February, 25, 2019

Barrick Proposes Merger With Newmont as an Unprecedented Value Creation Opportunity for Shareholders

Letter from Mark Bristow
  • 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

TORONTO — 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 expected 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 assets2 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 proposed merger would secure Nevada’s 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 would 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, respectively. 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.

Please read the complete press release at the following link: LINK