Ladies and gentlemen, thank you for standing by. This is the conference operator. Welcome to the Barrick and Newmont Forge Nevada joint venture agreement conference call. During the presentation, all participants are in listen only mode. Following the presentation, we will conduct a question and answer session.
I would now like to turn the conference over to Mark Bristow, President and Chief Executive Officer of Barrick Gold Corporation, who is joined by Gary Goldberg, Chief Executive Officer of Newmont Mining Corporation. Please go ahead.
Thank you very much, and good morning, ladies and gentlemen. As the announcer said, we're here with I'm here with Gary in Elko, Nevada, the center of the gold mining world. And we have an exciting and historic story to share with you today. We're pleased to announce that Gary and I have agreed to form outstanding to form a sensible joint venture of our outstanding assets and talented Nevada and realize the synergies that have eluded both of our companies for decades. We view this as a benefit not only to our collective shareholders, but to our employees, local stakeholders, and Nevada Nevada as a whole.
This is a Rubicon moment and the best illustration of how some of us in this industry are determined to turn our industry around. Our joint venture will allow us to tear down the fences and operate our assets as one mining complex, making the best use of our combined infrastructure and running the most profitable and sustainable long term gold mining business in Nevada. It also puts us in a position to invest more capital in our collective mines and projects, complete more focused exploration with an unconstrained district wide approach, and ultimately ensure that the full potential of Nevada's unequaled mineral endowment can be realized for all stakeholders. I will now turn the microphone to my new partner, Gary Goldberg from Newmont.
Thank you, Mark. Newmont has been operating in Nevada since 1965 and Barrick since 1986. During that time, our teams have been good neighbors, helped each other out during emergencies and more recently worked together to make our joint venture at Turquoise Ridge a success. Today, after more than two decades of looking at opportunities for further cooperation, we've reached an historic agreement to harness the power of both companies' assets here in Nevada to create an even more efficient business in one of the richest gold districts in the world. This agreement also paves the way for both Newmont and Barrick to unlock more value than either of us could create alone.
Our experience at the Turquoise Ridge joint venture has been an excellent demonstration of how our employees can work together to capture synergies and create long term value. Our Board recognizes this value creation opportunity and voted unanimously to approve the joint venture implementation agreement. This joint venture is a win for Newmont, a win for Barrick and equally important, a win for Nevada. We will create the world's largest gold mining complex and the third largest gold company here with world class ore bodies and processing facilities in one of the most favorable mining jurisdictions. We also bring more than eighty years of combined operating experience in Nevada, which I'm confident will serve us well in maximizing value for all of our stakeholders, from employees and shareholders to governments and communities.
Newmont and Barrick have always operated with the highest commitment to safety as well as the highest standards for responsible and meaningful engagement with the people who work at and live near our operations. This will continue to be a major focus of our joint venture company. I'll now turn the microphone back over to Marc.
So thank you, Gary. And as you all have noticed, I'm really working on the pronunciation of Nevada. I've been having lessons for the last couple of days. I'll now move on to speak to the slide deck that's on both of both Newmont and Barrick's websites. I do apologize that you're gonna have to log on to our website if you wanna follow the slide deck, but yeah, the the reason for that is we're sitting at Elko, and and it was impossible to arrange a webcast as we normally do here out in the in the the countryside.
Let me describe the transaction details. Barrick will contribute to the joint venture, Goldstrike, Cortez, Turquoise Ridge, Goldrush, and associated processing facilities and infrastructure. And Newmont has agreed to contribute Carlin, Twin Creeks, Phoenix, Long Canyon and associated processing facilities and infrastructure as well. Development assets such as Fourmile, which is Barrick's, Mike and Fiber Line, which are Newmont's, are excluded for the time being, but may be included at a later date subject to meeting economic hurdles. Ownership percentages will be 61 and a half percent Barrick and 38 and a half percent Newmont, which are based on analysts' consensus values.
The Board of Directors will also be split along ownership lines. Barrick will be the operator of the joint venture and will be advised by a technical exploration committee with equal representation of what Gary referred to, and I have no doubt he's right, experienced Newmont and Barrick personnel. We have signed a binding implementation agreement to form a joint venture on the terms proposed and expect we can close formally in the next few months. The map in the presentation highlights the tremendous opportunity of our Nevada joint venture as Newmont and Barrick have perhaps the most complementary asset base in our industry from which significant synergies and benefits can be realized. On the following two slides, we highlight the industry leading statistics the joint venture will have.
It will have three Tier one assets in the form of Goldstrike Carlin combination, Cortez Complex and the Turquoise Ridge Twin Crease combination, with Goldrush, another potential Tier one asset on the way. These assets produced approximately 4,000,000 ounces in 2018 at a pro form a all in sustaining cost of $775 per ounce. The joint venture will have a 48,000,000 ounce high grade reserve and resources of an additional 28,000,000 ounces to start with, with outstanding exploration potential that I have no doubt we will continue to unlock. As the as a complex, our joint venture will be the largest single gold mining operation in the world. And by the way, it will be the third largest gold company after Newmont and Barrick.
Newmont and Barrick shareholders will share in approximately $5,000,000,000 in real synergies, which will be immediately accretive to both of our per share net assets and net asset values, and all this without the issuance of a single common share. In addition to the benefits to our collective shareholders, we believe that the joint venture will ensure more than twenty years of profitable and responsible production in Nevada, leading to a longer term benefit for all of our stakeholders and Nevada as a whole. In particular, this joint venture will allow us to view our Nevada assets as one ore body, provide greater ability for capital investment, and ensure that the enormous geological potential of the state is realized for all of our stakeholders. Ladies and gentlemen, I thank you for your attention. And Gary and I would now be very happy to take on any questions you might have.
Thank you very much. We will now begin the question and answer session. The first question comes from Carey MacRury of Canaccord Genuity. Congratulations
on the JV. Maybe a question first for Newmont. I think the previous work you had done, you had estimated the synergies as being less than what Barrick had proposed. Are you more comfortable now with having sat down with Barrick in terms of what the ultimate synergies can be?
Kerry, numbers that we put out here a week or so ago were tied back to discussions that were held back in 2014. So since that time, you've seen the numbers that Barrick's put out, the $4,700,000,000 And whether it's 4,700,000,000.0 or something above or below that, it's something that we both believe are achievable by working together through this joint venture.
So, Carey, I can comment on that. I think what we try to do in that number is to try I mean, we've modeled it. We've we included the cost of transacting a joint venture of this type. And as Gary says, you know, there's deep there's there's other details. And just chatting yesterday, some of the opportunities just as far as mining schedules, access immediate access to some of the ore bodies.
Yeah. And we you know, I I guess when we get the the two geology groups together and start looking at the opportunity, for instance, between Turquoise Ridge and Twin Creeks, there's been a long standing debate on property swaps. And now that's really something we can just lock up in this agreement. And and there are many other examples I know too between some of the boundaries and and orebodies between Goldstrike and Carlin. I believe we'll be able to there's some easy wins to to really redefine targets and let let them be properly evaluated.
So I've got no doubt that, you know, in the fullness of time, this is a very significant opportunity. And at the end of the day, it's up to us to deliver on this as we're the operators in the in the in the joint venture, and we're very comfortable that we'll be able to do that. And I'm sure that Newmont will be looking over our shoulder and making sure that we do.
And then maybe secondly, just on Slide three, you show some of the order flows changing. I mean, of course, you're shipping to Carlin. When the deal closes the middle of the year, how quickly do you expect that to change orders, some of the quicker things you can do on that front? Obviously, Gold Rush is still out in the future a bit.
So we will start working together to look at synergies that don't compromise any final approval to close out on the on the formal joint venture. Again, a lot of these are things that we should have done in the past, and so it makes good sense to start debating them and and planning to to realize them just as Randgold and Barrick work together even before we finalize the or closed out on the transaction. So we will do that. And and again, there's many opportunities immediately. For instance, the ability one of the things that I believe will be attractive to every all stakeholders is is as we plan the trucking back to either Carlin, which was our preference from from our Cortez operations, to be able to shift some of the transport onto private roads and take them off the national highways as an immediate benefit.
So those those arrows that you see in the in in the in the presentation are, you know, simple first step synergies that I think we, you know, we would we would wanna do now that we put our heads together anyway.
And then maybe just last one last one. I know, Barrick, you've you've looked at adding capacity in Nevada. With the new combined footprint, is that still a requirement down the road? Or you think you can exist with the current footprint here in terms of processing capacity?
No. I think I don't think I know that the both Gary's team and the new team coming into Newmont and and our team, which is a new team, effectively have brought a fresh look at these opportunities. And and what this does is it really puts the best infrastructure in Nevada at the disposal of a single entity. And, you know, the big barrier to entry in Nevada is once you get to the end of the to the bottom of the pits, the oxide sort of transition zone, you you move into refractory and double refractory ore that needs access to, you know, significant processing infrastructure, which at a significant cost and also requiring a long permitting time. So I think there's, again, knock on opportunities for us as a joint venture to look at accessing and exploiting other opportunities that are not currently in in in included in our in our agreement, but are within the area of interest.
Okay. That's it for me. Thanks, guys.
The next question comes from Josh Wilson of Desjardins. Please go ahead.
First, on the actual creation of the structure, given the I'm assuming the assets will be put into a different holding, is that going to be a taxable event for either company?
No. We're working through the details of that, Josh, in terms of how that actually gets affected. They're performing a limited liability company out of Delaware that the assets will be held in, and that's that's some of the details that we'll be going through here. But that's what we're working to to to maneuver through as we we we bring it to a close.
Okay. And then similarly for, I guess, go forward tax analysis, what is the sort of reasonable range of taxes that the new joint venture is expected to pay for Nevada roughly?
So Nevada is one of I think, I can see both for Newmont and Barrick is a is a very efficient and attractive tax destination. And and again, all I can say, Josh, is that we we are driven to to get if we if we deliver on the synergies, which as I pointed out, we we believe we will, we'll drop the cutoff grades across the organization, increase the margin, pay and get access to better free cash flow and also be able to deliver additional taxes to the state and the federal government.
But I think it's fair to say we're really focused on the operational efficiencies that will result from the joint venture in the first instance, and tax efficiencies will follow with Okay.
And then on the Cripple Creek asset, which I understand is important to the overall complex in Nevada, just to be clear, that one is not included in the joint venture, correct?
That's correct, Josh. That was not an asset that Barrick wanted to include. And what we've agreed is we'd work out basically a processing agreement to be able to process those concentrates. Because as you rightly point out, it's the heat content, it's the sulfur, and that helps with the processing at Carlin That is an important part of the overall process. So we'll be working through the details on that in the coming months.
Okay. And last question, I apologize if this makes things awkward, but is there a standstill agreement included as part of the joint venture between the two companies?
Yes, it is.
There is? Okay. Thank you very much.
The next question comes from Michael Sapirco, who's with Macquarie. Please go ahead, Michael.
Yes. Thanks very much. Maybe a couple of quick questions for Mark. First, what really changed your mind on a JV versus a potential merger in terms difficulties in managing a JV and all of the associated issues that you talked about? And second, how should we be thinking about the €330,000,000 in corporate synergies that were being discussed as part of a larger deal.
Is that something you think you can chip away at as part of this? Or any color on that would be appreciated. So
Michael, this was never sort of a sideshow or a second, you know, plan b. It was always focused on delivering value for our stakeholders. And and as we pointed out, this first step, which is the focus in Nevada, has always been the focus over, as we both Gary and I pointed out, more than twenty years. So it made good sense. I think I've never been a person that goes back.
We've always we need to move forward. We've got to this point. I think it's a very productive point. It's a it's a leading sort of event in our industry. Certainly, since I've been in the industry last thirty years, you have never seen something as engaging and and and inclusive as this transaction and the ability to get it done in the in the time that we did our respective teams work through to deliver.
You know, your your the the synergies you're referring to are Newmont Barrick synergy, and, that's now off the table. Our focus is on delivering on this joint venture.
And very much so from from our end at Newmont is working with with the team here at Barrick to make sure that those synergies are delivered as as has been stated and hopefully beyond that point. And we continue to work and we'll continue with our process with Goldcorp and bring that hopefully to a successful conclusion here pending approval by shareholders and regulators towards the end of next month. And that has the synergy value there. But the combination between the two has significant value really for all shareholders, as Mark has been pointing out.
Maybe if I can ask a follow-up to both of you. Is there any to the extent that you can answer, is there any consideration to the JV in Nevada being a a stepping stone to a larger deal?
I'm not prepared to comment on that, Marco.
I'm with I'm with Mark on that at this stage as well.
You guys are never satisfied. We got a lot
to deliver in both of our camps right now.
Very good. Thank you.
The next question comes from Carrie Smith who's with Haywood Securities. Please go ahead.
Thanks, operator. Mark, is there some sort of area of exclusion that the joint venture would have to respect? Like, you're gonna have an expiration team in the joint venture. Would the exploration that they could conduct only be able to be conducted on lands that were currently within the JV, and they wouldn't be able to look outside of that at new assets, say, in, you know, other parts of Nevada or in other parts of the Great Basin in in Utah, let's say.
So we've got an area of interest defined in the joint venture. All I can say is it's a very large area. You gotta keep us very busy, and it's definitely the most prospective part of the the the Nevada geology. We have, as you know, got kept out our our growth projects, both of us, and we'll be working on that. But I would, you know, I would I would want to believe that we really pulled this joint venture, and we are able to do more together across the state.
That's that would be my my objective as, you know, the responsible person for the joint venture.
Okay. So the area of interest would be larger than the state of Nevada if I read your commentary correctly.
In the state of Nevada? Yeah. It's an area that involves the, you know, a boundary around and includes all the projects that we've defined in the, in the announcement.
It's not larger than the state of Nevada. Definitely not. Nevada. Yeah.
Okay. Okay. And then for the assets that are specifically excluded, the development stage assets, the one that Barrick has and the two that that Newmont have, how would it work to bring an asset like that into the mix? Would it be the JV actually acquiring the asset from the company that held it? Is that likely how it would be done?
Yes. So the the the guidance is that we that it would be a a right to include it if the projects were proven to be projects that deliver more than a 15% internal real rate of return based on a backward looking two years average gold price. And that doesn't necessarily exclude it if it doesn't meet it because then it would be a, you know, a a decision for the joint venture partners to decide to bring it up.
Okay. And then the employees that will be working for the JV, will they be actual employees of the JV, or would they be be seconded from Barrick and Newmont into that partnership?
So we would see, you know, the most of the employees in Nevada are employed by the respective mining companies that operate, and there will be corporate people, you know, skills that are dedicated for Nevada, and we'll, you know, we'll work together to make sure that we put the best team together to be able to lead this business. It's a significant business, as I pointed out, bigger than our any of our other respective assets for either company.
And the employees that continue would be employees of the joint venture?
That's correct. We would employ them in the joint venture. It's a an LLC, you know, structure, so it's a it's a a legal entity.
Right. I gotcha. Okay. Well, it's a long overdue sensible deal. Congratulations to everybody.
Thank you.
Thank you.
The next question comes from Mark Lanes who's with Credit Suisse. Congratulations
on the joint venture. Just two questions on my end. The 61.5%, 38.5% split, how was that determined? I know when Newmont had proposed last week, was based on consensus NAVs or NPDs. Can you give me a little color on that, please?
Sure, Mark. I think what what we did, it was based on consensus NAV. Last week when we proposed the fifty five forty five, that had CC and V in it. CC and V is not in it. So when you take that value out and look at consensus median, basically, you come down to that 61 and a half, 38 and a half split.
Okay. And just to follow-up on that, once to the both parties do additional diligence, would that split be renegotiated?
That is what it is.
Okay. And I and my second my third question now is, with the joint venture, do you guys foresee that moving forward regardless of the outcome of the Goldcorp Newmont merger?
Absolutely. They're independent. They both travel. As far as Newmont shareholders, they're good potential for both sets of shareholders.
So they're mutually exclusive. Yes.
All right. Thank you very much.
The next question comes from John Tomazos of John Tomazos Very Independent Research. Please go ahead, sir.
Thank you very much.
Does the 61.5, 38.5 split change after four mile is defined or Mike or Fiber Line or his new deposits come into the reserve and resource base?
John, as Mark explained on adding an asset in before, there'll be a process that goes through provided it meets the certain hurdle rates that Mark described in terms of using a gold price and a 15% real rate of return. And then, depending on which partner, you could either take a dilution mechanism or take a basically a cash up to maintain the percentage split. That's the simple summary of it. Thank you.
Thanks, John.
The next question comes from Tanya Jakusconek of Scotiabank. Please go ahead, Tanya.
Yes. Good morning, everybody, and congratulations on getting a joint venture done. Just a couple of questions on my side. Maybe just to start with the technical finance and exploration advisory committees. Maybe, Mark or or Gary, you you can let us know how will the management teams be appointed?
Will they be done by Barrick or both companies jointly?
So, Tanya, there's only one responsible person, and that's Barrick to to deliver on the plan. The plan will be developed and approved by the board, which will will vote it's able to vote its economic interest. Although, in all the joint ventures I've ever worked with, I've never had to do that. The technical committees are both and there'll be a number of them, finance, exploration, technical. As we run the committees in Turquoise Ridge, Kalgoorlie, you know, we we've got lots of experience with AngloGold Ashanti and Africa on two very big joint ventures.
And they're there to make sure that there's a you know, that we challenge the operating teams and the people that are actually running the business. And that will be my responsibility to ensure that we we deploy the best people we've got from the combination of both the companies.
And and in regards to the concept, I mean, haven't named the people on these committees yet, but it'll be equal representation from both Newmont and and Barrick, three people each on those committees, and it's really taking the best from both of our businesses to get the best results out of the Nevada joint venture. In terms of the board representation, our initial board representation will be myself and Tom Palmer as the two representatives.
And so mine is is myself, Catherine, and Gregor. Is that right? Catherine? Yeah. Okay.
And then do you expect to realize the full status Tanya,
correction. It's George Jim Rob. Rob. Sorry. It's Rob Chrismeroff.
Gregor is on the technical exploration committee. So it's myself, Catherine, and Rob Chrismeroff.
Okay. Thank you. And then just on the full stated synergies, do you expect to get those even as a joint venture mark? I think you said yes, but I just wanted to check.
Yeah. What part of the the synergies don't you understand, Tanya?
Oh, no. I understand. It's just you had mentioned before that you wouldn't be able to capture all of them as a joint venture.
No. No. No. No. I said we wouldn't be able to capture them all if we didn't have a one one person responsible to deliver on it.
Otherwise, we end up with keeping two sets of corporate structures trying to work, you know, and and protect our bases. Just go back to the old story. So we've agreed this is a single business unit, of of, you know, put together under a legal entity with a responsible operator accountable to the stake the shareholders effectively.
Mhmm. And it's something that we've got you know, as Mark described his experiences, we've had similar experiences both within Newmont and with the team the senior teams in Newmont that have worked very successfully in in having the one party, but then working together is a very good way to get best value for everyone.
Mhmm. And and then maybe, Gary, just on the expiration side on on anything that's found on the joint venture land, I know your initial proposal had been to have, you know, that person's, you know, land get an NSR was your original proposal. What have you done in terms of the expiration found on on this joint venture? How is that gonna be dealt with?
That that's exactly where it's landed, Tanya. One and a half percent NSR would apply for either one of the parties depending on what's found beyond the reserve and resources already identified.
So for the avoidance of doubt, the declared reserves and resources are as they are with the respective companies. And any additional reserves or resources that we add will attract a 1.5% net smelter return. As they're produced. Yeah. Yep.
Okay. And and and and just my last question, I just wanted to ask on the infrastructure and the processing, and I I appreciate you you'd mentioned as you go deeper, you get sulfidic. Or are all of these synergies also capturing the fact that you may change your thiosulfate autoclaves back to normal autoclaves?
Yes. I think there's lots of discussions now that we have the opportunity. I mean, there's there's also the opportunity to look, you know, one of the things in Phoenix is to look at how we process, you know, the ore going forward as it gets deeper, whether there's a there's logic in in changing an autoclave to be able to do that sort of process. There are many different options that we will be looking at. The SIA sulfate project as it stands in Goldstrike at the moment, we've still got you know, we our new sort of focus on that process is is still committed to look and see because of of being able to deliver the bench scale results.
We've definitely got results on a on a a pilot plant scale, and we've we've been struggling to deliver those results, particularly with the alkaline ore. And and but we're working on it because we've been able to deliver it in the in in in the sort of smaller scale. And so we'll continue with that. And I'm sure, again, when we add this and and, you know, new additional expertise, maybe we'll be able to unlock some of those opportunities.
Okay. Well, good luck with the joint venture. It's great to see.
Thanks, Tanya. Thank you, Tanya.
We have a follow-up question from Carey MacRury, who's with Canaccord Genuity. Please go ahead.
Hi. Just one follow-up question, maybe for Gary. In the JV term sheet that you proposed, there were certain activities that were subject to majority approval and certain activities were subject to unanimous approval. I'm just wondering in the new structure, is there anything that would still fall under that would require unanimous approval?
Yes. There are still some that are unanimous, but it's very large sort of things. Large capital, I think it's about $500,000,000 is is an example of that. If there were to be asset sales out of the business, as we talked about bringing assets in, those would be the sorts of things that land in there.
Pretty bulk standard stuff.
Yes. The
next question comes from Dan Rollins, who's with RBC Capital Markets.
Thanks very much, and congrats to both teams. Hopefully, this is the template the industry can use going forward. Just one question with respect to both of the CEOs. Given the amount of synergies that you've discussed and acknowledging potentially capital needs for the new joint venture, is there any plans to direct a portion of the dollar in synergies to investors as increased dividends?
Yes. Yes, of course. But let's get there first. I mean, that's from Barrick's side. You know, our focus is, as we've said, if we if we get this thing together and we and we deliver on, you know, what we believe is is possible, we will free up extra cash flow for our respective shareholders.
And from Barrick's side, that's our focus, less debt, more dividend.
Like that. Dan, from Newmont's standpoint, we've got the $0.56 dividend that we currently have. We've committed to continue with that post the Goldcorp transaction, which puts us in a leading dividend position in the industry. It's one we'll continue to assess, as Mark says, as we deliver the synergies from both the joint venture here and the acquisition of the Goldcorp assets that look to deliver £4,400,000,000 in synergy values over time. So we'll continue to always assess making sure we get that right split of cash return to shareholders, investment back in the business and looking to the future.
Thank you.
That's great. I think having investors benefit directly from those synergies would be great. Thank you.
This concludes time allocated for questions on today's call. I would now like to turn the conference back over to Mark Bristow for any closing remarks.
So ladies and gentlemen, thank you very much. I'm sure that if you if anybody's got any additional questions, our team is available as normal to pick up on questions, and I'll pass over to Gary, but thank you for making the time. We look forward to working with you going forward.
Yes. Thanks, Mark, and thanks, everyone, for joining the call. I think it's appropriate that this call is coming from Elko, Nevada today as we forge a new relationship and a great future relationship for all the employees of the Nevada joint venture or for all the stakeholders. Really, really looking forward to working with the Barrick team as we put this together going forward. Thanks very much.
This concludes today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.