Gary Goldberg, Newmont Mining Corporation CEO (File image: NMC)
Whether it was a premeditated move by CEO Mark Bristow to launch Barrick’s hostile bid only a couple of hours before Newmont’s outgoing boss Gary Goldberg was scheduled to speak to a select group of investors isn’t entirely clear.
What is apparent though, is that the outgoing Newmont CEO came prepared for such an eventuality by opening his presentation at the BMO Capital Markets mining conference in Hollywood, Florida on Monday morning with slides disparaging Barrick’s track record and casting doubt on its intentions with the no-premium all-share offer.
Bristow is known as a straight talker, but from the excerpt and first two slides of the Newmont presentation, it’s clear Goldberg does not mince his words either:
We have delivered, they simply, have not. We have the global mining and management experience, they simply do not
I’d like to start out by sharing with you this slide, which highlights our clearly differentiated performance. As you all know, we’re well aware of Barrick’s unsolicited, negative premium proposal. Let me be clear, we remain confident in our ability to deliver superior value for our shareholders.
Our team has proven track record of successfully managing and operating a global mining portfolio, delivering total shareholder returns of 65% since January of 2014 compared with Randgold’s anemic 9% and Barrick’s shocking negative 22% over that same period.
The current Barrick management team has only been together for 8 weeks and has never collectively managed to the global portfolio of our scale, complexity or quality. We have delivered, they simply, have not. We have the global mining and management experience, they simply do not.
Source: Newmont Mining at BMO Capital Markets Metals and Mining Conference
As this graph clearly illustrates, our team has delivered vastly superior performance over Barrick during the last 5 years.
During this period, we have evaluated acquisitions of both Barrick and Randgold, neither met our risk or return requirements.
Both the Barrick and the Randgold portfolios present unacceptable risk and in unfavorable jurisdictions. However, we agree with Barrick’s position that jointly operating our collective assets in Nevada represents a compelling value opportunity for all of our shareholders, but there is no reason to bear the risk from Barrick’s other assets.
Clearly, our hope that Mark and his team would bring a fresh and professional approach to managing Barrick’s business has proven disappointing within just 8 weeks of his arrival
We’re hopeful that Mark and his team would take a practical and constructive approach to unlocking value in Nevada doing that with us.
Instead, they appear to be pursuing the same hostile and value destructive tactics that their Executive Chairman has pursued since arriving at Barrick.
We have a much more effective and efficient proposal. We have been, and remain, prepared to immediately begin constructive discussions with Barrick’s team in Nevada to create a world-class joint venture there.
Unfortunately, Mark’s claim this morning that he has shared all of this with Newmont to no avail is simply not true.
Clearly, our hope that Mark and his team would bring a fresh and professional approach to managing Barrick’s business has proven disappointing within just 8 weeks of his arrival.
Barrick’s behavior this morning unfortunately, provides yet another clear example of why they’re unqualified to responsibly manage Newmont’s global portfolio of world-class assets.
By contrast, our approach represents a clear and effective path to unlock the full potential of our collective assets in Nevada, without exposing our shareholders to the unacceptable risks associated with the rest of Barrick’s portfolio and team.
Source: Newmont Mining at BMO Capital Markets Metals and Mining Conference
Barrick’s anticipated cost savings for a combined mega-gold producer have raised a few eyebrows and Goldberg was asked after the presentation whether he deemed the $7 billion worth of “synergies” a realistic number:
First, our number of $265 million in annual savings translates to $2.5 billion. That we’ve done deep diligence on, we understand and it makes sense. In terms of what I’ve just proposed to work with the team in Barrick in Nevada and capture those synergies, that’s something we can also do at the same time.
So it’s not lost in the process of doing this transaction with Goldcorp. We look forward to the opportunity, should the party in Nevada want to work with us to work to deliver those.
This has been something that’s been on the table since I joined Newmont, it’s something I’ve seen since I first visited Barrick’s operations back in the early 1990s.
Clearly, we couldn’t do it back in 2014 and come to a way. I was hopeful that Mark coming in, sitting down miner to miner rather than lawyer and finance person would be an opportunity to deliver that. That’s been put in question this morning, whether they really want to truly pursue something that makes sense for our shareholders.
With a personal investment of $225 million on the line, much is at stake for Rob McEwen with the success of McEwen Copper’s flagship Los Azules project in Argentina.
