GOLD PRODUCERS TALK TRUCE.

Proposed joint venture for firms in Nevada

T ORON T O/ N E W YOR K • After more than a week of tough talk firing back and forth, the leaders of the two biggest gold producers are finally coming to the table.

Newmont Mining Corp. chief executive Gary Goldberg and Barrick Gold Corp.’ s Mark Bristow were scheduled to meet Tuesday afternoon in New York to talk through their differences. However, Goldberg said in a Bloomberg TV interview that he won’t be discussing Barrick’s bid for his company, but rather Newmont’s proposal for a joint venture around the two companies’ assets in Nevada.

Goldberg said he heard from Bristow earlier and that “I’m looking forward to catching up with him later today here in New York. This will be the discussion on the joint venture with what we proposed yesterday.’’

In the past week, leaders at the two companies have disparaged their counterparts as inept managers who have squandered assets and destroyed shareholder value. And that’s before a formal offer is even on the table.

At stake is a potential Us$17.8-billion deal that would create the world’s largest gold producer. Newmont kicked off the fighting talk, with Goldberg calling Barrick’s no-premium proposal to buy the company “desperate and bizarre” even before Barrick publicly presented its terms on Feb. 25. Bristow responded in kind, saying he could run Newmont’s assets better than Goldberg does.

Barrick is “swinging for the fences,” Jpmorgan analyst John Bridges said at the PDAC conference in Toronto Tuesday. It’s an “audacious bid,” he said, adding that “we don’t think it’s impossible.”

Newmont’s board rejected the offer on Monday, saying its shareholders would be better off completing a pending purchase of Goldcorp Inc. But Goldberg also offered a concession, saying his company would be willing to negotiate a friendly joint venture with Barrick at their Nevada operations that would give Barrick the greater share — in addition to pushing forward with the Goldcorp deal.

There’s no doubt there are significant synergies that could be realized between Barrick Gold and Newmont in Nevada, but the specific value is “questionable,” Bridges said.

Barrick has said it is keen to talk as well. But how such negotiations could ever be friendly is hard to imagine.

The war of words started immediately after Barrick confirmed it was contemplating a bid. Goldberg quickly questioned whether Barrick’s management team is capable of running a combined Newmont-barrick company, saying, “they haven’t delivered.’’

Later Goldberg got a bit more personal, targeting Bristow by name. “Mark has never run a global portfolio,’’ Goldberg said. “In fact, I’d say none of his team have run a global portfolio like what we have in place.’’

In a March 4 presentation, Goldberg seemed to damn Bristow with faint praise. Sure, “there is no doubt that Mark has been successful as an explorer and a geologist,’’ Goldberg said. But “as an operator, he has not created shareholder value and he has yet to prove that he can successfully manage or integrate a global portfolio.’’

Goldberg also d i d n’ t spare Barrick chair John Thornton. Goldberg accused Thornton of “numerous mis-steps’’ and “value destruction.’’ Newmont’s slide presentation said that since Thornton arrived at the company, it has underperformed Newmont by more than US$12 billion, “while pocketing over US$65M from Barrick shareholders.”

For his part, Bristow has been less personal, though no less direct, saying he could do a better job managing gold fields in Nevada, where Barrick has long wanted to combine its fields with Newmont’s. Bristow also suggested that because Goldberg is scheduled to leave as CEO at the end of the year, Newmont is in an unstable situation. And he’s said Newmont’s play for Goldcorp would destroy shareholder value.

Newmont’s suggestion Barrick could take the larger stake in a JV seemed to calm the waters — but suspicions on both sides remain high. Bristow says Newmont’s JV pitch may be a “smoke screen” to block its hostile bid. Meanwhile, Newmont has said all along Barrick’s hostile bid is really about derailing its play for Goldcorp.

MATTHEW STAVER / BLOOMBERG FILES Newmont CEO Gary Goldberg has floated a proposal for a joint venture between his firm’s Nevada mines and Barrick Gold’s as their war of words continues.