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TABLE OF CONTENTS
TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ý | ||
Filed by a Party other than the Registrant o |
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Check the appropriate box: |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
Newmont Mining Corporation | ||||
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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(1) | Title of each class of securities to which transaction applies: |
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(2) | Aggregate number of securities to which transaction applies: |
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(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
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(4) | Proposed maximum aggregate value of transaction: |
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(5) | Total fee paid: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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(2) | Form, Schedule or Registration Statement No.: |
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(3) | Filing Party: |
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(4) | Date Filed: |
March 11, 2019
PROPOSED ARRANGEMENTYOUR VOTE IS VERY IMPORTANT
Dear Stockholders,
I am pleased to inform you that, Newmont Mining Corporation ("Newmont" or the "Company") and Goldcorp Inc. ("Goldcorp") have agreed to a strategic business combination transaction whereby Newmont will acquire all of the issued and outstanding Goldcorp common shares (the "arrangement") and Goldcorp will become a wholly-owned subsidiary of Newmont. Upon completion of the arrangement, Goldcorp shareholders will receive 0.3280 of a share of Newmont common stock, par value $1.60 per share ("Newmont common stock") and $0.02 in cash for each Goldcorp common share (collectively, the "consideration") pursuant to an arrangement agreement entered into by Newmont and Goldcorp on January 14, 2019, which was subsequently amended on February 19, 2019 (as amended, the "arrangement agreement"), in a transaction valued at approximately $10 billion as of the date of transaction announcement.
The arrangement will be implemented by way of a plan of arrangement (the "plan of arrangement") in accordance with the Business Corporations Act (Ontario) (the "OBCA") and is subject to approval by the Ontario Superior Court of Justice (Commercial List) (the "Court") and the stockholders of Newmont and the shareholders of Goldcorp. Upon completion of the arrangement, it is expected that existing Goldcorp shareholders will own approximately 35% of the outstanding Newmont common stock.
The Newmont board of directors believes that Newmont's proposed combination with Goldcorp will create an unmatched portfolio of world-class operations, projects, reserves, exploration opportunities, and talent and represents the best opportunity to maximize value for Newmont's stockholders. After the transaction closes, which is expected in the second quarter of 2019, Newmont Goldcorp will:
The Newmont board of directors unanimously recommends that you vote "FOR" each of the proposals described in this proxy statement. Your vote is very important, no matter how many shares you own.
We are sending you the accompanying proxy statement to cordially invite you to attend a special meeting of the stockholders of Newmont to be held on April 11, 2019, at 8 a.m. local time, at the Four Seasons Hotel, 1111 14th Street, Denver, Colorado 80202, or to vote your shares by proxy, for the following purposes in connection with the arrangement:
Newmont has entered into an implementation agreement to establish a joint venture (the "Barrick Nevada agreement") with Barrick Gold Corporation ("Barrick") to realize synergies and savings from Newmont's and Barrick's Nevada-related operations. The terms of the Barrick Nevada agreement are modeled on similar terms to other successful joint ventures, including ones that Barrick has with Newmont and Goldcorp. In connection with entering into the Barrick Nevada agreement, Barrick has agreed to withdraw its previously announced acquisition proposal for an all-stock acquisition of Newmont.
After careful consideration, the Newmont board of directors has unanimously determined that it is advisable and in the best interests of Newmont and its stockholders to consummate the arrangement with Goldcorp as contemplated by the arrangement agreement, and unanimously recommends that you vote "FOR" each of the foregoing proposals.
The accompanying proxy statement provides you with information about the arrangement and the special meeting of Newmont stockholders. Newmont encourages you to read the proxy statement carefully and in its entirety, including the arrangement agreement, which is attached as Annex A. Before deciding how to vote, you should consider the "Risk Factors" beginning on page 47 of the proxy statement. You may also obtain more information about Newmont from documents Newmont has filed with the Securities and Exchange Commission (the "SEC") as described under "Where You Can Find More Information" beginning on page 147 of the proxy statement.
Your vote is very important.
The arrangement cannot be completed unless both the amendment proposal and the share issuance proposal are approved. Approval of the amendment proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Newmont common stock as of the record date for the special meeting. Approval of the share issuance proposal requires the affirmative vote of the holders of a majority of the votes cast on the proposal at the special meeting. Whether or not you plan to attend the special meeting, you are requested to promptly vote your shares by completing, signing and dating the enclosed proxy card or voting instruction form and returning it in the postage-paid envelope provided, or by voting over the telephone or via the Internet as instructed in these materials. If you sign, date and mail your proxy card without indicating how you wish to vote, your vote will be counted as a vote "FOR" each of the proposals described above. If your shares are held in the name of a broker, bank or other nominee, please follow the instructions provided by that institution to vote your shares.
I strongly support the combination of Newmont and Goldcorp and join with our board of directors in unanimously recommending that you vote "FOR" each of the proposals described in this proxy statement.
Thank you for your continued support of Newmont.
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Very truly yours, | |
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NOREEN DOYLE |
Neither the SEC nor any state securities commission has approved or disapproved the arrangement, passed upon the merits or fairness of the arrangement agreement or the transactions contemplated in the arrangement agreement, including the arrangement, or passed upon the adequacy or accuracy of the information in this document. Any representation to the contrary is a criminal offense.
This proxy statement is dated March 11, 2019 and, together with the accompanying proxy card, is first being mailed or otherwise distributed to stockholders of Newmont on or about March 14, 2019.
Newmont Mining Corporation
6363 South Fiddler's Green Circle
Greenwood Village, Colorado 80111
NOTICE OF
SPECIAL MEETING OF STOCKHOLDERS
To Be Held On April 11, 2019
A special meeting of stockholders of Newmont Mining Corporation ("Newmont") will be held at the Four Seasons Hotel, 1111 14th Street, Denver, Colorado 80202 on April 11, 2019, at 8 a.m. local time, unless adjourned or postponed to a later date, for the following purposes:
The board of directors of Newmont unanimously recommends that you vote "FOR" all of the proposals described above.
The accompanying proxy statement provides you with information about the arrangement agreement, the plan of arrangement, the arrangement and the special meeting of Newmont stockholders. Newmont encourages you to read the proxy statement carefully and in its entirety, including the arrangement agreement, which is attached as Annex A.
Record Date: February 20, 2019. Only stockholders of record as of the record date are entitled to receive notice of and to vote at the special meeting and any adjournment or postponement of the special meeting.
The proxy statement is dated March 11, 2019, and is first being mailed to our stockholders on or about March 14, 2019.
All stockholders are cordially invited to attend the special meeting in person. It is important that your shares be represented at the special meeting whether or not you are personally able to attend. If you are unable to attend, please promptly vote your shares by telephone or Internet or by signing, dating and returning the enclosed proxy card at your earliest convenience. Voting by the Internet or telephone is fast, convenient, and enables your vote to be immediately confirmed and tabulated, which helps Newmont reduce postage and proxy tabulation costs.
Your vote is important. The arrangement cannot be completed unless the amendment proposal and the share issuance proposal are approved. Approval of the amendment proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Newmont common stock as of the record date for the special meeting. Approval of the share issuance proposal requires the affirmative vote of the holders of a majority of the votes cast on the proposal at the special meeting. Whether or not you plan to attend the special meeting, please vote as soon as possible to ensure that your shares are represented and voted at the special meeting.
By Order of the Board of Directors, | ||
STEPHEN P. GOTTESFELD Executive Vice President and General Counsel |
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March 11, 2019 |
WHETHER OR NOT YOU EXPECT TO ATTEND THE NEWMONT SPECIAL MEETING IN PERSON, NEWMONT URGES YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE (1) BY TELEPHONE, (2) VIA THE INTERNET OR (3) BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED. You may revoke your proxy or change your vote at any time before the Newmont special meeting. If your shares are held in the name of a broker, bank or other nominee, please follow the instructions provided by that institution to vote your shares.
Newmont urges you to read the proxy statement, including all documents incorporated by reference into the proxy statement, and its annexes carefully and in their entirety.
If you are a Newmont stockholder and have any questions concerning the arrangement or the proxy statement, would like additional copies of the proxy statement, need to obtain proxy cards or need help voting, please contact Newmont's proxy solicitor:
1407
Broadway, 27th Floor
New York, New York 10018
(212) 929-5500
or
Call Toll-Free (800) 322-2885
Email: proxy@mackenziepartners.com
To receive timely delivery of requested documents in advance of the Newmont special meeting, you should make your request no later than April 4, 2019. You will not be charged for any of these documents that you request.
For additional information about documents incorporated by reference into this proxy statement, please see "Where You Can Find More Information" beginning on page 147 of this proxy statement.
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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
The following are some questions that you, as a stockholder of Newmont, may have regarding the arrangement and the other matters being considered at the special meeting of Newmont stockholders, as well as answers to those questions. Newmont urges you to read this proxy statement carefully and in its entirety because the information in this section does not provide all of the information that might be important to you with respect to the arrangement. Additional important information is also contained in the annexes to, and the documents incorporated by reference into, this proxy statement.
You are receiving this proxy statement because you have been identified as a holder of Newmont common stock. This proxy statement is being used to solicit proxies on behalf of the Newmont board of directors for the special meeting to obtain the required approval of Newmont stockholders. This proxy statement contains important information about the arrangement and related transactions and the special meeting, and you should read it carefully.
In order to complete the arrangement, Goldcorp must obtain a final order from the Ontario Superior Court of Justice (Commercial List) (the "Court") approving the arrangement and all other conditions to the arrangement must be satisfied or waived. Goldcorp will hold a separate special meeting of its shareholders to obtain the required approval of its shareholders.
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The Goldcorp shareholder meeting will be held on April 4, 2019. Among other things, the closing of the arrangement is conditioned on the approval of the Goldcorp resolution by the affirmative vote of at least two-thirds of the votes cast on the Goldcorp resolution by Goldcorp shareholders present in person or represented by proxy and entitled to vote at the Goldcorp meeting.
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If a quorum is not present at the meeting, Newmont's chair of the board of directors may adjourn the meeting to continue to solicit proxies.
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for such consideration shares that will be issued under the arrangement. In addition, Newmont has agreed to use its reasonable best efforts to obtain approval of the listing for trading on the NYSE by the effective time of the shares of Newmont common stock issuable upon exercise of the options to purchase Goldcorp common shares (the "Goldcorp options") and exercise of the replacement restricted stock units (the "replacement RSUs") issuable pursuant to the arrangement, subject to official notice of issuance.
Newmont will apply to list the shares of the combined company following completion of the arrangement on the Toronto Stock Exchange ("TSX") under the trading symbol "NGT."
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If your shares of common stock are held in "street name" by your broker, bank or other nominee, you should have received a voting instruction form with these proxy materials from that organization rather than from Newmont. Your broker, bank or other nominee will vote your shares only if you provide instructions to that organization on how to vote. You should provide your broker, bank or other nominee with instructions regarding how to vote your shares by following the enclosed procedures provided by that organization. Your shares will not be voted with respect to any proposal for which you fail to provide instructions, which will have no effect on the approval of the proposals.
A control number, located on your proxy card or voting instruction form, is designed to verify your identity and allow you to vote your shares of Newmont common stock, and to confirm that your voting instructions have been properly recorded when voting over the Internet or by telephone.
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shares. If you sold your shares after the record date you are encouraged to still vote the shares you owned on the record date.
The adjournment proposal is not conditioned upon the approval of any other proposal set forth in this proxy statement and is not a condition to the closing of the arrangement.
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60 days in the aggregate to obtain key regulatory approvals), (ii) a law or order comes into effect prohibiting consummation of the arrangement and such law or order has become final and non-appealable, or (iii) the Goldcorp shareholder approval of the arrangement or the Newmont stockholder approval of the amendment proposal and the share issuance proposal is not obtained at the relevant meeting held for such purpose. Additionally, each of Newmont and Goldcorp has a separate termination right in certain circumstances, including if (i) the board of directors of the other party changes its recommendation, (ii) the other party materially breaches its no solicitation restrictions, (iii) there is or has been a material adverse effect on the other party, (iv) the other party materially breaches its representations, warranties or covenants resulting in certain conditions to the arrangement not to be fulfilled, which are incapable of being satisfied by July 31, 2019 (as such date may be extended in accordance with the arrangement agreement), or (v) its own board of directors changes its recommendation in accordance with the terms of the arrangement agreement and, at the time of termination of the arrangement, either (a) the meeting of Newmont stockholders is scheduled for a date that is later than April 11, 2019, or (b) it is on or after March 23, 2019 and the meeting of Newmont stockholders has not been scheduled.
The arrangement agreement further provides that, upon termination of the arrangement agreement under certain circumstances, Goldcorp will be required to pay to Newmont a termination payment of $350 million in connection with such termination, or Newmont will be required to pay to Goldcorp a termination payment of $650 million in connection with such termination. See "The Arrangement Agreement and the Plan of ArrangementTermination of the Arrangement Agreement" beginning on page 137 of this proxy statement for a more complete summary of the termination provisions under the arrangement agreement.
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As part of a planned and orderly leadership succession process, Gary Goldberg, Newmont's Chief Executive Officer, and the Newmont board of directors have been engaged in discussions anticipating a chief executive officer succession in early 2019. To ensure a smooth and successful combination, Mr. Goldberg has agreed to lead the combined company through closure of the transaction and integration of the two companies. Newmont expects this process to be substantially completed in the fourth quarter of 2019, when Mr. Goldberg plans to retire and Thomas Palmer, Newmont's President and Chief Operating Officer, will become President and Chief Executive Officer of the combined company. In addition, Rob Atkinson will be appointed to the role of Executive Vice President and Chief Operating Officer of Newmont, effective June 1, 2019. Nancy Buese is expected to continue in the role of Executive Vice President and Chief Financial Officer and Randy Engel is expected to continue in the role of Executive Vice President, Strategic Development. For additional information, see "The ArrangementBoard of Directors Following the Arrangement" and "The ArrangementManagement Following the Arrangement" beginning on pages 111 and 112 of this proxy statement, respectively.
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procedures for voting your shares, you should contact MacKenzie Partners, Inc., Newmont's proxy solicitation agent. The address of MacKenzie Partners, Inc. is 1407 Broadway, 27th Floor, New York, New York 10018. You can call MacKenzie Partners, Inc. toll-free at (800) 322-2885 or at (212) 929-5500.
You may also wish to consult your legal, tax and/or financial advisors with respect to any aspect of the arrangement, the arrangement agreement or other matters discussed in this proxy statement.
You may also obtain additional information about Newmont from the documents we file with the SEC, or by following the instructions in the section entitled "Where You Can Find More Information" beginning on page 147 of this proxy statement.
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This proxy statement is being furnished to the stockholders of Newmont Mining Corporation ("Newmont" or the "Company") in connection with the solicitation of proxies by the Newmont board of directors for use at a special meeting of stockholders to be held on April 11, 2019 at 8 a.m. local time, unless adjourned or postponed to a later date, and at any reconvened meeting following any adjournment or postponement thereof. The special meeting will be held at the Four Seasons Hotel, 1111 14th Street, Denver, Colorado 80202. The purpose of the special meeting is for Newmont stockholders to consider and vote on certain proposals in connection with the transaction contemplated by the arrangement agreement, dated as of January 14, 2019, by and between Newmont and Goldcorp Inc. ("Goldcorp"), which was subsequently amended on February 19, 2019 (as amended, the "arrangement agreement"), pursuant to which Newmont will acquire all of the outstanding shares of Goldcorp in exchange for newly issued shares of Newmont common stock and cash provided by Newmont pursuant to a plan of arrangement (the "plan of arrangement") and Goldcorp will become a wholly-owned subsidiary of Newmont (the "arrangement").
This summary highlights information contained elsewhere in this proxy statement. Newmont urges you to read carefully the remainder of this proxy statement, including the attached annexes, the documents incorporated by reference into this proxy statement and the other documents to which Newmont and Goldcorp have referred you because this section does not provide all of the information that might be important to you with respect to the arrangement and the related matters being considered and voted on by the Newmont stockholders at the Newmont special meeting. See also the section entitled "Where You Can Find More Information" beginning on page 147 of this proxy statement. Newmont has included page references to direct you to a more complete description of the topics presented in this summary.
Newmont Mining Corporation (see page 119)
Newmont, headquartered in Greenwood Village, Colorado, is primarily a gold producer with significant operations and/or assets in the United States, Australia, Peru, Ghana and Suriname. As of December 31, 2018, Newmont had attributable proven and probable gold reserves of 65.4 million ounces and an aggregate land position of approximately 24,000 square miles (63,000 square kilometers). Newmont is also engaged in the production of copper, principally through operations in Boddington in Australia and Phoenix in the United States. Its regions include North America, South America, Australia, and Africa. Its North America segment consists primarily of Carlin, Phoenix, Twin Creeks and Long Canyon and Cripple Creek & Victor in the United States. Its South America segment consists primarily of Yanacocha in Peru and Merian in Suriname. Its Australia segment consists primarily of Boddington, Tanami and Kalgoorlie in Australia. Its Africa segment consists primarily of Ahafo and Akyem in Ghana. Newmont's original predecessor corporation was incorporated in 1921 under the laws of Delaware.
The principal trading market for Newmont's common stock is the NYSE under the symbol "NEM." Newmont's principal executive offices are located at 6363 South Fiddler's Green Circle, Greenwood Village, Colorado 80111. Its telephone number is (303) 863-7414. Newmont's website is located at www.newmont.com (the contents of which are not part of this proxy statement).
Goldcorp is a senior gold producer engaged in the acquisition, exploration, development, operation, and reclamation of precious metal properties in Canada, the United States, Mexico, and Central and South America.
Goldcorp was founded in 1994 and is currently headquartered in Vancouver, British Columbia, Canada. Goldcorp's principal operating mining properties are comprised of the Éléonore, Musselwhite,
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Porcupine and Red Lake gold mine complexes in Canada; the Peñasquito gold-silver-lead-zinc mine in Mexico; the Cerro Negro gold-silver mine in Argentina; and the Pueblo Viejo gold-silver-copper mine (40.0% interest) in the Dominican Republic. Goldcorp's development projects include the Coffee gold project and Borden gold project in Canada, and the NuevaUnión gold-copper project (50.0% interest) and Norte Abierto gold project (50.0% interest) in Chile.
Goldcorp's current sources of operating cash flows are primarily from the sale of gold, silver, lead, zinc and copper. Goldcorp's principal product is refined gold bullion sold primarily in the London spot market. In addition to gold, Goldcorp also produces silver, copper, lead and zinc primarily from concentrate produced at the Peñasquito mine, which is sold to third party smelters and refineries.
The Goldcorp common shares are listed and posted for trading on the TSX under the symbol "G" and on the NYSE under the symbol "GG." Goldcorp is a corporation governed by the Business Corporations Act (Ontario). Its principal executive offices are located at Suite 3400, Park Place, 666 Burrard Street, Vancouver, British Columbia, V6C 2X8, and its registered office is located at Suite 2100, 40 King Street West, Toronto, Ontario, M5H 3C2. Its telephone number is (604) 696-3000. Its website is located at www.goldcorp.com (the contents of which are not part of this proxy statement).
SPECIAL MEETING OF NEWMONT STOCKHOLDERS
The Special Meeting (see page 59)
Newmont stockholders are being asked to consider and vote on the following proposals in connection with the arrangement:
The Newmont stockholder vote on such proposals will take place at a special meeting to be held at 8 a.m. local time, on April 11, 2019, unless adjourned or postponed to a later date, at the Four Seasons Hotel, 1111 14th Street, Denver, Colorado 80202.
Record Date for the Special Meeting (see page 59)
You can vote at the special meeting all of the shares of Newmont's common stock you held of record as of the close of business on February 20, 2019, which is the record date for the special meeting. As of the close of business on the record date, there were 532,669,445 shares of Newmont's common stock outstanding.
Recommendations of the Newmont Board of Directors (see page 78)
The Newmont board of directors unanimously recommends that you vote "FOR" each of the proposals to be considered and voted upon at the special meeting. In connection with its decision to recommend that you vote "FOR" each of the proposals, the Newmont board of directors has determined that it is advisable and in the best interests of Newmont and its stockholders to amend the Newmont Restated Certificate of Incorporation to increase Newmont's authorized shares of common stock and to issue the Newmont common stock in connection with the arrangement. See "The
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ArrangementNewmont's Reasons for the Arrangement" beginning on page 74 of this proxy statement and "The ArrangementRecommendations of the Newmont Board of Directors" beginning on page 78 of this proxy statement for more information about the factors considered by the Newmont board of directors.
Each share of Newmont's common stock is entitled to one vote at the special meeting. The holders of a majority of the outstanding shares of capital stock of the Company entitled to vote at the special meeting must be present in person or represented by proxy in order to constitute a quorum for all matters to come before the meeting. For purposes of determining the presence of a quorum, "shares of capital stock of the Company" includes all shares of common stock entitled to vote at the special meeting. Abstentions and broker non-votes are counted for purposes of determining whether a quorum is present at the special meeting. Banks, brokers and other nominees that hold their customers' shares in street name may not vote their customers' shares on "non-routine" matters without instructions from their customers. As each of the proposals to be voted upon at the special meeting is considered "non-routine," such organizations do not have discretion to vote on any proposal for which they do not receive instructions from their customers (this is referred to in this context as a "broker non-vote"). As a result, since there are no matters in which a broker non-vote may be counted, if you fail to provide your broker, bank or other nominee with any instructions regarding how to vote your shares, your shares will not be considered present at the special meeting, will not be counted for purposes of determining the presence of a quorum and will not be voted on any of the proposals. If you provide instructions to your broker, bank or other nominee which indicate how to vote your shares with respect to one proposal but not with respect to the other proposals, your shares will be considered present at the special meeting and will be counted for purposes of determining the presence of a quorum and voted, as instructed, with respect to the appropriate proposal, but will not be voted with respect to the other proposals.
Approval of the proposals presented at the special meeting will require the following:
Security Ownership of Certain Beneficial Owners and Management (see page 60)
As of the close of business on February 20, 2019, the current directors and executive officers of Newmont were deemed to beneficially own 2,980,787 shares of Newmont's common stock, constituting, in the aggregate, less than 1% of the shares of Newmont's common stock outstanding on that date.
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Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission ("SEC"), as described below under "The Special MeetingSecurity Ownership of Certain Beneficial Owners and Management" beginning on page 60 of this proxy statement.
The arrangement agreement provides that at the effective time of the arrangement, Newmont will acquire all of the outstanding Goldcorp common shares. The arrangement will be implemented under the Business Corporations Act (Ontario) and requires approval of (a) at least two-thirds of the votes cast by shareholders who vote (in person or by proxy) at a special meeting of Goldcorp shareholders; and (b) the Ontario Superior Court of Justice (Commercial List). After giving effect to the arrangement, Newmont will own all of the outstanding Goldcorp common shares. As Goldcorp is incorporated in the Province of Ontario, Canada, the acquisition is being effected through an arrangement instead of a merger.
A copy of the arrangement agreement and the plan of arrangement are attached as Annex A to this proxy statement. You are urged to read the arrangement agreement and the plan of arrangement in their entirety because they are the legal documents that govern the arrangement. For more information on the arrangement, the arrangement agreement and the plan of arrangement, see the section entitled "The Arrangement Agreement and the Plan of Arrangement" beginning on page 120 of this proxy statement.
Consideration Received Pursuant to the Arrangement (see page 121)
If the arrangement is completed, Goldcorp shareholders (other than Newmont and its affiliates or shareholders that validly exercise, and do not withdraw, their dissent rights) will receive 0.3280 of a share of Newmont common stock, par value $1.60 per share ("Newmont common stock") and $0.02 in cash for each Goldcorp common share (the "consideration"). No fractional shares of Newmont common stock will be issued under the arrangement, and Goldcorp shareholders will receive cash in lieu of any fractional shares of Newmont common stock in accordance with the terms of the plan of arrangement. Upon completion of the arrangement, it is expected that Goldcorp shareholders will own approximately 35% of the outstanding Newmont common stock.
No Solicitation of Alternative Transactions and Changes of Recommendation (see page 131)
Each of Goldcorp and Newmont has agreed not to, and to cause its subsidiaries and their respective directors, officers and employees not to, and to use its reasonable best efforts to cause its other respective representatives not to:
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If, at any time prior to a party obtaining the approval of its stockholders or shareholders, as applicable, Goldcorp or Newmont, as applicable, receives a request for material non-public information or to enter into discussions from a person that makes an unsolicited bona fide written acquisition proposal that did not result from a breach of the arrangement agreement (and which has not been withdrawn) and the party's board of directors determines, in good faith after consultation with its outside financial and legal advisors, that such acquisition proposal constitutes or would reasonably be expected to constitute a superior proposal, as such term is defined under the section entitled "The Arrangement Agreement and the Plan of ArrangementNo Solicitation of Alternative Transactions and Changes of Recommendation" beginning on page 131 of this proxy statement, then, and only in such case, Goldcorp or Newmont, as applicable, may (x) enter into, participate in, facilitate and maintain discussions or negotiations with, and otherwise cooperate with or assist, the person making such acquisition proposal, and (y) provide the person making such acquisition proposal with, or access to, confidential information regarding itself and its subsidiaries, but only to the extent that the other party had or has access to the same information, and only if such party is in compliance with the arrangement agreement and Goldcorp or Newmont, as applicable, has entered into a confidentiality and standstill agreement on terms no less favorable in aggregate to Goldcorp or Newmont, as applicable, than the confidentiality agreement entered into between Goldcorp and Newmont in connection with the arrangement.
The board of directors of each of Goldcorp and Newmont may not change its recommendation in favor of the arrangement unless:
Notwithstanding any change in recommendation, unless the arrangement agreement has been terminated in accordance with its terms, the party whose board of directors changed its recommendation must still hold its stockholder or shareholder meeting, as applicable, and allow its
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stockholders or shareholders, as applicable, to vote on the arrangement, and such party is not permitted, except in accordance with applicable law, to submit to a vote of its stockholders or shareholders, as applicable, any acquisition proposal other than the arrangement prior to the termination of the arrangement agreement.
On February 25, 2019, Newmont's chair of the board of directors and Newmont's Chief Executive Officer received a letter from Barrick containing an acquisition proposal. After careful consideration and consultation with outside financial and legal advisors, the board of directors unanimously determined, in good faith, that such acquisition proposal did not constitute a superior proposal to the arrangement with Goldcorp pursuant to the arrangement agreement and would not reasonably be expected to constitute such a superior proposal. See the section entitled "Background of the Transaction" beginning on page 67 of this proxy statement.
Conditions to Completion of the Arrangement (see page 135)
The respective obligations of Goldcorp and Newmont to complete the arrangement are subject to the satisfaction or waiver of the following conditions on or before the effective time of the arrangement:
The obligation of Newmont to complete the arrangement is subject to the satisfaction or waiver of the following conditions on or before the effective time of the arrangement:
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The obligation of Goldcorp to complete the arrangement is subject to the satisfaction or waiver of the following conditions on or before the effective time of the arrangement:
Termination of the Arrangement Agreement (see page 137)
The arrangement agreement may be terminated at any time prior to the effective time of the arrangement, whether before or after the approval of the arrangement by the Goldcorp shareholders and the approval of the share issuance and increase in authorized capital by the Newmont stockholders, respectively, by mutual written agreement of Newmont and Goldcorp or by Newmont or Goldcorp under certain circumstances:
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If the arrangement agreement is terminated in accordance with its terms, there will be no liability on the part of any party thereto, except certain provisions of the arrangement agreement will survive such termination.
Termination Fees (see page 138)
Goldcorp is required to pay a termination fee of $350 million to Newmont in the event that:
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not be available to any party whose failure to fulfill any of its obligations or breach of any of its representations or warranties under the arrangement agreement has been the cause of, or resulted in, the failure of the meeting of Newmont stockholders to occur on or prior to April 11, 2019.
Newmont is required to pay a termination fee of $650 million to Goldcorp in the event that:
NEWMONT'S REASONS FOR THE ARRANGEMENT
In evaluating the arrangement, including the issuance of Newmont common stock to shareholders of Goldcorp in connection with the arrangement, the Newmont board of directors consulted with Newmont's senior management, outside legal counsel and independent financial advisors. In recommending that Newmont stockholders vote in favor of the amendment proposal and the share issuance proposal, the Newmont board of directors also considered a number of factors that it believed supported its determination. For a more detailed discussion of the reasoning of the Newmont board of directors, see "The ArrangementNewmont's Reasons for the Arrangement" beginning on page 74 of this proxy statement and "The ArrangementRecommendations of the Newmont Board of Directors" beginning on page 78 of this proxy statement.
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RECOMMENDATION OF THE NEWMONT BOARD OF DIRECTORS
After careful consideration, the Newmont board of directors has determined that it is advisable and in the best interests of Newmont and its stockholders to consummate the arrangement as contemplated by the arrangement agreement. Accordingly, the Newmont board of directors unanimously recommends that Newmont stockholders vote:
OPINIONS OF NEWMONT'S FINANCIAL ADVISORS TO THE NEWMONT BOARD OF DIRECTORS
Opinion of BMO Capital Markets Corp. to the Newmont Board of Directors (see page 78)
Newmont has engaged BMO Capital Markets Corp. ("BMOCM") as a financial advisor in connection with the proposed arrangement. In connection with BMOCM's engagement, BMOCM delivered a written opinion, dated January 13, 2019, to the Newmont board of directors as to the fairness, from a financial point of view and as of the date of the opinion, to Newmont of the consideration to be paid by Newmont pursuant to the terms and conditions of the arrangement agreement entered into by Newmont and Goldcorp on January 14, 2019 (which is referred to in this section as the "arrangement agreement").
The full text of BMOCM's written opinion, dated January 13, 2019, which describes the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken, is attached as Annex E to this proxy statement and is incorporated into this proxy statement by reference. The description of BMOCM's opinion set forth below is qualified in its entirety by reference to the full text of BMOCM's opinion. BMOCM's opinion was prepared at the request and for the benefit and use of the Newmont board of directors (in its capacity as such) in connection with its evaluation of the consideration to be paid by Newmont from a financial point of view and did not address any other terms, aspects or implications of the arrangement. BMOCM expressed no opinion as to the relative merits of the arrangement or any other transactions or business strategies discussed by the Newmont board of directors as alternatives to the arrangement or the decision of the Newmont board of directors to proceed with the arrangement, nor did BMOCM express any opinion on the structure, terms (other than the consideration to the extent specified in its opinion) or effect of any other aspect of the arrangement, including, without limitation, any Pre-Acquisition Reorganization (as defined in the arrangement agreement), any terms, aspects or implications of any voting agreement or any other agreement, arrangement or understanding to be entered into in connection with or contemplated by the arrangement or the other transactions contemplated by the arrangement agreement. BMOCM's opinion does not constitute a recommendation as to any action the Newmont board of directors should take in connection with the arrangement or the other transactions contemplated by the arrangement agreement or any aspect thereof and is not a recommendation to any director of Newmont on how such person should vote or act with respect to the arrangement or related transactions and proposals. BMOCM's opinion also does not constitute a recommendation to any security holder as to how such holder should vote or act with respect to the arrangement or related transactions or proposals. Newmont has agreed to pay BMOCM and/or certain of its affiliates for its services in connection with the proposed arrangement an aggregate fee of $17 million, of which $4 million was payable upon delivery of BMOCM's opinion and the remainder is payable contingent
19
upon consummation of the arrangement. For additional information, see "The ArrangementOpinions of Newmont's Financial Advisors to the Newmont Board of DirectorsOpinion of BMO Capital Markets Corp. to the Newmont Board of Directors" beginning on page 78 of this proxy statement.
Opinion of Citigroup Global Markets Inc. to the Newmont Board of Directors (see page 88)
In connection with the proposed arrangement, Citigroup Global Markets Inc. ("Citi") delivered a written opinion, dated January 13, 2019, to the Newmont board of directors to the effect that, as of such date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken, the consideration to be paid by Newmont in the arrangement was fair, from a financial point of view, to Newmont.
The full text of Citi's written opinion, dated January 13, 2019, which describes the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken, is attached as Annex F to this proxy statement and is incorporated into this proxy statement by reference. The description of Citi's opinion set forth below is qualified in its entirety by reference to the full text of Citi's opinion. Citi's opinion was provided for the information of the Newmont board of directors (in its capacity as such) in connection with its evaluation of the consideration from a financial point of view and did not address any other terms, aspects or implications of the arrangement. Citi expressed no view as to, and its opinion did not address, the underlying business decision of Newmont to effect or enter into the arrangement, the relative merits of the arrangement as compared to any alternative business strategies that might exist for Newmont or the effect of any other transaction in which Newmont might engage. Citi's opinion is not intended to be and does not constitute a recommendation to any stockholder as to how such stockholder should vote or act on any matters relating to the proposed arrangement or otherwise. Pursuant to an engagement letter between Newmont and Citi, Newmont has agreed to pay Citi for its services in connection with the proposed arrangement an aggregate fee of $17 million, of which $4 million was payable upon delivery of Citi's opinion and $13 million is payable contingent upon consummation of the arrangement. For additional information, see "The ArrangementOpinions of Newmont's Financial Advisors to the Newmont Board of DirectorsOpinion of Citigroup Global Markets Inc. to the Newmont Board of Directors" beginning on page 88 of this proxy statement.
Opinion of Goldman Sachs & Co. LLC to the Newmont Board of Directors (see page 97)
Goldman Sachs & Co. LLC ("Goldman Sachs") delivered its opinion to the Newmont board of directors that, as of January 14, 2019 and based upon and subject to the factors and assumptions set forth therein, the consideration to be paid by Newmont for each of the Goldcorp common shares pursuant to the arrangement agreement entered into by Newmont and Goldcorp on January 14, 2019 was fair from a financial point of view to Newmont.
The full text of the written opinion of Goldman Sachs, dated January 14, 2019, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex G. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Newmont board of directors in connection with its consideration of the arrangement and such opinion is not a recommendation as to how any holder of Newmont common stock should vote with respect to the arrangement or any other matter. Pursuant to an engagement letter between Newmont and Goldman Sachs, Newmont has agreed to pay Goldman Sachs a transaction fee of $17 million, $4 million of which became payable at announcement of the arrangement, and the remainder of which is contingent upon consummation of the arrangement. For additional information, see "The ArrangementOpinions of Newmont's Financial Advisors to the Newmont Board of DirectorsOpinion of Goldman Sachs & Co. LLC to the Newmont Board of Directors" beginning on page 97 of this proxy statement.
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THE SUPPORT AND VOTING AGREEMENTS
On January 14, 2019, in connection with the signing of the arrangement agreement, each of Goldcorp and Newmont entered into support and voting agreements with one another's directors and certain members of one another's respective executive leadership teams, in their capacity as shareholders or stockholders, as applicable, pursuant to which such shareholders or stockholders, as applicable, have agreed, among other things, to vote their respective Goldcorp common shares in favor of the Goldcorp resolution, in the case of Goldcorp shareholders, and vote their respective shares of Newmont common stock in favor of the amendment proposal and share issuance proposal, in the case of Newmont stockholders. As of February 22, 2019, the record date of the Goldcorp meeting, Goldcorp shareholders subject to support and voting agreements with Newmont, collectively, owned, directly or indirectly, or exercised control or direction over, an aggregate of approximately 0.57% of the outstanding Goldcorp common shares on a non-diluted basis and approximately 0.66% of the outstanding Goldcorp common shares on a partially-diluted basis, assuming the exercise or vesting of their Goldcorp options and Goldcorp RSUs. As of the record date of the Newmont special meeting, Newmont stockholders subject to support and voting agreements with Goldcorp, collectively, owned, directly or indirectly, or exercised control or direction over, an aggregate of approximately 0.22% of the outstanding shares of Newmont common stock on a non-diluted basis and approximately 0.56% of the outstanding Newmont common stock on a partially-diluted basis, assuming the exercise or vesting of their Newmont restricted stock units ("Newmont RSUs"), Newmont performance leveraged stock units ("Newmont PSUs"), Newmont options to purchase shares of Newmont common stock ("Newmont options") and Newmont director stock units ("Newmont DSUs"). Copies of the form of support and voting agreements are attached to this proxy statement as Annex C and Annex D.
BOARD OF DIRECTORS FOLLOWING THE ARRANGEMENT
Newmont has covenanted with Goldcorp that it will take all actions necessary to ensure that, as of the effective time of the arrangement agreement, two-thirds of the members of the Newmont board of directors will be existing members of the Newmont board of directors and one-third of the members of the Newmont board of directors will be existing members of the Goldcorp board of directors. See "The ArrangementBoard of Directors Following the Arrangement" beginning on page 111 of this proxy statement.
MANAGEMENT FOLLOWING THE ARRANGEMENT
As part of a planned and orderly leadership succession process, Gary Goldberg, Newmont's Chief Executive Officer, and the Newmont board of directors have been engaged in discussions anticipating a chief executive officer succession in early 2019. To ensure a smooth and successful combination, Mr. Goldberg has agreed to lead the combined company through closure of the transaction and integration of the two companies. Newmont expects this process to be substantially completed in the fourth quarter of 2019, when Mr. Goldberg plans to retire and Thomas Palmer, Newmont's President and Chief Operating Officer, will become President and Chief Executive Officer of the combined company. In addition, Rob Atkinson will be appointed to the role of Executive Vice President and Chief Operating Officer of Newmont, effective June 1, 2019. Nancy Buese is expected to continue in the role of Executive Vice President and Chief Financial Officer and Randy Engel is expected to continue in the role of Executive Vice President, Strategic Development. For additional information, see "The ArrangementBoard of Directors Following the Arrangement" and "The ArrangementManagement Following the Arrangement" beginning on pages 111 and 112 of this proxy statement, respectively.
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INTERESTS OF NEWMONT DIRECTORS AND EXECUTIVE OFFICERS IN THE TRANSACTION
No current Newmont directors or executive officers having served at any time since the beginning of 2018 own Goldcorp common shares. None of Newmont's directors or executive officers or their associates has any substantial financial interest, direct or indirect, in the arrangement or the issuance of Newmont common stock to Goldcorp shareholders under the arrangement, other than being a director or executive officer of Newmont and a stockholder of Newmont.
Newmont prepares its financial statements in accordance with the generally accepted accounting principles in the United States ("U.S. GAAP"). The arrangement will be accounted for using the acquisition method of accounting. Newmont will be treated as the acquirer for accounting purposes. Newmont will record assets acquired, including identifiable intangible assets, and liabilities assumed from Goldcorp at their respective estimated fair values at the date of completion of the arrangement. For additional information, see "The ArrangementAccounting Treatment" beginning on page 112 of this proxy statement.
Court Approvals (see page 114)
The arrangement requires approval by the Court under Section 182 of the OBCA. On February 22, 2019, Goldcorp obtained the interim order providing for the calling and holding of the Goldcorp meeting and other procedural matters. A copy of the interim order is attached as Annex B to this proxy statement. Under the arrangement agreement, Goldcorp is required to seek the final order as soon as reasonably practicable, but in any event not later than three business days following the approval of the Goldcorp resolution by Goldcorp shareholders at the Goldcorp meeting, the approval of the amendment proposal and the share issuance proposal by Newmont stockholders at the special meeting, and the receipt of regulatory approvals. The Court hearing in respect of the final order is expected to take place on or about April 8, 2019 at the Courthouse at 330 University Avenue, Toronto, Ontario, Canada, or as soon thereafter as is reasonably practicable.
Investment Canada Act Approval (see page 115)
Under the Investment Canada Act (Canada) ("Investment Canada Act"), certain transactions involving the "acquisition of control" of a Canadian business by a non-Canadian are subject to review and cannot be implemented unless the responsible minister or ministers under the Investment Canada Act is satisfied or deemed to be satisfied that the transaction is likely to be of "net benefit" to Canada (a "reviewable transaction"). The transactions contemplated by the arrangement agreement constitute a reviewable transaction under the Investment Canada Act. Pursuant to the arrangement agreement, Newmont submitted its application for review with the Investment Review Division of Innovation, Science and Economic Development Canada on January 29, 2019. As of the date of this proxy statement, the review of the transactions contemplated by the arrangement agreement under the Investment Canada Act is ongoing, and the Investment Canada Act approval required pursuant to the arrangement agreement has not been obtained.
Canadian Antitrust Approval (see page 116)
Part IX of the Competition Act (Canada) ("Competition Act") requires that parties to certain prescribed classes of transactions provide notifications to the commissioner of competition (the "commissioner") where the applicable thresholds set out in Sections 109 and 110 of the Competition Act are exceeded and no exemption applies ("notifiable transactions"). Subject to certain limited exceptions, a notifiable transaction cannot be completed until the Parties to the transaction have each
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submitted the information prescribed pursuant to Subsection 114(1) of the Competition Act (a "notification") to the commissioner and the applicable waiting period has expired, has been terminated early or the appropriate waiver has been provided by the commissioner. The transactions contemplated by the arrangement agreement constitute a notifiable transaction, and as such the parties must comply with the merger notification provisions of Part IX of the Competition Act. On February 11, 2019, the Commissioner issued a no-action letter and a waiver, exempting the parties from filing a notification and terminating the waiting period.
Other Regulatory Approvals (see page 117)
Completion of the transactions contemplated by the arrangement agreement is also conditional upon the satisfaction of certain notice, filing, waiting period and/or approval requirements under competition or antitrust laws in Mexico and South Korea. The parties submitted their filing with the Comisión Federal de Competencia Económica (Mexico) on February 7, 2019 and with the Korea Fair Trade Commission on February 11, 2019. On February 25, 2019, the Korea Fair Trade Commission issued its decision that the transactions contemplated by the arrangement agreement are not in violation of Article 7(1) of the Monopoly Regulation and Fair Trade Act (South Korea).
Under Delaware law, holders of shares of Newmont common stock are not entitled to appraisal rights in connection with the arrangement or any of the matters to be acted on at the special meeting.
If you need assistance in completing your proxy card or have questions regarding the various voting options with respect to the special meeting, please contact Newmont's proxy solicitor:
1407
Broadway, 27th Floor
New York, New York 10018
(212) 929-5500
or
Call Toll-Free (800) 322-2885
Email: proxy@mackenziepartners.com
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF NEWMONT
The following tables present the selected historical consolidated statements of operations of Newmont as of and for the years ended December 31, 2018, 2017, 2016, 2015 and 2014. The consolidated balance sheet data as of December 31, 2018 and 2017 and the consolidated statements of operations data for the years ended December 31, 2018, 2017 and 2016 have been derived from Newmont's audited consolidated financial statements as of and for the fiscal years ended December 31, 2018, 2017 and 2016 contained in its Annual Report on Form 10-K filed with the SEC on February 21, 2019 (the "Newmont 2018 Annual Report"), which is incorporated by reference into this proxy statement. The consolidated balance sheet data as of December 31, 2016, 2015 and 2014 and the consolidated statement of operations data for the years ended December 31, 2015 and December 31, 2014 have been derived from Newmont's audited consolidated financial statements as of and for such years contained in Newmont's other reports filed with the SEC, which are not incorporated by reference into this proxy statement.
The information set forth below is only a summary and is not necessarily indicative of the results of future operations of Newmont, including following completion of the arrangement, and you should read the following information together with Newmont's consolidated financial statements and the notes thereto and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Newmont 2018 Annual Report, which is incorporated by reference into this proxy statement, and in Newmont's other reports filed with the SEC. For more information, see the section entitled "Where You Can Find More Information" beginning on page 147 of this proxy statement.
|
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||
|
(dollars in millions, except per share data) |
|||||||||||||||
Sales |
$ | 7,253 | $ | 7,379 | $ | 6,680 | $ | 6,085 | $ | 6,819 | ||||||
Income (loss) from continuing operations |
$ | 319 | $ | (71 | ) | $ | (812 | ) | $ | (161 | ) | $ | 603 | |||
Net income (loss) |
$ | 380 | $ | (109 | ) | $ | (943 | ) | $ | 280 | $ | 318 | ||||
Net income (loss) attributable to Newmont stockholders(1) |
$ | 341 | $ | (114 | ) | $ | (629 | ) | $ | 206 | $ | 500 | ||||
Income (loss) per common share: |
||||||||||||||||
Basic: |
||||||||||||||||
Continuing operations |
$ | 0.53 | $ | (0.14 | ) | $ | (0.43 | ) | $ | (0.02 | ) | $ | 1.28 | |||
Discontinued operations |
0.11 | (0.07 | ) | (0.76 | ) | 0.42 | (0.28 | ) | ||||||||
| | | | | | | | | | | | | | | | |
|
$ | 0.64 | $ | (0.21 | ) | $ | (1.19 | ) | $ | 0.40 | $ | 1.00 | ||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Diluted: |
||||||||||||||||
Continuing operations |
$ | 0.53 | $ | (0.14 | ) | $ | (0.42 | ) | $ | (0.02 | ) | $ | 1.28 | |||
Discontinued operations |
0.11 | (0.07 | ) | (0.76 | ) | 0.42 | (0.28 | ) | ||||||||
| | | | | | | | | | | | | | | | |
|
$ | 0.64 | $ | (0.21 | ) | $ | (1.18 | ) | $ | 0.40 | $ | 1.00 | ||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Dividends declared per common share |
$ | 0.560 | $ | 0.250 | $ | 0.125 | $ | 0.100 | $ | 0.225 |
|
At December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||
|
(dollars in millions) |
|||||||||||||||
Total assets |
$ | 20,715 | $ | 20,646 | $ | 21,071 | $ | 25,224 | $ | 24,954 | ||||||
Debt, including current portion |
$ | 4,044 | $ | 4,040 | $ | 4,599 | $ | 5,842 | $ | 6,033 | ||||||
Lease and other financing obligations, including current portion |
$ | 217 | $ | 25 | $ | 16 | $ | 21 | $ | 7 | ||||||
Newmont stockholders' equity |
$ | 10,502 | $ | 10,535 | $ | 10,663 | $ | 11,294 | $ | 10,232 |
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF GOLDCORP
The following tables present the selected historical consolidated statements of earnings of Goldcorp as of and for the years ended December 31, 2018, 2017, 2016, 2015 and 2014. The consolidated balance sheet data as of December 31, 2018 and 2017 and the consolidated statements of earnings data for the years ended December 31, 2018 and 2017 have been derived from Goldcorp's audited consolidated financial statements as of and for the fiscal year ended December 31, 2018 and 2017 contained in its Current Report on Form 6-K, filed with the SEC on February 14, 2019, which is incorporated by reference into this proxy statement. The consolidated balance sheet data as of December 31, 2016 and the consolidated statement of earnings data for the year ended December 31, 2016 have been derived from Goldcorp's audited consolidated financial statements as of and for the fiscal years ended December 31, 2017 and 2016 contained in its Annual Report on Form 40-F, filed with the SEC on March 23, 2018, which is incorporated by reference into this proxy statement. The consolidated balance sheet data as of December 31, 2015 and 2014 and the consolidated statement of earnings data for the years ended December 31, 2015 and 2014 have been derived from Goldcorp's audited consolidated financial statements as of and for such years contained in Goldcorp's other reports filed with the SEC, which are not incorporated by reference into this proxy statement.
The information set forth below is only a summary and is not necessarily indicative of the results of future operations of Goldcorp, including following completion of the arrangement, and you should read the following information together with Goldcorp's consolidated financial statements and the notes thereto and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in its Current Report on Form 6-K, filed with the SEC on February 14, 2019, which is incorporated by reference into this proxy statement, and in Goldcorp's other reports filed with the SEC. For more information, see the section entitled "Where You Can Find More Information" beginning on page 147 of this proxy statement.
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Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||
|
(dollars in millions, except per share data) |
|||||||||||||||
Sales |
$ | 3,032 | $ | 3,423 | $ | 3,510 | $ | 4,375 | $ | 3,436 | ||||||
Income (loss) from continuing operations |
$ | (4,149 | ) | $ | 658 | $ | 162 | $ | (4,203 | ) | $ | (2,168 | ) | |||
Net income (loss) |
$ | (4,149 | ) | $ | 658 | $ | 162 | $ | (4,157 | ) | $ | (2,159 | ) | |||
Net income (loss) attributable to Goldcorp shareholders |
$ | (4,149 | ) | $ | 658 | $ | 162 | $ | (4,157 | ) | $ | (2,161 | ) | |||
Income (loss) per common share: |
||||||||||||||||
Basic: |
||||||||||||||||
Continuing operations |
$ | (4.77 | ) | $ | 0.76 | $ | 0.19 | $ | (5.08 | ) | $ | (2.67 | ) | |||
Discontinued operations |
| | | 0.05 | 0.01 | |||||||||||
| | | | | | | | | | | | | | | | |
|
$ | (4.77 | ) | $ | 0.76 | $ | 0.19 | $ | (5.03 | ) | $ | (2.66 | ) | |||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Diluted: |
||||||||||||||||
Continuing operations |
$ | (4.77 | ) | $ | 0.76 | $ | 0.19 | $ | (5.08 | ) | $ | (2.67 | ) | |||
Discontinued operations |
| | | 0.05 | 0.01 | |||||||||||
| | | | | | | | | | | | | | | | |
|
$ | (4.77 | ) | $ | 0.76 | $ | 0.19 | $ | (5.03 | ) | $ | (2.66 | ) | |||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Dividends declared per common share |
$ | 0.08 | $ | 0.08 | $ | 0.12 | $ | 0.45 | $ | 0.60 |
|
At December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||
|
(dollars in millions) |
|||||||||||||||
Total assets |
$ | 16,967 | $ | 21,685 | $ | 21,497 | $ | 21,428 | $ | 27,866 | ||||||
Debt, including current portion |
$ | 2,867 | $ | 2,483 | $ | 2,510 | $ | 2,688 | $ | 3,592 | ||||||
Lease and other financing obligations, including current portion |
$ | 238 | $ | 248 | $ | 252 | $ | 272 | $ | 21 | ||||||
Goldcorp shareholders' equity |
$ | 9,875 | $ | 14,184 | $ | 13,415 | $ | 12,848 | $ | 16,960 |
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SUMMARY OF SIGNIFICANT IFRS TO U.S. GAAP DIFFERENCES
The financial information of Goldcorp incorporated by reference into this proxy statement has been prepared and presented in accordance with International Financial Reporting Standards (as promulgated by the International Accounting Standards Board) ("IFRS"). Certain differences exist between IFRS and U.S. GAAP, which might be material to the financial information incorporated by reference into this proxy statement.
The principal differences between U.S. GAAP and IFRS which might be material in the preparation of Goldcorp's consolidated financial statements are described below. The following summary does not include all differences that exist between IFRS and U.S. GAAP and is not intended to provide a comprehensive listing of all such differences specifically related to Newmont, Goldcorp or the industry in which Newmont and Goldcorp operate.
The differences described below reflect only those differences in accounting policies in force at the time of the preparation of the historical financial information of Goldcorp. There has been no attempt to identify future differences between IFRS and U.S. GAAP as the result of prescribed changes in accounting standards, transactions or events that may occur in the future.
Impairment of Long-Lived Assets
Under both U.S. GAAP and IFRS, long-lived assets are tested for impairment when events or changes in circumstances indicate that the carrying amounts may be impaired. Under U.S. GAAP, the asset group is first tested for recoverability by determining if its carrying amount exceeds the expected future cash flows from the asset group on an undiscounted basis. If the asset group is determined to not be recoverable, an impairment expense is recorded for the excess of the asset group's carrying amount over its fair value. Further, future reversal of a previously recognized impairment loss is prohibited.
Under IFRS, when an impairment indicator is determined to exist, an impairment expense is recorded for the excess of the cash generating unit carrying amount over the greater of its fair value less costs of disposal and its value in use. Impairment expense previously recorded is reversible in subsequent periods under certain conditions.
Mine Development and Stripping Costs
Under U.S. GAAP, mine development costs and costs of removing overburden and waste materials to access the ore body prior to the production phase, referred to as pre-stripping costs, are capitalized once mineralization is classified as proven and probable reserves. Stripping costs incurred during the production phase of a mine are variable production costs that are included as a component of inventory and are recognized in costs applicable to sales in the same period as the revenue from the sale of inventory. Under IFRS, mine development costs and pre-stripping costs incurred prior to the production stage of a mining property are capitalized before mineralization is classified as proven and probable reserves. In addition, certain stripping costs continue to be capitalized after the production phase of a mine is achieved when the current strip ratio exceeds the estimated life of mine strip ratio.
Under U.S. GAAP, certain mine development costs are amortized using the units-of-production method based on estimated recoverable ounces or pounds in proven and probable reserves. Under IFRS, certain mine development costs are also amortized using the units-of-production method, but based on estimated recoverable ounces contained in proven and probable reserves and a portion of resources, when it is considered highly probable that resources will be economically extracted.
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Reclamation and Remediation Liabilities
Under U.S. GAAP, the initial recognition of asset retirement obligation is based on the fair value of the reclamation and remediation liability, generally utilizing a present value technique to estimate the liability and discounted at a credit-adjusted risk-free interest rate. Subsequently, period-to-period revisions to either the timing or amount of the original estimate of undiscounted cash flows are treated as separate layers of the obligation.
Under IFRS, initial recognition of reclamation and remediation liability is generally measured as the best estimate of the expenditure to settle the obligation utilizing a present value technique to estimate the liability, discounted at a pretax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Subsequently, period-to-period revisions for changes in the estimate of expected undiscounted cash flows or discount rate is re-measured for the entire obligation by using an updated discount rate that reflects current market conditions as of the balance sheet date.
Under U.S. GAAP, a joint venture is defined as an entity whose operations and activities are jointly controlled by its equity investors. Joint ventures are accounted for using the equity method of accounting. Proportionate consolidation is used in the oil and gas and mining and extractive industries, when working interest owners join together in the development and operation of a jointly-owned or unitized property outside a separate legal entity pursuant to a written agreement.
IFRS addresses two types of joint arrangements: (1) joint operations and (2) joint ventures, both distinguished by the rights and obligations of the parties involved. In a joint operation, an entity has rights to the underlying assets and obligations for the liabilities of the arrangement and recognizes its share of the assets, liabilities, revenues, and expenses arising from its interest. In a joint venture, the equity method of accounting is used and requires the use of a separate legal entity. Unlike U.S. GAAP, the existence of a separate legal entity is not sufficient evidence to conclude that an arrangement is a joint venture.
Under U.S. GAAP, deferred taxes are recognized for temporary differences arising from the initial recognition of assets acquired or liabilities assumed. Under IFRS, deferred income taxes are not recognized for temporary differences arising from the initial recognition of an asset or liability in a transaction that (i) is not a business combination, and (ii) affects neither accounting nor taxable profit.
U.S. GAAP prohibits recognition of deferred tax consequences for differences that arise from changes in exchange rates or indexing for tax purposes for those foreign subsidiaries that are required to use historical rates to remeasure nonmonetary assets and liabilities from the local currency into the functional currency. Under IFRS, deferred tax assets or liabilities are recognized for temporary differences related to nonmonetary assets or liabilities that are remeasured from the local currency into the functional currency for book purposes using historical exchange rates, but are reported in local currency for tax purposes using current exchange rates.
U.S. GAAP requires investments in equity securities to be measured at fair value, with changes in fair value recognized in net income, unless equity securities do not have a readily determinable fair value. Under IFRS, equity securities designated as fair value through other comprehensive income are carried at fair value and changes in fair value are recognized in other comprehensive income, which is not subsequently charged to earnings.
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Under U.S. GAAP, proceeds from the sale of pre-production metal produced during commissioning of a processing facility are credited to other income, net of operating costs. However, sales of metal produced during the development phase of a mine where there is already an existing processing facility are recorded within sales and costs applicable to sales. Under IFRS, proceeds from the sale of metal produced during the development phase of a mine are offset against capitalized asset costs, net of allocated operating costs.
Under U.S. GAAP, the upfront cash payment received upon entering into an off-market fixed price sales contract to deliver metal from future production (i.e., a metal streaming contract) is recognized as a financing transaction, through recognition of a liability for the future metal delivery performance obligation. Under IFRS, upfront cash payment received upon entering into a metal streaming contract is recognized as an offset to property, plant and mine development. The payment received is indirectly recognized in the statement of earnings through a reduction of depreciation and amortization expense over the term of the contract.
28
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information ("unaudited pro forma financial information") has been prepared based on the historical audited consolidated financial statements of Newmont and Goldcorp, and is intended to provide you with information about how the arrangement might have affected Newmont's historical financial statements. The unaudited pro forma condensed combined statement of operations ("unaudited pro forma statement of operations") for the year ended December 31, 2018, combines the historical audited consolidated statement of operations of Newmont for the corresponding period, with the respective historical audited consolidated statement of earnings of Goldcorp, as derived from audited consolidated financial statements as indicated below, as if the arrangement had occurred on January 1, 2018. The unaudited pro forma condensed combined balance sheet ("unaudited pro forma balance sheet") as of December 31, 2018, combines the historical audited consolidated balance sheet of Newmont, and the historical audited consolidated balance sheet of Goldcorp as of December 31, 2018, derived from audited consolidated financial statements as indicated below, as if the arrangement had occurred on December 31, 2018.
The unaudited pro forma financial information have been developed from and should be read in conjunction with:
The unaudited pro forma financial information is presented using the acquisition method of accounting, with Newmont as the acquirer of Goldcorp. See section entitled "The ArrangementAccounting Treatment" beginning on page 112 of this proxy statement. Under the acquisition method of accounting, the purchase price is allocated to the underlying Goldcorp tangible and intangible assets acquired and liabilities assumed based on their respective fair market values with any excess purchase price allocated to goodwill.
The unaudited pro forma combined financial information is presented for informational purposes only. The information has been prepared in accordance with Article 11 of Regulation S-X of the SEC and is not necessarily indicative of the financial position and results of operations that actually would have been achieved had the arrangement occurred as of the dates indicated herein, nor do they purport to project the future financial position and operating results of the combined company. The pro forma financial information also does not reflect the costs of any integration activities or cost savings or synergies expected to be achieved as a result of the arrangement, which are described in the section entitled "The ArrangementNewmont's Reasons for the Arrangement" beginning on page 74 of this proxy statement, and, accordingly, do not attempt to predict or suggest future results.
The unaudited pro forma financial information does not give effect to the proposed creation of a joint venture (the "joint venture") to operate and manage certain mining operations and assets located in Nevada and included in our North America reportable segment (the "Assets") and certain of Barrick's Nevada mining operations and assets. Newmont believes that the proposed creation of the joint venture is not material to understanding the combination with Goldcorp and is not directly attributable to the combination with Goldcorp.
29
Newmont Mining Corporation
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2018
|
|
Reclassified Historical |
|
|
Purchase Accounting and Other Pro Forma Adjustments (Note 4) |
|
|
|
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Historical | IFRS to U.S. GAAP Adjustments (Note 3) |
|
|
|
|
|||||||||||||||
|
Goldcorp (Note 2) |
|
|
Pro Forma Combined |
|
||||||||||||||||
in millions (USD), except per share
|
Newmont | (Note) | (Note) | (Note) | |||||||||||||||||
Sales |
$ | 7,253 | $ | 3,032 | $ | (53 | ) | 3(i)(j) | $ | 82 | 4(e) | $ | 10,314 | ||||||||
Costs and expenses: |
|||||||||||||||||||||
Costs applicable to sales |
4,093 | 1,769 | (49 | ) | 3(b)(i) | | 5,813 | ||||||||||||||
Depreciation and amortization |
1,215 | 983 | 140 | 3(c)(j) | (300 | ) | 4(b) | 2,038 | |||||||||||||
Reclamation and remediation |
163 | 47 | | 7 | 4(c) | 217 | |||||||||||||||
Exploration |
197 | 43 | | | 240 | ||||||||||||||||
Advanced projects, research and development |
153 | 43 | | | 196 | ||||||||||||||||
General and administrative |
244 | 131 | | | 375 | ||||||||||||||||
Impairment of long-lived assets |
369 | 4,727 | (787 | ) | 3(a) | | 4,309 | ||||||||||||||
Other expense, net |
29 | | | | 29 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
|
6,463 | 7,743 | (696 | ) | (293 | ) | 13,217 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Other income (expense): |
|||||||||||||||||||||
Other income, net |
155 | (10 | ) | (106 | ) | 3(g) | | 39 | |||||||||||||
Interest expense, net of capitalized interest |
(207 | ) | (123 | ) | | 35 | 4(a)(f) | (295 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
|
(52 | ) | (133 | ) | (106 | ) | 35 | (256 | ) | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Income (loss) before income and mining tax and other items |
738 | (4,844 | ) | 537 | 410 | (3,159 | ) | ||||||||||||||
Income and mining tax benefit (expense) |
(386 | ) | 612 | 145 | 3(a)(b) (c)(f) | (140 | ) | 4(g) | 231 | ||||||||||||
Equity income (loss) of affiliates |
(33 | ) | 83 | (10 | ) | 3(b) | 12 | 4(b) | 52 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Net income (loss) from continuing operations |
319 | (4,149 | ) | 672 | 282 | (2,876 | ) | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Net loss (income) from continuing operations attributable to noncontrolling interests |
(39 | ) | | | | (39 | ) | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Net income (loss) from continuing operations attributable to Newmont stockholders |
$ | 280 | $ | (4,149 | ) | $ | 672 | $ | 282 | $ | (2,915 | ) | |||||||||
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Basic earnings per common share attributable to Newmont stockholders |
$ | 0.53 | $ | (3.57 | ) | 4(j) | |||||||||||||||
Diluted earnings per common share attributable to Newmont stockholders |
$ | 0.53 | $ | (3.57 | ) | 4(j) |
30
Newmont Mining Corporation
Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 2018
|
|
Reclassified Historical |
|
|
Purchase Accounting and other Pro Forma Adjustments (Note 4) |
|
|
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Historical | IFRS to U.S. GAAP Adjustments (Note 3) |
|
|
|
|||||||||||||||
|
Goldcorp (Note 2) |
|
|
Pro Forma Combined |
||||||||||||||||
in millions (USD)
|
Newmont | (Note) | (Note) | |||||||||||||||||
ASSETS |
||||||||||||||||||||
Cash and cash equivalents |
$ | 3,397 | $ | 134 | $ | | $ | (897 | ) | 4(a) | $ | 2,634 | ||||||||
Trade receivables |
254 | 91 | | | 345 | |||||||||||||||
Other accounts receivables |
92 | | | | 92 | |||||||||||||||
Investments |
48 | 38 | | | 86 | |||||||||||||||
Inventories |
630 | 423 | | | 1,053 | |||||||||||||||
Stockpiles and ore on leach pads |
697 | 68 | | | 765 | |||||||||||||||
Other current assets |
159 | 303 | | | 462 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Current assets |
5,277 | 1,057 | | (897 | ) | 5,437 | ||||||||||||||
Property, plant and mine development, net |
12,258 | 12,910 | 1,098 | 3(a)(b)(c) (e)(f)(h)(j) |
(2,518 | ) | 4(b) | 23,748 | ||||||||||||
Investments |
271 | 2,822 | 636 | 3(b)(e)(h) | (149 | ) | 4(b) | 3,580 | ||||||||||||
Goodwill |
| | | 1,254 | 4(i) | 1,254 | ||||||||||||||
Stockpiles and ore on leach pads |
1,866 | | | | 1,866 | |||||||||||||||
Deferred income tax assets |
401 | 22 | 477 | 3(f) | (242 | ) | 4(g) | 658 | ||||||||||||
Other non-current assets |
642 | 156 | (83 | ) | 3(e) | | 715 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total assets |
$ | 20,715 | $ | 16,967 | $ | 2,128 | $ | (2,552 | ) | $ | 37,258 | |||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
LIABILITIES |
||||||||||||||||||||
Debt |
$ | 626 | $ | 400 | $ | | $ | (400 | ) | 4(a) | $ | 626 | ||||||||
Accounts payable |
303 | 275 | (5 | ) | 3(e) | | 573 | |||||||||||||
Employee-related benefits |
305 | 93 | | | 398 | |||||||||||||||
Income and mining taxes payable |
71 | 113 | | | 184 | |||||||||||||||
Lease and other financing obligations |
27 | 7 | | | 34 | |||||||||||||||
Other current liabilities |
455 | 321 | | 210 | 4(c)(d)(e) | 986 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Current liabilities |
1,787 | 1,209 | (5 | ) | (190 | ) | 2,801 | |||||||||||||
Debt |
3,418 | 2,467 | | (473 | ) | 4(a)(f) | 5,412 | |||||||||||||
Reclamation and remediation liabilities |
2,481 | 581 | (2 | ) | 3(d)(e) | 12 | 4(c) | 3,072 | ||||||||||||
Deferred income tax liabilities |
612 | 2,289 | (517 | ) | 3(f) | 47 | 4(e)(g) | 2,431 | ||||||||||||
Employee-related benefits |
401 | 16 | | | 417 | |||||||||||||||
Lease and other financing obligations |
190 | 230 | | 43 | 4(f) | 463 | ||||||||||||||
Other non-current liabilities |
314 | 300 | 785 | 3(j) | 381 | 4(c)(e) | 1,780 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total liabilities |
9,203 | 7,092 | 261 | (180 | ) | 16,376 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Contingently redeemable noncontrolling interest |
47 | | | | 47 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
EQUITY |
||||||||||||||||||||
Common stock$1.60 par value |
855 | | | 455 | 4(h) | 1,310 | ||||||||||||||
Authorized1,280 million shares |
||||||||||||||||||||
Outstanding shares820 million shares |
||||||||||||||||||||
Treasury stock2 million shares |
(70 | ) | | | | (70 | ) | |||||||||||||
Additional paid-in capital |
9,618 | 18,248 | | (9,223 | ) | 4(h) | 18,643 | |||||||||||||
Accumulated other comprehensive income (loss) |
(284 | ) | (128 | ) | 247 | 3(g)(k) | (119 | ) | 4(h) | (284 | ) | |||||||||
Retained earnings |
383 | (8,245 | ) | 1,620 | 6,515 | 4(h) | 273 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Stockholders' equity |
10,502 | 9,875 | 1,867 | (2,372 | ) | 19,872 | ||||||||||||||
Noncontrolling interests |
963 | | | | 963 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total equity |
11,465 | 9,875 | 1,867 | (2,372 | ) | 20,835 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total liabilities and equity |
$ | 20,715 | $ | 16,967 | $ | 2,128 | $ | (2,552 | ) | $ | 37,258 | |||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
31
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The accompanying unaudited pro forma financial information presents the unaudited pro forma statement of operations and unaudited pro forma balance sheet of Newmont based on the historical audited consolidated financial statements of Newmont and Goldcorp after giving effect to the arrangement, and pro forma adjustments as described in these notes. Pro forma adjustments are included only to the extent they are (i) directly attributable to the arrangement, (ii) factually supportable, and (iii) with respect to the statement of operations only, expected to have a continuing impact on the combined results. The unaudited pro forma statements of operations do not reflect non-recurring expenses directly attributable to the arrangement, including fees to banks, attorneys, accountants and other professional advisors, and other transaction-related costs. However, the impacts of such expenses incurred subsequent to the balance sheet date are reflected in the unaudited pro forma balance sheet as accrued liabilities. This amount does not include estimates for fees that are not readily determinable or factually supportable. The unaudited pro forma statement of operations and the unaudited pro forma balance sheet give effect to the arrangement as if it had occurred on January 1, 2018, and December 31, 2018, respectively.
The historical audited consolidated financial statements of Newmont are prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") and are shown in U.S. dollars. The historical audited consolidated financial statements of Goldcorp are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), and are shown in U.S. dollars.
The arrangement will be accounted for using the acquisition method of accounting, which requires an allocation of the purchase price to the net assets acquired and liabilities assumed, based on their fair values as of the date of the arrangement. As of the date of this proxy statement, Newmont has not completed the detailed valuation study necessary to arrive at the required final estimates of the fair value of the Goldcorp's assets to be acquired and liabilities to be assumed and the related allocations of purchase price, nor has it identified all adjustments necessary to convert Goldcorp's historical audited financial statements prepared in accordance with IFRS to U.S. GAAP and conform Goldcorp's accounting policies to Newmont's accounting policies. A final determination of the fair value of Goldcorp's assets and liabilities, including property, plant and mine development, will be based on the actual property, plant and mine development of Goldcorp that exist as of the closing date of the arrangement and, therefore, cannot be made prior to the arrangement date. In addition, the value of the consideration to be paid by Newmont upon the consummation of the arrangement will be determined based on the closing price of Newmont's common stock on the arrangement date. As a result of the foregoing, the pro forma adjustments are preliminary and are subject to change as additional information becomes available and as additional analysis is performed. The preliminary pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma financial information presented herein. Newmont has estimated the fair value of Goldcorp's assets and liabilities based on discussions with Goldcorp's management, preliminary valuation studies, due diligence and information presented in Goldcorp's filings with the SEC. Until the arrangement is completed, both companies are limited in their ability to share certain information. Upon completion of the arrangement, a final determination of fair value of Goldcorp's assets and liabilities will be performed. Any increases or decreases in the fair value of assets acquired and liabilities assumed upon completion of the final valuations will result in adjustments to the unaudited pro forma balance sheet and unaudited pro forma statements of operations. The final purchase price allocation may be materially different than that reflected in the pro forma purchase price allocation presented herein.
32
Purchase Consideration
The total preliminary estimated purchase price of approximately $9,497 million was determined as of February 15, 2019 based on Goldcorp's issued and outstanding common shares and equity awards outstanding under Goldcorp's incentive compensation plans that will be exchanged or ultimately be paid out in cash on or after the closing of the arrangement. The number of shares of Newmont common stock to be issued is based on the number of Goldcorp common shares outstanding multiplied by the 0.3280 exchange ratio, adjusted for fractional shares. The aggregate purchase price for unaudited pro forma financial information purposes will be based on the actual closing price per share of Newmont common stock on the closing date, which could differ materially from the assumed value disclosed in the notes to the unaudited pro forma financial information. For purposes of the unaudited pro forma financial information, such common stock and equity awards are assumed to remain outstanding as of the closing date of the arrangement. Further, no effect has been given to any other new Goldcorp common shares or other equity awards that may be issued or granted subsequent to the date of this proxy statement and before the closing date of the arrangement. In all cases in which Newmont's closing stock price is a determining factor in arriving at the final purchase consideration, the stock price assumed for the total preliminary purchase price is the closing price of Newmont's common stock on February 15, 2019 ($33.24 per share), the most recent date practicable in the preparation of this proxy statement. A hypothetical 15% change in Newmont's closing stock price as of February 15, 2019, would have an approximate $1,421 million impact on the purchase price, which would result in $1,421 additional goodwill or a $167 million reduction in fair value of tangible assets and a potential gain from bargain purchase.
(in millions, except share and per share data)
|
Shares | Per Share | Purchase Consideration |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Stock Consideration |
||||||||||
Shares of Newmont exchanged for Goldcorp outstanding common shares(1) |
284,556,968 | $ | 33.24 | $ | 9,459 | |||||
Share awards and options allocated to purchase consideration(2) |
21 | |||||||||
| | | | | | | | | | |
|
284,556,968 | $ | 9,480 | |||||||
Cash Consideration |
||||||||||
Cash consideration payable for each Goldcorp outstanding common shares(3) |
867,551,731 | $ | 0.02 | $ | 17 | |||||
| | | | | | | | | | |
|
$ | 17 | ||||||||
| | | | | | | | | | |
Total Preliminary Purchase Price |
$ | 9,497 | ||||||||
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
33
Goldcorp options is valued using the "Black Scholes" valuation model using industry standard practice and certain inputs specified in the plan of arrangement.
Preliminary Purchase Price Allocation
The table below summarizes the preliminary allocation of purchase price to the assets acquired and liabilities assumed for purposes of the unaudited pro forma financial information as if the arrangement occurred on December 31, 2018:
|
(in millions) | |||
---|---|---|---|---|
Preliminary purchase price allocation |
||||
Cash and cash equivalents |
$ | 134 | ||
Trade receivables |
91 | |||
Investments |
228 | |||
Equity method investments |
3,119 | |||
Inventories |
423 | |||
Stockpiles and ore on leach pads |
68 | |||
Property, plant & mine development |
11,490 | |||
Goodwill |
1,254 | |||
Deferred income tax assets |
257 | |||
Other assets |
376 | |||
| | | | |
Total Assets |
$ | 17,440 | ||
| | | | |
Debt |
$ | 2,874 | ||
Accounts payable |
270 | |||
Employee-related benefits |
109 | |||
Income and mining taxes payable |
204 | |||
Lease and other financing obligations |
280 | |||
Reclamation and remediation liabilities |
675 | |||
Deferred income tax liabilities |
1,819 | |||
Other liabilities |
1,712 | |||
| | | | |
Total liabilities |
$ | 7,943 | ||
| | | | |
Total Preliminary Purchase Price |
$ | 9,497 | ||
| | | | |
| | | | |
| | | | |
The Goodwill balance is primarily attributed to the assembled workforce, operating synergies anticipated upon the integration of the operations of Newmont and Goldcorp, and potential strategic and financial benefits that include, the gold sector's largest reserve and resource base, the benefits of additional revenue from other products such as silver, zinc, and copper, and the financial flexibility to execute capital priorities.
2. Goldcorp Historical Financial Statements
Goldcorp historical balances were derived from Goldcorp's historical audited consolidated financial statements as described above and are presented under IFRS and are in U.S. dollars. The historical balances reflect certain reclassifications of Goldcorp's consolidated statement of (loss) earnings and consolidated balance sheet categories to conform to Newmont's presentation in its consolidated statement of operations and consolidated balance sheet. Further review may identify additional reclassifications that could have a material impact on the unaudited pro forma financial information of the combined company. The reclassifications identified and presented in the unaudited pro forma financial information are based on discussions with Goldcorp's management, due diligence and information presented in Goldcorp's filings with the SEC. Until the arrangement is completed, both companies are limited in their ability to share certain information. As of the date of this proxy statement, Newmont is not aware of any additional reclassifications that would have a material impact on the unaudited pro forma financial information that are not reflected in the pro forma adjustments.
34
The reclassifications are summarized below:
Goldcorp Financial Statement Line
|
Goldcorp Historical Amount |
Reclassifications | Goldcorp Historical Reclassified Amount |
Newmont Financial Statement Line |
|||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) |
|||||||||||
Income Statement for the year ended December 31, 2018 |
|||||||||||
Revenues |
$ | 3,032 | $ | | $ | 3,032 | Sales | ||||
Mine operating costsProduction costs |
(1,794 | ) | 25 | (1,769 | ) | Costs applicable to sales | |||||
Mine operating costsDepreciation and depletion |
(983 | ) | | (983 | ) | Depreciation and amortization | |||||
|
| (47 | ) | (47 | ) | Reclamation and remediation | |||||
Exploration, evaluation and project costs |
(86 | ) | 43 | (43 | ) | Exploration | |||||
|
| (43 | ) | (43 | ) | Advanced projects, research and development | |||||
Share of net earnings related to associates and joint venture |
83 | | 83 | Equity income (loss) of affiliates | |||||||
Impairment of mining interest, net |
(4,727 | ) | | (4,727 | ) | Impairment of long-lived assets | |||||
Corporate administration |
(131 | ) | | (131 | ) | General and administrative | |||||
Finance costs |
(145 | ) | 22 | (123 | ) | Interest expense, net of capitalized interest | |||||
Other (expense) income, net |
(10 | ) | | (10 | ) | Other income, net | |||||
Income tax recovery |
612 | | 612 | Income and mining tax benefit | |||||||
| | | | | | | | | | | |
Net loss from continuing operations |
$ | (4,149 | ) | $ | | $ | (4,149 | ) | |||
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Balance Sheet as of December 31, 2018 |
|||||||||||
Assets |
Assets | ||||||||||
Current: Cash and cash equivalents |
$ | 134 | $ | | $ | 134 | Current: Cash and cash equivalents | ||||
Current: Short-term investments |
38 | | 38 | Current: Investments | |||||||
Current: Accounts receivable |
91 | | 91 | Current: Trade receivables | |||||||
Current: Inventories |
491 | (68 | ) | 423 | Current: Inventories | ||||||
|
| 68 | 68 | Current: Stockpiles and ore on leach pads | |||||||
Current: Sales and indirect taxes recoverable |
228 | | 228 | Current: Other current assets | |||||||
Current: Income taxes receivable |
36 | | 36 | Current: Other current assets | |||||||
Current: Other |
39 | | 39 | Current: Other current assets | |||||||
Mining interestsowned by subsidiaries and joint operation |
12,910 | | 12,910 | Property, plant and mine development, net | |||||||
Mining interestsInvestments in associates and joint venture |
2,632 | | 2,632 | Investments | |||||||
Equity securities |
190 | | 190 | Investments | |||||||
Deferred income taxes |
22 | | 22 | Deferred income tax assets | |||||||
Other (non-current) |
156 | | 156 | Other non-current assets | |||||||
| | | | | | | | | | | |
|
$ | 16,967 | $ | | $ | 16,967 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
35
Goldcorp Financial Statement Line
|
Goldcorp Historical Amount |
Reclassifications | Goldcorp Historical Reclassified Amount |
Newmont Financial Statement Line |
|||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) |
|||||||||||
Liabilities |
Liabilities | ||||||||||
Current: Accounts payable and accrued liabilities |
$ | 596 | $ | (321 | ) | $ | 275 | Current: Accounts payable | |||
Current: Debt |
400 | | 400 | Current: Debt | |||||||
|
| 93 | 93 | Current: Employee-related benefits | |||||||
Current: Income taxes payable |
113 | | 113 | Current: Income and mining taxes payable | |||||||
|
| 7 | 7 | Current: Lease and other financing obligations | |||||||
Current: Provisions and other |
100 | 221 | 321 | Current: Other current liabilities | |||||||
Deferred income taxes |
2,289 | | 2,289 | Deferred income tax liabilities | |||||||
|
| 581 | 581 | Reclamation and remediation liabilities | |||||||
Debt |
2,467 | | 2,467 | Debt | |||||||
|
| 16 | 16 | Employee-related benefits | |||||||
Deferred payment obligation |
163 | | 163 | Other non-current liabilities | |||||||
Finance lease obligations |
230 | | 230 | Lease and other financing obligations (non-current) | |||||||
Provisions |
619 | (590 | ) | 29 | Other non-current liabilities | ||||||
Income taxes payable (non-current) |
60 | | 60 | Other non-current liabilities | |||||||
Other (non-current) |
55 | (7 | ) | 48 | Other non-current liabilities | ||||||
| | | | | | | | | | | |
|
7,092 | | 7,092 | ||||||||
Shareholders' equity |
Shareholders' equity |
||||||||||
Common shares, stock options and restricted share units |
18,248 | (18,248 | ) | | Common stock | ||||||
|
| 18,248 | 18,248 | Additional paid-in capital | |||||||
Accumulated other comprehensive loss |
(128 | ) | | (128 | ) | Accumulated other comprehensive loss | |||||
Deficit |
(8,245 | ) | | (8,245 | ) | Retained earnings | |||||
| | | | | | | | | | | |
|
$ | 16,967 | $ | | $ | 16,967 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
3. IFRS to U.S. GAAP Adjustments
IFRS differs in certain material respects from U.S. GAAP. The following material adjustments have been made to reflect Goldcorp's historical audited consolidated statement of earnings and consolidated balance sheet on a U.S. GAAP basis for purposes of unaudited pro forma financial information. In addition, the material adjustments have been made to align Goldcorp's historical significant accounting policies under IFRS to Newmont's significant accounting policies under U.S. GAAP.
36
(a) Impairment of Long-Lived Assets
Under both U.S. GAAP and IFRS, long-lived assets are tested for impairment when events or changes in circumstances indicate that the carrying amounts may be impaired. Under U.S. GAAP, the asset group is first tested for recoverability by determining if its carrying amount exceeds the expected future cash flows from the asset group on an undiscounted basis. If the asset group is determined to not be recoverable, an impairment expense is recorded for the excess of the asset group's carrying amount over its fair value. Further, future reversal of a previously recognized impairment loss is prohibited.
Under IFRS, when an impairment indicator is determined to exist, an impairment expense is recorded for the excess of the cash generating unit carrying amount over the greater of its fair value less costs of disposal and its value in use. Impairment expense previously recorded is reversible in subsequent periods under certain conditions.
The following table reflects the reversal of impairment expense recognized by Goldcorp under IFRS, after adjusting the carrying value of the property, plant and mine development for (i) the impact of excluding resources from recoverable ounces in units-of-production based depreciation expense, (ii) reversing previous impairment expense recognized by Goldcorp, net of previous IFRS impairment expense reversals, (iii) reversing mine development and stripping costs capitalized by Goldcorp, as outlined in Note 3(b), and (iv) reversing proceeds from the sale of preproduction metal, net of operating costs, which were deducted against Property, plant, and mine development, net, as outlined in Note 3(h), that would not be recognized under U.S. GAAP.
(in millions)
|
As of December 31, 2018 |
For the year ended December 31, 2018 |
|||||
---|---|---|---|---|---|---|---|
Condensed Balance Sheet |
|||||||
Increase to property, plant and mine development, net |
$ | 627 | $ | | |||
Increase to deferred income tax liabilities |
223 | | |||||
Condensed Statement of Operations |
|||||||
Decrease to impairment of long-lived assets |
| (787 | ) | ||||
Decrease to income and mining tax benefit (expense) |
$ | | $ | (150 | ) |
(b) Mine Development and Stripping Costs
Under U.S. GAAP, Newmont capitalizes mine development costs, including the initial costs to remove overburden and waste in order to access the main ore body and before the production phase of the mine is achieved. After the production phase of a mine is achieved, stripping costs are included as variable production costs of stockpiles and ore on leach pads. Under IFRS, Goldcorp capitalizes mine development costs, including stripping costs to remove overburden and waste to access the main ore body, and in addition, Goldcorp continues to capitalize certain stripping costs after the production phase of a mine is achieved when the current strip ratio exceeds the estimated life of mine strip ratio.
The following table reflects the reversal of mine development and stripping costs capitalized by Goldcorp for its consolidated subsidiaries and equity method investees, before mineralization is
37
classified as proven and probable reserves and after the production phase of a mine is achieved, net of depreciation and amortization.
(in millions)
|
As of December 31, 2018 |
For the year ended December 31, 2018 |
|||||
---|---|---|---|---|---|---|---|
Condensed Balance Sheet |
|||||||
Decrease to property, plant and mine development, net |
$ | (12 | ) | $ | | ||
Decrease to investments |
(37 | ) | | ||||
Decrease to deferred income tax liabilities |
(4 | ) | | ||||
Condensed Statement of Operations |
|||||||
Increase to cost applicable to sales |
| 17 | |||||
Increase to income and mining tax benefit (expense) |
| 6 | |||||
Decrease to equity income (loss) of affiliates |
$ | | $ | (10 | ) |
(c) Depreciation and Amortization
Under U.S. GAAP, Newmont's policy is to amortize certain mine development costs using the units-of-production method based on estimated recoverable ounces or pounds in proven and probable reserves. Under IFRS, Goldcorp includes estimated recoverable ounces contained in proven and probable reserves and a portion of resources, when it is considered highly probable that resources will be economically extracted.
The following table reflects the impact of excluding resources from recoverable ounces in units-of-production based depreciation expense calculations.
(in millions)
|
As of December 31, 2018 |
For the year ended December 31, 2018 |
|||||
---|---|---|---|---|---|---|---|
Condensed Balance Sheet |
|||||||
Decrease to property, plant and mine development, net |
$ | (147 | ) | $ | | ||
Decrease to deferred income tax liabilities |
(56 | ) | | ||||
Condensed Statement of Operations |
|||||||
Increase to depreciation and amortization |
| 127 | |||||
Increase to income and mining tax benefit (expense) |
$ | | $ | 47 |
(d) Reclamation and Remediation Liabilities
Under U.S. GAAP, the initial recognition of the asset retirement obligations is based on the fair value of the reclamation and remediation liability, generally utilizing a present value technique to estimate the liability and discounted at a credit-adjusted risk-free interest rate. Subsequently, period-to-period revisions to either the timing or amount of the original estimate of undiscounted cash flows are treated as separate layers of the obligation.
Under IFRS, reclamation and remediation liabilities are generally measured as the best estimate of the expenditure to settle the obligation utilizing a present value technique to estimate the liability, discounted at a pretax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Subsequently, period-to-period revisions for changes in the estimate of expected undiscounted cash flows or discount rate is remeasured for the entire obligation by using an updated discount rate that reflects current market conditions as of the balance sheet date.
The unaudited pro forma financial information does not reflect the impact of converting Goldcorp's reclamation and remediation liabilities, capitalized asset retirement costs, and related reclamation and remediation expenses on a U.S. GAAP basis as it is impractical to re-estimate the impact of period-to-period revisions to the timing or amount of the original reclamation liability over historical periods using the layering approach and credit adjusted risk free rates. In addition, the
38
impact of converting reclamation and remediation liabilities from IFRS to U.S. GAAP is not meaningful because, under the acquisition method of accounting, reclamation and remediation liabilities are recorded at fair value as of the closing date of the arrangement. Therefore, Newmont has reflected the adjustment to recognize Reclamation and remediation liabilities, and related capitalized asset retirement costs, at their estimated fair value on the arrangement closing date. Refer to Note 4(c) below for additional information.
(e) Joint ArrangementsNorte Abierto Project
Under U.S. GAAP, a joint venture is defined as an entity whose operations and activities are jointly controlled by its equity investors. Joint ventures are accounted for using the equity method of accounting. Proportionate consolidation is used in the oil and gas and mining and extractive industries, when working interest owners join together in the development and operation of a jointly-owned or unitized property outside a separate legal entity pursuant to a written agreement.
IFRS addresses two types of joint arrangements: (1) joint operations and (2) joint ventures, both distinguished by the rights and obligations of the parties involved. In a joint operation, an entity has rights to the underlying assets and obligations for the liabilities of the arrangement and recognizes its share of the assets, liabilities, revenues, and expenses arising from its interest. In a joint venture, the equity method of accounting is used and requires the use of a separate legal entity. Unlike U.S. GAAP, the existence of a separate legal entity is not sufficient evidence to conclude that an arrangement is a joint venture.
The following table reflects the impact of converting Goldcorp's accounting for its interest in Norte Abierto from joint operations accounting under IFRS to the equity method of accounting under U.S. GAAP as of December 31, 2018. The impact to Equity income (loss) of affiliates in the unaudited pro forma statement of operations for the year ended December 31, 2018 is not material.
(in millions)
|
As of December 31, 2018 |
|||
---|---|---|---|---|
Condensed Balance Sheet |
||||
Decrease to property, plant and mine development, net |
$ | (589 | ) | |
Increase to investments |
660 | |||
Decrease to other non-current assets |
(83 | ) | ||
Decrease to accounts payable |
(5 | ) | ||
Decrease to reclamation and remediation liabilities |
(2 | ) | ||
Decrease to deferred income tax liabilities |
$ | (5 | ) |
(f) Income Taxes
Under U.S. GAAP, deferred taxes are recognized for temporary differences arising from the initial recognition of assets acquired or liabilities assumed. Under IFRS, deferred income taxes are not recorded for temporary differences arising from the initial recognition of an asset or liability in a transaction that (i) is not a business combination, and (ii) affects neither accounting nor taxable profit. The impact of recording deferred taxes on asset acquisitions under U.S. GAAP resulted in an increase to Deferred income tax liabilities of $431 million and a corresponding increase to Property, plant and mine development, net, of $431 million as of December 31, 2018.
Additionally, U.S. GAAP prohibits recognition of deferred tax consequences for differences that arise from changes in exchange rates or indexing for tax purposes for those foreign subsidiaries that are required to use historical rates to remeasure nonmonetary assets and liabilities from the local currency into the functional currency. Under IFRS, deferred tax assets or liabilities are recognized for temporary differences related to nonmonetary assets or liabilities that are remeasured from the local currency into the functional currency for book purposes using historical exchange rates, but are reported in local
39
currency for tax purposes using current exchange rates. The impact of reversing deferred taxes on foreign nonmonetary liabilities resulted in a decrease to Deferred income tax liabilities of $1,107 million and an increase to Deferred income tax assets of $477 million as of December 31, 2018, and resulted in an increase to Income and mining tax benefit (expense) of $242 million for the year ended December 31, 2018.
The following table reflects the net increase (decrease) to deferred tax assets and deferred tax liabilities, respectively, relating to adjustments discussed in Note 3(a), 3(b), 3(c), 3(e), 3(f), and 3(h).
(in millions)
|
Note | As of December 31, 2018 |
||||
---|---|---|---|---|---|---|
Condensed Balance Sheet |
||||||
Increase (decrease) to deferred tax assets due to: |
||||||
Exchange rate changes and indexing for tax purposes |
3(f) | $ | 477 | |||
| | | | | | |
Net increase to deferred tax assets |
$ | 477 | ||||
| | | | | | |
Increase (decrease) to deferred tax liabilities due to: |
||||||
Impairment of long-lived assets |
3(a) | $ | 223 | |||
Mine development and stripping costs |
3(b) | (4 | ) | |||
Depreciation and amortization |
3(c) | (56 | ) | |||
Joint arrangementsrecognition of Norte Abierto as equity method investments |
3(e) | (5 | ) | |||
Initial recognition of asset acquisitions |
3(f) | 431 | ||||
Exchange rate changes and indexing for tax purposes |
3(f) | (1,107 | ) | |||
Pre-production sales |
3(h) | 1 | ||||
| | | | | | |
Net decrease to deferred tax liabilities |
$ | (517 | ) | |||
| | | | | | |
(g) Marketable Equity Securities
U.S. GAAP requires investments in equity securities to be measured at fair value, with changes in fair value recognized in net income, unless equity securities do not have a readily determinable fair value. Under IFRS, equity securities designated as fair value through other comprehensive income (FVTOCI) are carried at fair value and changes in fair value are recognized in other comprehensive income, which is not subsequently charged to earnings.
This adjustment reflects the reversal of gains and losses recorded by Goldcorp for marketable equity securities classified as FVTOCI from Other comprehensive income into Other income of $106 million for the year ended December 31, 2018, and results in a reclassification of amounts recognized in Accumulated other comprehensive income (loss) to Retained earnings of $145 million as of December 31, 2018.
(h) Pre-production Sales
Under U.S. GAAP, proceeds from the sale of pre-production metal produced during commissioning of a processing facility are credited to other income, net of operating costs. However, sales of metal produced during the development phase of a mine where there is already an existing processing facility are recorded within sales and costs applicable to sales. Under IFRS, proceeds from the sale of metal produced during the development phase of a mine are offset against capitalized asset costs, net of allocated operating costs.
The following table reflects the impact of reversing proceeds from the sale of metal produced during the development phase of a mine, net of allocated operating costs, for consolidated subsidiaries
40
and equity method investees for the period ended December 31, 2018. The impact to sales in the unaudited pro forma statement of operations for the year ended December 31, 2018 is not material.
(in millions)
|
As of December 31, 2018 |
|||
---|---|---|---|---|
Condensed Balance Sheet |
||||
Increase to property, plant and mine development, net |
$ | 3 | ||
Increase to investments |
13 | |||
Increase to deferred income tax liabilities |
$ | 1 |
(i) By-Product versus Co-Product Revenue Accounting
Under Newmont's accounting policy, a metal is considered a by-product when sales represent less than 10% to 20% of the total sales from all metals on a life-of-mine basis and revenue from by-product metal sales is recognized as a reduction to cost applicable to sales. Goldcorp's accounting policy is to recognize proceeds from sales of all metals in sales.
The following table reflects the impact of reversing sales for certain metals that are considered by-products metals for the year ended December 31, 2018.
(in millions)
|
For the year ended December 31, 2018 |
|||
---|---|---|---|---|
Condensed Statement of Operations |
||||
Decrease to sales |
$ | (66 | ) | |
Decrease to cost applicable to sales |
$ | (66 | ) |
(j) Fixed Price Sales Contract
Under U.S. GAAP, the upfront cash payment received upon entering into an off-market fixed price sales contract to deliver metal from future production (i.e., a metal streaming contract) is recognized as a financing transaction, through recognition of a liability for the future metal delivery performance obligation. Under IFRS, upfront cash payment received upon entering into a metal streaming contract is recognized as an offset to property, plant and mine development. The payment received is indirectly recognized in the statement of earnings through a reduction of depreciation and amortization expense over the term of the contract.
The following table reflects the impact of reversing the offset to Property, plant and mine development, net of Depreciation and amortization expense, by recognizing a liability for the same amount for the year-ended December 31, 2018 and the impact to Sales in the pro forma statement of operations for the year ended December 31, 2018.
(in millions)
|
As of December 31, 2018 |
For the year ended December 31, 2018 |
|||||
---|---|---|---|---|---|---|---|
Condensed Balance Sheet |
|||||||
Increase to property, plant and mine development |
$ | 785 | $ | | |||
Increase to other non-current liabilities |
785 | | |||||
Condensed Statement of Operations |
|||||||
Increase to sales |
| 13 | |||||
Increase to depreciation and amortization |
$ | | $ | 13 |
(k) IFRS 1First-time Adoption of International Financial Reporting Standards ("IFRS 1")
Goldcorp adopted IFRS in accordance with IFRS 1 with a transition date of January 1, 2010 and its consolidated financial statements were prepared in accordance with IFRS standards and interpretations effective as of December 31, 2011. In accordance with IFRS 1, Goldcorp recognized $102 million cumulative translation difference from translating its Canadian operations prior to April 1, 2005 in opening retained earnings at January 1, 2010.
41
This adjustment reflects the reversal of $102 million cumulative translation difference recorded by Goldcorp in opening Retained earnings at January 1, 2010 to Accumulated other comprehensive income (loss) as of December 31, 2018.
Further review may identify additional IFRS to U.S. GAAP and accounting policy differences that, when conformed, could have a material impact on the unaudited pro forma financial information of the combined company. At this time, Newmont is not aware of any other significant accounting policy differences that would have a material impact on the unaudited pro forma financial information that are not reflected in the pro forma adjustments.
4. Purchase Accounting and Other Adjustments
The following adjustments have been made to the unaudited pro forma financial information to reflect certain preliminary purchase price accounting and other pro forma adjustments. Further review may identify additional adjustments that could have a material impact on the unaudited pro forma financial information of the combined company. At this time, Newmont is not aware of any additional arrangement related adjustments that would have a material impact on the unaudited pro forma financial information that are not reflected or disclosed in the pro forma adjustments.
(a) Cash and Cash Equivalents and Debt
The net decrease in Cash and cash equivalents of $897 million represents the agreed-upon cash consideration for Goldcorp common shares at $0.02 per share for $17 million (Note 1), the repayment of Goldcorp's $400 million term loan and the repayment of $480 million drawn on Goldcorp's $3 billion revolving credit facility. See the section entitled "The ArrangementRepayment of Goldcorp Debt" beginning on page 112 of this proxy statement. As a result of the planned repayment of Goldcorp's term loan and termination of its revolving credit facility, net interest expense for the year ended December 31, 2018 decreased by $31 million.
(b) Property, Plant and Mine Development and Investments
The adjustments to decrease Property, plant and mine development, net and Investments by $2,518 million and $149 million, reflects the fair value estimate of property, plant, and mine development and equity method investments, respectively, as of December 31, 2018, and the related decrease to Depreciation and amortization of $300 million and increase to Equity income (loss) of affiliates of $12 million for the year ended December 31, 2018.
(c) Reclamation and Remediation Liabilities
As discussed in Note 3(d), the increase to Reclamation and remediation liabilities of $17 million, of which $5 million is included in Other current liabilities, reflects an adjustment to recognize asset retirement obligation at fair value as of December 31, 2018. In addition, an increase of $40 million to Other non-current liabilities reflects an adjustment to recognize the fair value of incremental reclamation and remediation liabilities relating to an equity method investee with a nil carrying value as of December 31, 2018. As a result of the increases to the Reclamation and remediation liabilities, Reclamation and remediation expense for the year ended December 31, 2018 increased by $7 million.
(d) Accrued and Other Liabilities
The $110 million increase in accrued liabilities, included in Other current liabilities, and the corresponding offset to Retained earnings (see Note 4(h)) reflects estimated transaction expenses for banking, accounting, legal, and other professional fees associated with the arrangement. This amount does not include estimates for fees that are not readily determinable or factually supportable. These
42
costs are excluded from the unaudited pro forma statements of operations as they are non-recurring charges directly attributable to the arrangement.
(e) Other Current and Non-Current Liabilities
As discussed in Note 3(j), the adjustment reflects the recognition of incremental fair value of liabilities relating to metal streaming contracts of $95 million and $150 million, included in Other current liabilities and Other non-current liabilities, respectively, for the year ended December 31, 2018. In addition, a decrease to Deferred tax liabilities of $238 million and an increase to income taxes payable of $191 million (included in Other non-current liabilities) has been recorded for the metal streaming contract and other tax liabilities as of December 31, 2018, respectively. As a result of the increase in other current and non-current liabilities, a net increase of $82 million to Sales has been recognized as a result of the amortization of the increased liabilities for the year ended December 31, 2018.
(f) Debt and Lease and Other Financing Obligations
The increase of $7 million to long-term debt reflects the adjustment to recognize Goldcorp's assumed $1.0 billion and $1.5 billion notes at fair value, net of unamortized debt issuance costs of $13 million as of December 31, 2018. The increase of $43 million to Lease and other financing obligations reflects the adjustment to recognize Goldcorp's finance lease obligations at fair value as of December 31, 2018. The aggregate impact to interest expense in the unaudited pro forma statement of operations from both the fair value adjustments to Debt and Lease and other financing obligations for the year ending December 31, 2018 is not material.
(g) Income Taxes
Deferred income taxes have been recognized based on the pro forma fair value adjustments to identifiable assets acquired and liabilities assumed using the marginal tax rate on a jurisdictional basis. The $285 million increase in Deferred tax liabilities and the $242 million decrease in Deferred tax assets reflect the preliminary estimate of deferred tax assets and liabilities recognized on the new book to tax basis differences of assets acquired and liabilities assumed, and have been recognized as part of Goodwill.
The estimated income and mining tax expense impact of the pro forma adjustments (except for net adjustments to interest expense) has been recognized based upon a blended federal and state statutory rate of 35 percent. The estimated tax rate of 22 percent has been applied to the pro forma adjustments to interest expense based on a preliminary analysis of the applicable rules for interest cost allocation required by tax regulations.
(h) Goldcorp Shareholders' Equity
The adjustment reflects an adjustment of $11,742 million to eliminate Goldcorp's historical stockholder's equity, which represents the historical book value of Goldcorp's net assets, as a result of the application of purchase accounting.
The adjustment reflects an increase of $455 million and decrease of $9,223 million to Common stock and Additional paid-in capital, respectively, to reflect the issuance of 284,556,968 shares of Newmont common stock with a par value of $1.60 per share to satisfy the issuance of 0.3280 of a share of Newmont common stock for each Goldcorp common share outstanding pursuant to the arrangement agreement, assuming a closing price of Newmont common stock on February 15, 2019 of $33.24 per share. In addition, Retained earnings and Accumulated other comprehensive income (loss) have been adjusted by $6,515 million and $119 million, respectively, to eliminate Goldcorp's historical equity balances adjusted for IFRS to U.S. GAAP differences and purchase accounting and other pro forma adjustments as of December 31, 2018.
43
The table below reflects elimination of Goldcorp's historical equity balances after adjustments for IFRS to U.S. GAAP differences and purchase accounting and other pro forma adjustments as of December 31, 2018.
(in millions)
|
Historical Newmont |
Reclassified Historical Goldcorp |
IFRS to U.S. GAAP Adjustments |
Purchase Accounting Adjustments |
Other Pro Forma Adjustments |
Equity Adjustments |
Notes | Pro Forma Combined |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common stock$1.60 par value |
$ | 855 | $ | | $ | | $ | | $ | | $ | 455 | (1) | $ | 1,310 | |||||||||
Authorized1,280 million shares |
||||||||||||||||||||||||
Outstanding shares820 million shares |
||||||||||||||||||||||||
Treasury stock2 million shares |
(70 | ) | | | | | | (70 | ) | |||||||||||||||
Additional paid-in capital |
9,618 | 18,248 | | | | (9,223 | ) | (2) | 18,643 | |||||||||||||||
Accumulated other comprehensive income (loss) |
(284 | ) | (128 | ) | 247 | | | (119 | ) | (3) | (284 | ) | ||||||||||||
Retained earnings |
383 | (8,245 | ) | 1,620 | (2,972 | ) | (110 | ) | 9,597 | (4) | 273 | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
Stockholders' equity |
$ | 10,502 | $ | 9,875 | $ | 1,867 | $ | (2,972 | ) | $ | (110 | ) | $ | 710 | $ | 19,872 | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
(i) Goodwill
Goodwill is calculated as the difference between the preliminary estimated purchase price and the fair values assigned to the identifiable tangible and intangible assets acquired and liabilities assumed. The Company is continuing to value all assets acquired and liabilities assumed, and, upon completion of the arrangement, a final determination of fair value of Goldcorp's assets and liabilities will be performed. Based on the preliminary purchase price allocation, the Company has allocated $1,254 million to Goodwill in the unaudited pro forma balance sheet. This amount may increase or decrease based on the final purchase price allocation. Goodwill recorded in connection with the merger will not be deductible for income tax purposes.
(j) Earnings (Loss) Per Share
The pro forma combined diluted earnings (loss) per share presented below for the year ended December 31, 2018, reflects the adjustment to weighted average number of shares outstanding based on 0.328 of a share of Newmont common stock for each share of Goldcorp common shares outstanding as of February 15, 2019 and cash consideration as follows:
(in millions)
|
For the year ended December 31, 2018 |
|||
---|---|---|---|---|
Pro forma net income (loss) from continuing operations attributable to Newmont stockholders |
$ | (2,915 | ) | |
Pro forma basic and diluted weighted average Newmont shares outstanding |
818 | |||
| | | | |
Pro forma basic and diluted earnings (loss) per share |
$ | (3.57 | ) |
44
5. Proposed Joint Venture with Barrick Gold Corporation
The unaudited pro forma financial information does not give effect to the proposed creation of a joint venture (the "joint venture") to operate and manage certain mining operations and assets located in Nevada and included in our North America reportable segment (the "Assets") and certain of Barrick's Nevada mining operations and assets, as the joint venture is not directly attributable to the arrangement. Newmont's unaudited pro forma statement of operations includes $334 million of Income (loss) before income and mining tax and other items attributable to the Assets for the year ended December 31, 2018, which (i) does not reflect general corporate expenses, interest (except project-specific interest) or income and mining taxes and (ii) does reflect elimination of intercompany revenue and expense amounts with our other reportable segments. Similarly, the unaudited pro forma balance sheet includes $5,597 million of Total assets attributable to the Assets as of December 31, 2018. The Income (loss) before income and mining tax and other items and Total assets attributable to the Assets disclosed above are preliminary and subject to change based on the final terms of the joint venture to-be formed.
45
UNAUDITED PRO FORMA PER SHARE DATA
The following table presents, as of the dates and for the periods indicated, selected historical unaudited pro forma consolidated financial information per share of Newmont common stock and Goldcorp common shares. You should read this information in conjunction with, and the information is qualified in its entirety by, the consolidated financial statements of Newmont and notes thereto incorporated by reference into this proxy statement and the consolidated financial statements of Goldcorp and notes thereto incorporated by reference into this proxy statement. See the section entitled "Where You Can Find More Information" beginning on page 147 of this proxy statement.
The following pro forma information has been prepared in accordance with the rules and regulations of the SEC and accordingly includes the effects of acquisition accounting. It does not reflect cost savings, synergies or certain other adjustments that may result from the arrangement. This information is presented for illustrative purposes only. You should not rely on the pro forma combined or equivalent pro forma amounts as they are not necessarily indicative of the operating results or financial position that would have occurred if the arrangement had been completed as of the dates indicated, nor are they necessarily indicative of the future operating results or financial position of the combined company. The pro forma information, although helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the benefits of expected cost savings, opportunities to earn additional revenue, the impact of restructuring and arrangement-related costs, or other factors that may result as a consequence of the arrangement and, accordingly, does not attempt to predict or suggest future results.
The following table assumes the issuance of approximately 285 million shares of Newmont common stock in connection with the arrangement, which is the number of shares issuable by Newmont in connection with the arrangement assuming the arrangement occurred on January 1, 2018 and based on the number of outstanding Goldcorp common shares at that time. As discussed in this proxy statement, the actual number of shares of Newmont common stock issuable under the arrangement will be adjusted based on the number of Goldcorp common shares outstanding at the completion of the arrangement. The pro forma data in the table assumes that the arrangement occurred on January 1, 2018 for income statement purposes and on December 31, 2018 for balance sheet purposes, and that the arrangement is accounted for as a business combination.
|
Newmont | Goldcorp | Pro forma Newmont and Goldcorp Consolidated |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
(in millions)
|
As of and for the year ended December 31, 2018 |
As of and for the year ended December 31, 2018 |
As of and for the year ended December 31, 2018 |
|||||||
Income (loss) from continuing operations per common share |
||||||||||
Basic |
$ | 0.53 | $ | (4.77 | ) | $ | (3.57 | ) | ||
Diluted |
0.53 | (4.77 | ) | (3.57 | ) | |||||
Shares used in calculating basic and diluted income (loss) from continuing operations per common share |
||||||||||
Basic |
533 | 869 | 818 | |||||||
Diluted |
535 | 869 | 818 | |||||||
Book Value per share |
$ | 22 | $ | 11 | $ | 25 |
46
You should consider carefully the following risk factors, as well as the other information set forth in and incorporated by reference into this proxy statement, before making a decision on the amendment proposal or the share issuance proposal presented. As a stockholder of Newmont following the consummation of the arrangement, you will be subject to all risks inherent in the business of Newmont in addition to the risks relating to Goldcorp. The market value of your shares will reflect the performance of the business relative to, among other things, that of the competitors of Newmont and general economic, market and industry conditions. The value of your investment may increase or may decline and could result in a loss. You should carefully consider the following factors as well as the other information contained in and incorporated by reference into this proxy statement. For information regarding the documents incorporated into this proxy statement by reference, see the section entitled "Where You Can Find More Information" beginning on page 147 of this proxy statement.
RISKS RELATING TO THE ARRANGEMENT
The arrangement is subject to satisfaction or waiver of several conditions.
The arrangement is conditional upon, among other things, approval of the issuance of the Newmont common stock to Goldcorp shareholders in exchange for their Goldcorp common shares (the "consideration shares") pursuant to the arrangement agreement and approval of the amendment proposal by Newmont stockholders, approval of the arrangement by the Goldcorp shareholders, and Newmont and Goldcorp having obtained all government or regulatory approvals required by law, policy or practice, including, without limitation, approval of competition or antitrust and/or foreign investment authorities in Canada, Mexico and South Korea. The regulatory approval processes may take a lengthy period of time to complete, which could delay completion of the arrangement. There can be no assurance that any or all such approvals will be obtained.
The arrangement agreement may be terminated in certain circumstances.
Each of Newmont and Goldcorp has the right to terminate the arrangement agreement in certain circumstances. Failure to complete the arrangement could negatively impact the trading price of our common stock or otherwise adversely affect Newmont's business.
If the arrangement is not consummated by July 31, 2019, either Goldcorp or Newmont may choose not to proceed with the arrangement.
Either Goldcorp or Newmont may terminate the arrangement agreement if the arrangement has not been completed by July 31, 2019 (subject to extension to obtain certain key regulatory approvals) and the parties do not mutually agree to extend the arrangement agreement. See "The Arrangement Agreement and the Plan of ArrangementTermination of the Arrangement Agreement" beginning on page 137 in this proxy statement.
The issuance of a significant number of shares of Newmont common stock and a resulting "market overhang" could adversely affect the market price of shares of Newmont common stock after completion of the arrangement.
On completion of the arrangement, a significant number of additional shares of our common stock will be issued and available for trading in the public market. The increase in the number of shares of our common stock may lead to sales of such shares or the perception that such sales may occur (commonly referred to as "market overhang"), either of which may adversely affect the market for, and the market price of, shares of our common stock.
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We do not currently control Goldcorp and its subsidiaries.
We will not control Goldcorp and its subsidiaries until completion of the arrangement and the business and results of operations of Goldcorp may be adversely affected by events that are outside of our control during the intervening period. The performance of Goldcorp may be influenced by, among other factors, economic downturns, changes in commodity prices, political instability in the countries in which Goldcorp operates, changes in applicable laws, expropriation, increased environmental regulation, volatility in the financial markets, unfavorable regulatory decisions, litigation, rising costs, civic and labor unrest, disagreements with joint venture partners, delays in ongoing exploration and development projects and other factors beyond our control. As a result of any one or more of these factors, among others, the operations and financial performance of Goldcorp may be negatively affected, which may adversely affect the future financial results of the combined company.
We will incur substantial transaction fees and costs in connection with the arrangement.
We have incurred and expect to incur additional material non-recurring expenses in connection with the arrangement and completion of the transactions contemplated by the arrangement agreement, including, among others, costs relating to obtaining required shareholder and regulatory approvals. Additional unanticipated costs may be incurred in the course of coordinating the businesses of the combined company after completion of the arrangement. If the arrangement is not consummated, we will be required to pay certain costs relating to the arrangement incurred prior to the date the arrangement is abandoned, such as legal, accounting, financial advisory, proxy solicitation and printing fees. Such costs may be significant and could have an adverse effect on our future results of operations, cash flows and financial condition.
We may be required to pay a termination fee.
If the arrangement is not completed as a result of, among other reasons, a change in recommendation by us or a breach of a representation or warranty made by us in the arrangement agreement and prior to termination there is an acquisition proposal for us announced and within 12 months we enter into an agreement or consummate an acquisition proposal, we will be required to pay a termination fee of $650 million to Goldcorp in connection with the termination of the arrangement agreement. If the termination fee is ultimately required to be paid to Goldcorp, the payment of such fee will have an adverse impact on our financial results.
Goldcorp and Newmont may be the targets of legal claims, securities class actions, derivative lawsuits and other claims and negative publicity related to the arrangement.
Goldcorp and Newmont may be the target of securities class actions and derivative lawsuits which could result in substantial costs and may delay or prevent the arrangement from being completed. Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into an agreement to acquire a public company or to be acquired. Third parties may also attempt to bring claims against Newmont or Goldcorp seeking to restrain the arrangement or seeking monetary compensation or other remedies. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting consummation of the arrangement, then that injunction may delay or prevent the arrangement from being completed.
In addition, political and public attitudes towards the arrangement could result in negative press coverage and other adverse public statements affecting Newmont and Goldcorp. Adverse press coverage and other adverse statements could lead to investigations by regulators, legislators and law enforcement officials or in legal claims or otherwise negatively impact the ability of the combined company to take advantage of various business and market opportunities. The direct and indirect
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effects of negative publicity, and the demands of responding to and addressing it, may have a material adverse effect on the combined company's business, financial condition and results of operations.
The exchange ratio is fixed and will not be adjusted in the event of any change in either Newmont's or Goldcorp's share price.
Upon completion of the arrangement, each Goldcorp common share will be converted into the right to receive 0.3280 of a share of Newmont common stock and $0.02 in cash. This exchange ratio was fixed in the arrangement agreement and will not be adjusted to reflect changes in the market price of either Goldcorp common shares or Newmont common stock before the arrangement is completed. Stock price changes may result from a variety of factors (many of which are beyond Newmont's and Goldcorp's control), including the following:
The price of Newmont's common stock at the completion of the arrangement will vary from its price on the date the arrangement agreement was executed, the date of this proxy statement and the date of the special meeting. As a result, the market value represented by the exchange ratio will also vary. For example, based on the range of closing prices of Newmont common stock during the period from January 11, 2019, the last trading day before public announcement of the arrangement, through February 20, 2019, the latest practicable date before the date of this proxy statement, the exchange ratio represented a market value ranging from a low of $10.06 to a high of $11.76 for each Goldcorp common share.
Newmont stockholders will experience reduction of the percentage of their equity and voting interests as a result of the stock issuance.
In connection with the arrangement, Newmont is expected to issue approximately 285 million shares of its common stock to Goldcorp shareholders. Immediately following the completion of the arrangement, former Goldcorp shareholders will own collectively approximately 35% of the total number of shares of the combined company's outstanding common stock and the existing stockholders of Newmont will own approximately 65% of the outstanding common stock of the combined company. Accordingly, the issuance of Newmont common stock to Goldcorp shareholders will have the effect of reducing the percentage of equity and voting interest held by each of Newmont's existing stockholders. Consequently, Newmont stockholders as a group will have less influence over the management and policies of the combined company after the arrangement than they currently exercise.
The arrangement could negatively affect the price of our common stock as a result of market response to the arrangement, significant delays in the consummation of the arrangement or the termination of the arrangement agreement.
The market price of our common stock may vary significantly from the price on the date of the arrangement agreement. Negative market response to the arrangement or any significant delays in the consummation of the arrangement could negatively affect our stock price. In addition, there can be no assurance that the conditions to the consummation of the arrangement will be satisfied in a timely
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manner or at all. If the arrangement is not consummated or is delayed, the market price of our common stock may decline significantly, particularly to the extent the market price reflects a market assumption that the arrangement will be consummated or will be consummated in a particular timeframe.
Stock price changes may result from a variety of factors that are beyond our control, including:
RISK FACTORS ON COMPLETION OF THE ARRANGEMENT
Significant demands will be placed on the combined company as a result of the arrangement.
As a result of the pursuit and completion of the arrangement, significant demands will be placed on the managerial, operational and financial personnel and systems of the combined company. We cannot provide any assurance that the systems, procedures and controls of Newmont and Goldcorp will be adequate to support the expansion of operations and associated increased costs and complexity following and resulting from the arrangement. The future operating results of the combined company will be affected by the ability of its officers and key employees to manage changing business conditions, to integrate the acquisition of Goldcorp, to implement a new business strategy and to improve its operational and financial controls and reporting systems.
We may not realize the anticipated benefits of the arrangement and the integration of Goldcorp may not occur as planned.
The arrangement has been agreed with the expectation that its completion will result in an increase in sustained profitability, cost savings and enhanced growth opportunities for the combined company. These anticipated benefits will depend in part on whether Goldcorp's and Newmont's operations can be integrated in an efficient and effective manner. A significant number of operational and strategic decisions and certain staffing decisions with respect to integration of the two companies have not yet been made. These decisions and the integration of the two companies will present challenges to management, including the integration of systems and personnel of the two companies which may be geographically separated, anticipated and unanticipated liabilities, unanticipated costs (including substantial capital expenditures required by the integration) and the loss of key employees.
The performance of the combined company's operations after completion of the arrangement could be adversely affected if, among other things, the combined company is not able to achieve the anticipated savings and synergies expected to be realized in entering the arrangement, or retain key employees to assist in the integration and operation of Goldcorp and Newmont. The consummation of the arrangement may pose special risks, including one-time write-offs, restructuring charges and unanticipated costs. In addition, the integration process could result in diversion of the attention of
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management and disruption of existing relationships with suppliers, employees, customers and other constituencies of each company. Although Newmont and its advisors have conducted due diligence on the operations of Goldcorp, there can be no guarantee that Newmont is aware of any and all liabilities of Goldcorp. As a result of these factors, it is possible that certain benefits expected from the combination of Goldcorp and Newmont may not be realized.
Goldcorp's public filings are subject to Canadian disclosure standards, which differ from SEC disclosure requirements.
Our reserve estimates have been prepared in accordance with Industry Guide 7 published by the SEC. We have not been involved in the preparation of Goldcorp's mineral reserve and mineral resource estimates. Goldcorp's mineral reserves and mineral resource estimates were prepared in accordance with the disclosure standards of National Instrument 43-101Standards of Disclosure for Mineral Projects ("NI 43-101") and the Canadian Institute of Mining and Metallurgy Classification system under Canadian securities laws, which differ from the requirements of United States securities laws.
Industry Guide 7 and NI 43-101 have similar goals in terms of conveying an appropriate level of confidence in the disclosures being reported, but embody different approaches and definitions. For example, the terms "mineral reserve," "proven mineral reserve" and "probable mineral reserve" are Canadian mining terms as defined in NI 43-101, and these definitions differ from the definitions in Industry Guide 7. The terms "mineral resource," "measured mineral resource," "indicated mineral resource" and "inferred mineral resource" are defined in and required to be disclosed in accordance with, NI 43-101, these terms are not defined terms under Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. "Inferred mineral resources" under NI 43-101 have a great amount of uncertainty as to the existence of such resources and their economic and legal feasibility. A significant amount of exploration must be completed in order to determine whether an inferred mineral resource may be upgraded to a higher category. By contrast, under Industry Guide 7 standards, a "final" or "bankable" feasibility study is typically required to report reserves or cash flow analysis to designate reserves. Further, under Industry Guide 7, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.
Expectations regarding the combined mineral reserves and mineral resources of Newmont and Goldcorp following the closing of the arrangement will remain subject to adjustment, pending continuing review of Goldcorp's mineral resources in accordance with SEC Industry Guide 7 standards. Future adjustment may occur due to differing standards, required study levels, price assumptions, future divestments and acquisitions and other factors.
The Newmont board of directors and Newmont's financial advisors considered financial projections in connection with the arrangement. Actual performance of Newmont and Goldcorp may differ materially from these projections.
The Newmont board of directors and Citi, BMOCM and Goldman Sachs (together with Citi and BMOCM, "Newmont's financial advisors") considered, among other things, certain projections with respect to each of Newmont (the "Newmont projections"), Goldcorp (the "adjusted Goldcorp projections") and the combined company following the completion of the arrangement (the "combined pro forma projections" and, together with the Newmont projections and the adjusted Goldcorp projections, the "projections") prepared by Newmont management. All such projections were based on assumptions and information available at the time such projections were prepared. Newmont and its advisors do not know whether the assumptions made will be realized. Such information can be adversely affected by known or unknown risks and uncertainties, many of which are beyond Newmont's
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and Goldcorp's control. Further, financial forecasts of this type are based on estimates and assumptions that are inherently subject to risks and other factors such as company performance, geological uncertainties, industry performance, general business, economic, regulatory, market and financial conditions, as well as changes to the business, financial condition or results of operations of Newmont and Goldcorp, including the factors described in this "Risk Factors" section and "Cautionary Statement Regarding Forward-Looking Statements" beginning on page 56 of this proxy statement, which factors and changes may impact such forecasts or the underlying assumptions. As a result of these contingencies, there can be no assurance that the financial and other projections will be realized or that actual results will not be significantly higher or lower than projected. In view of these uncertainties, the inclusion of the projections in this proxy statement, and the references in this proxy statement should not be regarded as an indication that Newmont, its board of directors, or any of its advisors or any other recipient of this information considered, or now considers, it to be an assurance of the achievement of future results.
The projections were prepared for internal use and to, among other things, assist Newmont and its advisors in evaluating the transaction. The Newmont projections were not prepared with a view toward public disclosure or toward compliance with GAAP, published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Ernst & Young, Newmont's independent registered public accounting firm, has not examined, compiled or performed any procedures with respect to the projections.
In addition, the projections have not been updated or revised to reflect information or results after the date that such financial and other forecasts were prepared or as of the date of this proxy statement. Except as required by applicable securities laws, Newmont does not intend to update or otherwise revise its financial and other forecasts to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error.
The unaudited pro forma consolidated financial information of Newmont and Goldcorp is presented for illustrative purposes only and may not be indicative of the results of operations or financial condition of the combined company following the arrangement.
The unaudited pro forma consolidated financial information included in this proxy statement are presented for illustrative purposes only to show the effect of the arrangement, and should not be considered to be an indication of the financial condition or results of operations of the combined company following the arrangement. For example, the pro forma consolidated financial information have been prepared using the consolidated historical financial statements of Newmont and of Goldcorp and do not represent a financial forecast or projection. In addition, the pro forma consolidated financial information included in this proxy statement are based in part on certain assumptions regarding the arrangement. In addition, certain adjustments and assumptions have been made regarding the combined company after giving effect to the arrangement. The information upon which these adjustments and assumptions have been made is preliminary, and these types of adjustments and assumptions are difficult to make with complete accuracy, and other factors may affect the combined company's results of operations or financial condition following the arrangement.
In preparing the pro forma consolidated financial information contained in this proxy statement, we have given effect to, among other things, the completion of the arrangement and the issuance of the consideration shares. The unaudited pro forma consolidated financial information does not reflect all of the costs that are expected to be incurred by us in connection with the arrangement. For example, the impact of any incremental costs incurred in integrating Newmont and Goldcorp is not reflected in the pro forma consolidated financial information. See the notes to the unaudited pro forma consolidated
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financial statements of Newmont and Goldcorp included in "Unaudited Pro Forma Consolidated Financial Information" beginning on page 29 of this proxy statement.
Accordingly, the historical and pro forma consolidated financial information included in this proxy statement does not necessarily represent the combined company's results of operations and financial condition had Newmont and Goldcorp operated as a combined entity during the periods presented, or of the combined company's results of operations and financial condition following the arrangement.
The actual financial condition and results of operations of the combined company following the arrangement may not be consistent with, or evident from, these pro forma financial statements. In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect the combined company's financial condition or results of operations following the arrangement. Any potential decline in the combined company's financial condition or results of operations may cause a significant decrease in our stock price.
The opinions obtained by Newmont from its financial advisors as to the fairness of the consideration, from a financial point of view, to Newmont only speak as of the date of such opinions, and will not be updated to reflect changes in circumstances from the signing of the arrangement agreement in January 2019 through the closing of the arrangement.
Newmont's financial advisors presented their respective financial analyses to the Newmont board of directors and also delivered their respective oral opinions, which were subsequently confirmed in writing, that as of the dates of and based on the factors described in the written opinions, the consideration to be paid by Newmont for each of the Goldcorp common shares pursuant to the arrangement was fair, from a financial point of view, to Newmont. However, Newmont has not obtained updated opinions from its financial advisors as of the date of this proxy statement, and Newmont does not anticipate asking its financial advisors to update their opinions. In rendering their opinions, Citi, BMOCM and Goldman Sachs made judgments and, with the consent of Newmont, assumptions with regard to industry performance, general business, market and financial conditions and other matters that are beyond the control of Newmont and Goldcorp. These include, among other things, the impact of competition on the businesses of Newmont and Goldcorp, the industry generally, industry growth, the absence of any material adverse change in the financial condition and prospects of Newmont and Goldcorp, and the industry and financial markets in general, any of which could affect the public trading value of Newmont common stock by the time the arrangement is completed.
Because the opinions were issued in connection with the signing of the arrangement agreement and will not be updated, the opinions will not address the fairness to Newmont, from a financial point of view, of the consideration to be paid by Newmont for each of the Goldcorp common shares pursuant to the arrangement at the time the arrangement is completed or as of any date other than the date of the opinions. The opinions also do not address the prices at which Newmont common stock will trade at any time. The opinions that Newmont received from Citi, BMOCM and Goldman Sachs are attached as Annexes E, F and G to this proxy statement. For a description of the opinions, see the section entitled "The ArrangementOpinions of Newmont's Financial Advisors to the Newmont Board of Directors" beginning on page 78 of this proxy statement.
The combined company will face political risks in new jurisdictions.
Goldcorp's principal operations, development and exploration activities and significant investments are held in Canada, Mexico, Chile, Argentina, and the Dominican Republic, some of which may be considered to have an increased degree of political and sovereign risk. Any material adverse changes in government policies or legislation of such countries or any other country that Goldcorp has economic interests in that affect mining or mineral exploration activities may affect the viability and profitability of the combined company following the arrangement.
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While the governments in Canada, Mexico, Chile, Argentina, the Dominican Republic and other countries in which Goldcorp has mining operations or development or exploration projects have historically supported the development of natural resources by foreign companies, there is no assurance that such governments will not in the future adopt different regulations policies or interpretations with respect to, but not limited to, foreign ownership of mineral resources, royalty rates, taxation, rates of exchange, environmental protection, labor relations, repatriation of income or return of capital, restrictions on production or processing, price controls, export controls, currency remittance, or the obligations of Goldcorp under its respective mining codes and stability conventions. The possibility that such governments may adopt substantially different policies or interpretations, which might extend to the expropriation of assets, may have a material adverse effect on the combined company following the arrangement. Political risk also includes the possibility of terrorism, civil or labor disturbances and political instability. No assurance can be given that applicable governments will not revoke or significantly alter the conditions of the applicable exploration and mining authorizations nor can assurance be given that such exploration and mining authorizations will not be challenged or impugned by third parties. The effect of any of these factors may have a material adverse effect on the combined company's results of operations and financial condition.
The consummation of the arrangement may result in one or more ratings organizations taking actions which may adversely affect the combined company's business, financial condition and operating results, as well as the market price of our common stock.
Rating organizations regularly analyze the financial performance and condition of companies and may reevaluate the combined company's credit ratings following the consummation of the arrangement. Factors that may impact the combined company's credit ratings include debt levels, planned asset purchases or sales and near-term and long-term production growth opportunities, liquidity, asset quality, cost structure, product mix and commodity pricing levels. If a ratings downgrade were to occur in connection with the arrangement, the combined company could experience higher borrowing costs in the future and more restrictive covenants which would reduce profitability and diminish operational flexibility. We cannot provide assurance that any of our current ratings will remain in effect following the consummation of the arrangement for any given period of time or that a rating will not be lowered by a rating agency if, in its judgment, circumstances so warrant.
Increased exposure to foreign exchange fluctuations and capital controls may adversely affect the combined company's earnings and the value of some of the combined company's assets.
Our reporting currency is the US dollar and the majority of our earnings and cash flows are denominated in US dollars. The operations of Goldcorp are also conducted in US dollars, but Goldcorp conducts some of its business in currencies other than the US dollar and, as a result, following the arrangement, the combined company's consolidated earnings and cash flows may be impacted by movements in the exchange rates to a greater extent than prior to the arrangement. In particular, any change in the value of the currencies of the Canadian Dollar, the Mexican Peso, the Dominican Peso, the Argentine Peso, or the Chilean Peso versus the US dollar following the arrangement could negatively impact the combined company's earnings, and could negatively impact the combined company's ability to realize all of the anticipated benefits of the arrangement.
In addition, from time to time, emerging market countries such as those in which the combined company will operate adopt measures to restrict the availability of the local currency or the repatriation of capital across borders. These measures are imposed by governments or central banks, in some cases during times of economic instability, to prevent the removal of capital or the sudden devaluation of local currencies or to maintain in-country foreign currency reserves. In addition, many emerging markets countries require consents or reporting processes before local currency earnings can be converted into US dollars or other currencies and/or such earnings can be repatriated or otherwise
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transferred outside of the operating jurisdiction. These measures may have a number of negative effects on the combined company, reduction of the immediately available capital that the combined company could otherwise deploy for investment opportunities or the payment of expenses. In addition, measures that restrict the availability of the local currency or impose a requirement to operate in the local currency may create other practical difficulties for the combined company.
New legislation and tax risks in certain Goldcorp operating jurisdictions.
Goldcorp has operations and conducts business in multiple jurisdictions in which we do not currently operate or conduct business, which may increase our susceptibility to sudden tax changes. Taxation laws in these jurisdictions are complex, subject to varying interpretations and applications by the relevant tax authorities and subject to changes and revisions in the ordinary course, which could result in an increase in Goldcorp's taxes, or other governmental charges, duties or impositions, or an unreasonable delay in the refund of certain taxes owing to Goldcorp. No assurance can be given that new tax laws, rules or regulations will not be enacted or that existing tax laws will not be changed, interpreted or applied in a manner that could result in the combined company's profits being subject to additional taxation, result in the combined company not recovering certain taxes on a timely basis or at all, or that could otherwise have a material adverse effect on the combined company.
Failure by Goldcorp to comply with applicable laws prior to the arrangement could subject the combined company to penalties and other adverse consequences following the arrangement.
We are subject to the provisions of the US Foreign Corrupt Practices Act. Goldcorp is subject to the US Foreign Corrupt Practices Act and the Corruption of Foreign Public Officials Act (Canada). The foregoing laws prohibit companies and their intermediaries from making improper payments to officials for the purpose of obtaining or retaining business. In addition, such laws require the maintenance of records relating to transactions and an adequate system of internal controls over accounting. There can be no assurance that either party's internal control policies and procedures, compliance mechanisms or monitoring programs will protect it from recklessness, fraudulent behavior, dishonesty or other inappropriate acts or adequately prevent or detect possible violations under applicable anti-bribery and anti-corruption legislation. Following the arrangement, the combined company may be responsible for any liability in respect of any of the foregoing attributable to Goldcorp prior to the arrangement. A failure by Newmont or Goldcorp to comply with anti-bribery and anti-corruption legislation could result in severe criminal or civil sanctions, and may subject the combined company to other liabilities, including fines, prosecution, potential debarment from public procurement and reputational damage, all of which could have a material adverse effect on the business, consolidated results of operations and consolidated financial condition of the combined company following the arrangement. Investigations by governmental authorities could have a material adverse effect on the business, consolidated results of operations and consolidated financial condition of the combined company following the arrangement.
Goldcorp is also subject to a wide variety of laws relating to the environment, health and safety, taxes, employment, labor standards, money laundering, terrorist financing and other matters in the jurisdictions in which it operates. A failure by Goldcorp to comply with any such legislation prior to the arrangement could result in severe criminal or civil sanctions, and may subject the combined company to other liabilities, including fines, prosecution and reputational damage, all of which could have a material adverse effect on the business, consolidated results of operations and consolidated financial condition of the combined company following the arrangement. The compliance mechanisms and monitoring programs adopted and implemented by Goldcorp prior to the arrangement may not adequately prevent or detect possible violations of such applicable laws. Investigations by governmental authorities could also have a material adverse effect on the business, consolidated results of operations and consolidated financial condition of the combined company following the arrangement.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement and other documents incorporated by reference into this proxy statement contain or may contain "forward-looking statements." Where a forward-looking statement expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the forward-looking statements. Forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "anticipate," "intend," "plan," "will," "would," "estimate," "expect," "believe," "target," "indicative," "preliminary," or "potential." Forward-looking statements in this proxy may include, without limitation:
Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect. Such assumptions include, but are not limited to:
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Risks relating to forward-looking statements in regard to the Company's business and future performance may include, but are not limited to:
In addition, material risks that could cause actual results to differ from forward-looking statements include: the inherent uncertainty associated with financial or other projections; the prompt and effective integration of Newmont's and Goldcorp's businesses and the ability to achieve the anticipated synergies and value-creation contemplated by the arrangement; the risk associated with Newmont's and Goldcorp's ability to obtain the approval of the arrangement by their shareholders required to consummate the arrangement and the timing of the closing of the arrangement, including the risk that the conditions to the transaction are not satisfied on a timely basis or at all and the failure of the transaction to close for any other reason; the risk that a consent or authorization that may be required for the arrangement is not obtained or is obtained subject to conditions that are not anticipated; the outcome of any legal proceedings that may be instituted against the parties and others related to the arrangement agreement; unanticipated difficulties or expenditures relating to the transaction, the response of business partners and retention as a result of the announcement and pendency of the transaction; potential volatility in the price of Newmont common stock due to the proposed transaction; the anticipated size of the markets and continued demand for Newmont's and Goldcorp's resources and the impact of competitive responses to the announcement of the transaction; and the diversion of management time on transaction-related issues.
For a more detailed discussion of such risks and other factors, see "Risk Factors" beginning on page 47 of this proxy statement, Newmont's 2018 Annual Report on Form 10-K, filed with the SEC as well as Newmont's other SEC filings incorporated by reference in this proxy statement, as well as Goldcorp's filings incorporated by reference in this proxy statement. Newmont does not undertake any obligation to release publicly revisions to any "forward-looking statement," including, without limitation, outlook, to reflect events or circumstances after the date of this proxy statement, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. You should not place undue reliance on these forward-looking statements in deciding how your vote should be cast or in voting your shares on the proposals set forth in this proxy statement.
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CAUTIONARY STATEMENT REGARDING ILLUSTRATIVE MEASURES
This proxy statement and other documents incorporated by reference into this proxy statement contain or may contain references to certain measures that are used for illustrative purposes only.
Projections as used in this proxy statement are considered "forward looking statements." Forward-looking information representing post-closing expectations is inherently uncertain. Estimates such as expected accretion, net asset value, net present value creation, synergies, expected future production, internal rate of return, financial flexibility and balance sheet strength are preliminary in nature. There can be no assurance that the proposed arrangement will close or that the forward-looking information will prove to be accurate.
The cost savings or improvements under the "full potential" continuous improvement program ("full potential") as used in this proxy statement are considered operating measures provided for illustrative purposes, and should not be considered GAAP or non-GAAP financial measures. Full potential amounts are estimates utilized by management that represent estimated cumulative incremental value realized as a result of full potential projects implemented and are based upon both cost savings and efficiencies that have been monetized for purposes of the estimation. Because full potential savings and improvements estimates reflect differences between certain actual costs incurred and management estimates of costs that would have been incurred in the absence of the full potential program, such estimates are necessarily imprecise and are based on numerous judgments and assumptions. Expected full potential cost savings or improvements are projections and "forward-looking statements" subject to risks, uncertainties and other factors which could cause actual results to differ from current expectations.
Net present value creation as used in this proxy statement is a management estimate provided for illustrative purposes, and should not be considered a GAAP or non-GAAP financial measure. Net present value creation represents management's combined estimate of pre-tax synergies, supply chain efficiencies and full potential improvements, as a result of the proposed arrangement that have been monetized and projected over a twenty year period for purposes of the estimation, applying a discount rate of five percent. Such estimates are necessarily imprecise and are based on numerous judgments and assumptions. Expected net present value creation is a "forward-looking statement" subject to risks, uncertainties and other factors which could cause actual value creation to differ from expected value creation.
2019 dividends beyond Q1 2019 have not yet been approved or declared by the board of directors. Management's expectations with respect to future dividends or annualized dividends are "forward-looking statements." Investors are cautioned that such statements with respect to future dividends are non-binding. The declaration and payment of future dividends remain at the discretion of the board of directors and will be determined based on Newmont's financial results, balance sheet strength, cash and liquidity requirements, future prospects, gold and commodity prices, and other factors deemed relevant by the board of directors. The board of directors reserves all powers related to the declaration and payment of dividends. Consequently, in determining the dividend to be declared and paid on Newmont common stock, the board of directors may revise or terminate the payment level at any time without prior notice.
You should not place undue reliance on these estimates in deciding how your vote should be cast or in voting your shares on the proposals set forth in this proxy statement.
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The special meeting of Newmont stockholders will take place at 8 a.m. local time, on April 11, 2019, unless adjourned or postponed to a later date, at the Four Seasons Hotel, 1111 14th Street, Denver, Colorado 80202.
At the special meeting, the holders of Newmont's common stock, par value $1.60 per share, will be asked to consider and vote on the following three proposals:
After determining that it is advisable and in the best interests of Newmont and its stockholders to consummate the arrangement as contemplated by the arrangement agreement, the Newmont board of directors unanimously authorized, approved, and declared advisable the issuance of shares of Newmont common stock. Accordingly, the Newmont board of directors unanimously recommends that Newmont stockholders vote "FOR" each of the foregoing proposals.
The Newmont stockholders can cast separate votes on each proposal.
There are certain risks associated with the arrangement. See "Risk Factors" beginning on page 47 of this proxy statement for more information regarding such risks. Newmont stockholders should carefully read this proxy statement in its entirety for more detailed information concerning the arrangement. In particular, Newmont stockholders are directed to the arrangement agreement, which is attached as Annex A to this proxy statement.
RECORD DATE; OUTSTANDING SHARES; SHARES ENTITLED TO VOTE
The Newmont board of directors has fixed the close of business on February 20, 2019 as the record date for determination of stockholders entitled to notice of, and to vote at, the special meeting. Only stockholders of record of shares of Newmont common stock as of the close of business on the record date will receive notice of, and be entitled to vote at, the special meeting and any adjournments, postponements or continuations of the special meeting.
As of the close of business on the record date for the special meeting, there were 532,669,445 shares of Newmont common stock outstanding and held by approximately 7,030 holders of record. Each stockholder is entitled to one vote at the special meeting for each share of Newmont common stock held by that stockholder at the close of business on the record date. Newmont's common stock is the only security the holders of which are entitled to notice of, and to vote at, the special meeting.
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If you own shares that are registered in the name of someone else, such as a broker, bank or other nominee, you need to direct that organization to vote those shares or obtain an authorization from them and vote the shares yourself at the meeting.
The holders of a majority of the outstanding shares of capital stock of the Company entitled to vote at the special meeting must be present in person or represented by proxy in order to constitute a quorum for all matters to come before the meeting. For purposes of determining the presence of a quorum, "shares of capital stock of the Company" includes all shares of common stock entitled to vote at the special meeting. A quorum must be present in order for there to be a vote on the amendment proposal and the share issuance proposal. It is important that Newmont stockholders vote promptly so that their shares are counted toward the quorum.
Abstentions and broker non-votes are counted for purposes of determining whether a quorum is present at the special meeting. Banks, brokers and other nominees that hold their customers' shares in street name may not vote their customers' shares on "non-routine" matters without instructions from their customers. As each of the proposals to be voted upon at the special meeting is considered "non-routine," such organizations do not have discretion to vote on any proposal for which they do not receive instructions from their customers (this is referred to in this context as a "broker non-vote"). As a result, since there are no matters in which a broker non-vote may be counted, if you fail to provide your broker, bank or other nominee with any instructions regarding how to vote your shares, your shares will not be considered present at the special meeting, will not be counted for purposes of determining the presence of a quorum and will not be voted on any of the proposals. If you provide instructions to your broker, bank or other nominee which indicate how to vote your shares with respect to a proposal but not with respect to the other proposals, your shares will be considered present at the special meeting, be counted for purposes of determining the presence of a quorum and voted, as instructed, with respect to the appropriate proposal, but will not be voted with respect to the other proposals.
Newmont may seek to adjourn the special meeting if a quorum is not present at the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table reflects certain information known to Newmont as to Newmont common stock beneficially owned by: (i) each current director, (ii) each named executive officer, and (iii) all current directors and executive officers of Newmont as a group. The address for each of the named individuals below is c/o Newmont Mining Corporation, 6363 South Fiddler's Green Circle, Greenwood Village, Colorado 80111. Such information is presented as of February 20, 2019, except as otherwise noted.
No director or executive officer (a) beneficially owned more than 1% of the outstanding shares of Newmont common stock or (b) shares voting power in excess of 1% of the voting power of Newmont's outstanding capital stock. Each director and executive officer has sole voting power and dispositive power with respect to all shares beneficially owned by them, except as set forth below. It is expected that Newmont's directors and executive officers will vote "FOR" each of the proposals. Additionally, on January 14, 2019, in connection with the signing of the arrangement agreement, Goldcorp entered into support and voting agreements with Newmont's directors and certain members of Newmont's executive
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leadership team, as described in the section entitled "The Support and Voting Agreements" beginning on page 141 of this proxy statement.
Names of
|
Common Stock |
Restricted Stock, Restricted Stock Units and Director Stock Units(1)(2) |
Option Shares(3) |
Beneficial Ownership Total |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Non-Employee Directors |
|||||||||||||
Gregory H. Boyce |
| 21,086 | | 21,086 | |||||||||
Bruce R. Brook |
24,933 | 8,643 | | 33,576 | |||||||||
J. Kofi Bucknor |
23,383 | 8,643 | | 32,026 | |||||||||
Joseph A. Carrabba |
| 43,529 | | 43,529 | |||||||||
Noreen Doyle |
| 45,844 | | 45,844 | |||||||||
Veronica Hagen |
| 45,844 | | 45,844 | |||||||||
Sheri E. Hickok |
| 7,479 | | 7,479 | |||||||||
René Médori |
| 3,933 | | 3,933 | |||||||||
Jane Nelson |
| 33,576 | | 33,576 | |||||||||
Julio M. Quintana |
| 21,086 | | 21,086 | |||||||||
Molly P. Zhang |
| 7,479 | | 7,479 | |||||||||
Named Executive Officers |
|||||||||||||
Gary Goldberg(4) |
523,788 | 575,075 | | 1,098,863 | |||||||||
Nancy Buese(5) |
29,262 | 14,625 | | 43,887 | |||||||||
Randy Engel |
151,725 | 154,662 | 109,845 | 416,232 | |||||||||
Scott Lawson |
51,183 | 99,589 | | 150,772 | |||||||||
Thomas Palmer |
75,002 | 211,647 | | 286,649 | |||||||||
All directors and executive officers as a group (20 persons) |
1,187,422 | 1,539,852 | 148,605 | 2,980,787 |
The following table sets forth information with respect to each person known by Newmont to be the beneficial owner of more than 5% of any class of Newmont's voting securities. The share
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information contained herein is based solely on investor filings with the SEC pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Names and Addresses of Beneficial Owners
|
Title of Class |
Amount and Nature of Beneficial Ownership |
Percentage of Class |
||||||
---|---|---|---|---|---|---|---|---|---|
BlackRock, Inc. |
Common Stock | (1 | ) | 14.9 | % | ||||
The Vanguard Group Inc. |
Common Stock |
(2 |
) |
10.99 |
% |
||||
Van Eck Associates Corporation |
Common Stock |
(3 |
) |
5.91 |
% |
Assuming a quorum is present at the special meeting, approval of the adoption of the amendment proposal will require the affirmative vote of the holders of a majority of the outstanding shares of Newmont's common stock as of the record date for the special meeting. An abstention from voting or a broker non-vote on this proposal will have the same effect as a vote against this proposal.
Assuming a quorum is present at the special meeting, approval of the share issuance proposal will require the affirmative vote of the holders of a majority of the shares of Newmont's common stock properly cast on the proposal at the special meeting. Under the rules of the NYSE, an abstention from voting is effectively treated as a vote cast against this proposal. A broker non-vote on this proposal will have no effect on the outcome of the vote on this proposal.
Approval of one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of adoption of the amendment proposal or the share issuance proposal, will require the affirmative vote of the holders of a majority of the shares of Newmont's common stock properly cast on the proposal at the special meeting. An abstention from voting or a broker non-vote on this proposal will have no effect on the outcome of the vote on this proposal. If you fail to submit a proxy and do not attend the special meeting in person, or if you fail to provide instructions to your broker, bank or other nominee to vote on your behalf, your shares will not affect whether these proposals are approved.
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This proxy statement is being sent to you on behalf of the Newmont board of directors for the purpose of requesting that you allow your shares of Newmont common stock to be represented at the special meeting by the persons named in the enclosed proxy card. All shares of Newmont common stock represented at the meeting by properly executed proxy cards, voted over the telephone or voted over the Internet will be voted in accordance with the instructions indicated on those proxies. If you sign and return a proxy card without giving voting instructions, your shares will be voted as follows:
Whether or not you plan to attend the special meeting in person, you should submit your proxy as soon as possible.
If you own shares of Newmont common stock in your own name, you are an owner or holder of record. This means that you may use the enclosed proxy card or the Internet or telephone voting options to tell the persons named as proxies how to vote your shares of Newmont common stock. You have four voting options:
If your shares of common stock are held in "street name" by your broker, bank or other nominee, you should have received a voting instruction form, as well as voting instructions with these proxy materials from that organization rather than from Newmont. Your broker, bank or other nominee will vote your shares only if you provide instructions to that organization on how to vote. You should provide your broker, bank or other nominee with instructions regarding how to vote your shares by following the enclosed instructions provided by that organization. Your shares will not be voted with
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respect to any proposal for which you fail to provide instructions, which will have the effect on the approval of the proposals described under "The Special MeetingRequired Vote."
The Internet and telephone voting options available to holders of record are designed to authenticate stockholders' identities, to allow stockholders to give their proxy voting instructions and to confirm that these instructions have been properly recorded. Proxies submitted over the Internet or by telephone through such a program must be received by 1:00 a.m. (eastern U.S. time) on April 11, 2019. Submitting a proxy will not affect your right to vote in person if you decide to attend the special meeting.
Your grant of a proxy on the enclosed proxy card or through one of the alternative methods discussed above does not prevent you from voting in person or otherwise revoking your proxy at any time before it is voted at the special meeting. If your shares of Newmont common stock are registered in your own name, you may revoke your proxy in one of the following ways:
Your last vote is the vote that will be counted.
If you have instructed a broker, bank or other nominee to vote your shares, you must follow the directions received from your broker, bank or other nominee if you wish to change your vote.
VOTING IN PERSON AT THE SPECIAL MEETING
All stockholders of record may vote their shares in person by attending the special meeting and submitting the ballot that will be provided there. If your shares are held in "street name," you may vote in person at the special meeting if you have a document known as a "legal proxy" from the holder of record. You will need to ask the broker, bank or other nominee holding your shares for a legal proxy and bring the legal proxy with you to the special meeting. If your shares are held in "street name," you will not be able to vote your shares at the meeting without a legal proxy. If you request a legal proxy, any previously executed proxy will be revoked, and your vote will not be counted unless you appear at the special meeting and vote in person or legally appoint another proxy to vote on your behalf.
ADJOURNMENTS AND POSTPONEMENTS
Although it is not currently expected, the special meeting may be adjourned or postponed to a later date. Any adjournment or postponement to a date not more than 30 days after the date originally fixed for the special meeting may be made without notice, other than by an announcement made at the special meeting of the time and place of the adjourned meeting. Any adjournment or postponement to a date more than 30 days after the date originally fixed for the special meeting will require that notice of the hour, date and place of the adjourned meeting be given to Newmont stockholders entitled to vote thereat. Any adjournment of the special meeting for the purpose of soliciting additional proxies will allow Newmont stockholders who have already sent in their proxies to revoke them at any time before voting occurs at the rescheduled special meeting. See "Proposal 3: Adjournment of Special
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Meeting" beginning on page 145 of this proxy statement for more information about the proposal relating to adjournments of the special meeting.
Representatives of Ernst & Young LLP, Newmont's independent auditor, are expected to be present at the special meeting and will be afforded the opportunity to make a statement if they desire and will be available to respond to appropriate questions from stockholders.
Certain of Newmont stockholders who share an address are being delivered only one copy of this proxy statement unless Newmont or one of its mailing agents has received contrary instructions. Upon the written or oral request of a stockholder at a shared address to which a single copy of this proxy statement was delivered, Newmont will promptly deliver a separate copy of such document to the requesting stockholder. Written requests should be made to the Secretary of Newmont, 6363 South Fiddler's Green Circle, Greenwood Village, Colorado 80111, and oral requests may be made by calling Newmont Investor Relations at (303) 863-7414.
In addition, Newmont stockholders who wish to receive a separate copy of Newmont's proxy statements and annual reports, if any, in the future should notify Newmont either in writing addressed to the foregoing address or by calling the foregoing telephone number. Newmont stockholders sharing an address who are receiving multiple copies of Newmont's notice of Internet availability of proxy materials and/or proxy statements and annual reports may request delivery of a single copy of such documents by writing to Newmont at the address above or calling Newmont at the telephone number above.
INSPECTOR OF ELECTION; TABULATION OF VOTES
The Newmont board of directors expects to appoint a representative of Computershare Inc. to act as the inspector of election at the special meeting. The inspector of election will determine the number of shares outstanding, the shares represented at the special meeting, the existence of a quorum and the validity of proxies and ballots, and will count all votes and ballots.
Newmont is soliciting proxies for the special meeting from Newmont stockholders. Newmont will bear the entire cost of soliciting proxies from Newmont stockholders, including the expenses incurred in connection with the preparation of the proxy statement and its filing with the SEC. In addition to this mailing, Newmont's directors, officers and employees, who will not receive any additional compensation for their services, may solicit proxies personally, electronically or by telephone. Arrangements also will be made with brokerage firms and other custodians, nominees and fiduciaries to forward proxy solicitation materials to the beneficial owners of Newmont common stock held of record by those persons, and Newmont will reimburse these brokerage firms, custodians, nominees and fiduciaries for related, reasonable out-of-pocket expenses they incur.
Newmont has engaged MacKenzie Partners, Inc. to assist in the solicitation of proxies for the special meeting and will pay MacKenzie Partners, Inc. a fee of approximately $60,000, plus reimbursement of out-of-pocket expenses.
A list of stockholders entitled to vote at the special meeting will be open for examination by any Newmont stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of ten days before the meeting at Newmont's principal executive offices at 6363 South Fiddler's
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Green Circle, Greenwood Village, Colorado 80111, and at the time and place of the meeting during the entire time of the meeting.
Newmont does not expect that any matter other than the proposals listed above will be brought before the special meeting. If, however, other matters are properly brought before the special meeting, or any adjournment or postponement of the special meeting, the persons named as proxies will vote in accordance with their judgment.
If you need assistance in completing your proxy card or have questions regarding the various voting options with respect to the special meeting, please contact Newmont's proxy solicitor:
1407 Broadway, 27th Floor
New York, New York 10018
(212) 929-5500
or
Call Toll-Free (800) 322-2885
Email: proxy@mackenziepartners.com
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This section of the proxy statement describes the material aspects of the proposed arrangement. This section may not contain all of the information that is important to you. You should carefully read this entire proxy statement and the documents incorporated by reference into this proxy statement, including the full text of the arrangement agreement, a copy of which is attached to this proxy statement as Annex A, for a more complete understanding of the proposed arrangement. In addition, important business and financial information about each of Goldcorp and Newmont is included in or incorporated by reference into this proxy statement. See the section entitled "Where You Can Find More Information" beginning on page 147 of this proxy statement.
On January 14, 2019, Newmont entered into the arrangement agreement with Goldcorp, which was subsequently amended on February 19, 2019 (as amended, the "arrangement agreement"), pursuant to which, among other things, Newmont will acquire all of the issued and outstanding Goldcorp common shares (the "arrangement"). The arrangement will be implemented by way of a plan of arrangement (the "plan of arrangement") in accordance with the Business Corporations Act (Ontario) (the "OBCA") and is subject to approval by the Ontario Superior Court of Justice (Commercial List) (the "Court") and the stockholders of Newmont and the shareholders of Goldcorp. The parties intend to rely upon the exemption from the registration requirements of the Securities Act pursuant to Section 3(a)(10) thereof with respect to the issuance of the Newmont common stock and Newmont restricted stock units under the arrangement. Upon completion of the arrangement, Goldcorp will be a wholly-owned subsidiary of Newmont. As Goldcorp is incorporated in the Province of Ontario, Canada, the acquisition is being effected through an arrangement instead of a merger.
If the arrangement is completed, Goldcorp shareholders will receive 0.3280 of a share of Newmont common stock, par value $1.60 per share ("Newmont common stock") and $0.02 in cash for each Goldcorp common share (the "consideration"). No fractional shares of Newmont common stock will be issued under the arrangement, and Goldcorp shareholders will receive cash in lieu of any fractional shares of Newmont common stock. Any shares in respect of which dissent rights have been properly exercised and not withdrawn, pursuant to Section 185 of the OBCA, will be deemed to be transferred and assigned to Newmont, but will not be entitled to the consideration and will, instead, be subject to dissent rights under the OBCA, as modified by the plan of arrangement and the interim and final orders of the Court. Newmont stockholders will continue to own their existing shares, and the Newmont common stock will not be affected by the arrangement. Upon completion of the arrangement, it is expected that Goldcorp shareholders will own approximately 35% of the outstanding Newmont common stock.
Newmont's senior management and board of directors regularly explore, with the assistance of financial and legal advisors, strategic options that may be available to Newmont, with the goal of identifying potential opportunities and, ultimately, enhancing stockholder value. As part of this process, Newmont regularly reviews a broad range of opportunities, including transformational opportunities, potential strategic investments, joint ventures and business combinations with other mining and exploration companies. The Newmont board of directors and management have recognized that, in the precious metals mining industry, truly transformational opportunities are rare and, therefore, it is necessary to always be knowledgeable about those potential opportunities so that they can be capitalized on when the opportunity arises.
Consequently, as part of Newmont's continuous assessment of its overall strategy, from time to time, Newmont and its representatives engage in discussions with representatives of other companies concerning the possibility of such strategic transactions. In particular, Newmont has long recognized that an opportunity to combine with Goldcorp would present a unique transformational opportunity that would warrant serious consideration. Newmont, therefore, sought to foster an ongoing positive
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relationship with Goldcorp in order to be prepared to pursue such an opportunity should it arise. Accordingly, the Newmont and Goldcorp executive leadership teams and certain directors have met periodically over the past several years, including at semi-annual dinners, at mining industry and investor conferences and at the World Economic Forum. During these interactions, Newmont and Goldcorp have discussed strategic opportunities, such as development projects, joint ventures and joint acquisitions.
To facilitate these discussions, on October 14, 2016, Newmont and Goldcorp entered into a confidentiality and standstill agreement, which was extended on October 3, 2017, to enable the parties to share non-public information in connection with their ongoing evaluation of potential strategic opportunities. Between October 2016 and October 2018, each party engaged in meetings and preliminary discussion regarding due diligence and analysis in connection with the evaluation of potential transactions. While no actionable transactions ultimately resulted from such discussions (prior to the pending transaction), Newmo