Engineering & Mining Journal

FEB 2019

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NEWS-LEADING DEVELOPMENTS FEBRUARY 2019 • E&MJ 5 the Córrego de Feijão mine at the time of the dam breach; maintenance of the wage payments to the relatives of direct and third-party employees that are still missing while the status of fatality is un- confirmed; payment of funeral expenses, transfer of body, burial of all direct and third-party employees; and other admin- istrative measures. Also, on January 28, a class action complaint was filed against Vale, its CEO Fabio Schvartsman, and CFO Luciano Siani Pires in the United States District Court for the Eastern District of New York. The complaint alleged the company made false and misleading statements, and omitted to make disclosures, concerning the risks and potential damage of a dam breach, violat- ing the Securities Exchange Act of 1934. "The proceeding is still in early stage, Vale intends to defend vigorously against the claims," the company said in a statement. Several people have also been arrest- ed in connection with the dam failure. On Tuesday, January 29, three employees of Vale and two contractors were arrested. Two of those arrested were Vale's senior managers at the Córrego de Feijão mine. Vale said it is fully cooperating with the authorities. "The company will continue to con- tribute to the investigations to find out the facts, along with the unconditional support to the affected families," the company re- leased in a statement. "Three employees of Vale were detained together with two people responsible for the audit company that testified to the stability of Dam I." This is the second dam failure by a company owned by Vale. The first oc- curred in 2015 at Samarco, also in Minas Gerais, owned by Vale and BHP. That di- saster killed 19 and devastated the local community. Kirkland Lake Gold Reports Record Q4 Production Kirkland Lake Gold Ltd. (announced re- cord levels of quarterly and annual gold production for the fourth quarter and full- year respectively. Production in Q4 2018 totaled 230,993 oz, 28% higher than the previous record of 180,155 oz achieved in the third quarter of 2018. That was also significantly above target levels for the quarter and was driven by record quarterly production at both Fosterville (124,307 oz) and Macassa (69,936 oz). Kirkland Lake's gold production for 2018 totaled 723,477 oz, a 21% increase from 596,405 oz for 2017. Three of the company's mines achieved record annual production in 2018, including 356,230 oz at Fosterville, 240,126 oz at Macassa and 58,633 oz at the Taylor mine, with the Holt mine producing 67,770 oz for the year. "2018 was an outstanding year for us," said Tony Makuch, president and On January 14, Newmont Mining Corp. and Goldcorp Inc. announced they en- tered into a definitive agreement where Newmont will acquire all of the outstand- ing common shares of Goldcorp in an all- stock transaction valued at $10 billion. Under the terms of the agreement, New- mont will acquire each Goldcorp share for 0.3280 of a Newmont share, which represents a 17% premium based on the companies' 20-day volume weighted av- erage share prices. "This combination will create the world's leading gold business with the best assets, people, prospects and val- ue-creation opportunities," said Gary Goldberg, Newmont's CEO. "We have a proven strategy and disciplined imple- mentation plan to realize the full value of the combination, including an exception- al pool of talented mining professionals, stable and profitable gold production of 6 million to 7 million ounces (oz) over a de- cades-long time horizon, the sector's larg- est gold reserve and resource base, and a leading project and exploration pipeline. "Our cultures are well aligned, with strong commitments to zero harm, inclu- sion and diversity, and industry-leading environmental, social and governance performance. We expect to generate up to $100 million in annual pre-tax synergies, with additional cost and efficiency oppor- tunities that will be pursued through our proven Full Potential continuous improve- ment program." Newmont Goldcorp's reserves and re- sources will represent the largest in the gold sector and will be located in favor- able mining jurisdictions in the Ameri- cas, Australia and Ghana, representing approximately 75%, 15% and 10%, re- spectively. Newmont Goldcorp will also prioritize project development by returns and risk, while targeting $1 billion to $1.5 billion in divestitures over the next two years to optimize gold production at a sustainable, steady-state level of 6 mil - lion oz to 7 million oz annually. "This combination creates the world's premier gold company," said Goldcorp President and CEO David Garofalo. "The strategic rationale for combining Gold- corp with Newmont is powerfully com- pelling on many levels, and both teams are fully committed to delivering on the transaction's value proposition for all of our stakeholders." Newmont Goldcorp will be one of Can- ada's largest gold producers and will have its North America regional office in Vancou- ver, he added. Newmont expects to oversee more than 3 million oz of the combined company's total annual gold production. In 2017 (latest data available), New- mont produced 5.3 million oz and Gold- corp produced 2.6 million oz. Newmont Goldcorp's management team will be appointed on a "best talent" basis, with Goldberg as CEO and Tom Palmer as president and COO. As part of a planned succession process, Goldberg and Newmont's board have been engaged in discussions anticipating a CEO suc- cession in early 2019. He has agreed to lead Newmont Goldcorp through closure of the transaction and integration of the two companies. The process should be substantially completed in the fourth quarter of 2019, when Goldberg plans to retire and Palmer will become president and CEO. The board of directors will be proportionally comprised of Newmont and Goldcorp directors, with Noreen Doyle as chair and Ian Telfer as deputy chair. Goldcorp's Vancouver, Canada, office will become Newmont Goldcorp's North America regional office. Newmont Gold- corp's South American regional office will be in Miami, Florida. The Australian re- gional office will be in Perth. The African regional office will be in Accra, Ghana. Newmont Goldcorp will remain a Delaware corporation with its corporate headquar- ters based in Colorado, USA. Newmont Goldcorp's shares will be traded on the New York Stock Exchange using the tick- er symbol NEM and expected to be listed for trading on the Toronto Stock Exchange (TSX) following closing of the transaction. The transaction is expected to close in the second quarter of 2019. Newmont, Goldcorp Combine to Create World's Largest Gold Company

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