Gold mining giants Barrick Gold and Newmont Mining have agreed to combine their respective mining operations and assets in the US state of Nevada into a joint venture (JV) with an aim to unlock synergies worth $5bn.
The Canada-based Barrick Gold will have an ownership of 61.5% in the joint venture along with the operatorship role while Newmont Mining will own the remaining stake of 38.5%.
Upon completion of the joint venture, the Nevada complex is expected to become the single-largest gold producer in the world with an output of over four million ounces in 2018, 48 million ounces of reserves, and three Tier One assets with possible addition of another one.
Barrick Gold president and CEO Mark Bristow said: “We listened to our shareholders and agreed with them that this was the best way to realize the enormous potential of the Nevada goldfields’ unequalled mineral endowment, and to maximize the returns from our operations there.
“We are finally taking down the fences to operate Nevada as a single entity in order to deliver full value to both sets of shareholders, as well as to all our stakeholders in the state, by securing the long-term future of gold mining in Nevada.”
Currently, Barrick Gold’s operations in Nevada comprise the Cortez and Goldstrike properties, which have a workforce of 3,000 employees and 800 contractors.
At Cortez, the operations are divided between two complexes, the Pipeline complex, which is mined through open pit, and Cortez Hills, which is mined through both open pit and underground.
Goldstrike, on the other hand, comprises the Betze-Post open pit along with the Meikle and Rodeo underground mines.
Newmont Mining owns or controls nearly 2.6 million acres in Nevada, which contribute nearly 33% or so of the company’s worldwide gold production. The US-based miner’s Nevada operations include 11 surface mines, eight underground mines along with 13 processing facilities.
Barrick Gold’s Fourmile project and Newmont Mining’s Fiberline and Mike deposits will be excluded from the joint venture until the determination of their commercial feasibility.
Newmont Mining CEO Gary Goldberg said: “This agreement represents an innovative and effective way to generate long-term value from our joint assets in Nevada, and represents an important step forward in expanding value creation for our shareholders.
“Through the joint venture, we will also continue to pursue the highest standards in safety, along with responsible and meaningful engagement with our employees, communities, and other stakeholders.”
Newmont Mining proposed the joint venture in Nevada in response to Barrick Gold’s bid to acquire the former for $18bn. The US miner rejected the takeover offer citing that it is not in the best interests of its shareholders and also that its $10bn merger with Canadian gold miner Goldcorp represents a superior value creation opportunity.
Following the joint venture agreement, Barrick Gold has withdrawn its acquisition proposal to the US firm. The joint venture will be finalized in the next few months after securing regulatory approvals and satisfying other conditions.