TORONTO--(BUSINESS WIRE)--Dec. 14, 2001--
Barrick Gold Corporation (NYSE:ABX TSE:ABX. PARIS:ABX.)
(SWISS:ABX.) (LSE:ABX.) today announced the completion of its merger
with Homestake Mining Company (NYSE: HM), strengthening Barrick's
leadership position as the most valuable gold mining company by market
capitalization. ``Going forward, our goal is to be the most profitable,
lowest-cost producer, not to be the biggest producer,'' said Randall
Oliphant, Barrick's President and Chief Executive Officer.
Homestake shareholders strongly approved the merger during a
special meeting held earlier today. Under the terms of the merger
agreement, each share of Homestake common stock was converted into
0.53 Barrick common shares. The combined Company has approximately 536
million shares outstanding. Former holders of Homestake common stock
now own approximately 26% of the outstanding Barrick common shares.
``This merger ties strength to strength,'' said Mr. Oliphant,
``creating a company with a stronger balance sheet, stronger free cash
flows and more opportunities than either company had alone.'' Jack
Thompson, Homestake's Chairman and C.E.O., said: ``We are pleased that
our shareholders have shown overwhelming support for the merger, which
uniquely positions the combined Company for an exciting and dynamic
future.''
The transaction creates the clear market leader in four key areas:
--
Operating strength - provided by a large, low-cost asset base with
the lowest geo-political risk profile among senior producers in
the gold industry (54% of the merged Company's reserves are in
North America and Australia, with another 33% in South America);
--
Financial strength - the industry's highest cash flows, only
A-rated balance sheet and Premium Gold Sales Program, which has a
14-year track record of earning a premium to the spot price;
--
Capital markets strength - the largest market capitalization,
roughly by a factor of two, with liquidity that is expected to
place the combined Company in the top 100 of the S&P 500; and
--
A strong growth profile - with dominant land positions in the most
prolific gold-producing regions in the world and a promising
pipeline of new projects.
The Company has streamlined its management structure and appointed
Homestake executives to the team. Barrick has appointed Jack Thompson
as Vice Chairman of the Company and as a member of its Board of
Directors. In addition, Homestake's Steve Orr has been appointed as
Vice President, North American Operations, and Greg Lang as Vice
President, Australian Operations. ``This new team structure has three
key drivers: profitable growth, operational excellence and leadership
development,'' said Mr. Oliphant. The Company's corporate offices will
continue to be located in Toronto.
When the transaction was announced June 25, Barrick projected
administrative and financial synergies of at least $55 million
annually beginning in 2002, comprised of approximately $20 million in
tax savings, $20 million in administrative expense savings, and $15
million as a result of exploration expense savings and the benefits of
combining complementary operations. ``Based on the work done to date,
the Company now expects to realize approximately $60 million next
year, which we see as a base to build on for 2003,'' said Mr. Oliphant.
Over and above these synergies, an integration team made up of two
dozen people, half Barrick and half Homestake, has been focusing on
operating savings at each of the mining operations. Another
integration team, focused on development projects, is assessing the
Pascua and Veladero properties in Chile and Argentina as an
opportunity for future growth. The focus is on developing Pascua and
Veladero as a single, unified gold district, with the benefits that
provides in the form of lower capital and operating costs. The primary
objective for 2002 will be to finalize the development plan for the
Veladero Property.
Post-merger, Barrick's Premium Gold Sales Program will continue to
provide security during periods of low gold prices while maintaining
flexibility to participate in higher spot prices. With the inclusion
of Homestake's hedge position, the Program is very much in line with
its historic parameters. The Program had 18.3 million ounces in spot
deferred contracts at average price of $345 an ounce at the end of the
third quarter this year. The Program is expected to generate
approximately $200 million annually in premiums for the Company,
continuing a 14-year track record in which the Program has earned an
additional $2 billion in revenue, or an average $68 per ounce premium
to the spot price. Going forward, a portion of Barrick's annual
production is expected to be sold into the spot market. This will
provide additional participation in a rising gold price environment
while the Program continues to assure strong cash flows.
The combined Company now has a reserve base of 84.3 million
ounces(1) and is expected to produce approximately 5.7 million ounces
of gold at a cash cost of about $165 per ounce in 2002. Barrick trades
under the ticker symbol ABX on the Toronto, New York, London and Swiss
Stock Exchanges and the Paris Bourse.
Certain statements included herein, including those regarding,
market capitalization, production, cash costs, cash flows, costs
synergies and liquidity, constitute ``forward looking statements''
within the meaning of the United States Private Securities Litigation
Reform Act of 1995. Such forward looking statements involve known and
unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of Barrick or of the gold
mining industry to be materially different from future results,
performance or achievements expressed or implied by those forward
looking statements. These risks, uncertainties and other factors
include, but are not limited to, changes in the worldwide price of
gold or certain other commodities and currencies and the risks
involved in the exploration, development and mining business. These
factors are discussed in greater detail in Barrick's most recent
Annual Information Form and ``Management's Discussion and Analysis of
Financial and Operating Results'' on file with the U.S. Securities and
Exchange Commission and Canadian provincial securities regulatory
authorities.
(1) Calculated in accordance with the standards set out in
National Instrument 43-101, as required by Canadian securities
regulatory authorities, which are different than the standards set out
in U.S. Industry Guide 7 (under the Securities Act of 1934).
Contact:
Barrick Gold Corporation
Vincent Borg, 416/307-7477
416/861-1509 (FAX)
E-mail: media@barrick.com