Barrick Gold Corporation (NYSE:GOLD) (TSX:ABX) and Newmont Goldcorp
Corporation (NYSE:NEM) (TSX:NGT) have successfully concluded the
transaction establishing Nevada Gold Mines LLC. The new
company, owned 61.5% and operated by Barrick, and owned 38.5% by
Newmont Goldcorp, was officially launched today.
The new joint venture will rank as the largest
global gold producing complex by a wide margin, with three of the
world’s top 10 Tier One1 gold assets (Goldstrike/Carlin, Cortez and
Turquoise Ridge/Twin Creeks) and potentially another one in the
making (Goldrush).
Its assets in North-eastern Nevada comprise 10
underground and 12 open pit mines, two autoclave facilities, two
roasting facilities, four oxide mills, a flotation plant and five
heap leach facilities. In 2018 these operations produced a
total of 4.1 million ounces of gold, approximately double that of
the industry’s next largest gold mine (Muruntau in
Uzbekistan). The company has a strong reserve and resource
base with Proven and Probable Reserves of 48.3 million ounces;
Measured and Indicated Resources of 27.4 million ounces; and a
further 7.5 million ounces of Inferred Resources with still more
potential.2,3,4
Nevada Gold Mines is targeting production of
between 1.8 and 1.9 million ounces at a preliminary estimated cost
of sales5 of $940 to $970 per ounce and AISC6 of $920 to $950 per
ounce for the second half of 2019.
Barrick President and Chief Executive Officer
Mark Bristow, who is chairman of the new company, says the
establishment of Nevada Gold Mines was designed to combine arguably
the industry’s best assets and people in order to deliver the best
value to stakeholders.
“Its creation was driven by a compelling logic
which had long been evident to all but had been elusive for two
decades until we finally achieved a breakthrough this year,”
Bristow said.
“Over the past months we have selected and set
Nevada Gold Mines’ leadership in place. The company now has
one team that shares one vision, and who are more than ready to
race out of the starting blocks. We have also identified the
very significant synergy opportunities which are immediately
available and those which have been targeted for the future.”
Gary Goldberg, Newmont Goldcorp’s Chief
Executive Officer said, “This innovative joint venture represents a
unique opportunity to generate additional long-term value for our
shareholders, employees, and the communities of northern Nevada.
By combining our assets and talent in Nevada, the joint
venture will extend safe, profitable and responsible production
much further than what each company could have done on its own.
We look forward to actively participating in and supporting
the JV to deliver a positive step-change in results.”
Identified synergies are expected to deliver up
to $500 million per year over the first five years from 2020,
stepping down over time after that. These will come mainly
from integrated mine planning, optimized mining and processing,
cost reductions and the combination of the adjacent Turquoise Ridge
and Twin Creeks, which will be operated as a single mine.
Second half guidance builds in those synergies that the company
believes it should be able to realize within the next six months,
representing approximately half of the targeted annual cash flow
improvements. With the closing of the JV now complete, the
company will look to incorporate further synergies to benefit 2020
and beyond.
The future benefits include longer profitable
mine lives, longer-term employment opportunities, longer-term
benefit-sharing with local communities and longer-term advantages
for Nevada’s economy.
Bristow noted that the Nevada Gold Mines
management team included executives from both joint venture
partners. The Executive Managing Director is Greg Walker,
formerly head of operations and technical excellence for Barrick’s
North American region. Barrick has three board seats and
Newmont Goldcorp two, with the board supported by technical,
finance and exploration advisory committees on which both companies
have equal representation.
Enquiries:
Barrick Investor and Media Relations Kathy du
Plessis +44 20 7557 7738 Email: barrick@dpapr.com
Website: www.barrick.com
Cautionary Statement on Forward-Looking
InformationThis press release contains statements which
are, or may be deemed to be, “forward-looking statements” (or
“forward-looking information”), under applicable securities laws
including for the purposes of the US Private Securities Litigation
Reform Act of 1995. Forward-looking statements are prospective in
nature and are not based on historical facts, but rather on current
expectations and projections of the management of Barrick about
future events, and are therefore subject to risks and uncertainties
which could cause actual results to differ materially from the
future results expressed or implied by the forward-looking
statements. The forward-looking statements contained in this press
release include statements relating to: the expected impact of the
creation of the new joint venture, including potential synergies;
the potential for Goldrush to become a Tier One gold asset; and
other statements other than historical facts.
Although Barrick believes that the expectations
reflected in such forward-looking statements are reasonable,
Barrick can give no assurance that such expectations will prove to
be correct. By their nature, forward-looking statements involve
risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ
materially from those expressed or implied by such forward-looking
statements. These factors include: risks relating to Nevada Gold
Mines, Barrick and Newmont Goldcorp’s respective credit ratings;
local and global political and economic conditions; Barrick’s
economic model; liquidity risks; fluctuations in the spot and
forward price of gold, copper, or certain other commodities (such
as silver, diesel fuel, natural gas, and electricity); financial
services risk; the risks associated with each of Nevada Gold
Mines’, Barrick’s and Newmont Goldcorp’s brand, reputation and
trust; environmental risks; safety and technology risks; the
ability to realize the anticipated benefits of the joint venture
(including estimated synergies and financial benefits) or
implementing the business plan for the joint venture; legal or
regulatory developments and changes; risks associated with working
with partners in jointly controlled assets; employee relations
including loss of key employees; the outcome of any litigation,
arbitration or other dispute proceeding; the impact of any
acquisitions or similar transactions; competition and market risks;
the impact of foreign exchange rates; pricing pressures; the
possibility that future exploration results will not be consistent
with expectations; risks that exploration data may be incomplete
and considerable additional work may be required to complete
further evaluation, including but not limited to drilling,
engineering and socioeconomic studies and investment; risk of loss
due to acts of war, terrorism, sabotage and civil disturbances;
contests over title to properties, particularly title to
undeveloped properties, or over access to water, power and other
required infrastructure; and business continuity and crisis
management. Other unknown or unpredictable factors could cause
actual results to differ materially from those in the
forward-looking statements. Such forward-looking statements should
therefore be construed in the light of such factors.
Neither Barrick, Newmont Goldcorp nor any of
their respective directors, officers, employees or advisers,
provides any representation, assurance or guarantee that the
occurrence of the events expressed or implied in any
forward-looking statements in this press release will actually
occur. You are cautioned not to place undue reliance on these
forward-looking statements. Other than in accordance with their
legal or regulatory obligations, neither Barrick nor Newmont
Goldcorp is not under any obligation, and both Barrick and Newmont
Goldcorp expressly disclaim any intention or obligation, to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise. Investors should not
assume that any lack of update to a previously issued
“forward-looking statement” constitutes a reaffirmation of that
statement.
Newmont Goldcorp is not affirming or adopting
any statements or reports attributed to Barrick in this press
release or made by Barrick outside of this press release. For a
detailed discussion of risks and other factors related to Newmont
Goldcorp, see Newmont Goldcorp’s 2018 Annual Report on Form 10-K,
filed with the Securities and Exchange Commission (the “SEC”) as
well as Newmont Goldcorp’s other SEC filings, available on the SEC
website or www.newmontgoldcorp.com.
Third Party DataCertain
comparisons of Barrick, Newmont Goldcorp and their industry peers
are based on data obtained from Wood Mackenzie. Wood Mackenzie is
an independent third party research and consultancy firm that
provides data for, among others, the metals and mining industry.
Wood Mackenzie does not have any affiliation to Barrick or Newmont
Goldcorp.
Other than in respect of their own mines,
neither Barrick nor Newmont Goldcorp has the ability to verify the
data or information obtained from Wood Mackenzie and the non-GAAP
financial performance measures used by Wood Mackenzie may not
correspond to the non-GAAP financial performance measures
calculated by Barrick, Newmont Goldcorp or their respective
industry peers. For more information on these non-GAAP financial
performance measures see Endnote 1.
Neither Barrick nor Newmont Goldcorp has sought
or obtained consent from any third party to be quoted in this press
release.
Technical InformationThe
scientific and technical information contained in this press
release in respect of Barrick has been reviewed and approved for
release by Steven Yopps, MMSA, Director - Metallurgy, North America
and Rodney Quick, MSc, Pr. Sci.Nat, Mineral Resource Management and
Evaluation Executive, each a “Qualified Person” as defined in
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects.
Endnotes
- A Tier One gold asset is a mine
with a stated mine life in excess of 10 years with annual
production of at least five hundred thousand ounces of gold and
total cash cost per ounce within the bottom half of Wood
Mackenzie’s cost curve tools (excluding state-owned and privately
owned mines). Total cash cost per ounce is based on data from Wood
Mackenzie as of August 31, 2018, except in respect of Barrick’s
mines where Barrick relied on its internal data which is more
current and reliable. The Wood Mackenzie calculation of total cash
cost per ounce may not be identical to the manner in which Barrick
calculates comparable measures. Total cash cost per ounce is a
non-GAAP financial performance measure with no standardized meaning
under IFRS and therefore may not be comparable to similar measures
presented by other issuers. Total cash cost per ounce should not be
considered by investors as an alternative to cost of sales or to
other IFRS measures. Barrick believes that total cash cost per
ounce is a useful indicator for investors and management of a
mining company’s performance as it provides an indication of a
company’s profitability and efficiency, the trends in cash costs as
the company’s operations mature, and a benchmark of performance to
allow for comparison against other companies.
- The pro forma reserves and
resources figures of Nevada Gold Mines were derived by adding the
respective reserves and resources in respect of Nevada operations
reported by Barrick in its Q4 2018 Report and Newmont in its press
release dated February 21, 2019 reporting its 2018 Reserves and
Resources and its annual report on Form 10-K for the fiscal year
ended December 31, 2018 in respect of the relevant Nevada
properties set out in endnotes 3 and 4. The pro forma reserves and
resources are provided for illustrative purposes only. Barrick and
Newmont calculate such figures based on different standards and
assumptions, and accordingly such figures may not be directly
comparable and the pro forma reserves and resources may be subject
to adjustments due to such differing standards and assumptions. In
particular, Barrick mineral reserves and resources have been
prepared according to Canadian Institute of Mining, Metallurgy and
Petroleum 2014 Definition Standards for Mineral Resources and
Mineral Reserves as incorporated by National Instrument 43-101 –
Standards of Disclosure for Mineral Projects, which differ from the
requirements of U.S. securities laws. Newmont’s reported reserves
are prepared in compliance with Industry Guide 7 published by the
SEC, however, the SEC does not recognize the terms “resources” and
“measured and indicted resources”. Newmont has determined that its
reported “resources” would be substantively the same as those
prepared using Guidelines established by the Society of Mining,
Metallurgy and Exploration (SME) and that its reported measured and
indicated resources (combined) are equivalent to “Mineralized
Material” disclosed in its annual report on Form 10-K.
- Reserves and resources of Barrick
in Nevada are stated on an attributable basis as of December 31,
2018 and include Goldstrike, Cortez, Goldrush, South Arturo (60%)
and Turquoise Ridge (75%). Proven reserves of 84.4 million tonnes
grading 4.36g/t, representing 11.8 million ounces of gold. Probable
reserves of 155.6 million tonnes grading 2.93g/t, representing 14.7
million ounces of gold. Measured resources of 13.5 million tonnes
grading 4.22g/t, representing 1.8 million ounces of gold. Indicated
resources of 101.6 million tonnes grading 4.34g/t, representing
14.2 million ounces of gold. Inferred resources of 28.7 million
tonnes grading 5.2g/t, representing 4.8 million ounces of gold.
Complete mineral reserve and resource data for all Barrick mines
and projects referenced in this press release, including tonnes,
grades, and ounces, as well as the assumptions on which the mineral
reserves for Barrick are reported, are set out in Barrick’s Q4 2018
Report issued on February 13, 2019.
- Reserves and resources of Newmont
in Nevada are stated on an attributable basis as of December 31,
2018 and include Carlin, Phoenix, Lone Tree, Twin Creeks (including
Newmont’s 25% equity in Turquoise Ridge) and Long Canyon. Proven
reserves of 46.6 million tonnes grading 3.84g/t, representing 5.8
million ounces of gold. Probable reserves of 378.1 million tonnes
grading 1.32g/t, representing 16.0 million ounces of gold. Measured
resources of 19.7 million tonnes grading 2.2 g/t, representing 1.4
million ounces of gold. Indicated resources of 244.4 million tonnes
grading 1.27g/t, representing 10.0 million ounces of gold. Inferred
resources of 45.5 million tonnes grading 1.81g/t, representing 2.7
million ounces of gold. Complete mineral reserve and resource data
for all Newmont mines and projects referenced in this press
release, including tonnes, grades, and ounces, as well as the
assumptions on which the mineral reserves for Newmont are reported,
are set out in Newmont’s press release dated February 21, 2019
reporting its 2018 Reserves and Resources and its annual report on
Form 10-K for the fiscal year ended December 31, 2018.
- Cost of Sales estimates stated
prior to any fair value adjustments relating to the creation of the
joint venture and will be updated in due course once these
adjustments have been finalized.
- “Total cash costs” per ounce and
“All-in sustaining costs” per ounce are non-GAAP financial
performance measures. “Total cash costs” per ounce starts with cost
of sales applicable to gold production, but excludes the impact of
depreciation, the non-controlling interest of cost of sales, and
includes by-product credits. “All-in sustaining costs” per ounce
begin with “Total cash costs” per ounce and add further costs which
reflect the additional costs of operating a mine, primarily
sustaining capital expenditures, sustaining leases, general &
administrative costs, minesite exploration and evaluation costs,
and reclamation cost accretion and amortization. Barrick believes
that the use of “total cash costs” per ounce and “all-in sustaining
costs” per ounce will assist investors, analysts and other
stakeholders in understanding the costs associated with producing
gold, understanding the economics of gold mining, assessing our
operating performance and also our ability to generate free cash
flow from current operations and to generate free cash flow on an
overall Company basis. “Total cash costs” per ounce and “All-in
sustaining costs” per ounce are intended to provide additional
information only and do not have any standardized meaning under
IFRS. Although a standardized definition of all-in sustaining costs
was published in 2013 by the World Gold Council (a market
development organization for the gold industry comprised of and
funded by 27 gold mining companies from around the world, including
Barrick), it is not a regulatory organization, and other companies
may calculate this measure differently. Starting in the first
quarter of 2019, Barrick has renamed "cash costs" to "total cash
costs" when referring to its gold production. The calculation of
total cash costs is identical to Barrick’s previous calculation of
cash costs with only a change in the naming convention of this
non-GAAP measure. These measures should not be considered in
isolation or as a substitute for measures prepared in accordance
with IFRS. Further details on these non-GAAP measures are provided
in the MD&A accompanying Barrick’s financial statements filed
from time to time on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov.
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