Newmont Board Unanimously Determines that Barrick’s Unsolicited, Negative Premium Proposal Is Not in Newmont Shareholders’ Best Interests

  • Goldcorp Combination Represents Superior Value Creation Opportunity
  • Barrick’s Proposal Presents Significant Risks to Newmont Shareholders
  • Provides Term Sheet for Nevada Joint Venture with Barrick to Realize Synergies
  • Files Investor Presentation Responding to Barrick Claims and Providing Long-Term Outlook for Newmont Goldcorp
  • Company to Host Conference Call at 9:00 AM ET

Newmont Mining Corporation (NYSE: NEM) (Newmont or the Company) today announced that its Board of Directors has unanimously determined that Barrick Gold Corporation’s (Barrick) (NYSE: GOLD) (TSX: ABX) unsolicited, all-stock negative premium proposal to acquire Newmont is not in the best interests of Newmont’s shareholders.

After a comprehensive review conducted in consultation with its financial and legal advisors, Newmont’s Board unanimously concluded that Barrick’s proposal does not constitute, and would not reasonably be expected to constitute, a Newmont Superior Proposal (as such term is defined in the arrangement agreement between Newmont and Goldcorp Inc. (NYSE: GG, TSX: G) (Goldcorp)). The Company’s previously announced combination with Goldcorp represents a superior value creation opportunity to generate long-term value through an unmatched portfolio of world class operations, projects, exploration opportunities, reserves and talent.

“Our thorough review of Barrick’s unsolicited proposal and its associated risks has reaffirmed our conclusion that the combination of Newmont and Goldcorp represents the best opportunity to create value for Newmont’s shareholders and deliver industry-leading returns for decades to come,” said Gary Goldberg, Newmont’s Chief Executive Officer. “Unlike Barrick, Newmont Goldcorp will be centered in the world’s most favorable mining jurisdictions and gold districts. The combination with Goldcorp is significantly more accretive to Newmont’s shareholders on all relevant metrics compared to Barrick’s proposal, even when factoring in Barrick’s own synergy estimates. Realizing value through Barrick’s proposal for Newmont’s shareholders hinges entirely on a new management team that lacks global operating experience and is only two months into its own transformational integration.”

Newmont Goldcorp Combination Represents Superior Value Creation Opportunity Over Barrick’s Proposal

The Newmont Board of Directors’ unanimous determination that the combination with Goldcorp represents a superior value creation opportunity over Barrick’s unsolicited proposal is based on the following:

  • The Goldcorp transaction generates twice the accretion to Newmont’s Net Asset Value (NAV) per share compared to Barrick’s proposal, even when factoring in Barrick’s unsubstantiated synergy assumptions.
  • Barrick’s proposal is four percent (4%) dilutive to Newmont’s NAV per share, before any synergies.i
  • The value creation claimed in Barrick’s proposal relies entirely on the delivery of synergies from a management team that lacks global operating experience and is only two months into its integration effort with Randgold Resources Ltd.
  • Barrick’s portfolio includes numerous unfavorable and high-risk jurisdictions with several ongoing and significant operational and sustainability problems.
  • By contrast, Newmont Goldcorp’s assets will be located in favorable mining jurisdictions and prolific gold districts on four continents.
  • Completing the Newmont transaction with Goldcorp does not preclude Newmont or Barrick from achieving the available synergies in Nevada through a joint venture and may permit them to be realized sooner.

Because Newmont’s Board determined that the Barrick proposal is not a “Newmont Superior Proposal” under the Goldcorp arrangement agreement, Newmont is prohibited under the provisions of that agreement from engaging with Barrick in relation to its proposal.

Proposed Nevada Joint Venture with Barrick

To realize the savings from Newmont’s and Barrick’s Nevada-related operations, Newmont today submitted a joint venture proposal to Barrick. The terms of the proposal are modeled on similar terms to other successful joint ventures, including ones that Barrick has with Newmont and Goldcorp.

Mr. Goldberg continued, “Newmont has consistently expressed to Barrick that we are open to a joint venture for our operations in Nevada. In that regard, today we have submitted a term sheet to Barrick proposing a Nevada joint venture. This proposal would enable both companies’ shareholders to realize the available synergies while avoiding the significant risks and complexities associated with Barrick’s unsolicited proposal.”

Key terms of the joint venture proposal to combine the Nevada-related operations of Newmont Goldcorp and Barrick include:

  • Economic Interests: Barrick to hold an economic interest equal to 55 percent and Newmont Goldcorp to hold a 45 percent economic interest. The proposed economic interests are based upon analyst consensus Net Present Values for each company’s Nevada-related assets and an equal split of Barrick’s estimated Nevada synergies.
  • Governance: Newmont Goldcorp and Barrick will have an equal number of representatives on the Management and Technical Committees. Decisions by the Management Committee shall be determined by majority vote, with the voting power of the parties’ representatives based on their respective economic interests, subject to a list of customary material matters requiring joint approval. The proposed joint venture’s Operational Management will be jointly appointed by both parties and will be responsible for day-to-day operations.

“We are confident that Newmont’s demonstrated technical expertise and consistent execution will be critical in realizing the synergy opportunities of the proposed joint venture,” said Tom Palmer, Newmont’s President and Chief Operating Officer.

 

Newmont Goldcorp

Newmont has also filed an updated investor presentation regarding the compelling value creation opportunity of the Newmont Goldcorp transaction. Newmont’s proposed combination with Goldcorp is expected to close in the second quarter of 2019.

On day one after the transaction closes, Newmont Goldcorp will:

  • Be accretive to Newmont’s NAV per share by 27 percent and 34 percent accretive to 2020 cash flow per share;i
  • Begin delivering a combined $365 million in expected annual pre-tax synergies, supply chain efficiencies and Full Potential improvements representing the opportunity to create $4.4 billion in Net Present Value (pre-tax);ii
  • Target 6-7 million ounces of steady-state gold production over a decades-long time horizon;i
  • Have the largest gold Reserves and Resources in the gold sector, including on a per share basis;
  • Be located in favorable mining jurisdictions and prolific gold districts on four continents;
  • Deliver the highest dividend among senior gold producers;iii
  • Offer financial flexibility and an investment-grade balance sheet to advance the most promising projects generating a targeted Internal Rate of Return (IRR) of at least 15 percent;iv
  • Feature a deep bench of accomplished business leaders and high-performing technical teams and other talent with extensive mining industry experience; and
  • Maintain industry leadership in environmental, social and governance performance.

Newmont today sent the following letter to Barrick’s Executive Chairman, John L. Thornton, and President and Chief Executive Officer, Mark Bristow:

Newmont MiningCorporation

6363 South Fiddlers Green Circle
Greenwood Village, CO
80111

T (303) 863-7414

F (303) 837-5837

www.newmont.com

March 4, 2019

Board of Directors
BARRICK GOLD CORPORATION

TD Canada Trust Tower 161 Bay
Street, Suite 3700

Toronto, ON M5J 2S1 Canada

Attn.: John L. Thornton, Executive Chairman
          Mark Bristow, President and Chief Executive Officer

Dear John and Mark:

Re: February 25, 2019 Letter

Our board of directors and senior management, with the assistance of our advisors, have undertaken an intensive and detailed review and analysis of your February 25, 2019 letter proposing to acquire all of the outstanding shares of common stock of Newmont Mining Corporation. Consistent with its focus on the best interests of our company and its stakeholders and on maximizing stockholder value for the long-term, our board has determined that the proposal set forth in your letter does not constitute, and would not reasonably be expected to constitute, a Newmont Superior Proposal (as such term is defined in the arrangement agreement dated January 14, 2019 between Newmont and Goldcorp Inc., as amended on February 19, 2019). Accordingly, Newmont is not permitted to engage in discussions and negotiations with Barrick Gold Corporation with respect to its proposal, nor are such actions required by the fiduciary duties of our board of directors. Therefore, in accordance with our contractual obligations under the Goldcorp arrangement agreement and consistent with our judgment as to the best interests of Newmont’s stockholders, we will proceed with our transaction with Goldcorp. We believe that transaction provides greater value to the Newmont stockholders and is superior from the perspective of Newmont’s other stakeholders.

We believe that the transaction you are proposing would reduce, rather than enhance, Newmont stockholder value. Your “at market” proposal is at a material discount to current market values, and any potential value creation depends entirely on Barrick’s execution. Since previous merger discussions terminated in 2014, Newmont has significantly outperformed Barrick on almost every metric. Our management team has a consistent, long-standing track record of delivering superior execution (including productivity improvements and cost reduction measures) through a proven, scalable operating model and deep bench strength supporting thoughtful and structured succession planning. In contrast, Barrick’s underperformance highlights its ineffective operating model, poor record on delivering stockholder returns, and significant jurisdictional risk. The basis for our board’s determinations have been and will continue to be detailed in our public disclosures.

The value creation of Barrick’s proposal relies entirely upon the delivery of synergies from a management team that was put in place just two months ago. This new team has never managed a global portfolio the size of Barrick, let alone the size of a potential Newmont and Barrick combination. From a stockholder perspective, how a company conducts its business is an important component of value. In addition to compelling economic performance, Newmont has maintained industry leadership in environmental, social and governance performance and, unlike Barrick and Randgold Resources Ltd., has generally avoided material operational, governmental and investment pitfalls. Moreover, Newmont is committed to strong governance practices and has been recognized for having a culture that values responsible corporate citizenship, inclusion and diversity. Barrick’s expressed disdain for process and oversight, and its absence of diversity of leadership, including in its board room, runs contrary to the expressed values of Newmont, our employees, our stockholders and our other valued stakeholders. For all of these reasons, we strongly believe that our stockholders are far better off as owners of Newmont Goldcorp Corporation than as holders of a minority stake in Barrick, a far less attractive entity.

We recognize that there are value-creation opportunities available in Nevada if we work together. We have always been, and we remain, prepared to explore these opportunities, despite your public comments to the contrary. Achieving these opportunities does not require Newmont to be acquired by Barrick, and for our stockholders to be exposed to the many risks inherent in Barrick. To facilitate the realization of the potential synergies, we are providing you with a term sheet for a joint venture that would combine our Nevada operations and create value for both sets of stockholders. We are prepared to move forward with you on this basis expeditiously.

Our board of directors, our management team and our thousands of employees around the world are dedicated to creating value for all of our stockholders and that is exactly what we will continue to do by executing on our strategic plan and completing our pending transaction with Goldcorp.

On behalf of our board of directors,

Noreen Doyle
Chair

Gary J. Goldberg
Chief Executive Officer

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