<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 15, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [ ]
FILED BY A PARTY OTHER THAN THE REGISTRANT [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
SANTE FE PACIFIC GOLD CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HOMESTAKE MINING COMPANY
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and 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 was 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 filings:
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
Homestake Mining Co.
[Homestake & Santa Fe Pacific Gold Corp. Logo]
Superior Long-Term Value
<PAGE> 3
[HOMESTAKE BACKGROUND
LOGO] ---------------------------------------------------------------
[SANTA FE - Homestake - Santa Fe Merger Agreement
LOGO] - 1.115 Homestake shares for each Santa Fe share
- Santa Fe shareholders to own 50% of combined company
- Newmont's Hostile Offer
- 0.4 of a Newmont share for each Santa Fe share
- Santa Fe shareholders to own 35% of combined company
- Claimed their combination had greater upside potential
<PAGE> 4
[HOMESTAKE
LOGO] BACKGROUND
-----------------------------------------------------------------
[SANTA FE
LOGO] - Newmont making statements we believe are inaccurate and
misleading
- This discussion today is to set the record straight
... and to explain why we believe a Homestake - Santa Fe
combination will deliver far more long-term value to Santa Fe
shareholders
<PAGE> 5
[HOMESTAKE
LOGO] SMALL DIFFERENCE IN SHORT-TERM VALUE
-------------------------------------------------------------
* Both offers are in stock, not cash
[SANTA FE * Premium offered by Newmont eroding fast
LOGO]
-- Lost one half of its value in first three trading days
-- May erode further before transaction closes in
several months
-- Illustrates uncertainty when focusing on current premiums
based on stock offers
<PAGE> 6
[HOMESTAKE ERODING SHORT-TERM VALUE DIFFERENTIAL
LOGO]
[SANTA FE
LOGO]
Graph shows erosion in short-term value differential between competing Newmont
and Homestake offers. Graph shows decline since 11/20/96 of 74% from $2.74 on
11/20/96 to $0.71 on 1/13/97.
<PAGE> 7
[HOMESTAKE
LOGO] LONG-TERM VALUE OF OFFERS
-------------------------------------------------------
[SANTA FE
LOGO] * Key is which offer most likely to deliver more
long-term value to shareholders
* Factors include
- Appreciation potential
- Making the most of Santa Fe's assets
- Relative financial strength
<PAGE> 8
[HOMESTAKE
LOGO] POTENTIAL TO DELIVER LONG-TERM VALUE
-------------------------------------------------------
[SANTA FE * Homestake offers better deal to Santa Fe shareholders
LOGO]
- Greater long-term value
- Immediately accretive to EPS and cash flow per
share
- Greater ability to realize Nevada potential
- Superior balance sheet
- Lower overhead costs
* Presently undervalued Homestake more likely to reward
shareholders compared to limited prospects of merging
with an already highly valued Newmont
<PAGE> 9
[HOMESTAKE GREATER OWNERSHIP INTEREST FOR
LOGO] SANTA FE SHAREHOLDERS
-------------------------------------------------------
[SANTA FE * Homestake gives Santa Fe shareholders 50%
LOGO]
* Newmont gives Santa Fe shareholders only 35%
<PAGE> 10
[HOMESTAKE
LOGO] GREATER APPRECIATION POTENTIAL
-------------------------------------------------------
[SANTA FE - Homestake a value play
LOGO]
-- Currently valued below the S&P Gold Index Average
-- $95 per ounce of reserves
- Newmont stock is already valued at $157 per ounce
of reserves
- Homestake's new fundamentals and improved
performance should enable us to close the gap
<PAGE> 11
[HOMESTAKE
LOGO] RERATING POTENTIAL
---------------------------------------------------------------
[SANTA FE
LOGO]
Graph shows current market capitalization per ounce of reserves as of 1/14/97.
Graph shows Homestake at $95 per ounce, Newmont at $157 per ounce and S&P Gold
average at $159 per ounce.
<PAGE> 12
[HOMESTAKE APPRECIATION POTENTIAL FOR
LOGO] SANTA FE SHAREHOLDERS
---------------------------------------------------------------
[SANTA FE
LOGO]
Graph shows appreciation potential for Santa Fe shareholders. Graph shows value
to Santa Fe shareholders on 1/14/97 at $15.19 per share for Homestake offer and
$15.90 per share for Newmont offer. Assumes Newmont stock valued at $157 market
capitalization per ounce of reserves. Shows that offer differential closes and
reverses if Homestake can achieve higher market capitalization valuation per
ounce of reserves. Shows parity of offers at Homestake valuation of $100 market
capitalization per ounce of reserves. Shows Homestake offer value to Santa Fe
shareholders at $25.29 if Homestake can achieve same market capitalization
valuation per ounce of reserves as Newmont ($157).
<PAGE> 13
[HOMESTAKE ACCRETION/DILUTION*
LOGO] ------------------------------------------------------------
[SANTA FE . Contrary to Newmont's assertions, Santa Fe-Homestake
LOGO] merger immediately accretive to cash flow and earnings
per share
. By Newmont's own admission, their proposed combination
dilutive in 1997 and 1998
* Excluding transaction costs, based on $400 gold
<PAGE> 14
[HOMESTAKE HOMESTAKE'S GREATER ABILITY TO REALIZE
LOGO] POTENTIAL OF SANTA FE'S ASSETS
------------------------------------------------------------
[SANTA FE - Long-term value in Santa Fe's principal mines is locked
LOGO] up in complex refractory ores
- Expertise and experience in treatment of such ores
required
- Future of Nevada is in underground mining
- Particularly so at Santa Fe's mines
HOMESTAKE IS AN EXPERT AND
NEWMONT IS A NOVICE IN BOTH AREAS
<PAGE> 15
[HOMESTAKE
LOGO] TREATMENT OF COMPLEX ORES
-------------------------------------------------------------------
[SANTA FE
LOGO] - Santa Fe's mines use autoclave technology pioneered by Homestake
-- Years of autoclave experience: Homestake - 12
Newmont - 0
- Newmont latecomer to roasting technology
-- Newmont's own roaster at Carlin uses technology pioneered by
Homestake at Kalgoorlie in 1989
-- Only just begun production
- Homestake has 21 years of roasting experience
-- Newmont has only 1 year
<PAGE> 16
[HOMESTAKE TREATMENT OF COMPLEX ORES - OTHERS
LOGO] -------------------------------------------------------
[SANTA FE - Biotechnology
LOGO] - Readily available
- No commercial use of Newmont's technology
- Flotation Plants
- Homestake's plant at Kalgoorlie, Snip, Eskay, McLaughlin
- Smelting
- Homestake has more experience than Newmont
<PAGE> 17
[HOMESTAKE COMPLEX ORE PROCESSED (1990-1995)
LOGO] --------------------------------------------
Graph compares Homestake and Newmont tons of complex ore
[SANTA FE processed for 1990 to 1995. Graph shows Homestake having
LOGO] processed 22.6 million tons of complex ore by autoclave and 14.3
million tons by roasting during such period. Graph shows Newmont
having processed 0 tons of complex ore by autoclave and 2.8
million tons by roasting during such period. Graph shows
Homestake autoclave and roaster experience processing 13 times
the amount of ore as Newmont.
<PAGE> 18
[HOMESTAKE UNDERGROUND MINING - HOMESTAKE
LOGO] --------------------------------------------------------------
[SANTA FE - Easy near-surface mining opportunities in Nevada are few and
PACIFIC far between
LOGO]
- Underground mining way of the future
- Homestake's advantage unquestioned
- 120 years of continuous underground mining experience
- Knowledge of virtually every mining technique
- Mines as deep as 8,000 feet
- Six current underground mines
<PAGE> 19
[HOMESTAKE
LOGO] UNDERGROUND MINING - NEWMONT
-------------------------------------------------------
[SANTA FE * Newmont only just beginning an underground add-on to
LOGO] its Carlin open pit operations
- Recent experience only 2 years
- Annual tons of ore mined underground:
Homestake - 7.5 million
Newmont - 0.5 million
<PAGE> 20
[HOMESTAKE UNDERGROUND MINING (1990-1995)
LOGO] ---------------------------------------------------------------
[SANTA FE
LOGO]
Graph compares Homestake to Newmont in underground mining tonnage for 1990 to
1995. Graph shows Homestake having mined 24.7 million tons of ore during such
period. Graph shows Newmont having mined 0.6 million tons of ore during such
period. Graph shows Homestake having 41 times the underground mining tonnage as
Newmont over the last six years.
<PAGE> 21
[HOMESTAKE EXPLORATION
LOGO] ----------------------------------------------------------------
* Homestake's exploration program on accelerating path
-- New people
[SANTA FE -- New approach
LOGO] -- Bigger budgets
-- Two discoveries in past two years
* Newmont's exploration stalled
-- No Nevada success outside Carlin trend in 30 years
-- Significant Nevada discoveries made by others
-- Since 1989 Nevada reserves increased by only a nominal 1%
-- Overseas growth due to acquisitions or discoveries years ago
<PAGE> 22
[HOMESTAKE ANALYSIS OF RESERVE ADDITIONS
LOGO] ----------------------------------------------------------------
(Net of Production)
[SANTA FE
LOGO]
Aggregate Reserve Additions (MM oz.)
<TABLE>
<CAPTION>
Homestake Newmont Newmont(NEV) Santa Fe
----------------------------------------------------------------
<S> <C> <C> <C> <C>
'94-95 3.6 2.7 2.4 2.5
'93-95 3.1 2.8 3.1 3.8
'92-95 4.2 5.0 1.4 11.5
'91-95 8.3 8.7 0.8 12.1
'90-95 7.7 9.9 2.0 13.2
'89-95 6.8 8.1 0.2 14.1
</TABLE>
<PAGE> 23
[HOMESTAKE ANALYSIS OF RESERVE ADDITIONS
LOGO] ----------------------------------------------------
(Net of Production)
[SANTA FE
LOGO] Reserve Additions (% Change)
<TABLE>
<CAPTION>
Homestake Newmont Newmont(NEV) Santa Fe
-------------------------------------------------------------
<S> <C> <C> <C> <C>
'94-95 20.1 10.3 12.9 16.2
'93-95 16.9 10.8 17.4 26.9
'92-95 24.3 21.0 7.2 179.7
'91-95 62.8 43.3 3.9 208.9
'90-95 55.8 52.4 10.6 280.9
'89-95 46.3 39.1 1.0 371.1
</TABLE>
<PAGE> 24
[HOMESTAKE
LOGO] EXPLORATION CAPABILITIES
-------------------------------------------------------
[SANTA FE * In each time period Homestake has had greater percent
LOGO] increases in reserves than Newmont
* Measured in ounces, Homestake reserve additions have
outstripped Newmont since 1993
* Santa Fe has enjoyed a stronger reserve growth than
either Homestake or Newmont
* Newmont's Nevada performance is modest at best, adding
only 200,000 ounces since 1989 (1.0% increase)
<PAGE> 25
[HOMESTAKE
LOGO] HOMESTAKE'S SUPERIOR BALANCE SHEET
-------------------------------------------------------
[SANTA FE - Homestake's strong balance sheet has net cash position
LOGO]
- Pro forma (9/30/96) net debt-to-capitalization ratio*
w/Homestake 18%
w/Newmont 32%
- Newmont will owe more than $1 billion
- Facing immediate requirements to raise large
amounts of capital for new projects
- Debt service will divert cash from exploration and
other production activities
* Net of cash and short-term investments
<PAGE> 26
[HOMESTAKE
LOGO] BALANCE SHEET AS OF 9/30/96
-------------------------------------------------------
[SANTA FE
LOGO]
Graph shows pro forma balance sheets for a Homestake-Santa Fe combination and a
Newmont-Santa Fe combination as of 9/30/96. Graph shows total debt for
Homestake-Santa Fe at $580 million and net debt at $312 million as of 9/30/96.
Graph shows total debt for Newmont-Santa Fe of $1.042 billion and net debt of
$804 million as of 9/30/96. Graph shows Newmont having 2.6 times the net debt of
Homestake as of 9/30/96.
<PAGE> 27
[HOMESTAKE
LOGO] HOMESTAKE'S LOWER OVERHEAD COSTS
-------------------------------------------------------
[SANTA FE - Homestake has been consistently reducing overhead costs
LOGO] since 1992
- Homestake's 1995 overhead expenses 19% lower per ounce
of production than Newmont's
- Homestake expects further 20% reduction to $16 per
ounce post merger
<PAGE> 28
[HOMESTAKE
LOGO] HOMESTAKE'S IMPROVING COST STRUCTURE
-------------------------------------------------------
[SANTA FE
LOGO]
Graph shows comparative cost structures. Graph shows that from 1990 to 1995,
Homestake reduced overall overhead $11 per ounce or 35%, generating five times
the savings as Newmont. Graph shows that from 1990 to 1995, Homestake reduced
total cash operating and overhead costs $16 per ounce more than Newmont.
<PAGE> 29
[HOMESTAKE OPERATING COSTS
LOGO] ------------------------------------------------
[SANTA FE - Operating costs rapidly converging
LOGO]
- Newmont's historical lower costs due to treating
simple oxide ores
- Currently treating only 35% refractory ores
- Ore reserve 65% refractory
<PAGE> 30
[HOMESTAKE CASH COSTS - NEWMONT'S CARLIN OPERATIONS
LOGO] ----------------------------------------------------
% oz. Produced
[SANTA FE
LOGO]
Graph shows cash costs at Newmont's Carlin operations. Graph shows cash
costs of $198 per ounce in 1993 (0% refractory); $208 per ounce in 1994
(< 1% refractory); $223 per ounce in 1995 (22% refractory); and $244 per
ounce for the first nine months of 1996 (35% refractory).
<PAGE> 31
[HOMESTAKE SUPERIOR OPPORTUNITY FOR RERATING AND FUTURE APPRECIATION
LOGO] ------------------------------------------------------------
[SANTA FE - Larger size is not the primary goal
LOGO]
- New Homestake will have greater capabilities
- Improves ability to compete for attractive opportunities
and to maximize return from current assets
- Improved fundamentals in new company should be reflected in
share price
- Requires continued exploration success, new mine
development, lower costs, improved profitability and above
all sustainable growth
<PAGE> 32
[HOMESTAKE
LOGO] THE NEW HOMESTAKE - SANTA FE
-------------------------------------------------------
[SANTA FE - Leading international gold company
LOGO]
- #1 Gold reserves 39.4 MM oz.
- #2 Gold production 3.2 MM oz. by 1998
- #1 Nevada land position 1.5 MM acres
- 17 mines (8 underground, 9 surface)
- 10 development projects
- Low political risk
<PAGE> 33
[HOMESTAKE
LOGO] THE NEW HOMESTAKE - SANTA FE
-------------------------------------------------------
[SANTA FE - Strong commitment to exploration
LOGO] -- Nevada Focus
- Complementary technological expertise
-- A spectacular fit
- Production growth profile
<PAGE> 34
[HOMESTAKE
LOGO] HOMESTAKE MINING COMPANY
-------------------------------------------------------
[SANTA FE
LOGO]
Graph shows Homestake's annual gold production (in millions of ounces) growing
from 304,877 in 1973 to 3,160,255 for 1998 estimated (including Santa Fe
figures).
<PAGE> 35
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS
OF HOMESTAKE MINING COMPANY AND OTHER REPRESENTATIVES
OF HOMESTAKE MINING COMPANY WHO MAY COMMUNICATE WITH
HOMESTAKE AND SANTA FE PACIFIC GOLD CORPORATION SHAREHOLDERS
The following is information concerning the directors and executive
officers of Homestake Mining Company and other representatives of Homestake
("Homestake") who may communicate with Homestake and Santa Fe Pacific Gold
Corporation ("Santa Fe") shareholders with respect to (i) Homestake's planned
combination with Santa Fe pursuant to which Santa Fe will become a wholly-owned
subsidiary of Homestake and each outstanding share of Santa Fe Common Stock,
$0.01 par value, will be converted into the right to receive 1.115 shares of
Homestake Common Stock, $1.00 par value (the "Combination") and (ii) the
proposed offer by Newmont Mining Corporation ("Newmont") disclosed in the
preliminary prospectus contained in the Registration Statement on Form S-4 of
Newmont that was filed with the Securities and Exchange Commission on January 7,
1997 (Registration No. 333-19335), to exchange each outstanding share of Santa
Fe Common Stock for 0.40 of a share of Newmont Common Stock, $1.60 par value.
Newmont's proposed offer has not been commenced. Newmont's Registration
Statement states that its principal executive offices are located at 1700
Lincoln Street, Denver, Colorado 80203. Santa Fe's principal executive offices
are located at 6200 Uptown Boulevard NE, Suite 400, Albuquerque, New Mexico
87110.
DIRECTORS AND OFFICERS OF HOMESTAKE
<TABLE>
<CAPTION>
PRESENT POSITION WITH HOMESTAKE OR OTHER PRINCIPAL
NAME AND BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT
- ------------------------- --------------------------------------------------
<S> <C>
M. Norman Anderson............................... Director, Homestake Mining Company; Former
N Anderson & Associates Chairman International Corona Corporation;
502-455 Granville Street Mining Industry Consultant.
Vancouver, V6C1V2
Jan P. Berger.................................... Treasurer, Homestake Mining Company.
Homestake Mining Company
650 California Street
San Francisco, CA 94108-
2788
Michael L. Carroll............................... Director of Taxes and Assistant Secretary,
Homestake Mining Company Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
Robert H. Clark, Jr.............................. Director, Homestake Mining Company; President and
529 Fifth Avenue Chief Executive Officer, Case, Pomeroy & Company,
Suite 1600 Inc.
New York, NY 10017
</TABLE>
<PAGE> 36
2
<TABLE>
<S> <C>
Harry M. Conger.................................. Director and Chairman of the Board,
Homestake Mining Company Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
G. Robert Durham................................. Director, Homestake Mining Company.
943 Seddon Cove Way
Tampa, FL 33602
Gene G. Elam..................................... Vice President, Finance and Chief Financial
Homestake Mining Company Officer, Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
Douglas W. Fuerstenau............................ Director, Homestake Mining Company; Professor in
University of California, the Graduate School, Department of Materials
Berkeley Science and Mineral Engineering, University of
477 Evans Hall California, Berkeley.
No. 1760
Berkeley, CA 94720
Dennis B. Goldstein.............................. Corporate Counsel and Assistant Secretary,
Homestake Mining Company Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
Lee A. Graber.................................... Vice President, Corporate Development, Homestake
Homestake Mining Company Mining Company.
650 California Street
San Francisco, CA 94108-
2788
Henry G. Grundstedt.............................. Director, Homestake Mining Company; Former Senior
P.O. Box 105 Vice President, Capital Guardian Trust.
Umpqua, OR 97486-0105
Fred Hewett...................................... Assistant Controller, Homestake Mining Company.
Homestake Mining Company
650 California Street
San Francisco, CA 94108-
2788
William A. Humphrey.............................. Director, Vice Chairman of the Board, Former
Homestake Mining Company President and Chief Operating Officer, Homestake
650 California Street Mining Company.
San Francisco, CA 94108-
2788
Robert K. Jaerdicke.............................. Director, Homestake Mining Company; Professor
Graduate School of Business (Emeritus) of Accounting Graduate School of
Stanford University Business, Stanford University.
Stanford, CA 94305-5015
Wayne Kirk....................................... Vice President, General Counsel and Corporate
Homestake Mining Company Secretary, Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
</TABLE>
<PAGE> 37
3
<TABLE>
<S> <C>
Gillyeard J. Leathley............................ Vice President, Operations, Homestake Mining
Homestake Mining Company Company.
650 California Street
San Francisco, CA 94108-
2788
William F. Lindqvist............................. Vice President, Exploration, Homestake Mining
Homestake Mining Company Company.
650 California Street
San Francisco, CA 94108-
2788
John Neerhout, Jr................................ Director, Homestake Mining Company.
15 Peninsula Road
Belvedere, CA 94920
Ronald D. Parker................................. Vice President, Canada, Homestake Mining Company.
1000-700 W. Pender Street
Vancouver, BC V6C 168
CANADA
David W. Peat.................................... Vice President and Controller, Homestake Mining
Homestake Mining Company Company.
650 California Street
San Francisco, CA 94108-
2788
Stuart T. Peeler................................. Director, Homestake Mining Company; Petroleum
Casa Codorniz Industry Consultant.
POB 35852
Tucson, AZ 85740
Carol A. Rae..................................... Director, Homestake Mining Company; Former
HC 89 - Box 188A President and Chief Executive Officer, Magnum
Hermosa, SD 57744 Diamond Corporation.
Berne A. Schepman................................ Director, Homestake Mining Company; President, The
The Adair Company Adair Company.
1670 South Amphlett Blvd.
Suite 214
San Mateo, CA 94402
Richard A. Tastula............................... Vice President, Australia, Homestake Mining
9th Floor Company.
2 Mill Street
Perth, WA 6000
Jack E. Thompson................................. Director, President and Chief Executive Officer,
Homestake Mining Company Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
Thomas H. Wong................................... Assistant Treasurer and Assistant Secretary,
Homestake Mining Company Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
</TABLE>
On November 17, 1996, Homestake and Santa Fe entered into a
confidentiality agreement pursuant to which, among other things, each party
agreed to protect the confidential and
<PAGE> 38
4
proprietary information and data provided to each other in connection with the
evaluation of one or more business transactions. On December 8, 1996, Homestake,
Santa Fe and HMGLD Corp, a wholly-owned subsidiary of Homestake, entered into an
Agreement and Plan of Merger pursuant to which the Combination will be
consummated. On January 9, 1997, Homestake purchased 100 shares of Santa Fe
common stock. In addition, the following individuals named above own the
following shares of Santa Fe common stock, all of which has been owned by such
individuals for more than 60 days: Mr. Peeler - 10,300 shares; Mr. Elam - 2,000
shares; and Mr. Graber - 1,000 shares.
At the effective time (the "Effective Time") of the Combination, five
members of the Homestake Board will continue as directors of Homestake. The
other eight members of the Homestake Board will voluntarily resign as directors
of Homestake. The Agreement provides that at the Effective Time, Mr. Thompson
will become Homestake's Chairman of the Board and Chief Executive Officer.
A total of ten Homestake management personnel, including Messrs.
Thompson, Elam, Kirk, Leathley and Lindqvist, have severance agreements with
Homestake under which they are entitled to receive benefits in the event of a
change of control followed by certain events. The Combination is a change of
control for purposes of these severance agreements. Under the severance
agreements, entitlement to benefits arises if, within three years following the
consummation of the Combination, such person's employment is terminated or such
person elects to terminate his employment following (i) a reduction in salary or
certain benefits, (ii) a change in location of employment, (iii) a change in
position, duties, responsibilities or status inconsistent with such person's
prior position, or (iv) a reduction in responsibilities, title or office as in
effect just before the consummation of the Combination. Benefits consist of (i)
a lump sum payment equal to two times such person's highest annual salary and
bonus (including deferred compensation) during the three years prior to
termination, (ii) continuation of participation in insurance and certain other
fringe benefits for two years, (iii) continued vesting of stock options, and
(iv) relocation assistance. Such benefits are in lieu of severance benefits
otherwise payable under Homestake's general severance policy.
The same ten management personnel are also participants in Homestake's
Executive Supplemental Retirement Plan (the "Homestake ESRP"). The Homestake
ESRP provides that participating employees accrue retirement benefits at the
rate of 4 1/3% times years of service up to a maximum of 15 years. Service
credit is then multiplied by average monthly compensation during the 36
consecutive months of highest compensation (salary and bonus) to determine a
monthly retirement benefit. Benefits are payable on
<PAGE> 39
5
retirement at age 62 after 10 continuous years of service, with provision for
early retirement between ages 55 and 62. Within two years following the
Combination, if any participant's employment is terminated by Homestake or by
the participant for any reason, such participant will fully vest in the maximum
benefits payable under the Homestake ESRP to the extent such participant is not
already fully vested, and will be entitled to commence receiving such benefits
at age 55. Benefits payable under the Homestake ESRP are reduced to the extent
of retirement benefits otherwise payable under any other Homestake retirement
plan (except the Homestake Mining Company Savings Plan).
Homestake has a deferred compensation plan under which 23 eligible
employees and the directors are entitled to defer receipt of compensation.
Deferred compensation earns interest at rates determined under the plan, with a
higher rate equal to 120% of the regular rate (the "Preferred Rate") for persons
who have been participants for more than five years. Under the deferred
compensation plan, following the Combination, all deferred compensation will
earn interest at the Preferred Rate.
<PAGE> 40
6
OTHER REPRESENTATIVES OF HOMESTAKE WHO MAY COMMUNICATE
WITH HOMESTAKE AND SANTA FE SHAREHOLDERS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME AND BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT
- ------------------------- ------------------------
<S> <C>
Robert A. Pilkington......................................... Managing Director
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, NY 10022
</TABLE>
Homestake has retained Dillon, Read & Co. Inc. ("Dillon Read") to act
as its financial advisor in connection with the Combination and related matters.
Pursuant to an engagement letter dated as of November 21, 1996, between
Homestake and Dillon Read, Homestake has agreed to pay Dillon Read a fee of
0.33% of the equity consideration in the Combination, subject to a maximum fee
of $6,500,000, for services provided in connection with the Combination. Of this
amount, $2,250,000 was paid upon the announcement by Homestake of the execution
of the Agreement; the payment of the balance is contingent upon the consummation
of the merger. Homestake has also agreed to reimburse Dillon Read for the
expenses reasonably incurred by it in connection with its engagement (including
reasonable counsel fees) and to indemnify Dillon Read and its officers,
directors, employees, agents and controlling persons against certain expenses,
losses, claims, damages or liabilities in connection with its services,
including those arising under the federal securities laws.
This letter is being furnished by Homestake to Homestake and Santa Fe
shareholders pursuant to Rule 14a-12 under the Securities Exchange Act of 1934,
as amended, in response to the proposed Newmont exchange offer and Newmont's
proposed solicitation of proxies. This letter is not being furnished by Santa Fe
or its Board of Directors.
