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Historic joint venture designed to unlock $5 billion1 in
synergies
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Barrick to be Operator
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Ownership to be 61.5% Barrick; 38.5% Newmont
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Board representation based on ownership
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Advisory committees to have equal representation
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Barrick to withdraw Newmont acquisition and AGM proposals
ELKO, Nev.--(BUSINESS WIRE)--
Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) (Barrick) and Newmont
Mining Corporation (NYSE:NEM) (Newmont) said today that the two
companies have signed an implementation agreement to create a joint
venture combining their respective mining operations, assets, reserves,
and talent in Nevada.
The joint venture is an historic accord between the two gold mining
companies, which have operated independently in Nevada for decades, but
have previously been unable to agree terms for cooperation. The joint
venture will allow them to capture an estimated $500 million in average
annual pre-tax synergies in the first five full years of the
combination, which is projected to total $5 billion pre-tax net present
value1 over a 20-year period.
Barrick President and Chief Executive Officer Mark Bristow said the
agreement marked the successful culmination of a deal that had been more
than 20 years in the making.
“We listened to our shareholders and agreed with them that this was the
best way to realize the enormous potential of the Nevada goldfields’
unequalled mineral endowment, and to maximize the returns from our
operations there. We are finally taking down the fences to operate
Nevada as a single entity in order to deliver full value to both sets of
shareholders, as well as to all our stakeholders in the state, by
securing the long-term future of gold mining in Nevada,” he said.
Gary Goldberg, Chief Executive Officer of Newmont, said the logic of
combining the two companies’ operations was compelling.
“This agreement represents an innovative and effective way to generate
long-term value from our joint assets in Nevada, and represents an
important step forward in expanding value creation for our shareholders.
Through the joint venture, we will also continue to pursue the highest
standards in safety, along with responsible and meaningful engagement
with our employees, communities, and other stakeholders,” he said.
Following the completion of the joint venture, the Nevada complex will
be the world’s single-largest gold producer, with a pro forma output of
more than four million ounces in 2018, three Tier One2
assets, potentially another one in the making, and 48 million ounces of
reserves.3,4,5
The establishment of the joint venture is subject to the usual
conditions, including regulatory approvals, and is expected to be
completed in the coming months. The joint venture will exclude Barrick’s
Fourmile project and Newmont’s Fiberline and Mike deposits, pending the
determination of their commercial feasibility.
As a result of this agreement, Barrick has withdrawn its Newmont
acquisition proposal announced on February 25, and its proposals for the
Newmont annual general meeting submitted on February 22.
Joint Conference Call and Webcast
Please join us for a conference call and webcast to discuss the joint
venture agreement today at 9:00 a.m. Eastern time (6:00 a.m. Pacific
time, 1:00 p.m. UK time). There will be an opportunity for analysts and
investors to ask questions during the Q&A following the presentation.
U.S. and Canada (toll free): 1-855-327-6838
UK (toll free):
0808-101-2791
International: +1 416 915-3239 or +1 604 638-5340
Webcast: https://78449.choruscall.com/dataconf/productusers/barrick/mediaframe/29201/indexl.html
The webcast will remain online for replay, and the conference call will
be available for replay by telephone at 1-855-669-9658 (U.S. and Canada)
and +1 604 674-8052 (international), access code 3028.
About Newmont
Newmont is a leading gold and copper producer. The Company’s operations
are primarily in the United States, Australia, Ghana, Peru and Suriname.
Newmont is the only gold producer listed in the S&P 500 Index and was
named the mining industry leader by the Dow Jones Sustainability World
Index in 2015, 2016, 2017 and 2018. The Company is an industry leader in
value creation, supported by its leading technical, environmental,
social and safety performance. Newmont was founded in 1921 and has been
publicly traded since 1925.
Cautionary Statement Regarding Forward-Looking Statements:
This press release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which
are intended to be covered by the safe harbor created by such sections
and other applicable laws. Where a forward-looking statement expresses
or implies an expectation or belief as to future events, such
expectation or belief is expressed in good faith and believed to have a
reasonable basis. However, such statements are subject to risks,
uncertainties and other factors, which could cause actual events to
differ materially from future events expressed, projected or implied by
the forward-looking statements. Forward-looking statements often address
our expected future business and often contain words such as
“anticipate,” “intend,” “plan,” “will,” “would,” “estimate,” “expect,”
“believe,” “target,” “indicative,” “preliminary,” or “potential.”
Forward-looking statements in this press release may include, without
limitation, expectations regarding the Nevada joint venture between
Newmont and Barrick, including expectations regarding closing of the
joint venture, value accretion, joint venture synergies and the benefits
thereof. Such statements are intended to present events and results
based upon the parties’ agreed upon terms, but a definitive joint
venture agreement will not be forthcoming until later in the year.
Estimates or expectations of future events or results are based upon
certain assumptions, which may prove to be incorrect. Such assumptions,
include, but are not limited to: (i) there being no significant change
to current geotechnical, metallurgical, hydrological and other physical
conditions; (ii) permitting, development, operations and expansion of
Newmont’s operations and projects being consistent with current
expectations and mine plans, including, without limitation, receipt of
export approvals; (iii) political developments in Nevada being
consistent with its current expectations; (iv) certain exchange rate
assumptions for the Canadian dollar to the U.S. dollar; (v) certain
price assumptions for gold, copper, silver, zinc, lead and oil; (vi)
prices for key supplies being approximately consistent with current
levels; (vii) the accuracy of current mineral reserve, mineral resource
and mineralized material estimates; (viii) satisfying the conditions to
implementation of the Nevada joint venture between Barrick and Newmont,
including obtaining regulatory approvals, and (ix) other planning
assumptions. In addition, material risks that could cause actual results
to differ from forward-looking statements include: the inherent
uncertainty associated with financial or other projections; the risk
associated with the closing of the Nevada joint venture transaction and
ability to achieve the anticipated synergies and value-creation
contemplated by the proposed Nevada joint venture transaction;
unanticipated difficulties or expenditures relating to the transactions,
the response of business partners and retention as a result of the
announcement and pendency of the transactions; potential volatility in
the price of Newmont common stock due to the proposed transactions; and
the diversion of management time on transaction-related issues. For a
more detailed discussion of risks and other factors that might impact
future looking statements, see Newmont’s 2018 Annual Report on Form
10-K, filed with the Securities and Exchange Commission (SEC) as well as
Newmont’s other SEC filings, available on the SEC website or www.newmont.com.
Newmont does not undertake any obligation to release publicly revisions
to any “forward-looking statement,” including, without limitation,
outlook, to reflect events or circumstances after the date of this press
release, or to reflect the occurrence of unanticipated events, except as
may be required under applicable securities laws. Investors should not
assume that any lack of update to a previously issued “forward-looking
statement” constitutes a reaffirmation of that statement. Continued
reliance on “forward-looking statements” is at investors’ own risk.
Newmont is not affirming or adopting any statements or reports
attributed to Barrick in this press release or made by Barrick outside
of this press release.
Third Party Data and Quotations
Certain comparisons of Barrick, Newmont and their industry peers are
based on data obtained from Wood Mackenzie. Wood Mackenzie is an
independent third party research and consultancy firm that provides data
for, among others, the metals and mining industry. Wood Mackenzie does
not have any affiliation to Barrick.
Other than in respect of their own mines, neither Barrick nor Newmont
has the ability to verify the data or information obtained from Wood
Mackenzie and the non-GAAP financial performance measures used by Wood
Mackenzie may not correspond to the non-GAAP financial performance
measures calculated by Barrick, Newmont or their respective industry
peers. For more information on these non-GAAP financial performance
measures see Endnote 2.
Neither Barrick nor Newmont has sought or obtained consent from any
third party to be quoted in this press release.
Endnotes
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1.
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Represents the NPV of pre-tax synergies projected over a twenty-year
period, assuming consensus commodity prices and a 5% discount rate.
Based on Barrick estimates. Synergies (or NPV of synergies) as used
in this presentation is a management estimate provided for
illustrative purposes, and should not be considered a GAAP/IFRS or
non-GAAP/non-IFRS financial measure. "Synergies" represent
management’s combined estimate of pre-tax synergies, supply chain
efficiencies and cost improvements, as a result of the proposed
joint venture that have been monetized and projected over a twenty
year period for purposes of the estimation, applying a discount rate
of 5 percent. Such estimates are necessarily imprecise and are based
on numerous judgments and assumptions. Expected synergies is a
“forward-looking statement” subject to risks, uncertainties and
other factors which could cause actual synergies to differ from
expected synergies.
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2.
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A Tier One gold asset is a mine with a stated mine life in excess of
10 years with annual production of at least five hundred thousand
ounces of gold and total cash cost per ounce within the bottom half
of Wood Mackenzie’s cost curve tools (excluding state-owned and
privately owned mines). Total cash cost per ounce is based on data
from Wood Mackenzie as of August 31, 2018, except in respect of
Barrick’s mines where Barrick relied on its internal data which is
more current and reliable. The Wood Mackenzie calculation of total
cash cost per ounce may not be identical to the manner in which
Barrick calculates comparable measures. Total cash cost per ounce is
a non-GAAP financial performance measure with no standardized
meaning under IFRS and therefore may not be comparable to similar
measures presented by other issuers. Total cash cost per ounce
should not be considered by investors as an alternative to cost of
sales or to other IFRS measures. Barrick believes that total cash
cost per ounce is a useful indicator for investors and management of
a mining company’s performance as it provides an indication of a
company’s profitability and efficiency, the trends in cash costs as
the company’s operations mature, and a benchmark of performance to
allow for comparison against other companies.
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3.
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The potential pro forma proven and probable reserve figure of
Barrick and Newmont’s operations in Nevada was derived by adding the
reserves reported by Barrick in its Q4 2018 Report and Newmont in
its press release dated February 21, 2019 reporting its 2018
Reserves and Resources and its annual report on Form 10-K for the
fiscal year ended December 31, 2018 in respect of the relevant
Nevada properties set out in endnotes 4 and 5. The pro forma
reserves are provided for illustrative purposes only. Barrick and
Newmont calculate such figures based on different standards and
assumptions, and accordingly such figures may not be directly
comparable and the potential pro forma reserves may be subject to
adjustments due to such differing standards and assumptions. In
particular, Barrick mineral reserves have been prepared according to
Canadian Institute of Mining, Metallurgy and Petroleum 2014
Definition Standards for Mineral Resources and Mineral Reserves as
incorporated by National Instrument 43-101 – Standards of Disclosure
for Mineral Projects (“NI 43-101”), which differ from the
requirements of U.S. securities laws. Newmont’s reported reserves
are prepared in compliance with Industry Guide 7 published by the
SEC. These reporting standards have similar goals in terms of
conveying an appropriate level of confidence in the disclosures
being reported, but embody different approaches and definitions. For
example, the terms "Mineral Reserve", "Proven Mineral Reserve" and
"Probable Mineral Reserve" are Canadian mining terms as defined in
NI 43-101, and these definitions differ from the definitions in
Industry Guide 7. Under Industry Guide 7 standards, a "final" or
"bankable" feasibility study is typically required to report
reserves or cash flow analysis to designate reserves. Further, under
Industry Guide 7, mineralization may not be classified as a
"reserve" unless the determination has been made that the
mineralization could be economically and legally produced or
extracted at the time the reserve determination is made. Newmont has
not been involved in the preparation of Barrick’s reserve or
resource estimates. Accordingly, Newmont assumes no responsibility
for such estimates. For more information regarding Newmont’s
reserves, see Newmont’s Annual Report filed with the SEC on February
21, 2019 for the proven and probable reserve tables prepared in
compliance with the SEC’s Industry Guide 7, which is available at
www.sec.gov or on Newmont’s website.
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4.
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Proven and probable gold reserves of Barrick in Nevada are stated on
an attributable basis as of December 31, 2018 and include
Goldstrike, Cortez, Goldrush, South Arturo (60%) and Turquoise Ridge
(75%). Proven reserves of 84.4 million tonnes grading 4.36 g/t,
representing 11.8 million ounces of gold. Probable reserves of 155.6
million tonnes grading 2.93 g/t, representing 14.7 million ounces of
gold. Complete mineral reserve data for all Barrick mines and
projects referenced in this press release, including tonnes, grades,
and ounces, as well as the assumptions on which the mineral reserves
for Barrick are reported, are set out in Barrick’s Q4 2018 Report
issued on February 13, 2019.
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5.
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Proven and probable gold reserves of Newmont in Nevada are stated on
an attributable basis as of December 31, 2018 and include Carlin,
Phoenix, Twin Creeks (including Newmont’s 25% equity in Turquoise
Ridge) and Long Canyon. Proven reserves of 46.6 million tonnes
grading 3.84 g/t, representing 5.8 million ounces of gold. Probable
reserves of 378.1 million tonnes grading 1.32 g/t, representing 16.0
million ounces of gold. Complete mineral reserve data for all
Newmont mines and projects referenced in this press release,
including tonnes, grades, and ounces, as well as the assumptions on
which the mineral reserves for Newmont are reported, are set out in
Newmont’s press release dated February 21, 2019 reporting its 2018
Reserves and Resources and its annual report on Form 10-K for the
fiscal year ended December 31, 2018.
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View source version on businesswire.com:
https://www.businesswire.com/news/home/20190311005390/en/
Media Contact
Omar Jabara 303.837.5114 omar.jabara@newmont.com
Investor Contact
Jessica Largent
303.837.5484 jessica.largent@newmont.com
Source: Newmont Mining Corporation