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Newmont-Barrick

Newmont Mining Corp. expresses support for a joint venture agreement in Nevada instead of a merger in this slide from a presentation released Feb. 25 by the company.

DENVER -- Newmont Mining Corp. confirmed Monday that it has received an acquisition proposal from Barrick Gold Corp. proposing an all-stock merger with Newmont, at a negative premium based on market prices as of the close of business on Feb. 22, 2019. The transaction proposal is conditional on Newmont not proceeding with its proposed combination with Goldcorp Inc. and other conditions, including confirmatory due diligence by Barrick.

Newmont stated it has a long history of evaluating potential transactions, and undertakes robust analysis and diligence on a continuous basis of acquisition opportunities in the interests of creating long-term shareholder value. Newmont has previously reviewed and rejected potential combinations with each of Barrick and Randgold Resources Ltd., prior to their merger. Newmont’s proposed combination with Goldcorp represents the best opportunity to create optimal value for Newmont’s shareholders and other stakeholders, including for the reasons summarized below:

Superior Returns:

Newmont has delivered superior shareholder returns. Since January 1, 2014 (merger discussions between Barrick and Newmont ended in April 2014), Newmont has achieved 65 percent total shareholder returns compared to the negative 22 percent total shareholder return delivered by Barrick, while gold prices improved 15 percent during that period.

Proven Track Record of Successful Execution:

Newmont’s 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 addition to compelling economic returns, Newmont has maintained industry leadership in environmental, social and governance performance, and generally avoided material operational, governmental and investment pitfalls.

Newmont Goldcorp Offers Compelling and Superior Benefits:

The Newmont Goldcorp combination provides the greatest potential for additional value creation through asset optimization, project sequencing, and application of Newmont’s operating model. The combination will be immediately and highly value-accretive to Newmont’s net asset value and cash flow per share; generate an estimated $75 per ounce in Full Potential cost and efficiency improvements, representing anticipated benefits of approximately $165 million per year, and along with $100 million in pre-tax synergies, generate $265 million in combined expected annual pre-tax synergies and Full Potential benefits representing potential value creation of more than $2.5 billion.

Barrick’s Proposed Combination Ignores Risks and Overstates Rewards:

Newmont has analyzed a potential combination with Barrick, whose asset portfolio has changed significantly since 2014, including as a result of the merger with Randgold seven weeks ago and its ongoing integration process. Newmont has previously determined that Barrick’s risk and return profile is inferior on many fronts, including factoring Barrick’s comparatively ineffective operating model, poor track record on delivering shareholder returns and unfavorable jurisdictional risk

Newmont Can Capture Nevada Synergies More Efficiently:

Any of the Nevada synergies could be more efficiently realized through a Nevada joint venture between the companies without exposing Newmont’s shareholders to Barrick’s riskier portfolio, integration risks and transaction costs. Newmont has consistently communicated to Barrick its willingness to explore value-generating opportunities for the companies’ Nevada assets.

Newmont Goldcorp Offers Strongest Opportunity:

Compared to the demonstrated and compelling value creation benefits of the Newmont Goldcorp transaction, the synergy estimates referenced in the Barrick proposal are unsubstantiated and do not account for cost reduction initiatives Newmont has already implemented at various operations, including in Nevada, and would rely on a high-risk operating model to be realized.

Dividends:

The Newmont Goldcorp combined entity will sustainably continue Newmont’s industry-leading dividend. 

Newmont’s Board of Directors intends to fully evaluate the Barrick proposal and respond in due course, including providing advice to its shareholders. No shareholder action is necessary in response to Barrick’s proposal.

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