EXHIBIT 99.1
Contact:
Michael A. Steeves
Director, Investor Relations
415-983-8169
HOMESTAKE ANNOUNCES POSITIVE FEASIBILITY FOR STUDY
FOR ESKAY CREEK MILL PROJECT
San Francisco, CA, February 28, 1997 -- Homestake Mining
Company (NYSE:HM) today announced that Prime Resources Group
Inc. (50.6% owned by Homestake) received a positive
feasibility study for the construction of a gravity and
flotation processing facility at the Eskay Creek mine
located in northern British Columbia, Canada.
PROJECT HIGHLIGHTS
Estimated capital cost of $12.4 million
Annual mill production of 70,000 equivalent ounces of
gold, resulting in an annual net increase of 30,000
equivalent ounces of gold for the mine.
Cash production costs of $175 per equivalent ounce of
gold produced from the mill, including third party
smelter charges.
Expected nine-year life at 165 tons per day.
Pretax payback of one year.
The start-up of the mill will require an increase in the
current mining rate from 330 tons per day, all of which is
shipped direct to smelters, to approximately 440 tons per
day. Future direct shipments to smelters are estimated to be
275 tons per day. This mining rate will balance direct
shipment and mill production from the mine throughout its
remaining life.
Ronald D. Parker, President and CEO of Prime Resources Group
Inc. commented: "This is an excellent project. It has a
payback of one year and will significantly increase the
long-term profitability of the Eskay Creek mine. Sixty five
(65) percent of our production costs are related to
transportation and smelting. This project will reduce those
costs materially by producing a high-grade gravity and
flotation concentrate, therefore allowing us to process
lower grade ore while maintaining our low cash cost per
ounce."
PROJECT SPECIFICS
Metallurgical tests for mill-amenable ores have been
completed at independent laboratories with excellent
results. It is estimated that 23% of the precious metals
will be recovered by gravity concentration and 64% will be
recovered from a flotation concentrate, after third party
smelter recoveries. This will result in an overall precious
metal recovery of 87%. Average flotation concentration
ratios of 4.6 to 1 are expected. The flotation concentrates
will be low in mercury and antimony and high in base metal
content, which should result in separate smelter contracts,
with improved terms.
Over 381,000 tons of Eskay Creek's proven and probable
reserves and 147,000 tons of mineralized material have been
identified as amenable to gravity and flotation separation.
Although the head grade of the mill feed, 0.9 ounces per ton
gold and 36 ounces per ton silver, will be considerably less
than that of ore shipped directly to smelters, cash costs
per ounce are expected to be similar. This is a result of
the large reduction in tons shipped and lower smelter
penalty charges.
Final engineering and design are in progress for the mill
expansion, which will be located adjacent to the existing
crusher building at the Eskay Creek minesite. The project
capital cost is estimated at $12.4 million and it is
anticipated that the project will create 22 new permanent
jobs, which will be filled primarily from the local
communities.
Production from the mill circuit is estimated at 70,000
gold equivalent ounces per year (for a net increase of
30,000 gold equivalent ounces for the mine), with an
expected life of 9 years based on current mill reserves and
mineralized material. The project will provide an excellent
return, with a pretax payback period of one year.
PERMITTING and CONSTRUCTION
The permitting process is well underway. Initial public
meetings in five local communities were completed during the
first week of February. The permit application was
submitted to the appropriate regulatory agencies on February
14, 1997 for a preliminary completeness review.
Project construction should take approximately 5 months.
However, the ability to complete the mill project this year
is contingent upon timely approval of the application by the
regulatory and permitting agencies, and project approval by
Prime's Board of Directors.
EXPLORATION POTENTIAL
As a result of the excellent project economics,Prime will
expand its exploration efforts to identify additional mill-
amenable ores. This will include a reassessment of existing
reserves as well as a focused search for new reserves. Prime
is optimistic about the prospect of finding additional mill
feed at Eskay Creek.
Homestake Mining Company is an international gold mining
company with substantial operations and exploration in the
United States, 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.
Statements contained in this press release which are not
historical facts are forward-looking statements as that 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 from estimated results. Such risks and
uncertainties are detailed in Homestake's filings with the
Securities and Exchange Commission.
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS
OF HOMESTAKE MINING COMPANY AND OTHER REPRESENTATIVES
OF HOMESTAKE MINING COMPANY WHO MAY COMMUNICATE WITH
HOMESTAKE AND SANTA FE PACIFIC GOLD CORPORATION
SHAREHOLDERS
The following is information concerning the directors
and executive officers of Homestake Mining Company and other
representatives of Homestake ("Homestake") who may
communicate with Homestake and Santa Fe Pacific Gold
Corporation ("Santa Fe") shareholders with respect to (i)
Homestake's planned combination with Santa Fe pursuant to
which Santa Fe will become a wholly-owned subsidiary of
Homestake and each outstanding share of Santa Fe Common
Stock, $0.01 par value, will be converted into the right to
receive 1.115 shares of Homestake Common Stock, $1.00 par
value (the "Combination") and (ii) the proposed offer by
Newmont Mining Corporation ("Newmont") disclosed in the
preliminary prospectus contained in the Registration
Statement on Form S-4 of Newmont that was filed with the
Securities and Exchange Commission on January 7, 1997
(Registration No. 333-19335), to exchange each outstanding
share of Santa Fe Common Stock for 0.40 of a share of
Newmont Common Stock, $1.60 par value. Newmont's proposed
offer has not been commenced. Newmont's Registration
Statement states that its principal executive offices are
located at 1700 Lincoln Street, Denver, Colorado 80203.
Santa Fe's principal executive offices are located at 6200
Uptown Boulevard NE, Suite 400, Albuquerque, New Mexico
87110.
Directors and Officers of Homestake
Name and Business Address Present Position with Homestake or
Other Principal Occupation or Employment
M. Norman Anderson
N Anderson & Associates 502-455 Granville Street
Vancouver, V6C1V2
Director, Homestake Mining Company; Former Chairman
International Corona Corporation; Mining Industry
Consultant.
Jan P. Berger
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Treasurer, Homestake Mining Company.
Michael L. Carroll
Homestake Mining Company 650 California Street
San Francisco, CA 94108-2788
Director of Taxes and Assistant Secretary,
Homestake Mining Company.
Robert H. Clark, Jr.
529 Fifth Avenue Suite 1600 New York, NY 10017
Director, Homestake Mining Company; President and Chief
Executive Officer, Case, Pomeroy & Company, Inc.
Harry M. Conger
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Director and Chairman of the Board,Homestake Mining Company.
G. Robert Durham
943 Seddon Cove Way
Tampa, FL 33602
Director, Homestake Mining Company; Former Chairman and
Chief Executive Officer of Walters Industries, Inc. and
Former Chairman and President of Phelps Dodge Corporation.
Gene G. Elam
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Vice President, Finance and Chief Financial Officer,
Homestake Mining Company.
Douglas W. Fuerstenau
University of California, Berkeley 477 Evans Hall No. 1760
Berkeley, CA 94720
Director, Homestake Mining Company; Professor in the
Graduate School, Department of Materials Science and
Mineral Engineering, University of California, Berkeley.
Dennis B. Goldstein
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Corporate Counsel and Assistant Secretary,
Homestake Mining Company.
Lee A. Graber
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Vice President, Corporate Development,
Homestake Mining Company.
Henry G. Grundstedt
P.O. Box 105 Umpqua, OR 97486-0105
Director, Homestake Mining Company; Former Senior Vice
President, Capital Guardian Trust.
Fred Hewett
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Assistant Controller, Homestake Mining Company.
William A. Humphrey
Homestake Mining Company
650 California StreetSan Francisco, CA 94108-2788
Director, Vice Chairman of the Board, Former President and
Chief Operating Officer, Homestake Mining Company.
Robert K. Jaedicke
Graduate School of Business
Stanford University
Stanford, CA 94305-5015
Director, Homestake Mining Company; Professor (Emeritus) of
Accounting Graduate School of Business, Stanford University.
Wayne Kirk
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Vice President, General Counsel and Corporate Secretary,
Homestake Mining Company.
Gillyeard J. Leathley
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Vice President, Operations, Homestake Mining Company.
William F. Lindqvist
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Vice President, Exploration, Homestake Mining Company.
John Neerhout, Jr.
15 Peninsula Road
Belvedere, CA 94920
Director, Homestake Mining Company; Former Executive Vice
President and Director of Bechtel Group Inc.
Ronald D. Parker
1000-700 W. Pender Street
Vancouver, BC V6C 168 CANADA
Vice President, Canada, Homestake Mining Company.
David W. Peat
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Vice President and Controller, Homestake Mining Company.
Stuart T. Peeler
Casa Codorniz
POB 35852
Tucson, AZ 85740
Director, Homestake Mining Company;
Petroleum Industry Consultant.
Carol A. Rae
13117 N. Creekview Road
Rapid City, SD 57702
Director, Homestake Mining Company;
Former President and Chief Executive Officer, Magnum Diamond
Corporation.
Berne A. Schepman
The Adair Company
1670 South Amphlett Blvd.
Suite 214 San Mateo, CA 94402
Director, Homestake Mining Company; President,The Adair
Company and Russian Technology Group.
Richard A. Tastula
9th Floor
2 Mill Street
Perth, WA 6000
Vice President, Australia, Homestake Mining Company.
Jack E. Thompson
Homestake Mining Company
650 California StreetSan Francisco, CA 94108-2788
Director, President and Chief Executive Officer,
Homestake Mining Company.
Thomas H. Wong
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Assistant Treasurer and Assistant Secretary,
Homestake Mining Company.
On November 17, 1996, Homestake and Santa Fe entered
into a confidentiality agreement pursuant to which, among
other things, each party agreed to protect the confidential
and proprietary information and data provided to each other
in connection with the evaluation of one or more business
transactions. On December 8, 1996, Homestake, Santa Fe and
HMGLD Corp, a wholly-owned subsidiary of Homestake, entered
into an Agreement and Plan of Merger pursuant to which the
Combination will be consummated. On January 9, 1997,
Homestake purchased 100 shares of Santa Fe common stock. In
addition, the following individuals named above own the
following shares of Santa Fe common stock, all of which has
been owned by such individuals for more than 60 days: Mr.
Peeler - 10,300 shares; Mr. Elam - 2,000 shares; and Mr.
Graber - 1,000 shares.
At the effective time (the "Effective Time") of the
Combination, five members of the Homestake Board will
continue as directors of Homestake. The other eight members
of the Homestake Board will voluntarily resign as directors
of Homestake. The Agreement provides that at the Effective
Time, Mr. Thompson will become Homestake's Chairman of the
Board and Chief Executive Officer.
A total of ten Homestake management personnel,
including Messrs. Thompson, Elam, Kirk, Leathley and
Lindqvist, have severance agreements with Homestake under
which they are entitled to receive benefits in the event of
a change of control followed by certain events. The
Combination is a change of control for purposes of these
severance agreements. Under the severance agreements,
entitlement to benefits arises if, within three years
following the consummation of the Combination, such person's
employment is terminated or such person elects to terminate
his employment following (i) a reduction in salary or
certain benefits, (ii) a change in location of employment,
(iii) a change in position, duties, responsibilities or
status inconsistent with such person's prior position, or
(iv) a reduction in responsibilities, title or office as in
effect just before the consummation of the Combination.
Benefits consist of (i) a lump sum payment equal to two
times such person's highest annual salary and bonus
(including deferred compensation) during the three years
prior to termination, (ii) continuation of participation in
insurance and certain other fringe benefits for two years,
(iii) continued vesting of stock options, and (iv)
relocation assistance. Such benefits are in lieu of
severance benefits otherwise payable under Homestake's
general severance policy.
The same ten management personnel are also participants
in Homestake's Executive Supplemental Retirement Plan (the
"Homestake ESRP"). The Homestake ESRP provides that
participating employees accrue retirement benefits at the
rate of 4 1/3% times years of service up to a maximum of 15
years. Service credit is then multiplied by average monthly
compensation during the 36 consecutive months of highest
compensation (salary and bonus) to determine a monthly
retirement benefit. Benefits are payable on retirement at
age 62 after 10 continuous years of service, with provision
for early retirement between ages 55 and 62. Within two
years following the Combination, if any participant's
employment is terminated by Homestake or by the participant
for any reason, such participant will fully vest in the
maximum benefits payable under the Homestake ESRP to the
extent such participant is not already fully vested, and
will be entitled to commence receiving such benefits at age
55. Benefits payable under the Homestake ESRP are reduced
to the extent of retirement benefits otherwise payable under
any other Homestake retirement plan (except the Homestake
Mining Company Savings Plan).
Homestake has a deferred compensation plan under which
23 eligible employees and the directors are entitled to
defer receipt of compensation. Deferred compensation earns
interest at rates determined under the plan, with a higher
rate equal to 120% of the regular rate (the "Preferred
Rate") for persons who have been participants for more than
five years. Under the deferred compensation plan, following
the Combination, all deferred compensation will earn
interest at the Preferred Rate.
Other Representatives of Homestake Who May Communicate
with Homestake and Santa Fe Shareholders
Present Principal
Occupation or Employment
RobertA. Pilkington....................... Managing Director
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, NY 10022
James C. Katzman............................ Vice President
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, NY 10022
Homestake has retained Dillon, Read & Co. Inc. ("Dillon
Read") to act as its financial advisor in connection with
the Combination and related matters. Pursuant to an
engagement letter dated as of November 21, 1996, between
Homestake and Dillon Read, Homestake has agreed to pay
Dillon Read a fee of 0.33% of the equity consideration in
the Combination, subject to a maximum fee of $6,500,000, for
services provided in connection with the Combination. Of
this amount, $2,250,000 was paid upon the announcement by
Homestake of the execution of the Agreement; the payment of
the balance is contingent upon the consummation of the
merger. Homestake has also agreed to reimburse Dillon Read
for the expenses reasonably incurred by it in connection
with its engagement (including reasonable counsel fees) and
to indemnify Dillon Read and its officers, directors,
employees, agents and controlling persons against certain
expenses, losses, claims, damages or liabilities in
connection with its services, including those arising under
the federal securities laws. In the past, Dillon Read has
provided investment banking services to Homestake and has
received customary compensation for such services. In the
ordinary course of business, Dillon Read trades the
securities of Homestake and Santa Fe for its own account and
the accounts of its customers and, accordingly, may at any
time hold a long or short position in such securities.
This information is being furnished by Homestake to
Homestake and Santa Fe shareholders pursuant to Rule 14a-12
under the Securities Exchange Act of 1934, as amended, in
response to the proposed Newmont exchange offer and
Newmont's proposed solicitation of proxies. This
information is not being furnished by Santa Fe or its Board
of Directors.