Newmont and Santa Fe vote in favor of merger plan

Shareholders of both Santa Fe Pacific Gold (GLD-N) and Newmont Mining (NEM-N) have expressed their overwhelming support for a proposed merger.

During a special meeting, both groups of shareholders met and voted in favor of the US$2.1-billion arrangement.

Each Santa Fe share will be exchangeable for 0.43 of a share of Newmont Mining. The latter company will issue 56.6 million new shares.

Following the merger, Newmont Mining transferred Santa Fe to Newmont Gold (NGC-N) for the same number of Newmont Gold shares. The transaction had the effect of increasing Newmont Mining’s interest in Newmont Gold to 94% from 91%.

The restructured company is expected to produce 3.7 million oz. gold in the current year, growing to 4.1 million oz. in 1998. Cash costs are not expected to exceed US$210 per oz.

Newmont Mining expects the merger will result in annual savings of US$70 to $80 million. Operations in Nevada account for more than 70% of reserves and production.

Newmont and Santa Fe have invested more than US$2.7 billion in their Nevada operations. The former intends also to invest US$100 million in the construction of an 8-Million-Ton leach pad for bio-oxidation processes. As a result of the merger, Newmont’s reserves will rise to beyond 55 million oz.

from 37.1 million oz. in 1996. The company will have a total of four underground mines and 17 open-pit mines throughout the world.