Nevada gold mining showdown – top gun CEOs face-off

Newmont's board unanimously rejected Barrick's $17.8bn unsolicited proposal, saying it would not be better than Newmont's previously announced takeover of Goldcorp Inc. Instead, Newmont submitted a joint venture proposal to Barrick that would encompass the two companies' Nevada operations.

Barrick is "definitely not" going to withdraw the hostile bid, Chief Executive Officer Mark Bristow said in a telephone interview. Barrick will take its offer to Newmont shareholders, and at same time will try to advance talks about the Nevada joint venture, according to Bristow. "Time is of the essence," adding that Barrick plans to speak to Newmont "ASAP."

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Omar Jabara, a spokesman for Newmont, said by email that "we look forward to hearing back from Barrick on our letter and joint venture proposal."

Newmont had raised serious doubts about Toronto-based Barrick's full merger proposal – a hostile all-share no-premium bid – from the day it was made public Feb. 25. Newmont said its previously announced agreement to take over Goldcorp offered better benefits, and Goldberg called Barrick's takeover offer "desperate" and "bizarre."

"We can deliver the value from the Goldcorp transaction and we can work with Barrick to deliver the value from the synergy potential in Nevada," Tom Palmer, who will succeed Gary Goldberg as the next Newmont chief executive officer, said on an investor call.

"The combination with Goldcorp is significantly more accretive to Newmont's shareholders on all relevant metrics compared to Barrick's proposal, even when factoring in Barrick's own synergy estimates," Goldberg said in the statement.

Barrick has no intention of raising its offer, a person familiar with the matter said last week.

State of transformation

The top end of the gold industry has been in a state of transformation – in September, industry leader Barrick agreed to buy Randgold Resources Ltd. for $5.4bn. Three months later, Newmont announced its plan to purchase for $10 billion, which would leapfrog it into the leading gold-producer spot.

Newmont proposes to give Barrick a 55% stake in a joint venture of the companies' Nevada operations, the Colorado-based miner said in its statement Monday.

While giving Barrick the larger share of a deal is "progress," Bristow said in the interview that he would need to run the joint venture. He also questioned whether Newmont is really committed to cooperation or merely trying to block Barrick's merger proposal.

Barrick also said earlier that a joint venture between the company and Newmont in Nevada wouldn't accomplish the benefits that come with combining the two biggest gold producers.

'Better job'

"Barrick's experience with Newmont as a joint venture partner suggests that is not a transaction that would maximize value for either party," Barrick said in its updated presentation on its website. "As a result, negotiations with Newmont over the years have not been fruitful and do not give us confidence that a suitable JV or similar transaction can be implemented."

Under its agreement with Goldcorp, Newmont is barred from engaging with Barrick on its takeover bid after the board has determined that it's not a "superior proposal," Newmont said in its statement.

Asked if Newmont would consider a higher bid by Barrick for a full merger, Goldberg said in a phone interview Monday after the conference call that Newmont prefers to push forward with both the Goldcorp deal and a possible Barrick JV in Nevada instead.

"We believe getting both is the best for our shareholders," he said.

Bristow said in a statement Monday afternoon that Newmont's proposal "reinforced the frustration Barrick has experienced in its efforts to unlock the value in the two companies' assets in Nevada."

"Newmont's latest proposal is essentially based on the stale and convoluted process that foundered previously," Bristow said. "As usual, it comes with unrealistic preconditions including swapping the chairmanship and the leadership of the JV. Experience has shown us that JVs only work well when the majority owner is also the operator."

Newmont shares rose 1.9 percent to close at $34.45 in New York Monday, while Barrick gained 1.6% to $12.51.

'Poor record'

"Since previous merger discussions terminated in 2014, Newmont has significantly outperformed Barrick on almost every metric," Goldberg said in a letter Monday to Bristow and Barrick Executive Chairman John Thornton. "Our management team has a consistent, long-standing track record of delivering superior execution," he wrote. "In contrast, Barrick's underperformance highlights its ineffective operating model, poor record on delivering stockholder returns, and significant jurisdictional risk."

"Mark has never run a global portfolio," Goldberg said in a Feb. 25 interview, referring to Barrick CEO Mark Bristow, who until Jan. 1 ran Africa-focused Randgold. "In fact, I'd say none of his team have run a global portfolio like what we have in place."

On the same day, Bristow said his team could do a better job running his rival.

"I have spent a lot of time in Nevada, and I have no doubt that I can do a better job than Newmont," Bristow said in an interview with Bloomberg Television.