Rather than Barrick Gold continuing its $18 billion bid to acquire Newmont Mining in a hostile takeover, the two mining concerns have inked a joint venture agreement that will unite assets from both companies in pursuing gold mining in Nevada.

The firms report the venture will allow the combined annual production of more than 4 million ounces of gold, the firms said.

As a result of the joint venture, Barrick will own 61.5 percent of the venture and Newmont 38.5 percent, with Barrick serving as the lone proprietor.

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The agreement between the two gold mining giants comprises Barrick's Goldstrike, Cortez, Turquoise Ridge, Goldrush and South Arturo mines and Newmont's Carlin, Twin Creeks, Phoenix, Long Canyon and Lone Tree sites and associated processing facilities.

The joint venture agreement does not include development assets such as Mike, Fiberline and Fourmile, although they could be investment targets in the future, according to Barrick and Newmont sources.

According to a joint news release from both companies, “Following the completion of the joint venture, the Nevada complex will be the world’s single-largest gold producer, with a pro forma output of more than four million ounces in 2018, three Tier One assets, potentially another one in the making, and 48 million ounces of reserves.”

The joint venture is an historic accord between the two gold mining companies, which have operated independently in Nevada for decades, but have previously been unable to agree to terms for cooperation. The joint venture will allow them to capture an estimated $500 million in average annual pre-tax synergies in the first five full years of the combination, which is projected to total $5 billion pre-tax net present value over a 20-year period.

Barrick President and chief executive officer Mark Bristow said the agreement marked the successful culmination of a deal that has been more than 20 years in the making.

“We listened to our shareholders and agreed with them that this was the best way to realize the enormous potential of the Nevada goldfields’ unequalled mineral endowment, and to maximize the returns from our operations there,” Bristow said. “We are finally taking down the fences to operate Nevada as a single entity in order to deliver full value to both sets of shareholders, as well as to all our stakeholders in the state, by securing the long-term future of gold mining in Nevada.”

Gary Goldberg, chief executive officer of Newmont, said the logic of combining the two companies’ operations was compelling.

“This agreement represents an innovative and effective way to generate long-term value from our joint assets in Nevada, and represents an important step forward in expanding value creation for our shareholders,” Goldberg said. “Through the joint venture, we will also continue to pursue the highest standards in safety, along with responsible and meaningful engagement with our employees, communities, and other stakeholders.”

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