Exhibit 99.10
NEWS RELEASE
Homestake Mining Company
650 California Street
San Francisco, CA 94108
Phone: 415/ 981-8150
Fax: 415/397-5038
Contact:
Michael A. Steeves
Director, Investor Relations
415-983-8169
HOMESTAKE TO ACQUIRE SANTA FE PACIFIC GOLD FOR $2.3 BILLION IN
STOCK, CREATING A NEW LEADING INTERNATIONAL GOLD COMPANY.
SAN FRANCISCO, CA, and ALBUQUERQUE, NM, December 9, 1996 -- Homestake Mining
Company (NYSE: HM) and Santa Fe Pacific Gold Corporation (NYSE: GLD) today
announced a strategic combination that will create a new leading international
gold company. The new Homestake will rank first among North American companies
in worldwide gold reserves and second in gold production, with the largest
Nevada land position of any gold company.
Under the terms of a definitive merger agreement unanimously approved by the
boards of both companies, Santa Fe shareholders will receive 1.115 newly issued
Homestake common shares for each Santa Fe common share, valued at $17.42 per
Santa Fe share, or approximately $2.3 billion in the aggregate, based on
Homestake's closing stock price last Friday. The transaction will be accounted
for as a pooling of interests and is expected to be tax-free.
The acquisition will be accretive to Homestake's expected 1997 cash flow and
earnings before one-time transaction costs. The new Homestake will have 39.4
million ounces of gold reserves and pro forma 1996 production of 2.7 million
ounces of gold, growing to 3.2 million ounces in 1998, with cash costs under
$245 per ounce. It will have 10 domestic and international development projects,
a 1.5 million acre Nevada land position and other high-potential exploration
sites.
"We are creating a new top-tier gold producer with the asset base, portfolio of
growth opportunities, financial strength and operating skills to pursue an
aggressive strategy that should enable the new Homestake to earn a market
valuation reflecting its improved fundamentals," said Jack E. Thompson,
President and Chief Executive Officer of Homestake, who will become Chairman and
Chief Executive Officer of Homestake.
"We have a detailed plan to integrate the best of Homestake and Santa Fe,
creating a new company with a strong management team and a reconstituted board
of directors," said Thompson. "In addition to increased near-term and long-range
growth potential, the new Homestake will also benefit from significant savings
in administrative and operating costs and from a combined and refocused
exploration program, especially in Nevada. We will be well positioned to
capitalize on an extremely strong base of U.S., Canadian and Australian assets
and to compete more aggressively for attractive opportunities worldwide."
Patrick M. James, Chairman, President and Chief Executive Officer of Santa Fe,
who will become Homestake's President and Chief Operating Officer, said, "This
is a compelling strategic combination of two companies with complementary
capabilities and shared goals. Together, we
have the mining expertise, technical skills and financial strength to
accelerate exploration and development of an unsurpassed land position. We will
be able to tap Homestake's underground mining skills and Santa Fe's patented
technology in refractory ore treatment to help convert our large base of
mineralized material into reserves on a cost-effective basis. Upon closing, we
will be ready to forge a new more competitive gold company capable of achieving
strong growth while maintaining a competitive cost position."
James noted that the new Homestake will benefit from the lowest political risk
profile of any major gold producer because virtually all of its current reserves
and mineralized material are in the U.S., Canada and Australia. "This powerful
platform will give us the capability to take on promising international projects
without substantially increasing overall portfolio risk," he said.
The new Homestake, with headquarters in San Francisco and an operating base in
northern Nevada, will have 17 mines (8 underground, 9 surface) in four
countries. It expects to achieve over $30 million in annual cost savings by
eliminating overlapping expenses and by combining and refocusing its exploration
program, especially in Nevada. These savings are expected to be fully realized
by the end of 1997. Specific near-term initiatives include:
Closing Santa Fe's Albuquerque headquarters, and relocating certain
members of the management team to San Francisco and Nevada.
Combining U.S. Operations management of both companies in a single base in
Reno, taking advantage of Santa Fe's northern Nevada infrastructure to
manage more efficiently both companies' Nevada properties.
Focusing exploration efforts on the strategic land position in Nevada and
on highest-priority international projects in Australasia, Latin America
and Central Asia.
Accelerating exploration/development at existing operations, including
Eskay Creek, Kalgoorlie, Pinson, Twin Creeks, Round Mountain and the Lone
Tree complex.
Optimizing development of 10 domestic and international projects in the
feasibility, permitting or construction stages, including Sage Mill
autoclaves, the Lone Tree and Eskay Creek flotation projects, Ruby Hill and
the La Falda/Jeronimo project.
Leveraging complementary resources and technological expertise, such as
using Santa Fe's inert gas flotation technology at Homestake's Jeronimo
project in Chile and using Homestake's McLaughlin autoclaves and oxygen
plant at Santa Fe's Lone Tree complex.
Upon closing of the combination, the reconstituted Homestake Board will have 12
directors: five designated by Homestake, five designated by Santa Fe and two
additional directors selected by the new Board to complement its capabilities.
The transaction, which is expected to close by early April 1997, is subject to
approval by both companies' shareholders, antitrust approval, qualification as
pooling of interests, and other customary conditions.
"This is an ideal transaction for the shareholders of both companies," said
Thompson. "Santa Fe's shareholders get a full and fair price, representing a 47%
premium to last Wednesday's unaffected market price for their shares, and the
potential upside of owning half of a dynamic new gold company. Homestake's
shareholders get a substantially increased base of U.S. reserves for an
effective price of about $125 per ounce of reserves. This price is very
attractive for such high-quality, low-risk assets. Homestake will also benefit
from $1 billion in newly built Santa Fe plant and equipment, millions of ounces
of mineralized material we believe can be converted to gold reserves, and the
enormous potential of the Nevada properties. Our shareholders will also own half
of a new, more vigorous and aggressive Homestake that is determined to increase
value for shareholders. We believe our stock can outperform that of our peers,
regardless of the direction of gold prices."
Said James, "Santa Fe has carefully evaluated its strategic alternatives for
well over a year, and the combination with Homestake is clearly the best option
for our shareholders. Before Thanksgiving, Santa Fe's board unanimously
determined not to pursue the Newmont offer made public last Thursday. We have no
intention of allowing this last-minute spoiler tactic to interrupt a
well-conceived and carefully planned combination which will create value for
both companies' shareholders and an exciting new workplace for our employees."
Homestake's financial advisor is Dillon, Read & Co. Inc., and Santa Fe is being
advised by SBC Warburg Inc.
Homestake Mining Company is an international gold mining company with
substantial operations and exploration in the U.S. Canada and Australia.
Homestake also has active exploration programs in the Andes, Venezuela, French
Guiana, Brazil and elsewhere in Latin America, and development and/or evaluation
projects in Chile, Russia and Bulgaria. Homestake has won numerous industry
environmental and safety awards.
Santa Fe Pacific Gold Corporation is one of the largest gold mining companies in
North America, with mines in Nevada and California and exploration offices and
projects throughout the world, including Central Asia, Brazil, Chile, West
Africa and Australia. Santa Fe has one of the industry's best environmental and
safety records.
Statements contained in this press release which are not historical facts are
forward-looking statements as the item is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
form estimated results. Such risks and uncertainties are detailed in the
companies' filings with the Securities and Exchange Commission.