Nevada’s two largest gold producers have agreed to merge their local assets to create the world’s single-largest, precious metal mining operation.
Barrick Gold Corp. and Newmont Mining Corp. will contribute production mines, processing facilities and infrastructure stretching from Wells near the Utah border to Winnemucca into a new joint venture.
Barrick Gold withdrew its $18 billion bid for its biggest rival Newmont Mining, ending a hostile and bitter takeover effort that sought to unite the world’s two biggest gold producers.
The two companies have instead, agreed to shake hands, so to speak, and work together to build a joint venture for their operations in Nevada, where Newmont has 19 mines adjacent to Barrick’s.
The new Nevada entity — some 20 years in the making — will produce more than 4 million ounces of gold annually and poses nearly 50 million ounces of proven reserves. It will be one of the most efficient gold producers in the world with an average 2018 output cost of $775 per ounce.
In a press release on Monday, Barrick President and Chief Executive Officer Mark Bristow announced the two companies have signed an implementation agreement to create a joint venture combining their respective mining operations, assets, reserves, and talent in Nevada.
Under the terms of the deal, Barrick Gold will take a 61.5 percent of the joint venture company, with Newmont holding the remainder. This will make the new company the world’s biggest producer of gold with 4.1m ounces of production a year, according to the Financial Times.
Newmont has not included its Cripple Creek & Victor gold mine in Colorado, and Barrick’s has not included its Fourmile exploration asset in Nevada, although it could be added to the joint venture later if it meets certain requirements.
“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,” Barrick president Mark Bristow said.
Gary Goldberg, Chief Executive Officer of Newmont, said the logic of combining the two companies’ operations was compelling. “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.”
The new deal also means that Newmont can proceed with its plans to buy Canadian miner Goldcorp Inc. in a deal it valued at about $10 billion, according to CBC Canada.