Barrick drops bid for Newmont as companies enter JV

Barrick Gold and Newmont have agreed to form a joint venture (JV) at their Nevada, United States-based operations for a combined value of $US5 billion ($7.07 billion) over a 20-year period.

The agreement brings Barrick’s $US18 billion hostile takeover bid for Newmont to an end, which followed Newmont’s rejection of the offer and a $US10 billion merger plan with Goldcorp.

Newmont was, however, open to combining the two companies’ Nevada operations in a JV.

“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,” Barrick president and chief executive Mark Bristow said.

The JV will create a combined output of over four million ounces a year, 48 million ounces of reserves and three Tier 1 assets. The ownership will be split into 61.5 per cent for Barrick (taking the role of operator) and 38.5 per cent for Newmont.

Canada-based Barrick and US-based Newmont have long been considered rivals in the gold mining world. Both companies own significant operations in Australia, and are already involved in a 50:50 JV at the Kalgoorlie Super Pit operation in Western Australia.

“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,” Newmont chief executive Gary Goldberg concluded.

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