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Barrick, Newmont forming Nevada JV to end bitter takeover bid

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Barrick, Newmont forming Nevada JV to end bitter takeover bid

Bringing a bitter hostile takeover attempt to an end, Barrick Gold Corp. and Newmont Mining Corp. struck an implementation agreement to form a joint venture comprising core gold mining assets in Nevada.

In a joint March 11 news release, the major gold miners outlined the combination of respective Nevada operations into a single unit producing around 4 million ounces gold per year, to be 61.5%-owned by Barrick and 38.5%-owned by Newmont.

As a result, Barrick dropped its all-share hostile bid for Newmont, as well as proposals it sought to table at the company's upcoming annual general meeting.

The miners expect the partnership to yield an average US$500 million in annual synergies in the initial five years of operations and pegged its net present value over 20 years at US$5 billion, both before taxes.

Barrick and Newmont have long considered a joint venture in Nevada but were previously unable to forge an agreement. They considered merging in 2014 but failed to reach a final agreement, reportedly over issues such as management positions.

In making its hostile bid, Barrick President and CEO Mark Bristow had said that operational control and ownership were sticking points in tentative talks over a possible partnership with Newmont. Bristow said that Newmont sought a 50% interest and to manage it, which Barrick considered unreasonable.

In response, Newmont CEO Gary Goldberg said it was too early to talk about ownership levels until the two sides sat down to hammer out the value of the Nevada assets.

On that front, the two sides have clearly made progress in recent days.

Barrick and Newmont did not describe the structure of the joint venture in detail, however. They said it would comprise three Tier 1 assets and cover 48 million ounces in gold reserves.

For the time being, the gold miners also said the partnership would exclude Barrick's Fourmile project, which is part of the Goldrush property, as well as Newmont's Fiberline and Mike deposits, "pending the determination of their commercial feasibility."

The deal comes amid the ongoing merger between Newmont and Goldcorp Inc. Barrick had made its takeover bid contingent on that deal being dropped.

Responding to news of the joint venture, Goldcorp said it fully supports the Nevada deal and reiterated its recommendation in favor of its merger with Newmont.