A joint venture agreement involving Newmont Gold and American Barrick Resources is the latest development in Newmont Mining Corp.’s attempt to stave off a takeover bid by an American investment company led by T. Boone Pickens.
While the two events are said to be unconnected, Newmont and Barrick tentatively agreed to mine their respective gold reserves in Elko, Nev. from the same open pit, the day after Pickens- controlled Ivanhoe Partners made its initial acquisition offer.
Last Tuesday, Ivanhoe began a $2.6-billion ($95(US) per share) tender offer for 28 million of Newmont’s 66 million outstanding common shares which, combined with Ivanhoe’s present holdings, would give it a majority stake in Newmont.
Earlier this week, Pickens increased his bid to $105 per share for a 51% interest in Newmont.
However, Newmont Chairman Gordon Parker rejected the first offer saying it is inadequate and not in the best interests of shareholders. He is backed by Newmont’s largest shareholder, Consolidated Gold Fields plc. Based in England, Consolidated owns 26.2% of Newmont’s outstanding common shares.
“Pressure from Pickens probably didn’t hurt but I’ve always felt the Nevada deal would have been concluded anyway,” said Jerry Garbutt, Barrick’s chief financial officer when questioned about the timing of the Barrick/Newmont joint venture in Nevada.
After filing a federal lawsuit in Nevada to block the $95-per-share-partial tender offer, Newmont has unveiled a business plan which it hopes will thwart the Pickens takeover bid.
To fight the bid, Newmont Mining has arranged a $2.2-billion line of bank credit and unveiled an aggressive new production and capital improvements plan designed to increase the value of its shares.
These steps were taken after Ivanhoe Partners stepped up its attempted takeover by announcing its intention to place Mr. Pickens and two associates on Newmont’s board of directors.
As part of a new business plan, Newmont says it will spend $400 million over five years to increase production of its 90%-owned Newmont Gold Co. by more than 50% next year to 913,000 oz.
When it raises production to 1.4 million oz in 1989, Newmont will be the first North American producer to exceed the one- million-oz mark.
A further production increase of 200,000 oz by 1990 will keep the company’s annual production at 1.6 million oz through 1992.
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