . The events of default are customary events of default for facilities of this nature, including failure to make repayments of principal and interest, failure to comply with covenants and insolvency proceedings. . The representations and warranties to be given on draw-down are the usual form of representations and warranties, such as valid incorporation and the absence of default. . The Revolving Credit Facilities are undrawn. (b) Shares We have agreed to issue or procure the issue of sufficient shares of our common stock to satisfy the consideration payable to Normandy shareholders. 160 EX-20 7 feb25ex202.txt EXHIBIT 20.2 EXHIBIT 20.2 QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS Q: WHAT WILL HAPPEN IN THE TRANSACTIONS? A: In the proposed transactions, we intend to acquire both Normandy and Franco-Nevada to create the world's largest gold producer. It is also possible that we will acquire less than all of the shares of Normandy, either together with or separately from an acquisition of Franco-Nevada. We refer to the combined company that will result from the transactions as "New Newmont." To acquire Normandy, we are making an off-market bid for all of the outstanding ordinary shares in the capital of Normandy in exchange for 3.85 shares of Newmont common stock plus A$50.00 for every 100 Normandy shares. To acquire Franco-Nevada, we have entered into an arrangement agreement with Franco-Nevada, pursuant to which we intend to acquire all of the shares of Franco-Nevada for 0.8 of a share of Newmont common stock (or exchangeable shares, exchangeable for our common stock) for each Franco-Nevada common share. OUR BID FOR NORMANDY IS NOT CONDITIONED ON COMPLETION OF THE FRANCO-NEVADA TRANSACTION. However, completion of the Franco-Nevada transaction is conditioned on, among other things, Newmont and its associates achieving a relevant interest in at least 50.1% of the ordinary shares in the capital of Normandy, calculated on a fully diluted basis. Q: WHAT IS THE "RESTRUCTURING" OF NEWMONT THAT IS BEING PROPOSED? A: In connection with the transactions, Newmont intends to merge with its indirect, wholly owned subsidiary, Delta Acquisitionco Corp. ("Acquisitionco"), with Newmont continuing as the surviving corporation in the merger. Shares of Newmont common stock will be exchanged for shares of common stock of Delta Holdco Corp. ("Holdco"), a direct, wholly owned subsidiary of Newmont. In connection with the merger, Holdco would be renamed "Newmont Mining Corporation." If the merger is completed, stockholders of Normandy and Franco-Nevada also would receive shares of the new Newmont Mining Corporation in the transactions described above. THIS MERGER IS NOT A PREREQUISITE TO THE TRANSACTIONS. It is designed to facilitate the acquisitions of Normandy and Franco-Nevada and to create a flexible corporate structure for the combined group. It is possible that we may complete the acquisitions of Normandy and Franco-Nevada without completing the merger. HOWEVER, FAILURE TO APPROVE THE MERGER COULD LIMIT OUR ABILITY TO ACHIEVE CERTAIN OF THE BENEFITS OF THE TRANSACTIONS. See "The Transactions--Overview" on page 31. Q: WHY DOES NEWMONT WANT TO ACQUIRE CONTROL OF NORMANDY AND FRANCO-NEVADA? A: We believe that the acquisition of Normandy and Franco-Nevada will provide us with a number of benefits and allow us to pursue our strategy to deliver superior stockholder value, including: . potential cost savings and synergies; . exploration and development; . scale and balanced political risk profile; . financial strength and flexibility; . leverage to gold price; . superior management; . growth; and . market liquidity. See "The Transactions--Reasons for the Transactions" on page 40. Q: WOULD THE FAILURE TO ACQUIRE FRANCO-NEVADA PREVENT NEWMONT FROM ACHIEVING THESE BENEFITS? A: If we do not acquire Franco-Nevada the expected benefits of the transactions and their magnitude will be reduced; however, there would still be significant benefits realized from a combination of Newmont and Normandy. See "The Transactions--Reasons for the Transactions" on page 40. 1 Q: WHAT WILL NEW NEWMONT LOOK LIKE FOLLOWING THE TRANSACTIONS? A: If the transactions are consummated in their entirety, New Newmont will become the world's leading gold company in terms of gold reserves, gold production and leverage to gold and will derive more than 70% of its production from politically and economically stable locations. The combination of Newmont, Normandy and Franco-Nevada will create one of the financially strongest companies in the gold industry. The transactions will strengthen our balance sheet and decrease our net-debt to net-book capitalization (after transaction costs) from 41% to an estimated 24%. Although we currently expect to consummate both transactions, there is a possibility that we will acquire Normandy while being unable to acquire Franco-Nevada. If we only acquire Normandy, New Newmont would still be the world's leading gold company in terms of reserves, gold production and leverage to gold and would still derive approximately 70% of its production from politically stable locations. However, our net-debt to net-book capitalization (after transaction costs) after the acquisition of Normandy only would be an estimated 40%. Q: WHEN DO YOU EXPECT TO COMPLETE THE TRANSACTIONS? A: We expect to complete the transactions as quickly as possible once all the conditions to the transactions, including obtaining the necessary stockholder approvals, are fulfilled. Fulfilling some of these conditions, such as receiving certain governmental clearances or approvals, is not entirely within our control. We currently expect to complete the transactions before the end of February 2002. Q: AFTER THE RESTRUCTURING AND THE TRANSACTIONS, WHAT WILL THE COMPANY BE CALLED AND WHERE WILL IT BE HEADQUARTERED? A: Holdco will change its name to "Newmont Mining Corporation" after the restructuring. Our corporate headquarters will remain in Denver, Colorado. Newmont, which at that time will be a wholly owned subsidiary of Holdco, will change its name to "Newmont Gold Company." See "The Transactions--Overview" on page 31. Q: WHAT WILL HAPPEN TO SHARES OF NEWMONT COMMON STOCK IN THE MERGER? A: Holders of Newmont common stock will receive one share of Holdco common stock for each share of Newmont common stock that they own. Q: WHAT WILL HAPPEN TO SHARES OF $3.25 CONVERTIBLE PREFERRED STOCK IN THE MERGER? A: If we complete the merger, pursuant to the merger agreement, we have the option either to leave outstanding our $3.25 convertible preferred stock or exchange the outstanding shares of our $3.25 convertible preferred stock for shares of Holdco $3.25 convertible preferred stock. In either case, holders of convertible preferred stock after the merger will be entitled to vote together with the holders of common stock on all matters relating to Newmont (if we choose to leave outstanding our $3.25 convertible preferred stock) or Holdco (if we effect the exchange for Holdco convertible preferred stock). In general, absent non-payment of dividends, our $3.25 convertible preferred stock does not currently have voting rights and will not obtain further voting rights if we do not complete the merger. Q: WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO NEWMONT STOCKHOLDERS? A: We expect that holders of Newmont common stock will not be required to pay any U.S. federal income tax as a result of the merger. Holders should consult their own tax advisors regarding the tax consequences to them of the merger. Q: WHEN IS THE SPECIAL MEETING OF STOCKHOLDERS? A: The special meeting will take place on February 13, 2002. The location of the special meeting is specified on the cover page of this document. 2 NORMANDY MINING LIMITED 100 Hutt Street Adelaide, 5000, South Australia Australia +61-8-8303-1700 Normandy is a company incorporated in Australia whose ordinary shares are listed on the ASX and whose ADSs are listed on the Toronto Stock Exchange (TSE) under the symbol "NDY". Normandy is Australia's largest gold producer, producing over two million ounces of gold each year. Normandy has extensive production and exploration interests, with operations in Australia, the United States, New Zealand, Turkey, Chile, Brazil, Canada, Ghana and Uganda. Normandy is also a producer of zinc concentrates (from its Golden Grove operations), cobalt (from Kasese Cobalt Company Limited) and magnesium (from Australian Magnesium Corporation Limited). FRANCO-NEVADA MINING CORPORATION LIMITED 20 Eglington Avenue West, Suite 1900 Toronto, Ontario, Canada M4R 1K8 (416) 480-6480 Franco-Nevada is a company incorporated under the laws of Canada. Its common shares are listed on the TSE under the symbol "FN", its class A warrants are listed on the TSE under the symbol "FN.WT" and its class B warrants are listed on the Canadian Venture Exchange (CDNX) under the symbol "YFN.WT.B". Franco-Nevada is the leading precious minerals royalty company and, by market capitalization, ranks among the largest gold companies in the world. Franco-Nevada continues to deliver superior returns to investors through its high-quality, high-margin assets in gold, platinum group metals, diamonds and oil and gas located in politically secure countries. Franco-Nevada, which is debt-free, has a very strong track record of successful investments. Franco-Nevada's key assets include its Goldstrike gold royalty in Nevada, its Stillwater platinum group metals royalty in Montana and its oil and gas royalties in western Canada. Franco-Nevada is also Normandy's largest shareholder, holding 446.1 million Normandy shares, which represents a 19.79% interest in Normandy, calculated on a fully diluted basis. THE SPECIAL MEETING (PAGE 27) The special meeting of stockholders will be held on Wednesday, February 13, 2002, at 8:00 a.m., local time, at the Brown Palace Hotel, 321 17th Street, Denver, Colorado. At the special meeting, you will be asked to: . adopt the merger agreement; . approve an amendment to our restated certificate of incorporation to increase the number of authorized shares of Newmont common stock from 250 million shares to 750 million shares in the event the restructuring contemplated by the merger agreement is not completed; . approve the issuance of Holdco common stock, or, in the event the restructuring contemplated by the merger agreement is not completed, Newmont common stock, to be issued to the stockholders of Normandy and Franco-Nevada pursuant to our proposed acquisitions of Normandy and Franco-Nevada; and . adjourn the special meeting, if necessary, to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the above proposals. 7 RECORD DATE; VOTE REQUIRED (PAGES 27 AND 28) You can vote at the special meeting if you owned Newmont common stock at the close of business on January 4, 2002. On that date, the record date, there were 196,165,919 shares of Newmont common stock outstanding and entitled to vote. You can cast one vote for each share of Newmont common stock you then owned. Adoption of the merger agreement and approval of the amendment to our restated certificate of incorporation requires the affirmative vote of the holders of the majority of shares of Newmont common stock outstanding as of the record date. Approval of the share issuance requires the approval of the holders of a majority of the votes cast on the proposal, provided that at least a majority of the shares of Newmont common stock are voted at the special meeting. As of the close of business on the record date, Newmont directors and executive officers beneficially owned approximately 2% of the outstanding shares of Newmont common stock. These individuals have indicated that they intend to vote in favor of our proposals. THE TRANSACTIONS (PAGE 31) THE MERGER AGREEMENT IS ATTACHED AS APPENDIX A TO THIS DOCUMENT. THE ARRANGEMENT AGREEMENT WITH FRANCO-NEVADA IS ATTACHED AS APPENDIX B TO THIS DOCUMENT. THE DEEDS OF UNDERTAKING WITH NORMANDY ARE ATTACHED AS APPENDIX C TO THIS DOCUMENT. PLEASE READ THESE DOCUMENTS CAREFULLY, AS THEY ARE THE LEGAL DOCUMENTS THAT GOVERN THE TRANSACTIONS. In the transactions, we intend to acquire both Normandy and Franco-Nevada to create the world's largest gold producer. We refer to the combined company resulting from one or both of these acquisitions as "New Newmont." To acquire Normandy, we are making an off-market bid for all the Normandy shares held by persons other than Franco-Nevada and its subsidiaries. To acquire Franco-Nevada, we have entered into the arrangement agreement, pursuant to which holders of Franco-Nevada common shares will receive 0.8 of a share of Newmont common stock (or exchangeable shares, exchangeable for Newmont common stock) for each of their Franco-Nevada common shares. Our bid for Normandy is not conditioned on completion of the Franco-Nevada transaction. However, the completion of the Franco-Nevada transaction is conditioned on us and our associates achieving a relevant interest in at least 50.1% of the Normandy shares, calculated on a fully diluted basis. To complete the transactions, our stockholders must approve the issuance of the shares of Holdco common stock or, in the event the merger is not completed, shares of Newmont common stock to be issued to Franco-Nevada stockholders pursuant to the arrangement agreement and to holders of Normandy shares pursuant to our bid for Normandy. In addition, if the common stock to be issued is Newmont common stock, our stockholders must approve an amendment to our restated certificate of incorporation to increase the number of authorized shares of Newmont common stock to be issued in connection with the transactions. THE MERGER (PAGE 52) GENERAL: THE RESTRUCTURING In connection with the transactions, we propose a merger with Acquisitionco, an indirect, wholly owned subsidiary created for the purpose of effecting the merger. After the merger, we will survive as a wholly owned subsidiary of Holdco, which will become the holding company for the Newmont group and will directly own all the common stock of Newmont; Newmont will be renamed ''Newmont Gold Company.'' Holdco will be renamed "Newmont Mining Corporation," and you will become stockholders of the new Newmont Mining Corporation. 8 CONVERSION OF NEWMONT STOCK If we complete the merger, each share of Newmont common stock will be converted, without any action on your part, into one share of Holdco common stock. Pursuant to the merger agreement, we have the option either to leave outstanding the shares of our $3.25 convertible preferred stock or to exchange the outstanding shares of our $3.25 convertible preferred stock for shares of Holdco $3.25 convertible preferred stock having the same preferences and rights with respect to Holdco. In either case, the holders of convertible preferred stock will be entitled to vote together with the holders of common stock on all matters relating to Newmont (if we choose to leave outstanding our convertible preferred stock) or Holdco (if we effect the exchange for Holdco convertible preferred stock). In either case, the aggregate voting power of the Holdco convertible preferred stock, as a class, or the Newmont convertible preferred stock, as a class, will be commensurate with the proportionate economic interest in Newmont of holders of Newmont convertible preferred stock, as a class, immediately prior to the completion of the merger. In general, absent non-payment of dividends, our $3.25 convertible preferred stock does not currently have voting rights and will not obtain further voting rights if we do not complete the merger. MANAGEMENT AND OPERATIONS AFTER THE TRANSACTIONS (PAGE 49) Upon completion of the transactions and the merger, Wayne W. Murdy, our current Chairman, President and Chief Executive Officer, will serve as Chairman and Chief Executive Officer of New Newmont. Pierre Lassonde, currently President and Co-Chief Executive Officer of Franco-Nevada, will serve as President of New Newmont. The New Newmont board of directors will consist of 17 members, including the current 12 directors of Newmont, Seymour Schulich and Pierre Lassonde, the co-chief executive officers of Franco-Nevada, one additional nominee from Franco-Nevada and two nominees from Normandy. Robert J. Champion de Crespigny, currently Chairman and Chief Executive Officer of Normandy, will be invited to fill one of the Normandy positions. If the Normandy transaction is completed but the Franco-Nevada transaction is not, New Newmont's board of directors will consist of 14 members, including the current 12 directors of Newmont and two nominees from Normandy. Mr. Champion de Crespigny will be invited to fill one of the Normandy positions. Mr. Murdy will serve as Chairman, President and Chief Executive Officer of New Newmont. OUR RECOMMENDATION TO STOCKHOLDERS (PAGE 45) Your board of directors has determined that the merger agreement, the proposed amendment to Newmont's restated certificate of incorporation, the issuance of shares and the proposed transactions with Normandy and Franco-Nevada are fair to and in the best interests of Newmont and its stockholders and has declared them advisable. Your board has approved the merger agreement, the proposed amendment to our restated certificate of incorporation and the issuance of the shares necessary to complete the transactions. YOUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT, FOR THE AMENDMENT TO NEWMONT'S RESTATED CERTIFICATE OF INCORPORATION, FOR THE ISSUANCE OF SHARES OF HOLDCO OR NEWMONT COMMON STOCK AND FOR THE ADJOURNMENT OF THE MEETING, IF NECESSARY, TO PERMIT THE SOLICITATION OF FURTHER VOTES IN FAVOR OF THESE PROPOSALS. TERMINATION (PAGE 52) The merger agreement may be terminated before the effective time of the merger, notwithstanding the adoption of the merger agreement by our stockholders, for any reason by any of the parties to the merger agreement. 9 AUSTRALIAN FOREIGN ACQUISITIONS AND TAKEOVERS ACT. Under the Foreign Acquisitions and Takeovers Act 1975 (Cth) of Australia, we must notify the Foreign Investment Review Board (or "FIRB"), which acts on behalf of the Treasurer of Australia, before we acquire more than 15% of Normandy. The Treasurer may prohibit the acquisition, if he considers that it would be contrary to the national interest. The Treasurer must decide within 30 days whether he has any objection to the acquisition, or extend the time for making a decision by up to a further 90 days. The notification was lodged with FIRB on December 7, 2001; hence, the initial period for a decision was due to expire on January 6, 2002. On January 7, 2002 FIRB made an interim order in relation to our proposal. Although the interim order allows for a further period of 90 days for FIRB to examine our proposal, FIRB has stated that it has all the information which it requires to consider our proposal and anticipates that a recommendation to the Treasurer will be made much sooner. ADDITIONAL ANTITRUST APPROVALS. We and Normandy conduct operations in a number of other jurisdictions where regulatory filings or approvals may be required in connection with the offer. We have made or will make antitrust filings with the relevant authorities in Brazil and anticipate making appropriate antitrust filings in Germany. Notification has been made with the applicable Brazilian regulatory agency, and as a result, no waiting periods or approvals are required prior to completion of the offer. We are currently in the process of reviewing whether any other filings will be required or advisable in other jurisdictions, and currently intend to make the appropriate regulatory filings and applications if it is determined that such filings are required or advisable. INTERESTS OF CERTAIN PERSONS IN THE TRANSACTIONS INTERESTS OF NEWMONT DIRECTORS AND EXECUTIVE OFFICERS Some of our executives and directors have interests in the transactions that are or may be considered different from or in addition to the interests of our stockholders generally. Our board was aware of these interests when it approved the merger agreement and the merger. We summarize below the material interests of our executive officers and directors. At the effective time of the merger, each option with respect to a number of shares of Newmont common stock held by an executive officer or director will be converted into an option with respect to the same number of shares of Holdco common stock, subject to the terms of the plan and agreement under which the option was granted. As of January 4, 2002, our executive officers and directors held options, exercisable within 60 days, to purchase 3,207,528 shares of Newmont common stock. The terms of these options will not change as a result of the merger or the transactions. INTERESTS OF CERTAIN NORMANDY DIRECTORS AND EXECUTIVE OFFICERS If the acquisition of Normandy is completed, Robert J. Champion de Crespigny will be invited to join New Newmont's board of directors. If he accepts the position, he will be entitled to the fees and benefits to which directors of New Newmont will be entitled. In connection with Mr. Champion de Crespigny's proposed appointment to the board of New Newmont, it has been proposed that Mr. Champion de Crespigny agree to a voluntary escrow of Newmont CDIs which are issued to him under our offer for Normandy shares for a maximum period of two years from the issue date. See "Other Matters Relating to the Transactions--Champion de Crespigny Escrow Agreement." INTERESTS OF FRANCO-NEVADA DIRECTORS AND EXECUTIVE OFFICERS Certain officers and directors of Franco-Nevada have interests in the transactions that are different from those of Franco-Nevada shareholders generally. Seymour Schulich, Pierre Lassonde and seven other executives (collectively, the "executives") have employment agreements which have a term of five years and are automatically renewed annually. Franco-Nevada 48 has the right by notice to the executive to terminate each executive's agreement at any time after the fifth anniversary of each agreement. Franco-Nevada also has the right to replace each agreement after the 14th month following a change of control provided the benefits of the new agreement are equal to or better than those in the agreement. On termination of the executive after a change of control and before the third anniversary of a change of control, Franco-Nevada must pay the executive the accrued amount of the executive's latest annual salary plus the last bonus to the date of termination as well as a termination payment (unless the executive is terminated for cause). The termination payment for both Seymour Schulich and Pierre Lassonde is US$750,000, and for the other executives ranges from C$100,000 to C$1,000,000. Under the agreements and Franco-Nevada's stock option plan, following a change of control all stock options held by the executives (other than Mr. Schulich) prior to a change of control become fully vested and must be exercised prior to the second anniversary of a change of control. Seymour Schulich does not hold any stock options. If the acquisition of Franco-Nevada is completed, Seymour Schulich and Pierre Lassonde will become directors of New Newmont and will be entitled to the fees and benefits to which directors of New Newmont will be entitled. If the acquisition is completed, Pierre Lassonde will become the President of New Newmont, Seymour Schulich will become Chairman of the merchant banking subsidiary of New Newmont and other executive officers of Franco-Nevada may become executive officers of New Newmont or the merchant banking subsidiary of New Newmont. As of this date, the terms of Mr. Lassonde's employment by New Newmont and the terms of Mr. Schulich's employment by the merchant banking subsidiary of New Newmont have not been determined. See "Other Matters Relating to the Transactions--Schulich and Lassonde Lock-Up and Escrow Agreements." The directors and officers of Franco-Nevada do not own any shares of Newmont common stock or any Normandy shares. MANAGEMENT AND OPERATIONS AFTER THE TRANSACTIONS New Newmont's Board of Directors will initially consist of 17 members, including the current 12 directors of Newmont, the two Co-Chief Executive Officers of Franco-Nevada (Messrs. Seymour Schulich and Pierre Lassonde), one additional nominee from the board of Franco-Nevada, and two nominees from the board of Normandy. Mr. Champion de Crespigny will be invited to fill one of the Normandy positions. Wayne W. Murdy will serve as Chairman and Chief Executive Officer of New Newmont and Pierre Lassonde will serve as its President. If the Normandy transaction is completed but the Franco-Nevada transaction is not, New Newmont's board of directors will consist of 14 members, including the current 12 directors of Newmont and two nominees from Normandy. Mr. Champion de Crespigny will be invited to fill one of the Normandy positions. Mr. Murdy will serve as Chairman, President and Chief Executive Officer of New Newmont. ACCOUNTING TREATMENT Under US GAAP, we will account for the acquisition of Normandy and Franco-Nevada using the purchase method of accounting. LEGAL PROCEEDINGS AngloGold Limited has made an application to the Takeover Panel in Australia for certain orders in relation to our proposed bid for Normandy, on the basis that we may give Franco-Nevada and its shareholders benefits that are not offered to other Normandy shareholders, arising out of the agreements governing the transactions. On December 12, 2001, the Takeover Panel announced that it had declined AngloGold's application for a declaration of unacceptable circumstance in relation to our bid for Normandy. 49 THE ACQUISITION OF NORMANDY DELTA ACQUISITION LLC, A DELAWARE LIMITED LIABILITY COMPANY AND AN INDIRECT, WHOLLY OWNED SUBSIDIARY OF NEWMONT, IS MAKING THE BID DESCRIBED IN THIS SECTION. THEREFORE, UNLESS THE CONTEXT REQUIRES OTHERWISE, REFERENCES IN THIS SECTION "THE ACQUISITION OF NORMANDY" TO "NEWMONT" (INCLUDING REFERENCES TO WORDS SUCH AS "WE," "US" AND "OUR") AS THE ENTITY MAKING THE BID ARE REFERENCES TO DELTA ACQUISITION LLC. THE OFFER FOR NORMANDY SHARES To acquire Normandy, we are making an off-market bid for the ordinary shares in the capital of Normandy. The consideration offered is 3.85 shares of Newmont common stock for every 100 Normandy shares. In addition, we will pay A$0.50 for each ordinary share of Normandy, or the U.S. dollar equivalent of that amount for holders outside Australia. Normandy shareholders who are located in the United States or are residents in Canada will receive their share consideration in the form of Newmont common stock. Normandy shareholders who are located outside the United States and are not residents in Canada (with certain exceptions) will receive CDIs, which will trade on the ASX. We anticipate that ten Newmont CDIs will represent one share of Newmont common stock. Holders of Newmont CDIs will participate fully in all dividends, other distributions and entitlements declared by us in respect of fully paid shares of Newmont common stock. OFFER PERIOD Unless the offer period is extended or the offer is withdrawn, the offer will remain open for acceptance by holders of Normandy shares during the period commencing on the date of the offer and ending at 7:00 p.m., Sydney time, 3:00 a.m., New York City time, on February 15, 2002. Subject to applicable law, we may extend the offer period. In addition, if, within the last seven days of the offer period: the offer is varied (I.E., amended) to increase the consideration offered, or our voting power in Normandy increases to more than 50%, then, in accordance with applicable laws, the offer period will be mandatorily extended so that it ends 14 days after that event. In addition, if the offer period is not extended under the terms described above, in accordance with U.S. federal securities laws, we will extend the offer period if we vary the offer to decrease the consideration offered, within 10 business days of the then scheduled expiration of the offer period, so that the offer period will end 10 business days after the publication of this event. However, in accordance with applicable laws, we will not decrease the consideration offered. If the offer period is extended, we must give Normandy and every Normandy shareholder written notice of the extension, so long as the extension is not an extension of the offer period subsequent to the offer period being declared unconditional in all respects, in which case we will only give notice to Normandy shareholders who have not previously accepted the offer. CONDITIONS OF OUR OFFER The offer is subject to the satisfaction or waiver by us of the following conditions: . AUSTRALIAN FOREIGN INVESTMENT REVIEW BOARD. The Treasurer of the Commonwealth of Australia advises us in writing, before the expiration date of the offer that there is no objection under Australia's foreign investment policy or under the Foreign Acquisitions and Takeovers Act 1975 (Cth) of Australia to our acquisition of Normandy shares if that acquisition is not otherwise in breach of that legislation or the Treasurer ceases to be entitled to make an order under Part II of that legislation regarding our acquisition of such Normandy shares; 54 . MINIMUM ACCEPTANCE CONDITION. Before the end of the offer period, we and our associates have relevant interests in at least 50.1% of the Normandy shares, calculated on a fully diluted basis; . NEWMONT STOCKHOLDER APPROVAL. Before the end of the offer period, our stockholders shall have taken all actions necessary to approve the issuance of the shares of Newmont common stock under the offer; . NO PRESCRIBED OCCURRENCES. None of the following prescribed occurrences happen after November 14, 2001 and before the expiration of the offer: -- Normandy converting all or any of its shares into a larger or smaller number of shares under section 254H of the Corporations Act 2001 (Cth); -- 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 or executive share incentive plan or the issue of shares by Normandy NFM Limited, a subsidiary of Normandy, as consideration for the takeover bid for Otter Gold Mines Limited) 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 of 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; . NO 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 the ASX or ASIC since January 1, 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; 55 . NO PUBLIC AUTHORITY INTERFERENCE. During the period from November 14, 2001 to the expiration of the offer: -- there is not in effect any preliminary or final decision, order or decree issued by any government or governmental, semi-governmental, statutory or judicial entity or authority, whether in Australia or elsewhere, including without limitation any self-regulatory organization established under statute or any stock exchange, which we refer to as a public authority, -- no application is made to any public authority (other than by us), or commenced by a public authority against either Newmont or Normandy, in consequence or in connection with the offer, which restrains or prohibits, or otherwise materially adversely impacts upon, the making of the offer or the completion of any transaction contemplated by the offer or the deeds of undertaking entered into by us and Normandy or the rights of us or our associates in respect of Normandy and the Normandy shares to be acquired under the offer or otherwise; . DEEDS OF UNDERTAKING. Before the end of the offer period, no breach of any covenant, warranty or representation made by Normandy or in the deeds of undertaking entered into by us and Normandy occurs or is announced which has a 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; . OTHER GOVERNMENTAL OR REGULATORY APPROVALS. All necessary governmental or regulatory filings (including under the HSR Act, 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 the offer by any governmental authority, and all necessary governmental or regulatory approvals having been obtained to ensure that: -- we can vote and acquire all the Normandy shares under the offer; and -- our shares of common stock and Newmont CDIs can be issued under the offer and traded without restriction, including, without limitation, under the Securities Act of 1933, as amended; . AUSTRALIAN MAGNESIUM CORPORATION LIMITED COMMITMENTS -- neither Normandy nor any subsidiary of Normandy is a party to any agreement with Australian Magnesium Corporation Limited or is subject to any 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 October 15, 2001; or . an obligation by Normandy to subscribe for Australian Magnesium Corporation Limited shares in the manner and subject to the conditions contained in the Australian Magnesium Corporation Limited prospectus dated October 15, 2001; and -- before the end of the offer period, 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 to commitments disclosed or referred to in the Australian Magnesium Corporation Limited prospectus dated October 15, 2001. It is a term of the offer that we may, subject to section 650F of the Corporations Act, declare the offer and all other offers and all contracts resulting from the acceptance of offers to be free from the conditions (or any one or more of them or any part thereof) listed above. Any declaration made must be made by us by notice in writing to Normandy. 56 In accordance with section 625(3) of the Corporations Act, the offer and all other offers and all contracts that result from the acceptance of offers are subject to the condition that: . an application for admission to quotation of Newmont on ASX and of the shares of Newmont common stock on the NYSE will be made within seven days after the date when our bidder's statement is given to Normandy; and . permission for admission to quotation of Newmont CDIs on ASX and for quotation of the shares of Newmont common stock on the NYSE will be granted no later than seven days after the end of the offer period. We will apply for the necessary quotations as soon as practicable in order to satisfy this condition. The offer may not be declared free of this condition. The condition relating to the Australian Investment Review Board above is a condition precedent to our acquisition of an interest (within the meaning of those terms in the Foreign Acquisitions and Takeovers Act) in your Normandy shares (including shares represented by Normandy ADSs). The other conditions under that paragraph are conditions subsequent. The non-fulfillment of any condition subsequent does not prevent a contract to sell Normandy shares resulting from a Normandy shareholder's acceptance of our offer, but entitles us by written notice to you, to rescind the contract resulting from the acceptance of our offer. Subject to the provisions of the Corporations Act, we alone have the benefit of the conditions in section (a) above and any breach or non-fulfillment of any such conditions may be relied on only by us. The date specified for giving the notice referred to in section 630(3) of the Corporations Act is February 7, 2002, subject to extension in accordance with section 630(2) of the Corporations Act if the offer period is extended in accordance with the Corporations Act. If at the end of the offer period in respect of the conditions specified in the first section above: . we have not declared the offer and all other offers made by us under the bid and all contracts resulting from the acceptance of offers to be free from the conditions; and . the conditions have not been fulfilled, then all contracts resulting from the acceptance of offers and all offers that have been accepted and from whose acceptance binding contracts have not yet resulted are void. In that event, we will, if a Normandy shareholder has accepted the offer: (1) return at the Normandy shareholder's risk his acceptance form together with all documents forwarded by the Normandy shareholders with that form to the address as shown in the acceptance form; or (2) if the Normandy shares are in a CHESS Holding, notify Securities Clearing House under the Securities Clearing House Business Rules that the contract resulting from the acceptance of the offer is avoided. THE DEEDS OF UNDERTAKING THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS, NOT OTHERWISE DISCUSSED IN THIS PROXY STATEMENT/PROSPECTUS, OF THE THREE DEEDS OF UNDERTAKING, TWO DATED AS OF NOVEMBER 14, 2001 AND ONE DATED AS OF DECEMBER 10, 2001, BY AND BETWEEN US AND NORMANDY, IN RELATION TO OUR OFF-MARKET BID FOR ALL THE NORMANDY SHARES HELD BY PERSONS OTHER THAN FRANCO-NEVADA. THE DEEDS OF UNDERTAKING ARE ATTACHED TO THIS DOCUMENT AS APPENDIX C. ALTHOUGH NORMANDY HAS ENTERED INTO THE DEEDS OF UNDERTAKING, NORMANDY, DESPITE REPEATED REQUESTS FROM NEWMONT, HAS DECLINED TO SUPPLY CERTAIN INFORMATION TO NEWMONT (INCLUDING ITS AUDITOR'S CONSENT) THAT WOULD 57 GENERALLY BE REQUIRED TO BE INCLUDED IN THIS PROXY STATEMENT/PROSPECTUS UNDER RULES PROMULGATED BY THE SEC. SEE "RISK FACTORS--RISKS RELATED TO THE TRANSACTIONS--ALTHOUGH NORMANDY HAS RECOMMENDED THE NEWMONT OFFER, IT HAS DECLINED TO PROVIDE NEWMONT WITH FINANCIAL INFORMATION THAT NEWMONT HAS REQUESTED FOR INCLUSION IN THIS DOCUMENT" AND "RISK FACTORS--RISKS RELATED TO THE TRANSACTIONS--WE HAVE NOT VERIFIED THE RELIABILITY OF THE NORMANDY INFORMATION INCLUDED IN, OR WHICH MAY HAVE BEEN OMITTED FROM, THIS DOCUMENT" ON PAGES 19 TO 20. FIRST DEED OF UNDERTAKING (a) NON-SOLICITATION. Normandy may not, nor may it permit its subsidiaries to, nor may it authorize or permit any of its officers, directors or employees or require any investment banker, attorney or other advisor, agent or representative of Normandy or its subsidiaries to: (1) directly or indirectly solicit, initiate or encourage the making of (including by way of furnishing non-public information) any inquiries or proposals regarding a competing takeover proposal; (2) accept or enter into any agreement, arrangement or understanding with respect to a competing takeover proposal or directly or indirectly participate in any discussions or negotiations regarding or furnish to any person any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, a competing takeover proposal; or (3) approve or recommend a competing takeover proposal. A "competing takeover proposal" is defined as any proposal or offer (not including the bid for Normandy by AngloGold as initially announced and constituted by AngloGold's bidder's statement dated October 16, 2001 and the supplementary bidder's statement dated November 1, 2001, but including any increase or proposed increase by AngloGold of the consideration offered under the AngloGold bid) with respect to any transaction that would, if completed substantially in accordance with its terms, result in any person or group of persons other than us and our subsidiaries acquiring (a) assets of Normandy and/or its subsidiaries that have, individually or in the aggregate, a market value exceeding 15% of the market value of all the assets of Normandy and its subsidiaries (taken as a whole) or (b) 25% or more of the voting shares of Normandy. The restrictions in (1) and (2) above do not prevent Normandy and the Normandy board from taking or refusing to take any action with respect to a bona fide competing takeover proposal, provided that the Normandy board has determined in good faith and acting reasonably after consultation with its financial advisors and outside legal counsel that the bona fide competing takeover proposal, which was not solicited, initiated or encouraged by Normandy in violation of (1) above and did not otherwise result from a breach or deemed breach of (1) or (2) above, is a superior takeover proposal. A "superior takeover proposal" is defined as a bona fide competing takeover proposal which the Normandy board has determined, acting reasonably and in good faith (after consulting its financial and legal advisors and considering all material aspects of the proposal and the party making that proposal), would, if consummated in accordance with its terms, be reasonably likely to result in a transaction more favorable to the holders of Normandy shares than our takeover bid. Normandy's obligations under these non-solicitation provisions do not restrict Normandy or the Normandy board from taking or failing to take actions where the Normandy board determines in good faith and acting reasonably after consulting its financial advisors and outside legal advisors that to take or fail to take such action constitutes, or would be likely to constitute, a breach of the fiduciary or statutory duties or obligations of the members of the Normandy board. 58 (b) UNDERTAKING. Normandy must make a payment to us of A$38.33 million as compensation for our reasonable opportunity costs, reputational costs associated with a failed transaction and costs and expenses in connection with our proposed bid, if: (1) a competing takeover proposal is announced or open for acceptance and, pursuant to that proposal, the bidder acquires a relevant interest in more than 50% of all Normandy's shares and that proposal becomes free from any defeating conditions either before or after the end of the applicable offer period; or (2) the Normandy board fails to recommend our takeover bid in Normandy's target statement in response to our takeover bid, or the board withdraws or modifies in a manner adverse to us a recommendation previously made in respect of our bid (or proposed bid) or enters into any agreement, arrangement or understanding to recommend or support, or recommends, a competing takeover proposal. Normandy is not obligated to make the payment if the following events occur, unless another person, including AngloGold, makes a competing takeover proposal which becomes free from any defeating conditions either before or after the end of the applicable offer period: (a) the terms and conditions of our bid when made are materially less favorable to Normandy shareholders than the terms and conditions of the bid specified in the announcement of our intention to make our bid made on November 14, 2001; (b) our stockholders vote against the resolution to approve the issue of our securities under our bid; or (c) our bid does not receive the required approval from the Treasurer of Australia on terms acceptable to us. (c) SECURITY BOND. Normandy must provide a security bond to us as security for its obligation to make the payment referred to above. The security bond has been delivered. (d) FACILITATION OF OFFER. Normandy agrees, in certain circumstances, to permit us to dispatch our bidder's statement within five days of the date it is sent to Normandy and to use best endeavors to distribute its target statement in response to our bid as soon as practicable. (e) NORMANDY WARRANTIES. Normandy makes certain representations and warranties to us in connection with a number of matters, including: (i) its share capital and authority to enter into the deed; (ii) the accuracy of information it has provided to us in connection with our due diligence of Normandy; (iii) Normandy's conduct of its business; and (iv) the reserves and resources of the Normandy group. (f) ORDINARY COURSE OF BUSINESS. Normandy agrees, until the consummation of our bid to conduct its business in the ordinary course of business consistent with past practice. SECOND DEED OF UNDERTAKING If at any time before Normandy is due to make the payment to us required by the first deed of undertaking, there is a challenge before a court or the Australian Takeover Panel concerning Normandy making the payment: (a) we will not enforce or seek to enforce Normandy's obligation to make the payment (or seek to recover the payment under Normandy's security bond) until the challenge is finally determined; and (b) if, when a challenge to Normandy's making the payment (whether it is brought before or after Normandy has made the payment to us) is finally determined, Normandy is restrained from making the payment (or any part of the payment), or if the making of the payment is determined to be illegal or unlawful (other than for any purpose by a director or officer of Normandy to obtain improper personal financial benefits), then we will not seek to recover the payment (or, if 59 applicable, part of the payment) or damages in lieu of the payment against Normandy or any of its directors or officers, we will not seek to exercise our rights under Normandy's security bond, and, if the challenge was brought after Normandy has made the payment to us, we will refund the payment to Normandy. We will not seek payment or recovery from Normandy, and will refund Normandy's payment, under the circumstances outlined above as long as Normandy, in consultation with us, takes all necessary actions to vigorously defend against the challenge before the court or the Australian Takeover Panel, seeks to join us at our cost as a party to any proceeding in which the challenge is made or brought and, at our discretion, initiates all appeal rights from a decision by a court or by the Australian Takeover Panel which has the effect or result of preventing the payment from being made to us. THIRD DEED OF UNDERTAKING On December 10, 2001, the parties to the first and second deeds of undertaking agreed to amend the definition of "competing takeover proposal" to clarify that the amendment of the AngloGold bid announced on November 29, 2001 was a "competing takeover proposal," and the reference to our takeover bid was amended to refer to the takeover bid announced by us on November 14, 2001 as amended by the announcement made by us on December 10, 2001. We also agreed that we will not assert that the filing of any application to the Australian Takeover Panel by AngloGold prior to December 10, 2001 constituted a breach of any condition to our takeover bid for Normandy. FRANCO-NEVADA LOCK-UP AGREEMENT THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS, NOT OTHERWISE DISCUSSED IN THIS PROXY STATEMENT/PROSPECTUS, OF THE LOCK-UP AGREEMENT, DATED AS OF NOVEMBER 14, 2001, BY AND AMONG US, FRANCO-NEVADA AND FRANCO-NEVADA MINING CORPORATION, INC. (FOR PURPOSES OF THIS SUMMARY, FRANCO-NEVADA AND FRANCO-NEVADA MINING CORPORATION, INC. ARE COLLECTIVELY REFERRED TO AS "FRANCO-NEVADA") RELATING TO FRANCO-NEVADA'S 446,100,000 NORMANDY SHARES, WHICH REPRESENT A 19.79% INTEREST IN NORMANDY, CALCULATED ON A FULLY-DILUTED BASIS, AND WHICH WE REFER TO IN THIS SUMMARY AS THE FRANCO-NEVADA NORMANDY SHARES. (a) SALE OF SHARES. Franco-Nevada will not, and will not permit any person over which it exercises influence or control to, contract to sell, sell or otherwise transfer or dispose of the Franco-Nevada Normandy Shares (or any interest, securities convertible into, or derivative of, or any voting rights with respect to, any of those shares), other than (a) with our prior consent or (b) pursuant to an acquisition transaction (defined below) under the circumstances described in this section. (b) NON-SOLICITATION. Franco-Nevada may not (and may not permit any of its subsidiaries to), directly or indirectly, through any of its or its subsidiaries' directors, officers, employees, insiders, professional advisors, agents or other authorized representatives: (i) solicit, initiate, encourage or facilitate (including by way of furnishing non-public information) any inquiries or proposals regarding a competing takeover proposal; (ii) participate in any discussions or negotiations regarding any competing takeover proposal; (iii) approve or recommend any competing takeover proposal; or (iv) accept or enter any agreement, arrangement or understanding related to any competing takeover proposal, other than an acquisition transaction under the circumstances described in this section. Further, Franco-Nevada will immediately cease or cause to be terminated any existing discussions or negotiations with any person in respect of a competing proposal and shall not waive or vary any terms or conditions of any confidentiality or standstill agreement that it has with a person considering a competing proposal. (c) CALL NOTICE. At any time prior to Franco-Nevada making the payment referred to in (d) below, we have the right to notify Franco-Nevada (a "call notice") that we require it to sell the Franco-Nevada Normandy shares to us or any entity designated by us (subject to the Treasurer of Australia giving notice that it does not object to such acquisition, which condition relates only to 60 such number of the Franco-Nevada Normandy shares which exceed, in number, 15% of Normandy's issued ordinary shares). The price at which the Franco-Nevada Normandy shares are to be purchased is 0.0385 of a Newmont common share (or of a common share of New Newmont that issues the shares into which the original Newmont shares are converted or for which they are exchanged in connection with the transactions contemplated by the plan of arrangement) per Normandy ordinary share. (d) NOTICE AND TERMINATION PAYMENT. If another party acquires a relevant interest in at least 50.1% of the Normandy shares calculated on a fully diluted basis (an "acquisition transaction"), Franco- Nevada may at any time give notice of its intention to tender the shares pursuant to the acquisition transaction. Within four business days following receipt of Franco-Nevada's tender notice, we may deliver a call notice to Franco-Nevada. If we deliver the call notice and acquire the Franco-Nevada Normandy shares under these circumstances, we may not tender those shares into the acquisition transaction that gave rise to Franco-Nevada's entitlement to deliver the tender notice. In addition, for a period of two years from the date of the acquisition transaction, we may not, directly or indirectly, contract to sell, sell or otherwise transfer or dispose of any of the Franco-Nevada Normandy shares (or any interest, securities convertible into or derivative of) or any voting rights with respect to, any of those shares, other than with Franco-Nevada's prior written consent, provided that a transfer to a wholly owned subsidiary or New Newmont that acknowledges that it is bound by the above restrictions will not require such consent. If we do not deliver a call notice within four business days following the delivery of Franco-Nevada's tender notice, Franco-Nevada must pay us a termination payment of US$20 million, after which time Franco-Nevada must irrevocably tender the Franco-Nevada Normandy shares to the acquisition transaction. If, upon the occurrence of the acquisition transaction, Franco-Nevada does not deliver a tender notice to us within 15 days, Franco-Nevada must pay us the US$20 million termination payment on that date. In addition, for two years from the date of the acquisition transaction, Franco-Nevada must not, directly or indirectly, contract to sell, sell or otherwise transfer or dispose of any of the Franco-Nevada Normandy shares (or any interest, securities convertible into, or derivative of, or any voting rights with respect to, any of the shares), other than with our prior written consent, provided that a transfer to a wholly owned subsidiary that acknowledges that it is bound by the above restrictions will not require that consent. At any time prior to the occurrence of an acquisition transaction as described above, if the number of the Franco-Nevada Normandy shares, together with any other Normandy shares tendered to our transaction, equals at least 50.1% of the Normandy shares (calculated on a fully diluted basis), and the conditions to our transaction capable of satisfaction prior to the take-up of Normandy shares have been otherwise satisfied or waived, we may require Franco-Nevada to tender the Franco-Nevada Normandy shares to our transaction. 61 THE ACQUISITION OF FRANCO-NEVADA To acquire Franco-Nevada, we have entered into an arrangement agreement under which each Franco-Nevada shareholder (other than holders who exercise and perfect their dissent rights) will be entitled to receive in exchange for each Franco-Nevada common share either (i) 0.80 of an exchangeable share or (ii) 0.80 of a share of Newmont common stock, on the terms and subject to the limitations and conditions set out in the plan of arrangement. Each Franco-Nevada shareholder will be required to make the same election between (i) and (ii) in respect of all Franco-Nevada common shares held by that shareholder. If we complete the merger each Franco-Nevada shareholder will be entitled to receive either 0.80 of an exchangeable share (exchangeable into Holdco common stock) or 0.80 of a share of Holdco common stock in exchange for each share of Franco-Nevada common stock held, depending on the election made. THE ARRANGEMENT AGREEMENT THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS, NOT OTHERWISE DISCUSSED IN THIS PROXY STATEMENT/PROSPECTUS, OF THE ARRANGEMENT AGREEMENT. THE ARRANGEMENT AGREEMENT IS ATTACHED TO THIS DOCUMENT AS APPENDIX B. (a) REPRESENTATIONS AND WARRANTIES. The arrangement agreement contains various representations and warranties of Newmont with respect to Newmont and our subsidiaries relating to, among other things: (a) our corporate organization, existence and similar corporate matters; (b) our capitalization; (c) the authorization, execution, delivery and enforceability of the arrangement agreement; (d) the execution and delivery of the arrangement agreement and consummation of the transaction not conflicting with or resulting in a violation of, or default under, or giving rise to a right of consent, termination or acceleration of any obligation under, or resulting in a lien on their properties or assets under their articles or by-laws, any law, regulation, order, judgment or decree and other agreements and documents, applicable to us; (e) the reports, schedules, forms, statements and other documents filed by us with the SEC, the compliance in all material respects thereof with the requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the accuracy of the information contained therein; (f) the absence since December 31, 2000 of any event, change, effect or development which, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on us and our subsidiaries, taken as a whole; (g) the absence of judgments, injunctions, orders or decrees that have the effect of impairing the conduct of the business of Newmont and any of our subsidiaries; (h) our title to our real property interests; (i) our insurance coverage; (j) the absence of litigation that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on Newmont and our subsidiaries, taken as a whole; and (k) compliance with applicable laws. The arrangement agreement also contains various representations and warranties of Franco-Nevada with respect to Franco-Nevada and its subsidiaries relating to, among other things, (a) their corporate organization, existence and similar corporate matters; (b) their capitalization; (c) the authorization, execution, delivery and enforceability of the arrangement agreement; (d) the execution and delivery of the arrangement agreement and consummation of the transaction not conflicting with or resulting in a violation or default under, or giving rise to a right of consent, termination or acceleration of any obligation under, or resulting in a lien on their property or assets under their articles or by-laws, any law, regulation, order, judgment or decree and other agreements and documents; (e) the reports, schedules, forms, statements and other documents filed by Franco-Nevada with Canadian securities regulatory authorities, the compliance in all material respects thereof with the requirements of Canadian securities laws and the accuracy of the information contained therein; (f) the absence since March 31, 2001 of any event, change, effect or development which, individually or in the aggregate, has had or would reasonably be expected to have a materially adverse effect on Franco-Nevada and its subsidiaries, taken as a whole; (g) compliance with applicable laws; (h) the absence of judgments, injunctions, orders or decrees that have the effect of impairing the conduct of the business of Franco-Nevada and any of its subsidiaries; (i) the filing of tax returns and the payment of taxes; (j) the title of Franco-Nevada to its real property interests; (k) compliance with environmental laws; (l) ownership of intellectual property; 62 (m) employment matters; (n) pension and employee benefits; (o) completeness and accuracy of financial and corporate books and records; (p) insurance matters; (q) the absence of litigation that, individually or in the aggregate, would reasonably be expected to have a materially adverse effect on Franco-Nevada and its subsidiaries, taken as a whole; (r) compliance with mine health and safety legislation; (s) dispositions of assets or property since March 31, 2001; and (t) there having been no material reduction in reserves or in the aggregate amount of mineralized material since March 31, 2001. (b) CONDUCT OF BUSINESS OF FRANCO-NEVADA. Prior to the effective time, unless we otherwise agree in writing, Franco-Nevada is required, and is required to cause each of its subsidiaries, to (i) conduct its business only in, not take any action except in, and maintain its facilities in, the ordinary course of business consistent with past practice, (ii) maintain and preserve its business organization and its material rights and franchises, (iii) retain the services of its officers and key employees, (iv) maintain relationships with customers, suppliers, lessees, joint venture partners, licensees, lessors, licensors and other third parties, and (v) maintain all of its operational assets in their current condition (normal wear and tear excepted) to the end that its goodwill and ongoing business are not impaired in any material respect. Without limiting the generality of the foregoing, Franco-Nevada is required (unless contemplated by the arrangement agreement or we otherwise agree in writing) to: (1) not do, permit any of its subsidiaries to do or permit to occur any of the following (directly or indirectly): (A) issue, grant, sell, transfer, pledge, lease, dispose of, encumber or agree to issue, grant, sell, pledge, lease, dispose of or encumber: (i) any common shares or other securities entitling the holder to rights in respect of the securities or assets of Franco-Nevada or its subsidiaries, other than pursuant to rights to acquire such securities existing at the date of the arrangement agreement, or (ii) any property or assets of Franco-Nevada or any of its subsidiaries, except in the ordinary course of business consistent with past practice; (B) amend or propose to amend its constitutional documents (including articles or other organizational documents or by-laws); (C) declare or make any dividend or other distribution (in cash, securities or other property) in respect of any of its securities; (D) redeem, purchase or offer to purchase any securities or enter into any agreement, understanding or arrangement with respect to the sale, voting, registration or repurchase of its capital stock; (E) adjust, split, combine or reclassify its capital stock or merge, consolidate or enter into a joint venture with any person; (F) except in accordance with existing executed agreements of purchase and sale, acquire or agree to acquire (by purchase, amalgamation, merger or otherwise) any person or assets that individually exceeds US$5 million or, in the aggregate, exceed US$10 million; (G) make, or commit to make, any capital expenditures that, individually exceed US$10 million or, in the aggregate, exceed US$25 million; (H) amend or modify, or propose to amend or modify, its shareholder rights plan; (I) incur, create, assume, commit to incur, guarantee or otherwise become liable or responsible for indebtedness for borrowed money, other than: (i) advances from subsidiaries of Franco-Nevada made in the ordinary course of business consistent with past practice; 63 (ii) advances from subsidiaries of Franco-Nevada made to fund expenditures permitted by the arrangement agreement; and (iii) pursuant to existing operating lines of credit with third party lenders; (J) settle or compromise any suit, claim, action, proceeding, hearing, notice of violation, demand letter or investigation involving the possible payment or receipt of amounts that exceed, in the aggregate, US$250,000; (K) enter into, adopt or amend any employee benefit plan or employment agreement, except as may be required by applicable law; (L) modify, amend or terminate, or waive, release or assign any material rights or claims with respect to any confidentiality agreement to which Franco-Nevada is a party; (M) take any action that could give rise to a right to severance benefits pursuant to any employment, severance, termination, change in control or similar agreements or arrangements; (N) adopt or amend, or increase or accelerate the timing, payment or vesting of benefits under or funding of, any bonus, profit sharing compensation, stock option, pension, retirement, deferred compensation, employment or other employee benefit plan, agreement, trust, fund or arrangement for the benefit or welfare of any current or former employee, director or consultant; (O) enter into any confidentiality agreements or arrangements other than in the ordinary course of business consistent with past practice; (P) except as otherwise required by law, make any material tax election, settle or compromise any material tax claim, file any tax return (other than in a manner consistent with past practice) or change any method of tax accounting; (Q) take any action to exempt or make not subject to the provisions of any take-over law or other law, which purports to limit or restrict business combinations or the ability to acquire or vote shares, any person (other than we or our subsidiaries) or any action taken thereby, which person or action would have otherwise been subject to the restrictive provisions thereof and not exempt therefrom; (R) make any changes to existing accounting practices, except as the auditors of Franco-Nevada advise in writing are required by applicable law or generally accepted accounting principles, or write up, write down or write off the book value of any assets in amount that, in aggregate, exceed US$500,000 except for depreciation and amortization in accordance with generally accepted accounting principles; or (S) enter into or modify any employment, severance, collective bargaining or similar agreements or arrangements with, or take any action with respect to or grant any salary increases, bonuses, benefits, severance or termination pay to, any current or former officers, directors or other employees or consultants; (2) use its best efforts to cause its current insurance (or re-insurance) policies not to be cancelled or terminated or any other coverage under those policies to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance and re-insurance companies of nationally recognized standing providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect; (3) not do or permit any action that would, or could reasonably be expected to, render any of its representations or warranties in the arrangement agreement untrue or inaccurate in a manner that 64 would, or could reasonably be expected to, be materially adverse to Franco-Nevada and its subsidiaries, taken as a whole; (4) promptly notify us orally and in writing of any change in the ordinary course of its business, operations or properties and of any material complaints, investigations or hearings (or communications indicating that the same may be contemplated) that, individually is, or in the aggregate are, or could reasonably be expected to be materially adverse to Franco-Nevada and its subsidiaries, taken as a whole; (5) not implement any other change in its business, affairs, capitalization or dividend policy that is, or in the aggregate are, or could reasonably be expected to be materially adverse to Franco-Nevada and its subsidiaries, taken as a whole; and (6) not enter into or modify any contract, agreement, commitment or arrangement with respect to any of the foregoing matters. (c) CONDUCT OF BUSINESS AND COVENANTS BY NEWMONT. Prior to the effective time, unless Franco-Nevada otherwise agrees in writing, we are required, and are required to cause each of our subsidiaries to, (i) conduct our business and maintain our facilities in the ordinary course of business consistent with past practice, (ii) maintain and preserve our business organization and our material rights and franchises, (iii) retain the services of our officers and key employees, (iv) maintain relationships with customers, suppliers, lessees, joint venture partners, licensees, lessors, licensors and other third parties, and (v) maintain all of our operational assets in their current condition (normal wear and tear excepted) to the end that our goodwill and ongoing business are not impaired in any material respect. Without limiting the generality of the foregoing, we are required (unless contemplated by the arrangement agreement or Franco-Nevada otherwise agrees in writing) to: (1) not, nor permit any of our subsidiaries to, redeem, purchase or offer to purchase any securities of our capital stock, or enter into any agreement, understanding or arrangement with respect to the repurchase of our capital stock (except for transactions among Newmont and our presently existing or future direct or indirect wholly-owned subsidiaries); (2) not make any amendment to our certificate of incorporation that changes the fundamental attributes of Newmont common stock; (3) not make, declare or pay any dividend (other than quarterly dividends not in excess of US$0.03 per share of Newmont common stock and US$0.8125 per share of preferred stock, with record and payment dates consistent with past practice); (4) not adjust, split, combine or reclassify our capital stock or merge or consolidate with any person; (5) not incur, create, assume, commit to incur, guarantee or otherwise become liable or responsible for indebtedness for borrowed money that, in the aggregate, exceed US$200 million, except in the ordinary course of business consistent with past practice and other than: (i) advances from our subsidiaries made to fund expenditures permitted by the arrangement agreement; and (ii) pursuant to existing operating or replacement lines of credit with third party lenders; (6) not do or permit any action that would, or could reasonably be expected to, render any of its representations or warranties in the arrangement agreement untrue or inaccurate in a manner that would, or could reasonably be expected to, be materially adverse to us and our subsidiaries, taken as a whole; (7) promptly notify Franco-Nevada orally and in writing of any change in the ordinary course of its business, operations or properties and of any material complaints, investigations or hearings (or communications indicating that the same may be contemplated) that, individually is, or in the 65 aggregate are, or could reasonably be expected to be, materially adverse to us and our subsidiaries, taken as a whole; (8) not enter into or modify any contract, agreement, commitment or arrangement with respect to any of the foregoing matters; and (9) not implement any other change in its business, affairs, capitalization or divided policy that is, or in the aggregate are, or could reasonably be expected to be, materially adverse to us and our subsidiaries, taken as a whole. In addition, we must not (unless we first consult with Franco-Nevada) do, permit any of its subsidiaries to do or permit to occur any of the following (directly or indirectly), except in connection with the transaction and among Newmont and our direct or indirect wholly-owned subsidiaries: (1) issue, grant, sell, transfer, pledge, lease, dispose of, encumber or agree to issue, grant, sell, pledge, lease, dispose of or encumber: (A) any shares of Newmont common stock or other securities entitling the holder to rights in respect of the securities or assets of Newmont or our subsidiaries, other than pursuant to existing rights to acquire such securities; or (B) any property or assets of Newmont or any of our subsidiaries, except in the ordinary course of business consistent with past practice; (2) except in accordance with existing executed agreements of purchase and sale, acquire or agree to acquire (by purchase, amalgamation, merger or otherwise) any person or assets that individually exceed US$50 million or, in the aggregate, exceed US$100 million; or (3) except as provided in our regular budget, make, or commit to make, any capital expenditures that individually exceeds US$50 million. Under the arrangement agreement, we agree to use our best efforts to: (1) obtain all orders required from the applicable Canadian securities regulatory authorities to permit the first resale of: (A) the exchangeable shares issued pursuant to the arrangement; and (B) the Newmont shares issued from time to time upon exchange of the exchangeable shares, in each case without qualification with or approval of or the filing of any prospectus (other than in the case of a control person for purposes of Canadian securities laws); (2) cause the exchangeable shares to be listed and posted for trading on the TSE by the effective time and to take reasonable steps to maintain such listings for so long as there are exchangeable shares outstanding (other than securities held by us or any of our affiliates); (3) take reasonable steps to ensure that Newmont Canada has, at the effective time and for so long as there are exchangeable shares outstanding (other than exchangeable shares held by us or any of our affiliates), a "substantial Canadian presence" within the meaning of subsection 206(1.1) of the Income Tax Act ("ITA"); (4) take reasonable steps to cause the listing and admission to trading on the NYSE of the shares of Newmont common stock to be issued at the effective time and from time to time (i) upon exchange of the exchangeable shares, and (ii) upon the exercise of the Franco-Nevada options, Franco-Nevada class B warrants and Franco-Nevada class C warrants; and (5) take reasonable steps to ensure that Newmont Canada is, at the effective time and for so long as there are exchangeable shares outstanding (other than exchangeable shares held by us or any of 66 our affiliates), a "taxable Canadian corporation" and not a "mutual fund corporation," each within the meaning of the ITA. (d) NON-SOLICITATION. Franco-Nevada has agreed that it will not, and will not permit any of its subsidiaries to, directly or indirectly, through any director, officer, employee, insider, professional advisor, agent or authorized representative or otherwise, take any action that may in any way adversely affect or reduce the successful completion of the transaction. Without limiting the foregoing, Franco-Nevada has agreed that it will not, and will not permit any of its subsidiaries, directly or indirectly, through any of the foregoing to solicit, initiate, encourage or facilitate (including by way of furnishing non-public information) any inquiries or proposals regarding an alternative transaction; participate in any discussions or negotiations regarding any alternative transaction; approve or recommend any alternative transaction; or accept or enter into any agreement, arrangement or understanding related to any alternative transaction; provided, however, that, subject to Franco-Nevada's obligation to give notice and our right to respond, nothing will prevent the board of directors from (i) complying with its obligations under applicable securities law to prepare and deliver a directors' circular in response to a take-over bid, and (ii) considering, participating in discussions or negotiations and entering into confidentiality agreements and providing information regarding an unsolicited BONA FIDE written acquisition proposal that does not result from a breach of the foregoing and that the board of directors determines by formal resolution in good faith, after consultation with its financial advisors and outside legal counsel, is a superior proposal, but only to the extent that the board of directors has also determined by formal resolution, in good faith after consultation with its outside counsel that the failure to take such action would reasonably be expected to constitute a breach of its fiduciary duties. Franco-Nevada may accept, approve, recommend or enter into an agreement, understanding or arrangement to implement a superior proposal if (i) it has provided us with a copy of the documentation relating to the superior proposal, and (ii) five business days have elapsed from the later of the date we received written notice from the board of directors that it has resolved to accept, approve, recommend or enter into a binding agreement to implement the superior proposal, and the date we received all of the documentation relating to the superior proposal. During that five business day period, we will have the right, but not the obligation, to offer to amend the terms of the arrangement agreement. The board of directors will review any offer by us to amend the terms of the arrangement agreement in good faith, in consultation with its financial advisors and outside legal counsel, to determine whether the acquisition proposal to which we are responding would be a superior proposal when assessed against our amended proposal. If the board of directors does not so determine, by formal resolution, it will enter into an amended agreement with us reflecting our amended proposal. If the board of directors determines by formal resolution that the acquisition proposal is nonetheless a superior proposal and Franco-Nevada has made the payment to us described in "Termination and Termination Fees" below, Franco-Nevada may approve, recommend, accept or enter into an agreement, understanding or arrangement to implement the superior proposal, provided that in no event is the board of directors permitted to take any action that may obligate Franco-Nevada or any other person to seek to interfere with the completion of the transactions or impose any "break-up," "hello" or other fees or options or rights to acquire assets or securities, or any other obligations that would survive completion of the transaction, of Franco-Nevada or any of its subsidiaries, property or assets. (e) CONDITIONS TO THE TRANSACTION. The obligations of Franco-Nevada and us to consummate the transaction are subject to the satisfaction of certain mutual conditions, including (i) approval of the requisite resolutions by Franco-Nevada shareholders at the Franco-Nevada shareholders' meetings, (ii) approval of the arrangement by the Superior Court of Justice of the Province of Ontario (or the "Ontario Superior Court"), (iii) approval by our shareholders of the issuance of the shares of common stock to complete the arrangement and the acquisition of Normandy, (iv) listing of the shares of common stock of Newmont and the exchangeable shares issuable to Franco-Nevada shareholders pursuant to the arrangement on the NYSE and the TSE, respectively, (v) the acquisition by us and our 67 associates of a "relevant interest" (as defined below) in at least 50.1% of the Normandy shares, calculated on a fully-diluted basis and (vi) receipt of all necessary regulatory approvals. As defined in the Corporations Act 2001, a person will have a relevant interest in securities if such person (i) is the holder of the securities, (ii) has the power to exercise, or control the exercise of, the right to vote attached to the securities or (iii) has the power to dispose of, or control the exercise of a power to dispose of, the securities. The obligations of Franco-Nevada to complete the transaction are subject to the satisfaction of certain conditions in its favor, including the representations and warranties of Newmont under the arrangement agreement being true and correct in all material respects and there not having occurred any event, change, effect or development that individually or in the aggregate, has had or is reasonably likely to have, a materially adverse effect on Newmont and our subsidiaries, taken as a whole. Our obligations to complete the transaction are subject to the satisfaction of certain conditions in our favor, including the representations and warranties of Franco-Nevada under the arrangement agreement being true and correct in all material respects, there not having been delivered and not withdrawn notices of dissent with respect to the requisite Franco-Nevada shareholder resolutions in respect of more than 4,000,000 Franco-Nevada common shares, and there not having occurred any event, change, effect or development that individually or in the aggregate, has had or is reasonably likely to have, a materially adverse effect on Franco-Nevada and its subsidiaries taken as a whole. (f) AMENDMENT AND WAIVER. The arrangement agreement, including the plan of arrangement, may be amended by written agreement of the parties at any time before or after the Franco-Nevada shareholder meeting, but not later than the effective date and any such amendment may, subject to applicable law or the interim order of the Ontario Superior Court, without limitation, (i) change the time for performance of any of the obligations or acts of the parties, (ii) waive any inaccuracies in or modify any representation contained in the arrangement agreement or any document to be delivered pursuant to the arrangement agreement, (iii) waive compliance with or modify any of the covenants contained in the arrangement agreement or waive or modify performance of any of the obligations of the parties, and/or (iv) waive compliance with or modify any condition precedent contained in the arrangement agreement. If Franco-Nevada or Newmont, as the case may be, proposes any amendment or amendments to the arrangement agreement or the plan of arrangement, the other must consider that amendment and if it and its security holders are not prejudiced by reason of any such amendment, it will cooperate so that that amendment can be effected subject to applicable law and the rights of the security holders. Franco-Nevada and we will use all efforts to obtain the approvals of the Ontario Superior Court and the Franco-Nevada shareholders in respect of any amendments to the arrangement agreement, including the plan of arrangement, to the extent required by applicable law. (g) TERMINATION AND TERMINATION FEES. The arrangement agreement may be terminated at any time prior to the effective time by mutual written agreement of Franco-Nevada and Newmont, or by either Franco-Nevada or Newmont, subject to the other party's right to cure in certain circumstances, if the conditions to the arrangement have not been waived or satisfied on or before October 31, 2002. Franco-Nevada may terminate the arrangement at any time if our shareholders do not approve all matters necessary to consummate the transaction or if a person other than Newmont or a related entity of Newmont unconditionally acquires not less than 50.1% of the Normandy shares, calculated on a fully diluted basis. Newmont may terminate the arrangement agreement if at any time: (A) the Franco-Nevada board of directors (i) does not recommend or withdraws or modifies in a manner adverse to Newmont or refuses to affirm its recommendation of the arrangement, or (ii) approves, recommends, accepts or enters into any agreement, undertaking or arrangement in respect of an alternative transaction; (B) the Franco-Nevada shareholders meeting is cancelled, adjourned or delayed, except as expressly contemplated by the arrangement agreement or agreed to by us in writing; 68 (C) the shareholders do not cast (or do not cause to be cast) sufficient votes at the Franco-Nevada shareholders meeting to permit completion of the arrangement; or (D) a person other than Newmont or an affiliate of Newmont unconditionally acquires not less than 50.1% of the Normandy shares calculated on a fully diluted basis. Provided that we have not failed to perform any covenant required to be performed by us pursuant to the arrangement agreement (or such failure is not materially adverse to Franco-Nevada and its subsidiaries taken as a whole) and no representation or warranty made by us contained in the arrangement agreement is untrue in any material respect, if we exercise our right of termination pursuant to: (a) clauses (A), (B) or (C) above (where, in the case of clause (C), at the time of the Franco-Nevada shareholders meeting a bona fide acquisition proposal that has been made has not been withdrawn), Franco-Nevada will immediately pay to us US$100 million in immediately available funds to an account designated by us; or (b) clause (C) above, where, at the time of the Franco-Nevada shareholders meeting, a bona fide acquisition proposal that has been made has been withdrawn or no such proposal has been made, Franco-Nevada will immediately pay to us US$20 million in immediately available funds to an account designated by us. In addition, with respect to paragraph (b), if, at any time within 12 months after the date of such payment, Franco-Nevada approves, recommends, accepts, enters into or consummates an acquisition proposal, Franco-Nevada will pay to us US$80 million in immediately available funds to an account designated by us upon consummation of that acquisition proposal. Franco-Nevada will not be obligated to make payments exceeding US$100 million pursuant to the provisions above. If (i) the Franco-Nevada shareholders approve the transaction and our shareholders do not approve the transaction, (ii) Franco-Nevada has not failed to perform any covenant required to be performed by it pursuant to the arrangement agreement (or such failure is not materially adverse to Franco-Nevada and its subsidiaries or Newmont and our subsidiaries, in each case taken as a whole), (iii) no representation or warranty made by Franco-Nevada is untrue in any material respect, and (iv) Franco-Nevada exercises its right to terminate the arrangement agreement, we will pay to Franco-Nevada US$10 million in immediately available funds to an account designated by Franco-Nevada, for its out-of-pocket expenses. COURT APPROVAL OF THE ARRANGEMENT AND COMPLETION OF THE FRANCO-NEVADA TRANSACTION The arrangement requires approval by the Ontario Superior Court and the approval of the Franco-Nevada shareholders at the Franco-Nevada shareholders meeting. On December 27, 2001, Franco-Nevada obtained the requisite interim order from the Ontario Superior Court approving, among other things, calling the Franco-Nevada shareholders meeting to be held on January 30, 2002 in connection with the plan of arrangement. Subject to the approval of the requisite arrangement resolutions by the Franco-Nevada shareholders at the Franco-Nevada shareholder meeting, the hearing in respect of the requisite final order from the Ontario Superior Court is scheduled to take place on February 1, 2002. At this hearing, the Ontario Superior Court will consider, among other things, the fairness and reasonableness of the arrangement. The Ontario Superior Court may approve the arrangement as proposed or as amended in any manner the Ontario Superior Court may direct, subject to compliance with such terms and conditions, if any, as the Ontario Superior Court deems fit. Assuming the final order is granted and other conditions to the arrangement agreement are satisfied or waived, we anticipate that the documents necessary to consummate the transactions contemplated under the arrangement agreement will be executed and delivered. We currently anticipate that the effective date will occur prior to the end of February 2002. 69 OTHER MATTERS RELATING TO THE TRANSACTIONS CHAMPION DE CRESPIGNY ESCROW AGREEMENT In connection with Mr. Champion de Crespigny's proposed appointment to the board of directors of New Newmont, it has been proposed that Mr. Champion de Crespigny will be requested to agree to a voluntary escrow of Newmont CDIs which are issued to him under the offer for a maximum period of two years from the issue date. Mr. Champion de Crespigny disclosed in Normandy's target statement in response to the AngloGold bid that he and his associates held 71,076,161 Normandy shares. See "The Transactions--Interests of Certain Persons in the Transactions" for a discussion of Mr. Champion de Crespigny's interests in the transactions. SCHULICH AND LASSONDE LOCK-UP AND ESCROW AGREEMENTS THE FOLLOWING IS A SUMMARY OF THE MATERIAL TERMS OF THE LOCK-UP AND ESCROW AGREEMENTS, DATED AS OF NOVEMBER 14, 2001 BY AND BETWEEN US AND PIERRE LASSONDE AND BY AND BETWEEN US AND SEYMOUR SCHULICH. Seymour Schulich, Chairman of the Board and Co-Chief Executive Officer of Franco-Nevada, and his affiliates own 10,200,492 Franco-Nevada common shares and Pierre Lassonde, president and co-chief executive officer of Franco-Nevada, and his affiliates own 3,651,167 Franco-Nevada common shares (and Franco-Nevada options to purchase 667,200 Franco-Nevada common shares), representing, in the aggregate, approximately 8.7% of the Franco-Nevada common shares issued and outstanding. Pursuant to the lock-up agreements, each of Mr. Schulich and Mr. Lassonde has agreed that all of his Franco-Nevada common shares (including common shares acquired by him after the date of the lock-up agreements) will be voted in favor of the transaction and that he will not vote any of his Franco-Nevada common shares in favor of any alternative transaction. Each of Mr. Schulich and Mr. Lassonde irrevocably agrees, among other things, that he will not, and will not permit any person over which he exercises influence or control to, contract to sell, sell or otherwise transfer or dispose of any of his Franco-Nevada common shares (or any interest, securities convertible into or any voting rights with respect to any of his Franco-Nevada common shares), other than pursuant to the arrangement or with our prior written consent. The lock-up agreements further provide that each of Mr. Schulich and Mr. Lassonde: (a) will not permit any person over which he exercises influence or control, directly or indirectly (including, if applicable, through its directors, officers, employees, insiders, professional advisors, agents or other authorized representatives) to take any action that may in any way adversely affect or reduce the likelihood of the successful completion of the transaction; and (b) will not (and will not permit any of its subsidiaries to), directly or indirectly, through any of its or its subsidiaries' directors, officers, employees, insiders, professional advisors, agents or other authorized representatives: (i) solicit, initiate, encourage or facilitate (including by way of furnishing non-public information) any inquiries or proposals regarding an alternative transaction; (ii) participate in any discussions or negotiations regarding any alternative transaction; (iii) approve or recommend any alternative transaction; or (iv) accept or enter any agreement, arrangement or understanding related to any alternative transaction. Pursuant to the escrow agreements, each of Mr. Schulich and Mr. Lassonde has deposited or agreed to deposit in escrow the certificate(s) representing the Franco-Nevada common shares referred to in the lock-up 70 agreements (and, in the case of Mr. Lassonde, the certificate(s) representing Franco-Nevada common shares issued upon exercise of his Franco-Nevada stock options). The Franco-Nevada common shares deposited in escrow will be released, subject to accelerated release in certain events, three months following the termination of the escrow agreements. On the effective date of the acquisition of Franco-Nevada, 30% of the exchangeable shares received in exchange for the escrowed Franco-Nevada common shares will be released and the balance will be released as to 30% on the first anniversary of the effective date, and as to 20% on each of the second and third anniversaries of the effective date. JOINT VENTURE BETWEEN NEWMONT AND NORMANDY Newmont and Normandy each has a 50% interest in the Pajingo joint venture as successors to a joint venture agreement between Posgold Operations Pty Ltd and Battle Mountain (Australia) Inc. Under the joint venture agreement, Normandy manages mine operations and exploration. For these services, Normandy receives a management fee of approximately A$1.2 million per annum from Newmont. NEWMONT PROPERTIES SUBJECT TO FRANCO-NEVADA ROYALTIES Newmont owns and in some cases actively conducts operations on a number of properties in Nevada which are subject to the payment of a production royalty to Franco-Nevada. The following properties are currently producing and provided Franco-Nevada with the royalty payment indicated over the period of October 1, 2000 through September 30, 2001: . The Deepstar Mine, for which Franco-Nevada received US$579,795 in payments based on a variable royalty of 5.75%-6% NSR; . The Deep Post Mine, for which Franco-Nevada receives a variable royalty of 5.5%-6% NSR. The BLLS 5-0 Stockpile is subject to a royalty of 4.62% NSR. The combined royalty from Deep Post and BLLS 5-0 Stockpile production was US$867,737; . The Maggie Creek claims, for which Franco-Nevada received US$154,872 in payments based on a variable royalty of 3.072%-4.9% NSR; and . The Good Hope patents and Nevada King claims, for which Franco-Nevada received US$14,739 in payments based on a royalty of 8% NSR. Non-producing properties owned by Newmont that are subject to Franco-Nevada royalties include: the Barr claims (2% NSR), Carlin Valley claims and adjacent lands (3.6% NSR), Chicago claims (5% NSR), Golden Boy claims (3% NSR), Joe and Don claims (5% NSR), London claims (5% NSR), a part of the Lone Tree Mine (1% NSR), Micron claims (3% NSR), and Getchell Section 13 lands (2% NSR). Effective December 4, 2001, Newmont and Getchell Gold Corporation entered into an agreement under which Newmont will process a 150,000 ton ore stockpile, which is subject to a 2% NSR royalty in favor of Franco-Nevada. In addition, Franco-Nevada has 0.5%-4% NSR interest covering parts of Newmont's Holloway camp in Ontario, Canada, currently non-producing, pursuant to which arrangements Franco-Nevada receives annual advanced royalty payments of $25,000. 71 EX-20 8 feb28ex203.txt EXHIBIT 20.3 EXHIBIT 20.3 AUDITORS' REPORT TO THE DIRECTORS OF FRANCO-NEVADA MINING CORPORATION LIMITED We have audited the consolidated balance sheets of FRANCO-NEVADA MINING CORPORATION LIMITED as at March 31, 2001 and 2000 and the consolidated statements of earnings, retained earnings and cash flows for each of the years in the three-year period ended March 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in Canada and the United States. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at March 31, 2001 and 2000 and the results of its operations and cash flows for each of the years in the three-year period ended March 31, 2001 in accordance with Canadian generally accepted accounting principles. /s/ PriceWaterhouseCoopers LLP PRICEWATERHOUSECOOPERS LLP Chartered Accountants Toronto, Ontario April 30, 2001 COMMENTS BY AUDITORS FOR UNITED STATES READERS ON CANADIAN - UNITED STATES REPORTING DIFFERENCES In the United States, reporting standards for auditors require the addition of an explanatory paragraph, following the opinion paragraph, when there is a change in accounting principles that has a material effect on the comparability of the Company's consolidated financial statements, such as the change described in Note 2 to the consolidated financial statements. Our report to the Directors dated April 30, 2001 is expressed in accordance with Canadian reporting standards which do not require a reference to such a change in accounting principles in the Auditors' Report when the change is properly accounted for and adequately disclosed in the consolidated financial statements. /s/ PriceWaterhouseCoopers LLP PRICEWATERHOUSECOOPERS LLP Chartered Accountants Toronto, Ontario April 30, 2001 E-8 FRANCO-NEVADA MINING CORPORATION LIMITED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, MARCH 31, MARCH 31, 2001 2001 2000 ------------- ---------- ---------- (UNAUDITED) (THOUSANDS OF CANADIAN DOLLARS) (NOTE 1) ASSETS Current assets Cash and short-term investments..................... $ 864,053 $ 939,011 $ 705,714 Receivables......................................... 22,281 14,991 18,862 Precious metals..................................... 44,224 13,612 27,584 Taxes recoverable................................... 4,790 -- -- ---------- ---------- ---------- 935,348 967,614 752,160 Investments in marketable securities (note 4).......... 134,396 160,800 248,869 Resource properties (note 5)........................... 179,063 337,757 349,364 Capital assets (note 6)................................ 9,264 81,579 70,498 Investment in Normandy Mining Limited.................. 349,055 -- -- ---------- ---------- ---------- 1,607,126 1,547,750 1,420,891 ========== ========== ========== LIABILITIES Current liabilities Accounts payable.................................... 2,989 9,036 4,382 Taxes payable....................................... -- 17,385 8,289 ---------- ---------- ---------- 2,989 26,421 12,671 ---------- ---------- ---------- Future income taxes (note 9)........................... 82,437 85,873 62,033 ---------- ---------- ---------- SHAREHOLDERS' EQUITY Capital stock (note 7) (September 30, 2001--158,920,430 shares, March 31, 2001--158,630,670 shares, March 31, 2000--158,630,670 shares)............................ 1,026,139 1,021,321 1,021,321 Retained earnings...................................... 421,533 344,516 303,601 Deferred foreign exchange gain (note 8)................ 74,028 69,619 21,265 ---------- ---------- ---------- 1,521,700 1,435,456 1,346,187 ---------- ---------- ---------- $1,607,126 $1,547,750 $1,420,891 ========== ========== ==========
E-9 FRANCO-NEVADA MINING CORPORATION LIMITED CONSOLIDATED STATEMENTS OF EARNINGS
SIX MONTHS ENDED FOR THE YEARS ENDED ------------------------------ ---------------------------------- SEPTEMBER 30, SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, 2001 2000 2001 2000 1999 ------------- ------------- --------- --------- --------- (UNAUDITED) (UNAUDITED) (THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE AMOUNTS) (NOTE 1) REVENUES Resource................................ $51,323 $41,142 $ 95,596 $ 81,970 $ 72,777 Equity earnings in Normandy............. 11,215 -- -- -- -- Investment.............................. 22,902 38,960 82,035 38,607 43,330 ------- ------- -------- -------- -------- 85,440 80,102 177,631 120,577 116,107 ------- ------- -------- -------- -------- EXPENSES General and administration.............. 3,164 4,848 10,688 7,554 5,508 Operating costs......................... 371 473 1,141 1,396 1,573 Depletion and depreciation.............. 3,192 8,866 13,856 15,069 14,280 Provision for mining assets............. -- -- 28,216 -- -- ------- ------- -------- -------- -------- 6,727 14,187 53,901 24,019 21,361 ------- ------- -------- -------- -------- EARNINGS BEFORE TAXES...................... 78,713 65,915 123,730 96,558 94,746 ------- ------- -------- -------- -------- Tax provision (note 9) --current........................... 25,959 23,770 49,641 27,100 26,163 --future............................ (2,361) (2,041) (5,783) 5,463 5,129 ------- ------- -------- -------- -------- 23,598 21,729 43,858 32,563 31,292 ------- ------- -------- -------- -------- EARNINGS FROM CONTINUING OPERATIONS........ 55,115 44,186 79,872 63,995 63,454 Gain on sale of discontinued operations (note 12)............................. 21,902 -- -- -- -- Income from discontinued operations..... -- 16,931 33,573 33,641 5,075 ------- ------- -------- -------- -------- NET EARNINGS............................... $77,017 $61,117 $113,445 $ 97,636 $ 68,529 ======= ======= ======== ======== ======== EARNINGS PER SHARE Continuing operations................... 0.35 0.28 0.51 0.41 0.42 Discontinued operations................. 0.14 0.11 0.21 0.21 0.03 ------- ------- -------- -------- -------- TOTAL EARNINGS PER SHARE................... $ 0.49 $ 0.39 $ 0.72 $ 0.62 $ 0.45 ======= ======= ======== ======== ========
E-10 FRANCO-NEVADA MINING CORPORATION LIMITED CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
SIX MONTHS ENDED FOR THE YEARS ENDED -------------------------- ---------------------------- SEPTEMBER 30, SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, 2001 2000 2001 2000 1999 ------------- ------------- --------- --------- --------- (UNAUDITED) (UNAUDITED) (THOUSANDS OF CANADIAN DOLLARS) (NOTE 1) Beginning of period........................... $344,516 $303,601 $303,601 $253,554 $217,261 Change in accounting for income taxes (note 2) -- (17,009) (17,009) -- -- -------- -------- -------- -------- -------- 344,516 286,592 286,592 253,554 217,261 Earnings...................................... 77,017 61,117 113,445 97,636 68,529 Dividends..................................... -- -- (55,521) (47,589) (32,236) -------- -------- -------- -------- -------- End of period................................. $421,533 $347,709 $344,516 $303,601 $253,554 ======== ======== ======== ======== ========
E-11 FRANCO-NEVADA MINING CORPORATION LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED FOR THE YEARS ENDED -------------------------- ----------------------------- SEPTEMBER 30, SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, 2001 2000 2001 2000 1999 ------------- ------------- --------- --------- --------- (UNAUDITED) (UNAUDITED) (THOUSANDS OF CANADIAN DOLLARS) (NOTE 1) OPERATING ACTIVITIES Earnings from continuing operations..... $ 55,115 $ 44,186 $ 79,872 $ 63,995 $ 63,454 --------- -------- -------- -------- --------- Non-cash items Depletion and depreciation........... 3,192 8,866 13,856 15,069 14,280 Future income taxes.................. (2,361) (2,041) (5,783) 5,463 5,129 Provision for mining assets.......... -- -- 28,216 -- -- Loss (gain) on sale of marketable securities......................... 3,469 (15,097) (24,187) -- -- Equity earnings in Normandy.......... (11,215) -- -- -- -- --------- -------- -------- -------- --------- Total non-cash items.................... (6,915) (8,272) 12,102 20,532 19,409 --------- -------- -------- -------- --------- CASH FLOW FROM OPERATIONS............... 48,200 35,914 91,974 84,527 82,863 Change in non-cash working capital... (65,902) (12,559) 27,883 (24,093) 23,320 --------- -------- -------- -------- --------- (17,702) 23,355 119,857 60,434 106,183 --------- -------- -------- -------- --------- FINANCING ACTIVITIES Shares issued for cash............... 4,818 -- -- 1,990 131,501 Dividends............................ -- -- (55,521) (47,589) (32,236) --------- -------- -------- -------- --------- 4,818 -- (55,521) (45,599) 99,265 --------- -------- -------- -------- --------- INVESTING ACTIVITIES Marketable securities................ 22,298 37,984 118,107 (35,494) (144,809) Resource properties.................. (3,114) (1,338) (2,195) (9,189) (65,019) Capital assets....................... (1,102) (1,149) (1,900) (40) (782) Investment in Normandy............... (82,584) -- -- -- -- Short-term investments............... (101,572) (32,703) (76,464) 28,891 (50,626) --------- -------- -------- -------- --------- (166,074) 2,794 37,548 (15,832) (261,236) --------- -------- -------- -------- --------- FOREIGN EXCHANGE GAIN (LOSS)............ 198 2,886 8,317 (2,531) 8,787 --------- -------- -------- -------- --------- DISCONTINUED OPERATIONS................. -- (43,363) 33,034 36,182 (66,513) --------- -------- -------- -------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................... (178,760) (14,328) 143,235 32,654 (113,514) Cash and cash equivalents--beginning of period................................ 318,653 175,418 175,418 142,764 256,278 --------- -------- -------- -------- --------- Cash and cash equivalents--end of period $ 139,893 $161,090 $318,653 $175,418 $ 142,764 Short-term investments.................. 724,160 569,009 620,358 530,296 564,743 --------- -------- -------- -------- --------- CASH AND SHORT-TERM INVESTMENTS--END OF PERIOD................................ $ 864,053 $730,099 $939,011 $705,714 $ 707,507 ========= ======== ======== ======== =========
E-12 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) 1. ACCOUNTING POLICIES The consolidated financial statements of Franco-Nevada Mining Corporation Limited (the "Company") have been prepared in accordance with accounting principles generally accepted in Canada. Summarized below are the significant accounting policies used in these consolidated financial statements. The accompanying unaudited interim financial statements are prepared in accordance with generally accepted accounting principles ("GAAP") in Canada. Certain information included in the Annual Financial Statements are not included herein. In the opinion of management, all adjustments considered necessary for fair presentation have been included in these financial statements. Operating results for the period ended September 30, 2001 are not necessarily indicative of the results that may be expected for the full fiscal period ended December 31, 2001 (see note 12). (A) BASIS OF CONSOLIDATION The consolidated financial statements include the statements of the Company and its wholly owned subsidiaries. (B) USE OF ESTIMATES The preparation of the financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes. The most significant estimates and assumptions are related to taxes and the recoverability of resource property costs through future production. Actual results could be different from these estimates. (C) CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Cash and cash equivalents include highly-liquid instruments with an original maturity of less than 90 days. The carrying amounts of cash and cash equivalents are stated at cost which approximates their fair value. The Company's short-term investments include highly-liquid instruments with an original maturity of 90 days or more and are carried at cost, which approximates their fair value. (D) PRECIOUS METALS AND INVENTORIES Precious metals inventory is valued at the period end spot price. Mine operating supplies are valued at the lower of average cost and net realizable value. (E) INVESTMENTS IN MARKETABLE SECURITIES Investments in marketable securities are valued at cost until it is determined that a permanent impairment exists at which time a write-down is taken. (F) RESOURCE PROPERTIES MINERAL PROPERTY AND DEVELOPMENT COSTS The Company records its interest in mineral properties at cost. Producing properties are amortized on the units-of-production basis. The ultimate recovery of costs associated with non-producing properties is dependent E-13 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) upon the discovery and development of economic reserves or the profitable sale of the properties. If a property is abandoned or sold, the proceeds on the sale, less the cost of the property and any related deferred expenditures, are included in operations at that time. The Company periodically reviews its mineral properties to ascertain whether an impairment in value has occurred. Where a property is considered uneconomic it is written off. OIL AND GAS PROPERTY Producing oil and gas royalty properties are carried at the lower of the cost and net recoverable amount. Depletion is provided on capitalized amounts using the units-of-production method. Net recoverable amount is the aggregate of estimated future net revenues from proven reserves less operating, administration, financial and income tax expense. Estimated future net revenues are determined using year-end prices. (G) CAPITAL ASSETS Assets expected to remain productive throughout the mine's life are depreciated using the units-of-production method. Other assets are depreciated on a straight-line basis over their estimated useful lives. (H) TRANSLATION OF FOREIGN CURRENCY Foreign operations are self-sustaining and are translated using the current rate method. Assets and liabilities are translated at exchange rates prevailing at the period-end and revenue and expense items at average exchange rates for the period. Translation adjustments arising from changes in exchange rates are accounted for as a separate component of shareholders' equity. These adjustments will be included in operations upon realization. (I) FAIR VALUES OF FINANCIAL INSTRUMENTS The carrying value of Cash and Short Term Investments and Accounts Payable in the consolidated balance sheets approximate fair values due to the short-term duration of these instruments. (J) REVENUE RECOGNITION Gold and silver revenues from mining operations and royalty interests are recognized at the time of production. Payment is received in cash or in-kind. (K) COMPARATIVE FIGURES Certain comparative figures have been reclassified to conform with the current year's presentation. 2. CHANGE IN ACCOUNTING POLICY On April 1, 2000 the Company adopted the new Canadian Institute of Chartered Accountants recommendations for income taxes. Franco-Nevada provides for income taxes using the asset and liability method. Under this method, future tax assets and liabilities are determined based on differences between the financial accounting and tax bases of assets and liabilities and are measured using the substantively enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company has elected to adopt these standards retroactively without restatement. The cumulative effect of adopting the standard is an increase in future tax liabilities and a reduction in retained earnings of $17.0 million. Prior to April 1, 2000, the Company followed the deferral method of tax allocation in accounting for income taxes. E-14 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) 3. BUSINESS MERGER On September 20, 1999, the Company announced completion of the merger that resulted in Franco-Nevada Mining Corporation Limited ("Franco-Nevada") merging with Euro-Nevada Mining Corporation Limited ("Euro-Nevada"). The merger of the Company and Euro-Nevada is accounted for as a pooling of interests which combines, at book value, the net assets and operations of the two companies. Accordingly, these financial statements have been prepared, and are presented as though the predecessor corporations had operated as a single entity since inception. Euro-Nevada shareholders received 0.77 Franco-Nevada shares for each Euro-Nevada share. Euro-Nevada had 101.2 million shares outstanding and, as a result, the Company issued 77.9 million additional common shares to former shareholders of Euro-Nevada. The following tables set forth results of operations of the previously separate companies for the periods before the combination.
FRANCO- EURO- NEVADA NEVADA COMBINED ------- ------- -------- THREE MONTHS ENDED JUNE 30, 1999 (UNAUDITED) Revenue-continuing operations............ $17,145 $11,576 $ 28,721 Net earnings............................. 14,892 10,611 25,503 YEAR ENDED MARCH 31, 1999 Revenue-continuing operations............ 70,777 45,330 116,107 Net earnings............................. $43,711 $24,818 $ 68,529
E-15 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) 4. INVESTMENTS IN MARKETABLE SECURITIES The Company holds the following investments:
MARCH 2001 ------------------------ UNITS HELD CARRYING --------------- INVESTMENT VALUE NUMBER CLASS - ---------- -------- ------ -------- Inco Limited (note a).............................. $ 17,237 4,309 Warrants Aber Diamond Corporation........................... 69,507 7,717 Common Duff & Phelps Utilities Income Inc................. 14,208 1,000 Common First Australia Prime Income Fund, Inc............. 56,155 5,000 Common Other.............................................. 3,693 -------- $160,800 ========
MARCH 2000 --------------------------- UNITS HELD CARRYING ------------------ INVESTMENT VALUE NUMBER CLASS - ---------- -------- ------ ----------- Inco Limited....................................... $ 80,705 9,576 VBN Aber Diamond Corporation........................... 69,507 7,717 Common Duff & Phelps Utilities Income Inc................. 27,504 2,100 Common First Australia Prime Income Fund, Inc............. 51,767 5,000 Common San Juan Basin Royalty Trust....................... 14,503 2,000 Trust Units Other.............................................. 4,883 -------- $248,869 ========
- -------- (a) The Inco Limited ("Inco") Class VBN Shares ("VBN Shares") were tendered to Inco in December 2000 in exchange for 4,309,277 warrants of Inco ("warrants") and cash proceeds of $7.50 per VBN Share. The Company recognized a gain of $8.3 million on the transaction. (b) The fair market value of investments at year-end is $179,153,753 (2000; $221,577,536). (c) On September 5, 2001, Franco-Nevada entered into an agreement to convert US$72.4 million principal amount (US$115.3 million with accrued interest as at September 30, 2001) of capital securities of Echo Bay Mines Ltd. ("Echo Bay") into common shares of Echo Bay. Pending Echo Bay's shareholder approval, Franco-Nevada expects to maintain a 49.5% interest in Echo Bay following conversion. (unaudited) 5. RESOURCE PROPERTIES
MARCH 2001 MARCH 2000 ----------------------------- ----------------------------- NET NET ACCUMULATED BOOK ACCUMULATED BOOK COST DEPLETION VALUE COST DEPLETION VALUE -------- ----------- -------- -------- ----------- -------- Producing property.... $392,497 $(116,669) $275,828 $354,424 $(78,185) $276,239 Non-producing property 88,462 (26,533) 61,929 79,139 (6,014) 73,125 -------- --------- -------- -------- -------- -------- $480,959 $(143,202) $337,757 $433,563 $(84,199) $349,364 ======== ========= ======== ======== ======== ========
E-16 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) 6. CAPITAL ASSETS
MARCH 2001 MARCH 2000 ---------------------------- ---------------------------- NET NET ACCUMULATED BOOK ACCUMULATED BOOK COST AMORTIZATION VALUE COST AMORTIZATION VALUE ------- ------------ ------- ------- ------------ ------- Plant & mining equipment $49,115 $ (5,905) $43,210 $36,569 $(2,278) $34,291 Well equipment.......... 9,121 (955) 8,166 7,267 (725) 6,542 Buildings............... 31,200 (4,461) 26,739 27,860 (2,069) 25,791 Other................... 5,998 (2,534) 3,464 5,965 (2,091) 3,874 ------- -------- ------- ------- ------- ------- $95,434 $(13,855) $81,579 $77,661 $(7,163) $70,498 ======= ======== ======= ======= ======= =======
7. CAPITAL STOCK The Company has an unlimited number of authorized preferred and common shares.
MARCH 2001 MARCH 2000 MARCH 1999 ------------------ ------------------ ------------------- ISSUED AND OUTSTANDING: NUMBER $ NUMBER $ NUMBER $ - ----------------------- ------- ---------- ------- ---------- ------- ---------- COMMON SHARES Beginning of year (note a).... 158,631 $1,014,348 158,357 $1,009,537 152,293 $ 861,653 Issued for cash............... -- -- -- -- 3,253 103,937 Issued for resource properties -- -- -- -- 957 25,693 Options exercised............. -- -- 274 4,811 185 3,472 Warrants exercised............ -- -- -- -- 1,669 17,603 ------- ---------- ------- ---------- ------- ---------- End of year................... 158,631 $1,014,348 158,631 $1,014,348 158,357 $1,012,358 ======= ========== ======= ========== ======= ========== WARRANTS (NOTE B) Beginning of year............. 4,380 $ 6,973 4,380 $ 6,973 4,830 $ 484 Exercised..................... -- -- -- -- (1,084) (271) Issued........................ -- -- -- -- 634 6,760 ------- ---------- ------- ---------- ------- ---------- End of year................... 4,380 $ 6,973 4,380 $ 6,973 4,380 $ 6,973 ======= ========== ======= ========== ======= ==========
- -------- (a) On September 20, 1999 Franco-Nevada Mining Corporation Limited merged with Euro-Nevada Mining Corporation Limited. See note 3. The 1999 comparative share capital amounts have been adjusted for the merger. The opening share capital dollar amount for fiscal 2000 is net of $2,821,000 of share issue costs incurred in the year. (b) The Company has two classes of warrants issued and outstanding. There are 2,246,336 Class A warrants each of which entitles the holder thereof to acquire four common shares of the Company at a price of $200 per warrant. There are 2,133,751 Class B warrants outstanding each of which entitles the holder thereof to acquire 3.08 common shares of the Company at a price of $100 per warrant. The Class A and B warrants expire on September 15, 2003 and November 12, 2003, respectively. (c) As at September 30, 2001, in addition to its 158,920,430 common shares, the Company has two classes of warrants issued and outstanding. See note 7 (b). (d) Franco-Nevada adopted a shareholders' rights plan (the "Rights Plan") on February 24/th/, 2000. The Rights Plan was approved by the shareholders of the Company on September 21, 2000. Under the Rights Plan, each Franco-Nevada common share carries with it the right to purchase shares of Franco-Nevada, at a discounted price, under certain circumstances and in the event of particular hostile efforts to acquire control of the Company. The rights are evidenced by and trade with the Franco-Nevada common shares. E-17 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) (e) Share Option Plan Common share options outstanding at March 31, 2001, 2000 and 1999 under the share option plan are as follows:
MARCH 2001 MARCH 2000 MARCH 1999 ------------------- ------------------- ------------------- WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE EXERCISE EXERCISE EXERCISE NUMBER PRICE NUMBER PRICE NUMBER PRICE --------- -------- --------- -------- --------- -------- Outstanding at beginning of year 5,873,716 $20.79 3,934,876 $18.29 4,084,316 $18.17 Changes during year Granted....................... 50,000 18.30 2,500,000 24.50 35,400 31.09 Exercised..................... -- -- (273,359) 17.60 (184,840) 17.88 Expired....................... (593,600) 24.87 (287,801) 21.92 -- -- --------- ------ --------- ------ --------- ------ Outstanding at end of year...... 5,330,116 20.31 5,873,716 20.79 3,934,876 18.29 ========= ====== ========= ====== ========= ====== Exercisable at end of year...... 1,656,068 $16.65 1,283,416 $16.16 1,103,914 $15.33 ========= ====== ========= ====== ========= ======
The following table summarizes information about the share options outstanding at March 31, 2001.
NUMBER WEIGHTED AVERAGE NUMBER RANGE OF OUTSTANDING AT REMAINING WEIGHTED AVERAGE EXERCISABLE AT WEIGHTED AVERAGE EXERCISE PRICE MAR. 31/01 CONTRACTUAL LIFE EXERCISE PRICE MAR. 31/01 EXERCISE PRICE - --------------- -------------- ---------------- ---------------- -------------- ---------------- $ 4.35 - $13.64 1,133,186 3.6 years $11.50 675,036 $10.05 $14.21 - $22.14 1,599,880 4.5 years $18.67 662,742 $18.37 $23.57 - $35.43 2,597,050 8.0 years $25.17 318,290 $27.09
- -------- (i) Options granted under the Share Option Plan generally have a term of 10 years and vest evenly over their term. The exercise price of each option is the closing price of the Company's common stock on the Toronto Stock Exchange on the day on which the option is granted. (ii) On September 20, 1999 the Company merged with Euro-Nevada Mining Corporation Limited. At the time of the merger there were 2,102,332 options of Euro-Nevada outstanding. These options were converted to 1,618,796 options of Franco-Nevada at a ratio of 0.77. The 1999 comparatives for share options have been adjusted for this transaction. 8. DEFERRED FOREIGN EXCHANGE GAIN Components of deferred foreign exchange include:
MARCH MARCH 2001 2000 ------- ------- Cash.......................................................... $25,362 $15,170 Mineral properties............................................ 31,939 2,748 Marketable securities......................................... 10,538 2,650 Other......................................................... 1,780 697 ------- ------- $69,619 $21,265 ======= =======
E-18 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) 9. INCOME TAXES (a) The Company's effective tax rate differs from the combined Canadian federal and provincial statutory tax rate as follows:
MARCH MARCH MARCH 2001 2000 1999 ----- ----- ----- Tax at Canadian statutory rate.............................. 43% 45% 45% Lower U.S. tax rate on U.S. earnings........................ (10) (12) (13) Non-taxable earnings........................................ -- (2) (3) Capital and mining taxes.................................... 2 3 4 --- --- --- Effective tax rate.......................................... 35% 34% 33% === === ===
(b) The following table depicts the primary temporary differences included in future income taxes as at March 31, 2001 and 2000. The 2000 comparative amounts have been presented after reflecting the $17.0 million effect of the implementation adjustment described in note 2.
MARCH MARCH 2001 2000 ------ ------ Future income taxes: Liabilities: Mineral properties........................................... 65,169 64,395 Capital assets............................................... 16,445 10,734 Other........................................................ 4,259 3,913 ------ ------ Net future income taxes......................................... 85,873 79,042 ====== ======
(c) Details of income tax (credit) expense by jurisdiction are:
MARCH MARCH MARCH 2001 2000 1999 ------ ------ ------ Current United States........................................ 23,293 15,215 14,596 Canada............................................... 26,348 11,885 11,567 ------ ------ ------ 49,641 27,100 26,163 Future United States........................................ 866 2,319 621 Canada............................................... (6,649) 3,144 4,508 ------ ------ ------ (5,783) 5,463 5,129
(d) Income taxes paid in 2001 were $45,249,276 (2000--$26,002,590, 1999--$19,357,381). E-19 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) 10. SEGMENT INFORMATION The Company operates in the Mining and Oil and Gas industries. The operations are evaluated and managed in two segments, namely, Mining royalties and Oil and Gas. Mining royalties include precious metals and base metal royalties and the Company's exploration interests that are aimed at generating royalties. Oil and Gas operations are largely in Canada.
SIX MONTHS ENDED FOR THE YEARS ENDED ----------------------- ----------------------- SEPTEMBER SEPTEMBER MARCH MARCH MARCH 2001 2000 2001 2000 1999 ----------- ----------- ------- ------- ------- (UNAUDITED) (UNAUDITED) REVENUES Mining royalties....... $37,798 $27,800 $66,030 $64,771 $61,589 Oil & gas.............. 13,525 13,342 29,566 17,199 11,188 ------- ------- ------- ------- ------- 51,323 41,142 95,596 81,970 72,777 ------- ------- ------- ------- ------- OPERATING COSTS Mining royalties....... 43 136 341 196 155 Oil & gas.............. 328 337 800 1,200 1,418 ------- ------- ------- ------- ------- 371 473 1,141 1,396 1,573 ======= ======= ======= ======= ======= DEPLETION AND DEPRECIATION Mining royalties....... 2,312 7,237 11,555 11,269 11,089 Oil & gas.............. 880 1,629 2,301 3,800 3,191 ------- ------- ------- ------- ------- $ 3,192 $ 8,866 $13,856 $15,069 $14,280 ======= ======= ======= ======= =======
E-20 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED)
SIX MONTHS ENDED FOR THE YEARS ENDED ---------------------- ---------------------------------- SEPTEMBER SEPTEMBER MARCH MARCH MARCH 2001 2000 2001 2000 1999 ----------- ----------- ---------- ---------- ---------- (UNAUDITED) (UNAUDITED) SEGMENT INCOME BEFORE TAXES Mining royalties..................... $ 35,443 $ 20,427 $ 54,134 $ 53,306 $ 50,345 Oil & Gas............................ 12,317 11,376 26,465 12,199 6,579 Provision for mining assets.......... -- -- (28,216) -- -- ---------- ---------- ---------- ---------- ---------- 47,760 31,803 52,383 65,505 56,924 Investment earnings.................. 22,902 38,960 82,035 38,607 43,330 Equity earnings in Normandy.......... 11,215 -- -- -- -- General and administration........... (3,164) (4,848) (10,688) (7,554) (5,508) ---------- ---------- ---------- ---------- ---------- EARNINGS BEFORE TAX..................... 78,713 65,915 123,730 96,558 94,746 Tax..................................... (23,598) (21,729) (43,858) (32,563) (31,292) ---------- ---------- ---------- ---------- ---------- EARNINGS FROM CONTINUING OPERATIONS..... 55,115 44,186 79,872 63,995 63,454 Discontinued operations................. 21,902 16,931 33,573 33,641 5,075 ---------- ---------- ---------- ---------- ---------- NET EARNINGS............................ 77,017 61,117 113,445 97,636 68,529 ========== ========== ========== ========== ========== REVENUE BY GEOGRAPHIC AREA USA.................................. 46,975 50,209 114,432 71,772 66,344 Canada............................... 26,054 28,499 60,120 45,228 46,232 Australia............................ 11,215 -- -- -- -- Other................................ 1,196 1,394 3,079 3,577 3,531 ---------- ---------- ---------- ---------- ---------- 85,440 80,102 177,631 120,577 116,107 ========== ========== ========== ========== ========== SEGMENT CAPITAL EXPENDITURES Mining royalties..................... 2,602 1,271 2,265 8,924 61,446 Oil & gas............................ 1,614 1,216 1,830 305 4,355 ---------- ---------- ---------- ---------- ---------- 4,216 2,487 4,095 9,229 65,801 ========== ========== ========== ========== ========== IDENTIFIABLE ASSETS BY GEOGRAPHIC AREA USA.................................. 1,191,180 593,671 1,386,228 521,363 515,581 Canada............................... 39,379 847,441 106,229 824,560 794,514 Australia............................ 349,055 30,628 23,779 31,208 29,943 Other................................ 27,512 42,776 31,514 43,760 49,487 ---------- ---------- ---------- ---------- ---------- 1,607,126 1,514,516 1,547,750 1,420,891 1,389,525 ========== ========== ========== ========== ========== IDENTIFIABLE ASSETS BY SEGMENT Mining royalties..................... 215,263 317,899 172,225 236,483 227,424 Oil & gas............................ 43,997 43,912 44,037 57,149 59,911 Mining operations.................... -- 193,902 231,371 172,237 176,002 ---------- ---------- ---------- ---------- ---------- Total assets for reportable segments. 259,260 555,713 447,633 465,869 463,337 Cash and investments at cost......... 1,347,504 958,506 1,099,811 954,583 925,826 Other................................ 362 297 306 439 362 ---------- ---------- ---------- ---------- ---------- $1,607,126 $1,514,516 $1,547,750 $1,420,891 $1,389,525 ========== ========== ========== ========== ==========
E-21 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) 11. COMMITMENTS (A) FOREIGN EXCHANGE CONTRACTS Franco has entered into foreign exchange contracts whereunder Franco-Nevada will receive Australian $4 million in June 2002 and 2003 at US$0.5873 and US$0.5882 respectively for each Australian dollar. These contracts were closed out subsequent to March 31, 2001. (B) NET PROFITS INTEREST Franco-Nevada pays the contract operator of the Ken Snyder Mine a 5% net profit interest based upon the Company's reported pre-tax profit from the mine. 12. SUBSEQUENT EVENT (a) On April 2, 2001, the Company entered into an agreement with Normandy Mining Limited ("Normandy"), Australia's largest gold producer, to exchange its Ken Snyder mine, US$48 million, and its Australian assets in return for a 19.99% interest in Normandy. On May 31, 2001 the transaction was consummated and Normandy issued 446.1 million freely-trading ordinary shares to Franco-Nevada. Franco-Nevada retained a minimum 5% NSR royalty over the Midas property, which escalates at gold prices over US$300 per ounce to a maximum of 10% at gold prices over US$400 per ounce. The exchange of assets resulted in a pre-tax gain of $38.6 million to Franco-Nevada and has been classified as "Discontinued operations." Income taxes of $16.7 million were recorded in connection with the exchange. Amounts included in the consolidated balance sheets relating to discontinued operations are as follows:
MARCH MARCH 2001 2000 -------- -------- Current assets............................................. $ 31,509 $ 8,863 Non-current assets......................................... 223,525 195,237 Current liabilities........................................ (8,880) (2,386) Non-current liabilities.................................... (51,071) (17,486) -------- -------- Net assets of discontinued operations...................... $195,083 $184,228 ======== ========
The summarized statements of operations for the discontinued operations are as follows:
MARCH MARCH MARCH 2001 2000 1999 -------- -------- -------- Revenue.......................................... $106,641 $ 97,659 $ 19,489 Expenses......................................... (65,738) (50,413) (12,048) Taxes............................................ (7,330) (13,605) (2,366) -------- -------- -------- Net earnings from discontinued operations........ $ 33,573 $ 33,641 $ 5,075 ======== ======== ========
The summarized statements of cashflows for the discontinued operations are as follows:
MARCH MARCH MARCH 2001 2000 1999 -------- -------- -------- Operating........................................ $ 65,948 $ 56,016 $ 4,708 Investing........................................ (33,309) (19,358) (71,339) Foreign exchange................................. 395 (476) 118 -------- -------- -------- Net cashflow from discontinued operations........ $ 33,034 $ 36,182 $(66,513) ======== ======== ========
(b) The Company has announced a change of its year end to December 31 effective for the period ended December 31, 2001. E-22 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) 13. LEGAL MATTERS (A) ENVIRONMENTAL The Company's mining and exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company conducts its operations so as to protect the public health and environment and believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations. (B) CLAIMS The Company is from time to time involved in various claims, legal proceedings and complaints arising in the ordinary course of business. The Company is also subject to reassessment for income and mining taxes for certain years. It does not believe that adverse decisions in any pending or threatened proceeding related to any potential tax assessments or other matters, or any amount which it may be required to pay by reason thereof, will have material adverse effect on the financial condition or future results of operations of the Company. 14. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES For Canadian GAAP purposes Franco-Nevada has accounted for the investment in Normandy Mining Limited on an equity basis using the best information available from Normandy in the public domain. As Normandy has declined to provide a reconciliation of its results of operations in US GAAP for the period ended September 30, 2001 there is no basis for recording an adjustment to US GAAP. Canadian GAAP varies in certain significant respects from the principles and practices generally accepted in the United States ("US GAAP"). The effect of these principal measurement differences on the Company's consolidated financial statements are quantified below and described in the accompanying notes: STATEMENTS OF EARNINGS (IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE DATA)
SIX MONTHS ENDED FOR THE YEARS ENDED ---------------------- -------------------------- SEPTEMBER SEPTEMBER MARCH MARCH MARCH 2001 2000 2001 2000 1999 ----------- ----------- -------- ------- ------- (UNAUDITED) (UNAUDITED) Net earnings for the period reported under Canadian GAAP............... $ 77,017 $ 61,117 $113,445 $97,636 $68,529 Mineral properties expense(a).......................................... (1,938) (1,890) 8,576 (5,236) (7,637) Business merger costs(b)............................................... -- -- -- (2,821) -- Fair market value adjustment of marketable securities(c)............... 12,228 (21,629) (21,971) -- -- Income taxes........................................................... (3,582) 8,239 4,370 2,911 3,101 -------- -------- -------- ------- ------- Net earnings for the period reported under US GAAP before US GAAP difference on discontinued operations and changes in accounting policy 83,725 45,837 104,420 92,490 63,993 Discontinued operations(d)(e).......................................... 27,385 1,183 213 (1,307) (1,481) -------- -------- -------- ------- ------- Net earnings for the period reported under US GAAP after discontinued operations and before changes in accounting policy.................... 111,110 47,020 104,633 91,183 62,512 Cumulative effect of change in accounting policy(e)(f).......................................................... -- (2,467) (2,467) (4,943) -- -------- -------- -------- ------- ------- Net earnings for the period reported under US GAAP after discontinued operations and changes in accounting policy........................... $111,110 $ 44,553 $102,166 $86,240 $62,512 ======== ======== ======== ======= =======
E-23 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) - -------- (a) In accordance with United States GAAP, the Company would be required to charge all costs of mineral properties exploration to earnings as incurred until proven economic reserves are established. In fiscal 2001, the Company recorded a provision against mining assets which contains mineral property assets already expensed under US GAAP. This has resulted in a reduction in the provision under US GAAP of $8,576,000. (b) Under US GAAP, merger costs are expensed as incurred. Under Canadian GAAP, the costs are considered a capital transaction and netted against capital stock. (c) Under US GAAP, the Company was required to write-down a marketable security investment in an earlier period. The provision and realized loss booked under Canadian GAAP in the period ended September 30, 2001 has been subsequently reversed as a result of the US GAAP adjustment. (d) The Company disposed of its Ken Snyder Mine in Nevada and Australian division to Normandy Mining Limited ("Normandy") of Australia in exchange for an equity interest in Normandy. The gain recognized on the transaction under Canadian GAAP has been adjusted for differences between carrying costs of the Ken Snyder Mine and Australian division under US GAAP. The above amounts are net of tax. (e) Effective January 1, 2001 the Company implemented Staff Accounting Bulletin ("SAB") Note 101, Revenue Recognition for US GAAP purposes. According to SAB 101, there are numerous conditions depicting when revenue can be recognized. Under Canadian GAAP, the Company recognized revenue upon the delivery of gold dore to the refiner. The above amounts are net of tax of $1,328,000. (f) Statement of Position 98-5 was adopted during fiscal 2000 which requires start-up costs to be expensed as incurred. Under Canadian GAAP, start-up costs are deferred and amortized over the mine life. The above adjustment is net of tax of $2,362,000. (g) The Company accounts for its share options under Canadian GAAP, which in the Company's circumstances are not different from the amounts that would be determined under the provisions of the Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related Interpretations. Accordingly, no compensation expense for its share option plan has been recorded in the consolidated statements of operations for the six months ended September 30, 2000 and 2001 and the fiscal years ending March 31, 2001, 2000 and 1999.
SIX MONTHS ENDED FOR THE YEARS ENDED ---------------------- ---------------------------- SEPTEMBER SEPTEMBER MARCH MARCH MARCH 2001 2000 2001 2000 1999 ----------- ----------- -------- -------- -------- (UNAUDITED) (UNAUDITED) BASIC EARNINGS PER SHARE Net earnings per share for the period reported under US GAAP before US GAAP difference on discontinued operations and changes in accounting policy................................................. $ 0.53 $ 0.29 $ 0.66 $ 0.58 $ 0.41 Discontinued operations(d)(e)...................................... 0.17 0.01 0.00 (0.01) (0.01) -------- -------- -------- -------- -------- Net earnings per share for the period reported under US GAAP after discontinued operations and before changes in accounting policy... 0.70 0.30 0.66 0.57 0.40 Cumulative effect of changes in accounting policy(e)(f)............ -- (0.02) (0.02) (0.03) -- -------- -------- -------- -------- -------- Net earnings per share for the period reported under US GAAP after discontinued operations and changes in accounting policy.......... $ 0.70 $ 0.28 $ 0.64 $ 0.54 $ 0.40 ======== ======== ======== ======== ======== Weighted average number of common shares outstanding (thousands)... 158,662 158,631 158,631 158,521 154,898 ======== ======== ======== ======== ========
E-24 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED)
SIX MONTHS ENDED FOR THE YEARS ENDED ----------------------- -------------------------- SEPTEMBER SEPTEMBER MARCH MARCH MARCH 2001 2000 2001 2000 1999 ----------- ----------- -------- -------- ------- (UNAUDITED) (UNAUDITED) STATEMENTS OF COMPREHENSIVE EARNINGS Net earnings for the period reported under US GAAP. $111,110 $ 44,553 $102,166 $ 86,240 $62,512 Other comprehensive earnings (net of tax): Foreign currency translation adjustment......... 4,749 21,043 46,074 (23,695) 27,161 Unrealized (loss)/gain on marketable securities. 374 49,514 51,776 (33,111) 9,427 -------- -------- -------- -------- ------- Comprehensive earnings............................. $116,233 $115,110 $200,016 $ 29,434 $99,100 ======== ======== ======== ======== =======
The above amounts are net of taxes as follows: September 2001: $272,000, September 2000: $20,867,000, March 2001: $16,913,000, March 2000: ($15,443,000) and March 1999: $4,780,000. The statements of comprehensive earnings provide a measure of all changes in equity the company that results from transactions with other than shareholders and other economic events that occur during the period.
SIX MONTHS ENDED FOR THE YEARS ENDED ---------------------- ----------------------------- SEPTEMBER SEPTEMBER MARCH MARCH MARCH 2001 2000 2001 2000 1999 ----------- ----------- -------- -------- --------- (UNAUDITED) (UNAUDITED) STATEMENTS OF CASH FLOWS The following summarizes the cash flow amounts in accordance with US GAAP. Operating activities................... $ (19,640) $ 21,466 $116,257 $ 52,377 $ 98,546 Investing activities................... (164,136) 4,683 41,148 (10,596) (253,599) Financing activities................... 4,818 -- (55,521) (42,778) 99,265 Foreign exchange....................... 198 2,886 8,317 (2,531) 8,787 Discontinued operations Operating........................... -- (20,152) 65,781 54,709 3,062 Investing........................... -- (22,573) (33,142) (18,051) (69,693) Foreign exchange.................... -- (638) 395 (476) 118 Opening cash and cash equivalents...... 318,653 175,418 175,418 142,764 256,278 Closing cash and cash equivalents...... 139,893 161,090 318,653 175,418 142,764 Closing cash and short-term investments 864,053 730,099 939,011 705,714 707,507
BALANCE SHEETS The following summarizes the balance sheet amounts in accordance with US GAAP where different from the amounts reported under Canadian GAAP.
(UNAUDITED) SEPTEMBER 2001 MARCH 2001 MARCH 2000 --------------------- --------------------- --------------------- CANADIAN US CANADIAN US CANADIAN US GAAP GAAP GAAP GAAP GAAP GAAP ---------- ---------- ---------- ---------- ---------- ---------- Precious metals..................... $ 44,224 $ 44,224 $ 13,612 $ 10,155 $ 27,584 $ 27,584 Investments in marketable securities 134,396 165,881 160,800 179,154 248,869 221,578 Resource properties................. 179,063 173,263 337,757 286,421 349,364 291,844 Deferred taxes...................... 82,437 80,984 85,873 67,577 62,033 49,380 Capital stock....................... 1,026,139 1,028,960 1,021,321 1,024,142 1,021,321 1,024,142 Retained earnings................... 421,533 406,608 344,516 295,498 303,601 248,853 Deferred foreign exchange gain...... 74,028 70,972 69,619 66,223 21,265 20,149
E-25 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) NEW STANDARDS FOR CANADIAN GAAP In late 2000, the Canadian Institute of Chartered Accountants ("CICA") issued a revised standard, Section 3500, "Earnings Per Share". Public companies with quarterly reporting requirements must calculate basic and fully diluted earnings per share in accordance with the new standard. Diluted earnings per share will now be calculated using the "Treasury Stock Method". The new section will be implemented for the fiscal period ended December 31, 2001. In August 2000, the CICA issued a new standard, Section 1751, "Interim Financial Statements" effective for interim periods in fiscal years beginning on or after January 1, 2001. This standard requires interim financial statements, at a minimum, to include an income and cash flow statement for the quarter and year to date periods, a balance sheet and a statement of retained earnings along with detailed notes to the financial statements. Management does not expect a significant impact on the financial statements of the Company upon the adoption of the new standard. The CICA recently issued new Handbook Sections 1581, "Business Combinations" and 3062, "Goodwill and Other Intangible Assets". Effective July 1, 2001, the standards require that all business combinations be accounted for using the purchase method. Additionally, effective January 1, 2002, goodwill and intangible assets with an indefinite life will no longer be amortized to earnings and will be assessed for impairment on an annual basis in accordance with the new standards, including a transitional impairment test whereby any resulting impairment will be charged to opening retained earnings. Management does not expect a significant impact on the financial statements of the Company upon the adoption of the new standard. In March 2000, the Accounting Standards Board of the CICA issued Accounting Guideline No. 11, "Enterprises in the Development Stage". The guideline addresses three specific issues: (a) capitalization of costs and expenditures, (b) impairment and (c) disclosure. Prior to its issuance, development stage entities were exempt from following certain aspects of Canadian GAAP. This guideline will require that all companies account for transactions based on the underlying characteristics of the transaction rather than the maturity of the enterprise. The guideline is effective no later than fiscal periods beginning on or after April 1, 2000. The Company is aware that there are two alternative views of how this guideline affects mining companies with respect to the capitalization of exploration costs. CICA Handbook Section 3061 "Property, Plant and Equipment" states that "For a mining property, the cost of the asset includes exploration costs if the enterprise considers that such costs have the characteristics of property, plant and equipment." The Company considers that exploration costs incurred meet the characteristics of property, plant and equipment and accordingly defers such costs. Under the view adopted by the Company, deferred exploration costs would not automatically be subject to regular assessments of recoverability, unless conditions such as those in Accounting Guideline No. 11 exist. Under the alternative view, there would be a regular assessment of capitalized exploration costs. Assessment of the probability of recoverability of deferred exploration costs from future operations would require the preparation of a projection based on objective evidence of economic reserves, such as a feasibility study. The Company's interpretation of the guideline will not have a significant impact on the financial statements. However, if the second view is accepted, all deferred exploration costs would be written off as of the beginning of fiscal 2001. This write-off would be treated as a change in accounting principle. The result would be a reduction of resource properties of $49.0 million, a decrease to retained earnings of $30.9 million and a reduction to future taxes of $18.1 million. The impact for the fiscal year ended March 31, 2001 would be a reduction in resource properties of $3.5 million, net income of $2.3 million and future taxes of $1.2 million. For the six-month periods ended September 30, 2000 and 2001 the reduction to resource properties, net income and future taxes would be $1.9 million, $1.2 million and $0.7 million, respectively. The CICA is currently evaluating this issue to determine the appropriate interpretation of the guideline and CICA Handbook Section 3061. E-26 FRANCO-NEVADA MINING CORPORATION LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED) (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS EXCEPT WHERE OTHERWISE INDICATED) NEW STANDARDS FOR US GAAP In July 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination and SFAS No. 142 addresses the initial recognition and measurement of intangible assets acquired outside of a business combination whether acquired individually or with a group of other assets. These standards require all future business combinations to be accounted for using the purchase method of accounting. The Company is required to adopt SFAS No. 141 for business combinations after July 1, 2001 and 142 on a prospective basis as of January 1, 2002. Management does not expect a significant impact on the financial statements of the Company upon the adoption of the new standard. The Financial Accounting Standards Board has recently issued FASB No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". FAS 144 supersedes FAS 121 and the accounting and reporting provisions of APB 30 for segments of a business to be disposed of. The pronouncement is effective January 1, 2002, and will be adopted by the Company at that time. Management does not expect a significant impact on the financial statements of the Company upon the adoption of the new standard. E-27 EX-20 9 mar1ex204.txt EXHIBIT 20.4 EXHIBIT 20.4 NORMANDY MINING LIMITED STATEMENTS OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE
CONVENIENCE TRANSLATION CONSOLIDATED CONSOLIDATED -------------- ----------------- NOTES 2000 2001 2001 2000 ----- ------ ------ -------- ------- US$M US$M A$M A$M Sales Revenue................................................... 2 794.2 782.1 1,543.7 1,323.6 Cost of production.............................................. (586.6) (610.2) (1,204.5) (977.6) ------ ------ -------- ------- GROSS PROFIT.................................................... 207.6 171.9 339.2 346.0 ------ ------ -------- ------- Other revenue from ordinary activities.......................... 2 15.1 14.3 28.2 25.2 Proceeds on sale of assets...................................... 2 127.8 77.4 152.9 213.0 Book value of assets sold....................................... (102.3) (59.2) (116.9) (170.6) Share of net profit/(loss) of associates and joint ventures accounted for using the equity method......................... 12.1 (2.4) (4.8) 20.1 Exploration and evaluation expenses............................. 14 -current year................................................. (28.0) (29.4) (58.1) (46.6) -previously capitalized....................................... 4 -- (15.7) (31.0) -- Administration expenses......................................... (36.2) (32.7) (64.6) (60.4) Borrowing costs................................................. (40.0) (56.8) (112.0) (66.7) Net write off of non-current assets............................. -previously capitalized....................................... 4 (309.2) (111.1) (220.0) (515.3) Other income/(expenses) from ordinary activities (18.1) (8.4) (15.9) (30.1) ------ ------ -------- ------- PROFIT/(LOSS) FROM ORDINARY ACTIVITIES.......................... (171.2) (52.1) (103.0) (285.4) Income tax expense relating to ordinary activities.............. 5 (22.4) (10.3) (20.4) (37.3) ------ ------ -------- ------- Profit/(loss) from ordinary activities after related income tax expense....................................................... (193.6) (62.4) (123.4) (322.7) Net profit/(loss) attributable to outside equity interests...... 24.2 (15.8) (31.2) 40.4 ------ ------ -------- ------- Net profit/(loss) attributable to members of the parent entity................................................. (169.4) (78.2) (154.6) (282.3) ------ ------ -------- ------- Increase/(decrease) in foreign currency translation reserve arising on translation of self-sustaining foreign operations.................................................... 23 10.2 14.4 28.3 17.0 ------ ------ -------- ------- Total revenue, expense and valuation adjustments attributable to members of the parent entity recognised directly in equity.... 10.2 14.4 28.3 17.0 ------ ------ -------- ------- Total changes in equity other than those resulting from transactions with owners as owners............................ (159.2) (63.8) (126.3) (265.3) ------ ------ -------- ------- Earnings per share -Basic (cents per share)...................................... 22 (9.7) (4.3) (8.6) (16.2) ------ ------ -------- -------
The above Statements of Financial Performance should be read in conjunction with the accompanying notes. D-12 NORMANDY MINING LIMITED STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE
CONVENIENCE TRANSLATION CONSOLIDATED CONSOLIDATED ---------------- ---------------- NOTES 2000 2001 2001 2000 ----- ------- ------- ------- ------- US$M US$M A$M A$M CURRENT ASSETS Cash assets...................................... 7 147.2 174.7 344.8 245.4 Receivables...................................... 8 74.4 62.6 123.7 124.0 Inventories...................................... 9 77.8 85.9 169.5 129.6 Other financial assets........................... 12 29.8 10.8 21.3 49.6 Other............................................ 17 74.1 71.2 140.6 123.5 ------- ------- ------- ------- TOTAL CURRENT ASSETS............................. 403.3 405.2 799.9 672.1 ------- ------- ------- ------- NON-CURRENT ASSETS Receivables...................................... 8 16.4 5.7 11.2 27.3 Tax assets....................................... 10 51.8 51.8 102.3 86.4 Investments accounted for using the equity method 11 268.1 123.6 244.0 446.8 Other financial assets........................... 12 163.0 71.4 141.0 271.7 Development properties........................... 13 186.4 253.0 499.5 310.7 Exploration and evaluation expenditure........... 14 105.1 76.8 151.7 175.1 Property, plant and equipment.................... 15 842.2 886.6 1,750.0 1,403.6 Intangible assets................................ 16 28.5 22.4 44.2 47.5 Other............................................ 17 111.0 52.2 102.7 185.0 ------- ------- ------- ------- TOTAL NON-CURRENT ASSETS......................... 1,772.5 1,543.5 3,046.6 2,954.1 ------- ------- ------- ------- TOTAL ASSETS..................................... 2,175.8 1,948.7 3,846.5 3,626.2 ------- ------- ------- ------- CURRENT LIABILITIES Payables......................................... 97.4 126.5 249.8 162.4 Interest bearing liabilities..................... 18 66.7 57.8 114.0 111.1 Provisions....................................... 19 133.5 109.9 216.8 222.4 Tax liabilities.................................. 20 16.4 11.0 21.8 27.4 ------- ------- ------- ------- TOTAL CURRENT LIABILITIES........................ 314.0 305.2 602.4 523.3 ------- ------- ------- ------- NON-CURRENT LIABILITIES Interest bearing liabilities..................... 18 863.2 598.7 1,181.8 1,438.6 Provisions....................................... 19 241.0 136.2 268.9 401.7 Tax liabilities.................................. 20 113.6 129.2 255.0 189.3 Other............................................ 21 52.4 71.1 140.4 87.3 ------- ------- ------- ------- TOTAL NON-CURRENT LIABILITIES.................... 1,270.2 935.2 1,846.1 2,116.9 ------- ------- ------- ------- TOTAL LIABILITIES................................ 1,584.2 1,240.4 2,448.5 2,640.2 ------- ------- ------- ------- NET ASSETS....................................... 591.6 708.3 1,398.0 986.0 ------- ------- ------- ------- EQUITY Contributed equity............................... 22 693.3 807.5 1,593.9 1,155.5 Reserves......................................... 23 27.0 36.2 71.4 45.0 Retained profits/(accumulated losses)............ 23 (151.1) (220.2) (434.8) (251.9) ------- ------- ------- ------- EQUITY ATTRIBUTABLE TO MEMBERS OF NORMANDY MINING LIMITED........................................ 569.2 623.5 1,230.5 948.6 Outside equity interests in controlled entities.. 24 22.4 84.8 167.5 37.4 ------- ------- ------- ------- TOTAL EQUITY..................................... 25 591.6 708.3 1,398.0 986.0 ======= ======= ======= =======
The above Statements of Financial Position should be read with the accompanying notes. D-13 NORMANDY MINING LIMITED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE
CONVENIENCE TRANSLATION CONSOLIDATED CONSOLIDATED -------------- ------------------ NOTES 2000 2001 2001 2000 ----- ------ ------ -------- -------- US$M US$M A$M A$M CASH FLOWS FROM OPERATING ACTIVITIES Receipts from sales..................................... 781.6 798.7 1,576.6 1,302.7 Payments to suppliers and employees..................... (630.6) (601.3) (1,186.9) (1,051.0) Interest received....................................... 16.6 11.4 22.5 27.7 Dividends received...................................... 11.6 21.6 42.6 19.3 Other receipts.......................................... 8.2 -- -- 13.6 Income tax paid......................................... (18.9) (19.7) (38.9) (31.5) Interest and other costs of finance paid................ (38.9) (47.5) (93.8) (64.9) ------ ------ -------- -------- NET CASH INFLOW FROM OPERATING ACTIVITIES............... 26(d) 129.6 163.2 322.1 215.9 ------ ------ -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Payments for property, plant and equipment.............. (78.5) (67.7) (133.6) (130.9) Interest capitalised on qualifying assets............... (9.4) (6.5) (12.9) (15.7) Payments for development projects....................... (61.1) (44.5) (87.8) (101.9) Payments for exploration and evaluation................. (35.2) (31.8) (62.8) (58.6) Payments for investments................................ (15.9) (4.7) (9.3) (26.4) Proceeds from sale of non-current assets................ 23.4 13.6 26.9 39.0 Proceeds from sale of investments....................... 38.2 66.0 130.3 63.7 Repayment of loans by other entities.................... 0.1 57.2 113.0 0.1 Loans to other entities................................. (21.8) (2.1) (4.1) (36.4) Businesses acquired..................................... 26(e) 28.0 24.5 48.3 46.4 Businesses disposed..................................... 26(f) 63.5 36.4 71.8 105.9 ------ ------ -------- -------- NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES..... (68.7) 40.4 79.8 (114.8) ------ ------ -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Repayments of borrowings................................ (388.7) (329.1) (649.7) (647.8) Proceeds from borrowings................................ 254.5 175.9 347.3 424.1 Dividends paid to outside equity interests in controlled entities.............................................. (7.1) (10.6) (20.9) (11.9) Dividends paid.......................................... 6 (40.9) (37.6) (74.3) (68.1) Proceeds from issue of shares........................... -- 47.5 93.8 -- ------ ------ -------- -------- NET CASH OUTFLOW FROM FINANCING ACTIVITIES.............. (182.2) (153.9) (303.8) (303.7) ------ ------ -------- -------- Net increase/(decrease) in cash......................... (121.3) 49.7 98.1 (202.6) Cash at the beginning of the financial year............. 263.9 124.3 245.4 439.9 Effect of changes in the exchange rate on cash held in foreign currencies at the beginning of the financial year.................................................. 4.8 0.7 1.3 8.1 ------ ------ -------- -------- Cash at end of financial year........................... 26(a) 147.4 174.7 344.8 245.4 ====== ====== ======== ========
The above Statements of Cash Flows should be read in conjunction with the accompanying notes. D-14 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2001 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This general purpose financial report has been prepared in accordance with applicable Accounting Standards, Urgent Issues Group Consensus Views and the Corporations Act 2001. It is prepared in accordance with the historical cost convention, except for certain assets which are noted as at valuation. The accounting policies adopted are consistent with those of the previous year. The directors have elected under section 334(5) of the Corporations Act 2001 to apply Accounting Standards AASB 1041 "Revaluation of Non-Current Assets" for this financial year, even though the standard is not required to be applied until annual reporting periods beginning on or after 30 September 2001. (A) PRINCIPLES OF CONSOLIDATION The consolidated financial statements are presented as one set of financial statements and include all entities which comprise the Normandy Mining Limited consolidated entity, being the parent entity and its controlled entities. There are no controlled entities in the consolidated entity other than those listed in Note 28. The effects of all transactions between entities within the consolidated entity are eliminated in full. (B) FOREIGN CURRENCIES Transactions denominated in foreign currencies have been brought to account at the exchange rates ruling at the time of the transactions. At balance date, foreign currency receivables and payables are translated at exchange rates ruling at that date. Exchange gains and losses and hedging costs arising on contracts entered into as hedges of specific revenue or expense transactions are deferred until the date of such transactions at which time they are included in the determination of such revenues or expenses. Assets and liabilities of self-sustaining overseas controlled entities are translated at exchange rates ruling at balance date and any exchange gain or loss arising on translation is carried directly to a foreign currency translation reserve. When anticipated purchase or sale transactions have been hedged, actual purchases or sales which occur during the hedged period are accounted for as having been hedged until the amounts of those transactions are fully allocated against the hedged amounts. Where a hedge transaction is terminated early and the anticipated transaction is still expected to occur as designated, the deferred gains and losses that arose on the hedge prior to its termination continue to be deferred and are included in the measurement of the purchase or sale or interest transaction when it occurs. Where a hedge transaction is terminated early because the anticipated transaction is no longer expected to occur as designated, deferred gains and losses that arose on the hedge prior to its termination are included in the statement of financial performance for the period. (C) REVENUE Gold bullion is taken up as a sale in the period during which it is shipped from the mine, provided it is either sold or delivered to a gold refinery within the normal time span. Bullion delivered against forward sales contracts is accounted for at the contract rate. Base metal concentrate sales are recognised at estimated sales value when D-15 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 shipped and adjusted for variations in metal prices, assay, weight and currency. Other sales are taken up when title has passed. Gold bullion held at year end is valued at the contract rates for those hedges it is expected to be delivered into. Base metal concentrate debtors are valued at the relevant forward contract US dollar rate. Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement. Gains or costs arising upon entry into a hedging transaction intended to hedge the sale of goods, together with subsequent exchange gains or losses resulting from those transactions, are deferred up to the date of sale and included in the measurement of the sale. If the hedging transaction is terminated prior to its maturity date and the hedged transaction is still expected to occur, deferral of any gains and losses which arose prior to termination continues and those gains and losses are included in the measurement of the hedged transaction. In those circumstances where a hedging transaction is terminated prior to maturity because the hedged transaction is no longer expected to occur, any previously deferred gains and losses are recognised in the statements of financial performance at the date of termination. If a hedge transaction relating to a commitment for the sale of goods or services is redesignated as a hedge of another specific commitment and the original transaction is still expected to occur, the gains and losses that arise on the hedge prior to its redesignation are deferred and included in the measurement of the original sale when it takes place. If the hedge transaction is redesignated as a hedge of another commitment because the original sale transaction is no longer expected to occur, the gains and losses that arise on the hedge prior to its redesignation are recognised in the statements of financial performance at the date of the redesignation. (D) RECEIVABLES Receivables are recorded at amounts due less any provision for doubtful debts. (E) DERIVATIVES Derivative financial instruments are not recognised in the financial statements on inception. The costs associated with entering hedge transactions in respect of commodity sales together with gains or losses to the date of sale are deferred and included in the measurement of the final sale price. Additional information in respect of hedging is set out in Note 32. The amount received or paid under interest rate swaps is recognised as an adjustment to interest rate expense when the cash flow takes place. (F) INCOME TAX Income tax has been brought to account using the liability method of tax effect accounting. No provision has been made for any taxes on capital gains which could arise in the event of a sale of certain revalued non-current assets for the amount at which they are stated in the financial statements as it is not expected that any such liability will crystallise. D-16 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 (G) GOODWILL Goodwill is measured as the excess of the cost of acquisition over the fair value of the identifiable net assets acquired. Amortisation is provided on a straight line basis over the period during which the benefits are expected to arise based on life of mine or over a period of twenty years whichever is the lesser. (H) INVENTORIES Inventories, apart from gold bullion, are valued at the lower of cost and net realisable value. Costs are assigned to inventories on hand by the method most appropriate to each class of inventory with the majority being valued on an average cost basis. Costs of production include fixed and variable direct costs and an appropriate portion of fixed overhead expenditure, depreciation and mine amortisation. (I) OTHER FINANCIAL ASSETS The consolidated entity's interests in companies are carried at the lower of cost and recoverable amount. Dividend income is recognised in profits when received, except for associated entities which are accounted for using the equity method. Loans to other corporations are recorded at amounts due less any provisions for doubtful loans. (J) JOINT VENTURES (i) Joint venture operation The proportionate interests in the assets, liabilities and expenses of a joint venture operation have been incorporated in the financial statements under the appropriate headings. Details of the joint venture are set out in Note 29. (ii) Joint venture entities The consolidated entity's interest in the assets and liabilities of joint venture entities are accounted for using the equity method. Additional information is provided in Note 30. (K) EXPLORATION AND EVALUATION EXPENDITURE Exploration and evaluation expenditure incurred by the consolidated entity is accumulated for each area of interest and recorded as an asset, if either: (i) it is expected to be recouped through successful development of and production from the area, or by its sale; or (ii) significant exploration or evaluation of the area is continuing. The expenditure incurred in areas of interest located around existing milling facilities is provided for over the life of the milling facilities. Expenditure on all other areas of interest is expensed for as the expenditure is incurred other than for exploration assets acquired, which are initially recorded at cost. The recoverable amount of each area of interest is determined on a bi-annual basis so that the net carrying amount does not exceed the recoverable amount. For areas of interest which are not considered to have any commercial value, or where exploration rights are no longer current, the capitalised amounts are written off against the provision and any remaining amounts are charged against profit. D-17 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 (L) DEVELOPMENT PROPERTIES Where it has been established to the satisfaction of Directors that ore reserves or mineral resources exist, development expenditure is accumulated as development properties. No amortisation is provided in respect of development properties until they are reclassified as mine properties following commencement of production. (M) DEPRECIATION AND AMORTISATION Mine properties are amortised on a units of production basis once production has commenced. Property, plant and equipment is depreciated using a units of production basis or a straight line basis over the useful life of the asset. The units of production method causes rates of depreciation and amortisation to vary according to the rate at which production has depleted the estimated future mineable reserves of the respective mines. (N) PREPAID/DEFERRED MINING COSTS Direct expenditure on surface mining is brought to account at the life of mine ratio of ore to waste for each pit. A prepayment or provision is booked whenever the stripping ratio for a period differs from the mine plan. Costs incurred in developing drives in underground mines which are expected to be used for periods shorter than the mine life are apportioned over the life of the mine using a ratio of development meters to tonnes of ore reserve. A prepayment or provision is booked whenever the metres developed for a period differs from the mine life ratio. (O) RECOVERABLE AMOUNT OF NON-CURRENT ASSETS Each reporting period, the recoverable amount of all non-current assets is assessed. Where the carrying amount of a non-current asset is greater than its recoverable amount, the asset is revalued down to its recoverable amount. Where net cash inflows are derived from a group of assets working together, such as at a mining operation, recoverable amount is determined on the basis of the relevant group of assets. The expected net cash flows included in determining recoverable amounts of non-current assets are discounted to their present values using a market-determined, risk-adjusted discount rate. The effect of capital gains tax has not been taken into account. (P) MINE COMPLETION COSTS Provision is made for estimated rehabilitation expenditure, decommissioning and closure costs using the incremental method on a units of production basis over the life of the mine from the time production commences. Future total mine completion costs are estimated annually on an undiscounted basis taking into account all current environmental and legal requirements and are adjusted on a prospective basis. Rehabilitation costs recognised include regrading of waste dumps, revegetation and erosion and drainage control, in order to allow for relinquishment of mining titles with no ongoing maintenance costs. Closure costs recognised include employee redundancy payments and costs incurred in auctioning remaining spares and D-18 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 consumables. Rehabilitation costs associated with exploration and evaluation activities are treated as exploration and evaluation expenditure. (Q) EMPLOYEE ENTITLEMENTS Provision is made for all know obligations in respect of employees. Annual leave, long service leave and vested sick leave are provided at the current rate of pay as per the relevant awards and employee contracts. Provisions for long service leave commence at the anniversary of three years of service, with further amounts being provided as the entitlement grows beyond three years. It is expected that the resultant provision for long service leave will approximate the present value of the estimated future cash outflows associated with long service leave. Additional information in respect of employee entitlements including ownership based remuneration schemes is provided in Note 36. (R) ACCOUNTS PAYABLE Trade payables and other accounts payable are recognised when the economic entity becomes obliged to make future payments resulting from the purchase of goods and services. (S) ACQUISITION OF ASSETS Assets acquired are recorded at the cost of acquisition, being the purchase consideration determined as at the date of acquisition plus costs incidental to the acquisition. In the event that settlement of all or part of the cash consideration given in the acquisition of an asset is deferred, the fair value of the purchase consideration is determined by discounting the amounts payable in the future to their present value as at the date of acquisition. (T) BORROWING COSTS Borrowing costs are expensed as incurred except where they relate to the financing of projects under construction where they are capitalised up to the date of commissioning or sale. (U) INTEREST BEARING LIABILITIES Interest expense is recognised on an effective yield basis. Debentures, bank loans and other loans are recorded at an amount equal to the net proceeds received. Interest expense is recognised on an accrual basis. Ancillary costs incurred in connection with the arrangement of borrowings are deferred and amortised over the period of borrowing. (V) UNITED STATES DOLLAR CONVERSIONS This financial report has been prepared using Australian dollars. For the convenience of readers outside Australia the statements of financial performance, statements of financial position and statements of cash flows have been converted from A$ to US$ but remain prepared under Australian Generally Accepted Accounting Practices. These conversions appear under columns headed "Convenience Translation" and represented rounded millions of US dollars. D-19 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 The conversion has been made using the noon-buying rate in New York City for cable transfers in non-US currencies. This rate is certified for custom purposes by the Federal Reserve Bank of New York. The rate on 30 June 2001 was A$1.00 to US$0.51 (2000: A$1.00 to US$0.60). These conversions are indicative only and do not mean that the A$ amounts could be converted to US$ at the rate indicated. (W) ROUNDING AMOUNTS The Company is of the kind referred to in Class Order 98/100 dated 10 July 1998 issued by the Australian Securities and Investment Commission. In accordance with that Class Order amounts in this report and the financial report have been rounded to the nearest one hundred thousand dollars, except where rounding to the nearest one thousand dollars is required. (X) COMPARATIVE AMOUNTS The Company has adopted the presentation and disclosure requirements of Accounting Standards AASB 1018 "Statement of Financial Performance", AASB 1034 "Financial Report Presentation and Disclosure" and AASB 1040 "Statement of Financial Position" for the first time in the preparation of this financial report. In accordance with the requirements of these new/revised Standards, comparative amounts have been reclassified in order to comply with the new presentation format. The reclassification of comparative amounts has not resulted in a change to the aggregate amounts of current assets, non-current assets, current liabilities, non-current liabilities or equity, or the net profit/loss of the company as reported in the prior year financial report. 2 REVENUE
CONSOLIDATED --------------- 2001 2000 ------- ------- A$M A$M REVENUE FROM OPERATING ACTIVITIES Gold.......................................................... 1,251.9 936.0 Metals........................................................ 257.7 288.6 Other......................................................... 34.1 99.0 ------- ------- 1,543.7 1,323.6 ------- ------- INTEREST REVENUE Other parties................................................. 27.8 21.7 Related parties............................................... 0.4 3.5 ------- ------- 28.2 25.2 ------- ------- REVENUE FROM NON-OPERATING ACTIVITIES Proceeds on sale of investments............................... 130.3 173.4 Proceeds on sale of property, plant and equipment............. 22.6 39.6 Insurance claims proceeds receivable.......................... 12.9 1.5 Other......................................................... 17.8 20.1 ------- ------- 183.6 234.6 ------- ------- 1,755.5 1,583.4 ======= =======
D-20 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 3 OPERATING PROFIT Profit/(loss) from ordinary activities before income tax includes the following specific net gains and expenses:
CONSOLIDATED ---------------- 2001 2000 ------- ------- A$M A$M NET GAINS Net gains on disposal of: Property, plant & equipment.............................. 20.5 4.1 Deferred hedge gain amortisation............................ 92.6 91.4 EXPENSES Amortisation Mine properties.......................................... 169.4 57.9 Goodwill................................................. 3.6 6.5 Other.................................................... -- 1.7 Depreciation Land and buildings....................................... 2.2 0.5 Plant and equipment...................................... 111.7 74.1 ------- ------- Total depreciation and amortisation(i)...................... 286.9 140.7 ------- ------- Royalties................................................... 27.6 14.9 Borrowing costs Interest and finance charges............................. 124.9 82.4 Less amount capitalised--qualifying assets............... (12.9) (15.7) ------- ------- Borrowing costs expensed.................................... 112.0 66.7 Addition to/(reductions in) provisions for Directors' entitlements.................................. 1.5 1.3 Employee entitlements.................................... 13.7 (1.7) Mine completion costs.................................... 1.4 17.3 Doubtful debts........................................... (0.7) (15.0) Other.................................................... 2.2 8.0 AUDITORS' REMUNERATION A$ A$ ------- ------- Audit Services Auditors of the company.................................. 869,000 748,000 Other auditors........................................... 425,000 659,000 Other Services Auditors of the company.................................. 854,000 382,000 Other auditors........................................... 2,000 52,000 ======= =======
- -------- (i) Amortisation and depreciation rates were recalculated during the year to reflect the increase in mineable reserves. The effect has been to reduce these expenses by A$12.9 million (2000: a reduction of A$27 million). D-21 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 4 INDIVIDUALLY SIGNIFICANT ITEMS
CONSOLIDATED -------------- 2001 2000 ------ ------ A$M A$M INCLUDED IN OPERATING PROFIT ARE THE FOLLOWING ITEMS: Profit on sale of investments....................................................... 14.3 36.6 Net write off of non-current assets to recoverable amount --development properties......................................................... (170.0) (96.0) --mine properties................................................................ (30.0) -- --investments.................................................................... (20.0) -- Exploration expenses................................................................ --previously capitalised expenditure............................................. (31.0) -- Purchase consideration expensed..................................................... -- (359.0) Equity share of writedowns of associates............................................ -- (60.3) ------ ------ (251.0) (515.3) INCLUDED IN OUTSIDE EQUITY INTEREST IS THE FOLLOWING SIGNIFICANT ITEM: Recognition/(write-down) of outside equity interest in Kasese Cobalt Company Limited (38.0) 58.0 ------ ------ (274.7) 420.7 ====== ======
D-22 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 5 INCOME TAX
CONSOLIDATED -------------- 2001 2000 ------ ------ A$M A$M THE INCOME TAX EXPENSES/(BENEFIT) FOR THE FINANCIAL YEAR DIFFERS FROM THE AMOUNT CALCULATED ON THE PROFIT/(LOSS). THE DIFFERENCES ARE RECONCILED AS FOLLOWS: Operating profit/(loss) before income tax................................................. (103.0) (285.4) ------ ------ Prima facie income tax expense calculated at applicable tax rate on the profit/(loss) from ordinary activities..................................................................... (35.0) (102.7) TAX EFFECT OF PERMANENT DIFFERENCES Non-deductible depreciation and amortisation.............................................. 1.5 3.2 Adjustment to carrying value of assets.................................................... 78.5 34.6 Purchase consideration expensed........................................................... -- 129.2 Equity accounted results.................................................................. -- 14.5 Research and development and investment allowance......................................... (0.6) (0.9) Capital losses recouped................................................................... (37.7) (45.8) Non-assessable revenue items.............................................................. (3.6) (11.9) Non-deductible exploration................................................................ 0.6 0.2 Other non-deductible items................................................................ 2.1 5.8 ------ ------ Income tax adjusted for permanent differences............................................. 5.8 26.2 Tax effect of timing differences not previously recognised................................ (4.2) 30.5 Change in company tax rates from 1 July 2000.............................................. (1.0) (8.5) Benefit of prior year losses recouped..................................................... (1.4) -- Losses not recognised as future income tax benefits....................................... 28.4 2.4 ------ ------ 27.6 50.6 Over provision in previous years.......................................................... (7.2) (13.3) ------ ------ Income tax expense attributable to operating profit/(loss)................................ 20.4 37.3 ====== ======
ADJUSTMENT TO DEFERRED INCOME TAX BALANCES Legislation reducing the Australian company income tax rate from 36% to 34% in respect of the 2000-2001 income tax year and then to 30% from the 2001-2002 income tax year was announced on 21 September 1999 and received Royal Assent on 10 December 1999. As a consequence, deferred tax balances which are expected to reverse in the 2000-2001 or a later income tax year have been remeasured using the appropriate new rates, depending on the timing of their reversal. D-23 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 6 DIVIDENDS
CONSOLIDATED -------------- 2001 2000 ----- ----- A$M A$M Ordinary shares Interim dividend paid (2.5 cents per share) (2000: 2.5 cents per share) Franked at 36 percent......................................................................... -- 18.3 Franked at 34 percent......................................................................... 19.4 -- Unfranked..................................................................................... 24.7 25.2 ----- ----- 44.1 43.5 ----- ----- Final dividend declared (nil) (2000: 3.5 cents per share) -- Franked at 34 percent......................................................................... -- 27.0 Unfranked..................................................................................... -- 34.3 ----- ----- -- 61.3 ----- ----- Total dividends provided for or paid (2.5 cents per share) (2000: 6.0 cents per share)............ 44.1 104.8 Over Provision arising from shareholders electing to take shares in lieu of cash dividends under the parent entity's Share Investment Plan....................................................... (13.9) (10.8) ----- ----- 30.2 94.0 ----- ----- Dividends satisfied by the issue of shares under the Dividend Reinvestment and Share Investment Plans........................................................................................... 17.1 35.5 Dividends paid in cash............................................................................ 74.3 68.1 ----- ----- 91.4 103.6 ----- ----- FRANKED DIVIDENDS The franked portion of the dividends proposed as at 30 June 2001 will be franked out of existing franking credits or out of franking credits arising from the payment of income tax in the year ending 30 June 2002. Franking credits available for subsequent financial years at 30% (2000: 34%)...................... 23.4 11.9 ===== =====
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for: (a) franking credits that will arise from the payment of the current tax liability (b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date (c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date (d) franking credits that may be prevented from being distributed in subsequent financial years D-24 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 7 CASH ASSETS
CONSOLIDATED ------------ 2001 2000 ----- ----- A$M A$M Cash............................................................. 239.4 152.7 Bank bills....................................................... 65.8 69.4 Gold bullion..................................................... 39.6 23.3 ----- ----- 344.8 245.4 ===== =====
8 RECEIVABLES CURRENT Trade debtors................................................... 35.7 28.7 Provision for doubtful debts.................................... (0.2) -- ----- ----- 35.5 28.7 Bank guarantee deposits......................................... -- 15.9 Other debtors................................................ 86.8 80.3 Provision for doubtful debts................................. (0.7) (0.9) ----- ----- 86.1 79.4 Amounts owing by associated entities............................ 2.1 -- ----- ----- 123.7 124.0 ===== ===== NON-CURRENT Amounts owing by associated entities............................ 0.5 24.8 Provision for doubtful debts.................................... -- (21.9) ----- ----- 0.5 2.9 Other debtors................................................... 11.2 30.0 Provision for doubtful debts.................................... (0.5) (5.6) ----- ----- 10.7 24.4 ----- ----- 11.2 27.3 ===== =====
D-25 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 9 INVENTORIES
CONSOLIDATED ------------ 2001 2000 ----- ----- A$M A$M CURRENT Stores at cost................................................... 46.5 34.6 Work in progress --gold ore stocks at cost..................................... 28.4 54.0 --gold ore stocks at net realizable value..................... 47.1 1.9 --base metals at cost......................................... -- 1.2 --gold in circuit at cost..................................... 28.4 17.9 ----- ----- 103.9 75.0 Finished goods --base metals concentrate at cost............................. 14.3 2.9 --base metals concentrate at net realizable value............. 3.9 13.1 --other finished goods at cost................................ 0.9 4.0 ----- ----- 19.1 20.0 ----- ----- 169.5 129.6 ===== =====
10 TAX ASSETS
CONSOLIDATED ------------ 2001 2000 ----- ---- A$M A$M NON-CURRENT FUTURE INCOME TAX BENEFIT Attributable to carry forward tax losses......................... 67.8 59.6 Attributable to timing differences............................... 34.5 26.8 ----- ---- 102.3 86.4 ===== ====
UNBOOKED FUTURE INCOME TAX BENEFITS The consolidated entity has future income tax benefits not brought to account as assets in respect of tax losses of A$168.2 million as at 30 June 2001 (2000: A$82.5 million). The potential future income tax benefit will only be realised if: (i) the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the losses and deductions to be realised; (ii) the consolidated entity continues to comply with the conditions for deductibility imposed by the law; and (iii) no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the deductions for the losses. D-26 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 11 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
CONSOLIDATED ------------ 2001 2000 ----- ----- A$M A$M NON-CURRENT Associated entities (listed) note 31........................... -- 76.4 Joint venture entities (unlisted) note 30...................... 244.0 370.4 ----- ----- 244.0 446.8 ===== =====
12 OTHER FINANCIAL ASSETS CURRENT Loans to associated entities................................... -- 49.6 Loans to other corporations.................................... 31.9 -- Provision for doubtful debts................................... (10.6) -- ----- ----- 21.3 49.6 ----- ----- NON-CURRENT Listed shares at recoverable amount............................ 6.3 52.0 Unlisted shares at recoverable amount.......................... 21.0 19.3 Loans to other corporations.................................... 115.1 148.7 Provision for doubtful debts................................... (1.4) (5.0) ----- ----- 113.7 143.7 ----- ----- Loans to associated entities................................... -- 56.7 ----- ----- 141.0 271.7 ===== =====
13 DEVELOPMENT PROPERTIES RECONCILIATION OF THE CARRYING AMOUNTS OF DEVELOPMENT PROPERTIES AT THE BEGINNING AND END OF THE CURRENT AND PREVIOUS FINANCIAL YEAR ARE SET OUT BELOW:
CONSOLIDATED -------------- 2001 2000 ------ ------ A$M A$M Balance brought forward............................................ 310.7 287.0 Expenditure incurred during the year including capitalised interest 100.7 62.6 Acquisitions....................................................... 230.7 30.4 Transferred from exploration and evaluation........................ -- 28.4 Expenditure written off during the year............................ (169.2) (104.0) Foreign exchange movements......................................... 26.6 6.3 ------ ------ Balance carried forward............................................ 499.5 310.7 ====== ======
Projects in the development phase include Kasese, Stanwell Magnesium Project, Perama and Yamfo Sefwi. D-27 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 ASSETS PLEDGED AS SECURITY Refer to note 18 for information on assets pledged as security by the parent entity or its controlled entities. 14 EXPLORATION AND EVALUATION EXPENDITURE RECONCILIATION OF THE CARRYING AMOUNTS OF EXPLORATION AND EVALUATION EXPENDITURE AT THE BEGINNING AND END OF THE CURRENT AND PREVIOUS FINANCIAL YEAR ARE SET OUT BELOW:
CONSOLIDATED ------------ 2001 2000 ----- ----- A$M A$M Balance brought forward..................................... (i) 175.1 189.7 Expenditure incurred during the year............................ 62.8 58.5 Expenditure written off during the year......................... (89.1) (46.6) Transferred to development properties........................... -- (28.4) Transferred to mine properties.................................. (6.2) (3.2) Acquisitions and disposals...................................... 3.2 (0.7) Foreign exchange movements...................................... 5.9 5.8 ----- ----- Balance carried forward......................................... 151.7 175.1 ===== =====
- -------- (i) A reclassification from property, plant and equipment to capitalised exploration and evaluation expenditure of A$46.1 million has been made to more accurately reflect the nature of the projects. This has resulted in a change in the disclosure of the comparative information 15 PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED ----------------------------------------------------------------------- 2001 2000 -------------------------------- --------------------------------- Gross Accumulated Net Gross Accumulated Net value of depreciation/ value of value of depreciation/ value of assets amorisation assets assets amorisation assets A$M A$M A$M A$M A$M A$M Land and buildings at cost. 119.2 (51.8) 67.4 57.1 (27.3) 29.8 Mine properties at cost (i) 1,843.9 (729.6) 1,114.3 1,499.1 (587.7) 911.4 Plant and equipment at cost 1,026.7 (486.3) 540.4 850.3 (426.8) 423.5 Capital work in progress... 27.9 -- 27.9 38.9 -- 38.9 ------- -------- ------- ------- -------- ------- 3,017.7 (1,267.7) 1,750.0 2,445.4 (1,041.8) 1,403.6 ======= ======== ======= ======= ======== =======
- -------- (i) A reclassification from property, plant and equipment to capitalised exploration and evaluation expenditure of A$46.1 million has been made to more accurately reflect the nature of the projects. This has resulted in a change in the disclosure of the comparative information The majority of the land and buildings relate to the mining operations and the Directors consider that the best indicator of their current value is their book value. These assets are being depreciated over the life of the mine to which they relate, in accordance with the accounting policy stated in Note 1 (m). These land and buildings form an integral part of producing assets and have no significant value beyond the life of the mine. It is considered that the current value of non-mining land and buildings as at 30 June 2001 approximates book value. D-28 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 ASSETS PLEDGED AS SECURITY Refer to note 18 for information on assets pledged as security by the parent entity or its controlled entities. RECONCILIATIONS Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current and previous financial year are set out below:
CAPITAL LAND AND MINE PLANT AND WORK IN BUILDINGS PROPERTIES EQUIPMENT PROGRESS TOTAL --------- ---------- --------- -------- ------- A$M A$M A$M A$M A$M CONSOLIDATED 2001 Carrying amount at start of year................................ 29.8 911.4 423.5 38.9 1,403.6 Additions.................................................... 16.5 55.1 56.5 5.5 133.6 Disposals.................................................... (0.8) (9.5) (6.4) -- (16.7) Additions through acquisitions of entities.... (note 26(e))..... 23.0 337.8 160.7 -- 521.5 Depreciation/amortisation expense................. (note 3)..... (2.2) (169.4) (111.7) -- (283.3) Transfer from exploration and evaluation........................ -- 6.2 -- -- 6.2 Transfer of capital work in progress............................ 1.0 3.1 12.4 (16.5) -- Recoverable amount write-off of mine properties................. -- (30.0) -- -- (30.0) Foreign currency exchange differences........................... 0.1 9.6 5.4 -- 15.1 ---- ------- ------ ----- ------- Carrying amount at end of year.................................. 67.4 1,114.3 540.4 27.9 1,750.0 ==== ======= ====== ===== =======
16 INTANGIBLE ASSETS
CONSOLIDATED ------------ 2001 2000 ----- ----- A$M A$M Goodwill at cost.................................................................................... 93.8 94.2 Accumulated amortisation............................................................................ (49.6) (46.7) ----- ----- 44.2 47.5 ===== =====
D-29 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 17 OTHER ASSETS
CONSOLIDATED ------------ 2001 2000 ----- ----- A$M A$M CURRENT Prepaid mining costs............................................ 111.2 58.9 Prepaid hedging fees............................................ 15.1 5.2 Other prepaid expenses.......................................... 8.9 7.9 Other assets.................................................... 5.4 -- Assets held for resale.......................................... -- 51.5 ----- ----- 140.6 123.5 ===== ===== NON-CURRENT Prepaid mining costs............................................ 25.7 94.7 Deferred expenses............................................... 25.9 12.0 Prepaid hedging fees............................................ 13.5 20.5 Prepaid interest................................................ -- 10.2 Redesignated hedge gains........................................ 37.6 37.6 Other........................................................... -- 10.0 ----- ----- 102.7 185.0 ===== =====
18 INTEREST BEARING LIABILITIES
CONSOLIDATED --------------- 2001 2000 ------- ------- A$M A$M CURRENT UNSECURED Bank loans(i)................................................... -- 11.0 Amounts owing to other parties.................................. 6.0 10.1 ------- ------- SECURED 6.0 21.1 Bank loans(iii)................................................. 108.0 90.0 ------- ------- 114.0 111.1 ======= ======= NON-CURRENT UNSECURED Bank loans(i)................................................... 200.1 170.0 US dollar guaranteed notes(ii).................................. 875.7 875.9 Amounts owing to other parties.................................. 2.8 22.3 ------- ------- 1,078.6 1,068.2 ======= ======= SECURED Bank loans(iii)................................................. 103.2 370.4 ------- ------- 1,181.8 1,438.6 ======= =======
D-30 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 Details of the financing facilities of the consolidated entity are as follows:
AVAILABLE AT USED AT UNUSED AT BALANCE DATE BALANCE DATE BALANCE DATE ------------ ------------ ------------ 2001 2000 2001 2000 2001 2000 ----- ----- ----- ----- ----- ----- A$M A$M A$M A$M A$M A$M Unsecured bank loans(i)................ 685.0 710.0 200.1 181.0 484.9 529.0 Secured bank loans(iii)................ 211.2 460.4 211.2 460.4 -- --
- -------- (i) Unsecured bank loans Normandy Group Finance Ltd, a wholly owned entity, has an A$650 million committed revolving multi-option facility with a syndicate of banks established in November 1997. The facility consists of three tranches. Tranche 1 and Tranche 2 are available to a maximum of A$370 million and mature in November 2001. Tranche 3 is a term facility available to a maximum of A$280 million and matures in November 2003. All tranches are at an interest rate dependent on the currency drawn plus a margin of 0.60 percent. Interest is paid at the end of each interest period nominated by the borrower, to a maximum of 180 days. As at 30 June 2001, Tranche 1 and Tranche 2 were undrawn (2000: A$60 million) and the amount drawn down under Tranche 3 was A$200 million (2000: A$110 million). Normandy NFM Limited, a controlled entity, had a A$25 million committed revolving multi-option facility which matured in August 2001. As at 30 June 2001, this facility was undrawn (2000: A$11 million drawn). Interest was paid at an interest rate dependent on the currency drawn plus a margin of 0.7 percent at the end of each interest period nominated by the borrower, to a maximum of 180 days. Normandy NFM Limited has a committed short term A$10 million overdraft facility, which at 30 June 2001 was undrawn (2000: undrawn) (ii) US dollar denominated debt In July 1998, Normandy Finance Limited ("NFL") issued US$100 million of seven year 7.5 percent and US$150 million of ten year 7.625 percent guaranteed notes. Interest on the notes is paid semi-annually in arrears. Certain financial instruments were entered into whereby NFL has agreed to exchange the US dollar fixed interest amounts payable on the seven and ten year notes, with the 90 day Australian dollar bank bill rate plus a margin of 1.70 percent and 1.76 percent respectively. The US$250 million has been recorded at A$403.2 million (2000: A$403.2 million) reflecting the future exchange rate of the hedge transaction. In April 1998, Normandy Yandal Operations Limited (formerly Great Central Mines Limited) issued US$300 million of ten year 8.875 percent senior unsecured notes. Interest on the notes is paid semi-annually in arrears. Certain financial instruments were entered into whereby Normandy Yandal Operations Limited has agreed to exchange US dollar fixed interest amounts payable with gold interest rate exposure. Of the total, US$183.6 million has been swapped into a gold interest rate exposure, of which half is fixed at 3.87% and half is floating. The floating rate at 30 June 2001 was 2.07% (2000: 1.49%). (iii) Secured bank loans A controlled entity has a loan facility in respect of the Ovacik mine for US$40.0 million, established in December 1996, subsequently refinanced in May 1998 and in April 2000. As at 30 June 2001, the facility was fully drawn (2000: fully drawn), has an interest rate of LIBOR plus 1.0 percent and matures in December 2001. A controlled entity has project financing facilities in respect of the Kasese project totalling US$50.7 million and are at varying interest rates dependent upon the term of each facility (2000: US$58.2 million) from a number of parties. These facilities were fully drawn in the current and prior years. D-31 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 A controlled entity has project financing facilities in respect of the QMAG project totalling A$38.6 million (2000: nil) from a number of parties. At 30 June 2001 these facilities were fully drawn and are at varying interest rates dependent upon the term of each facility. In the prior year a controlled entity, Yandal Gold Holdings Pty Ltd. had a fully-drawn secured term debt facility amounting to A$285 million. The facility was repaid and cancelled during the year. (iv) Assets pledged as security The carrying amounts of assets pledged as security are:
CONSOLIDATED ------------ 2001 2000 ----- ----- A$M A$M FIRST MORTGAGE Development properties.......................................... 83.5 239.1 FLOATING CHARGE Cash assets..................................................... 5.1 4.3 Receivables--current............................................ 5.6 6.2 Receivables--non-current........................................ 4.9 5.3 Other assets.................................................... 12.5 7.8 ----- ----- Total assets pledged as security................................ 111.6 262.7 ===== =====
19 PROVISIONS CURRENT Deferred hedge gain............................................. 102.2 100.7 Directors' entitlements......................................... 3.9 2.4 Dividends....................................................... -- 61.3 Employee entitlements........................................... 31.7 18.3 Mine completion costs........................................... 54.7 32.1 Other........................................................... 24.3 7.6 ----- ----- 216.8 222.4 ===== ===== NON-CURRENT Deferred hedge gain............................................. 151.1 242.0 Deferred mining costs........................................... -- 17.3 Employee entitlements........................................... 12.5 9.7 Mine completion costs........................................... 81.8 110.2 Deferred income................................................. -- 9.2 Other........................................................... 23.5 13.3 ----- ----- 268.9 401.7 ===== =====
D-32 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 20 TAX LIABILITIES
CONSOLIDATED ------------ 2001 2000 ----- ----- A$M A$M CURRENT Income tax payable................................................ 21.8 27.4 ----- ----- NON-CURRENT Deferred income tax liability..................................... 255.0 189.3 ===== =====
21 OTHER LIABILITIES NON-CURRENT Deferred exploration liability..................................... 72.2 81.3 Unearned income.................................................... 39.2 -- Deferred royalty liability......................................... 28.7 -- Other.............................................................. 0.3 6.0 ----- ---- 140.4 87.3 ===== ====
22 CONTRIBUTED EQUITY
PARENT ENTITY --------------- 2001 2000 ------- ------- A$M A$M 2,231,293,599 (2000: 1,751,558,731) Ordinary shares fully paid................................... 1,593.9 1,155.5 ======= =======
During the year the following changes to share capital occurred:
NUMBER OF SHARES 2001 2000 ------------- ------- ------- A$M A$M Balance at beginning of financial year........... 1,751,558,731 1,155.5 1,130.3 Exercise of unlisted options--1:1.101 basis...... 8,998 -- -- Issue of shares(ii).............................. 446,100,000 419.8 -- Employee share investment plan issue............. 1,453,350 1.6 0.5 Dividend Reinvestment Plan issue(iii)............ 17,439,957 17.0 24.7 Share Investment Plan issue(iii)................. 14,732,563 -- -- ------------- ------- ------- Balance at end of financial year................. 2,231,293,599 1,593.9 1,155.5 ============= ======= =======
ORDINARY SHARES Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote and upon a poll each share is entitled to one vote. D-33 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 - -------- (i) Listed Options At 30 June 2001 there were no listed options on issue. At 30 June 2000 there were 248,537,609 listed options on issue. These were exercisable at A$2.50 per option on any business day during the months of January, April, July and October each year. These options expired on 30 April 2001. (ii) Issue of Shares On 31 May 2001 446.1 million shares were issued to a nominee for Franco-Nevada Mining Corporation Limited and its subsidiary for various assets and cash. (iii) Share Investment and Dividend Reinvestment Plans Under the parent entity's dividend alternatives, holders of ordinary shares may elect to have all or part of their dividend entitlements satisfied by the issue of new fully paid ordinary shares rather than by being paid in cash.
MILLIONS OF SHARES ------------------ 2001 2000 ------- ------- Weighted average number of ordinary shares used in the calculation of basic EPS............................... 1,806.1 1,738.5 ======= =======
Diluted earnings per share are not materially different from basic earnings per share and therefore are not disclosed. D-34 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 23 RESERVES AND RETAINED PROFITS
CONSOLIDATED -------------- 2001 2000 ------ ------ A$M A$M (A) RESERVES Asset revaluation reserve.................................... -- 1.9 Foreign currency translation reserve......................... 71.4 43.1 ------ ------ 71.4 45.0 ====== ====== MOVEMENT IN RESERVES ASSET REVALUATION RESERVE Balance at beginning of financial year....................... 1.9 1.9 Transfer to accumulated losses............................... (1.9) -- ------ ------ Balance at end of financial year............................. -- 1.9 ====== ====== Foreign currency translation reserve Balance at beginning of financial year....................... 43.1 26.1 Net exchange difference on translation of overseas controlled entities........................................ 28.3 17.0 ------ ------ Balance at end of financial year............................. 71.4 43.1 ====== ====== (B) RETAINED PROFITS/(ACCUMULATED LOSSES) Retained profits/(accumulated losses) at the beginning of the financial year......................................... (251.9) 124.4 Transfer from asset revaluation reserve...................... 1.9 -- Net profit/(loss) attributable to members of Normandy Mining Limited............................................. (154.6) (282.3) Dividends provided for or paid (note 6)...................... (30.2) (94.0) ------ ------ Retained profits/(accumulated losses) at the end of the financial year............................................. (434.8) (251.9) ====== ======
(C) NATURE AND PROFIT OF RESERVES (i) Asset Revaluation Reserve The asset revaluation reserve was used to record increments and decrements on the revaluation of non-current assets. (ii) Foreign Currency Translation Reserve Exchange differences arising on translation of self-sustaining overseas controlled entities are taken to the foreign currency translation reserve, as described in accounting policy note 1(b). D-35 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 24 OUTSIDE EQUITY INTERESTS
CONSOLIDATED ------------ 2001 2000 ----- ----- A$M A$M Share capital................................................... 173.5 30.4 Accumulated losses.............................................. (72.8) (31.2) Other reserves.................................................. 66.8 38.2 ----- ----- 167.5 37.4 ===== =====
25 EQUITY Total equity at the beginning of the financial year........ 986.0 1,373.1 Total changes in equity recognised in the Statement of Financial Performance.................................... (126.3) (265.3) Contributions of equity net of transaction costs........... 438.4 25.2 Dividends provided for or paid............................. (30.2) (94.0) Total changes in outside equity interest................... 130.1 (53.0) ------- ------- Total equity at the end of the financial year.............. 1,398.0 986.0 ======= =======
26 NOTES TO STATEMENTS OF CASH FLOWS (A) RECONCILIATION OF CASH For the purpose of the statement of cash flows, cash includes cash on hand, investments in money market instruments and gold bullion on hand net of outstanding bank overdrafts. Cash at the end of the financial year, as shown in the statement of cash flows, is reconciled to the related items in the statements of financial positions as follows: Cash............................................................ 239.5 152.7 Bank bills...................................................... 65.8 69.4 Gold bullion.................................................... 39.5 23.3 ----- ----- 344.8 245.4 ===== =====
(B) FINANCING FACILITIES Refer to Note 18 for details of the credit standby arrangements and loan facilities available to the consolidated entity. (C) NON-CASH FINANCING AND INVESTING ACTIVITIES During the year the consolidated entity entered into a transaction with Franco-Nevada Mining Corporation Limited, under which the consolidated entity issued 446.1 million new ordinary shares to a nominee for Franco-Nevada Mining Corporation Limited and its subsidiary and received US$48 million (A$94 million) cash, as well as controlling interests in Normandy Midas Operations Inc and Little River Pty Ltd. The consolidated entity's investments in BRGM Perou and Mine Or were sold in exchange for cash and shares in Newmont Mining Corporation and Compania de Minas Beunaventura (Beunaventura) totalling A$106 million, the Newmont Mining D-36 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 Corporation shares were subsequently traded on-market. The consolidated entity's investments in and loans to Australian Magnesium Investments in exchange for Australian Magnesium Corporation Limited shares valued at A$112 million. During the previous year the Big Bell gold operations were sold to New Hampton Goldfields Limited, with A$11.0 million proceeds received in the form of ordinary shares in New Hampton Goldfields Limited. In June 2000, A$40.9 million of the acquisition of 100% of Normandy Yandal Operations Limited from Edensor Nominees Pty Ltd was financed by the conversion of a loan to Edensor into shares in Normandy Yandal Operations Limited. (D) RECONCILIATION OF NET CASH INFLOW FROM OPERATING ACTIVITIES TO OPERATING PROFIT/(LOSS) AFTER INCOME TAX
CONSOLIDATED -------------- 2001 2000 ------ ------ A$M A$M Operating profit/(loss) after income tax................................................ (123.4) (322.7) Bad and doubtful debts expense.......................................................... 8.5 0.3 Depreciation and amortisation........................................................... 286.9 140.7 Exploration and evaluation written off.................................................. 89.1 46.6 Unrealised foreign exchange gain/(loss)................................................. -- (0.4) Share of equity accounted (profit)/loss................................................. 4.8 40.2 Dividends received from associates...................................................... 42.6 19.3 Amortisation of deferred hedge gain..................................................... (92.6) (91.4) (Gain)/loss on loan forgiveness......................................................... -- 2.8 Profit on sale of investments........................................................... (14.6) (2.0) Profit on sale of other non-current assets.............................................. (21.1) (43.4) Profit on refinancing of gold loans..................................................... -- (1.5) Write down in carrying value of assets.................................................. 220.0 521.0 Loss on sale of investments............................................................. -- 0.3 Changes in net assets and liabilities, net of effects from businesses acquired/disposed: (Increase)/decrease in receivables...................................................... (6.2) 21.6 (Increase)/decrease in inventories...................................................... (41.0) 15.3 (Increase)/decrease in future income tax benefit........................................ (15.9) (7.6) (Increase)/decrease in other operating assets........................................... 4.9 (39.8) Increase/(decrease) in trade creditors.................................................. (9.5) (44.4) Increase/(decrease) in provision for income tax......................................... (5.6) 7.4 Increase/(decrease) in provision for deferred income tax................................ 2.0 (5.3) Increase/(decrease) in other provisions................................................. 9.0 (41.1) Increase/(decrease) in other operating liabilities...................................... (15.8) -- ------ ------ Net cash inflow from operating activities............................................... 322.1 215.9 ====== ======
(E) BUSINESSES ACQUIRED The consolidated entity entered into a transaction with Franco-Nevada Mining Corporation Limited, under which the consolidated entity received controlling interests in Normandy Midas Operations Inc and Little River Pty Ltd. The Normandy Group acquired a controlling interest in the Australian Magnesium Corporation group. During the previous year Normandy Yandal Operations Limited (formerly Great Central Mines Limited) and it controlled entities, and Yandal Gold Holdings Pty Ltd and its controlled entity were consolidated into the consolidated entity for the first time. D-37 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 Details of the acquisition are as follows:
CONSOLIDATED -------------- 2001 2000 ------ ------ A$M A$M CONSIDERATION Cash assets..................................................... 1.1 18.7 Shares Issued................................................... 333.2 -- Conversion of loan receivable................................... 49.7 40.9 Deferred exploration liability.................................. -- 83.2 ------ ------ Total........................................................... 384.0 142.8 ====== ====== FAIR VALUE OF NET ASSETS ACQUIRED Current assets Cash......................................................... 49.4 65.1 Receivables.................................................. 12.6 18.6 Inventories.................................................. 7.4 19.8 Other........................................................ 1.7 3.1 Non-current assets Mine properties, plant and equipment......................... 521.5 563.9 Development properties....................................... 229.1 110.4 Other........................................................ 6.0 61.8 Current liabilities Trade creditors.............................................. (39.5) (72.0) Provisions................................................... (14.8) -- Other........................................................ (1.9) -- Non-current liabilities Interest bearing liabilities................................. (48.7) (834.5) Provisions................................................... (77.8) (61.5) Other........................................................ (70.1) (1.4) ------ ------ Net assets acquired............................................. 574.9 (126.7) Outside equity interest share of business acquired.............. (125.0) -- Prior investment................................................ (65.9) (89.5) Purchase consideration expensed(i).............................. -- 359.0 ------ ------ Consideration................................................... 384.0 142.8 ====== ====== CASH (INFLOW)/OUTFLOW FOR ACQUISITION Cash consideration.............................................. 1.1 18.7 Less: cash balances acquired.................................... (49.4) (65.1) ------ ------ Net (inflow)/outflow of cash.................................... (48.3) (46.4) ====== ======
- -------- (i) This represents the purchase consideration greater than the fair value of the identifiable net assets acquired and, as the amount does not represent goodwill, it has been expensed. D-38 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 (F) BUSINESSES DISPOSED During the year, the consolidated entity disposed of its investments in Australian Magnesium Investments in exchange for Australian Magnesium Corporation Limited shares, and its investments in and loans to Larvik Pigment (Asia Pacific) Sdn Bhd, Larvik (Australia) Limited, Larvik Pigment (Norway) AS. During the previous year the consolidated entity disposed of its Big Bell gold operations, its 50% interest in Australian Magnesium Investments Pty Ltd and its interests in various industrial minerals businesses. Details of the disposals are as follows:
CONSOLIDATED ------------ 2001 2000 ----- ----- A$M A$M CONSIDERATION Cash assets..................................................... 71.8 114.6 Shares.......................................................... -- 11.0 Deferred settlement receivable.................................. -- 4.7 ----- ----- Total........................................................... 71.8 130.3 ===== ===== BOOK VALUE OF ASSETS AND LIABILITIES DISPOSED Current assets Cash assets.................................................. -- 8.7 Receivables.................................................. -- 19.2 Inventories.................................................. 0.6 34.6 Assets held for re-sale...................................... 57.2 -- Non-current assets Investments.................................................. -- 0.2 Property, plant and equipment................................ 7.5 60.7 Other........................................................ 7.2 33.7 Current liabilities Trade creditors.............................................. -- (6.6) Provisions................................................... -- (20.7) Non-current liabilities Interest bearing liabilities................................. (16.0) -- Provisions................................................... -- (6.9) ----- ----- Net assets disposed.......................................... 56.5 122.9 Deferred costs on disposal................................... 0.5 -- Net profit on disposal....................................... 14.8 7.4 ----- ----- Consideration................................................... 71.8 130.3 ===== ===== Cash inflow/(outflow) from disposal Cash consideration.............................................. 71.8 114.6 Less: cash balances disposed.................................... -- (8.7) ----- ----- Net inflow of cash.............................................. 71.8 105.9 ===== =====
D-39 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 (G) CASH NOT AVAILABLE A balance of US$20.0 million (2000: US$20.0 million) is being held as security in respect of a project loan facility of a controlled entity. 27 SEGMENT INFORMATION Details of industry segments are as follows:
SALES REVENUE ASSETS SEGMENT PROFIT --------------- --------------- -------------- 2001 2000 2001 2000 2001 2000 ------- ------- ------- ------- ------ ------ A$M A$M A$M A$M A$M A$M Gold......................... 1,252.0 936.0 2,577.4 2,445.9 224.9 (149.4) Base metals.................. 191.0 178.1 159.0 529.8 (166.3) (19.4) Industrial minerals.......... 69.6 179.7 394.7 101.0 (8.2) 43.0 Exploration.................. -- -- 151.7 129.0 (89.1) (46.6) ------- ------- ------- ------- ------ ------ 1,512.6 1,293.8 3,282.8 3,205.7 (38.7) (172.4) Unallocated.................. 31.1 29.8 563.7 420.5 (115.9) (109.9) ------- ------- ------- ------- ------ ------ Consolidated total........... 1,543.7 1,323.6 3,846.5 3,626.2 (154.6) (282.3) ======= ======= ======= ======= ====== ======
The major products/services from which the above segments derive revenue are: INDUSTRY SEGMENTS PRODUCTS/SERVICES Gold Gold and silver Base Metals Zinc, copper and lead Industrial Minerals Industrial minerals Exploration Exploration
Inter-segment pricing is determined on an arm's-length basis. GEOGRAPHICAL SEGMENTS The consolidated entity operates predominantly in Australia. More than 90% of revenue and profit from ordinary activities relate to operations in Australia. DETAILS OF GEOGRAPHICAL SEGMENTS ARE AS FOLLOWS:
SALES REVENUE ASSETS SEGMENT PROFIT --------------- --------------- -------------- 2001 2000 2001 2000 2001 2000 ------- ------- ------- ------- ------ ------ A$M A$M A$M A$M A$M A$M Australia/New Zealand........ 1,467.2 1,232.9 2,796.7 2,651.4 98.2 (213.6) Africa....................... 21.2 20.3 105.9 246.7 (194.1) (34.7) North America................ 18.7 -- 558.4 75.2 (17.0) -- South America................ -- -- 176.5 288.9 7.2 2.0 Other........................ 36.6 70.4 209.0 364.0 (48.9) (36.0) ------- ------- ------- ------- ------ ------ Consolidated total........... 1,543.7 1,323.6 3,846.5 3,626.2 (154.6) (282.3) ======= ======= ======= ======= ====== ======
D-40 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 28 CONTROLLED ENTITIES Details of controlled entities are shown below. For entities where the parent entity has less than 50 percent ownership, control is determined though the capacity to dominate decision making in relation to the financial and operating policies of the entity.
COUNTRY OF ENTITY INCORPORATION/FORMATION - ------ ----------------------- Normandy Mining Limited............................. Aust WHOLLY OWNED ENTITIES OF NORMANDY MINING LIMITED ACM (New Zealand) Ltd............................... NZ ACM Exploration Pty Ltd(b).......................... Aust ACM Gold Pty Ltd(b)................................. Aust ACM Mines Pty Ltd(b)................................ Aust Armada Resources Pty Ltd(b)......................... Aust Ausdev Investments Pty Ltd(b)....................... Aust Australian Consolidated Minerals Pty Ltd............ Aust Australian Gold Alliance Pty Ltd(b),(c),(d)......... Aust Australian Metals Corporation Pty Limited(b),(d),(e) Aust Autin Investments BV(b)............................. Netherlands Aztec Finance Pty Ltd(b)............................ Aust Aztec Mining Company Limited(b)..................... Aust Aztec Nominees Pty Ltd(b)........................... Aust Bardini Pty Ltd(b).................................. Aust Big Bell Mines Pty Ltd(b),(f)....................... Aust Blackhill Minerals Ltd.............................. NZ Clave Pty Ltd(b).................................... Aust Clynton Court Pty Ltd(b),(e)........................ Aust Commercial Minerals Beteiligungs-gesellschaft mbH(b) Germany Dafrico (Overseas) Limited(b)....................... Cyprus Eagle Mining Pty Ltd(b),(e)......................... Aust Gatro Cl............................................ Ivory Coast GMK Finance Pty Ltd................................. Aust GMK Investments Pty Ltd............................. Aust GoldenGrove Group Investment Holding Pty Ltd(b)..... Aust GoldenGrove Group Investment Unit Trust............. Aust Great Central Holdings Pty Ltd(b),(e)............... Aust Great Central Investments Pty Ltd(b),(e)............ Aust Grillo Zincoli GmbH(b).............................. Germany Hampton Areas Australia Pty Ltd(b).................. Aust Hampton Jubilee Pty Ltd(b).......................... Aust HTA Pty Ltd(b),(d).................................. Aust Hunter Resources Pty Limited(b),(e)................. Aust Kalgoorlie Lake View Pty Ltd........................ Aust LaSource Developpement SAS.......................... France Lachlan Zinc Pty Ltd(b)............................. Aust
D-41 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001
COUNTRY OF ENTITY INCORPORATION/FORMATION - ------ ----------------------- Linfast Pty Ltd(b)..................................... Aust Little River (Resources) Pty Ltd(b),(d)................ Aust Macapa Pty Ltd(b)...................................... Aust Martha Hill Gold Mines Limited(b)...................... NZ Matlock Castellano Pty Ltd(b),(e)...................... Aust Matlock Descanso Pty Ltd(b),(e)........................ Aust Matlock Mining Pty Ltd(b),(e).......................... Aust Metal Traders Australasia Pty Ltd(b)................... Aust Metals Exploration Pacific Pty Ltd(b).................. Aust Millmerran Coal Pty Ltd(b)............................. Aust Minera Normandy Argentina SA........................... Argentina Minera Normandy Chile Limitada......................... Chile Murchison Zinc Pty Ltd................................. Aust National Shareholder Services Pty Ltd(b)............... Aust NGF Limited............................................ Cayman Is Nicron Resources (US) Pty Ltd(b)....................... Aust NIM Australia Pty Ltd(b)............................... Aust NIM Overseas Pty Ltd(b)................................ Aust Norkal Pty Ltd......................................... Aust Normandie Service SAS.................................. France Normandy ACM Management Pty Ltd(b)..................... Aust Normandy ACM Pty Ltd. ................................. Aust Normandy Americas Holdings Limited..................... Canada Normandy Anglo Asian Pty Ltd(d),(b).................... Aust Normandy Anglo Pte Ltd(d).............................. Singapore Normandy Asia Pty Ltd(b)............................... Aust Normandy Asia (Philippines) Inc........................ Philippines Normandy Boddington Holdings Pty Ltd................... Aust Normandy Boddington Investments Pty Ltd................ Aust Normandy Boddington Pty Ltd............................ Aust Normandy Capital Group Pty Ltd(b)...................... Aust Normandy Carrington Pty Ltd(b)......................... Aust Normandy Cayman Hold Co Inc............................ Cayman Is Normandy Central Pty Ltd(b)............................ Aust Normandy Chile Holdings................................ Cayman Is Normandy Company (Malaysia) Sdn Bhd.................... Malaysia Normandy Consolidated Gold Holdings Pty Ltd............ Aust Normandy Exploration Pty Ltd(b)........................ Aust Normandy Finance Limited............................... Aust Normandy French Holdings SAS........................... France Normandy GMK Holdings Pty Ltd.......................... Aust Normandy Gold Exploration Pty Ltd(b)................... Aust Normandy Gold Holdings Pty Ltd(b)...................... Aust Normandy Gold Investments Pty Ltd(b)................... Aust
D-42 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001
COUNTRY OF ENTITY INCORPORATION/FORMATION - ------ ----------------------- Normandy Gold Management Pty Ltd(b).................... Aust Normandy Gold Marketing & Finance Pty Ltd(b),(c)....... Aust Normandy Gold Services Pty Ltd(b)...................... Aust Normandy Gold Treasury Pty Ltd......................... Aust Normandy Golden Grove Operations Pty Ltd............... Aust Normandy Group Finance Limited......................... Aust Normandy Group Gold Pty Ltd(b)......................... Aust Normandy Group Searches Pty Ltd(b)..................... Aust Normandy Group Trading Pty Ltd(b)...................... Aust Normandy GRPL Pty Ltd(b)............................... Aust Normandy Holdings BV................................... Netherlands Normandy Insurance Pte Ltd............................. Singapore Normandy International Exploration Pty Ltd(b).......... Aust Normandy International Group BV........................ Netherlands Normandy International Holdings Pty Ltd................ Aust Normandy Investments BV................................ Netherlands Normandy Kaltails Pty Ltd(b)........................... Aust Normandy Latin America Holdings Inc.................... Cayman Is Normandy Latin America Inc............................. Canada Normandy LaSource Kazakstan BV......................... Netherlands Normandy LaSource SA................................... France Normandy Lore Pty Ltd(b)............................... Aust Normandy Madencilik AS(c).............................. Turkey Normandy Metals Pty Ltd................................ Aust Normandy Midas Operations Inc(d)....................... USA Normandy Mildite Pty Ltd(b)............................ Aust Normandy Minerals Pty Ltd(b)........................... Aust Normandy Mining Finance Pty Ltd........................ Aust Normandy Mining Holdings Pty Ltd....................... Aust Normandy Mining Investments Pty Ltd(b)................. Aust Normandy Mining Kazakstan Pty Ltd(b)................... Aust Normandy Mining Services (Canada) Inc.................. Canada Normandy Mining Services Pty Ltd....................... Aust Normandy Mt Keith Pty Ltd(b)........................... Aust Normandy NGL Holdings Pty Ltd.......................... Aust Normandy US Inc(d)..................................... USA Normandy Overseas Holding Company Sdn Bhd.............. Malaysia Normandy Pacific Energy Pty Ltd(b)..................... Aust Normandy Pacific Pty Ltd(b)............................ Aust Normandy Pajingo Pty Ltd............................... Aust Normandy Pastoral Pty Ltd(b)........................... Aust Normandy Pipelines Finance Pty Ltd(b).................. Aust Normandy Pipelines Pty Ltd(b).......................... Aust Normandy Power Pty Ltd................................. Aust Normandy PT Pty Ltd(b)................................. Aust
D-43 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001
COUNTRY OF ENTITY INCORPORATION/FORMATION - ------ ----------------------- Normandy Resources Ltd(b).............................. UK Normandy Shelf (No. 3) Pty Ltd(b),(d).................. Aust Normandy Spain Holdings SL(b).......................... Spain Normandy Treasury Pty Ltd(b)........................... Aust Normandy Wiluna Gold Pty Ltd(b),(e).................... Aust Normandy Wiluna Metals Pty Ltd(b),(e).................. Aust Normandy Wiluna Mines Pty Ltd(b),(e)................... Aust Normandy Woodcutters Pty Ltd(b)........................ Aust Normandy Wownaminya Pty Ltd............................ Aust Normandy Yandal Operations Limited(e).................. Aust North Kalgurli Mines Pty Ltd........................... Aust NP Kalgoorlie Pty Ltd.................................. Aust Oberon Oil Pty Ltd(b).................................. Aust Orelia Pty Ltd(b)...................................... Aust Pacific Minerals & Metals Pty Ltd(b),(f)............... Aust Pacific-Nevada Mining Pty Ltd(b),(d)................... Aust Pan Ocean Finance Pty Ltd(b),(f)....................... Aust Pan Ocean Resources Pty Ltd(b)......................... Aust Paringa Mining and Exploration Company Limited......... UK Perpleks Pty Ltd (b)................................... Aust Petrocarb Exploration Pty Ltd(b)....................... Aust Phillip Creek Pastoral Co Pty Ltd(b)................... Aust Posor Pty Ltd(b)....................................... Aust Posdale Pty Ltd(b)..................................... Aust PT Normandy Indonesia.................................. Indonesia Quotidian No. 117 Pty Ltd(b)(e)........................ Aust Ranas Bruks AB......................................... Sweden Sanworth Pty Ltd(b).................................... Aust Sater Pty Ltd(b)....................................... Aust Sharevest Pty Ltd(b)................................... Aust Shenreef Pty Ltd(b).................................... Aust Tennant Creek Pastoral Co Pty Ltd(b)................... Aust Utal Pty Ltd(b)........................................ Aust Waihi Gold Mining Company Ltd.......................... NZ Welcome Gold Mines Ltd................................. NZ Wirralie Gold Mines Pty Ltd.(b)........................ Aust Yandal Gold Pty Ltd.................................... Aust Yandal Gold Holdings Pty Ltd........................... Aust Martha Holdings Limited................................ NZ
D-44 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001
COUNTRY OF ENTITY INCORPORATION/FORMATION - ------ ----------------------- Waihi Financing Limited................................ NZ Waihi Resources Limited................................ NZ Waihi Mines Limited.................................... NZ
OWNERSHIP% COUNTY OF ----------- PARTLY OWNED* ENTITY INCORPORATION/FORMATION 2001 2000 - -------------------- ----------------------- ----- ----- Australian Magnesium Corporation(d)........ Aust 62.4 36.9 Australian Magnesium Investments Pty Ltd. Aust 100.0 100.0 Australian Magnesium Operations Pty Ltd.. Aust 95.0 95.0 Enviromag (Marketing) Pty Ltd............ Aust 100.0 100.0 MG Magnesium Pty Ltd..................... Aust 95.0 95.0 NIM Magmetal Pty Limited................. Aust 100.0 100.0 Penhale Investments Pty Ltd.............. Aust 100.0 100.0 QMC Biotechnology Pty Ltd................ Aust 90.0 90.0 QMC (Enviromag) Pty Ltd.................. Aust 100.0 100.0 QMC Finance Pty Ltd...................... Aust 100.0 100.0 QMC (Flamemag) Pty Ltd................... Aust 100.0 100.0 QMC Investments Pty Ltd.................. Aust 100.0 100.0 QMC (Kunwarara) Pty Ltd.................. Aust 100.0 100.0 QMC Refmag Pty Ltd....................... Aust 100.0 100.0 QMC Refmag (Financing) Pty Ltd........... Aust 100.0 100.0 Queensland Magnesia Pty Ltd.............. Aust 100.0 100.0 Queensland Magnesia (Marketing) Pty Ltd.. Aust 100.0 100.0 Stanwell Finance Pty Ltd................. Aust 100.0 100.0 Banff Resources Ltd........................ Canada 85.6 85.6 Kasese Cobalt Company Limited............ Uganda 63.0 63.0 Companie Minera LJB Normandy Peru SA....... Peru 49.0 49.0 Comstaff Proprietary Limited(b)............ Aust 81.4 81.4 Golden Ridge Resources Ltd................. Ghana 80.0 80.0 GPS Finance (No2) Pty Ltd(b)............... Aust 66.7 66.7 GPS Finance Pty Ltd(b)..................... Aust 66.6 66.6 Hampton Australia Limited(a)............... Aust 100.0 100.0 Kentau Exploration and Mining Co........... Kazakstan 61.0 61.0 LaSource Bolivia Ltd....................... Bolivia 99.0 99.0 Martha Mining Limited...................... NZ 33.5 33.5 Mayflower Gold Mines Pty Ltd............... Aust 80.0 80.0 Minera LaSource Peru SA(a)................. Peru 100.0 100.0 Normandy Ghana Gold Ltd(c)................. Ghana 92.0 92.0 Normandy LaSource Resources Ltd............ UK 99.9 99.9
D-45 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001
OWNERSHIP % COUNTY OF ----------- ENTITY INCORPORATION/FORMATION 2001 2000 - ------ ----------------------- ----- ----- Normandy Mt Leyshon Limited............................. Aust 76.4 76.4 Balletto Pty Limited(b)................................ Aust 100.0 100.0 Normandy NFM Limited.................................... Aust 87.5 84.9 NP Finance (No2) Pty Ltd(b)............................. Aust 66.7 66.7 NP Finance Pty Ltd(b)................................... Aust 66.6 66.6 Sociedade de Exploracao de Recursos Minieros Limitada(a) Portugal 100.0 100.0 Societe des Mines D'lty................................. Ivory Coast 51.0 51.0 Thracean Gold Mining.................................... Greece 80.0 80.0
Ownership interest refers to the ownership interest held by the parent entity as listed immediately above the controlled entity. - -------- (a) Ownership percentage has been rounded up to 100 percent. (b) These companies are classified as 'small' proprietary companies under the Corporations Act 2001 and, accordingly, are relieved from the requirement to prepare audited financial reports under the Corporations Act 2001. (c) Entities which underwent a change of name during the year: Normandy Shelf (No. 1) Pty Ltd to Normandy Gold Marketing & Finance Pty Ltd Normandy Shelf (No. 2) Pty Ltd to Australian Gold Alliance Pty Ltd Eurogold Madencilik AS to Normandy Madencilik AS Centenary Gold Mining Ltd to Normandy Ghana Gold Ltd
D-46 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 (d) During the year the economic entity acquired and disposed of the following entities:
PROPORTION DATE OF OF SHARES ENTITY ACQUIRED ACQUISITION A$M ACQUIRED % - --------------- ----------- --------- ---------- Australian Magnesium Corporation................... 26.7.00 49.7 25.5 Australian Magnesium Investments Pty Ltd Australian Magnesium Operations Pty Ltd Enviromag (Marketing) Pty Ltd MG Magnesium Pty Ltd NIM Magmetal Pty Ltd Penhale Investments Pty Ltd QMC Biotechnology Pty Ltd QMC (Enviromag) Pty Ltd QMC Finance Pty Ltd QMC (Flamemag) Pty Ltd QMC Investments Pty Ltd QMC (Kunwarara) Pty Ltd QMC Refmag Pty Ltd QMC Refmag (Financing) Pty Ltd Queensland Magnesia Pty Ltd Queensland Magnesia (Marketing) Pty Ltd Stanwell Finance Pty Ltd Little River (Resources) Pty Ltd................... 31.05.01 15.4 100.0 HTA Pty Ltd Pacific-Nevada Mining Pty Ltd Normandy Shelf (No. 2) Pty Ltd..................... 1.3.01 -- 100.0 Normandy Shelf (No. 3) Pty Ltd..................... 1.3.01 -- 100.0 Normandy US Inc.................................... 31.5.01 -- 100.0 Normandy Midas Operations Inc...................... 31.5.01 317.8 100.0 Normandy Anglo Asian Pty Ltd....................... 31.3.01 -- 50.0 Normandy Anglo Pte Ltd............................. 31.3.01 -- 50.0 Pt Horas Nauli PHU Bra Mining Ltd PROFIT ON REMAINING DATE OF DISPOSAL INTEREST DISPOSAL A$M HELD % ----------- --------- ---------- ENTITY DISPOSED - --------------- Hampton Gold Mining Areas Limited.................. 1.7.00 3.5 -- Larvik Pigment (Asia Pacific) Sdn Bhd.............. 31.1.01 (i) -- Larvik Pigment (Australia) Limited................. 31.1.01 (i) -- Larvik Pigment (Norway) AS......................... 31.1.01 (i) -- Normandy Tennant Creek Pty Ltd..................... 8.6.01 7.5 --
(i) These companies were disposed of for a total profit on sale of A$4.1 million. (e) These wholly owned controlled entities have entered into a deed of cross guarantee with Normandy Yandal Operations Limited pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998 and are relieved from the Corporations Act 2001 requirements for preparation, audit, and lodgement of financial reports. D-47 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 Normandy Yandal Operations Limited and its Controlled Entities represent a 'Closed Group' for the purposes of the Class Order, and as there are no other parties to the Deed of Cross Guarantee that are controlled by Normandy Mining Limited, they also represent the 'Extended Closed Group'. (f) The entity has been deregistered since 30 June 2001. 29 JOINT VENTURE OPERATIONS The consolidated entity's interests in material unincorporated joint venture operations are as follows:
% INTEREST ---------- NAME OF JOINT VENTURE OPERATIONS 2001 2000 - -------------------------------- ---- ---- KCGM - -- Fimiston/Paringa Joint Venture.................................. 50.0 50.0 - -- Kalgoorlie Mining Associates Joint Venture...................... 50.0 50.0 - -- Mt Percy Joint Venture.......................................... 50.0 50.0 Boddington Gold Mine Joint Venture................................. 44.4 44.4 Goldfields Power Joint Venture..................................... 50.0 50.0 Goldfields Power Joint Venture Number Two.......................... 50.0 50.0 Kalgoorlie Tailings Retreatment Project Joint Venture.............. 90.0 90.0 Martha Hill Joint Venture.......................................... 28.4 28.4 Pajingo Joint Venture.............................................. 50.0 50.0
These joint venture operations are involved in exploration and mining, except for the Goldfields Power Joint Ventures which are involved in the operation of a power station. The consolidated entity's interest in assets employed in the joint venture operations and in other exploration joint ventures which individually are not material, are included in the statements of financial position under the following classifications:
2001 2000 ----- ----- A$M A$M CURRENT ASSETS Cash assets........................................................ 7.5 6.4 Receivables........................................................ 10.5 29.5 Inventories........................................................ 67.0 55.7 Other.............................................................. 22.5 9.9 ----- ----- 107.5 101.5 ----- ----- NON-CURRENT ASSETS Receivables........................................................ 0.7 0.7 Exploration and evaluation expenditure............................. 40.3 40.4 Property, plant and equipment...................................... 277.9 340.7 Other.............................................................. 24.8 21.7 ----- ----- 343.7 403.5 ----- ----- TOTAL ASSETS.................................................... 451.2 505.0 ===== =====
SHARE OF CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES The consolidated entity's share of joint venture operations capital expenditure commitments at balance date was A$19.8 million (2000: A$12.8 million) and of contingent liabilities was A$15.8 million (2000: A$15.7 million). D-48 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 30 JOINT VENTURE ENTITIES The consolidated entity has a significant non-controlling interest in the following joint venture entities:
BENEFICIAL INTEREST ------------------- NAME OF JOINT VENTURE ENTITY AND PRINCIPAL ACTIVITY 2001 2000 - --------------------------------------------------- ---- ---- % % Australian Magnesium Investments Pty Ltd (iii) Investment.. -- 50.0 BRGM Perou SAS (ii) Mining Investment...................... -- 49.0 Campagnie Miniere Internationale Or SA (ii) Mining Investment............................................... -- 49.0 TVX Normandy Americas (Canada) Inc. (i) Gold Mining........ 49.9 49.9 TVX Normandy Americas (Cayman) Inc. (i) Gold Mining........ 49.9 49.9
- -------- (i) Balance date 31 December. (ii) During the year the consolidated entity disposed of its interest in this entity. (iii) During the year this entity was consolidated into the consolidated entity for the first time. These joint venture entities are involved in exploration and mining. EQUITY ACCOUNTED INVESTMENT
CONSOLIDATED ------------ 2001 2000 ----- ----- A$M A$M MOVEMENTS IN CARRYING AMOUNT OF JOINT VENTURE ENTITIES Carrying amount at the beginning of the financial year........ 370.4 418.5 Share of operating profits/(losses) after income tax.......... (0.6) 7.4 Share of dividend income...................................... -- (19.3) Pre-acquisition dividends..................................... (42.6) -- Acquisition of additional interest in joint venture entities.. -- 2.1 Disposal of interest in joint venture entities................ (83.2) (38.3) ----- ----- Carrying amount at the end of the financial year.............. 244.0 370.4 ===== =====
SUMMARISED FINANCIAL POSITION OF JOINT VENTURE ENTITIES SHARE OF ASSETS AND LIABILITIES Current assets.............................................. 59.9 89.8 Non-current assets.......................................... 351.2 321.5 Current liabilities......................................... 17.0 52.8 Non-current liabilities..................................... 92.0 53.9 ------ ------ SHARE OF OPERATING PROFIT Revenue from ordinary activities............................ 104.8 171.6 Expenses from ordinary activities........................... (106.7) (162.5) ------ ------ Profit/(loss) from ordinary activities before income tax.... (1.9) 9.1 Income tax (expense)/benefit relating to ordinary activities 1.3 (1.7) ------ ------ Net profit/(loss)........................................... (0.6) 7.4 ====== ======
D-49 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001
CONSOLIDATED ----------- 2001 2000 ---- ----- A$M A$M SHARE OF RESERVES Accumulated losses at the beginning of the financial year....................... (0.3) (10.4) at the end of the financial year............................. (0.6) (0.3) Asset revaluation reserve at the beginning of the financial year....................... 1.9 1.9 at the end of the financial year............................. -- 1.9
31 ASSOCIATED ENTITIES The consolidated entity has a significant non-controlling interest in the following entities:
CARRYING BENEFICIAL INTEREST AMOUNT ------------------- --------- NAME OF ASSOCIATED ENTITY AND PRINCIPAL ACTIVITY 2001 2000 2001 2000 - ------------------------------------------------ ----- ----- ---- ---- % % A$M A$M Australian Magnesium Corporation Limited (i) - --Mining of industrial minerals.................. -- 36.9 -- 76.4
- -------- (i) Australian Magnesium Corporation Limited ("AMC") became a controlled entity from 26 July 2000. Share of results reflects the period AMC was an associated entity. CONSOLIDATED ENTITY'S SHARE OF RESULTS ATTRIBUTABLE TO ASSOCIATES:
CONSOLIDATED ------------- 2001 2000 ----- ------ A$M A$M Operating profit(loss) before income tax................... (4.4) (66.2) Income tax (expense)/benefit............................... -- 18.6 ----- ------ Operating profit/(loss) after income tax................... (4.4) (47.6) ===== ====== SHARE OF POST-ACQUISITION ACCUMULATED LOSSES ATTRIBUTABLE TO ASSOCIATES: Accumulated losses attributable to associates at the beginning of the financial year.......................... (25.3) (63.5) Share of net profit/(loss) of associates................... (4.4) (47.6) Dividends from associates.................................. -- -- Share of retained earnings on consolidation................ 29.7 85.8 ----- ------ Losses attributable to associates at the end of the financial year........................................... -- (25.3) ===== ====== MOVEMENTS IN CARRYING AMOUNTS OF INVESTMENTS IN ASSOCIATES: Carrying amount at the beginning of the financial year..... 76.4 200.1 Acquisitions at cost....................................... -- 71.8 Former associates now consolidated......................... (72.0) (147.9) Share of operating profits/(losses) after income tax....... (4.4) (47.6) ----- ------ Carrying amount at the end of the financial year........... -- 76.4 ===== ====== SUMMARISED FINANCIAL POSITION OF ASSOCIATES: Net profits/(losses) after income tax...................... -- (17.8) Assets..................................................... -- 189.7 Liabilities................................................ -- 73.7
D-50 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 32 FINANCIAL INSTRUMENTS (A) OBJECTIVES OF DERIVATIVE FINANCIAL INSTRUMENTS The consolidated entity employs derivative financial instruments, including forward sales contracts, option contracts, swaps and forward rate agreements to manage risk emanating from actual exposures to commodity price risk, foreign exchange risk and interest rate risk. The consolidated entity does not trade derivative financial instruments. (B) GOLD HEDGING The consolidated entity maintains hedging positions to provide certainty over future cash flows and protect revenue against periods of falling prices. As at 30 June 2001, the consolidated entity had committed to the following types of hedging contracts: FORWARD SALES CONTRACTS Gold forward sale contracts outstanding are of two types--outright forwards with a floating gold leasing rate and short term rolling contracts. Under an outright forward the forward price for the gold sale is fixed at the time of entering into the contract. Gold leasing fees are charged for the life of the contract and are set on a periodic basis at the discretion of the consolidated entity. The net price realised is the fixed contract price net of accrued gold leasing fees (paid at maturity of the contract). Under a short term rolling contract a spot transaction has been entered into and is being rolled periodically, with the new contract price being calculated on a net contango basis at each maturity date. The 90 day gold lease rate and the 12 month gold lease rate at 30 June 2001 were 1.66% and 1.99% respectively (2000: 0.88% and 1.51%). Over the 12 months to 30 June 2001 the 90 day lease rate has been in the range 0.58% to 4.23% (2000: 0.62% to 9.14%) and averaged 1.29% (2000: 1.876%) and the 12 month lease rate has been in the range 1.25% to 2.69% (2000: 1.30% to 6.56%) and averaged 1.61% (2000: 2.29%). The consolidated entity normally settles gold forward sale contracts by delivery of the underlying commodity. OPTIONS If exercised, gold put options are normally settled by delivery of gold. FORWARD RATE AGREEMENTS Forward rate agreements are used to fix future gold leasing rate exposures resulting from the outright forward positions described above. The agreements swap floating gold leasing rates for fixed rates with the transaction net settled at maturity in gold ounces. D-51 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 (C) BASE METALS HEDGING Outright forward contracts and participating forward contracts have been entered into by the consolidated entity. FORWARD SALES CONTRACTS Base metals contracts are net settled against the average price of the pricing month of the physical shipment (in US dollars). A net amount is paid or received by the consolidated entity. FOREIGN EXCHANGE CONTRACTS Outright forward sales contracts are entered into to hedge US dollar receipts associated with base metals activities. OPTIONS If exercised, base metals put and call options are net settled against monthly market averages. The costs of entering into these contracts and any realised or unrealised gains or losses are deferred until the underlying shipment occurs. The gains and losses deferred as at balance date and the periods to which they relate are set out in the table. (D) HEDGING OF OTHER COMMITMENTS DENOMINATED IN FOREIGN CURRENCIES Contracts to purchase and sell foreign exchange are entered into to hedge certain commitments denominated in foreign currencies. (E) CREDIT RISK The consolidated entity is exposed to credit related losses in the event of non-performance by counterparties (banks) with respect to the financial instruments; however exposures to individual counterparties are limited in accordance with policy set by the Board. The maximum credit risk on financial assets, which have been recognised on the balance sheet, other than investments in shares, is generally the carrying amount of the asset. For off balance sheet financial assets which are deliverable, including derivatives, credit risk also arises from the potential failure of counterparties to meet their obligations under the respective contracts at maturity. A material exposure arises from gold hedging and the consolidated entity is exposed to loss in the event that counterparties fail to settle on contracts, which are favourable to the consolidated entity. Unrealised gains on these contracts, net of master netting agreements, at balance date are A$178.8 million (2000: A$73.3 million). In order to mitigate these risks, the Board has approved a list of banks as appropriate counterparties, all rated A- or better by Standard and Poors. D-52 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 32 FINANCIAL INSTRUMENTS (CONT.)
2001-2002 2002-2003 2003-2004 2004-2012 TOTAL ------------ ------------ ------------ ------------- ------------- QTY AVG QTY AVG QTY AVG QTY AVG QTY AVG PRECIOUS METALS HEDGING HEDGED PRICE HEDGED PRICE HEDGED PRICE HEDGED PRICE HEDGED PRICE ----------------------- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ('000 (PER ('000 (PER ('000 (PER ('000 (PER ('000 (PER AS AT 30 JUNE 2001 OZ) OZ) OZ) OZ) OZ) OZ) OZ) OZ) OZ) OZ) FORWARD SALE CONTRACTS Gold outright forwards ($A sold).............. 1,241 552 1,587 574 986 603 3,510 636 7,324 604 ($US sold)............. -- -- -- -- -- -- 175 494 175 494 Silver outright forwards ($A sold).............. 1,307 8.08 408 7.83 65 7.87 -- -- 1,780 8.02 ($NZ sold)............. 317 10.13 297 9.42 232 9.53 -- -- 846 9.72 OPTIONS Gold option positions (bought $A put)........ 619 542 167 549 9 572 468 599 1,263 564 (bought EUR put)....... -- -- -- -- -- -- -- -- -- -- (bought $US put)....... 133 299 128 299 130 299 347 343 738 320 (convertible $A put)... -- -- -- -- -- -- 1,736 646 1,736 646 AGGREGATE DEFERRED LOSSES (A$M)................... (17.9) (44.2) (25.9) (338.4) (426.4)
2000-2001 2001-2002 2002-2003 2003-2010 TOTAL ------------ ------------ ------------ ------------- ------------- QTY AVG QTY AVG QTY AVG QTY AVG QTY AVG PRECIOUS METALS HEDGING HEDGED PRICE HEDGED PRICE HEDGED PRICE HEDGED PRICE HEDGED PRICE ----------------------- ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ('000 (PER ('000 (PER ('000 (PER ('000 (PER ('000 (PER AS AT 30 JUNE 2000 OZ) OZ) OZ) OZ) OZ) OZ) OZ) OZ) OZ) OZ) FORWARD SALE CONTRACTS Gold outright forwards ($A sold).............. 1,407 529 1,189 557 980 594 4,200 610 7,776 585 ($NZ sold)............. 14 634 -- -- -- -- -- -- 14 634 (EUR sold)............. 13 301 -- -- -- -- -- -- 13 301 ($US sold)............. -- -- -- -- -- -- 175 494 175 494 Silver outright forwards ($A sold).............. 78 8.05 56 7.97 79 7.92 36 7.94 249 7.97 ($NZ sold)............. 585 10.03 -- -- 297 9.42 232 9.53 1,114 9.76 OPTIONS Gold option positions (bought $A put)........ 612 499 303 537 164 557 607 599 1,686 547 (bought EUR put)....... 13 280 -- -- -- -- -- -- 13 280 (bought $US put)....... 129 299 132 299 128 301 477 291 866 295 (convertible $A put)... 62 569 74 575 200 576 2,050 630 2,386 622 (bought $A call)(i)...... 230 504 -- -- -- -- -- -- 230 504 (sold $A call)(i)........ 4 640 45 545 46 550 525 547 620 548 (sold EUR call)(ii)...... 13 335 -- -- -- -- -- -- 13 335 AGGREGATE DEFERRED LOSSES (A$M)................... (38.6) (17.9) (19.3) (187.6) (263.4)
- -------- (i) Bought gold $A call options are matched against gold outright forwards ($A sold) to create synthetic put options. (ii) The majority of sold gold call options are matched against bought gold put options to create collar structures. D-53 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001
2001-2002 2002-2003 2003-2004 2004-2005 TOTAL ---------------- ---------------- ---------------- ---------------- ---------------- QTY AVG QTY AVG QTY AVG QTY AVG QTY AVG BASE METALS HEDGING HEDGED PRICE HEDGED PRICE HEDGED PRICE HEDGED PRICE HEDGED PRICE - ------------------- -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- AS AT 30 JUNE 2001 (TONNES) (US$/T) (TONNES) (US$/T) (TONNES) (US$/T) (TONNES) (US$/T) (TONNES) (US$/T) FORWARD SALE CONTRACTS Copper sale contracts outright forwards ($US sold).......... 2,150 1,855 -- -- -- -- -- -- 2,150 1,855 OPTIONS Zinc sale contracts outright forwards ($US sold).......... 1,500 1,180 -- -- -- -- -- -- 1,500 1,180 A$M RATE A$M RATE A$M RATE A$M RATE A$M RATE FORWARD EXCHANGE CONTRACTS Sell US dollars--buy Australian dollars........... 108.7 0.6663 99.3 0.6549 42.0 0.6474 52.9 0.6320 302.9 0.6540 AGGREGATE DEFERRED GAINS/ (LOSSES) (A$M)............... (33.0) (28.2) (10.9) (11.8) (83.9)
2001-2001 2001-2002 2002-2003 2003-2010 TOTAL ---------------- ---------------- ---------------- ---------------- ---------------- QTY AVG QTY AVG QTY AVG QTY AVG QTY AVG BASE METALS HEDGING HEDGED PRICE HEDGED PRICE HEDGED PRICE HEDGED PRICE HEDGED PRICE - ------------------- -------- ------- -------- ------- -------- ------- -------- ------- -------- ------- AS AT 30 JUNE 2000 (TONNES) (US$/T) (TONNES) (US$/T) (TONNES) (US$/T) (TONNES) (US$/T) (TONNES) (US$/T) FORWARD SALE CONTRACTS Copper sale contracts outright forwards ($US sold).......... 425 2,092 -- -- -- -- -- -- 425 2,092 Zinc sale contracts outright forwards ($US sold).......... 3,575 1,161 -- -- -- -- -- -- 3,575 1,161 OPTIONS Copper option positions (bought $US put)............ 775 1,720 -- -- -- -- -- -- 775 1,720 (sold $US call)* (i)........ 775 1,960 -- -- -- -- -- -- 775 1,960 A$M RATE A$M RATE A$M RATE A$M RATE A$M RATE FORWARD EXCHANGE CONTRACTS Sell US dollars--buy Australian dollars........... 105.6 0.68 112.5 0.67 116.8 0.66 75.2 0.63 410.1 0.66 AGGREGATE DEFERRED LOSSES (A$M)........................ (8.6) (9.5) (12.0) (9.8) (39.9)
- -------- (i) Sold copper $US call options are matched against bought copper $US put options to create collar structures. D-54 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 32 FINANCIAL INSTRUMENTS (CONT.) (F) INTEREST RATE RISK The consolidated entity's exposure to interest rate risk at 30 June 2001 is set out below:
FIXED INTEREST MATURING IN ----------------------------- FLOATING LESS GREATER NON- INTEREST THAN THAN INTEREST RATE 1 YEAR 1-5 YEARS 5 YEARS BEARING TOTAL -------- ------ --------- ------- -------- ------- FINANCIAL ASSETS Cash assets.......................... 239.4 239.4 Bank bills........................... 65.8 65.8 Gold bullion......................... 39.6 39.6 Receivables.......................... 24.9 106.0 139.0 269.9 Investments.......................... 338.7 338.7 ----- ----- ----- ----- ----- ------- 953.4 Weighted average interest rate (%)... 4.4 6.1 3.0 -- FINANCIAL LIABILITIES Trade creditors...................... 249.8 249.8 Bank overdrafts and bank loans....... 102.1 206.0 308.1 Gold denominated debt................ US dollar guaranteed notes........... 417.7 125 333.0 875.7 Other borrowings..................... 70.4 32.8 103.2 Other liabilities.................... ----- ----- ----- ----- ----- ------- 1,536.8 Weighted average interest rate (%)... 5.09 5.87 8.61 7.97 -- ===== ===== ===== ===== ===== ======= The consolidated entity's exposure to interest rate risk at 30 June 2000 is set out below: FINANCIAL ASSETS Cash assets.......................... 101.5 34.8 16.4 152.7 Bank bills........................... 69.4 69.4 Gold bullion......................... 23.3 23.3 Receivables.......................... 15.9 76.1 22.7 103.6 183.0 401.3 Investments.......................... 585.6 585.6 ----- ----- ----- ----- ----- ------- 1,232.3 Weighted average interest rate (%)... 5.45 6.30 9.25 3.00 FINANCIAL LIABILITIES Trade creditors...................... 159.9 159.9 Bank overdrafts and bank loans....... 636.0 5.4 641.4 Gold denominated debt................ 5.0 5.0 US dollar guaranteed notes........... 141.8 303.2 100.0 330.9 875.9 Other borrowings..................... 3.8 26.1 29.9 Other liabilities.................... 87.3 87.3 ----- ----- ----- ----- ----- ------- 1,799.4 Weighted average interest rate (%)... 2.70 7.31 7.45 6.73 -- ===== ===== ===== ===== ===== =======
- -------- Amounts are disclosed net of provisions. D-55 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 (G) NET FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (I) RECORDED ON STATEMENT OF FINANCIAL POSITION The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities of the consolidated entity approximates their carrying value. The net fair value of other monetary financial assets and financial liabilities is based upon market prices where a market exists or by discounting the expected future cash flows by the current interest rates for assets and liabilities with similar risk profiles. Listed equity investments have been valued by reference to market prices prevailing at balance date. The carrying amounts of all financial assets and financial liabilities approximate net fair value, with the following exceptions: The market value of listed investments as at 30 June 2001 is A$6 million (2000: A$86.8 million). The carrying amount of A$6.3 million has not been reduced as it does not exceed recoverable amount. (II) NOT RECORDED ON STATEMENT OF FINANCIAL POSITION Commodity forward sale contracts, foreign exchange contracts, options and swaps have been valued at the mark-to-market gain or loss, which would arise if the contract were terminated at balance date. These values are disclosed under "Gold hedging", "Base metals hedging" and "Other commitments denominated in foreign currencies" above. 33 CONTINGENT LIABILITIES (A) GUARANTEES AND INDEMNITIES The consolidated entity has given bank guarantees totalling A$56.8 million (2000: A$48.8 million) to banks, mining departments and other public utilities. Normandy Mining Limited and several of its wholly-owned entities have guaranteed a A$650 million multi-option, revolving facility provided by a syndicate of banks to Normandy Group Finance Limited, a wholly owned entity of Normandy Mining Limited. At 30 June 2001, the facility was drawn down by A$200 million (2000: A$170 million). Normandy Mining Limited and a number of wholly owned entities have guaranteed the obligations of Normandy Mining Finance Limited pursuant to the issue of US$250 million guaranteed unsecured notes. Normandy Mining Limited and several of its wholly owned entities have provided guarantees over a fully drawn financing facility totalling A$38.6 million (2000: A$44.1 million) and foreign currency hedging facilities that a syndicate of banks has provided on behalf of Australian Magnesium Corporation Limited ("AMC"), formerly Queensland Metals Corporation Limited. Of the foreign currency hedging facilities totalling a face value of US$155 million (2000: US$155 million) US$124.5 million (2000: US$149 million) is utilised and has a marked to market deficiency of A$73.6 million as at 30 June 2001 (2000: A$37.4 million). D-56 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 Normandy Mining Limited and AMC have jointly and severally agreed to indemnify The Ford Motor Company ("Ford") in respect of an obligation of AMC to reimburse, in certain circumstances, part or all of the US$30 million investment provided by Ford in the Magmetal project. As a result of the transactions completed during the year 2000, AMC has indemnified Normandy Mining Limited in respect of liability under this arrangement in two of the four circumstances in which Normandy Mining Limited may be liable to Ford. Kasese Cobalt Company Limited, a controlled entity, has arranged loan finance agreements for US$50.7 million with a syndicate of banks. Normandy Mining Limited has provided a guarantee over the facility to the syndicate of banks. Normandy Mining Limited has guaranteed the obligations of Kasese Cobalt Company Limited in relation to a Cobalt Floor Price Support Agreement with Royal Bank of Scotland. Controlled entities have provided indemnities to third parties relating to the sale of wholly owned entities of Normandy Mining Limited. Normandy Mining Limited and several of its wholly owned entities have guaranteed the obligations of a wholly owned entity both to Esso Australia Resources Limited and SG Australia Limited. The guarantee is in relation to the deferred purchase consideration obligations of the wholly owned entity for the purchase of an additional 35 percent interest in the Golden Grove Joint Venture from Esso Australia Resources Limited. The discounted liability of A$6.1 million (2000: A$12.2 million) is included in payables in the consolidated statements of financial position. Wholly owned entities have provided guarantees over the treasury obligations of other wholly owned entities. As at 30 June 2001, the aggregate marked to market deferred loss in respect of these obligations is A$510.3 million (2000: A$303.3 million). Normandy Mining Limited has provided guarantees over the foreign exchange and base metal hedging obligations of various wholly owned entities. Normandy Mining Limited has given written confirmation of its present intention to support the operation of certain wholly owned entities which have a net asset deficiency. In an action brought by ASIC against Yandal Gold Pty Ltd, the Federal Court found the defendants to have committed various breaches of the Corporations Act 2001 and ordered payment by Edensor Nominees Pty Ltd ("Edensor") to ASIC of A$28.5 million for distribution to former Normandy Yandal Operations Limited shareholders. An appeal by Edensor to the Full Court of the Federal Court, to which Normandy became a party on the application of ASIC, was allowed on the basis that the Federal Court lacked jurisdiction to make the order. This decision was appealed to the High Court, which overturned the Full Federal Court decision. The High Court held that the Federal Court did have jurisdiction to hear and determine the matter and make orders under the Corporations Act 2001. The High Court has sent the matter back to the Full Federal Court to determine Edensor's appeal on the merits. Prior to the Federal Court appeal and in order to get a stay in enforcement of the original judgement, Normandy paid A$28.5 million into Court and Edensor agreed to bear half this amount if it was paid out of Court to former Normandy Yandal Operations Limited shareholders. Following the High Court appeal, the amount paid into Court has been recovered, but if the Full Federal Court determines Edensor's appeal against Edensor, the consolidated entity will be obliged to pay that amount plus interest to ASIC. Edensor remains bound to the consolidated entity to bear half that amount. D-57 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 During the year Normandy Mining Limited provided a A$90.0 million contingent equity commitment under which AMC may call upon Normandy Mining Limited to subscribe for AMC shares in the event that the Stanwell Magnesium Project does not achieve certain specified production and operating criteria by no later than September 2006. (B) DISPUTES A dispute exists between Thiess Contractors Pty Ltd ("Thiess") and Normandy Golden Grove Operations Pty Ltd ("NGGO"), a wholly owned entity, in respect of a claim for additional and unexpected costs arising from the development of the Gossan Hill Project decline. Conciliation procedures have failed to resolve the dispute. Thiess claimed approximately A$11 million in damages. NGGO has made a counterclaim of A$0.9 million and made an offer of A$2.1 million. Litigation in the Supreme Court of Western Australia is proceeding. Disputes exist between a controlled entity, Banff Resources Ltd, and a third party in respect of a claim for part-ownership in the Kilembe mine. The third party has lodged a claim for specific performance and damages with courts in Uganda and Canada. The disputes are currently awaiting hearing and the controlled entity intends to defend the action. Orica Australia Limited has commenced proceedings against a former controlled entity Normandy Industrial Minerals Limited ("NIML"), in respect of the supply of sand used in the manufacture of paints. A controlled entity has indemnified the purchaser of NIML in respect of this claim. Disputes exist between a controlled entity and contractors in respect of the Kasese Cobalt project. Claims have been lodged by contractors for additional payment in respect of extensions of time and additional costs. Claims have either been settled, or are subject to arbitrary proceeding, or are being evaluated. (C) OTHER Normandy Mining Limited provided a guarantee to the Commonwealth Bank of Australia relating to the sale for an amount of A$5 million, amortising to nil over a period of 10 years from 1999. Normandy Mining Limited has agreed to make an additional payment of US$8 million to Inmet Mining Corporation, in relation to the purchase of its interest in Autin Investments B.V., contingent upon certain conditions relating to construction of mine facilities at Perama Hill being met. Normandy Mining Limited has agreed to make an additional payment of US$3.6 million to Inmet Mining Corporation in relation to the purchase of its interest in Autin Investments BV, contingent upon certain conditions relating to production at the Ovacik Mine being met. A wholly owned entity has agreed to purchase all the shares in Normandy Anglo Pte Ltd and Normandy Anglo Asia Pty Ltd from Amcorp Exploration (South-East Asia) Limited (Amcorp) under the following terms and conditions, US$1.5 million paid upon the completion of a Bankable Feasibility Study, US$2.5 million paid upon the commencement of commercial production in a designated area, US$2.50 per ounce for the first 200,000 ounces sold by Normandy and thereafter US$5.00 for every ounce sold by Normandy after the initial 200,000 ounces. Normandy Mining Limited has also contracted to make payments for exploration based on the production and exploration results of a controlled entity. D-58 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 34 COMMITMENTS
CONSOLIDATED ----------------------- 2001 2000 ----- ----- A$M A$M COMMITMENTS NOT OTHERWISE PROVIDED FOR IN THE FINANCIAL STATEMENTS AT BALANCE DATE: CAPITAL EXPENDITURE Payable not later than 1 year............................ 21.5 26.5 Later than 1 year and not later than 5 years............. -- 0.2 ----- ----- 21.5 26.7 ===== ===== NON-CANCELLABLE OPERATING LEASES Payable not later than 1 year............................ 9.5 9.8 Later than 1 year and not later than 5 years............. 34.1 34.4 Later than 5 years....................................... 5.7 13.5 ----- ----- 49.3 57.7 ===== ===== The operating lease commitments include a 7 year lease of various open pit mining and auxiliary equipmentat the Kalgoorlie operations. The lease commitments are subject to change if interest rates are different to thatassumed in the lease model. EXPLORATION AND MINERAL LEASES (I) Payable not later than 1 year............................ 19.8 45.4 Later than 1 year and not later than 5 years............. 47.5 98.8 Later than 5 years....................................... 0.1 12.0 ----- ----- 67.4 156.2 ===== ===== OTHER COMMITMENTS (II) Payable not later than 1 year............................ 33.5 28.1 Later than 1 year and not later than 5 years............. 108.5 88.4 Later than 5 years....................................... 33.7 44.3 ----- ----- 175.7 160.8 ===== =====
- -------- (i) The consolidated entity has certain obligations to perform minimum exploration work and expend minimum amounts of money in order to maintain rights of tenure over mining and exploration tenements. The annual minimum expenditure will vary from time to time due to the acquisition or relinquishment of licences or mining department variations of the commitment levels by the various mining departments. (ii) The consolidated entity has entered into agreements with public utilities under which they supply electricity in several states. Pursuant to those agreements, the entities concerned are liable, or severally liable in the case where a joint venture exists, to pay the respective public utility a line charge for the service. The consolidated entity has also entered into an agreement for minimum use of Goldfields Gas Transmission capacity, equivalent to a total of A$102.3 million to 2008. During the year, a controlled entity provided a US$1 million (2000: US$150 million) committed debt and hedging facility to TVX Cayman Inc. ("TVX"), a controlled entity of TVX Gold Inc. Drawdowns under the facility are subject to normal commercial lending covenants. The facility is currently undrawn. D-59 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 The consolidated entity has commitments for the payment to Mr RJ Champion de Crespigny of salaries and other remuneration under a ten-year employment contract commencing from 1 July 1999. Obligations arising under this contract are recognised as an expense, and included in Directors' and Executives' remuneration, as services are provided to the consolidated entity under the contract. The contract provides for future payments recognising performance, plus an incentive arrangement based on growth in value of the consolidated entity's investments in the Americas above an agreed benchmark. Total annual payments under the contract are capped at A$3.5 million. During the year, no performance or incentive payments were made but, at 30 June 2001, the economic entity recognised A$1.5 million (2000:A$1.5 million) as an expense by providing pro-rata for the minimum amount due under the ten-year term. As at 30 June 2001, the total accrued was A$3.0 million (2000: A$1.5 million). These commitments will be met out of the surplus cash generated by existing operations. 35 RECEIVABLES AND PAYABLES DENOMINATED IN FOREIGN CURRENCIES The Australian dollar equivalents of foreign currency receivables and payables included in the financial statements, which are not effectively hedged, are as follows:
CONSOLIDATED ------------ 2001 2000 ----- ----- A$M A$M BORROWINGS CURRENT - --US Dollars (i)................................................. 39.2 33.4 NON-CURRENT - --U S Dollars (ii)............................................... 227.9 193.5 ===== =====
- -------- (i) Represents the unhedged portion of the US$40.0 million loan facility in respect of the Ovacik mine, net of the US$20.0 million cash deposit being held as security for the loan (2000: A$33.4 million), translated at an exchange rate of AS1.00: US$0.51 (2000: A$1.00: US$0.60). (ii) Represents the unhedged potion of the US$300.0 million senior unsecured notes (see Note 18). 36 EMPLOYEE ENTITLEMENTS Accrued wages and salaries....................................... 0.6 2.3 PROVISION FOR EMPLOYEE ENTITLEMENTS - --Current (Note 19).............................................. 31.7 18.3 Non-current (Note 19)............................................ 12.5 9.7 ----- ----- 44.8 30.3 ===== =====
EMPLOYEE NUMBERS 2001 2000 - ---------------- ----- ----- Number of employees at the end of financial year................. 2,613 2,760 ===== =====
D-60 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 THE EMPLOYEE SHARE INVESTMENT PLAN The Company's Employee Share Investment Plan was approved by special resolution at the annual general meeting of the Company held on 26 November 1991. Under this plan employees of the consolidated entity are eligible to acquire an annual allocation of 2,000 fully paid ordinary shares after one year of service which rises to 5,000 shares after three years service. The shares are offered at a price determined by the Board (at a discount of up to 5 percent of the prevailing market price) and employees may elect to pay cash for the shares or apply for a loan from the parent entity. Such loans are repayable over a maximum period of 10 years at a concessional rate of interest which is currently 4 percent. Shares issued under the scheme are non-transferable for a period of one year from the date of issue after which time an application is made for official quotation of the shares. DETAILS OF SHARES OFFERED AND ISSUED TO EMPLOYEES UNDER THE PLAN ARE AS FOLLOWS:
2001 2000 PLAN TO DATE ----------- ----------- ------------ Offer date............................... 4 Dec 2000 9 Nov 1999 Total shares offered..................... 5,763,000 7,718,000 32,479,000 Number of eligible employees............. 1,448 1,864 Offer price.............................. A$0.86 A$1.11 Acceptance required by................... 17 Jan 2001 14 Jan 2000 Shares issued............................ 1,453,350 484,300 5,257,614 Number of employees to whom shares were issued................................. 381 138 Issue date............................... 31 Jan 2001 31 Jan 2000 Consideration received................... A$1,249,881 A$537,573 A$6,542,735 Market value of the shares on date of issue.................................. A$1,380,682 A$503,672 A$7,137,989
The market price of a Normandy Mining Limited ordinary share at 30 June 2001 was A$1.24 (2000: A$0.90). The issue price of shares issued under the plan is recognised as issued capital at the date of issue. Amounts recognised in relation to the year ended 30 June were as follows:
2001 2000 ----- ----- A$000 A$000 Issued capital.................................................. 1,258 538
At 30 June 2001 loans arising from the Employee Share Investment Plan to employees who are also Directors of controlled entities totaled A$38,943 (2000: A$39,613). Loans totaling A$20,640 were made during the year to R Greenslade, D Hillier, C Swensson, P Dowd, KG Williams, C O'Connor (2000: A$5,550--M Nossal). Instalments and repayments totalling A$30,166 were made during the year by R Auld, T Cutbush, J Fehon, P Hastie, R Greenslade, D Hillier, M Nossal, S Sherwood, C Swensson, P Dowd, KG Williams, C O'Connor (2000: A$23,825--R Auld, ST Carty, T Cutbush, A de Vere, J Fehon, R Greenslade, P Hastie, I Hershman, D Hillier, M Nossal, S Sherwood, D Smith and C Swensson). EXECUTIVE SHARE INCENTIVE PLAN The Company's Executive Share Incentive Plan was approved by special resolution at the annual general meeting of the Company held on 26 October 1998. D-61 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 36 EMPLOYEE ENTITLEMENT (CONT.) Under this plan Executive Directors, Executives and Employees of the Company and associated entities may be eligible, at the discretion of the Board, to an allocation of rights to unlisted options. These rights vest once certain performance hurdles are met. During and since the end of the financial year an aggregate of 4,112,500 options over shares in Normandy Mining Limited were granted. Options are granted for nil consideration. Each option carries a right to subscribe for one ordinary share in the Company in certain periods. The exercise price of the option is the weighted average market per share during the 60 trading days prior to the date of acceptance of the rights to options, less the total amount of dividend per share. The dividend per share is calculated as the higher of the actual dividend per share for the period from the date of acceptance of the rights to options and the exercise date, and the average dividend per share paid by the Company for the 3 years preceding. The minimum exercise price is A$1.00. An application is made for official quotation of the shares at the time of issue. At 30 June 2001 no options had been granted under this plan. THE EMPLOYEE SHARE BONUS PLAN The Company's Employee Share Bonus Plan was established on 26 November 1991. Each year the Board determines whether eligible persons will receive a bonus. The bonus is calculated as a percentage of salary package and is apportioned into two tranches; 50 percent as an allocation of rights to options and 50 percent as cash or as additional allocation of rights to options. Rights to options allocated in lieu of cash vest upon the eligible person's acceptance of the Company's offer. Rights to the balance of the options allocated each year vest over the following three years. Options are granted for nil consideration. Each option carries a right to subscribe for fully paid ordinary shares on any business day up until its expiry date, being five years from the date of issue. For all options which were vested before 1 May 1996, the employee is entitled to receive 1.101 Normandy shares for each option exercised. For all options, which were vested after 1 May 1996, the employee is entitled to receive one Normandy share for each option exercised. The exercise price of the option is at 5 percent discount to the market price ruling when the allocations are made. It is management's intention that no further allocation of rights to options will be made under the plan. DETAILS OF OPTIONS VESTED AND OUTSTANDING UNDER THE PLAN ARE AS FOLLOWS:
2001 2000 ------------------- ------------------ NUMBER AVERAGE NUMBER AVERAGE ISSUED PRICE ISSUED PRICE ---------- ------- --------- ------- Opening balance.......................... 8,129,915 1.69 7,042,765 1.69 Options issued during the period......... 783,802 1.38 1,572,291 1.67 Options exercised during the year........ (8,173) 1.10 -- -- Options cancelled during the year........ (1,826,406) 1.22 (485,141) 1.61 ---------- ---- --------- ---- Closing balance (i)...................... 7,079,138 1.76 8,129,915 1.69 ========== ==== ========= ====
- -------- (i) 1,032,168 (2000: 1,954,478) of these options are convertible to 1.101 shares per option held. D-62 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 The issue price of shares issued under the plan is recognised as issued capital at the date of issue. Amounts recognised in relation to the year ended 30 June were as follows:
PARENT ENTITY ------------- 2001 2000 ----- ----- A$000 A$000 Issued capital................................................... 9 --
37 REMUNERATION OF DIRECTORS AND EXECUTIVES
CONSOLIDATED ------------ 2001 2000 ----- ----- A$000 A$000 (A) NON-EXECUTIVE DIRECTORS Amounts paid or payable, or otherwise made available to Directors of entities in the Normandy Mining Limited consolidated entity from entities in the consolidated entity....................... 693 789
The following income bands apply in respect of non-executive Directors of Normandy Mining Limited:
NUMBER --------- 2001 2000 ---- ---- A$0.000--A$9,999................................................. 1 -- A$40,000--A$49,999............................................... 1 -- A$70,000--A$79,999............................................... 1 -- A$80,000--A$89,999............................................... 1 1 A$90,000--A$99,999............................................... 1 1 A$110,000--A$119,999............................................. -- 1 A$120,000--A$129,999............................................. 1 -- A$130,000--A$139,999............................................. -- 1 A$210,000--A$219,999*............................................ -- 1
- -------- * A$Nil (2000A$180,000) was paid on retirement of non-executive Directors during the year. These bands include the remuneration received by non-executive Directors of Normandy Mining Limited from other companies in the Normandy Mining Limited consolidated entity as a result of their directorships and/or membership of communities of Directors.
CONSOLIDATED ------------ 2001 2000 ----- ----- A$000 A$000 (B) EXECUTIVE DIRECTORS Amounts paid or payable, or otherwise made available to executive officers who are or were Directors of entities in the Normandy Mining Limited consolidated entity from entities in the consolidated entity............................................ 4,976 6,504
D-63 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 The following income bands apply in respect of Executive Directors of Normandy Mining Limited:
CONSOLIDATED NUMBER ------------ 2001 2000 ---- ---- A$2,290,000--A$2,299,999*........................................ -- 1 A$2,670,000--A$2,679,999**....................................... -- 1 A$2,790,000--A$2,799,999**....................................... 1 --
- -------- * A$NiI (2000: AS$1,664, 000) was paid to executive Directors on retirement or resignation during the year. ** Includes AS 1,500, 000 accrued but not yet paid
CONSOLIDATED ------------ 2001 2000 ----- ----- A$000 A$000 (C) EXECUTIVE OFFICERS Amounts received or due and receivable by executive officers who are not Directors of Normandy Mining Limited. Executive Officers are those persons within the consolidated entity who have responsibility for the management of affairs of the consolidated entity and the Company and its strategic direction.............. 5,731 4,337
The following income bands apply in respect of executive officers:
2001 2000 ---- ---- A$130,000--A$139,999*............................................... 1 -- A$240,000--A$249,999*............................................... -- 1 A$250,000--A$259,999................................................ -- 1 A$280,000--A$289,999................................................ -- 2 A$290,000--A$299,999................................................ 1 -- A$310,000--A$319,999*............................................... -- 1 A$340,000--A$349,999................................................ -- 1 A$350,000--A$359,999................................................ 1 -- A$360,000--A$369,999................................................ -- 2 A$450,000--A$459,999................................................ 1 1 A$470,000--A$479,999................................................ 1 -- A$490,000--A$499,999................................................ 1 -- A$520,000--A$529,999................................................ 1 -- A$590,000--A$599,999................................................ 1 -- A$660.000--A$669,999................................................ -- 1 A$740,000--A$749,999................................................ 1 -- A$760,000--A$769,999*............................................... -- 1 A$770,000--A$779,999*............................................... 1 -- A$870,000--A$879,999*............................................... 1 --
- -------- * A$1,380,000 (2000: A$726,000) was paid to executive officers on retirement or resignation during the year. D-64 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 38 OTHER RELATED PARTY INFORMATION Information in respect of related entities of the consolidated entity not disclosed elsewhere in this financial report is as follows: DIRECTORS The directors of Normandy Mining Limited during the year were: Mr R J Champion de Crespigny Mr M S Hamson Dr P Lassonde (appointed 31 May 2001) Mr B G McKay Mr J B Prescott Mr K H Spencer (appointed 1 December 2000) Mr B Wheelahan Remuneration paid or payable or otherwise made available to the Directors of Normandy Mining Limited and its controlled entities is disclosed in Note 37. TRANSACTIONS WITH RELATED ENTITIES All transactions with related entities are made on normal commercial terms and conditions. TRANSACTIONS WITH DIRECTOR-RELATED ENTITIES Loans have been made to an entity associated with the following directors; Mr R J Champion de Crespigny, Mr M S Hamson, Mr B G McKay, Mr B Wheelahan, Mr K H Spencer, Mr D Hillier, Mr B D Kay, Mr J Reynolds, Mr P J Dowd, Mr J B Prescott, Mr K G Williams, Mr C O'Connor and Mr H Umlauff (2000: Mr R J Champion de Crespigny, Rt Hon J D Anthony, Dr I G Gould, Mr M S Hamson, Mr B G McKay, Mr B Wheelahan, Mr L Baertl, Mr M Cutifani, Mr D Hillier, Mr B D Kay, Mr J Reynolds, Mr J Richards, Mr R Robinson and Mr D J Smith). Interest accrues on the loan at 5% per annum and is payable monthly. The principal amount is repayable on 8 December 2008. The loan is secured over the assets of the related entity. Amounts recorded in the statement of financial performance and statement of financial position in respect of the above transactions are set out below.
2001 2000 ------ ------ A$000 A$000 Non-current loans receivable.................................. 10,866 14,477 Provision for doubtful debts.................................. (1,387) (5,000) ------ ------ 9,479 9,477 Accrued interest.............................................. 670 686 Interest revenue.............................................. 670 686 Additions/(reductions) to provision for doubtful debts........ (2,829) 1,000 Repayments made............................................... 4,691 3,587 Advances made................................................. 1,080 4,583
D-65 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 TRANSACTIONS WITH OTHER RELATED PARTIES
2001 2000 ------ ------ A$'000 A$'000 (a) During the previous year loans of A$33.5 million were made to Yandal Gold Holdings Pty Ltd ("YGH"), a former associated entity. YGH subsequently became a controlled entity. Interest recorded in respect of the period for which YGH was an associated entity is set out below. Interest revenue............................................. -- 1,997 (b) During the previous year a loan of A$12 million was made to Australian Magnesium Investments Pty Ltd, a former associated entity. Interest accrued on the loan at the 3 month bank bill swap rate plus a margin of 3%. The loan was repaid in May 2000. Interest revenue............................................. -- 420 (c) During the previous year guarantee fees were received by Normandy Mining Limited from Australian Magnesium Corporation (AMC), a former associated entity. AMC subsequently became a controlled entity. Revenue in respect of the period for which AMC was an associated entity is set out below. Other revenue................................................ 326 865 (d) During the previous year loans were made to Normandy Anglo Asian group companies for mineral exploration. Loans receivable--associates................................. -- 2,196 Additions to provision for doubtful debts.................... -- 699 (e) During the previous year interest was charged to BRGM Perou, an associated entity, in respect of loans made. Interest revenue............................................. -- 1,035 (f) During the year fees were paid for a range of legal services to a firm of which Mr R A Fisher (a Director of controlled entities) is one of a number of partners. Fees paid.................................................... 152 175 Trade creditors.............................................. 18 19
OWNERSHIP INTEREST IN RELATED ENTITIES Interests held in joint venture operations, joint venture entities, controlled entities and associated entities are set out in Notes 28, 29, 30 and 31 to the financial statements. AMOUNTS RECEIVABLE FROM RELATED ENTITIES Details of amounts receivable from related entities are set out in Note 8 to the financial statements. D-66 NORMANDY MINING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) FOR THE YEAR ENDED 30 JUNE 2001 SHARE AND SHARE OPTIONS Details of all share and share option transactions between Directors of Normandy Mining Limited and any entity in the consolidated entity are as follows:
NUMBER --------------------- 2001 2000 ---------- ---------- AGGREGATE NUMBER ISSUED DURING THE YEAR: Ordinary shares - --Normandy Mining Limited (i)............................ 3,118,064 2,795,142 AGGREGATE NUMBER HELD AT 30 JUNE: Ordinary shares - --Normandy Mining Limited................................ 73,298,532 69,429,743 Ordinary share options - --Normandy Mining Limited (ii)........................... -- 28,858,264
- -------- (i) Includes Share Investment Plan issues and Dividend Reinvestment Plan issues. (ii) Listed options expired in April 2001. Other movements in aggregate balances arise through normal on market transactions. There were no buy-backs of shares or share options during the financial year. 39 SUBSEQUENT EVENTS Since the end of the financial year, a proposed equity raising by a controlled entity, Australian Magnesium Corporation Ltd. was initially unsuccessful. Following additional negotiations in relation to alternate funding sources, it is the Directors' expectation that the equity raising will successfully proceed. No adjustment is required to the reported results and no material impact on the financial results for the subsequent period is expected. D-67 DIRECTORS' DECLARATION The Directors declare that: (a) the attached financial statements and notes thereto comply with Accounting Standards; (b) the attached financial statements and notes thereto give a true and fair view of the financial position and performance of the Company and the consolidated entity; (c) in the Directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001; and (d) in the Directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Directors made pursuant to Section 295 (5) of the Corporations Act 2001 and signed on behalf of the Directors by: /s/ R J Champion de Crespigny R J Champion de Crespigny Director /s/ K H Spencer K H Spencer Director Adelaide, 21 August 2001 INDEPENDENT AUDIT REPORT TO THE MEMBERS OF NORMANDY MINING LIMITED SCOPE We have audited the financial report of Normandy Mining Limited for the financial year ended 30 June 2001, as set out on pages 37 to 70. The financial report includes the consolidated financial statements of the consolidated entity comprising the Company and the entities it controlled at year end or from time to time during the financial year. The Company's Directors are responsible for the financial report. We have conducted an independent audit of the financial report in order to express an opinion on it to the members of the Company. Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards issued in Australia and other mandatory professional reporting requirements and statutory requirements so as to present a view which is consistent with our understanding of the Company's and the consolidated entity's financial position, and performance as represented by the results of their operations and their cash flows. The audit opinion expressed in this report has been formed on the above basis. AUDIT OPINION In our opinion, the financial report of Normandy Mining Limited is in accordance with: (a) the Corporations Act 2001, including: (i) giving a true and fair view of the Company's and consolidated entity's financial position as at 30 June 2001 and of their performance for the year ended on that date; and (ii) complying with Accounting Standards and the Corporations Regulations; and (b) other mandatory professional reporting requirements. /s/ Deloitte Touche Tohmatsu Deloitte Touche Tohmatsu Chartered Accountants /s/ R W Smith R W Smith Partner Adelaide, 21 August 2001 The liability of Deloitte Touche Tohmatsu is limited by, and to the extent of, the Accountants' Scheme under the Professional Standards Act 1994 (NSW) EX-20 10 mar1ex205.txt EXHIBIT 20.5 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------- NORMANDY MINING LIMITED ABN 86 009 295 765 HALF-YEARLY REPORT 31 December 2001 CONTENTS Pages Directors' Report 2 Financial Statements 3-17 Directors' Declaration 18 Compliance Statement 19 Independent Review Report 20 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------- DIRECTORS' REPORT The Directors present their report on the consolidated financial report of Normandy Mining Limited and its controlled entities for the half-year ended 31 December 2001. DIRECTORS The Directors of Normandy Mining Limited during or since the end of the half-year are: Mr Robert J Champion de Crespigny Mr Michael S Hamson Dr Pierre Lassonde Mr Bruce G McKay Mr John B Prescott Mr Ken Spencer Mr Bernard Wheelahan REVIEW OF OPERATIONS GROUP RESULT The consolidated profit for the year after taxation and outside equity interests for the half-year ended 31 December 2001 was $83.5M (2000:$62.6M). Consolidated gold ounces sold during the half-year totalled 1,225,218 ounces (2000: 1,049,405 ounces) at an average realised price of $577 per ounce (2000: $552 per ounce). This compares with the average spot price for the half-year of $537 per ounce (2000: $493 per ounce). The average cash cost was $310 per ounce (2000: $299) and the average total production cost was $416 per ounce (2000: $396). For further details see Report on Activities for the Quarter to 31 December 2001 released to shareholders on 18 January 2002, and the Financial Report for the six months released today. ROUNDING OF AMOUNTS The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts in the directors' report and the financial report have been rounded to the nearest hundred thousand dollars. Signed in accordance with a resolution of the Board of Directors. On behalf of the Directors /s/ R J Champion de Crespigny /s/ K H Spencer R J Champion de Crespigny K H Spencer Director Director Adelaide 5 February 2002 Page 2 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------- Half Year Ended 31 December 2001 FOR ANNOUNCEMENT TO THE MARKET A$M - -------------------------------------------------------------------------------- Revenues from ordinary activities (item 1.1) up 7% TO 944.6 Profit(loss) from ordinary activities after tax (before amortisation of goodwill) attributable to members (item 1.20) up 31% TO 85.4 Profit(loss) from ordinary activities after tax attributable to members (item 1.23) up 33% TO 83.5 Profit(loss) from extraordinary item after tax attributable to members (item 2.5(d)) - Net profit(loss) for the period attributable to members (item 1.11) up 33% TO 83.5 - -------------------------------------------------------------------------------- DIVIDENDS (DISTRIBUTIONS) AMOUNT PER Franked amount SECURITY per security - -------------------------------------------------------------------------------- Interim dividend NIL Not Applicable - -------------------------------------------------------------------------------- Previous corresponding period 2.5 1.10 cents at 34% - -------------------------------------------------------------------------------- -------- Record date for determining entitlements to the dividend N/A -------- Brief explanation of omission of directional and percentage changes to profit in accordance with note 1 and short details of any bonus or cash issue or other item(s) of importance not previously released to the market Nil Page 3 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M ------------------------------------- 1.1 Revenue from ordinary activities (SEE ITEMS 1.24) 944.6 879.3 1.2 Expenses from ordinary activities (SEE ITEMS 1.24) (797.3) (754.5) 1.3 Borrowing costs (44.9) (52.5) 1.4 Share of net profit (loss) of associates and joint venture entities (SEE ITEM 16.7) 3.8 (1.1) - ------------------------------------------------------------------------------------------------------ 1.5 PROFIT (LOSS) FROM ORDINARY ACTIVITIES BEFORE TAX 106.2 71.2 1.6 Income tax on ordinary activities (22.3) (11.0) - ------------------------------------------------------------------------------------------------------ 1.7 PROFIT (LOSS) FROM ORDINARY ACTIVITIES AFTER TAX 83.9 60.2 1.8 Profit (loss) from extraordinary items after tax (SEE ITEM 2.5) - - - ------------------------------------------------------------------------------------------------------ 1.9 NET PROFIT (LOSS) 83.9 60.2 1.10 Net profit (loss) attributable to outside equity interests (0.4) 2.4 - ------------------------------------------------------------------------------------------------------ 1.11 NET PROFIT (LOSS) ATTRIBUTABLE TO MEMBERS 83.5 62.6 - ------------------------------------------------------------------------------------------------------ Total revenues, expenses and valuation adjustments attributable to members recognised directly in equity (93.2) 38.7 - ------------------------------------------------------------------------------------------------------ Total changes in equity other than those resulting from transactions with owners as owners. (9.7) 101.3 - ------------------------------------------------------------------------------------------------------ CONSOLIDATED RETAINED PROFITS ------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M ------------------------------------- 1.12 Retained profits (accumulated losses) at the beginning of the financial period (434.8) (251.9) 1.13 Net profit (loss) attributable to members (ITEM 1.11) 83.5 62.6 1.14 Net transfers to and from reserves (94.2) - 1.15 Net effect of changes in accounting policies - - 1.16 Dividends paid or payable (0.2) (39.7) - ------------------------------------------------------------------------------------------------------ 1.17 RETAINED PROFITS (ACCUMULATED LOSSES) AT END OF FINANCIAL PERIOD (445.7) (229.0) - ------------------------------------------------------------------------------------------------------ PROFIT RESTATED TO EXCLUDE AMORTISATION OF GOODWILL ------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M ------------------------------------- 1.18 Profit (loss) from ordinary activities after tax before outside equity interests (ITEMS 1.7) and amortisation of goodwill 85.8 63.0 1.19 Plus (less) outside equity interests (0.4) 2.4 -------------------------------------- 1.20 PROFIT (LOSS) FROM ORDINARY ACTIVITIES AFTER TAX (BEFORE AMORTISATION OF GOODWILL) ATTRIBUTABLE TO MEMBERS 85.4 65.4 - ------------------------------------------------------------------------------------------------------
Page 4 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - --------------------------------------------------------------------------------
------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M ------------------------------------- PROFIT (LOSS) FROM ORDINARY ACTIVITIES ATTRIBUTABLE TO MEMBERS 1.21 Profit (loss) from ordinary activities after tax (item 1.7) 83.9 60.2 1.22 Plus (less) outside equity interests (0.4) 2.4 1.23 PROFIT (LOSS) FROM ORDINARY ACTIVITIES AFTER TAX, ------------------------------------- ATTRIBUTABLE TO MEMBERS 83.5 62.6 - ----------------------------------------------------------------------------------------------------- REVENUE AND EXPENSES FROM ORDINARY ACTIVITIES ------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M ------------------------------------- 1.24 Details of revenue and expenses REVENUES Sales revenue 839.5 756.0 Total cost of production (648.1) (581.9) ------------------------------------- GROSS PROFIT 191.4 174.1 ------------------------------------- Other revenue from ordinary activities 9.5 10.0 Proceeds on sale of assets 41.1 113.2 Cost of assets sold (35.4) (100.8) Share of net profit/(loss) of associates and joint ventures accounted for using the equity method. 3.8 (1.1) Exploration and evaluation expenses (17.8) (30.6) Administration expenses (33.5) (29.4) Borrowing costs (44.9) (52.5) Other income/(expenses) from ordinary activities (9.3) (11.7) SIGNIFICANT ITEMS INCLUDED IN RESULT - gain on change of interest of a formerly controlled entity (SEE ITEM 14.1) 54.5 - - takeover costs (25.7) - - writedown in receivables (18.0) - - writedown in non-current assets (9.5) - ------------------------------------- TOTAL SIGNIFICANT ITEMS 1.3 - ------------------------------------- PROFIT FROM ORDINARY ACTIVITIES 106.2 71.2 -------------------------------------
Page 5 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------- INTANGIBLE AND EXTRAORDINARY ITEMS
----------------------------------------------------------------- Consolidated - current period ----------------------------------------------------------------- Before tax Related tax Related outside Amount (after $AM $AM equity interests tax) attributable $AM to members $AM ----------------------------------------------------------------- 2.1 Amortisation of goodwill 1.9 - - 1.9 2.2 Amortisation of other intangibles - - - - ----------------------------------------------------------------- 2.3 Total amortisation of intangibles 1.9 - - 1.9 - --------------------------------------------------------------------------------------------------------- 2.4 Extraordinary items (details) - - - - ----------------------------------------------------------------- 2.5 Total extraordinary items - - - - - ---------------------------------------------------------------------------------------------------------
Page 6 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF FINANCIAL POSITION As shown in last annual CURRENT HALF-YEAR report Previous half-year A$M A$M A$M ------------------------------------------------------------ CURRENT ASSETS 4.1 Cash 358.1 344.8 257.2 4.2 Receivables 153.6 123.7 159.0 4.3 Inventories 166.5 169.5 167.7 4.4 Other financial assets 14.6 21.3 76.5 4.5 Prepaid mining costs 123.7 111.2 55.7 4.6 Other 35.5 29.4 33.5 ------------------------------------------------------------ 4.7 TOTAL CURRENT ASSETS 852.0 799.9 749.6 - -------------------------------------------------------------------------------------------------------------- NON-CURRENT ASSETS 4.8 Receivables 4.8 11.2 34.0 4.9 Tax assets 103.8 102.3 88.9 4.10 Investments (equity accounted) 348.8 244.0 293.9 4.11 Other financial assets 172.9 141.0 216.1 4.12 Development properties 151.2 499.5 546.8 4.13 Exploration and evaluation expenditure 180.4 151.7 179.9 4.14 Property, plant and equipment (net) 1,710.5 1,750.0 1,475.3 4.15 Intangibles (net) 42.3 44.2 46.1 4.16 Prepaid mining costs 24.7 25.7 74.8 4.17 Other 78.7 77.0 116.7 ------------------------------------------------------------ 4.18 TOTAL NON-CURRENT ASSETS 2,818.1 3,046.6 3,072.5 - -------------------------------------------------------------------------------------------------------------- 4.19 TOTAL ASSET 3,670.1 3,846.5 3,822.1 - -------------------------------------------------------------------------------------------------------------- CURRENT LIABILITIES 4.20 Payables 249.6 249.8 206.5 4.21 Interest bearing liabilities 127.1 114.0 110.0 4.22 Provisions 185.0 216.8 232.1 4.23 Tax liabilities 19.1 21.8 13.5 ------------------------------------------------------------ 4.25 TOTAL CURRENT LIABILITIES 580.8 602.4 562.1 - -------------------------------------------------------------------------------------------------------------- NON-CURRENT LIABILITIES 4.27 Interest bearing liabilities 1,204.9 1,181.8 1,526.2 4.28 Provisions 223.0 268.9 335.0 4.29 Tax liabilities 261.2 255.0 191.9 4.30 Other 121.6 140.4 82.3 ------------------------------------------------------------ 4.31 TOTAL NON-CURRENT LIABILITIES 1,810.7 1,846.1 2,135.4 - -------------------------------------------------------------------------------------------------------------- 4.32 TOTAL LIABILITIES 2,391.5 2,448.5 2,697.5 - -------------------------------------------------------------------------------------------------------------- 4.33 NET ASSETS 1,278.6 1,398.0 1,124.6 - -------------------------------------------------------------------------------------------------------------- EQUITY 4.34 Capital/contributed equity 1,602.6 1,593.9 1,164.1 4.35 Reserves 72.5 71.4 83.7 4.36 Retained profits (accumulated losses) (445.7) (434.8) (229.0) - -------------------------------------------------------------------------------------------------------------- 4.37 EQUITY ATTRIBUTABLE TO MEMBERS OF THE PARENT ENTITY 1,229.4 1,230.5 1,018.8 4.38 Outside equity interests in controlled entities 49.2 167.5 105.8 ------------------------------------------------------------ 4.39 TOTAL EQUITY 1,278.6 1,398.0 1,124.6 - -------------------------------------------------------------------------------------------------------------- 4.40 Preference capital included as part of 4.37 nil nil nil - --------------------------------------------------------------------------------------------------------------
Page 7 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - --------------------------------------------------------------------------------
OTHER INFORMATION --------------------------------------- Reconciliation of prima facie income tax to income tax expense CURRENT HALF-YEAR Previous half-year A$M A$M --------------------------------------- Operating profit before tax 106.2 71.2 ======================================= Income tax calculated at applicable rates 31.8 24.2 Tax effect of permanent differences (13.3) (8.9) Timing differences recognised 1.3 - Change in corporate tax rate - - Benefit of prior year losses recouped - Tax losses not recognised/(recognised) 3.6 - Over allowance for tax payable in prior years (1.1) (4.3) --------------------------------------- Income tax attributable to operating profit 22.3 11.0 --------------------------------------- EXPLORATION AND EVALUATION EXPENDITURE CAPITALISED --------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M --------------------------------------- 5.1 Opening balance 151.7 175.1 5.2 Expenditure incurred during current period 24.8 38.1 5.3 Expenditure written off during current period (22.3) (30.6) 5.4 Acquisitions, disposals, revaluation increments, etc 20.6 10.8 5.5 Expenditure transferred (to)/from mine properties 4.2 (13.5) 5.5 Foreign exchange movements 1.4 - 5.6 CLOSING BALANCE AS SHOWN IN THE CONSOLIDATED --------------------------------------- STATEMENT OF FINANCIAL POSITION (ITEM 4.13) 180.4 179.9 - ----------------------------------------------------------------------------------------------------------------------- DEVELOPMENT PROPERTIES --------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M --------------------------------------- 6.1 Opening balance 499.5 310.7 6.2 Expenditure incurred during current period 22.9 21.2 6.3 Expenditure transferred from exploration and evaluation - - 6.4 Expenditure written off during current period - (16.5) 6.5 Acquisitions, disposals, revaluation increments, etc (296.1) 214.1 6.6 Foreign exchange movements 2.4 17.0 6.6 Expenditure transferred (to)/from Property, Plant & Equipment (77.5) 0.3 6.7 CLOSING BALANCE AS SHOWN IN THE CONSOLIDATED --------------------------------------- STATEMENT OF FINANCIAL POSITION (ITEM 4.12) 151.2 546.8 - -----------------------------------------------------------------------------------------------------------------------
Page 8 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS --------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M --------------------------------------- ======================================= CASH FLOWS RELATED TO OPERATING ACTIVITIES 7.1 Receipts from customers 839.9 706.9 7.2 Payments to suppliers and employees (630.3) (556.9) 7.3 Dividends received from associates 11.4 10.3 7.4 Other dividends received - - 7.5 Interest and other items of similar nature received 10.3 14.4 7.6 Interest and other costs of finance paid (48.2) (59.5) 7.7 Income taxes paid (27.0) (28.0) 7.8 Other - 6.5 --------------------------------------- 7.9 NET OPERATING CASH FLOWS 156.1 93.7 - ----------------------------------------------------------------------------------------------------------------------- CASH FLOWS RELATED TO INVESTING ACTIVITIES 7.10 Payment for purchases of property, plant and equipment (104.6) (51.9) 7.11 Proceeds from sale of property, plant and equipment 1.3 0.9 7.12 Payments for exploration (24.8) (38.1) 7.12 Payments for development projects (22.9) (28.0) 7.12 Payment for purchases of investments (14.9) (9.8) 7.13 Proceeds from sale of investments 0.7 55.9 7.14 Loans to other entities (1.0) (1.9) 7.15 Loans repaid by other entities 4.5 66.0 7.16 Other - Interest capitalised on qualifying assets - 7.16 Other - Businesses acquired 0.2 0.5 7.16 Other - Businesses disposed (28.6) 9.2 --------------------------------------- 7.17 NET INVESTING CASH FLOWS (190.1) 2.8 - ----------------------------------------------------------------------------------------------------------------------- CASH FLOWS RELATED TO FINANCING ACTIVITIES 7.18 Proceeds from issue of securities - - 7.19 Proceeds from borrowings 82.8 209.2 7.20 Repayment of borrowings (27.7) (238.3) 7.21 Dividends paid (7.2) (59.8) 7.22 Other - - --------------------------------------- 7.23 NET FINANCING CASH FLOWS 47.9 (88.9) - ----------------------------------------------------------------------------------------------------------------------- 7.24 NET INCREASE (DECREASE) IN CASH HELD 13.9 7.6 7.25 Cash at beginning of period 344.8 245.4 (see Reconciliation of cash) 7.26 Exchange rate adjustments to item 7.25 (0.6) 4.2 --------------------------------------- 7.27 CASH AT END OF PERIOD 358.1 257.2 (see Reconciliation of cash) - -----------------------------------------------------------------------------------------------------------------------
Page 9 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------- NON-CASH FINANCING AND INVESTING ACTIVITIES Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows are as follows. The sale of Normandy's interest in the Ity mine and the Tasiast project resulted in receivables being recognised totalling $33.9 million, in addition to cash proceeds of $0.1 million. During the period a controlled entity announced a takeover for Otter Gold Mines Limited (Otter) whereby 1.9 of the controlled entity's shares were offered for every 100 Otter shares. On the close of business 28 December 2001 the controlled entity declared the offer unconditional. On this date acceptances were received for 53.35% of shares in Otter. Otter was consolidated in Normandy's accounts from 31 December 2001. As a result of the consolidation of Otter, Normandy's total assets increased by $68.8 million and total liabilities increased by $47.5 million.
RECONCILIATION OF CASH Reconciliation of cash at the end of the period (as shown in the --------------------------------------- consolidated statement of cash flows) to the related items in the CURRENT HALF-YEAR Previous half-year statement of financial position is as follows A$M A$M - ----------------------------------------------------------------------------------------------------------------------- ======================================= 8.1 Cash on hand and at bank 257.6 196.7 8.2 Deposits at call 52.9 42.1 8.3 Bank overdraft - - 8.4 Gold bullion 47.6 18.4 --------------------------------------- 8.5 TOTAL CASH AT END OF PERIOD 358.1 257.2 - ----------------------------------------------------------------------------------------------------------------------- RATIOS --------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M --------------------------------------- PROFIT BEFORE TAX / REVENUE 9.1 Consolidated profit(loss) from ordinary activities before tax (item 1.5) as a percentage of revenue (item 1.1) 11.24% 8.10% - ----------------------------------------------------------------------------------------------------------------------- PROFIT AFTER TAX / EQUITY INTERESTS 9.2 Consolidated net profit (loss) from ordinary activities after tax attributable to members (item 1.11) as a percentage of equity (similarly attributable) at the end of the period (item 4.37) 6.79% 6.14% - ----------------------------------------------------------------------------------------------------------------------- EARNINGS PER SECURITY (EPS) --------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M --------------------------------------- 10.1 Calculation of the following in accordance with AASB 1027: Earnings per Share (a) Basic EPS 3.7 3.6 (b) Diluted EPS 3.7 3.6 (c) Weighted average number of ordinary shares outstanding during the period used in the calculation of the Basic EPS 2,232,219,089 1,758,516,118 - ----------------------------------------------------------------------------------------------------------------------- NTA BACKING 11.1 Net tangible asset backing per ordinary security NOT APPLICABLE TO MINING COMPANIES - -----------------------------------------------------------------------------------------------------------------------
Page 10 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -----------------------------------------------------------------------------------------------------------------------
DETAILS OF SPECIFIC RECEIPTS/OUTLAYS, REVENUES/EXPENSES --------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M --------------------------------------- --------------------------------------- 12.1 Interest revenue included in determining item 1.5 9.5 10.0 --------------------------------------- 12.2 Interest revenue included in item 12.1 but not yet received 5.1 2.2 --------------------------------------- 12.3 Interest costs excluded from borrowing costs, capitalised in asset values - 6.8 --------------------------------------- 12.4 Outlays (except those arising from the acquisition of an existing business) capitalised in intangibles (if material) - - --------------------------------------- 12.5 Depreciation and amortisation (excluding amortisation of intangibles) 142.5 119.5 --------------------------------------- 12.6 Other specific relevant items not shown in item 1.24 - significant gain on sale of non-current assets - 14.3 ---------------------------------------
CONTROL GAINED OVER ENTITIES HAVING MATERIAL EFFECT 13.1 Otter Gold Mines Limited (Otter) and controlled entities were acquired effective 31 December 2001. Therefore the consolidated operating profit from the acquired entities from the date of acquisition to 31 December 2001 was nil. Loss from ordinary activities and extraordinary items after tax of Otter for the whole of the previous corresponding period was $8.9 million. Page 11 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------- LOSS OF CONTROL OF ENTITIES HAVING MATERIAL EFFECT 14.1 (a) On 23 November 2001, Australian Magnesium Corporation Limited (AMC) successfully completed an equity raising to fund the development of the Stanwell Magnesium Project. New partly paid stapled securities were issued and allotted on that date. In addition, to the fund raising Normandy converted its loan to AMC of $25 million and accrued interest of $2.6 million into ordinary shares in AMC. The effect of these transactions has been that Normandy's effective interest in AMC has been diluted from 62.6% to 22.8%, and accordingly AMC is no longer controlled by Normandy. Consequently, AMC has been deconsolidated from 23 November 2001, giving rise to a gain on loss of control of $10 million. From that date, AMC has been equity accounted in accordance with Accounting Standard AASB 1016, "Accounting for Investments in Associates". The effect of equity accounting AMC since original acquisition date, including the effect of any change in ownership interests, has been reflected in net profit or directly in reserves (as appropriate). Where this has resulted in a net debit to a reserve an amount has been transferred from retained earnings to offset the debit. MOVEMENTS IN CARRYING AMOUNT OF INVESTMENT IN AMC A$M Carrying amount at the beginning of the financial period - Original cost of AMC prior to deconsolidation 119.9 Conversion of loan to equity 27.6 ------------ 147.5 Share of post acquisition losses and reserves (10.0) Change in ownership interest of equity and reserves reflected directly in equity (94.3) Change in ownership interest in accumulated losses reflected in net profit 54.5 ------------ Total impact of initial adoption of equity accounting (49.8) Share of net profit after tax since 23 November 2001 0.1 ------------ Carrying amount of AMC at end of financial period. 97.8 ============ Prior to completion of the equity raising, Normandy provided financing arrangements to AMC, which confer certain rights to subscribe for new equity in AMC. These rights have been independently valued by Grant Samuel & Associates at between $28 million and $61 million. (b) Normandy Mt Leyshon Limited ceased to be a controlled entity effective 21 November 2001. The operating loss after tax of the entity for the period was $1.3 million. The loss on the sale of the entity was $1.0 million. Profit from ordinary activities and extraordinary items after tax of Normandy Mt Leyshon Limited for the whole of the previous corresponding period was $10.9 million. (c) The shareholding in Societe des Mines d'Ity was disposed of in December 2001. The operating profit after tax of the entity for the period was $1.9 million. The profit on sale of the entity was $0.2 million. Profit from ordinary activities and extraordinary items after tax of Societe des Mines d'Ity for the whole of the previous corresponding period was $6.8 million. Page 12 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------- DIVIDENDS 15.1 Date the dividend is payable N/A 15.2 Record date to determine entitlements to the dividend (ie on the basis of security holding balances established by 5.00pm) N/A
AMOUNT PER SECURITY ------------------------------------------------------------------- Amount per Franked amount Amount per security per security security of foreign source dividend ------------------------------------------------------------------------------------------------------------------ 15.6 Interim dividend Current year NIL NOT APPLICABLE Nil ----------------------------------------------- 15.7 Previous year 2.5 1.10c franked at 34% Nil ------------------------------------------------------------------------------------------------------------------ TOTAL DIVIDEND PER SECURITY (INTERIM PLUS FINAL) --------------------------------------- CURRENT HALF-YEAR Previous half-year --------------------------------------- 15.8 Ordinary securities NIL 44.1 15.9 Preference securities NIL Nil HALF YEARLY REPORT - INTERIM DIVIDEND ON ALL SECURITIES --------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M --------------------------------------- 15.10 Ordinary securities 0.0 44.1 15.11 Preference securities - - 15.12 Other equity instruments - - --------------------------------------- 15.13 Total 0.0 44.1 --------------------------------------- DETAILS OF AGGREGATE SHARE OF PROFITS (LOSSES) OF ASSOCIATES AND JOINT VENTURE ENTITIES --------------------------------------- CURRENT HALF-YEAR Previous half-year A$M A$M --------------------------------------- 16.1 Profit (loss) from ordinary activities before income tax 4.6 (1.0) 16.2 Income tax on ordinary activities (0.8) (0.1) 16.3 PROFIT (LOSS) FROM ORDINARY ACTIVITIES AFTER INCOME TAX 3.8 (1.1) 16.4 Extraordinary items net of tax - - 16.5 NET PROFIT (LOSS) 3.8 (1.1) 16.6 Outside equity interests - - --------------------------------------- 16.7 NET PROFIT (LOSS) ATTRIBUTABLE TO MEMBERS 3.8 (1.1) - -----------------------------------------------------------------------------------------------------------------------
Page 13 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------------------------------------------------------
MATERIAL INTERESTS IN ENTITIES WHICH ARE NOT CONTROLLED ENTITIES --------------------------------------------------------------------------------------- Percentage of ownership interest Contribution to net profit (loss) NAME OF ENTITY held at end of period or date of (item 1.9) disposal --------------------------------------------------------------------------------------- CURRENT HALF-YEAR Previous half-year CURRENT HALF-YEAR Previous half-year --------------------------------------------------------------------------------------- 17.1 EQUITY ACCOUNTED ASSOCIATES AND JOINT VENTURE ENTITIES Australian Magnesium Corporation Ltd (SEE ITEM 14.1) 22.8% * 0.1 (0.2) AGR JV Partnership 50.0% - 3.0 - TVX Normandy Americas (Canada) Inc. 49.9% 49.9% 0.4 (0.2) TVX Normandy Amercias (Cayman) Inc. 49.9% 49.9% 0.3 (0.7) - ------------------------------------------------------------------------------------------------------------------------------- 17.2 TOTAL 3.8 (1.1) - ------------------------------------------------------------------------------------------------------------------------------- 17.3 Other material interests - ------------------------------------------------------------------------------------------------------------------------------- 17.4 TOTAL 3.8 (1.1) - ------------------------------------------------------------------------------------------------------------------------------- * As at 31 December 2000 Australian Magnesium Corporation Limited was a controlled entity.
Page 14 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------------------------------------------------------
ISSUED AND QUOTED SECURITIES AT END OF THE CURRENT PERIOD --------------------------------------------------------------------------------------- Category of Securities Total number Number quoted Issue price per Amount paid up security (cents) per security (cents) --------------------------------------------------------------------------------------- 18.1 PREFERENCE SECURITIES NIL NIL N/A N/A (DESCRIPTION) --------------------------------------------------------------------------------------- 18.2 Changes during current period (a) increases through issues NIL NIL N/A N/A (b) decreases through returns of capital, buybacks, redemptions NIL NIL N/A N/A - ------------------------------------------------------------------------------------------------------------------------------- 18.3 ORDINARY SECURITIES 2,237,861,347 2,237,861,347 --------------------------------------------------------------------------------------- 18.4 Changes during current period (a) increases through issues (1) 6,567,748 6,567,748 (b) decreases through returns of capital, buybacks, redemptions NIL NIL N/A N/A - ------------------------------------------------------------------------------------------------------------------------------- 18.5 CONVERTIBLE DEBT SECURITIES NIL NIL N/A N/A -------------------------------------------------------------------------------------- 18.6 Changes during current period (a) increases through issues NIL NIL N/A N/A (b) decreases through securities matured, converted NIL NIL N/A N/A - ------------------------------------------------------------------------------------------------------------------------------- 18.7 OPTIONS Exercise price Expiry date --------------------------------------- -------------------------------------------------------------------------------------- 18.8 Issued during current period NIL NIL N/A N/A -------------------------------------------------------------------------------------- 18.9 Exercised during current period 6,567,748 NIL N/A N/A -------------------------------------------------------------------------------------- 18.10 Expired during current period NIL NIL N/A N/A - ------------------------------------------------------------------------------------------------------------------------------- 18.11 DEBENTURES NIL NIL N/A N/A - ------------------------------------------------------------------------------------------------------------------------------- 18.12 UNSECURED NOTES NIL NIL N/A N/A - ------------------------------------------------------------------------------------------------------------------------------- (1) The movement in ordinary shares comprises: Options exercised - Unlisted - 1:1.101 basis 95,331 - Unlisted - 1:1 basis 6,472,417 ------------- 6,567,748 -------------
Page 15 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------- COMMENTS BY DIRECTORS 19.1 BASIS OF FINANCIAL REPORT PREPARATION This is a general purpose financial report prepared in accordance with the listing rules and AASB 1029: Interim Financial Reporting. It does not include notes of the type normally included in the annual financial report. The financial report should be read in conjunction with the last annual report and any announcements to the market made by the entity during the period. 19.2 MATERIAL FACTORS AFFECTING THE REVENUES AND EXPENSES OF THE ECONOMIC ENTITY FOR THE CURRENT PERIOD Refer attached Financial Report. 19.3 A DESCRIPTION OF EACH EVENT SINCE THE END OF THE CURRENT PERIOD WHICH HAS HAD A MATERIAL EFFECT AND IS NOT RELATED TO MATTERS ALREADY REPORTED, WITH FINANCIAL EFFECT QUANTIFIED. Nil 19.4 FRANKING CREDITS AVAILABLE AND PROSPECTS FOR PAYING FULLY OR PARTLY FRANKED DIVIDENDS FOR THE NEXT YEAR Franking credits available as at 31 December 2001 were $37,685,983. 19.5 CHANGES IN ACCOUNTING POLICIES SINCE THE LAST ANNUAL REPORT ARE DISCLOSED AS FOLLOWS Nil 19.6 REVISIONS IN ESTIMATES ARE DISCLOSED AS FOLLOWS Changes in mineral inventories used as a basis for determining depreciation and amortisation and mine completion charges resulted in a reduction in these charges of $18.2 million during the period. 19.7 CHANGE IN CONTINGENT LIABILITIES OR ASSETS ARE DISCLOSED AS FOLLOWS Contingent liabilities existing at balance date that have changed since last reporting date are: Normandy Mining Limited and several of its wholly owned entities have provided guarantees over a fully drawn financing facility provided by an Australian bank to Australian Magnesium Corporation Limited (AMC) totalling $72 million. This facility was used by AMC in part to repay a fully drawn $38.6M bank facility and reduce foreign currency hedging obligations provided by a syndicate of banks. Wholly owned entities continue to provide guarantees over the treasury obligations of other wholly owned entities. As at 31 December 2001 the marked to market deferred losses in respect of these obligations decreased to $419 million as compared to $510 million at 30 June 2001. The following contingent liabilities have arisen since the last reporting date: A wholly owned entity of Normandy Mining Limited has agreed to subscribe for $100 million of shares in AMC between 31 October 2002 and 31 January 2003. Normandy Mining Limited has guaranteed the performance of the obligation by the wholly owned entity. During the period the Normandy Group engaged advisors to provide advice in relation to the takeover bid by AngloGold and any third party offer. The terms of the engagements include fees that would become payable in the event that more than 50% of Normandy is acquired under a higher AngloGold or third party offer. If the current Newmont Mining Corporation (NMC) offer were to be successful further fees payable to advisors are estimated at not less than $22 million. Normandy Mining Limited has agreed to pay $38.3 million to NMC as a compensating amount in relation to costs, expenses and damages incurred by NMC under certain predetermined circumstances in respect of its takeover offer for the company. Normandy Mining Limited has also indemnified the ANZ Banking Group (ANZ) in respect of a bank guarantee issued by the ANZ to NMC to secure this arrangement. A controlled entity of Normandy Mining Limited has indemnified various banks in respect of guarantees and letters of credit given for satisfactory contractual performance in relation to exploration and mining tenements. Total indemnities given at 31 December 2001 are NZ$8,035,740 and A$438,000. The majority relates to environmental bonding requirements for the Martha Mine Expansion. A former Chairman and Chief Executive Officer of a controlled entity has made a claim in excess of $1.9 million against that controlled entity under an employment contract. The controlled entity rejects the claim and awaits the delivery by the claimant of points of claim, under the arbitration process. The maximum amount to which the directors believe the controlled entity may be exposed in respect of this claim has been provided for in the Financial Statements. Page 16 NORMANDY MINING LIMITED APPENDIX 4B ABN 86 009 295 765 HALF YEARLY REPORT - ------------------------------------------------------------------------------------------------------------------------------------
PRIMARY REPORTING - BUSINESS SEGMENTS --------------------------------------------------------------------------------------------------------------------- External Sales Revenue Other Revenue Total Revenue Segment Profit Total Assets Total Liabilities --------------------------------------------------------------------------------------------------------------------- DEC 2001 Dec 2000 DEC 2001 Dec 2000 DEC 2001 Dec 2000 DEC 2001 Dec 2000 DEC 2001 Dec 2000 DEC 2001 Dec 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Gold 695.8 580.2 38.8 - 734.6 580.2 203.3 175.9 3,101.0 2,626.7 2,391.5 2,697.5 Base metals 87.9 105.8 - - 87.9 105.8 (7.1) 7.5 179.6 333.8 0.0 0.0 Industrial minerals 0.0 32.6 54.5 - 54.5 32.6 0.6 (0.6) 97.8 381.1 0.0 0.0 Exploration 0.0 0.0 - - 0.0 0.0 (22.3) (27.9) 180.4 179.9 0.0 0.0 --------------------------------------------------------------------------------------------------------------------- 783.7 718.6 93.3 - 877.0 718.6 174.5 154.9 3,558.8 3,521.5 2,391.5 2,697.5 Unallocated 55.8 37.4 11.8 123.2 67.6 160.6 (68.3) (83.7) 111.3 300.6 0.0 0.0 - ------------------------------------------------------------------------------------------------------------------------------------ Consolidated total 839.5 756.0 105.1 123.2 944.6 879.2 106.2 71.2 3,670.1 3,822.1 2,391.5 2,697.5 - ------------------------------------------------------------------------------------------------------------------------------------ Additional information; $M (1) Depreciation and amortisation included in Dec 2001 Segment Profit; Gold 121.7 Base metals 9.2 Unallocated 11.6 ------------ Total 142.5 ------------ (2) Other non-cash costs included in Dec 2001 Segment Profit; Gold 7.3 Base metals 4.9 Unallocated 0.2 ------------ Total 12.4 ------------ Profit Investment (3) Information regarding associates; Gold 3.1 288.9 Industrial Minerals 7.8 59.9 ----------------- Total 10.9 348.8 ----------------- GEOGRAPHICAL SEGMENTS --------------------------------------------------------------------------------------------------------------------- External Sales Revenue Other Revenue Total Revenue Segment Profit Total Assets Total Liabilities --------------------------------------------------------------------------------------------------------------------- DEC 2001 Dec 2000 DEC 2001 Dec 2000 DEC 2001 Dec 2000 DEC 2001 Dec 2000 DEC 2001 Dec 2000 DEC 2001 Dec 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Australia & New Zealand 740.2 725.5 71.1 10.0 811.3 735.5 95.4 90.9 2,772.9 3,046.4 2,212.5 2,532.5 Turkey & Greece 25.3 12.4 10.4 - 35.7 12.4 8.1 (10.4) 143.8 122.4 83.4 71.7 Africa 21.1 5.6 23.6 - 44.7 5.6 (1.6) (8.4) 88.9 270.4 79.2 93.3 North America 52.9 12.5 - - 52.9 12.5 3.0 (0.2) 503.6 168.3 16.4 0.0 South America 0.0 0.0 - 113.2 0.0 113.2 1.3 (0.7) 160.9 214.6 0.0 0.0 - ------------------------------------------------------------------------------------------------------------------------------------ Consolidated total 839.5 756.0 105.1 123.2 944.6 879.2 106.2 71.2 3,670.1 3,822.1 2,391.5 2,697.5 - ------------------------------------------------------------------------------------------------------------------------------------
Page 17 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------- DIRECTORS' DECLARATION The Directors declare that: a) The attached financial statements and notes thereto comply with Accounting Standards; b) The attached financial statements and notes thereto give a true and fair view of the financial position and performance of the consolidated entity; c) In the Directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001; and d) In the Directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the Directors made pursuant to s.295 (5) of the Corporations Act 2001. /S/ R J CHAMPION DE CRESPIGNY /S/ K H SPENCER R J CHAMPION DE CRESPIGNY K H SPENCER Director Director Adelaide, 5 February 2002 Page 18 APPENDIX 4B NORMANDY MINING LIMITED ABN 86 009 295 765 HALF YEARLY REPORT - -------------------------------------------------------------------------------- COMPLIANCE STATEMENT 1 This report has been prepared in accordance with AASB Standards or other standards acceptable to ASX. 2 This report, and the accounts upon which the report is based, use the same accounting policies. 3 This report does give a true and fair view of the matters disclosed 4 This report is based on accounts which have been subject to review. 5 The entity does have a formally constituted Audit Committee. Ms P F Carr SECRETARY Enquiries to Mr. Peter Bird Executive General Manager - Investor Relations (08) 8303 1700 Page 19 INDEPENDENT REVIEW REPORT TO THE MEMBERS OF NORMANDY MINING LIMITED SCOPE - ----- We have reviewed the attached financial report of Normandy Mining Limited in the form of Appendix 4B of the Australian Stock Exchange (ASX) Listing Rules, including the directors' declaration, for the half-year ended 31 December 2001, but excluding the following sections: a) material factors affecting the revenues and expenses of the consolidated entity for the current period (page 16); and b) compliance statement (page 19). The financial report includes the consolidated financial statements of the consolidated entity comprising the disclosing entity and the entities it controlled at the end of the half-year or from time to time during the half-year The disclosing entity's directors are responsible for the financial report. We have performed an independent review of the financial report in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with Accounting Standard AASB 1029 "Interim Financial Reporting" issued in Australia and other mandatory professional reporting requirements, statutory requirements and ASX Listing Rules as they relate to Appendix 4B, so as to present a view which is consistent with our understanding of the consolidated entity's financial position, and performance as represented by the results of its operations and its cash flows, and in order for the disclosing entity to meet its obligations to lodge the financial report with the Australian Securities and Investments Commission and the ASX. Our review has been conducted in accordance with Australian Auditing Standards applicable to review engagements. A review is limited primarily to inquiries of the entity's personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion. STATEMENT - --------- Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Normandy Mining Limited is not in accordance with: (a) the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity's financial position as at 31 December 2001 and of its performance for the half-year ended on that date; and (ii) complying with Accounting Standard AASB 1029 "Interim Financial Reporting" and the Corporations Regulations 2001; and (b) other mandatory professional reporting requirements and ASX Listing Rules as they relate to Appendix 4B. /s/ DELOITTE TOUCHE TOHMATSU DELOITTE TOUCHE TOHMATSU /s/ Timothy Biggs Timothy Biggs Partner Chartered Accountants Adelaide, 5 February 2002 The liability of Deloitte Touche Tohmatsu is limited by, and to the extent of, the Accountants' Scheme under the Professional Standards Act 1994 (NSW) Page 20 [LOGO] NORMANDY MINING LIMITED FINANCIAL REPORT INDEX ----- Profit Result ..................................... 2 Cash Flows ........................................ 3 Balance Sheet ..................................... 4 Investor Information .............................. 4 [GRAPHIC] N O R M A N D Y M I N I N G L I M I T E D ABN 86 009 295 765 - ------------------------------------------------------------------------------ Financial Report to Shareholders Six Months to 31 December 2001 A SUSTAINED FOCUS ON THE CORE ELEMENTS OF COST MAINTENANCE, GROWTH AND VALUE GENERATION ... DELIVERING A 31% UPLIFT IN SIX MONTH PROFIT TO A$83.5 MILLION. - ------------------------------------------------------------------------------ PROFIT - - $83.5 million ($62.6M) up 31% on the previous half year - - Operating contribution $191.4 million ($174.1M) GOLD - - Consolidated contribution, $199.6 million ($168.0M) - - Consolidated sales 1.225 million ounces (1.049Moz) - - Net realised price $577 per ounce ($552/oz) - - Total cash cost $310 per ounce ($297/oz) NON-GOLD - - Consolidated contribution ($8.2) million ($6.1M) CASH FLOW - - From operating activities $156.1 million ($93.7M) - - Cash balance $358.1 million ($344.8M June 2001) BALANCE SHEET - - Net debt to net debt and equity 43% (40% June 2001) - - Shareholder funds $1,278.6 million ($1,398.0M June 2001) - - gearing ratio on target, allowing for a reduction in total hedged ounces from 11.2 million ounces to 9.9 million ounces 5 FEBRUARY 2002 NOTE: (1) Previous December half figures italicised in brackets. (2) All figures in Australian dollars, unless specified otherwise. For further information, please contact: Peter Bird, Executive General Manager - Investor Relations Telephone: +61 8 8303 1705 Facsimile: +61 8 8303 1994 E-mail: investor@normandy.com.au Web Site: www.normandy.com.au PROFIT RESULT ... - -----------------
SIMPLIFIED FINANCIAL RESULTS (A$M) 3 mths to 3 mths to 6 mths to 6 mths to 31 Dec 30 Sep 31 Dec 31 Dec 2001 2001 2001 2000 - ------------------------------------------------------------------------------ SALES REVENUE ...................... 409.8 429.7 839.5 756.0 Cost of production ................. (251.2) (256.1) (507.3) (459.9) Depreciation & amortisation ........ (59.7) (71.8) (131.5) (110.4) Mine closure ....................... (4.4) (4.9) (9.3) (11.6) ------------------------------------------ GROSS PROFIT(1) .................... 94.5 96.9 191.4 174.1 ------------------------------------------ Share of net profit of associates .. 1.6 2.2 3.8 (1.1) Exploration provisions & write-offs ..................... (8.6) (9.2) (17.8) (30.6) Administration expenses ............ (18.3) (15.2) (33.5) (29.4) Borrowing costs .................... (20.7) (24.2) (44.9) (52.5) Other income/(expenses) ............ 4.3 1.6 5.9 10.7 Significant items; Gain on change in AMC ownership interest.............. 54.5 -- 54.5 -- Takeover costs ................... (25.7) -- (25.7) -- Asset writedowns ................. (27.5) -- (27.5) -- ------------------------------------------ PROFIT/(LOSS) FROM ORDINARY ACTIVITIES ......................... 54.1 52.1 106.2 71.2 Income tax expense relating to ordinary activities ........... (9.8) (12.5) (22.3) (11.0) ------------------------------------------ PROFIT/(LOSS) FROM ORDINARY ACTIVITIES AFTER RELATED INCOME TAX EXPENSE ........................ 44.3 39.6 83.9 60.2 Outside equity interests ........... 3.8 (4.2) (0.4) 2.4 ------------------------------------------ NET PROFIT/(LOSS) ATTRIBUTABLE TO MEMBERS OF NORMANDY MINING LIMITED .......................... 48.1 35.4 83.5 62.6 - ------------------------------------------------------------------------------ Operating profit before significant items attributable to members of Normandy Mining Limited ....... 46.8 35.4 82.2 62.6 Significant items included in operating profit/(loss) before outside equity interests (2) ..... 1.3 -- 1.3 -- Operating profit after significant items attributable to members of Normandy Mining Limited ....... 48.1 35.4 83.5 62.6 - ------------------------------------------------------------------------------
(1) See table on page 3 for detail by operation (2) No outside equity interest or income tax applicable Significant items include: o a $54.5 million gain on change in Australian Magnesium Corporation (AMC) ownership interest, comprising $10.0 million previously consolidated AMC losses recognised upon loss of control and $44.5 million representing the change in Normandy's interest in AMC's historical accumulated losses; o takeover related costs incurred and accrued to 31 December were $25.7 million (a minimum additional $22 million in advisor fees has been disclosed as a contingent liability); and o asset writedowns of $27.5 million relating to receivables, listed investments and the Mastra project in Turkey. Profit attributable to Normandy shareholders, excluding significant items, was $82.2 million for the six months to December 2001, an increase of 31% over the previous corresponding half year. Gross profit from gold operations increased 19% to $199.6 million due to higher consolidated gold production of 1.205 million ounces, up 11%. Higher production at Tanami and Bronzewing, together with new contributors Ovacik and Midas, have more than compensated for the loss of gold output from Mt Leyshon's cessation and the lower Super Pit head grade encountered in Kalgoorlie. The average realised gold price was $577/oz ($562/oz) based on consolidated gold sales of 1.225 million ounces. The average spot price for the half year was $537/oz. Average total production cost increased by $10/oz to $416/oz. Non-cash costs remained steady at $106/oz, however cash costs of production increased by 3% to $310/oz mainly as a result of the difficulties at the Super Pit in the September quarter. Non-gold operations had a negative contribution of $8.2 million mainly reflecting the impact of lower spot zinc prices on Golden Grove. The average realised zinc price for the half was 65 cents/lb compared to 85 cents/lb for the previous corresponding period. Normandy's share of associates results includes an inaugural contribution from the Australian Gold Refinery partnership covering the period from April 2001 in addition to the share of results from TVX Normandy Americas. Exploration provisions and writeoffs have decreased by 42% reflecting the decision taken last year to decrease global expenditure and focus on projects within 150km of existing infrastructure. Administration expenses increased by 4% from $26.80/oz to $27.80/oz. Borrowing costs have decreased as the Group has maintained its gearing at or near the 40% level. 2 FINANCIAL REPORT FOR THE TWELVE MONTHS TO 31 DECEMBER 2001 CASH FLOWS ... - ---------------------------------------------------------------------------
SIMPLIFIED STATEMENT OF CASH FLOWS (A$M) 6 months to 12 months to 31 December 30 June 2001 2001 - ---------------------------------------------------------------------------- OPERATING ACTIVITIES Receipts from customers ........................ 839.9 1,576.6 Payments to suppliers & employees .............. (630.3) (1,186.9) Dividends received from associates ............. 11.4 42.6 Interest paid .................................. (48.2) (93.8) Income tax paid ................................ (27.0) (38.9) Other .......................................... 10.3 22.5 ----------------------- NET OPERATING CASH FLOWS ......................... 156.1 322.1 ----------------------- INVESTING ACTIVITIES Payments for property, plant & equipment ....... (104.6) (146.5) Payments for exploration ....................... (24.8) (62.8) Payments for development projects .............. (22.9) (87.8) Payment for purchase of investments ............ (14.9) -- Proceeds from sale of investments .............. 0.7 130.3 Loans repaid by other entities ................. 4.5 113.0 Businesses acquired/disposed ................... (28.4) 120.1 Other .......................................... 0.3 13.5 ----------------------- NET INVESTING CASH FLOWS ......................... (190.1) 79.8 ----------------------- FINANCING ACTIVITIES Net proceeds from/(repayment of) borrowings .... 55.1 (302.4) Dividends paid ................................. (7.2) (95.2) Proceeds from issue of securities .............. -- 93.8 ----------------------- NET FINANCING CASH FLOWS ......................... 47.9 (303.8) ----------------------- NET INCREASE/(DECREASE) IN CASH HELD ............. 13.9 98.1 Cash at beginning of period .................... 344.8 245.4 Exchange rate adjustments ...................... (0.6) 1.3 CASH AT END OF PERIOD ............................ 358.1 344.8 -----------------------
OPERATIONAL GROSS PROFIT (A$M) 3 mths to 3 mths to 6 mths to 6 mths to 31 Dec 30 Sep 31 Dec 31 Dec 2001 2001 2001 2000 - ------------------------------------------------------------------------------ GOLD Yandal ........................ 12.8 9.6 22.4 28.9 Kalgoorlie .................... 22.0 19.8 41.8 52.7 Tanami ........................ 29.7 36.1 65.8 36.8 Pajingo ....................... 15.0 12.6 27.6 22.6 Boddington .................... 8.7 9.2 17.9 9.9 Midas ......................... (0.3) 3.9 3.6 -- Martha ........................ 7.5 0.2 7.7 5.3 Ovacik ........................ 5.5 2.6 8.1 -- Other ......................... (1.1) 5.8 4.7 11.8 ------------------------------------------- Total ......................... 99.8 99.8 199.6 168.0 NON-GOLD Golden Grove .................. 1.2 (4.0) (2.8) 17.4 Other ......................... (6.5) 1.1 (5.4) (11.3) ------------------------------------------- Total ......................... (5.3) (2.9) (8.2) 6.1 ------------------------------------------- Total ......................... 94.5 96.9 191.4 174.1 - ------------------------------------------------------------------------------
Net cash flow from operating activities was $156.1 million for the 6 months to December 2001. Normandy NFM's operating cash inflow before tax increased by 119% to $88.4 million, while the Group benefited from higher cash inflow from Bronzewing and Jundee as well as new operating cash contributions from Midas and Ovacik. The stronger underlying cash inflows from operations has more than compensated for the decrease in dividends from TVX Normandy Americas and higher income tax payments incurred by Normandy NFM. Capital expenditure on property, plant and equipment includes: o $35.6 million at Midas, including $10.1 million on underground development and $19.9 million on mining equipment, mainly trucks; o $17.0 million at Tanami, which includes $9.2 million on development of Groundrush; o $11.4 million at Jundee, mainly comprising decline and mine development; and o $11.2 million at Pajingo on mobile equipment as part of switch to owner mining. Development project expenditure largely reflects costs capitalised by AMC on the magnesium project while it was consolidated by Normandy. Cash balances disposed as part of sales of businesses totalled $28.4 million mainly due to Mt Leyshon and AMC. During the half year, the Group has drawn down a further $70 million on its syndicated corporate facility and has repaid about $15 million in project finance debt. 3 BALANCE SHEET ... - ------------------------------------------------------------------------------
SIMPLIFIED STATEMENT OF FINANCIAL POSITION (A$M) 31 December 30 June 2001 2001 - ------------------------------------------------------------------------------- CURRENT ASSETS Cash, bank bills & gold bullion .............. 358.1 344.8 Receivables .................................. 153.6 123.7 Inventories .................................. 166.5 169.5 Other ........................................ 173.8 161.9 ----------------------------- 852.0 799.9 ----------------------------- NON-CURRENT ASSETS Investments in associates .................... 348.8 244.0 Exploration & evaluation ..................... 180.4 151.7 Development properties ....................... 151.2 499.5 Property, plant & equipment .................. 1,710.5 1,750.0 Other ........................................ 427.2 401.4 ----------------------------- 2,818.1 3,046.6 ----------------------------- TOTAL ASSETS ................................... 3,670.1 3,846.5 CURRENT LIABILITIES Accounts payable ............................. 249.6 249.8 Interest-bearing liabilities ................. 127.1 114.0 Other ........................................ 204.1 238.6 ----------------------------- 580.8 602.4 ----------------------------- NON-CURRENT LIABILITIES Interest-bearing liabilities ................. 1,204.9 1,181.8 Other ........................................ 605.8 664.3 ----------------------------- 1,810.7 1,846.1 ----------------------------- TOTAL LIABILITIES .............................. 2,391.5 2,448.5 NET ASSETS ..................................... 1,278.6 1,398.0 EQUITY Contributed equity ........................... 1,602.6 1,593.9 Reserves ..................................... 72.5 71.4 Retained profits/(accumulated losses) ........ (445.7) (434.8) ----------------------------- Equity attributable to members of Normandy Mining Limited ...................... 1,229.4 1,230.5 Outside equity interests in controlled entities ........................ 49.2 167.5 ----------------------------- TOTAL EQUITY ................................... 1,278.6 1,398.0 -----------------------------
The balance sheet remains strong. Net debt was largely unchanged, however following the deconsolidations of AMC, Mt Leyshon and Ity, equity attributable to outside equity interests reduced by $118.3 million, resulting in a slight increase in the gearing ratio to 43%. The increase in receivables reflects the consideration owing for the sale of Ity in December 2001. Investments increased due to the acquisition of the 50% interest in the AGR partnership and the reversion to an equity investment in AMC following their equity issue and Normandy's loss of control. Exploration and evaluation increased as a result of the fair valuation applied to the exploration interests of Otter Gold Mines Limited. The decrease in development properties reflects the deconsolidation of the AMC project and the reclassification of Ovacik to property, plant and equipment now that it is in operation. Interest-bearing liabilities at 31 December comprise A$270 million drawn under a A$490 million syndicated corporate facility, US$300 million Yandal Notes (non-recourse to Normandy), US$250 million Normandy Notes, project financing relating to Kasese (US$40M) and Ovacik (US$37M), and A$30 million in bank debt from Otter Gold Mines Limited. Other liabilities decreased in line with the $46 million allocation of deferred hedge gains to revenue. Total equity decreased despite the $83.5 million net profit and no interim dividend. This was due to the removal of AMC outside equity interests of $119 million and a net $40 million reduction in retained earnings from the deconsolidation of AMC. HEDGING As previously announced, Normandy has revised its gold hedging policy, reducing the minimum hedge ratio from 60% to 45% of reserves, with Ovacik and Midas remaining unhedged. As a consequence, the hedge book was reduced in January 2002 with the buy-back of 1.3 million ounces of long term fixed price forward contracts on a cash neutral basis. DIVIDENDS Due to the currency of Newmont Mining Corporation's takeover offer for Normandy, the Normandy Board has resolved not to declare a dividend. INVESTOR INFORMATION - ------------------------------------------------------------------------------- BOARD OF DIRECTORS RJ Champion de Crespigny ..............................Chairman & CEO MS Hamson .............................................Non-Executive Director P Lassonde ............................................Non-Executive Director BG McKay ..............................................Non-Executive Director JB Prescott AC ........................................Non-Executive Director KH Spencer AM .........................................Non-Executive Director B Wheelahan ...........................................Non-Executive Director REGISTERED & PRINCIPAL OFFICE 100 Hutt Street, Adelaide 5000, SA, Australia Tel: +61 8 8303 1700; Fax: +61 8 8303 1900 E-mail: investor@normandy.com.au PF Carr ...............................................Company Secretary ISSUED CAPITAL At 31 December 2001, issued capital was 2,237,861,347 shares. SHAREHOLDER ENQUIRIES Matters relating to shares held, change of address, tax file number and dividends should be directed to the Share Registry: National Shareholder Services Pty Limited 100 Hutt Street, Adelaide 5000, SA, Australia Tel: +61 8 8232 0003; Fax: +61 8 8232 0072 E-Mail: shareregistry@normandy.com.au STOCK EXCHANGE LISTINGS Australian Stock Exchange ..............................Ticker Symbol NDY Toronto Stock Exchange .................................Ticker Symbol NDY ADS DEPOSITARY The Bank of New York, 101 Barclay Street, New York, NY 10286 Tel: +1 212 815 2204; Fax: +1 212 571 3050 4 EX-23 11 mar1ex231.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We hereby consent to the inclusion in this Form 8-K of Newmont Mining Corporation filed on March 1, 2002, of our report dated April 30, 2001, related to Franco-Nevada Mining Corporation Limited's financial statements for the year ended March 31, 2001. /s/ PriceWaterhouseCoopers LLP Toronto, Canada March 1, 2002 EX-23 12 mar1ex232.txt EXHIBIT 23.2 EXHIBIT 23.2 1 March 2002 The Directors Newmont Mining Corporation 1700 Lincoln Street Denver Colorado 80203 UNITED STATES OF AMERICA Dear Sirs CONSENT FOR INCLUSION OF DELOITTE TOUCHE TOHMATSU REPORTS Newmont Mining Corporation (Newmont) intends to file a Form 8-K dated 15 February 2002 with the Securities and Exchange Commission in respect of Newmont's acquisition of the shares of Normandy Mining Limited (Normandy). The Form 8-K incorporates by reference the audited financial report of Normandy for the year ended 30 June 2001 (which includes audited comparative information for the year ended 30 June 2000) as Exhibit 20.4 and the reviewed financial report of Normandy for the half year ended 31 December 2001 (which includes reviewed comparative information for the half year ended 31 December 2000) as Exhibit 20.5. Deloitte Touche Tohmatsu's (Deloitte's) audit report on Normandy's financial report for the year ended 30 June 2001 and review report on Normandy's financial report for the half year ended 31 December 2001 are included in the above exhibits. You have requested that Deloitte give its consent for the inclusion of our audit and review reports in Exhibit 20.4 and 20.5 to the Form 8-K. Deloitte consents to the inclusion in the Form 8-K exhibits of our audit and review reports in the form and context in which they are included. Yours faithfully DELOITTE TOUCHE TOHMATSU /S/ TIMOTHY BIGGS TIMOTHY BIGGS Partner TGGB:AH - ---------------------------------------------------------------------------- The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants' Scheme under the Professional Standards Act 1994 (NSW). -----END PRIVACY-ENHANCED MESSAGE-----