Including:
    The Bidding War, August 2000
    Letter to Noranda Shareholders
    1991 Brochure on Noranda's Lynne/Willow mine

    Link to: Map of Billiton mining operations
    For analyst comments on the proposed takeover of Rio Algom:
    http://www.noranda.ca/offer/comments.htm

Bidding War for Rio Algom, Aug. 2000

"Canadian mining giant Noranda and the British/South African mining firm Billiton are locked in a bidding war for Rio Algom, Ltd., the Toronto-based owner of the Nicolet Minerals Company, which plans the Crandon mine in Wisconsin."

LETTER TO NORANDA and BILLITON SHAREHOLDERS

The takeover rumors surrounding Rio Algom have citizens of Wisconsin very surprised. The company's proposed Crandon zinc-copper sulfide mine has run into a firestorm of protest in our environmentally conscious state. The proposed mine is upstream from the pristine Wolf River and the wild rice beds of the Mole Lake Ojibwe. Opposition to the project has united Native American nations with sportfishing groups, environmentalists with unionists, and local rural residents with urban students.

The state has passed moratorium legislation and met company groundwater models with skepticism; a legislative bill is pendng to prohibit cyanide use. The township of Nashville has also rescinded a Local Agreement with the company, and local tribes Mole Lake and Potawatomi have strengthened their reservation environmental regulations using federal laws. Rio Algom's Crandon mine looks increasingly like a very risky investment. Wisconsin scores the lowest of any U.S. state on the Fraser Institute index that ranks openness to mining. Noranda and BHP dropped mining plans here in the 1990s; Exxon and Phelps-Dodge both chose to withdraw from the Crandon

We would suggest that any prospective buyer of Rio Algom not buy the firm's assurances that the Crandon project is a done deal, and do its own independent Web research. Company shareholders can likewise visit http://www.treatyland.com and http://www.nocrandonmine.com

Zoltán Grossman
Wolf Watershed Educational Project/
Midwest Treaty Network

TORONTO, Aug 31 (Reuters) - Base metals miner Rio Algom Ltd (Toronto:ROM.TO - news) said on Thursday it had rejected Noranda Inc.'s (Toronto:NOR.TO - news) request for more information about its assets and operations so it could decide whether to raise its C$1.5 billion ($1 billion) hostile bid.

Rio Algom said it had turned down the request because of its agreement with South Africa's Billiton Plc (quote from Yahoo! UK & Ireland: BLT.L), which has made a friendly offer of C$27 a share or C$1.7 billion for the company.

"We have declined (Noranda's) request on the grounds that it is inconsistent with our agreement with Billiton," Rio Algom spokesman Corey Copeland told Reuters.

Noranda last week launched a cash offer of C$24.40 a share for Toronto-based Rio Algom and said it would sell 50 percent of Rio's assets to Chile's state-run Codelco, the world's biggest copper company, once the deal was closed.

However Billiton, in efforts to diversify its portfolio, topped the Noranda bid last Friday, offering a 49 percent premium to Rio's closing share price on August 21, the day before Noranda's bid, which carried a 35 percent premium.

($1 equals $1.47 Canadian)

Santiago, Aug. 30 (Bloomberg) -- Canadian mining giant Noranda Inc. is considering raising its $1.76 billion bid for rival Rio Algom Ltd., asking the Toronto-based minerals company for permission to examine its books.

Noranda yesterday asked Rio Algom Chief Executive Pat James for confidential information on mines, deposits and other holdings. Noranda and Chilean copper producer Codelco, which would buy half of Rio Algom as part of the hostile bid, need the information to determine whether the company is worth a higher price, said Codelco President Juan Villarzu. Noranda was put on defensive when U.K.-based Billiton Plc last week announced a $2 billion counter offer that was accepted by Rio Algom's board.

Billiton has traditionally concentrated on producing aluminum but has been steadily diversifying into other metals. Villarzu said Billiton appeared to be ready to pay a higher price for the opportunity to enter the copper business in one swoop with Rio Algom's collection of mines in Argentina, Chile, Peru and Canada.

"We believe Billiton could be willing to pay a premium that we're not willing to pay," Villarzu said at a news conference.

Rio Algom spokesman Corey Copeland said the company is reviewing Noranda's request, but he wouldn't say whether it would be granted. Villarzu expects an answer within a few days, while examining Rio Algom's books could take a month. Billiton officials couldn't immediately be reached.

"We feel very strongly that Noranda and Codelco should be afforded the same opportunity as Billiton to conduct a proper evaluation of Rio Algom before making any decisions," Noranda President David Kerr said in a statement.

Codelco, the world's biggest copper producer, would pay Noranda roughly $800 million for half of Rio Algom. Villarzu wants to buy Rio Algom to move outside Chile and boost Chilean government revenue.

Other Opportunities

If Codelco is unable to buy Rio Algom assets, the company plans to look for other opportunities to expand abroad, Villarzu said.

"We will keep working whether this fails or not," Villarzu said. "We can do it with or without partners."

Adding half of Rio Algom would allow Codelco to boost its copper production 25 percent by 2005, to about 2 million metric tons. That would increase revenue for government coffers, which has averaged $1 billion a year.

Expansion plans at Codelco mines like Chuquicamata already are expected to boost revenue for the government to $1.6 billion by 2006.

There are few mining companies within Codelco and Noranda's reach that have a collection mines comparable to what Rio Algom owns, analysts and mining executives said. That's because big competitors like Phelps Dodge Corp. bought up small and mid-sized mining companies over the last two years, leaving few medium-sized candidates like Rio Algom available.

Rio Algom, which owns some of the choicest undeveloped copper deposits in South America, has become more valuable this year, as copper prices rebounded from 12-year lows. Today, copper rose to 89.3 cents per pound in New York, its highest price in almost three years, on signs of strong demand for wire and pipes made from the metal.

Crandon - The proposed merger of Nicolet Minerals Co.'s parent corporation to a London company should not affect a proposed underground zinc and copper mine near Crandon, officials say.

The board of directors of Toronto-based Rio Algom Ltd., parent company of Nicolet Minerals, unanimously voted Friday to accept a $1.2 billion buyout offer from London-based Billiton PLC, one of the world's leading mining and metals operations. The deal awaits shareholder and regulatory approval.

Nicolet spokesman Dale Alberts said the pending buyout of Rio Algom is not a death notice for the Crandon mine.

"Companies spend millions looking for something this good. On a world scale, it's a good property," he said. "We're not going anywhere, folks. Just keep an eye on us."

About $85 million has been spent on the proposed mine, including $60 million by Rio Algom since it acquired the property from Exxon Minerals in January 1998, Alberts said.

Crandon Mayor Pat DeWitt said he was worried a much larger mining company would be less concerned about local residents.

"Rio has always seemed willing to spend an extra buck or take an extra hour to make this a good project," DeWitt said. "The general rule, the bigger the company, the less they care about the local people."

Nicolet Minerals, which has 16 workers in Wisconsin, is seeking local, state and federal permits to remove 55 million tons of mostly zinc and copper ore from the site south of Crandon.

Supporters of the mine contend it will be environmentally safe and provide badly needed jobs. Critics say the mine would pollute the area and jeopardize clean water in the Wolf River.

Marc Gonsalves, a Billiton spokesman, said it would be premature to comment on what it might do with any Rio Algom assets.

CRANDON -- The proposed Crandon mine probably is too close to operation and has too much to offer for a new owner to shut it down, a project spokesman said.

Dale Alberts, communications director for Nicolet Minerals, met with a dozen Crandon-area business and community leaders Monday and told them a pending buyout of parent company Rio Algom is not a death notice for the zinc and copper mine.

"We have no reason to believe anything will happen to our project," Alberts said during the meeting at Nicolet's information center in Crandon.

The Rio Algom board of directors resisted a hostile takeover bid last week by Toronto-based Noranda Mining and then voted to accept a more lucrative offer from another international mining concern, London-based Billiton Inc. The Billiton deal awaits shareholder and regulatory approval.

Mine critics immediately began to speculate that Noranda or Billiton could view the Crandon project as a liability, given the widespread opposition among Wisconsin environmental groups and the difficult permitting process.

But Alberts noted that Rio Algom has already spent $60 million preparing the mine in the Northwoods and spent an additional $25 million with Exxon when the two companies were partners on the project before January 1998, Alberts said.

They've spent so much because there's so much to gain, he said. The adjacent mineral deposits are the second largest in the United States and among the most lucrative in North America.

"You just don't find these things every day," Alberts said. "Companies spend millions looking for something this good. On a world scale, it's a good property."

Compared to the $85 million already invested, the new owner would have to spend little to complete the permit process in the next two years, he told the group.

Many of the officials at the meeting Monday have been attending similar briefings since Exxon began exploration for base metal deposits in the early 1980s. They joked with each other about the new crop of rumors that have started since last week's buyout attempts.

One of the first rumors to circulate was that a new owner might back away from the mine because of the statewide controversy it created over the years, local mine critic Mike Monte said in an interview Friday.

Opponents fear the mine would pollute the pristine Wolf River and other local waterways. Supporters say the project would create much-needed jobs in Forest County and that modern technology would prevent pollution.

The stakes are high enough that some controversy can be endured, Alberts said. He noted that Billiton is eight times larger than Rio Algom. Crandon Mayor Pat DeWitt asked if that meant the potential new owners would be less concerned about the opinions of local residents.

"Rio has always seemed willing to spend an extra buck or take an extra hour to make this a good project," DeWitt said. "The general rule, the bigger the company, the less they care about the local people."

Alberts said he hopes a new parent company would not interfere with Nicolet's favorable relationships with three out of the four area governmental entities. The city of Crandon, town of Lincoln and Forest County Board have issued permits for the mine to be built on 5,000 acres five miles south of Crandon.

An earlier permit issued by the town of Nashville is being challenged by the current Town Board and will be the topic of a hearing in Forest County Circuit Court Sept. 21.

Day-to-day operations for the 16 Nicolet Minerals employees have not changed since the announcement of the potential ownership change, Alberts said.

"We're just going to keep marching until the job is done," he said. "We're not going anywhere, folks. Just keep an eye on us."

Because so much of the groundwork has been laid, any new parent company should continue with the project, DeWitt said.

"If it's ever going to happen, now is the time it should happen," the mayor said.

Toronto, Ontario; August 30 - Noranda Inc. confirms that it has requested permission to conduct a full and thorough due diligence review of the operations and assets of Rio Algom Limited. A request was made to Pat James, President and CEO of Rio Algom by David Kerr, President and CEO of Noranda.

"We and Codelco want to ensure that we have made what we consider to be the best offer possible, based on complete information, and not just on information contained in Rio Algom's public disclosure documents," stated David Kerr, President and CEO of Noranda Inc. "Therefore, we feel very strongly that Noranda and Codelco should be afforded the same opportunity as Billiton to conduct a proper evaluation of Rio Algom before making any decisions. We believe that it is in the best interests of Rio Algom's shareholders that we be afforded this opportunity."

Santiago, Aug. 30 (Bloomberg) -- Noranda, Inc. has asked Rio Algom Ltd. for permission to examine its books, a move that could signal a possible increased offer by Noranda for the Toronto-based mining company.

Juan Villarzu, president of the Chilean government-owned copper producer Codelco, said Noranda yesterday sent a letter to Rio Algom's board asking to review confidential financial information on Rio Algom's mines, deposits and other holdings.

Noranda last week lost out on a $1.76 billion bid for Rio Algom after London-based Billiton Plc stepped in with a higher, $2 billion bid. Under Noranda's earlier offer, Codelco would acquire half of Rio Algom's assets for about $800 million.

Villarzu said a higher offer for Rio Algom would depend on a review of Rio Algom's books and that it would be difficult for Noranda to increase its offer at this point.

''We believe Billiton could be willing to pay a premium that we're not willing to pay,'' Villarzu said.

SANTIAGO (Dow Jones)--Chile's state-owned mining giant Corporacion Nacional del Cobre de Chile, known as Codelco, and Canada's Noranda Inc. (T.NOR, news, msgs) will decide within 30 to 45 days whether to increase their bid for Rio Algom Ltd. (ROM, news, msgs), provided Rio Algom responds to an information request, Codelco said Wednesday.

Codelco's Executive Vice-president Juan Villarzu said Noranda and Codelco on Tuesday asked Rio Algom for information to carry out a due diligence review, and expect the company to respond with 2 to 3 days.

If Rio Algom declines to deliver the information, Codelco and Noranda won't increase their bid. "With the information available now, the offer we've made is the best we can do," said Villarzu.

Noranda and Codelco launched an uninvited $1.6 billion bid for Rio Algom last week, which was later trumped by a $2 billion bid from Billiton PLC (U.BIX, news, msgs).

Rio Algom's Board agreed to accept Billiton's C$27.0 a share cash offer, after giving a cool response to the C$24.50 per share bid launched by Codelco and Noranda.

Rio Algom stockholders can tender their shares to Billiton beginning in early September, but Villarzu said he expected some to wait and see if Codelco and Noranda might sweeten their price.

In response to Billiton Plc's offer for Rio Algom Limited, Noranda Inc. announced today that it will be reviewing the Billiton offer for Rio Algom with Codelco before making any decisions. Further comments on this matter will be made at an appropriate time.

As shareholders in Falconbridge may recall, bare-fisted slugfests for control of companies aren't Noranda's style. But Falconbridge's old owners also know that when the mining arm of the Brascan empire takes off the gloves, it plays to win.

These days, Noranda is caught up in a high-stakes battle for control of Rio Algom, a copper mining company with stakes in several potentially promising plays in South America.

Noranda wants to be the one to realize on Rio Algom's potential. Early last week, the company teamed up with the Chilean state-owned mining company Codelco to lob a hostile $15-billion takeover bid at Rio Algom. This isn't typical behaviour for companies in the Brascan group -- these folks are masters of the creeping takeover.

Arbitragers promptly decided that bigger games were afoot, and drove Rio Algom's stock price through Noranda's $24.50-a-share bid. The speculators bet on a higher bid. By week's end, that bet paid off.

On Friday, Britain's second-largest mining group, Billiton, revealed that it had been in merger talks with Toronto-based Rio Algom and announced a friendly $1.7-billion takeover of the company. Noranda's preemptive bid was thwarted, with Billiton enjoying the support of Rio Algom's board, and setting the bar in this takeover battle at $27 a share.

The moment Rio Algom began trading after the Billiton announcement, the market signalled it expected Noranda to fire back. In frenzied trading on Friday, Rio Algom moved to $28.75 on the Toronto Stock Exchange, backing off slightly to close yesterday at $28.60.

We're now into something of a phony war, a period likely to last a few weeks. Noranda and Codelco will marshall their forces and wait for regulatory fillings that show Billiton's strengths and weaknesses.

With the guns silent, it's worth looking back to 1989, when Noranda was stalking nickel producer Falconbridge. In a wildly entertaining cat-and-mouse game, Noranda CEO Alf Powis tried to gain control at minimal cost, while his old friend Bill James at Falconbridge fought him every step of the way.

The pair danced for several years until Mr. James ended the stalemate by enticing a rich, full-blown takeover offer for his company out of U.S. mining company Amax. Noranda teamed up with Sweden's Trelleborg to top the offer; Amax then bowed out of the picture after banking a tidy breakup fee for its role.

The lesson to reflect on here is that Noranda has shown it will enlist partners and pay premium prices to win an asset it covets.

Analysts say there are compelling reasons for Noranda to raise the ante in the battle for Rio Algom. Joint ownership of one South American mine, and the close proximity of several properties, mean Noranda can realize cost savings at Rio Algom that Billiton will never see. It's also worth noting that Noranda will have no trouble financing its bid with credit facilities that are already in place. Company executives say any financing needed for this deal can be done without diluting the 40-per-cent ownership stake that Brascan holds in Noranda.

In comparing the bidding for Rio Algom to what happened around Falconbridge, recall that the partner has already arrived -- in fact, Codelco called up Noranda with the idea of a joint bid for Rio Algom.

There's a new hand on the helm at Noranda these days; David Kerr took over as CEO for Mr. Powis several years ago. But Mr. Kerr was also on the bridge during the battle for Falconbridge as Noranda's chief financial officer; he knows what it takes to get a hostile deal done.

On the other side, Billiton executives have already taken a bit of abuse from analysts over what some saw as an overly rich Rio Algom bid. The British company negotiated the right to match any rival offer for Rio Algom and keep the support of the Canadian company's board. But it also obtained a $68-million break-up fee before tabling the $1.7-billion bid. If Billiton does bow out, it won't go away empty handed.

This battle will come down to a question of who wants Rio Algom's rich copper properties more. History says Noranda will fight on, and so does the market. And to date, the market has been a canny gauge of what's happening in this takeover fight. On the advisory front, Rio Algom is looking to RBC Dominion and Credit Suisse First Boston for help as it deals with takeover bids.

Noranda has Trilon Securities and CIBC World Markets in its corner, while Morgan Stanley is guiding Codelco.

Billiton is looking to BMO Nesbitt Burns and Chase Manhattan for advice; the latter firm is relatively unknown in Canadian merger and acquisition circles, and its involvement here likely signals where Billiton might be borrowing money to finance its bid.

Rio Algom Ltd., parent to the company that seeks to build a zinc and copper mine near Crandon, entered into an agreement Friday with a United Kingdom company that offered to buy all of its mining assets for $1.7 billion in cash.

The agreement with Billiton PLC must be approved by regulators, but it wards off -- for now -- a joint hostile takeover bid for Rio Algom offered earlier this week by Toronto-based Noranda Inc. and Chile's Codelco.

Not known is what the potential sale means for the proposed Crandon mine in Wisconsin's Northwoods. Rio Algom's subsidiary, Nicolet Minerals Co., continues to seek state permits for a controversial 55 million-ton zinc and copper mine that environmentalists, Indian tribes and sportsmen fear will harm local waters.

"For Nicolet Minerals it's business as usual. We're just trying to stay focused," said Nicolet spokesman Dale Alberts.

"I don't have any speculation," he continued. "I just know that the Nicolet Minerals Co. is a good company. It's a good team, and we've got a good project -- regardless of who ends up owning this subsidiary, I think it's a good project."

Corey Copeland, vice president of corporate affairs for Rio Algom in Toronto, said Billiton has said it has no interest in selling off any of Rio Algom's assets.

"That having been said, of course, if they're successful in acquiring control of the company, the future course of all our assets will be at their discretion," Copeland said.

Billiton, which had been negotiating with Rio Algom for months, said in a joint statement with the company Friday that acquiring Rio Algom would provide it a major entry point into the global copper business.

Until now, the company had focused on metals such as aluminum, nickel, chrome and mined coal, largely in South Africa and Europe.

Rio Algom focuses largely on producing copper from mines in Chile, Argentina and Canada. But the company expects to triple its annual copper production by 2005 through its interest in the Antamina deposit -- a major copper-zinc mine under construction in Peru -- and its wholly owned Spence copper mine in Chile, which is now in the study phase.

Haytham Hodaly, senior mining analyst with Salman Partners in Vancouver, said Billiton may not be interested in keeping a smaller and controversial mining operation such as the Nicolet mine.

"If someone actually offered some form of compensation for it, they would look at it as a way of reimbursing some of the funds that they incurred on the acquisition price," he said.

Hodaly described the $27 per share price Billiton offered Rio Algom as "a phenomenal deal" for Rio Algom.

Billiton was willing to pay a premium for the Rio Algom shares because quality metallic mines are in high demand, but there are not many left, he said.

The fact that Rio Algom's share price had risen to $28.75 Friday was a sign that some investors expected another bid for the company's assets -- possibly a higher bid from Billiton or Noranda and Codelco, Hodaly said.

Noranda, which already owns 9 percent of Rio Algom, is one of the world's largest producers of zinc and nickel and a significant producer of copper and other metals. Noranda already has had some experience with the public's strong opposition to mining in Wisconsin. In 1998 the company pulled out of tentative plans to mine a deposit in Oneida County, determining it couldn't mine the site without harming wetlands.

Noranda spokesman Dale Coffin said Friday the company was considering its options.

Dave Blouin of the Mining Impact Coalition, which opposes the Nicolet mine, said whatever firm owns the mine doesn't make much difference in terms of public acceptance of the project.

"The issue is that the Crandon proposal is incompatible with the sensitive Wolf River watershed," Blouin said. "Any new company that wants to pursue the Crandon proposal is going to run into the same widespread opposition and the same technical problems that currently exist for Rio Algom."

CRANDON's $1.2 billion deal between foreign multinationals will thrust the proposed Crandon mine's future deeper into doubt.

The London-based mineral giant Billiton Friday outbid another interested company by 10 percent in an effort to purchase Rio Algom, the company trying to mine zinc and copper near the headwaters of the Wolf River. By buying Rio Algom, Billiton hopes to bolster its global copper and base metals business.

Rio Algom's board of directors has unanimously approved the offer, which awaits shareholder and regulatory approval. Corey Copeland, vice president of corporate affairs at Rio Algom, expects the deal to be completed by the end of September or the first part of October if everything goes as planned.

"We have been in discussions with Billiton since the beginning of July," Copeland said. "Our board is pleased with the deal."

Although there have been no indications that Billiton would sell any of Rio Algom's assets, the company has no other operations in the United States.

"Ultimately, if they gain the company, we have no say in what they do," Copeland said.

E-mail messages from the Wausau Daily Herald were returned unanswered by Billiton executives.

The proposed mine has inspired debate and even new legislation in recent years. Responding to pressure from environmental advocates, Gov. Tommy Thompson signed into law in 1998 a mining moratorium bill that requires companies wanting to mine in Wisconsin to show that a similar operation elsewhere has been pollution free. Mining proponents called the bill absurd and environmental activists said it didn't go far enough.

But resistance has not kept companies from sniffing around the Crandon site.

"If Rio Algom is dissolved and a new company purchases (the proposed) Crandon (mine), this will be the fifth company in 25 years since the discovery, and the project is no closer to being permitted because of technical issues," said David Blouin, Madison resident and coordinator of the Mining Impact Coalition of Wisconsin.

The coalition and other groups, including anglers, hunters, church groups, students and local government officials, oppose the mining project on the grounds that it would degrade the environment - specifically the beloved Wolf River, whose headwaters are near the proposed site.

Exxon Minerals discovered the mineral deposits in 1976 but abandoned the project in 1986. In 1993, there was a short-lived venture between Exxon and Phelps Dodge, which pulled out the same year, Blouin said. In late 1993, Exxon teamed with Rio Algom, which bought out Exxon's share in 1998 to form Nicolet Minerals.

"There's no way that we can predict what a new owner might do, but whatever the company should decide to do ... they're going to find the same widespread opposition and unsolved technical problems that Rio Algom has right now," Blouin said.

Rio Algom's Copeland said there is no indication Billiton plans to get rid of the Crandon project. "Billiton has said that they don't have any plans to sell any Rio Algom assets," he said.

Dale Alberts is among the 16 employees at Nicolet Minerals who have been "forging our way through a very rigorous permitting process."

The director of community relations said he does not expect billion-dollar deals to have any affect on his Rhinelander company and a good mining asset. And that's how his office has proceeded.

"It is very simply business as usual," Alberts said. "We can't control what goes on at the corporate level. Nicolet Minerals is a good company and this is a good project for Wisconsin."

Neither project quality nor ownership will matter if the company doesn't have a valid agreement with the town of Nashville, Town Chairman Chuck Sleeter said.

Town officials are disputing a 1996 agreement with Rio Algom that endorses the proposed underground zinc and copper mine. Opponents of the mine who were elected to the three-member Town Board in 1997 later voted to rescind the agreement.

The validity of the agreement will be decided at 10 a.m. Sept. 21 in Forest County Circuit Court.

"If there's no agreement with the town, then there's no mine," Sleeter said.

Jim Wise, Lincoln County resident and representative of Environmentally Concerned Citizens of the Lakeland Area, has been watching the bidding wars, frustrated that there's not more local control over what happens to the area.

"Whether the company lives or dies, this is in the hands of people that have no connection to the area," Wise said.

Wausau Daily Herald reporters Nikki Kallio and Pat Peckham contributed to this report.

Profile: Billiton
Headquarters: London, England.
Employees: 32,000 worldwide.
Operations: Australia, Brazil, Canada, Colombia, Mozambique, South Africa and Suriname.
Traded: Shares are listed on exchanges in London, Johannesburg and Paris.
Operations: Billiton is one of the world's leading mining and metals businesses. It ranks among the top four producers of aluminum. The company is the leading producer of chrome and manganese ores and alloys and the largest exporter of thermal coal. Billiton is also the western world's fourth-largest producer of nickel. It owns 50 percent of the foremost producer of titanium mineral sands.

Santiago, Aug. 28 (Bloomberg) -- Codelco, the world's biggest copper producer, may abandon its bid for Toronto-based Rio Algom Ltd. because sweetening its offer would mean paying more than the $800 million Codelco had budgeted for the purchase, newspaper El Diario said.

Billiton Plc offered $2 billion in cash and assumed debt for Rio Algom on Friday, beating out Tuesday's offer by Codelco and its partner, Noranda Inc.

[Billiton is actually a South African company based in London.........]

Billiton PLC triggered a bidding war for Rio Algom Ltd. yesterday, with a friendly offer worth $27 a share or $1.7-billion, countering a $24.50-a-share hostile bid made early this week by Noranda Inc.

"This is not just a last-minute, knee-jerk reaction," said Marc Gonsalves, senior manager of corporate affairs for Billiton, a British miner looking to expand into copper.

Billiton had a team in Toronto looking at Rio Algom, one of the world's fastest-growing copper producers, for several weeks before outbidding Noranda by 10 per cent. Billiton has been closely monitoring Rio Algom's performance for over a year, he said.

"Our board is recommending the bid and we are pleased with it," said Corey Copeland, a spokesman for Rio Algom. "They are looking at Rio Algom as a nucleus of a base metals division."

Noranda, whose initial offer was worth $1.5-billion, said yesterday that it was reviewing its options with its financial backer, Corporacion Nacional de Cobre, known as Codelco. The Chilean state agency has an agreement to acquire a 50-per-cent interest in Rio Algom's assets from Noranda.

At Noranda's press conference on Tuesday, David Kerr, its president, left his options open about whether Noranda, which owns 9 per cent of Rio Algom, might come back with a higher bid. Both companies are based in Toronto.

The shares of Rio Algom rose $2.50 to $28.75 on the Toronto Stock Exchange yesterday. About 12.6 million shares changed hands in a buying frenzy as speculators bet there will be a higher bid.

In addition to copper, Rio Algom also mines coal and operates a stainless steel and aluminum distribution business.

Informal talks about a merger began last spring between senior executives of Billiton and Rio Algom. Sources close to Rio Algom said its board decided not to pursue these discussions because the company was in the early stages of developing its South American copper properties, and the directors felt the potential value of these assets was not reflected in the stock price.

"It was always the board's first choice to remain independent, and realize on the potential of its properties for shareholders. However, that potential also made Rio Algom an attractive takeover candidate," said an investment banker close to the firm.

Rio Algom's board changed its views on independence in March on news that Noranda had taken a 5-per-cent stake in the company. The holding was correctly interpreted as a sign that a takeover might be coming. Rio Algom's board feared Noranda might establish a minority position that would grow large enough to scare off other potential suitors.

"Noranda was like a dog marking its turf, it was trying to warn off rivals," one analyst said. "And it was rumoured in mining circles that Codelco had made the rounds with the idea of taking a run at Rio Algom."

To keep his options open, Rio Algom's chairman, Gordon Gray, took a side trip to Billiton's home town of London during a cruise holiday in Scandinavia in June.

Mr. Gray had "a wonderful Sunday lunch at the Ritz hotel here in London with a fine bottle of Red Bordeaux," said Billiton chairman and chief executive officer Brian Gilbertson. The Rio Algom chairman picked up the bill.

The meal gave way to an afternoon working session on the two companies' strategies, sources said. In early August, Billiton and Rio Algom signed a confidentiality agreement and began serious merger negotiations.

In praising Rio Algom's chairman, Mr. Gilbertson said: "You can see there are still gentlemen in this industry, although he and I may be among the last, I think."

Billiton is taking the lead in the takeover. The senior officers of Rio Algom have not made themselves available for conferences with either analysts or the media since Noranda launched its takeover bid.

"Let me stress we are not in the habit of overpaying for any transaction," Mr. Gilbertson told analysts and investors in a conference call in London yesterday. "We have walked away from other transactions when we think the price has gone wrong."

Billiton wants to acquire Rio Algom so that it can add copper to the list of its other metals such as aluminum, magnesium, steam coal, chrome, titanium and nickel. It has operations in Australia, South America and South Africa, generating total sales of $4.6-billion (U.S.) in fiscal 1999, and a market capitalization of $10.4-billion.

Rio Algom's copper production, which is expected to be more than 440 million pounds this year, is forecast to increase to one billion pounds by 2005 as a result of projects under development. Billiton estimates Rio Algom will be the world's fifth-largest copper producer.

Rio Algom has agreed to pay Billiton a $45-million breakup fee should its takeover bid fail. The bid is conditional on the acceptance by holders of two-thirds of Rio Algom's shares outstanding and Billiton has the right to match any higher bid.

"I think the market is making the assumption that Noranda is going to come back [with another bid]," Manford Mallory, a metals analyst at Research Capital in Toronto, told Reuters News Agency. "There is a realistic chance that they will."

A British mining giant is going head-to-head with Canada's second-largest metals company, Noranda Inc., for ownership of Rio Algom Ltd., a well-known Canadian miner with lucrative assets in South America. Billiton PLC offered $1.7 billion Friday for Toronto-based Rio Algom, outbidding Noranda's $1.5-billion hostile bid earlier in the week.

Billiton's bid has the support of Rio Algom's directors, who have agreed to give Billiton the right to match any future offers, including a possible counter-offer from Noranda and its partner Codelco of Chile.

"It certainly heats up the story," said Manford Mallory, a mining analyst at Research Capital Corp. "I'm not shocked but certainly pleased for Rio Algom investors that they've got a competitive-bidding situation going. Rio Algom, I've thought for some time, has been ridiculously undervalued in the market," he said. "It was frustrating for some shareholders who were watching Noranda slowly do a creeping takeover on it."

Rio Algom's stock rocketed up in frantic trading of 12.6 million shares on the Toronto Stock Exchange, closing higher by $2.50 at $28.75 - well above Billiton's offer of $27 a share, indicating market players expect further bidding.

Noranda offered $24.50 a share Tuesday in a strategic move aimed at increasing its copper production and cementing a partnership with Chile's government-owned Corporacion Nacional del Cobre, or Codelco.

The fight for Rio Algom reflects a trend toward consolidation in the resource sector.

"The future is going to be fewer bigger companies dominating the industry," said Mallory.

Noranda, which already owns nine per cent of Rio Algom, said Friday its offer was at the "high end" in terms of value.

Rio Algom shares have traded as low as $14.65 in the past 10 days.

Dale Coffin, manager of public affairs for Noranda, said the company, along with Codelco, will review Billiton's proposal before considering a counter-offer. "When a company gets into a situation like this, anything is possible," he said. "We've seen it in other bidding wars."

Under the agreement between Billiton and the Rio Algom board, Rio Algom must pay a break fee of $45 million to the British company if it accepts another offer, and Billiton has the right to match any new bid.

Tony Lesiak, a base metals analyst with HSBC Securities, believes Noranda should proceed cautiously. "They've perhaps not given their best offer, but should their second offer be at a $5 premium to their previous one, I think that will be tough to justify to the shareholders," Lesiak said. "My take is it's getting very pricey."

A takeover of Rio Algom would help Toronto-based Noranda considerably as it moves aggressively to boost its mining operations. Rio Algom mines copper, molybdenum, uranium and coal in Chile, Argentina, the U.S. and Canada. Its assets include two of the world's biggest copper projects - the Antamina mine in Peru, which when completed late next year will be the world's biggest copper and zinc operation, and the undeveloped Spence copper site in northern Chile.

Noranda and Rio Algom are partners in Antamina, each holding 33.75 per cent. "Noranda needs mines," said Mallory.

Much is also at stake for Billiton, which in addition to paying $1.7 billion in cash has agreed, like Noranda and Codelco, to assume about $1 billion of Rio Algom debt should its offer be approved. It would mark a significant departure in Billiton's strategy and its biggest move yet into Latin America. Billiton, known for aluminum and nickel mines, has said it wants to increase its copper holdings. "The quality and potential of the Rio Algom assets represent for Billiton a unique entry vehicle into the global copper and metals market," said Brian Gilbertson, chief executive of Billiton. "There obviously is some strategic value - that's what Billiton is pricing in here," said Lesiak. "But at the end of the day, strategic value doesn't always flow into shareholder value."

The offer still needs regulatory approval and acceptance by holders of two-thirds of Rio Algom shares.

If Noranda gives up on Rio Algom, Mallory believes the Canadian company will go after full ownership of Falconbridge, a large nickel and copper producer with mines in Canada and the Dominican Republic. Noranda now owns just under half of Falconbridge.

ALSO SEE
World Metals Information Network http://www.amm.com/index2.htm

TORONTO, Aug 25 (Reuters) - Despite seeing its hostile bid for Canadian metals miner Rio Algom Ltd. <ROM.TO>. topped, Noranda Inc. <NOR.TO>. said on Friday it was not ready to give up the fight.

In what is clearly seen as a white knight coming to the rescue, South African miner Billiton Plc <BLT.L> announced an agreed C$1.7 billion ($1.15 billion) cash bid for Rio Algom, trumping Noranda's hostile bid of C$1.5 billion ($1 billion). The Billiton offer amounts to about C$27 a share.

Noranda launched its hostile offer of C$24.50 cash a share for Rio Algom earlier this week, saying it would sell half Rio's assets to Chile's state-owned Codelco (Corporacio Nacional del Cobre) for the same price, once the deal was done. They planned to jointly manage the assets.

Despite the sweeter Billiton deal, which has the blessing of Rio Algom, it appeared Noranda was not ready to admit defeat.

"We haven't seen the offer and we're going to wait to see the offer. We will certainly have to review it before we make any decisions going forward," said Dale Coffin, manager of public affairs at Noranda.

"They made the offer this morning and now we have to reflect and try to come to a decision on what we want to do next."

It appeared that investors were contemplating a further move by Noranda in the high-stakes takeover game. Rio Algom stock was up C$2.25 to C$28.50 in heavy trading on the Toronto Stock Exchange, with more than 10.3 million shares changing hands, making it the most active issue on the day.

The heavy trading propelled Rio through its 52-week high of C$26.45.

I think quite clearly the market is making the assumption that Noranda, at the very least, is going to come back (with another bid)," said Manford Mallory, a metals analyst at Research Capital in Toronto. "There is a realistic chance that they will."

Mallory said he was not surprised to see the C$2.50 a share premium found in the Billiton offer, noting he values Rio Algom at more than C$30 a share.

"These people have not lost control of their senses. What has distorted people's views is that mining stocks have been depressed for three years now and people have got used to those kind of share values and valuations, thinking that they were real," Mallory said.

"This is a cyclical industry and Rio Algom has potential that is about to blossom in the next couple of years, so I think the stock is legitimately worth what is being paid here."

($1=$1.48 Canadian)
12:05 08-25-00

TELL BILLITON ABOUT
WISCONSIN'S STRONG ANTI-MINING MOVEMENT

Billiton Plc ("Billiton") and Rio Algom Ltd ("Rio Algom"), a Toronto based, international mining and metals distribution company, have reached agreement whereby Billiton will offer to acquire the entire issued share capital of Rio Algom for C$27.00 per share in cash, or C$1.7 billion (some US$1.2 billion). The offer represents a premium of 49% to the closing price of Rio Algom on Monday 21 August 2000, the day before the announcement of an offer from Noranda Inc., and a 10% premium to the Noranda offer of C$24.50 per share.

The Rio Algom board of directors, on the recommendation of a special committee of the board, has unanimously recommended the agreement, and has received fairness opinions from its financial advisors. The offer is subject to, inter alia, acceptance by holders of 66.67% of Rio Algom shares and regulatory approvals.

Rationale

Billiton's stated strategy of growing its exposure in copper has relied upon three market entry points: exploration, the application of proprietary technology and asset acquisition. Following partnerships with a range of junior explorers and a major technological alliance, the acquisition of Rio Algom will provide Billiton with a significant entry point into the global copper business and a vehicle for future development of other base metals opportunities. Rio Algom produces primarily copper from mines in Chile, Argentina, and Canada, and also has a strong portfolio of predominantly copper and zinc development and exploration assets in South America, which are set to come on stream over the next few years.

Billiton has successfully identified projects, and transformed and expanded operations, to generate growth and reduce unit operating costs in a number of its commodity businesses, particularly aluminium and nickel. The characteristics of Rio Algom's range of projects, and their current stage of development, match Billiton's criteria for value enhancement.

Rio Algom will bring to Billiton a quality portfolio of low-cost, high-growth operating assets and development properties, together with an experienced and skilled operational and technical management team, who are expected to form the nucleus of Billiton's global copper and base metals business. The acquisition will allow Billiton to utilise its technological and development expertise to add value to the acquired assets, whilst being part of a larger group will provide access to the capital required to develop Rio Algom's growth opportunities.

Rio Algom's metals distribution business, which processes and distributes aluminium, stainless steel and other metals, is a strongly cash-generative business which has achieved an average ROCE of 17% over the last 5 years.

On a pro-forma basis, Billiton estimates the transaction will be modestly dilutive to earnings in the current financial year. However, following the commencement of production at Rio Algom's Antamina copper-zinc project in Peru which is scheduled for the second half of calendar 2001, Billiton anticipates that the transaction will become earnings enhancing.

The Transaction

Agreement on the transaction was reached after a period of due diligence by Billiton, and after discussions between the parties following the signing of a confidentiality agreement in early August.

Billiton will offer the shareholders of Rio Algom C$27.00 in cash per Rio Algom share and will fund the transaction from its own resources and bank financing.

The offer, which is recommended by the Board of Rio Algom, is subject, inter alia, to holders of 66.67% of Rio Algom shares depositing and not withdrawing shares under the offer, and certain regulatory approvals. It is expected that documents concerning the offer will be mailed to Rio Algom shareholders in early September.

Subject to the fiduciary duties of its board, Rio Algom has agreed not to solicit or encourage any competing offers. The agreement between Billiton and Rio Algom provides for a break fee for Billiton of US$45 million, and the right for Billiton to match any competing offer.

Comment

Brian Gilbertson, Chairman and Chief Executive of Billiton, said, "The quality and potential of the Rio Algom assets represent, for Billiton, a unique entry vehicle into the global copper and metals market. Given Billiton's proven project development record, our financial expertise and muscle, and the potential application of our BioCOPTM technology, we look forward to realising the potential of the Rio Algom assets by growing our new Copper and Base Metals business into an important source of earnings and value for shareholders."

Gordon Gray, Chairman of Rio Algom, said, "I am pleased that we have reached this agreement with Billiton, and secured a premium for Rio Algom's shareholders. We believe this offer reflects the value we have worked hard to build for investors, while our employees will benefit from joining a global company with the size and resources needed to compete worldwide. We look forward to working with Billiton on a smooth transition."

Steve Kesler, Billiton Executive Director responsible for Base Metals, New Business and Technology, said, "Rio Algom has an exciting portfolio of operating assets - characterised by their low cost of production profile - and of major development projects, which have the potential to treble Rio Algom's copper production by 2005. Together these provide a platform from which Billiton can grow its new copper business, as we have successfully done in other commodities, most recently aluminium and nickel."

Change of Date: Billiton Preliminary Results Announcement

The date of announcement of Billiton's preliminary results for the year ended 30 June 2000 has been brought forward to Tuesday 29 August 2000.

Information on Rio Algom (www.rioalgom.com)

Rio Algom (TSE & NYSE: ROM) is an international mining and metals distribution company based in Toronto, Canada, and listed on the Toronto and New York stock exchanges. For its full year results to 31 December 1999, Rio Algom reported net assets of C$1,658 million, and had net earnings of C$30 million, on a pre-exceptional basis, and attributable losses of C$208 million including exceptional items.

Rio Algom currently produces copper, molybdenum, uranium and coal from mines in Chile, Argentina, the United States and Canada. The company expects almost to treble its annual copper production from its current 405 million pounds by 2005, though its 33.75% interest in Antamina, a major copper-zinc mine under construction in Peru, and Spence, its a wholly owned copper project at the pre-feasibility study stage in Chile. Rio Algom Metals Distribution has 52 service centres serving more than 28,000 customers and is one of the largest distributors of stainless steel and aluminium in North America.

Information on Billiton (www.billiton.com)

Billiton (LSE & JSE: BLT.L; BLT LN) is one of the world's leading mining and metals businesses, with operations in Australia, Brazil, Canada, Colombia, Mozambique, South Africa and Suriname. The Company has an unrivalled portfolio of non-listed assets, diversified by commodity and country and characterised by their low-cost of production. The Group ranks among the world's top four producers of alumnium and alumina. It is the world's leading producer of chrome and manganese ores and alloys, and the largest exporter of thermal coal. Billiton is also the western world's fourth largest producer of nickel and owns 50 per cent of the world's foremost producer of titanium minerals sands.

Billiton shares are listed in London (where it is a member of the FTSE 100 index), Johannesburg and Paris. The Company employs some 32,000 people worldwide and has a market capitalisation in excess of US$10 billion.

TORONTO (CP) - The copper market just got hotter with Britain's Billiton PLC bidding $1.7 billion for Toronto-based miner Rio Algom Ltd., topping Noranda Inc.'s $1.5-billion offer made Tuesday.

And Billiton says its bid has the support of Rio Algom's directors. "The Rio Algom board of directors, on the recommendation of a special committee of the board, has unanimously recommended the agreement and has received fairness opinions from its financial advisers," Billiton said Friday in a release.

The offer still needs acceptance by holders of two-thirds of Rio Algom shares and regulatory approvals.

Noranda and a Chilean copper giant had joined forces earlier this week to bid for Rio Algom, which has lucrative assets in South America. Noranda offered $24.50 a share in a move aimed at increasing Noranda's copper production and cementing a partnership with Chile's Corporacion Nacional del Cobre, also known as Codelco.

Billiton's offer is $27 a share. The British company, known for its aluminum and nickel mines, is trying to increase its copper holdings.

"Following partnerships with a range of junior explorers and a major technological alliance, the acquisition of Rio Algom will provide Billiton with a significant entry point into the global copper business and a vehicle for future development of other base metals opportunities," the company said.

Rio Algom produces primarily copper from mines in Chile, Argentina and Canada and also has a strong portfolio of predominantly copper and zinc assets in South America that are set to come on stream in a few years.

Billiton said Rio Algom has agreed not to encourage any competing offers. and their pact provides for a break fee for Billiton of $45 million US with the right for Billiton to match any competing offer.

London � Mining group Billiton PLC on Friday vaulted into the copper industry, announcing an agreed $1.7-billion (Canadian) cash bid for Toronto-based Rio Algom Ltd., trumping a hostile offer led by Noranda Inc.

Billiton, seeking to diversify its base metals portfolio, said Rio Algom's board had unanimously recommended its offer of $27 a share, giving the London-listed South African bidder some coveted copper assets in both South and North America.

But Billiton shares fell over 5 per cent after the news amid market concerns that it had overpaid for Rio Algom and might have left itself stretched to make other acquisitions. One analyst said the price tag was 55 times prospective earnings.

"We are not particularly impressed," the analyst said, adding that Rio Algom shares were worth only $19 each if valued by discounting cash flows.

The stock stood at 292 pence, down 5.88 per cent, in morning trade, having underperformed its sector by 11.6 per cent this year. Billiton is to assume Rio Algom's net debt of $900-million (U.S.), doubling its gearing ratio to around 50 per cent.

Rio Algom shares closed on Thursday at $26.25 (Canadian), well above above the $24.50 cash per share offered by Noranda, which is being backed by state-owned Chilean copper miner Codelco.

Billiton is offering a 49 per cent premium o Rio Algom's closing price last Monday, the day before Noranda pounced. Billiton said it had been considering a Rio Algom bid for nths and signed a confidentiality agreement at the start of August.

"This offer reflects the value we have worked hard to build for investors, whilst our employees will benefit from joining a global company with the size and resources needed to compete worldwide," Rio Algom chairman Gordon Gray said in a statement.

Billiton chief Brian Gilbertson denied overpaing for Rio Algom and his finance director, Mick Davis, added that the deal would enhance earnings from the second half of next year, assuming a long-term copper price of 95 U.S. cents a pound. Copper currently fetches around 85 cents per pound.

"We are not in the habit of overpaying," Mr. Gilbertson said in briefing analysts about the acquisition. He insisted Billiton could still fund more big acquisitions. "This transaction we can finance easily and, indeed, we can finance any other reasonably sized acquisition," he added.

Billiton is looking to buy control of Australia's Worsley alumina refinery from Reynolds Metals Co. Reynolds' 56-per-cent Worsley stake � estimated to be worth between $1-billion (U.S.) and $1.5-billion � is for sale as a result of its merger with Alcoa Inc.

In an interview with Reuters, Mr. Gilbertson spoke of Rio Algom's strong growth potential and said that within about four years Billiton could be the world's fifth-largest copper producer. "Strategically it fills that gap in our portfolio," he said, referring to Billiton's lack of copper assets.

"The quality and potential of the Rio Algom assets represent, for Billiton, a unique entry vehicle into the global copper and metals market," he added in a statement.

Billiton's business is heavily weighted towards aluminium, nickel, ferroalloys and coal. One of the jewels in Rio Algom's crown is the massive Antamina project in Peru. When completed in 2001, it will be the largest copper and zinc mine in the world.

In Chile, Rio Algom owns the Cerro Colorado copper mine and the undeveloped Spence copper deposit. In Argentina, it controls 25 per cent of the Alumbrera open-pit copper-gold mine. It also owns 33.6 per cent of Highland Valley copper mine in Canada.

Billiton said the acquisition would modestly weaken earnings in the year to June 30 next year but that the Antamina project would reverse that when it came on stream next year.

Mr. Gilbertson said that once the Spence project entered production, scheduled for 2004, Billiton could be producing up to 550,000 tonnes of copper concentrate and cathode, making it by then the world's No.5 producer of the metal.

Analysts said Noranda could yet pull out a higher bid.

Noranda and Rio Algom each own 33.75 per cent of Antamina with Vancouver-based Teck Corp.. If Noranda triumphed, it would control the project and gain access to an additional 83 million tonnes of copper reserves.

As part of Noranda's offer, it has agreed to sell half of Rio Algom's assets to Codelco (Corporacio Nacional del Cobre), the world's largest copper miner, once the deal is sealed.

Billiton this year joined Codelco in a biotechnology joint venture to use bacteria in copper production, but said on Friday that the Rio Algom deal would not harm the relationship.

Mr. Gilbertson also said Billiton had no current plans to sell any of Rio Algom's assets to help fund the purchase, but he did not rule it out.

Billiton's bid is conditional on 66.67-per-cent acceptance. It said the deal also included a break fee of $45 million (U.S.) � and the right for Billiton to come back to the table � if a higher offer was made.

BMO Nesbitt Burns and Chase Manhattan are Billiton's advisers for the transaction. RBC Dominion Securities and Credit Suisse First Boston are acting for Rio Algom.

August 25, 2000

London, Aug. 25 (Bloomberg) -- Billiton Plc, the U.K.'s third- largest mining company, agreed to buy Rio Algom Ltd. for $2 billion in cash and assumed debt, thwarting a competing bid from Noranda Inc. and Codelco.

The plan marks Billiton's biggest move yet into South America and copper production. Until now, the company made metals such as aluminum, nickel and chrome and mined coal, largely in South Africa and Europe. In addition to copper exposure, the purchase would give Billiton a larger stake in Latin America, which last year produced 12 percent of sales.

"It's a huge swing in strategy," said Graham French, a fund manager at M & G Investment Management, which holds Billiton shares. "It's a different part of the world and a different metal. At this stage it's not what Billiton should be doing."

Shares Decline

Billiton shares dropped as much as 20.25 pence, or 6.5 percent, to 290 pence in London, indicating investors are concerned the company may be overpaying.

"I think the acquisition is too expensive, they have overpaid," said Kieran O'Gorman, a stockbroker at P.H. Pope & Son which holds shares in Billiton. "The management haven't thought this through. "

Investors say buying Rio Algom may limit Billiton's room for maneuver to buy further assets, such as the 56 percent stake in the Worsley alumina refinery in Australia that Alcoa is selling.

They are also disappointed that the company is moving away from aluminum where further consolidation is expected, which may boost producers' share prices.

Billiton declined to say in advance of its annual results announcement next week by how much the acquisition will increase borrowings. Last year, though, the company reported it owed creditors some $1.2 billion in loans and other debt.

"They are stretching their balance sheet," said French. "People want them to have a certain degree of flexibility."

Buying Rio Algom follows last month's announcement that Billiton wants to gain a foothold in the iron ore market by buying a 2.1 percent stake in Cia. Vale do Rio Doce, the world's largest iron ore producer.

With the acquisition of Toronto-based Rio Algom, the company will fulfill its objective of adding copper to its portfolio of industrial metals assets.

"If Rio Algom's assets are developed to their full potential it will be the world's fifth-largest copper producer," said Brian Gilbertson, chairman and chief executive of Billiton. "It is a gap in our portfolio and it slots in well."

South American Expansion

Rio Algom mines copper, molybdenum, uranium and coal in Chile, Argentina, the U.S. and Canada. It plans to triple its current output of 162,000 metric tons of copper a year by 2005 as it opens new mines in Peru and Chile.

The key assets Billiton is interested in acquiring are Rio Algom's 33.8 percent stake in the Antamina copper-zinc field in the Peruvian Andes and the as yet undeveloped Spence prospect in Chile. Copper prices have risen 12 percent in the past year.

"Rio Algom generates a lot of cash, said Martin Potts, an analyst at Williams de Broe. "True, they have debts, but it's quite common with North American companies. Their projects in Peru and Chile will be major money generators."

The company's history stretches back to 1860 when it acquired concessions to tin deposits on an island called Billiton, located between Sumatra and Borneo. In 1970, Royal Dutch/Shell Group bought the company which was listed on the London Stock Exchange in 1997.

Its assets now include aluminum smelters in South Africa, nickel operations in Australia and Colombia and coal mimes in Canada.

Billiton looked at Rio Algom earlier this year, said Gilbertson, although an 18 percent rise in the Canadian company's shares in March scuppered talks.

Still, the shares began to fall and Gilbertson and Rio Algom's Chief Executive Gordon Gray, met two months ago. Talks in earnest began at the start of August, said Gilbertson, resulting in today's agreed bid.

"Strategically it is a good deal," said Sylvain Brunet, an analyst at Morgan Stanley Dean Witter. "There aren't that many opportunities to enter the copper market."

Rival Bids

Noranda may increase its offer or another bidder may emerge, and Gilbertson told the Wall Street Journal Billiton may raise its offer. Still, he described Billiton's offer as "fair and full" and said "Billiton is not in the habit of overpaying."

Rio Algom Ltd. will be looking for a white knight to outbid Noranda Inc.'s $1.5-billion takeover offer, as well as evaluating the option of selling itself off piece by piece to get the most for its shareholders, one analyst said yesterday.

Shares of Rio Algom rose 5 cents yesterday on the Toronto Stock Exchange to $26.30 a share, indicating speculators believe the $24.50-a-share bid announced Tuesday will not be the last. About 5.4 million shares changed hands.

Investment dealers will be looking to assemble mining groups interested in bidding for Rio Algom with the aim of dismantling the company and each choosing their preferred assets, said the analyst, who did not want to be named.

Noranda and Chile's copper mining agency, Corporacion Nacional de Cobre (Codelco), acted together "just to get the process going," he said. Noranda has agreed to sell a 50-per-cent interest in the assets to Codelco if its takeover bid for Rio Algom is successful. Noranda and Rio Algom are based in Toronto.

"The market is probably expecting some additional bids. I wouldn't be surprised to see some additional bids for Rio, either by Canadian or international mining companies," Bank of Nova Scotia economist Patricia Mohr told Reuters News Agency.

Rio Algom's copper production, which is expected to be more than 440 million pounds this year, is forecast to increase to one billion pounds by 2005 as a result of its projects under development.

The company's assets, which consist of a number of separate wholly owned and joint-venture projects, would lend themselves to being sold separately.

They include 33.75 per cent of the $2.3-billion (U.S.) Antamina copper and zinc project in Peru, the $1-billion Spence copper project and Cerro Colorado mine in Chile, a 25-per-cent interest in the Alumbrera copper and gold mine in Argentina and a 33.6-per-cent interest in the Highland Valley copper mine in British Columbia.

TORONTO, Aug 24 (Reuters) - Until a month ago, Noranda was content with slowly buying shares in Canadian metals miner Rio Algom, but all that changed when Chile's state-run copper producer Codelco proposed a joint bid to take it over.

A tie-in with Codelco, the world's biggest copper producer with assets worth $5.8 billion, immediately gives Noranda new global clout in an industry thinning under consolidation.

"One of the shortages we have had is the mining assets. We are very strong metallurgically, but our assets on the mining side have been depleting over the years and we needed to do something to keep a balance," said David Kerr, Noranda's president and chief executive, in an interview.

The companies launched a hostile C$1.5 billion ($1 billion), or C$24.50 cash a share, offer for Toronto-based Rio Algom this week. Noranda said it would sell half of Rio's assets to Codelco (Corporacio Nacional del Cobre) for the same price as the offer, once the deal was done. They plan to jointly manage the assets.

Rio Algom has said the bid was unsolicited and not permitted under its shareholder rights plan.

"We were hesitant at first because we have been comfortable nibbling away, buying a few shares and growing our position in Rio Algom, but after some consideration we decided it was probably the right thing to do at this point in time," said Kerr, adding that he believed the offer price would discourage others from bidding.

Noranda, with revenues in 1999 of C$2 billion, is primarily a copper producer but also has interests in zinc, nickel, refined copper, primary and fabricated aluminum, lead, silver, gold and cobalt.

It is also about to launch a C$733 million magnesium plant in Quebec which will extract magnesium from asbestos tailings that represent more than 200 years of supply. The plant will produce about 63,000 tonnes annually.

While some might argue the logic behind a partnership with a 100 percent government-owned company, Kerr said it made sense because there are advantages a Canadian company would have for bidding for another Canadian company.

"They would've seen we were adding to our position in Rio Algom and that if they were going to find a partner other than us, there was a good chance that we would be a counter-bidder against them," Kerr said.

Codelco, whose board of directors includes top government ministers, has over the past six years accounted for over 18 percent of Chile's exports and about 3.4 percent of gross domestic product. It controls about 20 percent of the world's total known copper reserves.

"Codelco is an excellent choice as a partner. They have the strengths of being a strong influence in Chile and are strong financially," said Kerr.

Kerr said Noranda was mainly attracted by Rio's copper assets, especially its underdeveloped Spence copper deposit in Chile.

Additionally, Noranda and Rio Algom each own 33.75 percent of the Peru's massive Antamina mine with another Canadian miner Teck Corp.

The acquisition would give Noranda a 50.6 percent controlling share of the project, which when completed in 2001 will be the largest zinc/copper mine in the world.

"We have made some good additions to our mining assets but still it wasn't quite enough. We needed to keep doing it and one of the most obvious candidates from our perspective was the copper mining assets of Rio Algom," Kerr said.

Rio also owns the Cerro Colorado copper mine in Chile and in Argentina it controls 25 percent of the Alumbrera open-pit copper/gold mine. In Canada it has a 33.6 percent stake in the Highland Valley copper mine in British Columbia.

The acquisition would also double Noranda's annual copper production from approximately 250,000 tonnes to 500,000 tonnes by 2005. In addition, the deal would immediately increase its copper reserves to 11.1 million tonnes and help to better balance its copper mining and metallurgical assets.

Kerr said with $1.3 billion in assets currently under construction in North and South America, Noranda was eager to begin delivering profits.

"One of the problems over the past 15 years, we have spent a lot of money on things that did not have a great deal of return. While the industry like ours is not terribly interesting to investors at the moment, I also think that we have to start delivering on projects that we put in place," he said.

Kerr says the company adjusted its return on equity to 15 percent from 12 percent six months ago, more than doubling the average six percent it has managed on existing businesses over the past 10 years.

"Twelve first seemed like a stretch when we first signed up but 15 percent is now within our grasp," he said.

Copyright 2000 Reuters Limited.

 

 

Santiago
August 24, 2000

(Bloomberg) -- Chile is sending state-owned miner Codelco on a takeover hunt, vying to defend its position as the world's biggest copper producer and put more revenue into the Chilean government's coffers.

Codelco's plan to buy half of Canadian miner Rio Algom Ltd. for as much as $800 million would help boost the Chilean producer's copper output 25 percent by 2005, generating a surge in revenue for the government. It also would make good on company promises to expand outside Chile and hold onto its 13 percent share of global copper production.

"It's a first and strong signal of a strategy to reinforce the international presence of Codelco," company President Juan Villarzu said. The purchase, he added, would "consolidate Codelco as undisputed leader in the copper industry at a global level."

Privately owned competitors like Phelps Dodge Corp., the world's second largest copper producer, and Grupo Mexico SA, the third largest, have both made acquisitions recently, helping step up the pace of a global consolidation in copper mining.

Codelco, in contrast, has long stuck largely to mining in Chile. That would change if the offer for Rio Algom -- part of Noranda Inc.'s hostile $1.8 billon bid - succeeds, giving Codelco half of Rio Algom's mines and operations in Argentina, Canada, and Peru.

Buying into Rio Algom would be Codelco's biggest venture with a non-government owned company since the company was born in 1971, when then Socialist President Salvador Allende seized foreign owned copper mines.

Ease Concerns

A takeover would also serve to ease executives' concerns that Codelco might lose its nearly 13 percent share of some 12.7 million metric tons of copper mined worldwide last year. Codelco expects annual consumption to grow 3 percent a year and the company would have to add 40,000 tons of output a year just to keep up with demand.

Rio Algom will add about 250,000 tons of output, sending total annual production above 2 million tons by 2005 up from 1.6 million tons last year.

"We demand profits and efficiency," said Jose de Gregorio, who doubles as mining minister and Codelco's board chairman. "They've found a good way to do their business, and we support them totally."

Even so, Codelco's bid to stay No. 1 may be flawed, analysts said.

"I'm not sure that being a big company is better than being a small company in the mining industry," said Raymond Goldie, an analyst at First Associates Investments in Toronto.

Codelco could further strengthen its position by joining its mining operations in Chile with Rio Algom's and Noranda's, said First Associate's Goldie.

Rio Algom's Spence copper deposit is near Codelco's Chuquicamata, the world's No. 2 copper mine, allowing the new owners to cut costs by sharing manpower and processing plants at the two operations.

And Noranda owns a smelter nearby, allowing it to lock in supplies of copper concentrate to melt into fine copper from Spence and Chuquicamata. Codelco also would win a stake in Rio Algom's Alumbrera copper mine in Argentina.

And in Peru, Codelco will get a stake in the Antamina deposit high in the Andes Mountains, which is expected to become the world's largest copper-zinc mine once it opens in mid 2002.

Deep Recession

Still, the government's decision to allow Codelco to shell out $800 million comes as Chile is only barely recovering from a deep recession last year.

"I don't think the Chilean state should be investing the people's money in a business deal that may or may not be successful," Sen. Francisco Pratt, a right-leaning critic of Codelco, told Radio Cooperativa. "We should be spending that money on social causes like health or education."

It is also far from sure whether Codelco will succeed in its bid, since Rio Algom shareholders haven't accepted the offer and Noranda and Codelco may yet have to up their price for Rio Algom.

Rio Algom shares are trading at C$26.25 in Toronto -- higher than the C$24 offer price, a sign the two companies may yet have to up their bid.

NEW YORK, Aug 23 - Moody's Investor Services placed the Baa2 debt ratings of Noranda Inc. under review for possible downgrade, the Baa3 ratings of Rio Algom Limited on review with direction uncertain and confirmed the Baa1 ratings of Corporacion Nacional del Cobre de Chile (Codelco).

These ratings actions follow Noranda's C$24.50 per share conditional cash bid for Rio Algom for a total valuation of Rio Algom of C$1.5 billion. Under a separate agreement, simultaneous with a successful acquisition of Rio Algom, Noranda will sell to Codelco, at the same price paid by Noranda, a 50% interest in Rio Algom's assets.

These assets will be managed jointly until such time as separate management agreements for each asset are completed. In placing Noranda's ratings under review for possible downgrade, Moody's notes that leverage will increase materially from 39% at June 30, 2000 to a pro-forma 46% with interest coverage ratios also coming under greater pressure.

In addition, funding requirements remain to complete the equity investment in the Antamina project which will increase leverage further while the Spence mine remains in the development stage.

Moody's acknowledges however, the significantly strengthened copper production, reserve profile and copper feed sources that will be derived by Noranda from this acquisition. Although leverage could increase at Codelco, depending on the payments made to Noranda for its share of Rio Algoms assets, the Baa1 ratings for Codelco are confirmed based upon Codelco's dominant position in the copper industry with strong cash generation capability, continued focus on cost reduction, and Moody's expectation that the company will maintain acceptable coverage ratios over the intermediate term.

Moody's review of Noranda will focus on its financial risk profile and capital structure following completion of the proposed acquisition and subsequent sale to Codelco of 50% of Rio Algoms assets, as well as Noranda's cash flow generating and debt reduction ability going forward.

Moody's review will also focus on the status of in progress capital projects, such as Antamina, and potential development projects. Moody's review of Rio Algom will focus on how the company will be managed going forward, its legal and organizational structure and whether its outstanding debt will be assumed or guaranteed.

Noranda Inc., headquartered in Toronto, Canada, had 1999 revenues of C$6.5 billion.
Rio Algom, headquartered in Toronto, Canada, had 1999 revenues of C$2.0 billion.
Codelco, headquartered in Santiago, Chile, had 1999 revenues of US$2.9 billion.

TORONTO, Aug 22, 2000
(The Canadian Press via COMTEX)

Metals giant Noranda Inc. (NOR) is offering $1.5 billion in a hostile bid to buy Rio Algom (ROM), and then plans to sell half the Toronto company to a huge copper mining firm owned by the Chilean government.

Noranda announced Tuesday it's offering $24.50 a share for Rio Algom, one of Canada's best-known metal miners, in a move aimed at increasing Noranda's copper production and cementing a partnership with Chile's Corporacion Nacional del Cobre, also known as Codelco. Codelco is a key player in the global metals industry, with operations in key South American areas where Noranda and Rio Algom are increasing their focus and investments.

Tuesday's bid sent Rio's shares surging above Noranda's offer price on Canada's largest stock market Tuesday, suggesting that investors believe a rival offer may be in the works.

Rio Algom said the proposed bid, valued at $2.6 billion including debt, was unsolicited and not allowed under the company's shareholder rights plan aimed at warding off hostile takeovers. However, the miner said it will review the Noranda bid "and is committed to maximizing value for shareholders."

In a separate agreement, Noranda also said it will sell 50 per cent of Rio Algom's assets to Codelco, at the same price paid by Noranda. In fact, Codelco approached Noranda about a month ago with the idea of Noranda buying Rio Algom and then splitting the assets with the Chilean company. The two companies plan to jointly manage Rio Algom's assets and will hive them off into joint ventures later.

Noranda emphasized that new opportunities could arise through a closer association with Codelco, the world's largest copper producer, with assets in the same key areas as Noranda and Rio Algom. David Kerr, Noranda's president and chief executive, said the deal will significantly increase Noranda's profits and will give the company more development opportunities.

"It would establish an important partnership with the world's largest copper producer, which is Codelco," Kerr told a news conference. "Noranda's minerals reserves would be substantially increased, which has been one of our objectives over the last few years."

Noranda has a number of smelters but not enough mines to provide raw ore, an operating problem Tuesday's deal would help alleviate.

Noranda, Canada's second-biggest mining company after Montreal-based Alcan Aluminium, already owns nine per cent of Rio Algom and has been moving aggressively to boost its core mining operations.

In the last two years, the company has shed its Noranda Forest lumber subsidiary, sold off its Norcen Energy oil and gas unit and expanded its stake in Falconbridge Ltd. to control the Toronto-based nickel producer.

If successful, Tuesday's bid would see Noranda acquire promising Rio Algom assets in Chile, Argentina, Canada, the United States, and especially in Peru. Rio and Noranda are partners in Peru's Antamina project, which will be the world's biggest copper mine when completed next year.

"Noranda sees this as much a way for them to get into a joint venture with Codelco, with its prized position in Latin America, as it does a chance to have some synergies with Rio Algom and its own assets," Ray Goldie, a base metals and mining analyst with First Associates said in an interview with ROBTv, a Toronto-based specialty business cable channel.

"Noranda sees Codelco as the single most important part of this transaction."

Aaron Regent, Noranda's executive vice-president and chief financial officer, said the deal is fair to Rio Algom's shareholders, adding that the currently low share prices of mining companies "does make it easier to offer a premium."

This year, mining companies have posted big profits as the global economic recovery has increased demand and prices for base metals.

However, that's not shown up in miners' stock prices as investors have paid more attention to high-flying technology stocks.

"I think the (mining) group has been ridiculously undervalued given the events so maybe this will bring some broad interest into the group," said Manford Mallory, a mining analyst with Research Capital Corp.

Rumours circulated Tuesday that European miner Billiton Plc, which recently formed a joint venture with Codelco, may be considering its own bid for Rio Algom. That pushed Rio Algom's shares above the Noranda offer price. The shares closed $8.15 higher at $26.25, with a whopping 16.2 million shares changing hands. Meanwhile, Noranda's shares on the Toronto Stock Exchange fell 20 cents to $14.95.

It's an "opportunistic" move by Noranda, Mallory said. "They're buying cheap stock that represents assets they really need," since Noranda needs to boost its mining assets, and that's what Rio Algom has.

If the deal goes through, Noranda's copper production would double to about 500,000 tonnes by 2005, while the company's reserves would jump to 11.1 million tonnes from 6.4 million tonnes.

Noranda's offer Tuesday is conditional on, among other things, the acquisition of at least two-thirds of the shares of Rio Algom, regulatory approvals, and Rio Algom's board waiving the company's anti-takeover defence plan.

"We have not waived our shareholder rights plan," said Rio Algom's vice-president of corporate affairs, Corey Copeland, adding the company is examining all its options in light of the bid.

Metals giant Noranda Inc. made a $1.5 billion bid for Rio Algom on Tuesday.

Value: Noranda offering $24.40 a share in cash for a total of $1.5 billion.

Plan: After deal closes, Noranda will sell 50 per cent of Rio Algom to a mining firm owned by the Chilean government, known as Codelco. The two companies will jointly manage Rio Algom's assets.

Rio Algom: The miner produced about 184,000 tonnes of copper in 1999. Its assets are in Chile, Argentina, Peru, Canada and the United States.

Employees: About 2,700 worldwide.

Noranda: One of the world's largest producers of zinc and nickel, and also significant producer of copper, aluminum, lead, silver, gold cobalt. Controls nickel and copper producer Falconbridge Ltd. Its projects are in Canada, Chile, Peru, Argentina, the United States, Mexico. It also has operations in Europe, Africa, Asia and Australia. Employees: About 17,000 worldwide.

Quote: "It would establish an important partnership with the world's largest copper producer, which is Codelco. Noranda's minerals reserves would be substantially increased, which has been one of our objectives over the last few years." - David Kerr, Noranda's president and chief executive.


 

GILLIAN LIVINGSTON

The online source for news sports entertainment finance and business news in Canada
Copyright (C) 2000 The Canadian Press (CP), All rights reserved

Canadian mining conglomerate Noranda Inc. said Tuesday it has offered to buy rival Rio Algom Ltd. for about C$1.5 billion ($1.02 billion).

Noranda also announced that, when the transaction closes, it will sell as much as 50% of Rio Algom's assets to the state-owned Chilean mining company Codelco, the world's largest copper producer, at the same price Noranda paid. The offer values Rio Algom at C$24.50 a share, a 35% premium to Monday's closing price.

Toronto-based Noranda expects to make its formal offer to Rio Algom shareholders in the next ten days.

Shares of Rio Algom, also based in Toronto, surged C$8.15, or 45%, on news of the agreement to close at $26.25, while Noranda stock fell 20 Canadian cents to C$14.95.

"Noranda already has a long-standing relationship with Codelco, which this transaction will further solidify," said Noranda's President and Chief Executive Officer David Kerr. "It will help Noranda to share risk, realize operational synergies to maximize the value of its assets and may lead to other opportunities,"

The total value of the Noranda-Rio Algom transaction including debt is estimated to be about C$2.6 billion, with Noranda expecting to fund its share of the purchase price from cash on hand and committed credit facilities, the company said. Noranda and Codelco, the world's largest copper producer and owner of about 20% of the world's proven and probable copper reserves, will jointly manage the Rio Algom assets.

If Noranda's bid for Rio Algom's assets is successful, it will increase its effective interest in the Antamina zinc-copper project in Peru to 50.6% and will gain access to an additional 83 million tonnes of copper reserves. The company will also get access to Rio Algom's Spence copper deposit in Chile, which is estimated to contain 398 million tonnes of copper reserves with an average grade of 1.0%. The deposit is located near Noranda's Altonorte copper smelter, which could lead to operating cost savings and revenue enhancements, Noranda said. Noranda's acquisition of Rio Algom would double its annual copper mine production to 500,000 tonnes by 2005, while also immediately increasing its copper reserves by about 73%, the company added.

(c) Copyright 2000 FWN

TORONTO - Noranda plans to buy Rio Algom for $1.5 billion and then sell half of the metal miner to a company owned by the Chilean government.

The offer is for $24.50 a share, a 35 per cent premium over Monday's closing stock price for Rio Algom.

Rio Algom calls the takeover bid hostile and said it is not permitted under the company's shareholders rights plan.

Rio Algom's chairman, Gordon Gray said in a statement, "If an offer is received, Rio Algom's board will review it and respond in the appropriate manner. The company is on a growth program aimed at achieving a 15 per cent return on equity over the cycle, and is committed to maximizing value for shareholders."

Canada's second biggest miner, Noranda, already owns nine per cent of Rio Algom.

Noranda's president and CEO, David W. Kerr said, "This acquisition represents an attractive investment opportunity for Noranda. It fits with our strategy to increase our exposure to long-life and low-cost base-metal mining assets. "This will position Noranda as a premier base-metal producer and provide meaningful benefits for our hareholders."

The purchase of Rio Algom would boost Noranda's annual copper mine production from approximately 250,000 tonnes to 500,000 tonnes by 2005. In addition, Noranda's copper reserves would immediately increase by approximately 73 per cent.

For the deal to go through, a variety of things must occur including regulatory approval and Rio Algom's board waiving the company's anti-takeover defence plan. Also, Noranda has to acquire at least two-thirds of Rio Algom stock.

Separately, Noranda said it planned to sell half of Rio Algom's assets to Chile's Corporacion Nacional del Cobre after closing, at the same price paid by Noranda. The two companies will jointly manage the assets.

The Chilean company, Codelco, is 100 per cent owned by the Chilean government. It is the world's largest copper producer and controls about 20 per cent of the world's proven and probable copper reserves. In 1999, it produced 1.6 million tonnes or about 16 per cent of world copper production.

"Noranda already has a long-standing relationship with Codelco which this transaction will further solidify." said Kerr. He added, "It will help Noranda to share risk, realize operational synergies to maximize the value of its assets and may lead to other opportunities."

Shares of Rio Algom were the top trader and biggest gainer on the TSE Tuesday. They closed at $26.25, up 45 per cent or $8.15.

Rio Algom Limited announced today that it has been informed that Noranda intends to make an unsolicited bid to acquire all of the company's outstanding common shares for a consideration of $24.50 for each Rio Algom share. The unsolicited bid is not a permitted bid as defined in the company's shareholder rights protection plan, which is designed to provide the board of directors and shareholders with sufficient time to pursue other alternatives to maximize shareholder value.

Rio Algom Chairman Gordon Gray said: "If an offer is received, Rio Algom's board will review it and respond in the appropriate manner. The company is on a growth program aimed at achieving a 15% return on equity over the cycle, and is committed to maximizing value for shareholders."

Rio Algom is an international mining and metals-distribution company based in Toronto, and one of the fastest growing copper companies in the world. It is creating value for shareholders by finding and developing long life, low unit-cost base metal mines, and building profitable market share in its metals distribution business. It has paid dividends to shareholders every year since its incorporation in 1960, and has recorded annual profits for all but one of the last 40 years.

Contact:
Corey B. Copeland, Vice-President
Corporate Affairs, 416.365.6863

1991 BROCHURE ON NORANDA'S
LYNNE/WILLOW MINE IN ONEIDA COUNTY,
PROPOSED IN 1990-93

WHO IS NORANDA?
Noranda, Inc. is a Canadian corporation involved in minerals, forest products, energy and manufacturing. It is part of the Brascan corporate group. Noranda owns over half the shares of a number of firms, including Falconbridge, Minnova, Kerr Addison, Hemlo Gold, and MacMillan Bloedel. With its subsidiaries, Noranda mines much of the Western world's ore--10% of the zinc, 8% of the nickel, and 3% of the copper, as well as silver, gold, lead, and other minerals.

Noranda currently operates about 14 mines, and is test-drilling about 600 sites around the world. Since 1978, it has drilled at least 250 test holes at some sites in Wisconsin.

In a 1980 court case, Noranda won the right to keep secret from the Wisconsin public the contents of its drill core samples. Noranda lobbied for the state mining tax to be tied to company profits rather than local clean-up needs. In 1993, Noranda dropped its plans for the Lynne silver-zinc mine near the Willow Flowage in Oneida County, due to concerns over a nearby lake and wetlands. The company ended up owing the Wisconsin DNR $318,000--money which took years to retrive. In 1995, Noranda dropped plans for the New World gold mine next to Yellowstone, after a public outcry and White House intervention..

Noranda is one of about a dozen companies--including Kennecott/ Rio Tinto Zinc, Exxon, Asarco, and E.K. Lehmann (EKL)�hoping to open a Northern Wisconsin "mining district". They have the support of figures like Administration Secretary James Klauser (a former Exxon lobbyist) and ex-Governor Anthony Earl, a Noranda lobbyist.

[Sources: NM 4/24/89, 9/18/89, 5/6/91; LT 5/14/91; MJ 7/2/83; NOR 11/13/90; DOA 11/27/90; DNR]

WILL MINING HELP THE ECONOMY?
Mining will not automatically bring jobs to the North. One only has to look at the economic ruin in the U.P. or Appalachia to see the "boom-and-bust" effect of mining. Companies generally bring in highly skilled outside workers to mine ore for a few years, drain local towns' money for services, use huge amounts of energy and water, and then leave behind depressed property values and an expensive mess. (Each year, the mining of non-fuels generates up to seven times the garbage in all U.S. municipal dumps.) Mining is a particular gamble in counties reliant on tourism and fishing.

Noranda has held employees' jobs hostage to the health of the environment and the economy.

It has faced major miners' strikes in Quebec and New Brunswick. It threatened to close a British Columbia pulp mill employing 200 workers rather than install pollution controls.

Noranda didn't pay a penny in taxes for a mine in Ireland, and even backed out on paying its own contractors at a mine in Ontario. Why? At the start of 1991, the company was over four billion dollars in debt.

It is vulnerable to swings in mineral and timber prices, and dollar exchange rates.

Noranda has opened mines in countries like Chile, with low wages, low corporate taxes, few safety or environmental controls, and low regard for democracy.

Wisconsin shouldn't have to move in this direction to meet the "needs" of mining companies.

{Sources: TS 6/17/87; GM 12/11/89; NM 1/24/85, 12/17/90, 4/15/91; LAWG; WSJ 5/6/91, 10/29/90, 1/9/89, WW 1/91, RMN, Global 2000]

WHAT IS THE LYNNE/WILLOW PROJECT?
In January 1990, Toronto-based Noranda Minerals found a six-million ton deposit of zinc, silver, lead, gold and copper in the Town of Lynne, Wisconsin. The company proposes to construct an open-pit mine, up to 60 acres wide and 500 feet deep, and build an ore concentrating plant. The site is on Oneida County Forest land, one-half mile from the Willow River, and about a mile upstream from the Willow Flowage. It is also about a mile from the Lamer Springs.

[In 1993, Noranda dropped the permit application, and closed its Rhinelander office. The definition of a wetland as a "lake" played a major role in the decision.]

[Sources: DNR; NA; WRPC; TL 7/2/91; NOR 4/22/91, 4/5/91; NM 12/9/91; LT 10/30/90; SJ 5/12/91; WG]

WHAT WOULD HAPPEN TO THE AREA?
Except for a prominent ridge, the proposed mine site is nearly all wetlands. It is directly on an open water bog. The wetlands and the many hemlock, sugar maple, and other trees would be destroyed if the ridge is levelled.

The Willow Rapids (less than a mile downstream) are an important walleye spawning ground.

A pair of timber wolves inhabits the site area, which is within a larger wolf pack territory.

A mine would cause a loss of public opportunities on public land.

The waste materials generated by sulfide deposits can cause acid and toxic contamination. When sulfides mix with water, the result is sulphuric acid. Very large amounts of three kinds of wastes would be generated�sulfide waste rock, sulfide tailings, and wastewater sludge.

These contaminants would have to be isolated from the environment for centuries, without leaking or seeping into the groundwater. The mine pit would probably be used to dump the waste rock. Another dump would have to be constructed nearby for the tailings and sludge. (The dump would be expanded if ore from other mines were processed at the Lynne site.)

The pit construction would disrupt groundwater in the overlaying sand and gravel. Water would likely enter the pit and will have to be pumped out of it. This would "drawdown" the water levels in surrounding streams and wetlands. Contaminated water would have to be treated before being discharged into surrounding waters, though it can't be made totally clean, and the treatment system is not foolproof.

[Sources: WRPC; TL 7/17/90; MS 2/11/91; CAMDP; ECCOLA, NCA, SC, WED, CAMDP, NA]

HOW WOULD MINING AFFECT FISHING?
Directly downstream from the site are the Willow and Rice flowages, lakes Nokomis, Killarney, and Mohawksin, and the Willow, Little Rice, Tomahawk, and Wisconsin rivers.

DNR staff surveyed Willow Flowage as including "excellent population level/standing stock; outstanding size structure of stocks and/or trophy fishing; endangered, threatened or watch list aquatic species or unique strains." The survey supported the Willow's classification as Outstanding Resource Water (ORW), which would give it non-degradation status. Noranda opposed ORW status anywhere, and DNR leaders set up a special review board dominated by Noranda and its friends. Clearly, Noranda knows that its mine wastes would degrade water quality in the spawning area and the flowage.

Downstream lakes are rich fishing for both anglers and spearfishers, some of whom have disagreed over Chippewa treaty rights. But no matter what they feel about that issue, they can agree that the walleye should be there for future fishing. If mines are allowed to harm spawning beds, there may not be enough edible walleye left in ten years to disagree about..

The U.S. Bureau of Mines says that mine wastes have poisoned 10,000 miles of rivers. The wastes have made fish inedible (as in California's Clear Lake), and caused dramatic fish kills (as in Montana, where 5000 trout floated belly up down the Clark Fork River).

The Muskies, Inc. director says,"Mining is the real threat to fishing in Wisconsin. It has the potential to make the spearing controversy look like a piece of candy."

The site is on land sold by the Chippewa Nation to the United States in 1842. In return for the land, a treaty guaranteed Chippewa access to fish, wild rice, sugar maples, deer, and other ceded territory resources. Lac du Flambeau officials say that by harming these resources, a mine may violate this contract. They also point to Chippewa and Potawatomi cultural sites near the site. The DNR admits that the treaty may be used in federal court to impede a mine. The treaty could be a legal tool for clean water for all Wisconsinites � Indian and non-Indian alike.

[Sources: WDH 7/17/90; MTN; WRPC 11/30/91; MS 6/23/90; TL 9/10/91, 8/13/91, 7/26/91; LT 7/23/91, 7/30/91; DNR 11/29/90, 10/29/91; SJ 12/8/91; NYT 2/12/92; NWR 10/28/91;WSG; GLIFWC]

WHAT CAN I DO?
It sometimes seems impossible to defeat a huge multinational corporation. But it can and has been done. Noranda decided not to open a mine in Ontario and a pulp mill in Australia after local people strengthened environmental rules.

Inform your family and friends about the issue. Write letters to newspapers and officials. Attend hearings and other events. Get your local church, sportsmen's group, snowmobile club, or community group to pass a resolution against the mine, and to support metallic recycling as an alternative to more mining. And get involved in your local environmental group.

• CAMDP: Center for Alternative Mining Development Policy 210 Avon St. #9, LaCrosse 54603
• DNR: Department of Natural Resources (see address below)
• DOA: Department of Administration, Box 7864, Madison 53707
• ECCOLA: Ecologically Concerned Citizens of Lakeland Areas, P.O. Box 537, Minocqua 54548
• EPA: Env Protection Agency 401 M St SW Washington DC20460
• GLIFWC: Gt. Lks. Indian Fish & Wildlife Cmsn, Box 9 Odanah 54861
• GM: Globe & Mail, 44 Front St. W., Toronto Ont., Canada
• LAWG: Latin America Working Gp., 382 Harbord, Toronto, Canada
• LT: Lakeland Times, Box 790, Minocqua 54548
• MJ: Milwaukee Journal, Box 661, Milwaukee 53201
• MM: Multinational Monitor, Box 19405, Washington DC 20036
• MS: Milwaukee Sentinel, Box 371, Milwaukee 53201
• MTN: Midwest Treaty Network, P.O. Box 14382, Madison 53714-4382
• NA: Northwoods Alliance, Box 65, Tomahawk 54487
• NCA: Northwoods Conservation Association, Box 222, Boulder Junction 54512
• NM: Northern Miner 1450 Don Mills Rd. Don Mills Ont. Canada
• NOR: Noranda Wisconsin, Box 1126, Rhinelander 54501
• NWR: U.S. News & World Report, 2400 N St NW, Wash. DC
• NYT: New York Times, 229 W. 43rd St., New York NY 10036
• PP: Probe Post, 12 Madison Av.,Toronto Ont. M5R2S1 Canada
• RMN: Real Mining News, N3386 Co Tr G, Ladysmith 54848
• SC: Sierra Club, 111 King St., Madison WI 53703
• SE: Shepherd Express, 1123 N. Water St., Milwaukee 53202
• SJ: Wisconsin State Journal, Box 8060, Madison 53708
• TL: Tomahawk Leader, 315 W. Wisconsin, Tomahawk 54487
• TS: Toronto Star, 1 Yonge St., Toronto, Ontario, Canada
• WDH: Wausau Daily Herald , Box 1285, Wausau 54402
• WED: Wisc. Environmental Decade, 14 W Mifflin, Madison 53703
• WG: Wisconsin Greens, Box 341, West Bend 53095
• WRPC: Wisc. Resources Protection Council, Box 263, Rhinelander
• WSG: Wa-Swa-Gon, Box 217, Lac du Flambeau 54538
• WSJ: Wall Street Journal, 200 Liberty St., New York NY 10281
• WW: Worldwatch, 1776 Mass. Av. NW Washington DC 20036