Barrick Proposes Merger With Newmont as an Unprecedented Value Creation Opportunity for Shareholders
PRESS RELEASE
NYSE : GOLD TSX : ABX
Barrick Proposes Merger With Newmont as an
Unprecedented Value Creation Opportunity for
Shareholders
• All-share transaction offering far superior value to Newmont’s proposed
acquisition of Goldcorp
• At-market exchange ratio of 2.5694 Barrick shares for each Newmont share
• Over $7 billion net present value (pre-tax) of real synergies1
• Substantial NAV and cash flow accretion
• Strong executive leadership with demonstrated record of value creation
• Creation of the premier gold investment vehicle
Capturing the missing billions1
All amounts expressed in U.S. dollars
TORONTO, February 25, 2019 — Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) today announced
that it has made a proposal to the Newmont Mining Corporation (NYSE:NEM) Board of Directors to merge
with Newmont in an all-share transaction, saying a combination of the two would form the world’s best gold
company with unprecedented potential for value creation.
Barrick President and CEO Mark Bristow said the proposed merger is expec ted to unlock more than $7
billion net present value (pre-tax) of real synergies1, a major portion of which is generated by combining the
two companies’ highly complementary assets in Nevada, including Barrick’s significant mineral
endowments and Newmont’s processing plants and infrastructure.
“The combination of Barrick and Newmont will create what is clearly the world’s best gold company, with
the largest portfolio of Tier One gold assets 2 and the highest level of free cash flow to drive future growth
and support sustainable shareholder returns, run by a management team with an unparalleled record of
delivering value,” he said.
Bristow said the Barrick/Newmont deal was a logical and long overdue imperative for shareholders that
would be far superior to Newmont’s proposed acquisition of Goldcorp Inc., with expected Barrick/Newmont
annual synergies 7.5 times larger than the quoted annual synergies for the Newmont/Goldcorp transaction.1
The Barrick/Newmont merger would result in an estimated 14 percent uplift in Newmont’s current NAV per
share,3 offering Newmont shareholders an investment in a company of a much higher quality with a better
asset base, significant liquidity, a strong balance sheet and a proven management team.
Similarly, the Barrick/Newmont merger is expected to result in a significant uplift in Barrick NAV per share
from synergies, plus the opportunity for improvement in Barrick’s trading multiple from compelling financial,
strategic, scale and liquidity advances. Bristow noted that the propo sed merger would secure Nevada’s
BARRICK GOLD CORPORATION PRESS RELEASE
position as the world’s most prospective gold region. The efficient rationalization of the two companies’
assets would position the Nevada assets to deliver more than 20 years of profitable production for the
benefit of shareholders, employees, local communities and the economy of Nevada.
“Most important, it will enable us to consider our Nevada assets as one complex, which will result in better
mine planning and fully realize the state’s enormous geological potential for all stakeholders,” he said.
“Considered globally, the merger represents a radical and long -overdue restructuring of the gold industry,
and a transformative shift from short -term survival tactics to the long -term creation of sustainable value ,”
Bristow said.
“The optimization of Barrick’s asset portfolio is ongoing. Post-combination with Newmont, our teams would
review the combined portfolio applying the same quality and strategic filters currently in place at Barrick
with the goal of maintaining the best production, project and exploration assets in the industry.” Executing
on additional rationalization opportunities is expected to enable further shareholder returns.
The Barrick proposal to Newmont is for a merger in which each Newmont shareholder would receive 2.5694
Barrick shares per Newmont share, representing an at -market transaction based on the volume-weighted
average trading prices of the shares of Barrick and Newmont on the New York Stock Exchange over the
20 trading days ended February 20, 2019, being the last trading day before the day on which news of this
transaction was broadly leaked through the financial press. Barrick shareholders would own approximately
55.9 percent of the merged company and Newmont shareholders would own approximately 44. 1 percent.
The combined company intends to match Newmont’s annual dividend of $0.56 per share which, based on
the proposed exchange ratio, will represent a pro forma annual dividend of $0.22 per Barrick share
(compared to the current annual dividend of $0.16 per Barrick share).4
The Barrick proposal constitutes a significantly superior alternative to Newmont’s previously announced
agreement to acquire Goldcorp. In addition to the strategic benefits of the proposal, the combination of
Barrick and Newmont w ould be materially more accretive on all key financial metrics for Newmont
shareholders than Newmont’s proposed acquisition of Goldcorp, including NAV per share and cash flow
per share accretion estimated to be approximately 14 percent and 9 percent, respe ctively. The combined
company will be run by a best -in-class management team with a track record of delivering shareholder
value, as opposed to Newmont’s announced plan to appoint an untested CEO and management team after
the proposed acquisition of Goldcorp.
In light of the compelling rationale for a Barrick/Newmont combination, and the importance of allowing the
companies’ respective shareholders to capitalize on the benefits of the proposed transaction sooner rather
than later, Barrick is releasing the following letter to Newmont’s Board of Directors publicly so that both
Barrick and Newmont stakeholders will have the opportunity to fully evaluate this compelling proposal. In
addition, on Friday a subsidiary of Barrick submitted a shareholder proposal, t o be voted on at the next
Newmont annual meeting of stockholders, to preserve the ability of Newmont’s shareholders to call a
special stockholders meeting to ensure that if Newmont shareholders vote down the Goldcorp deal, they
are in a position to take action that will allow them to claim their share of the missing billions.
BARRICK GOLD CORPORATION
TD Canada Trust Tower
161 Bay Street, Suite 3700
Toronto, ON M5J 2S1
Canada
Tel +1 416 861 9911
Fax +1 416 861 2482
www.barrick.com
Board of Directors
Newmont Mining Corporation
6363 South Fiddler’s Green Circle
Greenwood Village, Colorado 80111
Attn: Noreen Doyle, Chair of the Board of Directors
Gary J. Goldberg, President and Chief Executive Officer
February 25, 2019
Dear Noreen and Gary:
As you know our companies have on many occasions discussed in considerable
detail the merits of combining Barrick Gold Corporation (“Barrick”) and Newmont Mining
Corporation (“Newmont”). A combination of Barrick and Newmont would represent a
unique, once in a lifetime opportunity to create the unrivalled leader in the gold sector and
generate significant – and in our industry, unparalleled – value creation for our
shareholders. Given the superior and obvious benefits to shareholders and other
stakeholders that a business combination between our two companies would create, we
were surprised and disappointed to learn that Newmont had agreed to combine with
Goldcorp Inc. (“ Goldcorp”) – a combination that would provide minimal real synergies
and dilute the quality of Newmont’s asset portfolio.
On behalf of Barrick, we are pleased to submit this proposal (our “ Proposal”) to
acquire all of the outstanding shares of Newmont common stock (“ Newmont Shares”) in
an all-share transaction.
As outlined in mor e detail below, our Proposal represents a unique and highly
attractive opportunity to deliver substantial shareholder value and build on the
accomplishments of our respective businesses. A combination of our companies would
result in significant value cre ation opportunities for the combined company that are not
available to our respective companies if they continue to operate independently of each
other and are far superior to the value that would result from Newmont’s proposed
acquisition of Goldcorp. In addition to other strategic, financial and operational benefits,
our Proposal offers Newmont shareholders the opportunity to fully participate in that value
creation and the over $7 billion net present value of real synergies expected to result from
our p roposed combination, and we are confident your shareholders will enthusiastically
support our proposal as a superior alternative to the Goldcorp acquisition.
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Value and Consideration
Barrick proposes to acquire all of the outstanding Newmont Shares in an a ll-share
transaction. Under our Proposal, Newmont shareholders would receive 2.5694 common
shares of Barrick (“Barrick Shares”) per outstanding Newmont Share, representing an at-
market transaction based on the volume -weighted average trading prices of Barrick Shares
and Newmont Shares on the New York Stock Exchange over the 20 trading days ended
February 20, 2019, being the last trading day before the day on which news of this
transaction was broadly leaked in the financial press.
Newmont shareholders woul d hold approximat ely 44.1 % of the issued and
outstanding Barrick Shares after giving effect to the combination and would have the
opportunity to participate in the significant upside of the combined company’s future
prospects and synergies.
The market reaction to date to your Goldcorp transaction suggests that investors do
not endorse your rationale for the transaction and have concerns about the condition of
Goldcorp’s asset base. On the day of announcement, your market capitalization dropped by
more than the estimated present value of the synergies you announced.
In contrast, our recent at -market combination with Randgold Resources was
roundly applauded by both sets of shareholders as a more appropriate way of combining
two companies and unlocking real value for shareholders. That Barrick-Randgold
combination has generated over $5 billion of combined value for Barrick and former
Randgold shareholders.
We are confident that our Proposal offers far superior value for Newmont
shareholders than is available to them under the Arrangement Agreement between
Newmont and Goldcorp (the “Goldcorp Arrangement Agreement”).
Securing the Long Term Future of Nevada
This proposed business combination will result in value creation opportunities that
are not available to our respective companies if they continue to operate independently of
each other. In particular, a large portion of Barrick and Newmont’s reserves, operations
and development projects in Nevada are highly complementary and located in close
geographic prox imity. This would offer a unique opportunity for a more efficient,
streamlined organization with a dramatic impact on our combined cost structure. In short,
this combination would allow us to capture financial, strategic and operational synergies in
an a mount that would be unprecedented in our industry and unavailable from any other
combination.
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The realization of these synergies would secure the long term future of the Nevada
gold industry and ensure that Nevada’s unique mineral endowment and potential is fully
utilized. These synergies will allow us to lower operating costs, increase reserves and
resources and significantly extend profitable mine lives for the benefit of not only our
shareholders, but our employees, the local communities and the economy of Nevada as a
whole. Based on our prior work with you and our unique knowledge of our collective asset
base, we are confident these synergies can be realized.
Creation of the Unrivalled Leader
A combination of Barrick and Newmont would create the unrival led leader in the
gold sector. The combined company would have a significantly improved capacity for free
cash flow generation due to our ownership of 8 Tier One gold assets, which will provide
greater flexibility to invest in profitable growth and return cash to shareholders. Without
question, our combination would create the industry’s best gold investment vehicle and a
business of sufficient merit that would attract generalist and yield -oriented investors as
well.
The transaction would create a company with:
• 8 Tier One gold assets, with a possible 9th in Goldrush/Fourmile;
• unmatched cash flow generation;
• the senior gold sector’s strongest balance sheet , which will fund growth and
shareholder returns;
• an unrivalled exploration and development portfolio covering all of the
world’s major gold districts;
• a known senior executive team with one of the industry’s best track records for
creating value for shareholders;
• revenues of approximately $15.6 billion, operating cash flow of approximately
$4.6 billion a nd adjusted EBITDA of approximately $7 .0 billion, based on
2018 reported results and after giving effect to the considerable anticipated
synergies of this transaction;
• total gold reserves of 141 million ounces and total gold resources of 275
million ounces;
Page 4
• a market capitalization and enterprise value that will attract new investors and
enable future growth opportunities;
• trading liquidity that will dwarf the liquidity of any other company in the gold
industry; and
• a strong business that would rival the w orld’s top resource companies,
attracting both gold and generalist investors.
Working Together = Opportunity for Our Employees
People are a vital component of the success of any enterprise, and we highly value
the talent and skills inherent in a world clas s organization such as Newmont. Our teams
know each other well and we can assure you that the combined company will utilize a best
in class approach, such that the best available people from each company will work
together to move the combined company forward. Your employees and other stakeholders
will benefit from the expanded opportunities available as part of a larger, stronger
organization with better longer term prospects.
Portfolio Optimization
The optimization of Barrick’s asset portfolio is ong oing. After a combination with
Newmont, our combined teams would review the combined portfolio applying the same
quality and strategic filters currently in place at Barrick with the goal of maintaining the
best production, project and exploration assets in the best jurisdictions. Any proceeds
received from the rationalization process would be used to fund debt reduction and returns
to shareholders. Given the combined strength of Barrick and Newmont, we will be under
no time constraints to conduct dispositions, and will only do so if they add value.
Dividends
The combined company will match Newmont’s annual dividend of $0.56 per share
which, based on the proposed exchange ratio, will represent a pro forma annual dividend of
$0.22 per Barrick Share. Going forward, our combined scale, stability and liquidity would
allow for a more optimal allocation of capital and return of capital to shareholders.
Ultimately, it is clear that the benefits of the financial, strategic and operational synergies,
selective divest itures of non -core assets and more disciplined growth would position the
Page 5
combined company to grow the dividend over time and consider other alternatives to
return capital to shareholders.
Next Steps
It is in the interests of our respective shareholders to progress this transaction as
expeditiously as possible. We have completed extensive due diligence and analysis of this
transaction based on publicly available information. As a result, our diligence
requirements are limited and confirmatory in nature an d would be able to be addressed
within a compressed timeframe.
We are aware of the restrictions imposed under the Goldcorp Arrangement
Agreement on your ability to consider our Proposal. Section 5.9(e) of the Goldcorp
Arrangement Agreement explicitly con templates Newmont engaging in negotiations and
providing diligence if it receives a “ bona fide written Newmont Acquisition Proposal that
did not result from a breach of this Section 5.9 (and has not been withdrawn) and the
Newmont Board determines, in good faith after consultation with its outside financial and
legal advisors, that such Newmont Acquisition Proposal constitutes or would reasonably
be expected to constitute a Newmont Superior Proposal (disregarding, for the purposes of
such determination, any due diligence or access condition to which such Newmont
Acquisition Proposal is subject)”. Our Proposal to acquire 100% of the Newmont Shares
constitutes a “ bona fide written Newmont Acquisition Proposal” under the terms of the
Goldcorp Arrangement Agreement. In addition, we are confident that the Newmont board
of directors must and will conclude in good faith that our Proposal constitutes a “ Newmont
Superior Proposal” because it would clearly result in a transaction that is more favourable,
from a finan cial point of view, to Newmont shareholders than the transactions
contemplated by the Goldcorp Arrangement Agreement and is reasonably capable of being
consummated without undue delay, taking into account all legal, financial, regulatory and
other aspects of our Proposal and Barrick. Accordingly, the Newmont board of directors
will be permitted under the Goldcorp Arrangement Agreement, and will be required by its
fiduciary duties, to engage in discussions and negotiations with us with respect to our
Proposal.
CIBC Capital Markets and M. Klein and Company, Inc. are acting as our financial
advisors. Our legal advisors are Cravath, Swaine & Moore LLP and Davies Ward Phillips
& Vineberg LLP.
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Approvals and Conditions
This Proposal has been reviewed and approved by Barrick’s Board of Directors,
which is unanimously supportive of this transaction. We are prepared, promptly following
the termination of the Goldcorp Arrangement Agreement, to enter into a merger agreement
in customary form that would provide materia lly greater value to your shareholders over
both the short and long term.
The completion of this transaction would be conditioned only on termination of the
Goldcorp Arrangement Agreement, the negotiation and execution of a definitive merger
agreement, approvals by Barrick and Newmont shareholders, the receipt of the necessary
regulatory approvals and other customary conditions. We do not anticipate any difficulties
or delays in obtaining the required regulatory approvals. Our Proposal is not subject to any
financing condition.
* * * * *
There is no other transaction in our industry that can create better value for
shareholders and other stakeholders than a business combination between Newmont and
Barrick. We are confident that after you have considered our Proposal, you will agree that
our Proposal constitutes a “ Newmont Superior Proposal” under the terms of the Goldcorp
Arrangement Agreement and that our Proposal presents a compelling opportunity for your
shareholders. The time has come to e xecute on this combination, and further delay simply
costs all of our shareholders not only their share of $7 billion in value that can be captured
but also an opportunity to own the unrivalled leader and premier gold investment in the
marketplace. We look forward to hearing from you promptly.