Newmont gold: Corporate direction following the Newmont Santa Fe merger

On May 5, 1997, the shareholders of Newmont Mining Corp. and Santa Fe Pacific Gold Corp. approved a merger of the two companies. Newmont Mining then transferred the merged Santa Fe interests to Newmont Gold Co., its operating subsidiary. With that transaction, Newmont Gold became the largest gold producer in North America and the second largest in the world. The merger with Santa Fe added 1.5M Santa Fe acres to Newmont's already considerable 0.5M acres in northern Nevada. This huge and well-placed land position was a primary determinant in Newmont's drive to see the merger through to completion. Postmerger, Newmont's exploration effort is being reorganized and refocused to develop exploration targets aggressively on former Santa Fe acreage. The merger increased Newmont Gold's proven and probable gold reserves to 55M oz from 37M oz at the end of 1996. In the United States, the merger added three former Santa Fe mines Lone Tree and Twin Creeks in Nevada and Mesquite in California - to Newmont's extensive operations on Nevada's Carlin Trend. During the second quarter of 1997, the merged companies produced 1.03M oz equity gold, up 38% from combined Newmont-Santa Fe production during the second quarter of 1996. Worldwide gold production by Newmont Gold is projected to increase from 2.3M oz equity in 1996 to 3.8M oz equity in 1997 and 4M oz equity in 1998. Cash costs during the latter two years are expected to be under $200/oz. The Newmont-Santa Fe merger brought new processing capability to Newmont Gold. Autoclaves at Santa Fe mines are complementary to Newmont's roasting capability on the Carlin Trend, and Santa Fe's recently developed N2TEC flotation technology adds to Newmont's ability to process low-grade refractory ores. Not long after the Newmont-Santa Fe merger, two Newmont executives shared their views with E&MJ on what the merger means to Newmont Gold and where the company goes from here. This is what they had to say.