Ladies and gentlemen, thank you for standing by. This is the conference operator. Welcome to the Barrick conference call. During the presentation, all participants are in listen only mode. Following the presentation, we will conduct a question and answer session. At that time, if you have a question, please press star followed by 1 on your telephone keypad. At any time during the conference, should you need operator assistance, please press star and 0. As a reminder, this conference call is being recorded and a replay will be made available on Barrick's website later today, February 25th, 2019. I would now like to turn the conference over to Mark Bristow, Chief Executive Officer of Barrick. Please go ahead, sir.
Thank you very much. Good morning, ladies and gentlemen. Thank you for those who have got up early or stayed up late to join the call. We appreciate your time. As you probably worked out, earlier today we sent a letter to Newmont's chairperson and CEO to propose a merger between our two companies. There have been many unsuccessful attempts over the years to forge such a merger. The reason for not doing it escapes me. This opportunity has strategic and financial rationale and is so obvious and compelling. However, while Barrick recently completed a widely applauded all-premium merger with Randgold, which positions it soundly for future profitable growth, Newmont, in contrast, has by all accounts, rushed into an ill-conceived premium merger with Goldcorp, which looks unlikely to deliver significant benefits to their shareholders.
This is the reason that we have, after some deliberation, decided to make an unsolicited, but clearly superior proposal to the Newmont shareholders. Our proposal is based on sound business rationale and industrial logic. Paying a 17% premium for Goldcorp with its second-tier assets and no synergies, followed almost immediately by the departure of Newmont's CEO strikes me as both desperate and bizarre. Our proposal will create more value than any other combination in our industry, realizing over $7 billion in synergies alone. That is before any full potential benefits of us operating their mines is considered. It is important to note that our annual synergies of more than $750 million per year is clearly identified rather than aspirational targets of future efficiencies.
To put this figure in perspective, it is more than the market capitalization of 14 of the top 20 North American-listed gold producers, roughly equivalent to over 80% of Goldcorp's entire net asset value. We, as a team, can't wait until after Newmont and Goldcorp merge because we don't want Goldcorp's lower quality assets in our portfolio. Given the importance of this transaction, I direct you to our disclaimer on forward-looking basis and the information that's going to be included in this presentation. The key messages of our proposal are the following. Number 1, it secures the long-term future of Nevada, which we believe is the most prospective location for gold mining anywhere in the world. In fact, Newmont and Barrick are Nevada. This proposed transaction would allow us to tear down $5 billion worth of fences.
Number two, it brings together the industry's largest portfolio of Tier 1 gold assets, including two in Latin America and three in Africa. Number three, it will have an unrivaled pipeline of global prospects and projects. Number four, its free cash flow will drive further profitable growth and support sustainable shareholder returns. Number five, and perhaps the most important, it will have a best-in-class committed management team with a long track record of delivering value to its stakeholders. Given that it will demonstrably be the world's best gold company, the potential for further rerating is also significant. As I've said many times, mining M&A transactions rarely create value for shareholders, mainly due to premiums paid on short-term price differentials, lack of real synergies, and questionable business rationale.
It is our view that the proposed Newmont-Goldcorp deal is a typical example of this kind of M&A, far from adding value, would dilute the quality of Newmont's asset base and double their head office while senior management itself is leaving. Nevada is the crux of our proposal because that is where the bulk of the synergies can be realized. The benefits of the proposed merger are obvious, as indicated here. Barrick has the bulk of the high-grade reserves and Newmont owns key processing plants. Rationalizing these would reduce operating costs, increase free cash flow, and reduce cut-off grades, which will increase reserves and resources, extending not only the lives of the mines, but also their profitability. In this slide, we illustrate the synergies I have referred to.
While we have similar levels of reserves and resources, the grade of Barrick reserves is nearly three times higher than Newmont's, and the grade of our resources is even higher. Newmont's reserve grade is only around 1.6 grams a ton, and their resources are even less than that. The pro forma company would not only deliver increased production at a higher grade, but would make more efficient use of all the processing facilities in Nevada. Building on from this, we highlight the areas we would optimize, such as transporting ore to the closest plants or the plants that provide the best recoveries for each ore type.
There are also savings to be made in procurement and logistics, and most significantly, the combination will enable us to consider the whole of Nevada as effectively one ore body, which will result in better mine planning and ensure that the state's enormous geological potential can be realized for all stakeholders. Incidentally, I have shared all of this with Newmont already, but to no avail. Other synergies, as already demonstrated at Barrick, will come from running the company as a modern mining business should be run, by flattening the corporate structures, focusing our exploration efforts on the most prospective target areas, and integrating our supply chains. As for the competence of our management team, the eight weeks that have passed since Barrick's merger with Randgold tell the story.
In that short time, we have integrated the two companies' managements, rationalized and repurposed corporate office administration, which delivered savings of approximately $150 million. We established regional executive teams in order to ensure that our businesses are run at the mine site and not by remote control. We have also defined an additional $200 million in annual savings, which we will deliver before the end of next year. We also created $5 billion of shareholder value when we announced the Barrick-Randgold merger back in September of last year and have outperformed our peers. There can be no doubt that we have the people to create that value for both sets of shareholders. Our proposal to Newmont is simple.
We will combine in an at-market deal, which equates to 2.5694 Barrick shares for each Newmont share, giving Barrick shareholders around 55.9% of the merged company and Newmont shareholders 44.1%. Key conditions are that Newmont terminates the Goldcorp transaction and enters into a merger agreement with us. The merged company will match Newmont's annual dividend of $0.56 per current Newmont share, which, based on the exchange ratio, will represent a pro forma annual dividend of $0.22 per new Barrick share. Assuming that Newmont's transaction with Goldcorp is terminated, we expect that our transaction would close in the third quarter of this year. Here you can see a value creation comparison between a Barrick-Newmont merger and one between Newmont and Goldcorp. As this clearly illustrates, the Barrick transaction creates far more real value for shareholders.
With $7 billion of synergies shared with all shareholders at our multiple, we are in fact offering Newmont more than $41 a share in value. The synergies are clearly a premium. Here we highlight the benefits of the merger to all shareholders. This is the pro forma portfolio of Tier One gold assets. We will have 8 Tier One assets, and we'll create another one or two. Importantly, the vast majority of our pro forma asset base and value will be concentrated in our Tier One portfolio, putting us in a very enviable position to achieve portfolio optimization without sacrificing the profitability of the business. By the way, the optimization of Barrick's asset portfolio is well advanced, and we expect to generate over $1.5 billion in the near term.
Post combination with Newmont, our teams will review the combined portfolio, applying the same filters currently in place at Barrick, with the goal of maintaining the best production, project, and exploration assets in the industry, and placing our non-core assets with the best owners. We have had numerous expressions of interest to date, and we have had numerous approaches to participate in this process. Cash proceeds can be used to provide returns to our shareholders or including buyback shares. Here you can see that our operations are spread across the world's best gold regions, and our portfolio has a very balanced political risk. Ladies and gentlemen, to sum up, we are offering Newmont and Barrick shareholders an exciting opportunity to own the world's best and most valued gold company.
A combined Barrick/Newmont offers shareholders a significant rerating potential due to its superior asset base, while realizing $7 billion of real synergies. It will have the highest levels of free cash flow and a management team with a long record of delivery. We are making this proposal because it is in the interests of both sets of shareholders. We as a team are fully committed to seeing it through. Thank you very much for your attention. We'll be happy to take questions.
We will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. We'll pause for a moment as callers join the queue. The first question comes from John Bridges of JPMorgan. Please go ahead, sir.
Thank you. Morning, Mark, everybody. I was just wondering, you've been to Nevada, you've spoken with Newmont about opportunities. I just wondered whether you'd considered the idea of a JV, a sort of combination under one corporate management, but still where you and Newmont take 50/50 or some other percentage of that. How that would compare to this proposal. Thank you.
John, thanks for that. Yes, we have, as you can imagine. I can say that, as you know, Barrick and Newmont have had many conversations going back some time. Going into the finals on the Barrick Randgold deal, Barrick had a number of conversations with Newmont on various options, whether it was a full combination or a unification of Nevada or anything in between. The position of Newmont at the time was that they wanted to have management control and 50%. Very clearly, as you know, Newmont has a lot lower asset quality in Nevada than Barrick's portfolio. It didn't make sense. Our engagement with Newmont was, surely we should get together and look at the synergies and we should do what's best for our owners rather than setting conditions before we even got to evaluating the synergies.
I picked up on that, both at Denver, when we made the announcement, then subsequent to that. The only response that I got was that, in fact, I had this conversation with the CEO. I asked him whether he had looked at the synergies in Nevada, and he confirmed that he had not looked at the synergies since he was in the CEO position. I found that very strange because that's the first thing I did, was spend time at Nevada. What makes no sense to me is all these trucks driving around the state, passing each other, transporting ore. We spend an enormous amount of money collectively just on transport, let alone on how we can combine things and unlock the cut-off grade, et cetera.
Again, Newmont has not spent any capital of substance in Nevada for a very long time, whereas Barrick is fully committed to unlocking the value that its geologists have delivered in Nevada. Now we have a real management team which understands that opportunity. If anything, the combination of Nevada under one management team simplifies the whole business that we are currently working to deliver on in Nevada.
Okay. Maybe as a follow-up, I fully understand you're interested in the synergies, and we've written about it in the past too. If there are such big opportunities there, then why no premium sweetener for the Newmont shareholders? Is this all-share offer full and final, or is there opportunities to sweeten the deal?
I've never seen in my time, John, in this industry, which is not dissimilar to yours, I've never seen a premium as high as this ever offered in the industry. If you take the $7 billion of synergies which we're offering, that's a premium in itself. By the way, you've seen the market respond on the share trades, and that is value created. Definitely the markets recognize that our proposal makes a lot more industrial sense than the proposal of trying to combine Newmont and Goldcorp.
Thanks, Mark.
You're welcome. Thank you.
The next question comes from Matthew Murphy, who's with Barclays. Please go ahead, sir.
Hi. I was wondering if you could provide some more color on your $4.7 billion Nevada synergies breakdown by what's cost out, what might be the enhanced utilization of reserves, et cetera.
Well, I'm very happy that we go through this with you in the fullness of time. I would just point out that G&A is a substantial part of this, just eliminating the regional businesses, the duplication of the supply chain, the stock standard or bolt standard operating costs. Mining, the underground mining costs at Newmont are still significantly above the Barrick cost. Again, we have spent time with the mines, and we believe we can improve on the already messaged improvements that Barrick are working towards. We believe that there's no reason that we can't do the same with the Newmont assets. Just looking at shared mining fleets, the whole thing, the balance between owner miner and contract miners is a substantial amount of the synergies.
The replacement and rotation and optimization of the fleet as some of these bits come to an end and we start up new ones, maintenance and planning. I've covered supply chain. Then there's an example. I'll just give you an example. The synergies between Goldstrike and Carlin are very real. Again, we cross each other. There's ore transported right across Nevada when Goldstrike roaster is sitting a few miles away from Carlin or the Carlin complex. Of course, the Turquoise Ridge, Twin Creeks joint venture, where Newmont has 25% of Turquoise Ridge, it is basically throttling the Turquoise Ridge value because of its very high toll treating contract, which it forced actually last year in the revised TMA. That effectively has added two grams to the cut-off grade of Turquoise Ridge.
I've had these conversations, by the way, with Newmont, and it makes no sense for me because we're leaving high grade ore underground because we have to try and deliver a profitable business to our joint venture partners being Barrick and Newmont. Putting those two assets together makes eminent sense and unlocks a larger NPV which will benefit both shareholders. We are very comfortable with absolutely the specifics. There's still other opportunities that are more difficult to put real values to, which I've got no doubt we will unlock. Nevada as a whole needs a reinvention. What we've done with the Barrick team has really got a long way down that, and it's been relatively easy.
I've got, again, what I've found in this mining industry, when you put people together and take away their head office control, you really unlock further value that you can't really measure. The more we look at this, the easier it is to unlock this value. In fact, a combination would really make our job easier. What it reinforces is that it really is an asset that should be run by one team with one focus and one responsibility.
Thank you.
The next question comes from Josh Wolfson of Desjardins. Please go ahead, sir.
Mark, first question. In the pro forma analysis, has Barrick incorporated the assumption that Newmont will pay Goldcorp the $650 million break fee if that transaction falls through?
Yes.
Okay. Secondly, there have been some rumors about other assets within the combined Barrick-Newmont portfolio that could be sold. I had noticed that the presentation doesn't outline Boddington and Tanami as core assets. Could you maybe provide your thoughts on those assets in the portfolio?
Josh, you'll have seen that I've been very careful not to start public auctions, even in the Barrick Randgold portfolio. I can assure you that we're far down the road in engaging interested parties to bring those assets that don't fit in our plan to account, and the same goes for Newmont. As you can imagine, the Australian assets are really very profitable, long-life assets, and the question is, do they fit into our plan, or are they better managed in the hands of more focused operators? Again, as I pointed out in my presentation, we're not short of interested parties. We've had conversations, we've got expressions of interest. We're very comfortable. In fact, on all the assets that might not fit into our filter, we have interested parties that have expressed an interest. We are comfortable we'll bring those assets to account.
There's no rush to do it, but it will be one of our focuses, is to clean up those assets. As you know, Josh, I've always talked about this industry and how it's running the risk of becoming irrelevant because it's just a collection of assets rather than a very focused, sort of strategic distribution of the assets with the best management teams to create value, and I think we can play a real role in ensuring that happens. The consequences of that will have roll-on effects that will create value for our shareholders as well.
Got it. One last quick question. I did see the Newmont press release yesterday about seeing the lowering of the shareholder percentage to call a meeting. Has Barrick secured any support, or written support, for that matter, from shareholders in Newmont?
I couldn't answer that question right now. It would be inappropriate for me to do so. What I can say is that we have common shareholders across these companies. What we've seen, both with the excessive break fee and some of the activities, and the fact that management is leaving, it's just hard for me to understand whether all this is in the best interest of owners and stakeholders. All we're, in our filing is suggesting is that this should be up to the shareholders to decide, and we should be prepared to expose ourselves as managers and deliver and argue the opportunities to create value and let our various owners make that decision for us.
Okay. Thanks for taking my questions.
The next question comes from Michael Satukho, who's with Macquarie. Please go ahead, Michael.
Thank you. Maybe a bit of an unfair question, but in the context of Barrick's ongoing talks with Newmont and of course, Barrick's merger with Randgold, can you comment on why you think Newmont made the offer for Goldcorp in the context of the sector and positioning in the sector? Is there an opinion you have about how they saw the business evolving and why they made that move when they did?
Well, I think that's a very good question because clearly they haven't convinced you, I'm still trying to work out exactly that. It makes no sense given that we've been engaged, this is a natural fit. It really is an important step in the reinvention of our industry. I think we, certainly I am, because as you know, I did the deal with Barrick and committed me and my management team to deliver on our strategy, I'm doing the same on this. We've got a great bunch of young executives capable of delivering on this transaction, we definitely have the rationale behind our proposal. I think if there was a strong rationale behind the Newmont-Goldcorp transaction, we would probably not be making this proposal.
Maybe just as a follow-up, if you're looking at the sector in terms of what investors are looking for, in terms of what they're telling you, obviously, how the sector's evolved over the last 5 years or so, can you talk about what Newmont and Barrick bring to the table in terms of the scale and diversification, especially relative to the alternatives to producers that we're seeing in terms of investing in precious metals? Of course, beyond the industrial logic there, how do you justify the sort of 2 plus 2 equals 5 equation? If that's the claim you're making, of course.
Yeah, that's definitely the claim I'm making. What part of $7 billion does she think adds value? That's the first point. The second point is, a business is as good as its management and the ability to deliver. Again, management is about individuals, and I have built a team around me over the last 2 decades, and that team is relevant for a modern, effective, efficient, real-time agile management that will be capable of taking this on. That's the most important ingredient in any business. Secondly, if you want to be a world-class business, you should have world-class assets. That goes particularly when you talk about mining, because our revenue comes from the quality of our assets. This combination really delivers 8 tier 1 assets into the hands of what we believe is the best management team in the industry.
It has the opportunity to further unlock or hash additional tier 1 assets because of the combinations, particularly in Nevada. In fact, what is intriguing about this proposal is it's actually quite simple. It's not a complex proposal. In fact, Newmont's real growth is in Africa. One thing that no one can argue about is we've got the real African experience. We know how to operate in Africa, and we can assimilate that part of the portfolio in a heartbeat. We have a dedicated, focused, long-serving executive team specifically for Latin America, and we run some of the biggest assets in the gold industry in that region. That team could do with a few more assets. That part of the portfolio is well cared for. The combination in Nevada makes our job easier because it allows us to operate the mine, the portfolio as one business.
We don't see any need for any additional oversight or corporate structure or anything else. I think I've proved to everyone that in this modern world, with the systems that we have, you don't need a huge head office. You need a more focused corporate set of skills that can hold the various businesses to account. We have no idea why Newmont would want to double up on its head offices, whereas we look to reduce those head offices. That's the rationale. Whether it's an industrial logic or just a business logic, it makes sense. At the same time, every point I make on the opposite side, we can't see relevance in the presentation of the alternate. I would again repeat that we haven't been, I was never induced to do the deal with Barrick. I've never sold any stock.
I certainly didn't sell any stock during the transaction. I've committed to bring my team for the long term to deliver on the Barrick Randgold merger and this one as well, which is in stark contrast to what's being presented from the other side. That's the way I would debate the differences.
Maybe if I could just ask one small follow-up there or ask slightly differently. Do you see inherent value in having one company at the top of the producer list at a $40 billion market cap with that list of assets versus having two at $20 billion competing for capital and attention and everything else? Is that something that you look at as well?
Yes, I think the point is that we really want to attract generalists into the industry. We want to be relevant, and we think that $40 billion is relevant. As we stand today, we're much more relevant than we were independently. Again, the point here is that most of the value destruction in the mining industry is a result of corporate oversight or lack thereof. We feel that we have a real track record of being disciplined. We've shared with the market our strategic investment focus. We have a very public record of what we intend to deliver. Again, whilst we will be the biggest, more importantly, we would be the most valuable.
Again, if you're worried about other $20 billion market cap companies in the industry, this transaction, I believe, will go a long way to support the delivery of new $20 billion businesses run by much more effective and efficient management teams.
Wonderful. Thank you very much.
The next question comes from Kerry Smith with Haywood Securities. Please go ahead.
Thanks, operator. Mark, if the bulk of the synergies, as you say, are in Nevada, which I would agree with, is there not some combination ratio on a joint venture that would still make sense? Maybe it's not 50/50. There has to be some workable arrangement that would make it work, and then you wouldn't have to pull in all of the rest of those assets, which by your own commentary, don't seem to really add much to the picture other than giving you more production.
Kerry, thanks for that. They're all profitable businesses, and we've got no doubt that, as I said to you, when we start running them, we'll make it better. I would just add, we've tried, and I can tell you without fear of contradiction, John Thornton tried. He tried repeatedly. He tried again just before we announced our transaction. I have tried. We have experience in joint ventures with Newmont, and I come untainted in this relationship. It's been less than transparent and open, and certainly not focused on delivering value for our owners collectively. I would say at the end of the day, as in most good businesses, and even teams, whatever teams they are, you need one leader with a real commitment and the ability and commitment to be held accountable.
I think after that, I always say, it's a biological impossibility to be half-pregnant, and we are fully committed to being accountable in this transaction.
Okay. Mark, just on the merger itself, does that hit your 20% return or maybe 15% return on $1,000 gold?
We've got, as we've disclosed, we have tier 1 assets. Have you ever tried to get a 15% return out of gold mines at a long-term price of $1,200? That's a plus 500,000-ounce producer for more than 10 years. This already, when you look at the $7 billion of uplift, and this is an instant valuation. Remember, it's a corporate transaction, but it's definitely not a value destroyer. We believe that, as we've indicated, there's a tangible deliverable value in the form of the $7 billion of synergies. There are more intangible opportunities to deliver further value. One of the key ones is Turquoise Ridge and repositioning it as one company with Twin Creeks and unlocking the full potential of what is undoubtedly one of the highest value gold projects on this planet.
We've got the Goldrush-Fourmile project, which by all accounts looks to be as good, if not better, than Turquoise Ridge. Again, that asset needs access to processing facilities and so on. Again, we believe that there are important opportunities to unlock value in Africa, in the Ghanaian assets. As you know, we've looked at Ghana for a long time. We've got a very long history in looking at opportunities in Ghana. As right out the blocks, this delivers real value for both sets of shareholders, and this is not a win or lose opportunity. Combining the portfolio of exploration opportunities with our, again, focus on exploration our ability to manage social license is a critical component and is required to deal with a very large liability embedded in Newmont in the form of their Peruvian operations.
As you know, there's been a long history there around social license. I think, collectively, apart from the tangible deliverables, which is important to us, there are many other opportunities to create value in this bigger portfolio.
Okay. Mark, can I just ask one last question? Maybe when you said that the Barrick team had engaged with Newmont prior to the announcement of the deal with you, would it be fair to assume that that engagement was not at the due diligence level? It was just conversations at a high level? As a converse to that, had you and your team ever had any chance to do any physical due diligence on the Newmont assets?
I mean, we employ a large number of ex-Newmont people as things have changed in Newmont. I think we've got a very good knowledge of the Newmont portfolio. It's an open secret because there's not much that is secret in Nevada. I think the ore bodies are similar and in some instances the same. Geologically, it's easy to model the synergies. You would have known, I mean, you know that there was a lot of work done by various parties on both sides at the beginning of this decade to look at ways to go forward. That's my business, is to worry about opportunities and gold assets and how we can deliver better value. We spend a lot of time doing that.
Okay. Thanks very much. I wish you good luck, my friend.
Thank you very much.
The next question comes from Brian MacArthur, who's with Raymond James. Please go ahead, sir.
Good morning. I know you don't want to get into it, big detail here. One of the other things that you've talked about is, in the industry, is capital allocation. Of the $4.7 billion, you talked about trucks and everything, which sound to be more operating. As far as reduction in capital going forward, and what I'm really thinking here is avoiding building new processing plants in Nevada. Would that count it into $4.7 billion, or do you see that as another potential benefit to the NPV going forward?
We haven't accounted that in the synergies, but it's a real opportunity to prevent additional capital. As you know, if you just look at the capital spend over the last five years, Barrick has spent 56% more total capital than Newmont over the last five years. If you look into the growth capital component of that total capital, Barrick has spent 250% more than Newmont. We have new projects. If you pull out any of Newmont's presentations, Nevada is not a growth center. It's not a growth focus for Newmont. It is for Barrick. As I pointed out in my presentation, we've got real high-quality assets, which again, is unique in this industry. Bringing them to an account by accessing the Newmont infrastructure where it's appropriate adds real value, and we've done that.
The flip side of that is that Newmont mines itself out of business and we go and waste money on new infrastructure, which doesn't make sense at all. That's the problem in this gold industry, is that we would rather go and build a new mine to keep control than to access and optimize ore bodies and infrastructure. I think the Australians do it much better than anyone else in the industry. This is a real example of that. I think you've touched on a very important point.
Correct. In simple terms, we can kind of assume the $4.7 billion just basically maximizes efficiencies using current assets. I can think of that as opposed to including anything else.
Yes, exactly. We were very mindful that to do this, we had to demonstrate deliverable synergies. At the same time, the prospectivity, the Barrick team discovered the Goldrush Fourmile project. We're busy drilling the gap between the two, as we pointed out in our quarterly results. Everything looks that this could well be one ore body, one giant high-grade ore body. The question that I ask is there prospectivity to find another one like Goldrush Fourmile? I can answer the question, having spent time there. Absolutely. Again, Barrick has the prospective ground, and a lot of it is associated with and adjacent to Newmont infrastructure.
Great. Thanks very much, Mark.
My pleasure.
The next question comes from Carey MacRury of Canaccord Genuity. Please go ahead, Carey.
Hi. Good morning. Just had a question. The Randgold Barrick merger is about two months old now. You've got a new management team. You're still working through the plan on the Barrick assets. Is there a risk here that you're taking on too much too soon with a merger of this size? You're going to be a 10-million-ounce producer from this.
Carey, there's no new team. This team has been together for more than two decades. What it is is we've got a few extra members in this team, again, which we've worked at going back to July. When John and I went, and John and I have been talking about this combination of Randgold and Barrick for three years. We started, we went and put the top 11 executives from each company together back in July last year and said, "Does this make sense? Can you play in this game? What are the issues around it, and what do we need to address?" This is a transaction that was put together completely with the input of the executive team members that are going to run the business. We're out of the blocks and we're running this business, as you've seen.
I mean, you just have to read the press on how we've reorganized the corporate office. As far as the local offices and oversight is concerned, we've done that as well. We've got three top executives and proven executive teams on site running the Americas under Catherine Raw, LATAM under Mark Bristow, and Africa under Willem Jacobs. All three who know the assets, understand the business. Catherine was the CFO of Barrick, and she understands that business backwards. There's been no gaps. There's been no stalls or stumbles. The point here is that the Nevada team, which includes Greg Walker, who was the Chief Operating Officer of Barrick, and he knows those assets backwards, along with the ex-exploration executive out of Newmont, who's our Africa- and America-focused mineral resource lead. Their business is made easier with this transaction, not more difficult.
This is not a case of turning up the volume of the fire hose. This is reducing a fire hose down to a garden pipe. In South America, we've gone a long way to deal with those challenges because it's a challenging area, but at the same time, it's an area of growth. Again, I've met with the national leadership and local governments across that region. We believe that we have the ability to grow our portfolio in this part of the world, and again, the Newmont South American assets will complement our portfolio there. Africa, I think you don't have to spend much time explaining our competence. That's our Randgold succession team, which has taken over that part of the world.
Great. Thank you.
The next question comes from Tanya Jakusconek of Scotiabank . Please go ahead, Tanya.
Okay. Good morning, everybody. Just a couple of questions. First, Mark, it appears, my understanding is that you tried to do a joint venture agreement with Newmont, they were not willing to do a joint venture. Is that a correct assumption from you?
Yes. We just tried to sit down and talk synergies and what's good for our owners. That is correct.
It broke down on the 50% and operatorship control from the Newmont side?
It broke down on Newmont deciding that they want to have absolute control in a situation where they don't bring that sort of value. At the end of the day, this business is not about, as I said at the time, this business is not about demand. This is about fitting the best teams to the best assets to make sure that we deliver the best value. By the way, subsequent to that, those people are leaving.
Okay. Maybe we can leave that and move on to, I think in 2014 when we looked back at doing a merger, and I think the synergies were $1 billion at the time, and half of that was in Nevada, which is about $500 million, which is what you're showing today. At the time, part of those synergies were also infrastructure. There were the coal power plant, the natural power plant. There was other infrastructure that was going to add to the synergy. Maybe with the $500 million in annual synergies, can we get a better breakdown? Maybe Catherine can give us a better breakdown of the synergies, even percentage-wise, what is operating maintenance, water? Somebody can give us a bit more color, because it just seems that it's almost the same number as it was in 2014.
Well, it might be, it's definitely not based on anything that happened in 2014. The things have changed. At the same time, most things have stayed the same. We can certainly give you a rough outline of the percentages.
Okay.
Catherine, do you want to?
Okay. If I do them in order of size and scale. You're totaling between $500 million for the first five years, $400 million for sort of 10 years, and then $350 million after that, and that will get you to the $4.7 billion number. In order of priority, rather than breaking them out individually, you've got the integrated planning benefits that we have identified. I would say this is a first pass, and that as we do more due diligence and as we understand better, we would expect these to go up, not down. Really it's around the preferential processing of underground ores, maximizing the use of the two roasters. Mill Six and our Goldstrike, and really as Mark said, focusing on sending the right ores to the right place.
Removing what we would describe as sub-economic production and therefore the capital associated with that. In addition, with that integrated planning comes the lower mining cost assumptions, which lower your cut-off grade, which allows you to increase mining rates.
Sorry, just on the roaster, I think yours was always running about $2 a ton. There was a $2 million difference between the roasters.
Yes.
Is that still the case?
There's a cost and recovery difference exactly.
Yeah.
We've not assumed an improvement. That's upside as to whether we can see whether we can run the Newmont roaster differently.
On the back of that, you've got the G&A removal. That's the second biggest item after that, within Nevada. You've got further fleet benefits, sharing of fleets across the businesses, consumables, contracts and services, the supply chain effectively synergies within Nevada. The central warehousing really benefiting from operating this as one entity rather than two and removing all of that duplication, improving our negotiating power with suppliers. You've got the Turquoise Ridge impact. The fact of not having to have the overhead associated with that joint venture, removing costs out of that, transport costs, et cetera. There are a number of different other rats and mice that sit within that. In priority, that's how you get to that between sort of $350 million-$500 million, depending upon which period you're looking at, to totaling a $4.7 billion over 20 years.
If you were to take a guesstimate on the mining versus processing and G&A, like all of that, would you say the majority of it is in the mining and processing?
Yeah. Well, if you were to add up the integrated planning benefits, which includes lower mining costs along with fleet sharing, then yeah, that's probably a half to two-thirds of that value, with Nevada G&A being the second largest after that.
Yeah. Okay. That's helpful. 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 comments.
Thank you everyone for your time and patience. Really appreciate that. Again, the team's available to take on any calls as you want over our presentation and we will be at the BMO conference for the next three days. I know we'll probably be meeting most of the fund managers on this call in the next three days. I will be then following that up with catching the people who don't want to get down to Miami and New York and Toronto later this week and early next week. Again, as you know, we're always open to anybody wanting to seek further information. Again, thank you for your time.
This concludes today's conference call. Should you have any additional questions, please contact the Barrick Investor Relations department. You may now disconnect your lines. Thank you for participating and have a pleasant day.