Barrick Gold announced Monday that it was withdrawing its $18 billion hostile takeover bid for Newmont Mining, and instead the two companies will create a joint venture “combining their respective mining operations, assets, reserves and talent in Nevada.”
According to a presentation accompanying Barrick’s announcement titled “Realizing the Missing Billions for Shareholders,” the venture will accrete an estimated $4.7 billion “of synergy value shared between Barrick and Newmont shareholders” without issuing any additional shares.
Barrick’s $18 billion hostile takeover bid had caused alarm in Elko, the heart of Nevada’s mining production. Mayor Reece Keener cautioned that the takeover would create “a single mining behemoth” posting a threat to wages and suppliers.
In an interview Monday, Keener said “there will definitely be some disruption occurring,” particularly management exits as a result of the Barrick-Newmont agreement.
“The supplier community is also very concerned and anxious,” Keener said.
But unlike the takeover, which would render the mining industry in the Elko area entirely in the hands of one company, Keener said he thinks the joint venture poses significantly less risk to his community.
“For the long term I think it’s a very good thing for Nevada,” the mayor said.
Barrick will be the joint venture’s operator, owning 61.5 percent of the operation, compared to Newmont’s 38.5 percent.
Barrick mines covered in the agreement are Goldstrike, Cortez, Turquoise Ridge, Goldrush, and South Arturo. The Newmont mines in the venture are Carlin, Twin Creeks, Phoenix, Long Canyon, and Lone Tree.
Those mines combined accounted for more than 75 percent of Nevada’s $7.4 billion gold mining production last year.
The combined properties will create what is easily the world’s largest gold mining operation.
The joint venture also includes the companies’ associated processing facilities and other infrastructure. Projects in development by either company could be included later.
The joint venture will be governed by a board with Barrick controlling three seats, and Newmont controlling two.
Barrick anticipates the agreement to be final within months, depending on shareholder and regulatory approval.