Barrick drops $18 billion Newmont bid to form Nevada JV

Barrick Gold has dropped its US$18 billion hostile bid for Newmont Mining after the two gold mining giants agreed on a deal to combine their operations in the US state of Nevada.

The joint venture company will be operated by Barrick under a 61.5% stake, with Newmont holding the remainder, and will become the world’s largest gold producer with an annual production of 4.1 million ounces.

The breakthrough deal was finally reached after weeks of bad-tempered retorts between both firm’s leaders, which threatened to derail the Nevada operations merger that has been in the offing for 20 years.

In the wake of the deal, Barrick’s CEO Mark Bristow called Newmont’s boss Gary Goldberg his ‘new partner’, just weeks after labelling him a ‘loser’. In rejecting Barrick’s hostile bid, Goldberg called the offer ‘egocentric’.

However, the mood changed when the pair began negotiations in New York last week, after some of Newmont and Barrick’s largest shareholders indicated their preference for a joint venture over a takeover of Newmont.

“We listened to our shareholders and agreed with them that this was the best way to realise the enormous potential of the Nevada goldfields’ unequalled mineral endowment,” said Bristow.

Barrick and Newmont said the venture would generate an estimated $500 million in annual pre-tax synergies in its first five full years.