Norton/Bellamel merger to create leading Australian gold producer

Norton Gold Fields today opened its off-market scrip offer for all ordinary shares of Bellamel Mining. Bellamel shareholders will receive four Norton shares for every five Bellamel shares. The Board of Bellamel unanimously recommends that Bellamel shareholders accept the offer and have indicated that they intend to accept the offer with respect to all shares they control, in the absence of a superior proposal. Norton Chairman, A. Anthony McLellan said the company was looking forward to welcoming Bellamel shareholders and to the opportunity to create a leading Australian gold producer. “Both Bellamel and Norton’s interests are aligned in their plans to develop gold assets in the Kalgoorlie region. We’re confident Bellamel shareholders will see the benefits of a combined gold producer and the compelling logic of bringing the two companies together to deliver synergies and unlock shareholder value.”

“The merger will bring together the exploration upside and development strategy of Bellamel with the substantial assets, development and operating skills and experience of a significant gold producer,” McLellan added. “This is the next step in our plan to develop into a major gold company. It follows our acquisition and turnaround of Paddington gold mine in August 2007. The combined entity will have significant JORC code-compliant reserves and resources in one of the world’s foremost gold provinces, together with a major operating mill.”

The proposed merger would provide the ability to accelerate development of Bellamel’s Kalgoorlie West gold project by:

  • Progressing the permitting of the Fort William project and bringing the project into early production
  • Bringing development of other deposits forward using Norton’s Paddington mill
  • Advancing the feasibility study into the development of a heap leach treatment operation at the Navajo Chief project
  • Enhancing Bellamel’s exploration program via integration with Norton’s overall exploration strategy.

The merger of Norton with Bellamel has the potential to add significant value to the operation of Norton’s Paddington mine (Kalgoorlie) by enhancing the project pipeline of near- and longer-term deposits to be processed at Norton’s 3 Mt/y Paddington processing plant. The merger would further strengthen the Paddington Life-of-Mine plan by providing early access to additional sources of higher-grade oxide ore. The immediate targets could be expected to provide the opportunity for up to an incremental 25,000 oz/y to Paddington’s production from expected higher-grade oxide feed.

Additionally, Bellamel’s projects offer considerable potential for a heap leach operation that would increase annual gold production at Norton’s Kalgoorlie operations. Norton intends to integrate the Bellamel exploration program within Norton’s existing program to deliver both growth in reserves and resources and higher grade feed to Paddington. Bellamlel’s assets are proximate to Norton’s Paddington mill.

Norton Gold Fields is Australia’s fourth largest ASX-listed Australian gold producer. It also has active gold, copper, and coal exploration projects. Norton’s all-share offer to acquire Bellamel Mining will, if accepted, add 1.68 Moz of gold to the Paddington resources, and further extend the life of the mine.

Bellamel also has the potential to develop a 40-50,000 oz/y gold heap leach operation. Additionally, the Bellamel properties are highly prospective for underground development. The company operates the Paddington gold mine near Kalgoorlie in Western Australia and is planning to develop the Mount Morgan mine project in Queensland. Paddington has a 4.8 Moz resource and a 3 Mt/y CIP plant capable of producing more than 150,000 oz/y of gold. With the planned addition of underground operations in FY2010, production is expected to lift to 250,000 oz/y of gold. Norton plans to augment this with up to 40-50,000 oz/y of gold from Mount Morgan.