SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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240.14a-12
HOMESTAKE MINING COMPANY
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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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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(1) Amount Previously Paid:
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[[Slide One]]
HOMESTAKE'S PRIME MINORITY ACQUISITION
[Pictures of mine sites and mining equipment.]
[[Slide Two]]
WIN/WIN TRANSACTION
- - WILL ENHANCE HOMESTAKE'S POSITION AS ONE OF THE WORLD'S LEADING GOLD MINING
COMPANIES
- - SIGNIFICANT PREMIUM TO PRIME SHAREHOLDERS
23.2% OVER SHARE PRICE ON MAY 22, 1998
- - OPPORTUNITY FOR PRIME SHAREHOLDERS TO PARTICIPATE IN HOMESTAKE'S LARGE MINE
PORTFOLIO AND GLOBAL REACH
[[Slide Three]]
WHAT HOMESTAKE IS BUYING
- - 100% OWNERSHIP OF LOW-COST, HIGH-QUALITY MINE
- - 2.1 MILLION GOLD EQUIVALENT OUNCES OF PROVEN AND PROBABLE RESERVES*
- - US $65 MILLION CASH
- - ADDITIONAL EQUITY PRODUCTION AMOUNTING TO 200,000 OUNCES EQUIVALENT PER
YEAR FROM ESKAY CREEK
- - ESKAY CREEK CASH COST OF US$ 130/OZ YTD FOR 1998
- - ASSET WE KNOW WELL
* BASED ON RESERVES AS AT DECEMBER 31, 1997 USING AU:AG 1:77
[[Slide Four]]
ADVANTAGES FOR HOMESTAKE
- - SIMPLIFY CORPORATE STRUCTURE; UNIFY HOMESTAKE'S PRESENCE IN CANADA
- - REDUCE CASH COSTS ON AN EQUITY BASIS AND ENHANCE HOMESTAKE'S CASH FLOW
- - OPTIMIZE WORLDWIDE EXPLORATION AND ACQUISITION EFFORT
- - BROADEN AND DIVERSIFY HOMESTAKE'S CANADIAN SHAREHOLDER BASE
[[Slide Five]]
IMPACT TO HOMESTAKE
- - HOMESTAKE IS PAYING 27.8 MILLION SHARES WITH A MARKET VALUE OF US $330
MILLION
- - US $50 MILLION OF PURCHASE PRICE WILL BE ALLOCATED TO "UNPROVEN MINERAL
PROPERTIES"
- - ADDS US $8/OZ TO HOMESTAKE'S NONCASH PRODUCTION COSTS
[[Slide Six]]
PRO FORMA COMPARISONS
HOMESTAKE BEFORE AND AFTER BUYOUT
PERCENT
CHANGE*
-------
RESERVES (OZ AU EQ/100 SHARES) (1%)
EQUITY PRODUCTION (OZ AU EQ/100 SHARES) (2%)
CASH COST (US $ PER OUNCE) (2%)
TOTAL COST (US $ PER OUNCE) 1%
* 5 YEARS
[[Slide Seven]]
HOMESTAKE'S PRODUCTION GROWTH
(EQUITY OUNCES)
[Graph showing general increase in Homestake's production growth, including
reference to increase resulting from the acquisition of Prime.]
[[Slide Eight]]
HOMESTAKE'S PRODUCTION ESTIMATES: 1998 - 2002
[Pie chart showing Homestake's production estimates of the following properties
as a percentage of Homestake's total production estimate for the years 1998 -
2002, and emphasizing the Prime minority percentage:
Plutonic 12%
Darlot/Centenary 7%
Kalgoorlie 18%
Homestake 9%
Round Mountain 6%
Other 17%
Hemlo 12%
Eskay Creek 9%
Prime Minority 10%]
[[Slide Nine]]
HOMESTAKE GOLD RESERVE DISTRIBUTION*
[Pie chart showing Homestake's gold reserve distribution in the following
countries as a percentage of Homestake's total gold reserves of 20.7 million oz:
Canada 29%
Australia 40%
U.S. 30%
Other 1%]
TOTAL RESERVES
---------------
20.7 MILLION OZ
* BASED ON PROVEN & PROBABLE RESERVES AS OF DECEMBER 31, 1997 INCLUDING PRIME
MINORITY INTEREST
EXCLUDES APPROXIMATELY 2 MILLION AU EQUIVALENT OUNCES IN ESKAY
SILVER RESERVES
[[Slide Ten]]
HOMESTAKE COST REDUCTION
[Chart showing general decline of Homestake's total cash cost
between 1991 and 1998.]
[[Slide Eleven]]
ADVANTAGES FOR PRIME SHAREHOLDERS
- - REALIZE A 23.2%* PREMIUM TO MARKET
- - BENEFIT FROM OWNING A STOCK WITH HIGHER MARKET MULTIPLES AND IMPROVED
LIQUIDITY
- - CANADIAN HOLDERS CAN ROLL OVER CAPITAL GAINS TAX
- - CANADIAN INSTITUTIONS CAN HOLD SHARES
- - ENJOY ENHANCED GLOBAL PRODUCTIONS, EXPLORATION AND ACQUISITIONS FOCUS
* BASED ON SHARE PRICES ON MAY 22, 1998
[[Slide Twelve]]
A HISTORY OF CREATING VALUE
- - SINCE 1992, HOMESTAKE HAS BEEN INFLUENTIAL IN PRIME'S GROWTH EFFORTS AND
CREATED LONG-TERM VALUE FOR ALL PRIME SHAREHOLDERS
- - 23.2% PREMIUM IN TIME OF LOW GOLD PRICES PAYABLE IN HOMESTAKE CURRENCY WITH
GREAT UPSIDE, IS CONSISTENT WITH HOMESTAKE'S EFFORTS TO RETURN VALUE TO ALL
PRIME SHAREHOLDERS
[[Slide Thirteen]]
PRIME PERFORMANCE VS. S&P GOLD INDEX
PRIME (US$) VS. S&P GOLD MINING INDEX
(BASE = 100, JANUARY 3, 1995)
[Chart showing the S&P Gold Mining Index generally out performing Prime from
1/3/95 through 2/29/96; the S&P Gold Mining Index and Prime generally performing
equally from 2/29/96 to 3/97; and Prime out performing the S&P Gold Mining Index
from 3/97 to 6/30/98.]
[[Slide Fourteen]]
RELATIVE VALUE OF HOMESTAKE OFFER
TRADING PRICE RATIOS
PRIME RESOURCES / HOMESTAKE
[Graph comparing the ratio of Prime's stock prices to Homestake's stock prices
from 1/3/92 to 7/3/98 to the actual exchange ratio of 0.74 for the transaction.
Graph generally depicts a premium to Prime, except during certain periods
between 1/3/98 and 4/3/98.]
[[Slide Fifteen]]
PRIME RESOURCES - HISTORICAL SHARE PRICE PERFORMANCE
January 1992 - October 1998
[Graph comparing Prime's share price performances to Homestake's bid values of
C$11.80 on 5/22/98 and C$16.55 on 10/07/98 from 1/92 to 10/98. Graph generally
depicts a general increase in share price performance.]
[[Slide Sixteen]]
SUMMARY
- - WIN/WIN FOR BOTH SETS OF SHAREHOLDERS
- - ENHANCE HOMESTAKE'S POSITION AS ONE OF THE LEADING GOLD MINING COMPANIES
[[Slide Seventeen]]
HOMESTAKE'S PRIME MINORITY ACQUISITION
[Pictures of mine sites and mining equipment.]
[[Slide Eighteen]]
PRIME'S PRINCIPAL ASSET
ATTRIBUTE UNITS ESKAY CREEK
- --------- ----- -----------
Ownership % 100
Reserves* 000 Tons 1,495
Gold Grade Oz / Ton 1.69
Silver Grade Oz / Ton 78.3
Total Reserve 000 Oz Equiv. ** 4,051
1997 Production 000 Oz Equiv. *** 417
Cash Cost (YTD 1998) US $ / Oz 130
* Reserves are as of Dec. 31, 1997.
** Equivalent ounces are based on the basis of 77 ounces of Ag per ounce Au.
*** Equivalent ounces are on the basis of 68 ounces of Ag per ounce Au.
[[Slide Nineteen]]
A HISTORY OF CREATING VALUE
- - ESKAY CREEK DEPOSIT WAS DISCOVERED BY PRIME PREDECESSOR COMPANY IN 1988
- - IN JUNE 1992, INTERNATIONAL CORONA CORPORATION, PRIME'S PRINCIPAL
SHAREHOLDER, MERGED WITH HOMESTAKE
- - IN NOVEMBER 1993, PRIME CONSOLIDATED 100% OWNERSHIP OF ESKAY CREEK
- - ESKAY CREEK MINE COMMENCED COMMERCIAL PRODUCTION UNDER BUDGET AND AHEAD OF
SCHEDULE IN JANUARY 1995 AFTER HOMESTAKE SECURED LONG TERM SMELTER
CONTRACTS FOR ITS HIGH GRADE ORE
- - IN 1997, THE MINE PRODUCED 244,722 OUNCES OF GOLD AND 11,766,000 OUNCES OF
SILVER AT AN AVERAGE CASH COST OF $157 PER OUNCE EQUIVALENT
[[Slide Twenty]]
TRANSACTION SUMMARY
OFFER:
- - All-stock offer for 49.4% minority interest of Prime (27.8 million shares)
EXCHANGE RATIO:
- - 0.74 shares for each share of Prime -- no collar
STRUCTURE
- - Plan of arrangement in British Columbia
SHARES TO BE ISSUED:
- - Homestake common stock or,
- - HCI exchangeable shares with Homestake voting / dividend rights
APPROVAL:
- - Committee of independent directors
- - British Columbia Supreme Court
- - 75% of all Prime shares voting at the meeting
- - Two/thirds of Prime minority shareholders voting at the meeting
- - Homestake shareholders must authorize new shares
- - Homestake & Prime shareholders meetings scheduled for early December
[[Slide Twenty-One]]
STATEMENTS IN THIS PRESENTATION REGARDING FUTURE OR ESTIMATED RESERVES AND OTHER
MINERALIZATION; PROJECTED QUANTITIES AND PERIODS OF FUTURE PRODUCTION;
PRODUCTION RATES, PRODUCTION, CAPITAL AND OTHER COSTS; AND OTHER ESTIMATES OF
FUTURE RESULTS OR ACTIVITY ARE FORWARD LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER FROM ESTIMATED RESULTS.
ACTUAL RESULTS COULD DIFFER MATERIALLY DEPENDING ON POLITICAL EVENTS, LABOR
RELATIONS, CURRENCY FLUCTUATIONS AND OTHER GENERAL ECONOMIC CONDITIONS, MARKET
PRICES FOR THE COMPANY'S PRODUCTS, TIMING OF PERMITS AND OTHER GOVERNMENT
APPROVALS AND REQUIREMENTS, CHANGES IN EXPECTED OPERATING CONDITIONS, LOWER THAN
EXPECTED ORE GRADES, UNEXPECTED GROUND AND MINING CONDITIONS, AVAILABILITY AND
COST OF MATERIALS AND EQUIPMENT, AND RISKS GENERALLY INHERENT IN THE OWNERSHIP
AND OPERATION OF MINING PROPERTIES AND INVESTMENTS IN FOREIGN COUNTRIES. SEE
THE COMPANY'S PRELIMINARY PROXY STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON SEPTEMBER 30, 1998, "CAUTIONARY STATEMENTS," FOR A MORE DETAILED
DISCUSSION OF FACTORS THAT MAY IMPACT ON EXPECTED FUTURE RESULTS.