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Newmont Ends Barrick Merger Talks to Stay Independent

Newmont Mining Corp. Gold Quarry Pit
Newmont produced 1.77 million ounces of gold in Nevada last year, the company said in a Jan. Photographer: Stephen Hilger/Bloomberg

Barrick Gold Corp. said Newmont Mining Corp. ended merger talks, the latest of several attempts over more than two decades to combine the world’s two largest gold producers and wring cost savings from their adjacent mining operations in Nevada.

“Although Barrick believes the interests of shareholders are best served through the completion of this business combination, Newmont’s board has determined that the interests of Newmont’s shareholders are best served by remaining independent,” Toronto-based Barrick said today in a statement.

Barrick, the biggest gold miner, and Greenwood Village, Colorado-based Newmont discussed a merger earlier this month and identified annual savings of $1 billion, two people with knowledge of the matter said April 19. Barrick was to offer Newmont shareholders a takeover premium of 13 percent, the people said. The talks were halted April 18 amid disagreements related to a proposed spinoff of some of the combined company’s mines, the people said.

Barrick founder and Chairman Peter Munk said last week that the latest round of talks may be different from previous attempts to merge because of the increased pressure to cut costs following gold’s decline. Shareholders may also put pressure on the companies to seal a deal, he said. Gold plunged 28 percent last year, the most in three decades, leading to at least $30 billion of writedowns across the gold-mining industry.

Newmont dropped 5.5 percent to $25 at 8:26 a.m. before the start of regular trading in New York.

Omar Jabara, a spokesman for Newmont, didn’t immediately respond to a phone call or e-mail seeking comment.

Nevada Savings

Most of the efficiencies seen in a Barrick-Newmont deal would come from the combination of their operations in Nevada, where they produce more than a third of their gold.

Munk, who founded Barrick in 1983, is set to retire as chairman at the company’s annual shareholder meeting on April 30, when he will be replaced by Co-Chairman John Thornton. Speaking in an April 23 interview at Bloomberg headquarters in New York, Munk said the plan to spin off some of the combined company’s assets outside North America, a move he said would help reduce risk, improve profitability and make the combination more attractive.

Newmont produced 1.77 million ounces of gold in Nevada last year, the company said in a Jan. 31 presentation, 35 percent of the total company gold output of 5.07 million ounces. Barrick’s Nevada production was about 2.79 million ounces, based on company disclosures, 39 percent of last year’s total.

Barrick and Newmont already are equal partners in the Kalgoorlie mine in Australia, and jointly own the Turquoise Ridge mine in Nevada, with Barrick controlling 75 percent.

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