<PAGE>
SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant [_]
Filed by party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SANTA FE PACIFIC GOLD CORPORATION
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
NEWMONT MINING CORPORATION
-----------------------------------------------------
(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 Rule 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and show how it is determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party: Same as above
(4) Date Filed:
<PAGE>
PRELIMINARY COPY
SUBJECT TO COMPLETION, DATED JANUARY 7, 1997
NEWMONT MINING CORPORATION
1700 LINCOLN STREET
DENVER, COLORADO 80203
, 1997
Dear Santa Fe Stockholders:
Newmont Mining Corporation has announced its intention to acquire Santa Fe
Pacific Gold Corporation in a tax-free exchange of 0.40 of a share of Newmont
Mining common stock for each share of Santa Fe common stock (including the
preferred share purchase rights associated with the Santa Fe common stock).
Santa Fe's Board of Directors authorized the entry by Santa Fe into an
Agreement and Plan of Merger, dated as of December 8, 1996 (the "Homestake
Merger Agreement"), with Homestake Mining Company and HMGLD Corp., a wholly-
owned subsidiary of Homestake, pursuant to which and upon the terms and subject
to the conditions contained therein, HMGLD is to be merged with and into Santa
Fe (the "Homestake Merger"). Pursuant to the Homestake Merger Agreement, upon
consummation of the Homestake Merger, each outstanding share of Santa Fe common
stock would be converted into the right to receive 1.115 shares of common stock,
par value $1.00 per share, of Homestake.
MAKE THE RIGHT CHOICE
THE NEWMONT MINING OFFER IS SUPERIOR TO THE PROPOSED HOMESTAKE MERGER.
NEWMONT'S PROPOSAL OFFERS MORE CURRENT VALUE AND FAR GREATER PROSPECTS FOR
FUTURE GROWTH AND APPRECIATION.
The Santa Fe Board has announced its intention to schedule a meeting of the
Santa Fe stockholders to solicit your vote in favor of the Homestake Merger
despite the superior value of the Newmont Mining proposal and the superiority of
the Newmont Mining exchange offer as further set forth in the attached Proxy
Statement.
PRESERVE YOUR OPPORTUNITY TO ACCEPT THE OFFER PROVIDING
THE HIGHEST MARKET VALUE; VOTE AGAINST THE PROPOSED
HOMESTAKE MERGER
Newmont Mining will abandon its exchange offer if the Santa Fe stockholders
approve the Homestake Merger. Thus, Newmont Mining urges you to vote against the
proposed Homestake Merger and preserve your opportunity to accept the superior
value offered by Newmont Mining. If the Santa Fe stockholders do not approve the
Homestake Merger, Newmont Mining believes that the Santa Fe Board should respect
the vote of the Santa Fe stockholders and enter into a merger with Newmont
Mining on the terms described herein.
<PAGE>
YOUR VOTE IS ESSENTIAL
IF YOU WANT THE NEWMONT MINING OFFER TO SUCCEED, VOTE AGAINST THE PROPOSED
HOMESTAKE MERGER BY SIGNING, DATING AND RETURNING THE ENCLOSED [COLOR] PROXY
CARD TODAY.
Sincerely,
Ronald C. Cambre
Chairman, President and Chief
Executive Officer
IMPORTANT
Only Santa Fe stockholders of record on , 1997 are entitled to
vote.
1. If your shares of Santa Fe common stock are held in your own name,
please sign, date and return the enclosed [COLOR] proxy card in the
postage-paid envelope provided. If your shares of Santa Fe common stock are
held in the name of a brokerage firm, bank or other institution, please
sign, date and return the [COLOR] proxy card to such brokerage firm, bank
or other institution in the envelope provided by that firm.
2. Please be sure your latest dated proxy is a [COLOR] card voting
AGAINST the proposed Homestake Merger. If you have already voted for the
Homestake Merger on Santa Fe's proxy card, it is not too late to change
your vote; simply sign, date and return the [COLOR] card. Only your latest
dated proxy will be counted.
If you have any questions or require any assistance in voting your shares of
Santa Fe common stock, please call:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKERS AND BROKERS CALL COLLECT: (212) 440-9800
ALL OTHERS CALL TOLL-FREE: (800) 223-2064
2
<PAGE>
PRELIMINARY COPY
SUBJECT TO COMPLETION, DATED JANUARY 7, 1997
SPECIAL MEETING OF STOCKHOLDERS
OF
SANTA FE PACIFIC GOLD CORPORATION
----------------
PROXY STATEMENT
OF
NEWMONT MINING CORPORATION
SOLICITATION OF PROXIES IN OPPOSITION
TO THE PROPOSED MERGER
OF
SANTA FE PACIFIC GOLD CORPORATION
AND
HOMESTAKE MINING COMPANY
This Proxy Statement and the enclosed [COLOR] proxy card are being furnished
by Newmont Mining Corporation ("Newmont Mining") in connection with its
solicitation of proxies to be used at a special meeting of stockholders of
record on , 1997 (the "Record Date") of Santa Fe Pacific Gold Corporation
("Santa Fe") to be held on , 1997 at ,local time, and at any
adjournments, postponements or reschedulings thereof (the "Special Meeting").
Pursuant to this Proxy Statement, Newmont Mining is soliciting proxies from the
holders of shares of common stock, par value $0.01 per share, of Santa Fe (each
a "Santa Fe Share" and collectively, the "Santa Fe Shares") to vote AGAINST
Santa Fe's proposal to merge HMGLD Corp. ("HMGLD"), a wholly-owned subsidiary of
Homestake Mining Company ("Homestake"), with and into Santa Fe (the "Homestake
Merger") pursuant to the Agreement and Plan of Merger dated as of December 8,
1996, by and among Santa Fe, Homestake and HMGLD (the "Homestake Merger
Agreement"). This Proxy Statement and the enclosed [COLOR] proxy card are first
being sent or given to the stockholders of Santa Fe on or about , 1997.
The principal executive offices of Santa Fe are located at 6200 Uptown Boulevard
NE, Suite 400, Albuquerque, New Mexico, and their telephone number is (505) 880-
5300. The principal executive offices of Newmont Mining are located at 1700
Lincoln Street, Denver, Colorado 80203, and their telephone number is (303) 863-
7414.
On January 7, 1997, Newmont Mining publicly announced its intention to offer,
upon the terms and subject to the conditions hereinafter described (the
"Offer"), to exchange 0.40 of a share of Newmont Mining common stock, par value
$1.60 per share ("Newmont Mining Common Stock"), for each Santa Fe Share,
including the associated preferred share purchase rights (each a "Santa Fe
Right" and collectively, the "Santa Fe Rights") issued pursuant to the Rights
Agreement, dated as of January 26, 1995, as amended, between Santa Fe and Harris
Trust and Savings Bank, as Rights Agent, validly tendered on or prior to the
Expiration Date (as hereafter defined) and not withdrawn. The term "Expiration
Date" means 12:00 midnight, New York City time on , 1997, unless and
until Newmont Mining extends the period of time for which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by Newmont Mining, shall expire. Newmont Mining
currently intends to extend the Offer until all conditions have been satisfied
or waived.
The purpose of the Offer is to acquire control of, and ultimately the entire
equity interest in, Santa Fe. Newmont Mining intends, as soon as practicable
after consummation of the Offer, to seek to have Santa Fe consummate a merger
with a wholly-owned subsidiary of Newmont Mining, in which each outstanding
Santa Fe Share (except for Santa Fe Shares held by Santa Fe, Newmont Mining or
any of their respective subsidiaries) would be converted into the
3
<PAGE>
right to receive 0.40 of a share of Newmont Mining Common Stock (the "Newmont
Mining/Santa Fe Merger"). Shares of Newmont Mining Common Stock to be issued
pursuant to the Offer will include the related Equal Value Rights and Newmont
Mining Rights (as such terms are defined in the Newmont Mining Prospectus
referred to below).
The Offer will be made solely pursuant to Newmont Mining's prospectus dated
, 1997 (the "Newmont Mining Prospectus") and the related Letter of
Transmittal. For additional information concerning the Offer and the Homestake
Merger, see the Newmont Mining Prospectus. THE OFFER, WHEN MADE, WILL BE SUBJECT
TO CERTAIN CONDITIONS.
On December 8, 1996, Santa Fe entered into the Homestake Merger Agreement,
pursuant to which and upon the terms and subject to the conditions contained
therein, the Homestake Merger would be consummated. Pursuant to the Homestake
Merger Agreement, upon consummation of the Homestake Merger each Santa Fe Share
would be converted into the right to receive 1.115 shares of common stock, par
value $1.00 per share, of Homestake. See "Background of the Offer--Homestake
Merger Agreement."
As described in more detail in this Proxy Statement, Newmont Mining does not
believe that the Homestake Merger is in the Santa Fe stockholders' best
interests. IF YOU WANT THE OPPORTUNITY TO RECEIVE THE BENEFITS OF THE OFFER WE
URGE YOU TO PROMPTLY VOTE AGAINST THE PROPOSED HOMESTAKE MERGER BY SIGNING,
DATING AND MAILING THE ENCLOSED [COLOR] PROXY CARD.
If the Santa Fe stockholders do not approve the Homestake Merger, Newmont
Mining believes that the Board of Directors of Santa Fe (the "Santa Fe Board")
should respect the vote of the Santa Fe stockholders and enter into a merger
with Newmont Mining on the terms described herein.
- - -------------------------------------------------------------------------------
IMPORTANT
NEWMONT MINING WILL ABANDON THE OFFER IF THE SANTA FE STOCKHOLDERS VOTE TO
APPROVE THE HOMESTAKE MERGER.
YOUR REJECTION OF THE HOMESTAKE MERGER WILL SEND AN IMPORTANT MESSAGE TO THE
SANTA FE BOARD THAT YOU WANT IT TO NEGOTIATE WITH NEWMONT MINING IN AN EFFORT TO
MAXIMIZE THE VALUE OF YOUR SANTA FE SHARES.
EVEN IF YOU HAVE ALREADY SENT A PROXY TO THE SANTA FE BOARD YOU HAVE EVERY
RIGHT TO CHANGE YOUR VOTE. YOU MAY REVOKE THAT PROXY AND VOTE AGAINST THE
PROPOSED HOMESTAKE MERGER BY SIGNING, DATING AND MAILING THE ENCLOSED [COLOR]
PROXY IN THE ENCLOSED ADDRESSED ENVELOPE. NO POSTAGE IS NECESSARY IF YOUR PROXY
IS MAILED IN THE UNITED STATES.
PLEASE SIGN, DATE AND MAIL THE [COLOR] PROXY TODAY.
YOUR VOTE IS IMPORTANT REGARDLESS OF HOW MANY SANTA FE SHARES YOU OWN.
- - -------------------------------------------------------------------------------
4
<PAGE>
THIS PROXY STATEMENT IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF OFFERS
TO BUY ANY SECURITIES WHICH MAY BE ISSUED IN THE OFFER OR IN ANY MERGER OR
SIMILAR BUSINESS COMBINATION INVOLVING NEWMONT MINING AND SANTA FE. THE ISSUANCE
OF SUCH SECURITIES WOULD HAVE TO BE REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND SUCH SECURITIES WOULD BE OFFERED ONLY BY MEANS OF A PROSPECTUS
COMPLYING WITH THE REQUIREMENTS OF SUCH ACT.
Only Santa Fe stockholders of record on the Record Date are entitled to vote.
1. If your Santa Fe Shares are held in your own name, please sign, date
and return the enclosed [COLOR] proxy card in the postage-paid envelope
provided. If your Santa Fe Shares are held in the name of a brokerage firm,
bank or other institution, please sign, date and return the [COLOR] proxy
card to such brokerage firm, bank or other institution in the envelope
provided by that firm.
2. Please be sure your latest dated proxy is a [COLOR] card voting
AGAINST the proposed Homestake Merger. Only your latest dated proxy will be
counted.
If you have any questions or require any assistance in voting your Santa Fe
Shares, please call:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKERS AND BROKERS CALL COLLECT; (212) 440-9800
ALL OTHERS CALL TOLL-FREE: (800) 223-2064
5
<PAGE>
INTRODUCTION
On January 7, 1997, Newmont Mining publicly announced its intention to make
the Offer. The purpose of the Offer is to acquire control of, and ultimately the
entire equity interest in, Santa Fe. Newmont Mining intends, as soon as
practicable after consummation of the Offer, to seek to have Santa Fe consummate
the Newmont Mining/Santa Fe Merger. Shares of Newmont Mining Common Stock to
be issued pursuant to the Offer or the Newmont Mining/Santa Fe Merger will
include the Equal Value Rights and Newmont Mining Rights. Newmont Mining
currently intends to extend the Offer from time to time until all conditions
thereto have been satisfied or waived. The Offer will be made solely pursuant to
the Newmont Mining Prospectus and the related Letter of Transmittal, copies of
which will be separately mailed to the stockholders of Santa Fe. For additional
information concerning the Offer and the Newmont Mining/Santa Fe Merger, see the
Newmont Mining Prospectus.
The Santa Fe Board caused Santa Fe to enter into the Homestake Merger
Agreement and has refused to let the stockholders realize the benefits of the
Offer. Instead, the Santa Fe Board is intent on pursuing the Homestake Merger,
even though in Newmont Mining's view the Offer offers Stockholders considerably
more value. See "Background of the Offer--Comparison of the Proposals" below.
COMPARISON OF THE PROPOSALS
Stockholders of Santa Fe face a choice: which company, Newmont Mining or
Homestake, is in a better position to provide greater value in the short and
long term to Santa Fe stockholders? Which company's stock--Newmont Mining or
Homestake--is a better investment, and which company will do more to realize
the value of Santa Fe's assets?
There are two fundamental reasons why Santa Fe stockholders should prefer a
combination with Newmont Mining. First, the Newmont Mining transaction offers
significantly more current value. Second, the Newmont Mining transaction offers
far greater prospects for future growth and appreciation.
--Based on the closing prices of Newmont Mining Common Stock and Homestake
Common Stock on January 6, 1997, Newmont Mining's proposal was worth
$16.50 per Santa Fe Share, compared with Homestake's proposal which then
had a value of $14.63 per Santa Fe Share.
--The key to unlocking value in Santa Fe is to capitalize on its
underexplored Nevada land resources. Newmont Mining has decades of
extensive, highly successful exploration, development and production
experience in Nevada; Homestake has minimal experience.
--In terms of exploration, production, profitability and stock price
performance, Newmont Mining has historically outperformed Homestake.
For a detailed comparison of the Newmont Mining and Homestake proposals, see
"Background of the Offer--Comparison of the Proposals" contained in the Newmont
Mining Prospectus.
Newmont Mining cannot consummate the Offer if the stockholders approve the
Homestake Merger Agreement. Thus, Newmont Mining urges the stockholders to vote
against the proposed Homestake Merger Agreement and preserve the stockholders'
opportunity to accept the higher market value of the Offer. If the Santa Fe
stockholders do not approve the Homestake Merger, Newmont Mining believes that
the Santa Fe Board should respect the vote of the Santa Fe stockholders and
enter into a merger with Newmont Mining on the terms described herein.
THE OFFER
Pursuant to the terms of the Newmont Mining Prospectus, Newmont will offer to
exchange 0.40 of a share of Newmont Mining Common Stock for each outstanding
Santa Fe Share validly tendered on or prior to the Expiration Date and not
withdrawn. The term "Expiration Date" shall mean 12:00 midnight, New York City
time, on , 1997, unless and until Newmont Mining extends the period
of time for which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by
Newmont Mining, shall expire.
6
<PAGE>
The purpose of the Offer is for Newmont Mining to acquire control of, and
ultimately the entire common equity interest in, Santa Fe. Newmont Mining
intends, as soon as reasonably practicable after consummation of the Offer, to
seek to have Santa Fe consummate the Newmont Mining/Santa Fe Merger in which
each outstanding Santa Fe Share (except for Santa Fe Shares held by Santa Fe,
Newmont Mining or any of their respective subsidiaries) would be converted into
the right to receive 0.40 of a share of Newmont Mining Common Stock. See "The
Offer--Purpose of the Offer; the Newmont Mining/Santa Fe Merger" in the Newmont
Mining Prospectus.
Subject to the applicable rules and regulations of the Securities and Exchange
Commission (the "Commission"), Newmont Mining expressly reserves the right, in
its sole discretion, at any time or from time to time, to delay acceptance for
exchange or, regardless of whether such Santa Fe Shares were theretofore
accepted for exchange, exchange of any Santa Fe Shares pursuant to the Offer or
to amend or terminate the Offer and not to accept for exchange or exchange any
Santa Fe Shares not theretofore accepted for exchange, or exchanged, upon the
failure of any of the conditions of the Offer to be satisfied. Newmont Mining
reserves the absolute right to waive any defect or irregularity in the tender of
any securities. Waiver or amendment of certain conditions of the Offer may
require an extension of the Offer.
CONDITIONS OF THE OFFER
Newmont Mining's obligation to exchange shares of Newmont Mining Common Stock
for Santa Fe Shares pursuant to the Offer is conditioned upon, among other
things, satisfaction of the following conditions:
(i) there being validly tendered prior to the expiration of the Offer and
not withdrawn a number of Santa Fe Shares which will constitute at least
90% of the total number of outstanding Santa Fe Shares on a fully diluted
basis (as though all options or other securities convertible into or
exercisable or exchangeable for Santa Fe Shares had been so converted,
exercised or exchanged) as of the date the Santa Fe Shares are accepted for
exchange by Newmont Mining pursuant to the Offer;
(ii) the Santa Fe Board having redeemed the Santa Fe Rights or Newmont
Mining being otherwise satisfied in its sole discretion that the Santa Fe
Rights will not be applicable to the acquisition of Santa Fe Shares
pursuant to the Offer and the Newmont Mining/Santa Fe Merger;
(iii) the Santa Fe Board, pursuant to Section 203 of the Delaware General
Corporation Law, having approved the acquisition of Santa Fe Shares
pursuant to the Offer, or Newmont Mining being otherwise satisfied in its
sole discretion that the provisions of Section 203 restricting certain
business combinations are not applicable to the acquisition of Santa Fe
Shares pursuant to the Offer and the Newmont Mining/Santa Fe Merger;
(iv) the receipt by Newmont Mining of a letter from its independent
public accountants, Arthur Andersen LLP, stating that the Offer and the
Newmont Mining/Santa Fe Merger will qualify for treatment as a pooling of
interests under Opinion 16 of the Accounting Principles Board and the
applicable regulations of the Commission;
7
<PAGE>
(v) the stockholders of Santa Fe not having approved the Homestake Merger
Agreement or the Homestake Merger Agreement being otherwise terminated
pursuant to its terms;
(vi) approval of the issuance of shares of Newmont Mining Common Stock
pursuant to the Offer and the Newmont Mining/Santa Fe Merger by the holders
of a majority of the shares of Newmont Mining Common Stock voted at a
meeting of such holders at which the total number of votes cast represents
over 50% of all shares of Newmont Mining Common Stock outstanding on the
applicable record date, and approval of an amendment to Newmont Mining's
Restated Certificate of Incorporation to increase the number of shares of
Newmont Mining Common Stock authorized for issuance to 225,000,000 by the
holders of a majority of the shares of Newmont Mining Common Stock outstanding
on the applicable record date (collectively the "Newmont Mining Stockholder
Approval Condition"); and
(vii) the waiting period (and any extension thereof) applicable to the
Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, having terminated or expired.
The Offer is subject to certain other conditions. See "The Offer--Conditions
of the Offer" in the Newmont Mining Prospectus.
TIMING OF THE OFFER
The Offer is scheduled to expire at 12:00 midnight, New York City time, on
, 1997. It is Newmont Mining's current intention to extend the Offer until
all conditions have been either satisfied or waived.
Concurrently with the public announcement of the terms of the Offer, Newmont
Mining requested the Santa Fe Board to enter into immediate negotiations with
Newmont Mining with respect to the Offer and to terminate the Homestake Merger
Agreement in accordance with its terms, so that Santa Fe could enter into a
merger transaction with Newmont Mining in which Santa Fe's stockholders would
receive 0.40 of a share of Newmont Mining Common Stock in exchange for each
Santa Fe Share.
Newmont Mining intends to call a special meeting of its stockholders to be
held as soon as reasonably practicable after the effective date of the
Registration Statement in which the Newmont Mining Prospectus is contained for
the purpose of obtaining the approvals necessary to satisfy the Newmont Mining
Stockholder Approval Condition.
EXTENSION, TERMINATION AND AMENDMENT
Newmont Mining expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the Offer
is to remain open by giving oral or written notice of such extension to the
Exchange Agent named in the Newmont Mining Prospectus, which extension must be
announced no later than 9:00 A.M., New York City time, on the next business day
after the previously scheduled Expiration Date. There can be no assurance that
Newmont Mining will exercise its right to extend the Offer. However, it is
Newmont Mining's current intention to extend the Offer until all conditions have
been satisfied or waived.
8
<PAGE>
BACKGROUND OF THE OFFER
GENERAL
On a number of occasions during the past several years, Ronald C. Cambre,
Chairman and Chief Executive Officer of Newmont Mining, and Patrick M. James,
Chairman and Chief Executive Officer of Santa Fe, have met at mining industry
conferences they have attended.
During the same period, members of senior management of Newmont Mining have
from time to time considered potential acquisition candidates in light of
their belief that the mining industry would continue its trend toward greater
consolidation. Various investment banking firms have, from time to time, made
presentations to Newmont Mining's senior management relating to the mining
industry and potential acquisition targets. In March 1996, Newmont Mining
retained Goldman Sachs (as hereinafter defined) for the express purpose of
exploring the possibility of a transaction with Santa Fe.
On April 1, 1996, at a meeting of the Gold Institute, a mining industry
association, Mr. Cambre approached Mr. James and discussed with him the
possibility of combining their businesses. During their April 1 discussion,
Mr. Cambre provided Mr. James summary materials prepared by Newmont Mining and
Goldman Sachs concerning the strategic rationale for a combination of Newmont
Mining and Santa Fe, including potential synergies and reserves estimates.
On April 29, 1996, Mr. Cambre sent a letter to Mr. James in which he thanked
Mr. James for taking the time to meet with him at the Gold Institute meeting.
Mr. Cambre reaffirmed his interest in the possibility of a business
combination involving their two companies and indicated his desire to
consummate a business combination between Newmont Mining and Santa Fe prior to
the end of 1996. Mr. Cambre enclosed with the April 29 letter a briefing
booklet providing further details and analyses relating to a potential
combination of Newmont Mining and Santa Fe.
In early May 1996, Mr. James telephoned Mr. Cambre to suggest the
possibility of forming a joint venture to capitalize on each company's
refractory ore processing technologies. Mr. James suggested that the joint
venture would provide a forum for the two firms to work together.
On May 17, 1996, Mr. Cambre sent a letter to Mr. James indicating his
support for Mr. James' suggestion concerning a technology joint venture
between Newmont Mining and Santa Fe. Mr. Cambre's letter suggested that the
companies meet to begin discussions concerning a joint venture, but Santa Fe
did not contact Newmont Mining to arrange a meeting.
On July 17, 1996, following discussions between the parties earlier in July,
Mr. Cambre sent a letter to Mr. James reiterating the interest of Newmont
Mining's Board of Directors in exploring a business combination of Newmont
Mining and Santa Fe. In the letter, Mr. Cambre noted that a combination of the
two companies "has the potential to immediately create significant value for
our respective shareholders" and set forth Newmont Mining's preliminary
estimate of $30-$40 million per year of operating and financial synergies. In
the July 17 letter, Mr. Cambre also offered to meet with Mr. James or members
of the Santa Fe Board at any time to discuss a possible transaction.
Early in the week of August 5, 1996, Mr. James telephoned Mr. Cambre and
informed Mr. Cambre that the Santa Fe Board had determined to "stay the
course" and not to pursue a transaction with Newmont Mining.
On August 8, 1996, Mr. Cambre sent a letter to Mr. James indicating Mr.
Cambre's disappointment with the decision of the Santa Fe Board to "stay the
course." Mr. Cambre noted in the August 8 letter Newmont Mining's belief that
considerable shareholder value would be created by a merger of the two
companies and said that he still would appreciate the opportunity to have a
more in-depth discussion with Mr. James or members of the Santa Fe Board
concerning the matter.
9
<PAGE>
Mr. James responded by letter dated August 22, 1996 to Mr. Cambre's letter
of August 8, stating, among other matters, that "I appreciate your continuing
interest in discussions and the possibility of a business combination between
our two companies. Although, as I mentioned when we last talked, I do not feel
that this is a good time to get into these matters, I certainly will keep in
mind your interest and the possibility of discussions in the future."
On September 30, 1996, Mr. James telephoned Mr. Cambre and arranged for an
October 1, 1996 meeting at Mr. Cambre's home. October 1, 1996 was the first
day that Santa Fe became eligible for pooling of interests accounting
treatment in connection with a business combination transaction after the two-
year period Santa Fe had been required to wait under applicable accounting
rules. Mr. James indicated that David H. Batchelder, another member of the
Santa Fe Board, would be present at the meeting.
On October 1, 1996, in response to Mr. James' request, Mr. Cambre and Wayne
W. Murdy, Executive Vice President and Chief Financial Officer of Newmont
Mining, met with Mr. James and Mr. Batchelder. At the meeting, Mr. James
indicated that, following discussions with members of the Santa Fe Board there
was sufficient interest on the part of the Santa Fe Board regarding a possible
business combination transaction with Newmont Mining to warrant further
discussions. Mr. Batchelder said that he had been assigned by the Santa Fe
Board to work with Mr. James on the matter, and that it would be helpful to
further deliberations by the Santa Fe Board if Newmont Mining could provide
Santa Fe with a potential indication of value (subject to due diligence) as a
demonstration of Newmont Mining's level of interest. If the value indicated by
Newmont Mining was of sufficient interest, Mr. Batchelder said that Santa Fe
would be prepared to commence mutual due diligence investigations. Messrs.
James and Batchelder said that Newmont Mining should concentrate on providing
a premium price for Santa Fe's stockholders in a stock-for-stock transaction
to be accounted for as a pooling of interests. They indicated that while Santa
Fe had specifically considered the possibility of business combination
transactions with other companies, a transaction with Newmont Mining was the
most sensible option for Santa Fe, and it was Santa Fe's preference to engage
in the merger process with only one potential acquisition partner.
On October 9, 1996, Mr. Cambre sent to Mr. James a letter outlining the
terms on which Newmont Mining would consider a merger transaction with Santa
Fe. The letter contemplated a stock-for-stock merger transaction that would be
tax-free to both companies' stockholders and would be accounted for as a
pooling of interests. The principal terms indicated in the letter included a
possible exchange ratio ranging from 0.32 to 0.35 of a share of Newmont Mining
Common Stock for each Santa Fe Share; a requirement for a 60-day exclusivity
period during which time Santa Fe would not be permitted to engage in
discussions concerning alternative transactions; an option to be granted by
Santa Fe giving Newmont Mining the right to buy Santa Fe Shares from Santa Fe
in an amount up to 19.9% of the Santa Fe Shares then outstanding; and a merger
agreement with customary break-up fee provisions.
On October 14, 1996, Messrs. James and Batchelder telephoned Mr. Cambre to
discuss the indication of interest set forth in Newmont Mining's letter of
October 9, and agreed with Mr. Cambre to hold a meeting on October 17 in
Denver to discuss issues raised by Newmont Mining's letter. During such
conversation, Mr. Batchelder said that the Santa Fe Board was interested in
pursuing discussions with Newmont Mining concerning a business combination if
Newmont Mining's proposal was at the upper half of the range, as the Santa Fe
Board was seeking a premium of 35% to 40%. Mr. Cambre responded that Newmont
Mining had defined the range as precisely as then possible.
On October 17, 1996, a meeting was held in Denver among Messrs. James,
Batchelder, Cambre and Murdy, a representative from Goldman Sachs and
representatives from SBC Warburg Inc., Santa Fe's financial advisor ("SBC
Warburg"). At this meeting, Newmont Mining indicated that it was immediately
prepared to begin its due diligence investigation of Santa Fe, but Santa Fe
asked to delay due diligence until November 1 in order to complete its new
five-year business plan. It was agreed that
10
<PAGE>
each party's due diligence investigation of the other would start on
approximately November 1 when Santa Fe's new five-year business plan would be
completed. During the course of this meeting, Santa Fe's representatives
rejected Newmont Mining's request for exclusivity, with Mr. Batchelder stating
that Santa Fe was not holding discussions with anyone else and committing not
to "shop" Newmont Mining's proposal. During the meeting, Santa Fe's
representatives also rejected Newmont Mining's request for an option on Santa
Fe's shares, stating that the Santa Fe Board had waited two years to be
eligible for pooling of interests accounting treatment and under no
circumstances could they approve anything that would preclude the use of
pooling. During the course of this meeting, it was agreed that Messrs. Cambre
and James would meet separately to discuss their respective management
personnel and the management of the combined company after the proposed
merger.
On October 21, 1996, Mr. Cambre called Mr. James to object to the inclusion
in the draft mutual confidentiality agreement furnished by Santa Fe's
representatives at the October 17 meeting of provisions ("standstill
provisions") which would have the effect of limiting or precluding Newmont
Mining from making an acquisition offer directly to Santa Fe's stockholders or
taking other actions in furtherance of an acquisition attempt by Newmont
Mining which might be made without approval of the Santa Fe Board. Following
this conversation, counsel for Newmont Mining and Santa Fe also discussed
Santa Fe's draft confidentiality agreement.
On October 22, 1996, Mr. Cambre sent Mr. James a revised mutual
confidentiality agreement which did not contain standstill provisions.
On October 25, 1996, Messrs. Cambre and James met to discuss their
respective companies' management personnel and the management of the combined
company after the proposed merger. At the beginning of the meeting, Mr. James
presented to Mr. Cambre an executed copy of a revised form of confidentiality
agreement which Newmont Mining had furnished to Santa Fe earlier that week,
which Mr. Cambre also subsequently executed. Mr. James also discussed Santa
Fe's problems of not being a large enough gold producer to be included in the
top tier of the industry and not having the financial strength to break out of
the second tier of gold producers. Mr. James said that Santa Fe's only
alternative to a business combination with another gold producer was a
complete restructuring which would involve ceasing many of its foreign
activities and concentrating its activities in Nevada, Brazil and Central
Asia.
Between October 25 and October 31, 1996, Mr. Cambre and Mr. James spoke
several times concerning a due diligence meeting at which the parties would
exchange information, and they agreed to hold a due diligence meeting on the
weekend of November 2 and 3 in Dallas, Texas. During this period, Newmont
Mining and Santa Fe began exchanging information, including certain non-public
information, in order to facilitate the due diligence process.
During the week of October 27, 1996, Mr. James called Mr. Cambre to postpone
the due diligence meeting scheduled for the weekend of November 2 and 3 until
the following weekend because Santa Fe's new five-year business plan was not
ready. On November 1, 1996, Mr. Cambre sent Mr. James a letter confirming
arrangements for the due diligence meeting, which had been rescheduled for
November 8 and 9.
On November 8 and 9, 1996, representatives of Newmont Mining and Santa Fe,
including, among others, Messrs. Cambre, Murdy, Batchelder and James and
representatives of Goldman Sachs and SBC Warburg, met in Dallas for an
extended session which included lengthy presentations by each company
concerning their future operations and projected performance and the
opportunity of each company to ask questions of the other. Santa Fe's
presentation included a presentation of Santa Fe's new five-year business
plan, as well as a discussion of the restructuring plan which Mr. James had
earlier discussed with Mr. Cambre.
11
<PAGE>
During the course of Newmont Mining's due diligence investigation of Santa
Fe, Santa Fe made available to Newmont Mining certain material non-public
information concerning Santa Fe, including the following projected financial
and other information from Santa Fe's new five-year business plan:
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 2001
---- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue (in millions)....... $342 $ 469 $ 534 $ 564 $ 585 $ 573
Net Income (in millions).............. $ 9(/1/) $ 44 $ 75 $ 55 $ 71 $ 74
Operating Cash Flow (in millions)..... $ 81 $ 90 $ 158 $ 194 $ 207 $ 220
Ounces Produced (in thousands)........ 836 1,122 1,279 1,354 1,401 1,359
Weighted Average Cash Cost of
Production Per Ounce................. $223 $ 236 $ 242 $ 250 $ 252 $ 258
Weighted Average Cost of Production
Per Ounce............................ $302 $ 326 $ 338 $ 341 $ 339 $ 338
Capital Expenditures (in
millions)(/2/)....................... $262 $ 109 $ 130 $ 52 $ 29 $ 31
</TABLE>
- - --------
(/1/) Including $28 million in pre-tax write-offs, and restructuring charges and
a $9 million one-time pre-tax gain from an exchange by Santa Fe of
properties for stock of another party.
(/2/) According to materials provided to Newmont Mining, these figures do not
include capitalized interest expense and deferred mining costs; if such
costs and expenses were included, capital expenditures for the periods
presented would be $340 million, $129 million, $168 million, $93 million,
$66 million and $90 million, respectively.
In addition to the foregoing information, Santa Fe's new five-year business
plan assumed that Santa Fe would consummate an equity offering in 1997 that
would generate proceeds of $150 million, based on the sale of 8.3 million
Santa Fe Shares at a price of $18 per Santa Fe Share. The new five-year
business plan also assumed that Santa Fe would realize proceeds of $124
million over the period from 1997 to 2001 from sales of exploration properties
and further assumed significant reductions in general and administrative, and
exploration expenses beginning in 1997. In the new five-year business plan all
production was assumed to come from existing operations and certain identified
development projects. In addition, the projections assumed continued hedging
by Santa Fe throughout the period resulting in an effective gold price to be
received by Santa Fe of approximately $416 per ounce of gold. Newmont Mining
also learned that Santa Fe includes in its deferred mining costs a portion of
its depletion, depreciation and amortization charges, as compared to Newmont
Mining's more conservative accounting policy of treating such charges as
expenses. Therefore, upon consummation of the Newmont Mining/Santa Fe Merger,
Santa Fe's treatment of depletion, depreciation and amortization charges would
need to be adjusted to Newmont Mining's accounting treatment of such charges,
which would result in an annual charge to net income for the combined entity
for a number of years. The charge is estimated to be $7 million in 1998 and $4
million to $13 million for the years 1997 through 2001.
At a dinner meeting held on November 8, 1996 attended by Messrs. James,
Batchelder, Cambre and Murdy, Mr. James and Mr. Batchelder requested that
Newmont Mining submit a formal proposal to the Santa Fe Board and they agreed
to send to Mr. Cambre a letter setting forth the items Santa Fe wanted Newmont
Mining to address in its proposal. In addition, Mr. Batchelder informed
Messrs. Cambre and Murdy for the first time that one written and one oral
indication of interest had been received from two other parties, but indicated
that Santa Fe would not pursue these other indications as long as negotiations
continued at the current pace with Newmont Mining.
On November 13, 1996, Mr. James sent a letter to Mr. Cambre stating, among
other things, that the "open and frank tone" of the discussions at the
November 8 meeting "went a long way toward advancing our potential
combination." Mr. James' letter set forth a list of items he indicated that
Santa Fe wanted Newmont Mining to address as part of its proposal. These
included the specific exchange ratio and the structure of the exchange ratio,
including pricing structure and collar and termination provisions, the major
provisions of a merger agreement, details of the number and nature of board
positions expected to be made available to existing directors of Santa Fe, an
indication of the potential future roles within the combined organization of
Santa Fe's current senior management, the treatment of Santa Fe's stock option
and benefit plans and the manner in which service seniority would be
12
<PAGE>
handled, the type and amount of synergies to be realized in a combination of
the two companies and an explanation of the proposed structure of the
transaction, in particular addressing the mechanism by which Santa Fe would be
combined with Newmont Gold and the approach to the management of the Newmont
Gold minority interest. Mr. Cambre agreed to provide a response to Mr. James'
letter by Thursday, November 21, and agreed to a telephone call to be held on
Saturday, November 23, to discuss Newmont Mining's proposal.
On November 15, 1996, Mr. James and Mr. Cambre spoke by telephone concerning
personnel matters and agreed to meet in New York with Hay Associates, a
personnel consulting firm, to discuss personnel matters and the selection of
management for the combined entity.
On November 19, 1996, Mr. James met with Mr. Cambre in New York, together
with a representative of Hay Associates, to discuss personnel matters and the
selection of management for the combined entity. On November 20, the Newmont
Mining Board met in New York to discuss the potential transaction. At such
meeting, the Newmont Mining Board authorized Mr. Cambre to determine the actual
exchange ratio to be included in the proposal to be given to Santa Fe, provided
that it was within the range approved by the Newmont Mining Board.
On November 21, 1996, Mr. Cambre sent a letter to Mr. James in response to
Santa Fe's request for a proposal and Mr. James' letter of November 13. On
behalf of Newmont Mining, Mr. Cambre proposed a stock-for-stock merger
transaction that would be tax-free to both companies' stockholders and would
be accounted for as a pooling of interests. The proposal, which was subject to
Newmont Mining's satisfactory completion of confirmatory due diligence,
offered an exchange ratio of 0.33 of a share of Newmont Mining Common Stock
for each Santa Fe Share (which represented a premium of 35% above the closing
price of the Santa Fe Shares on November 20). The proposal did not offer a
collar or any termination provision based on trading prices of the companies'
shares. In exchange for Newmont Mining's willingness, in response to Santa
Fe's request, to eliminate its request for an option to purchase 19.9% of the
Santa Fe Shares, Newmont Mining's proposal also required that the definitive
merger agreement to be entered into by the parties contain a $75 million
break-up fee payable by Santa Fe. In addition, the letter indicated that
Newmont Mining would be willing to place three current members of the Santa Fe
Board on the Newmont Mining Board upon completion of the transaction, and
further indicated Newmont Mining's intention to retain Hay Associates to
assist in the process of choosing the best management personnel from both
firms to lead the combined entity.
Mr. Cambre's November 21 letter also expressed Newmont Mining's
disappointment with the results of its initial due diligence investigation of
Santa Fe, particularly in light of prior statements to the effect that Newmont
Mining's management would be "positively surprised" with the results of its
due diligence effort. In particular, Mr. Cambre cited the fact that Santa Fe
was projecting lower operating earnings than the investment community had been
expecting. Mr. Cambre also indicated disappointment with Newmont Mining's
review of Santa Fe's new five-year business plan, which contemplated, among
other things, asset sales at what Newmont Mining considered extremely generous
valuations; an equity offering at a 40% premium to Santa Fe's then current
stock price; and over 50% reductions in general and administrative and
exploration spending, which Newmont Mining's management viewed as aggressive
assumptions that were unlikely to be achieved.
On November 22, 1996, Mr. James telephoned Mr. Cambre to confirm the call to
discuss the proposal submitted by Newmont Mining scheduled for the next day
and informed Mr. Cambre that the Santa Fe Board also was scheduled to meet on
the next day.
On November 23, 1996 Messrs. James and Batchelder telephoned Messrs. Cambre
and Murdy to provide certain responses to Newmont Mining's proposal, as set
forth in Mr. Cambre's letter of
13
<PAGE>
November 21. Messrs. James and Batchelder said that Santa Fe's Board would
meet on Tuesday, November 26, to consider the two proposals which had been
received. This was the first indication Newmont Mining had received from Santa
Fe that another party had submitted a formal proposal. During this
conversation, Messrs. James and Batchelder requested that Newmont Mining
reconsider or clarify certain aspects of its proposal, but at no time did they
request any increase in the exchange ratio of 0.33 of a share of Newmont
Mining Common Stock included in Newmont Mining's proposal. The specific
improvements and additional information which were requested included the
following: the addition of a collar related to the exchange ratio; a reduction
in the break-up fee from $75 million to $60 million plus $5 million for
reimbursement of expenses, and a request that it be made reciprocal; a request
that the three current directors of Santa Fe to be included on the Newmont
Mining Board following consummation of a merger with Santa Fe be chosen from a
group of five directors to be selected by Santa Fe; greater specificity as to
the roles in the combined company of Mr. James and Mr. Roy Wilkes, Santa Fe's
Executive Vice President and Chief Operating Officer; a draft of the merger
agreement and information as to whether the draft would contain a "fiduciary
out" provision; information as to whether Santa Fe's severance programs would
be honored; and a request that Newmont Mining complete its due diligence
investigation quickly. In response to a request by Santa Fe, the parties held
a conference call on November 25 during which Santa Fe received an update
concerning Newmont Mining's Batu Hijau project in Indonesia.
On Monday, November 25, 1996, Mr. Cambre sent an additional letter to Mr.
James and Mr. Batchelder responding to their November 23 telephone
conversation. In the November 25 letter, Mr. Cambre indicated that Newmont
Mining would not be willing to include a collar together with its exchange
ratio or to make the break-up fee reciprocal, but would be willing to revise
its proposal to reduce the break-up fee payable by Santa Fe to $65 million,
inclusive of expenses, and also provided "fiduciary out" language to be
included in the merger agreement. Mr. Cambre also indicated that, in response
to Santa Fe's request, Newmont Mining would permit Santa Fe to provide Newmont
Mining with a list of six directors, from which the nominating committee of
the Newmont Mining Board would select the three to be included on the Newmont
Mining Board. He further indicated Newmont Mining's willingness to offer Mr.
James and Mr. Wilkes employment contracts to ensure their security as to their
roles in the combined company, and to honor in Santa Fe's existing severance
agreements and the "change of control" provisions in Santa Fe's stock programs
as well as to offer to Santa Fe's employees the opportunity to participate in
benefit programs currently available to Newmont Mining employees at comparable
levels, taking into account years of service with Santa Fe.
In the afternoon of Wednesday, November 27, 1996, Mr. Cambre telephoned Mr.
James in order to learn of Santa Fe's decision with respect to Newmont
Mining's proposal. Mr. James was unavailable to receive the call. Later that
afternoon, Mr. James and Mr. Batchelder telephoned Mr. Cambre and informed him
that Newmont Mining's proposal of November 21, as modified by the letter of
November 25, had been rejected by the Santa Fe Board at a meeting on November
26. Mr. Cambre asked Mr. James and Mr. Batchelder to explain the reason for
the rejection and was told that the Santa Fe Board had not considered Newmont
Mining's proposal to be the best among the options it had available.
Subsequently, Mr. Cambre and other representatives of Newmont Mining attempted
without success to reach Mr. James and other representatives of Santa Fe to
discuss further the Santa Fe Board's decision with respect to the Newmont
Mining proposal.
During the period from Wednesday afternoon, November 27, 1996, to Wednesday,
December 4, 1996, the members of senior management of Newmont Mining held
discussions with Newmont Mining's legal and financial advisors to consider
alternatives with respect to a transaction with Santa Fe.
On Thursday, December 5, 1996, following a special meeting of the Newmont
Mining Board, Newmont Mining delivered the following proposal letter to the
Santa Fe Board, which letter was immediately made public by Newmont Mining
through a press release:
14
<PAGE>
December 5, 1996
Board of Directors
Santa Fe Pacific Gold Corporation
6200 Uptown Blvd. NE, Suite 400
Albuquerque, NM 87110
ATTENTION: Patrick M. James
The management and Board of Directors of Newmont Mining Corporation
("Newmont") have determined that the combination of our companies is
compelling in terms of value creation for the stockholders of both
Santa Fe Pacific Gold Corporation ("SFPG") and Newmont. I am,
therefore, writing to make the following proposal, which has been
approved by the Board of Directors of Newmont and is hereby submitted
to the Board of Directors of SFPG.
We propose to acquire SFPG in a stock-for-stock merger in which each
share of SFPG common stock would be exchanged for 0.33 shares of
Newmont common stock in a transaction that would be tax-free to SFPG
stockholders and would be accounted for as a pooling-of-interests. The
offer is not contingent upon due diligence and could close as soon as
regulatory and stockholder approvals are received.
We believe that this offer represents an attractive price for your
stockholders and fairly reflects the benefits we envision from the
combination of our businesses. Such a combination would result in:
. The largest gold mining company in North America;
. The most extensive gold operations, land position and exploration
prospects in Nevada;
. One of the best capitalized and most geographically diversified
mining companies in the world;
. Substantial operating synergies to provide continued earnings
growth and expansion opportunities; and
. The opportunity to leverage each of our strong proprietary
technology bases.
Such a transaction provides SFPG stockholders with a substantial
valuation premium for their shares and a continuing equity interest in
a premium gold mining concern in a tax-free transaction. It also offers
employees of SFPG the opportunity to work for one of the largest and
best funded gold exploration and mining concerns in the world.
It is our strong preference to work with you toward a friendly
transaction, in connection with which we would, of course, expect SFPG
to render its stockholder rights plan inapplicable. In any event, we
want you and your stockholders to know that we are fully committed to
completing this transaction.
We are today announcing our proposal publicly so that all SFPG
stockholders are made aware of it. Our objective is to work with you in
a professional and constructive manner to complete this transaction so
that its full potential can be realized and the best interests of all
stockholders can be served.
Sincerely,
Ronald C. Cambre
15
<PAGE>
Later on December 5, 1996, Santa Fe confirmed that it had received Newmont
Mining's letter, but declined to comment further.
On December 9, 1996, Santa Fe and Homestake announced that they had entered
into the Homestake Merger Agreement.
On January 3, 1997, the Newmont Mining Board approved the Offer and related
matters.
On January 7, 1997, Newmont Mining publicly announced its intention to make
the Offer and sent the following letter to the Santa Fe Board:
January 7, 1997
Board of Directors
Santa Fe Pacific Gold Corporation
6200 Uptown Blvd. N.E., Suite 400
Albuquerque, New Mexico 87110
Dear Directors:
On behalf of the Board of Directors of Newmont Mining Corporation, I am
pleased to inform you that Newmont Mining has increased its offer to acquire
Santa Fe Pacific Gold Corporation to .40 of a share of Newmont common stock
per Santa Fe common share. Based on yesterday's closing prices, our proposal
reflects a premium of 15.8% over Santa Fe's current price, a 39% premium over
Santa Fe's closing price on December 4, 1996, and a 12.75% premium over the
nominal value of Homestake's merger proposal previously accepted by Santa Fe.
As noted by Messrs. James and Batchelder when they invited Newmont to
initiate merger discussions, the "fit" between our two companies is clearly
superior to the fit between Santa Fe and any other gold mining company. This
theme has been reiterated by the overwhelming majority of the gold analyst
community who have commented on Santa Fe since the original Newmont proposal
was made public.
We appreciate the difficulty of your Board's decision when faced with a
Homestake proposal that was higher than Newmont's December 5, 1996 offer on a
nominal basis. However, our revised proposal provides significantly greater
current value than the proposed transaction with Homestake and offers far
greater prospects for the achievement of shareholder value over the longer
term. Our 30 year history of discoveries and operations in Nevada is
unmatched. Therefore, Newmont hereby requests that you take all action
necessary to ensure that your shareholders will be able to receive the
benefits of the Newmont proposal as soon as possible. Specifically, in light
of the superior value offered by Newmont, we hereby request that, pursuant to
Section 4.02 of the Homestake/Santa Fe Merger Agreement, you authorize Santa
Fe to enter into immediate negotiations with Newmont regarding our proposal.
Once the Santa Fe Board has taken the required action, we are confident that
Newmont and Santa Fe can quickly come to terms on a mutually acceptable merger
agreement, so that the Homestake/Santa Fe Merger Agreement can be terminated
pursuant to its terms and in accordance with your fiduciary obligations to the
Santa Fe shareholders.
To facilitate the earliest completion of our merger with Santa Fe, we have
today filed registration materials with the Securities and Exchange
Commission, and we intend to initiate an exchange offer for all outstanding
shares of Santa Fe as soon as our registration statement is declared
effective. These documents explain in detail why a merger with Newmont offers
significantly greater value to the Santa Fe shareholders than a transaction
with Homestake. Moreover, if Santa Fe does not terminate
16
<PAGE>
its proposed merger with Homestake, Newmont will solicit proxies against the
Homestake merger proposal pursuant to the proxy solicitation materials,
preliminary copies of which were filed today with the Commission. We will
start our campaign against the inferior Homestake proposal immediately so that
the Santa Fe shareholders may be informed of the benefits of the superior
Newmont transaction.
In addition, Newmont hereby requests that the Santa Fe Board of Directors
take all action necessary to: (i) make the rights issued pursuant to the
Rights Agreement dated January 26, 1995 inapplicable to Newmont's offer and to
defer indefinitely the Distribution Date (as defined in the Rights Agreement);
and (ii) make Section 203 of the Delaware General Corporation Law inapplicable
to Newmont's offer, actions which have already been taken with respect to the
inferior Homestake merger proposal.
Newmont believes a merger between Santa Fe and Newmont is the most sensible
option for Santa Fe and its shareholders. Since the Newmont proposal is
clearly superior to the Homestake proposal, we urge you to act promptly to
enter into negotiations so that Santa Fe may enter into a definitive agreement
with Newmont providing for a merger in which your shareholders will receive
..40 of a share of Newmont common stock for each of Santa Fe's outstanding
shares at the earliest possible time, and without the distraction of a
prolonged period of uncertainty for Santa Fe and its shareholders and
employees.
I am prepared to meet with you at any time to discuss the merits of our
generous proposal.
Very truly yours,
Ronald C. Cambre
Chairman, President and Chief
Executive Officer
In addition, on such date Newmont Mining filed the Registration Statement
with the Commission, as well as a preliminary proxy statement and other
materials for the solicitation by Newmont Mining of Santa Fe's stockholders to
vote against the Homestake Merger Agreement.
COMPARISON OF THE PROPOSALS
Stockholders of Santa Fe face a choice: which company, Newmont Mining or
Homestake, is in a better position to provide greater value in the short and
long term to Santa Fe stockholders? Which company's stock--Newmont Mining or
Homestake--is a better investment and which company will do more to realize
the value of Santa Fe's assets?
Santa Fe as a Merger Candidate. Santa Fe has been a public company since
June 1994. Its performance since then has been lackluster: production has
declined while costs have increased, there have been no major discoveries, the
company's modest exploration successes have been principally on acreage
adjacent to its existing activities and its earnings have been disappointing.
Yet Santa Fe is a company with significant unrealized potential--if properly
exploited. This potential is attributable to Santa Fe's existing mines and its
huge underdeveloped land position in northern Nevada. As will be discussed
below, Newmont Mining is best suited, by virtue of its extensive operations
and experience in northern Nevada, its industry leadership positions in
exploration and production and its technological capability to most
effectively develop Santa Fe's attractive asset base.
Why Newmont is the Better Choice. Although Newmont Mining and Homestake are
different companies, their proposals contemplate similar transaction
structures: each proposal involves a merger in which holders of Santa Fe
Shares would receive stock of the acquiror on a tax-free basis pursuant to a
fixed exchange ratio, and each proposal is conditioned upon the acquiror being
able to account for the transaction as a pooling of interests for financial
reporting purposes.
17
<PAGE>
There are two fundamental reasons why holders of Santa Fe Shares should
choose Newmont Mining's Offer over the proposed Homestake Merger:
1. The Newmont Mining transaction offers significantly more current
value; and
2. The Newmont Mining transaction offers far greater prospects for future
growth and appreciation. This is due to both the relative merits of Newmont
Mining and Homestake as investments and to what each company will do to
develop the value of Santa Fe following a merger.
What the Proposals are Worth Today. Newmont Mining's proposal offers more
current value to the Santa Fe stockholders than the Homestake proposal, as
shown below:
MORE VALUE TODAY: IMPLIED PURCHASE PRICE PER SHARE*
<TABLE>
<S> <C> <C> <C>
NEWMONT HOMESTAKE
MINING OFFER PROPOSAL DIFFERENTIAL
------------ --------- ------------
December 4, 1996** $19.00 $17.14 $1.86
January 6, 1997 16.50 14.63 1.87
</TABLE>
- - --------
* Data are based on the closing price per share of the common stock of Newmont
Mining or Homestake, as the case may be, on the indicated dates.
** On December 4, 1996, the closing price of the Santa Fe Shares was $11 7/8.
What Santa Fe Stockholders will realize in the Future from each
Proposal. Homestake and Santa Fe have emphasized that the Homestake proposal
should be judged on the potential it provides for future growth of, and
increase in value of the share price of, the combined entity. Newmont Mining
agrees that this is a critical consideration but believes that logic and
experience dictate that a combined Newmont Mining/Santa Fe entity will provide
significantly greater value to Santa Fe's stockholders than a combined
Homestake/Santa Fe. In reaching this conclusion, Newmont Mining believes it is
essential to review the historical performance of each of Newmont Mining and
Homestake, and analyze the benefits Newmont Mining and Homestake each can
offer to Santa Fe in a merger, including their respective abilities to manage
and derive value from the Santa Fe assets, and the financial effects of a
Newmont Mining/Santa Fe combination as compared to a Homestake/Santa Fe
combination.
Historical Performance
Newmont Mining has a record of successful sustained growth built upon
exploration success and exploitation of technological knowhow. It is a leader
in both exploration and production on a global basis. Newmont Mining has
demonstrated continued success in finding and processing ores throughout the
world, and has capitalized on its proprietary technologies to process and
extract additional value from complex ores. Newmont Mining discovered the
Carlin Trend in northern Nevada and has a 30-year operating and exploration
history in Nevada, the largest gold producing region in North America. As
Newmont Mining has successfully mined and processed the particularly complex
ores in the Carlin Trend, it has the ability to apply its experience to the
Santa Fe properties which, in many cases, are adjacent to Newmont Mining land
positions and have similar geologic characteristics. Newmont Mining's
production is growing and its production costs are declining.
18
<PAGE>
By comparison, Homestake has a history of disappointing results, declining
production and, relative to Newmont Mining and other major gold producers,
high costs. Homestake has a limited recent history of grassroots exploration
success. Unlike Newmont Mining, Homestake has minimal experience operating in
Nevada, and will not be able to realize meaningful operational synergies by
virtue of a combination with Santa Fe. Moreover, the Homestake Merger would
result in doubling the number of shares of Homestake Common Stock which would
be outstanding.
Determining Value: Factors Affecting the Value of a Gold Mining Company's
Stock. Newmont Mining believes the principal components of the value of a gold
mining company's shares include:
--Reserves: the amount of gold ore available for future production;
--Production: the amount of gold ore mined and processed for sale each
year;
--Cash and Total Costs: the expenditures required to mine and produce each
ounce of gold, focusing on marginal cash costs and total costs including
depreciation, respectively;
--Exploration Success: the company's record of successful exploration,
discovery and exploitation of new reserves, particularly those that can be
produced at low cost;
--Exploration Prospects: the amount and quality of territory available to
the company to explore for additional gold reserves which is necessary to
sustain production and provide for future growth;
--Profitability: the earnings generated by the company's business;
--Balance Sheet Strength and Flexibility: the company's ability to finance
the company's growth opportunities; and
--Management: the quality of the company's management team and its track
record in managing the company's assets while sustaining growth.
On all of the foregoing criteria, Newmont Mining is bigger, better and more
successful than Homestake.
Reserves and Exploration. The ability of a gold producer to successfully
explore for and increase its reserves is critical to its long term growth and
profitability. Newmont Mining's reserves are significantly greater than
Homestake's (28.8 million ounces as compared to Homestake's 21.5 million, in
each case as of December 31, 1995). In addition, Newmont Mining has been much
more successful at locating new gold reserves, both in the vicinity of its
producing mines and through exploration efforts. Over the ten-year period from
1986 to 1995, Newmont Mining added an aggregate of 38 million equity ounces to
its reserves, including 4.3 million equity ounces acquired in Uzbekistan.
--Newmont Mining's success during this period occurred primarily in Nevada,
with significant discoveries in Peru and Indonesia as well.
--Over the five-year period from 1991 to 1995, Newmont Mining increased its
reserves, net of mining depletion, by approximately 10 million ounces, or
52%.
Newmont Mining has a superior track record to Homestake in gold exploration.
While Homestake is seeking to increase its reserves by acquiring Santa Fe,
holders of Santa Fe Shares should consider whether--once the acquisition has
been completed--Homestake has the ability to exploit Santa Fe's Nevada
properties to their fullest. Santa Fe stockholders should consider that
Homestake, with only minor Nevada operations, cannot achieve the cost savings
and synergies available to Newmont Mining. Given Homestake's relatively weak
exploration track record, and Newmont Mining's specific Nevada exploration
experience, the decision for Santa Fe stockholders is clear: Newmont Mining is
the better choice.
19
<PAGE>
Production and Production Costs. Newmont Mining has estimated that it will
produce approximately 2.5 million equity ounces in 1997, while it estimates
that Homestake's 1997 equity production will be approximately 1.6 million
ounces. Over the period 1990-1997, Newmont Mining expects that its total
equity production will equal approximately 14.8 million ounces, as compared to
a total of approximately 12.5 million equity ounces which it expects to be
produced over this period by Homestake. In addition, for the period 1994-1997,
Homestake's annual production is expected by Newmont Mining to be essentially
flat, while Newmont Mining expects its production to increase by an average of
14% in each year during this period.
During the 1990-1997 period, Newmont Mining's weighted average cash cost per
ounce of gold produced is estimated to be $202, compared to a weighted average
of $248 per ounce for Homestake (according to historical information and
publicly available analyst estimates). During the entire period 1990-1997,
Newmont Mining's average cash costs per ounce are expected to be significantly
less than Homestake's in each year of the period, with the minimum annual
difference being $31 per ounce. Thus, Newmont Mining has produced more gold
than Homestake at a significantly lower cost. Newmont Mining believes that in
the period from 1997 to 1999, a combined Newmont Mining/Santa Fe entity would
produce approximately 2.3 million more ounces of gold in the aggregate than a
Homestake/Santa Fe entity, and that production over that period would grow at
rates of 30% per year for Newmont Mining/Santa Fe, in comparison to 23% per
year for Homestake/Santa Fe. Moreover, during the period 1997-1998, Newmont
Mining estimates that a Newmont Mining/Santa Fe entity would produce gold at
an average cash cost that would be $33 per ounce less than the average cash
cost for Homestake/Santa Fe.
Profitability. Newmont Mining is significantly more profitable than
Homestake. For the period 1990-1996, Newmont Mining expects to achieve
cumulative net income of $729 million. Over the same period, Newmont Mining
expects Homestake to record an aggregate net loss of $189 million. Thus,
during the relevant period, Newmont Mining's aggregate net income is expected
to exceed Homestake's by approximately $920 million. During this period,
Newmont Mining expects to earn $59 per ounce produced, while Homestake is
estimated to lose $17 per ounce.
Balance Sheet Strength. Newmont Mining has engaged in extensive exploration
activity, as described above, while maintaining a strong balance sheet.
Newmont Mining's corporate debt rating from Standard & Poor's is BBB+, while
Homestake's corporate debt rating is lower at BBB. Newmont Mining believes
that its strong balance sheet will permit a combined Newmont Mining/Santa Fe
to have the flexibility to exploit the opportunities presented by the
combination.
Market Performance. Under each of the components of value discussed above,
Newmont Mining's performance is better and, in most instances, materially
better than Homestake's. Thus, it is logical to expect Newmont Mining's stock
market performance to be clearly superior to Homestake's, and it is. If a
Santa Fe stockholder had invested $100 on June 15, 1994 (the day Santa Fe
became a public company) in Newmont Mining shares, by December 4, 1996 (the
day before Newmont Mining announced its original acquisition proposal), that
investment would have been worth more than $122 (including reinvestment of
dividends). The same investment in Homestake would have been worth barely $81:
the investor would have lost money. Indeed, an investment in gold itself would
have yielded $96.56 -- a better return than Homestake stock over the same
period. The investment in Newmont Mining would be worth 50% more than the
investment in Homestake.
This outcome is not limited to the period since Santa Fe's initial public
offering: Newmont Mining's stock has outperformed Homestake's over the last
five years, increasing approximately 23% from 1990 through December 4, 1996,
as compared to Homestake's approximately 25% decrease.
Management. Newmont Mining believes that the performance of its shares
reflects its superior management team, its expertise in exploration and its
superior technology and operating skills, resulting in sustained growth and
profitability. Newmont Mining believes that the superior performance of its
shares reflects the market's judgment that it has been and will continue to be
more profitable and better positioned for future growth than Homestake.
20
<PAGE>
Consummation of the Homestake/Santa Fe Merger would result in current Santa
Fe stockholders owning approximately 50% of the combined entity, as opposed to
only approximately 37% of a combined Newmont Mining/Santa Fe entity (and
approximately 32% of a combined Newmont Mining/Newmont Gold/Santa Fe entity).
Although not yet fully articulated, it appears that the senior management of a
combined Homestake/Santa Fe would be drawn liberally from the senior
management personnel of each company. In analyzing this, Santa Fe stockholders
should consider not only Homestake's historical performance but the results
achieved by Santa Fe since becoming a public company. Thus, the investment of
$100 made in Santa Fe Shares on June 15, 1994 would have been worth only
$81.79 at December 4, 1996, almost identical to Homestake's performance over
the same period and significantly below that of Newmont Mining.
The Benefits Newmont Mining and Homestake Bring to a Merger with Santa Fe
In addition to being a better company than Homestake, Newmont Mining's
particular combination of assets, experience and expertise will enable it to
bring far more value to a combination with Santa Fe than Homestake can.
Commitment to and Experience in Nevada/Operational Opportunities. Newmont
Mining has successfully managed significant changes in the production
characteristics in the gold-producing areas of northern Nevada, where the most
important productive assets of Newmont Mining and Santa Fe are located. There
are strong similarities in geological and metallurgical characteristics for
the Nevada properties owned by Newmont and Santa Fe. Underground mining is
rapidly increasing in importance as open pit mining has depleted many of the
most readily accessible ore bodies in the area. In addition, as the grade of
mineable ores declines, and the metallurgical characteristics change,
efficient operations and more sophisticated production methods assume ever
greater importance. Newmont Mining believes that its demonstrated ability to
successfully manage this transition in its own operations is directly
applicable to Santa Fe's operations in Nevada. Newmont Mining believes these
skills and expertise will enable it to maximize the cost-efficient production
from Santa Fe's existing mines resulting in the most productive exploration
and development of Santa Fe's acreage position.
Newmont Mining operates 11 mines in northern Nevada from which it expects to
produce 1.7 million ounces in 1996 and 1.8 million ounces in 1997. Its Nevada
reserves aggregate approximately 20.9 million ounces (as of December 31, 1995)
and its Nevada exploration properties total approximately 500,000 acres.
Newmont Mining discovered the Carlin Trend in northern Nevada and has been
operating in that region for 30 years. It has significant experience as a
result, especially in finding and processing complex Nevada ores, and it has
the ability to apply its experience to the Santa Fe properties which, in many
cases, are adjacent to Newmont Mining land positions. Newmont Mining's
technological capabilities are supported by its ownership and operation of the
only dedicated research and metallurgical laboratory in the gold mining
industry and a staff of 220 geoscientists and exploration geologists.
By contrast, Homestake's limited Nevada operations consist of minority
interests in two mines in Nevada which are operated by other companies and a
50% interest in a small mine for which it became the operator in December
1996. Newmont Mining estimates that Homestake's production from these Nevada
mines will be approximately 100,000 equity ounces in each of 1996 and 1997.
Its Nevada reserves aggregate approximately 3.5 million equity ounces and its
Nevada exploration properties are limited.
Newmont Mining believes the operational opportunities achievable in a merger
between Santa Fe and Homestake are minimal. In contrast, Newmont Mining will
be able to achieve significant operational benefits and cost savings by virtue
of its Nevada-based operations, experience and technology and its geographic
proximity to Santa Fe's Nevada operations. In addition to the more than $50
million of annual cost savings discussed below, Newmont Mining expects to
optimize the use of oxide mills, autoclaves, flotation units and gold roasters
of a combined Newmont Mining/Santa Fe
21
<PAGE>
entity by taking advantage of shorter haul distances where appropriate,
thereby increasing production efficiency. It expects to create additional
value by using its proprietary bioleach technology to process low grade
refractory ores from Santa Fe's Twin Creeks mine by transporting certain ores
and concentrate from Santa Fe's mines for processing by Newmont Mining's
treatment facilities and utilizing Santa Fe's flotation technology for
treatment of certain of Newmont Mining's lower-grade ores.
These opportunities are important to the realization of the intermediate and
long-term potential of Santa Fe because they are expected to enable the
combined Newmont Mining/Santa Fe to develop their combined Nevada holdings
more quickly and cost-effectively and to yield considerably greater production
than could otherwise be achieved. The intermediate and long-term values
ultimately achieved as a result of the Newmont Mining/Santa Fe Merger will be
highly dependent on the skill of the combined company in exploiting Santa Fe's
potential.
Financial Synergies and Cost Savings. Newmont Mining's tremendous advantage
over Homestake in operational opportunities is paralleled by its opportunities
for cost savings and other financial synergies.
Newmont Mining's cost advantage relative to Homestake extends beyond its
current and historical production cost advantage. In connection with its
proposed acquisition of Santa Fe, Newmont Mining estimates that it can achieve
approximately $56 million in annual pre-tax cash savings in 1998, including
approximately $13 million of savings due to consolidation of Nevada-based
staffs, centralized purchasing, and improved equipment utilization, $30
million of savings due to refocused exploration and development efforts, and
$13 million of savings in general and administrative overhead, due principally
to the planned closing of Santa Fe's Albuquerque, New Mexico headquarters.
These estimated savings in 1998 would be offset by a non-cash accounting
charge that is estimated to be approximately $7 million in 1998 resulting from
differences in Santa Fe's policy for accounting for its deferred mining costs,
which is not as conservative as Newmont Mining's policy. The amount of this
non-cash accounting charge will vary from year-to-year. Unlike a
Homestake/Santa Fe combination, the combined Newmont Mining/Santa Fe entity
could be required to pay a one-time $65 million termination fee to Homestake
in the year the acquisition was completed.
By comparison, Homestake and Santa Fe have publicly projected an aggregate
of only $30 million in annual synergies or cost savings. These cost savings
are primarily attributable to closing Santa Fe's headquarters and taking
similar steps to reduce overhead and are of a nature which are sought to be
accomplished in a great many business combinations in a wide variety of
industries. Newmont Mining's anticipated savings are thus approximately 66%
greater than those Homestake anticipates it will be able to realize. These
cost savings are important because they have a direct impact upon the combined
entity's future profitability and therefore constitute a significant advantage
for Newmont Mining in enhancing the values to be achieved by Santa Fe's
stockholders.
Newmont Mining believes that the Offer and the Newmont Mining/Santa Fe
Merger, while providing superior value to Santa Fe's stockholders, will be
accretive for its own stockholders with respect to reserves and earnings per
share in the first full year of the combination and with respect to production
and cash flow per share in the second full year assuming a $370 per ounce
market gold price. In contrast, Newmont Mining believes the proposed Homestake
Merger would entail substantial dilution to the stockholders of Homestake
(although Homestake has indicated to the contrary).
The "Rerating" Myth: Why Newmont Adds Value, and Homestake Does Not. In its
public statements to the investment community following announcement of the
Homestake Merger Agreement, Homestake made it clear that without attractive
prospects of internally generated growth, it had little choice but to acquire
a company with reserves and growth capability. In addition, Homestake
expressed the view that the combination offered significant opportunities for
increased stockholder value due to rerating. In other words, Homestake and
Santa Fe have expressed the view
22
<PAGE>
that by combining their assets, the stock price of a combined Homestake/Santa
Fe (which, for both companies, has traditionally lagged industry-leading
performance) will rise because the combined entity will be bigger.
Newmont Mining believes that Homestake's "rerating" claim is not borne out
by either logic or experience. What makes a gold mining company more
successful -- and what ultimately makes its stock more valuable -- is better
exploration success, higher production growth, lower operating costs, and
greater profitability. Without those attributes, size alone is not meaningful.
A 1996 combination of two gold producers, Battle Mountain Gold Company and
Hemlo Gold Mines Inc., strongly relied upon the opportunity for rerating as an
important basis for that transaction. The combined entity's stock market
performance has not resulted in a "rerating". Rather, for the period from
January 11, 1996 through December 4, 1996 the combined company's stock price
has declined by 24%. During the same period, the price of gold increased by
1%.
Homestake's own acquisition of International Corona Corporation in 1992 also
provides no evidence of "rerating". During the period from January 13, 1992
through December 4, 1996, Homestake's stock price has appreciated by only 6%,
while the price of gold increased by 4%. In contrast, the price of Newmont
Mining Common Stock increased by 46% during the same period, generated almost
entirely through internal growth.
The Bottom Line: A Stronger Company, a Better Deal. The company resulting
from a merger of Newmont Mining and Santa Fe will be the largest gold company
in North America: it will have nearly 50 million ounces of reserves; its
production is expected to increase almost one million ounces by 1999 (from
approximately 3.1 million ounces in 1996 to approximately 4.0 million ounces
in 1999); its total cash costs are expected to be less than $215 per ounce
through 1998; and it will combine companies with vast potential and the
technological capability and experience to exploit that potential.
Newmont Mining's superior exploration, reserves, production and
profitability, as well as the financial superiority of the Offer to the
Homestake proposal, make Newmont Mining the best choice for Santa Fe
stockholders. Newmont Mining is offering significantly more current value and
far greater prospects for future growth and appreciation.
Certain of the data with respect to Newmont Mining, Santa Fe and Homestake
contained in this section are "forward-looking statements" that are subject to
risks and uncertainties.
HOMESTAKE MERGER AGREEMENT
The following description of the Homestake Merger Agreement is qualified in
its entirety by reference to the text of such Agreement, a copy of which has
been filed by Santa Fe as an exhibit to the Santa Fe's Current Report on Form
8-K dated December 9, 1996.
HOMESTAKE MERGER
The Homestake Merger Agreement provides that HMGLD, a wholly owned
subsidiary of Homestake, would be merged with and into Santa Fe, with Santa Fe
being the Surviving Corporation. The Homestake Merger would become effective
at the time the certificate of merger is filed with the Secretary of State of
the State of Delaware, or at such other time as specified in the certificate
of merger after the satisfaction or waiver of the latest to occur of the
conditions summarized below under "--Conditions of the Homestake Merger" (the
"Effective Time").
23
<PAGE>
CONSIDERATION
Under the terms of the Homestake Merger Agreement, each Santa Fe Share
(excluding Santa Fe Shares held directly or indirectly by Homestake, Santa Fe
or any of their respective subsidiaries) will be converted into the right to
receive 1.115 (subject to certain adjustments (as described below)) shares of
Homestake Common Stock (the "Conversion Number"). Each Santa Fe Share owned
directly or indirectly by Santa Fe, Homestake or any of their respective
subsidiaries will be cancelled. Each issued and outstanding share of capital
stock of HMGLD will be converted into a share of the Surviving Corporation's
common stock. The Conversion Number may be adjusted by Homestake and Santa Fe
by mutual agreement to preserve the economic benefits reasonably expected to
be received by Santa Fe and Homestake as a result of the consummation of the
transaction in the event (i) of any split, combination or reclassification of
Homestake Common Stock or the issuance or the authorization of any issuance of
any other securities in exchange or in substitution for Homestake Common
Stock, (ii) a Santa Fe Distribution Date, Santa Fe Share Acquisition Date or
Santa Fe Triggering Event occurs (each as defined in the Santa Fe Rights
Agreement) or (iii) under certain circumstances, a Distribution Date, Share
Acquisition Date, Triggering Event or Business Combination occurs under the
Rights Agreement) dated as of October 16, 1987 between Homestake and The First
National Bank of Boston, as Rights Agent (as amended from time to time, the
"Homestake Rights Agreement").
REPRESENTATIONS AND WARRANTIES
The Homestake Merger Agreement contains certain representations and
warranties of Santa Fe including, among other things: (i) that no consents or
approvals of any governmental entity or third party which is not a
governmental entity are necessary to consummate the Homestake Merger and the
other transactions contemplated by the Homestake Merger Agreement, except as
disclosed in the Homestake Merger Agreement or, in the case of consents or
approvals from third parties which are not governmental entities, the failure
of which to obtain would not have a material adverse effect on Santa Fe;
(ii) that Santa Fe has filed all material reports, registrations and
statements required to be filed since January 1, 1995 with the Commission;
(iii) as to brokers; (iv) that there has been no event, change, effect or
development since September 30, 1996, except as disclosed in its documents
filed with the Commission prior to the date of the Homestake Merger Agreement,
that has had or, so far as reasonably can be foreseen, is likely to have,
individually or in the aggregate, a Santa Fe Material Adverse Effect (as
defined herein) on Santa Fe; (v) as to employee compensation; (vi) as to
actions and proceedings pending or threatened against Santa Fe; (vii) as to
employee benefit plans; (viii) that the documents filed by Santa Fe with the
Commission since January 1, 1995 did not contain any untrue statement of
material fact and did not omit any material fact necessary to make the
statements therein not misleading; (ix) as to governmental licenses and
permits, and compliance with laws, including relevant tax laws; (x) as to
material contracts; (xi) as to state takeover laws; (xii) that the information
to be provided by Santa Fe and its subsidiaries in the registration statement
and the joint proxy statement in connection with the Homestake Merger
Agreement will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not misleading;
(xiii) as to compliance with environmental laws and worker safety laws; and
(xiv) that Santa Fe has taken all necessary action to render the Santa Fe
Rights Agreement inapplicable to the transaction. In addition, the Homestake
Merger Agreement contains representations and warranties by Santa Fe as to,
among other things, its organization, capitalization, ownership of its
material subsidiaries, authority to enter into the Homestake Merger Agreement
and the binding effect of the Homestake Merger Agreement. As used in the
Homestake Merger Agreement, a "Santa Fe Material Adverse Effect" is defined as
any act or omission that would (i) have a material adverse effect on the
business, properties, financial condition or results of operations of Santa Fe
and its subsidiaries, taken as a whole (other than effects relating to the
gold mining industry in general), or (ii) prevent Santa Fe from performing its
obligations under the Homestake Merger Agreement.
The Homestake Merger Agreement also contains similar representations and
warranties of Homestake.
24
<PAGE>
CONDITIONS OF THE HOMESTAKE MERGER
The respective obligations of each party to effect the Homestake Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions: (i) the Homestake Merger Agreement shall have been approved by the
holders of a majority of the Santa Fe Shares (the "Santa Fe Stockholder
Approval"), and the issuance of Homestake Common Stock pursuant to the
Homestake Merger Agreement shall have been approved by the affirmative vote of
the holders of a majority of the shares of Homestake Common Stock ("Homestake
Stockholder Approval"); (ii) the shares of Homestake Common Stock issuable
upon consummation of the Homestake Merger shall have been authorized for
listing on the NYSE, subject to official notice of issuance; (iii) the waiting
periods (and any extensions thereof) applicable to the Homestake Merger
Agreement under the HSR Act shall have been terminated or expired and any
consents, approvals and filings under any foreign antitrust law, the absence
of which would prohibit the consummation of the Homestake Merger, shall have
been obtained; (iv) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Homestake Merger shall be in effect; (v) the registration statement on Form S-
4 for the Homestake Common Stock shall have become effective under the
Securities Act and no stop order suspending the effectiveness thereof shall
have been issued and no proceedings for that purpose shall have been initiated
or threatened by the Commission and Homestake shall have received all
necessary "blue sky" authorizations; (vi) Homestake shall have received a
letter from Coopers & Lybrand L.L.P. and Santa Fe shall have received a letter
from Price Waterhouse LLP, in each case stating that the Homestake Merger will
qualify as a pooling of interests transaction under Opinion 16 of the
Accounting Principles Board; and (vii) there shall not be pending any suit,
action or proceeding by any governmental entity (a) challenging the
acquisition of any Santa Fe Shares, seeking to restrain or prohibit the
consummation of the Homestake Merger or seeking to obtain from Santa Fe or
Homestake any damages that are material in relation to Santa Fe and its
subsidiaries taken as a whole, (b) seeking to prohibit or limit the ownership
or operation by Santa Fe or Homestake or any of their subsidiaries of any
material portion of the business or assets of Santa Fe or Homestake or any of
their subsidiaries or to compel Santa Fe or Homestake or any of their
subsidiaries to dispose of or hold separate any material portion of the
business or assets of Santa Fe or Homestake or any of their subsidiaries, as a
result of the Homestake Merger, (c) seeking to impose limitations on the
ability of Homestake to acquire or hold, or exercise full rights to acquire or
hold, or exercise full rights of ownership of, any shares of capital stock of
the Surviving Corporation, (d) seeking to prohibit Homestake from effectively
controlling in any material respect the business or operations of Santa Fe or
(e) which otherwise is reasonably likely to have a Santa Fe Material Adverse
Effect or a Homestake Material Adverse Effect (which is defined similarly to
Santa Fe Material Adverse Effect, except with reference to Homestake and its
subsidiaries).
The obligation of Homestake to effect the Homestake Merger is also subject
to the satisfaction or waiver by Homestake at or prior to the Effective Time
of the following conditions: (i) the representations and warranties of Santa
Fe set forth in the Homestake Merger Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties
of Santa Fe set forth in the Homestake Merger Agreement that are not so
qualified shall be true and correct in all material respects, as of the date
of the Homestake Merger Agreement and, except to the extent such
representations and warranties speak as of an earlier date, as of the Closing
Date (as defined in the Homestake Merger Agreement) and Homestake shall have
received a certificate on behalf of Santa Fe to such effect; (ii) Santa Fe
shall have performed in all material respects all of its obligations under the
Homestake Merger Agreement at or prior to the Closing Date and Homestake shall
have received a certificate on behalf of Santa Fe to such effect; (iii)
Homestake shall have received the letters from Santa Fe affiliates referenced
in the Homestake Merger Agreement; (iv) Homestake shall have received an
opinion of its counsel, in form and substance reasonably satisfactory to
Homestake, that the Homestake Merger will be treated for U.S. Federal income
tax purposes as a reorganization within
25
<PAGE>
the meaning of Section 368(a) of the Code; and (v) there shall not have
occurred since the date of the Homestake Merger Agreement any event change,
effect or development which, individually or in the aggregate, has had or is
reasonably likely to have a Santa Fe Material Adverse Effect.
The obligation of Santa Fe to effect the Homestake Merger is also subject to
the satisfaction or waiver by Santa Fe at or prior to the Effective Time of
the following conditions: (i) the representations and warranties of Homestake
set forth in the Homestake Merger Agreement that are qualified as to
materiality shall be true and correct, and the representations and warranties
of Santa Fe set forth in the Homestake Merger Agreement that are not so
qualified shall be true and correct in all material respects, as of the date
of the Homestake Merger Agreement and, except to the extent such
representations and warranties speak as of an earlier date, as of the Closing
Date, and Santa Fe shall have received a certificate on behalf of Homestake to
such effect; (ii) Homestake shall have performed in all material respects all
of its obligations under the Homestake Merger Agreement at or prior to the
Closing Date; (iii) Homestake shall have received the letters from Santa Fe
affiliates referenced in the Homestake Merger Agreement; (iv) Santa Fe shall
have received an opinion of its counsel, in form and substance reasonably
satisfactory to Santa Fe, that the Homestake Merger will be treated for U.S.
Federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code; and (v) there shall not have occurred, since the date of
the Homestake Merger Agreement, any event, change, effect or development which
individually or in the aggregate, has had or is reasonably likely to have, a
Homestake Material Adverse Effect.
CERTAIN COVENANTS
The Homestake Merger Agreement provides for certain covenants pending the
Effective Time. Generally, Homestake and Santa Fe shall, and shall cause their
respective subsidiaries to, (i) conduct their businesses in the usual, regular
and ordinary course consistent with past practices and (ii) use their
reasonable efforts to preserve intact their respective business organizations,
employees and business relationships. The Homestake Merger Agreement also
restricts, among other things, the ability of Homestake and Santa Fe and their
respective subsidiaries to (i) increase dividends or redeem, repurchase or
reclassify capital stock, (ii) issue, deliver, sell, grant, pledge or
otherwise encumber shares of their capital stock, (iii) dispose of or encumber
assets (other than sales of real property having an aggregate fair market
value of less than $20 million or encumbrances in the ordinary course of
business), (iv) make any material acquisitions, (v) increase employee
compensation (other than pursuant to existing employment agreements or as
required by applicable laws), (vi) incur any indebtedness, except for short-
term borrowings incurred in the ordinary course of business, (vii) make any
new capital expenditures that in the aggregate are in excess of $25 million
above the aggregate amount currently budgeted, (viii) amend their respective
certificates of incorporation and by-laws, (ix) make any material tax election
except to the extent already provided for in documents filed with the
Commission, (x) make any amendment to any Employee Stock Plan (as defined
therein) and (xi) terminate or amend on terms less favorable to itself any
agreement filed as an exhibit to any documents filed with the Commission.
Santa Fe has agreed not to, and not to permit any of its subsidiaries to,
authorize or permit any of their respective officers, employees or agents to
directly or indirectly solicit, initiate or encourage any inquiries relating
to, or the making of any proposal which constitutes a Santa Fe Takeover
Proposal (as hereinafter defined) or participate in any discussions or
negotiations, or provide third parties with any non-public information,
relating to any such inquiry or proposal or otherwise facilitate any effort or
attempt to make or implement a Santa Fe Takeover Proposal, unless, in the case
of a Santa Fe Takeover Proposal that was not solicited and did not otherwise
result from the initiation or encouragement of inquiries relating to a Santa
Fe Takeover Proposal, the Santa Fe Board, after having consulted with counsel
and its financial advisors, has reasonably determined in good faith that the
failure to do so would create a reasonable possibility of a breach by the
members of the Santa Fe Board of their fiduciary duties. Santa Fe shall
immediately advise Homestake following the receipt by
26
<PAGE>
it of any Santa Fe Takeover Proposal and the details thereof, and advise
Homestake of any developments with respect to such Santa Fe Takeover Proposal,
immediately upon the occurrence thereof. The term "Santa Fe Takeover
Proposal," as used in the Homestake Merger Agreement, is defined as any
proposal for a merger, consolidation or other business combination involving
Santa Fe or any of its respective subsidiaries or any proposal or offer to
acquire more than 30% of any class of voting securities of Santa Fe or any of
its Significant Subsidiaries (as defined in the Homestake Merger Agreement).
Santa Fe has also agreed to hold a meeting of its stockholders for the purpose
of obtaining the approvals of such stockholders required in connection with
the Homestake Merger Agreement and to cause the Santa Fe Board to recommend
that its stockholders approve the matters to be voted on by such stockholders
in connection with the Homestake Merger, except that the Santa Fe Board may
fail to make such recommendation (or withdraw, modify or change such
recommendation in a manner adverse to the other party) if a Santa Fe Takeover
Proposal is pending and the Santa Fe Board, after having consulted with
counsel and its financial advisors, determines in good faith, after
considering, among other things, whether such Santa Fe Takeover Proposal is
more favorable to Santa Fe stockholders than the transactions contemplated by
the Homestake Merger Agreement, that the failure to take such action would
create a reasonable possibility of a breach of the fiduciary duties of the
members of the Santa Fe Board under applicable law.
Homestake has agreed not to, and not to permit any of its subsidiaries to,
authorize or permit any of their respective officers, employees or agents to
directly or indirectly solicit, initiate or encourage any inquires relating
to, or the making of, any proposal which constitutes, a Homestake Takeover
Proposal (as hereinafter defined), or participate in any discussions or
negotiations, or provide third parties with any non-public information,
relating to any such inquiry or proposal or otherwise facilitate any effort or
attempt to make or implement a Homestake Takeover Proposal, unless, in the
case of a Homestake Takeover Proposal that was not solicited and did not
otherwise result from the initiation or encouragement of inquiries relating to
a Homestake Takeover Proposal, the Board of Directors of Homestake (the
"Homestake Board"), after having consulted with counsel and its financial
advisors, has reasonably determined in good faith that the failure to do so
would cause the members of the Homestake Board to breach their fiduciary
duties. Homestake shall immediately advise Santa Fe following the receipt by
it of any Homestake Takeover Proposal and the details thereof, and advise
Santa Fe of any developments with respect to such Homestake Proposal,
immediately upon the occurrence thereof. The term "Homestake Takeover
Proposal" means, with respect to any person, any tender or exchange offer,
proposal for a merger, consolidation or other business combination involving
Homestake or any of its subsidiaries or any proposal or offer to acquire more
than 30% of any class of voting securities of Homestake or any of its
Significant Subsidiaries (as such term is defined in the Homestake Merger
Agreement). Homestake has also agreed to hold a meeting of its stockholders
for the purpose of obtaining the approvals of such stockholders required in
connection with the Homestake Merger Agreement and to cause the Homestake
Board to recommend that its stockholders approve the matters to be voted on by
such stockholders in connection with the Homestake Merger, except that the
Homestake Board may fail to make such recommendation (or withdraw, modify or
change such recommendation in a manner adverse to the other party) if a
Homestake Takeover Proposal is pending and the Homestake Board, after having
consulted with counsel and its financial advisors, determines in good faith
after considering, among other things, whether such Homestake Takeover
Proposal is more favorable to Homestake stockholders than the transactions
contemplated by the Homestake Merger Agreement, that the failure to take such
action would create a reasonable possibility of a breach of the fiduciary
duties of the members of the Homestake Board under applicable law.
MANAGEMENT; BOARD OF DIRECTORS
The Homestake Merger Agreement provides that at the Effective Time, the
individuals who are the directors of HMGLD immediately prior to the Effective
Time shall be the directors of the Surviving
27
<PAGE>
Corporation until thereafter they cease to be directors in accordance with the
DGCL and the Certificate of Incorporation and By-Laws of the Surviving
Corporation. The individuals who are the officers of Santa Fe immediately
prior to the Effective Time shall be the officers of the Surviving Corporation
until thereafter they cease to be officers in accordance with the DGCL and the
Certificate of Incorporation and By-Laws of the Surviving Corporation.
The Homestake Merger Agreement also provides that the Homestake Board shall
take such corporate actions as are necessary to provide that, at the Effective
Time of the Homestake Merger, (i) the number of directors of Homestake shall
be reduced from 13 to 12 and (ii) the Homestake Board shall consist of (a)
five individuals who were members of the Homestake Board immediately prior to
the Effective Time, with Mr. Jack E. Thompson to be the Chairman of the
Homestake Board, such five individuals selected by the Homestake Board (b)
five individuals who were members of the Santa Fe Board immediately prior to
the Effective Time, such five individuals selected by the Santa Fe Board and
(c) two individuals selected by the 10 individuals who are selected as
directors of Homestake pursuant to subclauses (a) and (b) above. The Homestake
Merger Agreement also provides that the Santa Fe Board shall be permitted to
reject up to two of such five individuals selected by the Homestake Board
(other than Jack E. Thompson), in which case the Homestake Board shall
thereafter select another individual or individuals, as applicable. If the
Santa Fe Board shall have only rejected one individual in the first instance,
it shall be permitted to reject the replacement individual, in which case the
Homestake Board shall select another individual in lieu of such rejected
replacement individual. The Homestake Merger Agreement provides the Homestake
Board with similar rights to reject up to two of the five individuals selected
by the Santa Fe Board.
The Homestake Merger Agreement also provides that the Homestake Board shall
take such corporate actions as are necessary to provide that, effective as of
the Effective Time, Patrick M. James, President and Chief Executive Officer of
Santa Fe, shall be President and Chief Operating Officer of Homestake, and
that Jack E. Thompson, President and Chief Executive Officer of Homestake,
shall be Chairman of the Board and Chief Executive Officer of Homestake.
TERMINATION
The Homestake Merger Agreement may be terminated at any time prior to the
Effective Time:
(a) by mutual written consent of Homestake, HMGLD and Santa Fe; or
(b) by either Homestake or Santa Fe: (i) if, at a duly held stockholders
meeting of Santa Fe or any adjournment thereof at which Santa Fe
stockholder approval is voted upon, Santa Fe stockholder approval shall not
have been obtained; (ii) if, at a duly held stockholders meeting of
Homestake or any adjournment thereof at which the Homestake stockholder
approval is voted upon, the Homestake stockholder approval shall not have
been obtained; (iii) if the Homestake Merger shall not have been
consummated on or before June 30, 1997 (the "Outside Date"), unless the
failure to consummate the Homestake Merger is the result of a wilful,
material breach of the Homestake Merger Agreement by the party seeking to
terminate the Homestake Merger Agreement; (iv) if any court of competent
jurisdiction or other governmental entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Homestake Merger and such order,
decree, ruling or other action shall have become final and non-appealable;
or (v) in the event of a breach by the other party of any representation,
warranty, covenant or other agreement contained in the Homestake Merger
Agreement which (A) would give rise to the failure of a condition regarding
the truth of representations and warranties made by each party and the
performance of obligations of each party and (B) cannot be or has not been
cured within 30 days after the giving of written notice to the breaching
party of such breach (provided that the terminating party is not then in
breach of any representation, warranty, covenant or other agreement that
would give rise to a failure of a condition as described in clause (A)
above);
28
<PAGE>
(c) by Homestake in the event that the condition to the obligation of
Homestake to effect the Homestake Merger relating to the receipt of a
pooling-of-interests letter from Homestake's outside auditors, or any other
condition to Homestake's obligations that is not a mutual condition, is not
capable of being satisfied prior to the Outside Date;
(d) by Santa Fe in the event that the condition to the obligation of
Santa Fe to effect the Homestake Merger relating to the receipt of a
pooling-of-interests letter from Santa Fe's outside auditors, or any other
condition to Santa Fe's obligations that is not a mutual condition, is not
capable of being satisfied prior to the Outside Date;
(e) by Santa Fe, if the Santa Fe Board shall have approved, and Santa Fe
shall concurrently with such termination enter into, a definitive agreement
providing for the implementation of the transactions contemplated by a
Santa Fe Takeover Proposal; provided, however, that (i) such Santa Fe
Takeover Proposal was not solicited by Santa Fe and did not otherwise
result from a breach of the covenant relating to no solicitation by Santa
Fe, (ii) the Santa Fe Board shall have complied with the covenant to
provide Homestake with an opportunity to respond to such Santa Fe Takeover
Proposal and (iii) Santa Fe simultaneously pays to Homestake a break-up fee
of $65 million;
(f) by Homestake, if the Homestake Board shall have approved, and
Homestake shall concurrently with such termination enter into, a definitive
agreement providing for the implementation of the transactions contemplated
by a Homestake Takeover Proposal; provided, however, that (i) such
Homestake Takeover Proposal was not solicited by Homestake and did not
otherwise result from a breach of the covenant relating to no solicitation
by Homestake, (ii) the Homestake Board shall have complied with the
covenant to provide Santa Fe with an opportunity to respond to such
Homestake Takeover Proposal and (iii) Homestake simultaneously pays to
Santa Fe a break-up fee of $65 million;
(g) by Santa Fe, if Homestake's Board of Directors shall have (i) failed
to recommend to Homestake's stockholders that they give the Homestake
Stockholder Approval, (ii) withdrawn or modified in a manner adverse to
Santa Fe its recommendation to Homestake's stockholders that they give the
Homestake Stockholder Approval or (iii) failed to reaffirm its
recommendation to Homestake's stockholders that they give the Homestake
Stockholder Approval within fourteen days after Santa Fe has made a written
request to Homestake to do so (which written request may be made by Santa
Fe at any time after the public disclosure of a Homestake Takeover
Proposal); and
(h) by Homestake, if the Santa Fe Board shall have (i) failed to
recommend to Santa Fe's stockholders that they give Santa Fe Stockholder
Approval, (ii) withdrawn or modified in a manner adverse to Homestake its
recommendation to Santa Fe's stockholders that they give Santa Fe
Stockholder Approval or (iii) failed to reaffirm its recommendation to
Santa Fe's stockholders that they give the Santa Fe Stockholder Approval
within fourteen days after Homestake has made a written request to Santa Fe
to do so (which written request may be made by Homestake at any time after
the public disclosure of a Santa Fe Takeover Proposal).
EFFECT OF TERMINATION
In the event that any person shall make a Santa Fe Takeover Proposal that
shall not have been withdrawn on the date of a duly called, noticed and
convened meeting of Santa Fe stockholders for the purpose of obtaining
approval of Santa Fe stockholders necessary to approve the Homestake Merger
Agreement ("Santa Fe Stockholder Approval") and the Homestake Merger Agreement
is terminated because (i) Santa Fe Stockholder Approval shall not have been
obtained, (ii) Santa Fe shall have approved a Santa Fe Takeover Proposal or
(iii) Homestake terminated the Homestake Merger Agreement because the Santa Fe
Board failed to recommend that the Santa Fe stockholders approve the Homestake
Merger, then Santa Fe shall pay Homestake $65 million.
29
<PAGE>
In the event that any person shall make a Homestake Takeover Proposal that
shall not have been withdrawn on the date of a duly called, noticed and
convened meeting of Homestake stockholders for the purpose of obtaining
approval of Homestake stockholders necessary to approve the issuance of shares
pursuant to the Homestake Merger and an amendment to Homestake's Restated
Certificate of Incorporation to increase the number of authorized shares of
Homestake Common Stock ("Homestake Stockholder Approval") and thereafter the
Homestake Merger Agreement is terminated because (i) Homestake Stockholder
Approval shall not have been obtained, (ii) Homestake shall have approved a
Homestake Takeover Proposal or (iii) Santa Fe terminated the Homestake Merger
Agreement because the Homestake Board failed to recommend that the Homestake
stockholders approve the Homestake Merger, then Homestake shall pay Santa Fe
$65 million.
In the event of termination (i) by Santa Fe or Homestake because Santa Fe
Stockholder Approval shall not have been obtained or (ii) by Homestake because
of a breach of a covenant by Santa Fe contained in the Homestake Merger
Agreement, then Santa Fe shall reimburse Homestake for all reasonable out-of-
pocket expenses (up to $5 million).
In the event of termination (i) by Homestake or Santa Fe because Homestake
Stockholder Approval shall not have been obtained or (ii) by Santa Fe because
of a breach of a covenant by Homestake contained in the Homestake Merger
Agreement, then Homestake shall reimburse Santa Fe for all reasonable out-of-
pocket expenses (up to $5 million).
Newmont Mining has requested the Santa Fe Board to enter into immediate
negotiations with Newmont Mining with respect to the Offer and to terminate
the Homestake Merger Agreement in accordance with its terms, so that Santa Fe
can enter into a merger with Newmont Mining. In connection with the Offer,
Newmont Mining will commence a solicitation of proxies from Santa Fe's
stockholders against approval of the Homestake Merger Agreement. If the Santa
Fe Board proceeds to submit the Homestake Merger Agreement to a vote of Santa
Fe's stockholders and such stockholders do not approve the Homestake Merger
Agreement, Newmont Mining believes that the Santa Fe Board should respect the
vote of the Santa Fe stockholders and enter into a merger with Newmont Mining
on the terms described herein.
30
<PAGE>
VOTING ON THE HOMESTAKE MERGER
All outstanding Santa Fe Shares as of the close of business on , 1997
will be entitled to vote at the Special Meeting. Each Santa Fe Share is entitled
to one vote. According to the Homestake Merger Agreement, as of December 5, 1996
there were outstanding 131,459,422 Santa Fe Shares. As of the date hereof,
Newmont Mining and its subsidiaries beneficially owned 4,800 Santa Fe Shares.
Santa Fe Shares not voted (including broker non-votes) and Santa Fe Shares voted
to "ABSTAIN" from such vote will have the same effect as a vote "AGAINST" the
Homestake Merger.
The accompanying [COLOR] proxy will be voted in accordance with the
stockholder's instructions on such [COLOR] proxy. Stockholders may vote
against the proposed Homestake Merger by marking the proper box on the [COLOR]
proxy. If no instructions are given, the [COLOR] proxy will be voted AGAINST
the Homestake Merger.
31
<PAGE>
NEWMONT MINING
Newmont Mining was incorporated in 1921 under the laws of Delaware. Its sole
asset is approximately 91% of the outstanding shares of common stock of
Newmont Gold Company, a Delaware corporation ("Newmont Gold"). Newmont Gold is
engaged, directly and through its
32
<PAGE>
subsidiaries and affiliates, in gold production, exploration for gold and
acquisition of gold properties worldwide. Newmont Mining, together with
Newmont Gold and its subsidiaries, are referred to herein as the
"Corporation."
Substantially all of the Corporation's consolidated sales and operating
profit in 1995, 1994 and 1993 related to its gold mining activities. Although
most of the Corporation's consolidated identifiable assets relate to domestic
activities, 22% of its net identifiable assets as of December 31, 1995 were
related to foreign activities, with no single foreign operating entity
representing more than 10% of the Corporation's assets.
Newmont Gold, the second largest gold producer in North America with year-end
1995 reserves of approximately 28.8 million equity ounces of gold, produces gold
from 100% owned operations on the Carlin Trend in Nevada, through a 38% owned
venture in Peru which commenced gold production in 1993, a 50% owned venture in
Uzbekistan which commenced production in 1995 and an 80% owned venture in
Indonesia, which commenced production in early 1996. Newmont Gold currently has
an 80% interest in a large copper/gold project in Indonesia. Under the terms of
the joint venture agreement governing such project, after the required
contributions are made by both Newmont Gold and its joint venture partner,
Newmont Gold will retain a 45% interest in the project. The project is awaiting
various Indonesian governmental approvals to commence the construction process.
Newmont Gold also has a 44% interest in a project in Mexico which is in the
feasibility study phase. In addition to exploration activities conducted in
connection with these operations and projects, Newmont Gold continues to explore
for gold and/or is conducting joint venture discussions in various other
countries, including Canada, Ecuador, certain countries in East and Southeast
Asia, the Caribbean and the U.S. Newmont Gold produced approximately
1.9 million equity ounces of gold in 1995 and approximately 1.7 million equity
ounces of gold during the first nine months of 1996.
Newmont Mining has been considering various approaches to simplify its
corporate structure. To achieve this objective, Newmont Mining and Newmont Gold
are considering entering into a merger transaction simultaneously with the
consummation of the Offer and the Newmont Mining/Santa Fe Merger (the "Newmont
Gold Merger"). In such transaction, Newmont Gold would become a wholly-owned
subsidiary of Newmont Mining and the outstanding shares of common stock of
Newmont Gold (other than those held by Newmont Mining) would be converted into
shares of Newmont Mining Common Stock. Alternatively, Newmont Mining and Newmont
Gold may defer the Newmont Gold Merger. In such event, simultaneously with the
consummation of the Offer and the Newmont Mining/Santa Fe Merger, Newmont Mining
would contribute to Newmont Gold the Santa Fe Shares acquired by Newmont Mining
in the Offer and the Newmont Mining/Santa Fe Merger.
Newmont Mining is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Commission. The reports, proxy statements and other information filed
by Newmont Mining with the Commission may be inspected and copied at the
Commission's public reference room located at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the public reference
facilities in the Commission's regional offices located at: 7 World Trade
Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 400, Chicago, Illinois 60661. Copies of such material may be obtained at
prescribed rates by writing to the Commission, Public Reference Section, 450
Fifth Street, N.W., Washington, D.C. 20549. Newmont Mining is an electronic
filer with the Commission, which maintains a web site containing reports,
proxy and other information statements at the following location: http:
//www.sec.gov. The shares of Newmont Mining Common Stock are listed on the New
York Stock Exchange (the "NYSE"), the Paris Bourse, the Brussels Stock
Exchange and the Swiss Stock Exchanges. The periodic reports, proxy statements
and other information filed by Newmont Mining with the Commission may be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
Certain information concerning the directors and executive officers of Newmont
Mining and other representatives of Newmont Mining who may solicit proxies from
Santa Fe stockholders is set forth in Annex A hereto. Certain information
concerning the Santa Fe Shares held by the persons described in the preceding
sentence and by Newmont Mining and its affiliates, and certain transactions
between any of them and Santa Fe, is set forth in Annex B hereto.
VOTING OF PROXY CARDS
PROCEDURAL INSTRUCTIONS
The accompanying [COLOR] proxy card will be voted in accordance with the Santa
Fe stockholder's instructions on such [COLOR] proxy card. Santa Fe stockholders
may vote against the proposed Homestake Merger or may withhold their votes or
vote for such approval and adoption by marking the proper box
33
<PAGE>
on the [COLOR] proxy and signing, dating and returning it promptly in the
enclosed postage-paid envelope. If a Santa Fe stockholder returns a [COLOR]
proxy card that is signed, dated and not marked, that Santa Fe stockholder will
be deemed to have voted against approval and adoption of the Homestake Merger
Agreement.
Only Santa Fe stockholders of record on the Record Date are eligible to give
their proxies. Therefore, any stockholder owning Santa Fe Shares held in the
name of a brokerage firm, bank, or other institution should sign, date and
return the [COLOR] proxy card to such brokerage firm, bank or other institution
in the envelope provided by that firm.
Approval and adoption of the Homestake Merger Agreement requires the
affirmative vote of a majority of Santa Fe Shares outstanding on the Record
Date.
NEWMONT MINING URGES YOU TO VOTE AGAINST THE PROPOSED HOMESTAKE MERGER
AGREEMENT AND PRESERVE YOUR OPPORTUNITY TO ACCEPT THE HIGHER VALUE NEWMONT
MINING OFFER. IF YOU WANT THE NEWMONT MINING OFFER TO SUCCEED, VOTE AGAINST
THE PROPOSED HOMESTAKE MERGER AGREEMENT BY SIGNING, DATING AND RETURNING THE
ENCLOSED [COLOR] PROXY CARD TODAY.
REVOCATION OF PROXIES
An executed proxy may be revoked at any time prior to its exercise by
submitting another proxy with a later date, by appearing in person at the
Special Meeting and voting or by sending a written, signed, dated revocation
which clearly identifies the proxy being revoked to either (a) Newmont Mining
in care of Georgeson & Company Inc. at Wall Street Plaza, New York, New York
10005, or (b) the principal executive offices of Newmont Mining at 1700
Lincoln Street, Denver, Colorado 80203. A revocation may be in any written
form validly signed by the record holder as long as it clearly states that the
proxy previously given is no longer effective. Newmont Mining requests that a
copy of any revocation sent to Santa Fe also be sent to Newmont Mining in care
of Georgeson & Company Inc. at the above address so that Newmont Mining may
more accurately determine if and when proxies have been received from the
holders of record on the Record Date of a majority of the Santa Fe Shares then
outstanding.
IF YOU HAVE ALREADY SENT A PROXY CARD TO SANTA FE THE BOARD, YOU MAY REVOKE
THAT PROXY AND VOTE AGAINST THE PROPOSED HOMESTAKE MERGER AGREEMENT BY SIGNING,
DATING AND RETURNING THE ENCLOSED [COLOR] PROXY CARD. THE LATEST DATED PROXY IS
THE ONLY ONE THAT COUNTS.
APPRAISAL RIGHTS
According to the Registration Statement on Form S-4 filed with the Securities
and Exchange Commission by Homestake on January 6, 1997 (the "Homestake
Registration Statement") Santa Fe stockholders will not be entitled to any
appraisal rights in connection with the Homestake Merger.
OWNERSHIP OF SANTA FE SHARES
Each Santa Fe Share is entitled to one vote, and the Santa Fe Shares are the
only class of securities of Santa Fe currently entitled to vote at the Special
Meeting. According to Santa Fe's Annual Report on Form 10-K for the year ended
December 31, 1995, there were, as of February 20, 1996, 53,000 record holders of
Santa Fe Shares and according to the Homestake Merger Agreement there were, as
of December 5, 1996, 131,459,422 Santa Fe Shares outstanding.
34
<PAGE>
The following table sets forth the share ownership of all persons who own
beneficially more than 5% of the outstanding Santa Fe Shares to the extent
known by Newmont Mining. The information below with respect to such beneficial
ownership is based upon the disclosure contained in the Homestake Registration
Statement.
<TABLE>
<CAPTION>
SANTA FE SHARES HELD PERCENTAGE OF SANTA FE
NAME & ADDRESS OF AND NATURE OF SHARES
BENEFICIAL OWNER BENEFICIAL OWNERSHIP BENEFICIALLY OWNED(3)
- - -------------------------------------- ---------------------------- ----------------------
<S> <C> <C>
College Retirement Equities Fund 6,623,339 (1) 5.04%
730 Third Avenue
New York, NY 10017-3206
FMR Corp. 10,622,313 (2) 8.08%
Edward C. Johnson, 3rd
82 Devonshire Street
Boston, MA 02109
</TABLE>
- - --------
(1) A report on Schedule 13G, dated February 1, 1996, disclosed that College
Retirement Equities Fund had sole power to vote or to direct the vote of
6,623,339 Santa Fe Shares, shared voting power over no Santa Fe Shares, sole
dispositive power over 6,623,339 Santa Fe Shares and shared dispositive
power over no Santa Fe Shares.
(2) A report on Schedule 13G, dated February 14, 1996, disclosed that FMR Corp.
had sole power to vote or to direct the vote of 161,053 Santa Fe Shares,
shared voting power over no Santa Fe Shares, sole dispositive power over
10,622,313 Santa Fe Shares and shared dispositive power over no Santa Fe
Shares.
(3) Percentages are based on the 131,449,002 Santa Fe Shares outstanding as of
December 31, 1995.
For information relating to the ownership of Santa Fe Shares by the current
directors and executive officers of Santa Fe, see Annex C hereto.
The information concerning Santa Fe contained in this Proxy Statement
(including Annex C hereto) has been taken from or is based upon documents and
records on file with the Commission and other publicly available information. As
described in "Background of the Offer" contained in this Proxy Statement,
Newmont Mining has conducted only a limited review of certain information
provided to it by Santa Fe, and is not in a position to verify, or make any
representation with respect to the accuracy of, any such information or
statements.
SOLICITATION OF PROXIES
Proxies against the Homestake Merger will be solicited by mail, telephone,
telegraph, telex, telecopier and advertisement and in person. Solicitation may
be made by directors, executive officers and other representatives of Newmont
Mining. See Annex A hereto for a listing of such persons.
Banks, brokerage houses and other custodians, nominees and fiduciaries will
be requested to forward the solicitation materials to the beneficial owners of
Santa Fe Shares for which they hold of record and Newmont Mining will
reimburse them for their reasonable out-of-pocket expenses.
In addition, Newmont Mining has retained Georgeson & Company Inc.
("Georgeson") to assist and to provide advisory services in connection with
this proxy solicitation for which Georgeson will be paid a fee of not more
than $ and will be reimbursed for reasonable out-of-pocket expenses.
Newmont Mining will indemnify Georgeson against certain liabilities and expenses
in connection with the proxy solicitation, including certain liabilities under
the federal securities laws.
35
<PAGE>
Goldman, Sachs & Co. ("Goldman Sachs") is providing certain financial advisory
services to Newmont Mining in connection with the Offer, including, among other
things, this proxy solicitation. For information concerning the fees to be paid
to Goldman Sachs in connection with such engagement, see "The Offer--Fees and
Expenses" in the Newmont Mining Prospectus. Newmont Mining has also agreed to
reimburse Goldman Sachs for its reasonable out-of-pocket expenses, including the
reasonable fees and expenses of its legal counsel, incurred in connection with
its engagement, and has agreed to indemnify Goldman Sachs and certain related
persons and entities against certain liabilities and expenses in connection with
its engagement, including certain liabilities under the federal securities laws.
In connection with Goldman Sachs' engagement as financial advisor, Newmont
Mining anticipates that certain employees of Goldman Sachs may communicate in
person, by telephone or otherwise with a limited number of institutions, brokers
or other persons who are stockholders of Santa Fe for the purpose of assisting
in this proxy solicitation. Goldman Sachs will not receive any fee for or in
connection with such solicitation activities by its respective employees apart
from the fees they are otherwise entitled to receive as described above.
In addition to the fees to be received by Goldman Sachs in connection with its
engagement as financial advisor to Newmont Mining, Goldman Sachs has in the past
rendered and is expected to continue to render various investment banking and
financial advisory services to Newmont Mining for which it has received
customary compensation.
The expenses related to this proxy solicitation will be borne by Newmont
Mining. Newmont Mining does not intend to seek reimbursement of its expenses
related to this proxy solicitation from Santa Fe whether or not this proxy
solicitation is successful.
If you have any questions concerning this proxy solicitation or the
procedures to be followed to execute and deliver a proxy, please contact
Georgeson at the address or phone number specified below.
YOUR PROXY AND PROMPT ACTION ARE IMPORTANT. YOU ARE URGED TO GRANT YOUR
PROXY BY SIGNING, DATING AND RETURNING THE ENCLOSED [COLOR] PROXY CARD TODAY.
NEWMONT MINING CORPORATION
January , 1997
- - -------------------------------------------------------------------------------
GEORGESON & COMPANY INC.
88 PINE STREET
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKERS AND BROKERS CALL COLLECT: (212) 440-9800 or (800) 223-2064
ALL OTHERS CALL TOLL-FREE: (800) 223-2064 (if in New York State) or
(800) 533-1038 (if out of New York State)
- - -------------------------------------------------------------------------------
FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS CONTAINED IN THIS PROXY STATEMENT THAT ARE NOT STATEMENTS
OF HISTORICAL FACTS ARE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND ARE THUS PROSPECTIVE. SUCH
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS
WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM FUTURE RESULTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. ALL SUBSEQUENT WRITTEN
AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO NEWMONT MINING OR TO PERSONS
ACTING ON ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY
STATEMENTS. NEWMONT MINING WAS NOT INVOLVED IN THE PREPARATION OF ANY FORWARD-
LOOKING STATEMENTS RELATING TO SANTA FE OR HOMESTAKE AND IS NOT IN A POSITION TO
VERIFY SUCH STATEMENTS AND TAKES NO RESPONSIBILITY THEREFOR.
36
<PAGE>
ANNEX A
INFORMATION CONCERNING THE DIRECTORS AND OFFICERS OF
NEWMONT MINING AND OTHER REPRESENTATIVES OF
NEWMONT MINING WHO MAY SOLICIT PROXIES
The following tables set forth the name, business address and the present
principal occupation or employment, and the name, principal business and
address of any corporation or other organization in which such employment is
carried on, of the directors and officers of Newmont Mining and other
representatives of Newmont Mining who may solicit proxies from stockholders of
Santa Fe. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to employment with Newmont Mining and Newmont Gold.
DIRECTORS AND OFFICERS OF NEWMONT MINING
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER PRINCIPAL
BUSINESS ADDRESS* OCCUPATION OR EMPLOYMENT
------------------ ---------------------------------
<C> <S>
Rudolph I.J. Agnew.................. Director; Chairman of World Conservation
7 Eccleston Street Monitoring Centre
Belgravia, London SW1W 9LX
England
J.P. Bolduc......................... Director; Chairman and Chief Executive
JPB Enterprises, Inc. Officer of JPB Enterprises, Inc.
8808 Centre Park Drive #204
Columbia, Maryland 21045
Ronald C. Cambre.................... Director; Chairman, President and Chief
Executive Officer
Joseph P. Flannery.................. Director; Chairman, President and Chief
Uniroyal Holding, Inc. Executive Officer of Uniroyal Holding,
70 Great Hill Road Inc.
Naugatuck, Connecticut 06770
Leo I. Higdon, Jr................... Director; Dean and Charles C. Abbott
Darden Graduate School of Business Professor of the Darden Graduate School
University of Virginia of Business Administration at the
Massie Road Extended University of Virginia
Charlottesville, Virginia 22903
Thomas A. Holmes.................... Director; Retired Chairman and Chief
Ingersoll-Rand Company Executive Officer of Ingersoll-Rand
200 Chestnut Ridge Road Company
Woodcliff Lake, New Jersey 07675
Robin A. Plumbridge................. Director; Chairman of Gold Fields of
Gold Fields of South Africa Limited South Africa Limited
P.O. Box 61525
Marshalltown 2107
Republic of South Africa
Moeen A. Qureshi.................... Director; Chairman of Emerging Markets
Emerging Markets Partnership Partnership
2001 Pennsylvania Ave., #1100
Washington, DC 20006
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER PRINCIPAL
BUSINESS ADDRESS* OCCUPATION OR EMPLOYMENT
------------------ ---------------------------------
<C> <S>
Michael K. Reilly................... Director; Chairman of Zeigler Coal
Zeigler Coal Holding Company Holding Company
50 Jerome Lane
Fairview Heights, Illinois 62208
William I.M. Turner, Jr............. Director; Chairman and Chief Executive
EXSULTATE INC. Officer of EXSULTATE INC.
1981 McGill College Avenue
Suite 575
Montreal, Quebec H3A 2X1
Canada
Wayne W. Murdy...................... Executive Vice President and Chief
Financial Officer
John A.S. Dow....................... Senior Vice President, Exploration
Lawrence T. Kurlander............... Senior Vice President, Administration
Gary E. Farmar...................... Vice President and Controller
Patricia A. Flanagan................ Vice President, Treasurer and Assistant
Secretary
Joy E. Hansen....................... Vice President and General Counsel
Donald G. Karras.................... Vice President, Taxes
Timothy J. Schmitt.................. Vice President, Secretary and Assistant
General Counsel
</TABLE>
- - --------
* Unless otherwise indicated, the principal business address of each director
and officer is Newmont Mining Corporation, 1700 Lincoln Street, Denver,
Colorado 80203.
OTHER REPRESENTATIVES OF NEWMONT MINING WHO MAY SOLICIT PROXIES
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER PRINCIPAL
BUSINESS ADDRESS* OCCUPATION OR EMPLOYMENT
------------------ ---------------------------------
<C> <S>
Peter D. Brundage..................... Managing Director, Goldman, Sachs & Co.
Goldman, Sachs & Co.
100 Crescent Court, Suite 1000
Dallas, Texas 75201
Robert P. Fisher...................... Managing Director, Goldman, Sachs & Co.
Steven M. Heller...................... Managing Director, Goldman, Sachs & Co.
Lance G. Gilliland.................... Associate, Goldman, Sachs & Co.
Gregory A. Gonsalves.................. Associate, Goldman, Sachs & Co.
Sean J. Glodek........................ Analyst, Goldman, Sachs & Co.
</TABLE>
- - ----------
* Unless otherwise indicated, the principal business address of each
representative of Goldman, Sachs & Co. is Goldman, Sachs & Co., 85 Broad
Street, New York, New York 10004.
<PAGE>
ANNEX B
SANTA FE SHARES HELD BY NEWMONT MINING, ITS DIRECTORS AND
EXECUTIVE OFFICERS AND CERTAIN EMPLOYEES AND
OTHER REPRESENTATIVES OF NEWMONT MINING WHO MAY ALSO
SOLICIT PROXIES, AND CERTAIN TRANSACTIONS BETWEEN
ANY OF THEM AND SANTA FE
On December 31, 1996, Midtown One Corp., a wholly-owned subsidiary of
Newmont Mining, acquired 200 Santa Fe Shares at a price of $17.50 per Santa Fe
Share in a privately negotiated transaction with Mr. and Mrs. David H.
Francisco. Mr. Francisco is Vice President, International Operations, of
Newmont Gold. On January 6, 1997, Midtown One Corp. acquired an additional
4,600 Santa Fe Shares at a price of $17.50 per Santa Fe Share in a privately
negotiated transaction with Mr. and Mrs. Francisco. Except as set forth
herein, and except for Mr. Francisco, who may be deemed to beneficially own
480 Santa Fe Shares held by his wife in a retirement account, neither Newmont
Mining, Midtown One Corp. nor, to the best of Newmont Mining's knowledge, any of
the persons listed on Annex A to the Proxy Statement nor any associate or
majority-owned subsidiary of any of the foregoing, beneficially owns or has a
right to acquire any equity securities of Santa Fe. Except as set forth above,
neither Newmont Mining nor, to the best of its knowledge, any of the persons or
entities referred to above, nor any director, executive officer or subsidiary of
any of the foregoing, has effected any transaction in such equity securities
during the 60-day period preceding the date of the Proxy Statement.
Goldman Sachs engages in a full range of investment banking, securities
trading, market-making and brokerage services for institutional and individual
clients. In the ordinary course of its business, Goldman Sachs may actively
trade the securities of 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. As of January 6, 1997, Goldman Sachs held a net long position
of approximately 13,819 Santa Fe Shares. Goldman Sachs does not admit that it or
any of its directors, officers, employees or affiliates is a "participant," as
defined in Schedule 14A promulgated under the Securities Exchange Act of 1934,
as amended, by the Commission in the solicitation to which the Proxy Statement
relates or that such Schedule 14A requires the disclosure in the Proxy Statement
of certain information concerning Goldman Sachs.
Santa Fe and Newmont Mining entered into a Confidentiality Agreement, dated
October 25, 1996, pursuant to which and in consideration of a potential
transaction between Santa Fe and Newmont Mining, each party provided the other
with certain confidential information. See "Background of the Offer" in the
Proxy Statement.
Newmont Gold leases from Santa Fe certain properties in Eureka County,
Nevada pursuant to a Lease of Mining Rights dated November 1, 1977, as amended
(the "Lease Agreement"). The Lease Agreement grants to Newmont Gold the
exclusive right to mine the nonferrous metals located on the land covered by
the Lease Agreement. In addition, Newmont Gold, Santa Fe and certain other
individuals have entered into an Agreement for Unitization of Ore Reserves
dated as of January 18, 1982 (the "Unitization Agreement"), which provides for
unitization of certain of the properties leased pursuant to the Lease
Agreement. Pursuant to the terms of both the Lease Agreement and the
Unitization Agreement, Newmont Gold is required to pay Santa Fe royalty
payments based upon net smelter returns on ores and concentrates sent to
smelter or the gross sales price of any gold or silver bullion produced and
sold from Newmont Gold's mills. In 1995, the amount of such royalty payments was
approximately $4 million. The Lease Agreement is renewable annually but will
otherwise terminate on November 1, 2002. The Unitization Agreement will remain
in effect until Newmont Gold determines that all gold ores located on the
properties covered by the Unitization Agreement are mined. In addition, Newmont
Gold also leases from an affiliate of Santa Fe certain other properties in
Eureka County, Nevada pursuant to a Minerals Sublease dated April 1, 1991 (the
"Mineral Sublease"). The Mineral Sublease grants to Newmont Gold the right to
explore, develop, mine, recover and process minerals located on the land covered
by the Mineral Sublease. Pursuant to the terms of the Mineral Sublease, Newmont
Gold is required to pay Santa Fe's affiliate at least $12,800 per year plus an
annual royalty of 5% of net returns of minerals mined and removed. To date,
there has been no production on the property which is the subject of the Mineral
Sublease. The Mineral Sublease expires on the later to occur of April 1, 2001
and the date on which minerals cease being produced in commercial quantities.
Effective April 15, 1996, Newmont Exploration Limited ("Newmont
Exploration"), a wholly-owned subsidiary of Newmont Gold, entered into an
Exploration, Development and Mining Operations Agreement with Santa Fe (the
"Exploration Agreement"), pursuant to which the two parties agreed to enter
into a joint venture (the "Joint Venture") in order to jointly explore and
evaluate the possible development of certain properties located at Mary's
Mountain in Eureka County, Nevada. As an initial contribution to the Joint
Venture, Newmont Exploration agreed to lease to the Joint Venture 145
unpatented claims and Santa Fe agreed to lease to the Joint Venture five fee
sections owned by it and to sublease to the Joint Venture one fee section leased
by it. Newmont Exploration also agreed to spend an aggregate of $2,000,000
during the first six years of the effectiveness of the Exploration Agreement.
Each party has a 50% interest in the Joint Venture. Newmont Exploration is
manager of the Joint Venture. Newmont Exploration may withdraw from the
Exploration Agreement prior to the completion of its contribution, subject to
its obligation to complete the expenditure of the first $40,000 of exploration
expenditures (which obligation it has already met). Each party has the right to
withdraw after its contribution, but in the event that it does, it will have no
further interest in the Assets (as defined therein) of the Joint Venture. Unless
earlier terminated pursuant to its terms, the Exploration Agreement will remain
in effect until August 2, 2012 and for so long thereafter as the properties are
jointly owned pursuant to the Exploration Agreement.
Except as disclosed in this Annex B, to the best knowledge of Newmont Mining,
none of Newmont Mining, its directors and executive officers or other
representatives of Newmont Mining named in Annex A to the Proxy Statement has
any interest, direct or indirect, by security holdings or otherwise, in Santa
Fe.
<PAGE>
ANNEX C
SANTA FE SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS OF SANTA FE
The following table is based upon information contained in the Santa Fe 1996
Annual Proxy. It shows, as of February 29, 1996, the number of Santa Fe Shares
deemed beneficially owned by each director and each of the executive officers
named in the Summary Compensation Table contained in the Santa Fe 1996 Annual
Proxy and by all present directors and executive officers of Santa Fe as a
group.
<TABLE>
<CAPTION>
NUMBER OF OPTIONS TO
NAME OF BENEFICIAL OWNER SHARES(1)(2) ACQUIRE
- - ------------------------ ------------ ----------
<S> <C> <C>
David H. Batchelder................................... 0 0
James T. Curry........................................ 2,000 0
Donald W. Gentry...................................... 400 0
Bruce D. Hansen....................................... 18,178 18,760
David K. Hogan........................................ 11,705 20,230
Patrick M. James...................................... 63,445 75,840
Robert D. Krebs....................................... 240,750 0
George B. Munroe...................................... 3,364(3) 0
Kendall W. Sageser.................................... 32,827 24,910
Jean Head Siaco....................................... 2,223 0
David A. Smith........................................ 16,340 22,970
Peter Steen........................................... 0 0(4)
Richard J. Stoehr..................................... 1,000 0
Richard T. Zitting.................................... 50,852(5) 0
Directors and executive officers as a group (17
persons).............................................. 453,438 210,550
</TABLE>
- - --------
(1) Each person has, unless otherwise indicated in the following notes, sole
voting and investment power with respect to the indicated shares.
(2) Shares beneficially owned does not exceed one percent of the outstanding
Santa Fe Shares as of February 29, 1996.
(3) Includes 1,209 Santa Fe Shares held by Mr. Munroe's spouse, of which Mr.
Munroe disclaims beneficial ownership.
(4) Mr. Steen will receive an option to acquire 50,000 Santa Fe Shares under the
Directors' Stock Compensation Plan.
(5) Includes 4,900 Santa Fe Shares held by the Zitting Grandchildren Irrevocable
Trust of which Mr. Zitting is trustee and 2,825 Santa Fe Shares held by Mr.
Zitting's adult daughter, all of which Mr. Zitting disclaims beneficial
ownership.
<PAGE>
PRELIMINARY COPY--SUBJECT TO COMPLETION
FORM OF PROXY CARD-[COLOR]
PROXY SOLICITED BY NEWMONT MINING CORPORATION
IN OPPOSITION TO THE PROXY SOLICITED BY THE BOARD OF
DIRECTORS OF SANTA FE PACIFIC GOLD CORPORATION
Unless otherwise specified below, the undersigned, a holder of record
shares of Common Stock, par value $0.01 per share (the "Santa Fe
Shares"), of Santa Fe Pacific Gold Corporation ("Santa Fe") on ,
1997 (the "Record Date"), hereby appoints or , or any of
them, the proxy or proxies of the undersigned, each with full power of
substitution, to attend the [Special] Meeting of stockholders of Santa Fe
(the "Stockholders") to be held on , 1997 at which holders of
Shares will be voting on approval and adoption of the Agreement and Plan
of Merger, dated as of December 9, 1996, by and among Homestake Mining
Company, HMGLD Corp. and Santa Fe (the "Homestake Merger Agreement"), and
at any adjournments, postponements or reschedulings thereof, and to vote
as specified in this Proxy all the Santa Fe Shares which the undersigned would
otherwise be entitled to vote if personally present. The undersigned hereby
revokes any previous proxies with respect to the matters covered in this
proxy.
NEWMONT MINING RECOMMENDS A VOTE AGAINST APPROVAL AND
ADOPTION OF THE HOMESTAKE MERGER AGREEMENT.
<PAGE>
(IF RETURNED CARDS ARE SIGNED AND DATED BUT NOT MARKED,
THE UNDERSIGNED WILL BE DEEMED TO HAVE VOTED AGAINST APPROVAL
AND ADOPTION OF THE HOMESTAKE MERGER AGREEMENT.)
1. Approval and adoption of the Homestake Merger Agreement.
[ ] AGAINST [ ] ABSTAIN [ ] FOR
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE, PLEASE CONTACT
GEORGESON & COMPANY, INC. AT (212) 440-9800.
Proxies can only be given by stockholders of Santa Fe of record on the
Record Date. Please sign your name below exactly as it appears on your stock
certificate(s) on the Record Date or on the label affixed hereto. When Shares
are held of record by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by president or
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: , 1997
------------------
Signature (Title, if any)
------------------
Signature if held jointly
PLEASE SIGN, DATE AND RETURN PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
