Barrick, Newmont Agree To Nevada Joint Venture

Barrick Gold Corp. (NYSE: GOLD; TSX: ABX) and Newmont Mining Corp. (NYSE: NEM) have signed an implementation agreement to create a joint venture for their mining operations in Nevada, the two companies announced Monday.

With the deal, Barrick says it has withdrawn its previous offer to acquire Newmont Mining. Newmont had rejected the Barrick proposal, planning to proceed with its plan to acquire Goldcorp Inc. instead, but said it would be open to a joint venture with Barrick for the company’s Nevada assets.

In their joint statement, Barrick and Newmont described the joint venture as a “historic accord” between two gold-mining giants that have operated independently in Nevada for decades, but previously were unable to agree on any terms for cooperation. They said the joint venture will allow them to capture an estimated $500 million in average annual pre-tax synergies in the first five years and $5 billion over a 20-year period.

“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,” said Mark Bristow, president and chief executive officer of Barrick. “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.”

Gary Goldberg, chief executive officer of Newmont, said the agreement “represents an important step forward in expanding value creation for our shareholders.”

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 4 million ounces in 2018, three tier-one assets and potentially another one in the making, plus 48 million ounces of reserves, the companies said.

Completion of joint venture is subject to the certain conditions, including regulatory approvals, an

d is expected to be completed in the coming months, the companies said. The joint venture will exclude Barrick’s Fourmile project and Newmont’s Fiberline and Mike deposits, pending the determination of their commercial feasibility.