UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(x) Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the Quarterly Period Ended June 30, 1997
( ) Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from _______ to ________
Commission File Number 1-8736
HOMESTAKE MINING COMPANY
A Delaware Corporation
IRS Employer Identification No. 94-2934609
650 California Street
San Francisco, California 94108-2788
Telephone: (415) 981-8150
http://www.homestake.com
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ______
-----------
The number of shares of common stock outstanding as of August 8, 1997 was
146,732,000.
Page 1
<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
A. Condensed Consolidated Balance Sheets (unaudited)
(In thousands, except per share amount)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------------- -----------------
<S> <C> <C>
ASSETS
Current assets
Cash and equivalents $ 87,840 $ 89,599
Short-term investments 163,788 130,158
Receivables 37,789 47,650
Inventories:
Finished products 21,690 21,132
Ore and in process 38,012 39,980
Supplies 28,877 30,015
Deferred income and mining taxes 12,263 12,263
Other 5,442 8,551
--------------- -----------------
Total current assets 395,701 379,348
--------------- -----------------
Property, plant and equipment - at cost 2,016,633 1,970,300
Accumulated depreciation, depletion and amortization (1,022,514) (963,270)
--------------- -----------------
Property, plant and equipment - net 994,119 1,007,030
--------------- -----------------
Investments and other assets
Noncurrent investments 26,154 39,606
Other assets 56,014 56,124
--------------- -----------------
Total investments and other assets 82,168 95,730
--------------- -----------------
Total Assets $ 1,471,988 $ 1,482,108
=============== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 36,161 $ 36,171
Accrued liabilities:
Payroll and other compensation 26,181 23,085
Reclamation 10,010 10,055
Other 12,764 9,034
Income and other taxes payable 18,619 38,386
--------------- -----------------
Total current liabilities 103,735 116,731
--------------- -----------------
Long-term liabilities
Long-term debt 188,730 185,000
Other long-term obligations 121,987 114,168
Deferred income and mining taxes 193,828 201,454
--------------- -----------------
Total long-term liabilities 504,545 500,622
--------------- -----------------
Minority interests in consolidated subsidiaries 102,715 96,203
Shareholders' equity
Capital stock, $1 par value per share:
Preferred - 10,000 shares authorized; no shares outstanding
Common - 250,000 shares authorized; shares outstanding:
1997 - 146,728; 1996 - 146,672 146,728 146,672
Other shareholders' equity 614,265 621,880
--------------- -----------------
Total shareholders' equity 760,993 768,552
--------------- -----------------
Total Liabilities and Shareholders' Equity $ 1,471,988 $ 1,482,108
=============== =================
See notes to condensed consolidated financial statements.
</TABLE>
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HOMESTAKE MINING COMPANY AND SUBSIDIARIES
B. Condensed Statements of Consolidated Operations (unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
-------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Revenues
Gold and ore sales $ 160,453 $ 186,723 $ 324,666 $ 370,223
Sulfur and oil sales 6,842 7,370 13,794 15,793
Interest income 3,879 3,833 7,208 7,929
Gain on termination of Santa Fe merger - - 62,925 -
Other income (2,515) 3,566 10,253 10,355
-------------- -------------- -------------- ------------
168,659 201,492 418,846 404,300
-------------- -------------- -------------- ------------
Costs and Expenses
Production costs 121,122 122,704 239,236 247,956
Depreciation, depletion and amortization 28,057 29,032 56,212 55,361
Administrative and general expense 9,933 9,249 19,494 18,963
Exploration expense 13,678 11,535 22,013 17,576
Interest expense 2,851 2,645 5,433 5,292
Other expense 2,785 786 3,427 1,019
-------------- -------------- -------------- ------------
178,426 175,951 345,815 346,167
-------------- -------------- -------------- ------------
Income (Loss) Before Taxes and Minority Interests (9,767) 25,541 73,031 58,133
Income and Mining Taxes (3,465) (14,745) (33,244) (28,605)
Minority Interests (2,990) (4,020) (6,149) (9,099)
-------------- -------------- -------------- ------------
Net Income (Loss) $ (16,222) $ 6,776 $ 33,638 $ 20,429
============== ============== ============== ============
Net Income (Loss) Per Share $ (0.11) $ 0.05 $ 0.23 $ 0.14
============== ============== ============== ============
Average Shares Used in the Computation 146,728 146,662 146,705 145,949
============== ============== ============== ============
Dividends Paid Per Common Share $ 0.05 $ 0.05 $ 0.10 $ 0.10
============== ============== ============== ============
See notes to condensed consolidated financial statements.
</TABLE>
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HOMESTAKE MINING COMPANY AND SUBSIDIARIES
C. Condensed Statements of Consolidated Cash Flows (unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1997 1996
----------------- ------------------
<S> <C> <C>
Cash Flows from Operations
Net income $ 33,638 $ 20,429
Reconciliation to net cash provided by operations:
Depreciation, depletion and amortization 56,212 55,361
Gains on asset disposals (14,256) (2,750)
Deferred taxes, minority interests and other 14,898 23,799
Effect of changes in operating working capital items 1,087 12,481
----------------- ------------------
Net cash provided by operations 91,579 109,320
----------------- ------------------
Investment Activities
Decrease (increase) in short-term investments (33,630) 2,557
Additions to property, plant and equipment (63,056) (69,475)
Proceeds from asset sales 10,213 13,572
Purchase of HGAL minority interests - (6,435)
Purchase of interest in Snip mine - (39,279)
Other 1,707 1,692
----------------- ------------------
Net cash used in investment activities (84,766) (97,368)
----------------- ------------------
Financing Activities
Borrowings 3,730 -
Common shares issued 798 2,349
Dividends paid - Homestake (14,670) (14,674)
- Prime minority interests (1,085) (1,099)
Other 2,655 -
----------------- ------------------
Net cash used in financing activities (8,572) (13,424)
----------------- ------------------
Net decrease in cash and equivalents (1,759) (1,472)
Cash and equivalents, January 1 89,599 145,957
----------------- ------------------
Cash and equivalents, June 30 $ 87,840 $ 144,485
================= ==================
See notes to condensed consolidated financial statements.
</TABLE>
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HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
1. The condensed consolidated financial statements included herein
should be read in conjunction with the financial statements and notes
thereto, which include information as to significant accounting
policies, in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996.
The information furnished in this report reflects all adjustments
which, in the opinion of management, are necessary for a fair
statement of the results for the interim periods. Except as described
in notes 2 through 5, such adjustments consist of items of a normal
recurring nature. Results of operations for interim periods are not
necessarily indicative of results for the full year.
All dollar amounts are in United States dollars unless otherwise
indicated.
2. In March 1997, Santa Fe Pacific Gold Corporation terminated its
previously announced merger agreement with Homestake and paid
Homestake a $65 million termination fee. As a result, the Company
recorded a pretax gain of $62.9 million ($47.2 million after tax), net
of merger-related expenses of $2.1 million incurred in 1997.
3. Other income for the three and six months ended June 30 is as
follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- ---------------------------
1997 1996 1997 1996
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Gains on asset disposals $0.7 $2.0 $14.3 $2.8
Royalty income 0.6 0.8 1.2 1.4
Foreign currency contract
gains (losses) (2.8) 0.2 (3.8) 1.3
Foreign currency exchange
losses on intercompany
advances (2.4) (0.3) (2.8) (0.3)
Other foreign currency
gains (losses) - 0.3 (0.3) 0.2
Litigation settlement - - - 2.9
Other 1.4 0.6 1.7 2.1
------------- ------------- ------------ ------------
($2.5) $3.6 $10.3 $10.4
============= ============= ============ ============
</TABLE>
In February 1997, Homestake completed the sale of its interests in the
George Lake and Back River joint ventures in Canada to Arauco
Resources Corporation ("Arauco") for $9.3 million in cash and 3.6
million shares of Arauco common stock. As a result of this
transaction, the Company recorded a pretax gain of $13.5 million ($8.1
million after tax).
4. In April 1996, the Company's 50.6%-owned subsidiary, Prime Resources
Group Inc. ("Prime") purchased Cominco Ltd.'s ("Cominco") 60% interest
in the Snip mine in British Columbia for approximately $39.3 million
in cash. The purchase price included Cominco's share of the mine's
working capital. Prime now owns 100% of the Snip mine.
5. In 1995, Homestake offered to acquire the 18.5% of Homestake Gold
of Australia Limited ("HGAL") it did not already own by offering .089
of a Homestake share or A$1.90 in cash for each of the 109.6 million
HGAL shares owned by the public. Through December 31, 1995 a total of
38.9 million HGAL shares were acquired at a cost of $59.1 million. At
December 31, 1995 Homestake owned 88.1% of the shares of HGAL. The
acquisition was completed in the first quarter of 1996 when the
remaining 70.7 million publicly held HGAL shares were acquired at a
cost of $105.8 million, including $99.3 million for 6 million shares
of the
5
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HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Company, $5 million in cash and $1.5 million of transaction expenses.
The total purchase price to acquire all of the 18.5% of HGAL held by
minority shareholders was $164.9 million, including $141.7 million for
8.5 million shares of the Company, $19.5 million in cash and $3.7
million of transaction expenses. The acquisition of the HGAL minority
interests was accounted for as a purchase.
6. Under the Company's foreign currency protection program, the
Company has entered into a series of foreign currency option contracts
which establish trading ranges within which the United States dollar
may be exchanged for foreign currencies by setting minimum and maximum
exchange rates.
At June 30, 1997 the Company had forward currency contracts
outstanding as follows:
<TABLE>
<CAPTION>
Weighted-Average Exchange
Rates to U.S. Dollars
Amount Covered ----------------------------------- Expiration
Currency (U.S. Dollars) Put Options Call Options Dates
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Canadian $ 98,580 0.72 0.77 1997
Canadian 94,700 0.73 0.77 1998
Australian 55,860 0.77 0.80 1997
Australian 66,500 0.75 0.79 1998
-------------
$315,640
</TABLE>
7. In the fourth quarter of 1996, the Company entered into forward
sales commitments for 680,100 ounces expected to be produced from the
McLaughlin mine stockpiles from 1997 through 2003. In addition, during
the second quarter of 1997 the Company entered into forward sales
commitments for 20,000 ounces of gold to be produced in 2001 and 2002.
Gold sales for the three and six months ended June 30, 1997 include
sales of 30,000 ounces and 60,000 ounces at average prices of $383 per
ounce and $381 per ounce, respectively. Gold sales for the three and
six months ended June 30, 1996 include sales under the now-completed
Nickel Plate mine forward sales program of 23,200 and 45,100 ounces at
average prices of $421 per ounce and $418 per ounce, respectively.
At June 30, 1997 the Company's forward sales commitments were as
follows:
<TABLE>
<CAPTION>
Average Price of
Forward Sales Forward Sales
Year (ounces) (per ounce)
- -----------------------------------------------------------------------------------
<S> <C> <C>
1997 60,100 $389
1998 120,000 399
1999 109,900 415
2000 85,100 430
2001 95,000 441
2002 95,000 457
2003 75,000 481
-------------
640,100
</TABLE>
8. In June 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. ("SFAS") 131,
"Disclosures About Segments of an Enterprise and Related Information."
SFAS 131 specifies revised guidelines for determining an entity's
operating segments and the type and level of financial information to
be disclosed. SFAS 131 is effective for fiscal years beginning after
December 15, 1997. Adoption of SFAS 131 will not have a material
impact on Homestake's current geographic and segment disclosures.
6
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HOMESTAKE MINING COMPANY AND SUBSIDIARIES
In June 1997, the FASB issued SFAS 130, "Reporting Comprehensive
Income." SFAS 130 establishes standards for the reporting and display
of comprehensive income and its components (revenues, expenses, gains
and losses). The purpose of reporting comprehensive income is to
present a measure of all changes in shareholders' equity that result
from recognized transactions and other economic events of the period,
other than transactions with owners in their capacity as owners. SFAS
130 is effective for financial statements issued for periods ending
after December 15, 1997. Adoption of SFAS 130 will result in
additional disclosures in Homestake's financial statements but will
not impact the Company's reported net income or net income per share.
In February 1997, the FASB issued SFAS 128, "Earnings Per Share." SFAS
128 specifies the computation, presentation, and disclosure
requirements for earnings per share. SFAS 128 is effective for
financial statements issued for periods ending after December 15,
1997. Adoption of SFAS 128 will not have a material impact on
Homestake's previously reported earnings per share.
9. The Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") imposes heavy liabilities on persons who
discharge hazardous substances. The Environmental Protection Agency
("EPA") publishes a National Priorities List ("NPL") of known or
threatened releases of such substances.
The Company's former uranium millsite near Grants, New Mexico is
listed on the NPL. The EPA asserted that leachate from the tailings
contaminated a shallow aquifer used by adjacent residential
subdivisions. The Company paid the costs of extending the municipal
water supply to the affected homes and continues to operate a water
injection and collection system that has significantly improved the
quality of the aquifer. The Company has decommissioned and disposed of
the mills and has covered the tailings impoundments at the site. The
total future cost for reclamation, remediation, monitoring and
maintaining compliance at the Grants site is estimated to be $20.4
million.
Title X of the Energy Policy Act of 1992 (the "Act") and subsequent
amendments to the Act authorized appropriations of $335 million to
cover the Federal Government's share of certain costs of reclamation,
decommissioning and remedial action for by-product material (primarily
tailings) generated by certain licensees as an incident of uranium
sales to the Federal Government. Reimbursement is subject to
compliance with regulations of the Department of Energy ("DOE"), which
were issued in 1994. Pursuant to the Act, the DOE is responsible for
51.2% of past and future costs of reclaiming the Grants site in
accordance with Nuclear Regulatory Commission license requirements.
Through June 30, 1997 the Company had received $17.1 million from the
DOE and the accompanying balance sheet at June 30, 1997 includes an
additional receivable of $13.3 million for the DOE's share of
reclamation expenditures made by the Company through 1996. The Company
believes that its share of the estimated remaining cost of reclaiming
the Grants facility, net of estimated proceeds from the ultimate
disposals of related assets, is fully provided in the financial
statements at June 30, 1997.
In 1983, the state of New Mexico made a claim against the Company for
unspecified natural resource damages resulting from the Grants
tailings. The state of South Dakota made a similar claim in 1983 as to
the Whitewood Creek tailings. The Company denies all liability for
damages at the two CERCLA sites. The two states have taken no action
to enforce the 1983 claims.
On July 23, 1997 the Company received a letter from the
Mountain-Prairie Region of the United States Fish and Wildlife Service
stating that the "Department [of the Interior] intends to file suit,
subject to final approval by the Department of Justice, against your
company to recover natural resource damages and assessment costs" in
respect of Whitewood Creek, South Dakota, under CERCLA, the Clean
Water Act and other applicable laws. The letter stated that other
federal agencies may participate in such litigation and also stated
that the
7
<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Cheyenne River Sioux Tribe intended to file such an action. The letter
invited Homestake to participate in discussions with the Department of
the Interior and the Tribe over the next 60 days and indicated that
absent an agreement, "the Department intends to request that the
Department of Justice file a lawsuit for natural resource damages
against Homestake upon the expiration of the 60-day notice period."
(See Part II, Item 1- Legal Proceedings of this Form 10-Q.)
The Company believes that the ultimate resolution of the above matters
will not have a material adverse impact on its financial condition or
results of operations.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Unless specifically stated otherwise, the following information relates to
amounts included in the consolidated financial statements without reduction for
minority interests.)
RESULTS OF OPERATIONS
Homestake Mining Company ("Homestake" or the "Company") recorded a net loss of
$16.2 million or $0.11 per share during the second quarter of 1997 compared to
net income of $6.8 million or $0.05 per share during the second quarter of 1996.
The decrease in second quarter earnings primarily reflects a significantly lower
average realized gold price, decreased production, slightly higher total cash
costs, mark-to-market losses on foreign currency exchange contracts and
intercompany advances, and increased exploration expenditures.
Year-to-date 1997 net income of $33.6 million or $0.23 per share compares to
year-to-date 1996 net income of $20.4 million or $0.14 per share. The increased
1997 year-to-date earnings primarily are attributable to after-tax gains of
$47.2 million ($62.9 million pretax) or $0.32 per share from the termination fee
received from Santa Fe Pacific Gold Corporation ("Santa Fe") upon termination of
Homestake's merger agreement with Santa Fe, and $8.1 million ($13.5 million
pretax) or $0.06 per share from the sale of the George Lake and Back River joint
venture interests in the Northwest Territories of Canada to Arauco Resources
Corporation ("Arauco"). Results for the 1996 year-to-date period included an
after-tax gain of $4.9 million ($5.5 million pretax) from a litigation recovery.
Excluding the effect of the nonrecurring items, the Company incurred a net loss
of $21.7 million or $0.15 per share during the first half of 1997 compared to
net income of $15.5 million or $0.11 per share during the first half of 1996.
The lower 1997 earnings primarily are due to a $47 per ounce decline in the
average realized gold price, slightly lower production, and higher exploration
expenses.
Gold production during the second quarter of 1997 decreased to 488,500 ounces
compared to 505,900 ounces produced during the second quarter of 1996. The
absence of 25,100 ounces of production from the Nickel Plate mine in Canada,
which is in final reclamation, was the principal reason for the lower gold
production in 1997. Production declines from the Company's domestic operations
were offset by net increases in production at the Company's other foreign
operations. Revenues from gold and ore sales totaled $160.5 million during the
second quarter of 1997 compared to $186.7 million during the prior year's second
quarter. During the 1997 second quarter, the Company sold 491,200 ounces at an
average realized price of $344 per ounce compared to 512,100 ounces sold at an
average realized price of $389 per ounce during the 1996 second quarter.
Domestic production decreased to 174,600 ounces during the second quarter of
1997 compared to 201,200 ounces produced during the second quarter of 1996,
primarily reflecting production declines at the Homestake mine in South Dakota
and the McLaughlin mine in northern California, partially offset by increased
production at the Round Mountain mine in Nevada. At the
8
<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Homestake mine, production declined by 5,300 ounces to 97,900 ounces during the
1997 second quarter compared to 103,200 ounces during the 1996 second quarter
primarily due to lower underground ore grades caused by higher dilution. Total
cash costs increased to $330 per ounce during the second quarter of 1997 from
$300 per ounce during the prior year's second quarter as a result of the lower
production and stockpiled ore valuation adjustments made as a result of the
lower gold prices. The McLaughlin mine produced 30,900 ounces during the 1997
second quarter compared to 60,700 ounces produced during the 1996 second
quarter. Mining operations ceased at the end of June last year and lower-grade
stockpiled ore will be processed over the next six years. Total cash costs
increased to $254 per ounce during the second quarter of 1997 compared to $200
per ounce during the second quarter of 1996 as a result of lower ore grades and
recoveries associated with the treatment of the stockpiled material. Homestake's
25% share of production from the Round Mountain mine increased to 32,500 ounces
during the 1997 second quarter from 28,800 ounces during the 1996 second
quarter, primarily due to an increase in the tons loaded on the dedicated heap
leach pads. As a result, total cash costs declined to $204 per ounce during the
second quarter of 1997 from $230 per ounce in the second quarter of 1996.
Construction of an 8,000 ton-per-day gravity mill to treat higher-grade ore was
completed in July 1997, and the mill should be in full operation by the end of
the third quarter of 1997.
Total foreign gold production during the second quarter of 1997 increased by 3%
to 313,900 equivalent ounces over the comparable period for the prior year,
primarily due to production increases at the Eskay Creek and Snip mines in
Canada, at the Kalgoorlie operations in Western Australia, and the initial
production from the Agua de la Falda mine in Chile. These increases partially
were offset by declines in production at the Williams and David Bell mines in
Canada and the absence of production at the Nickel Plate mine.
Production at the Eskay Creek mine increased to 100,900 gold equivalent ounces
at a total cash cost (including third-party smelter charges) of $157 per ounce
during the second quarter of 1997 compared to 94,800 equivalent ounces produced
at a total cash cost of $173 per ounce during the second quarter of 1996. The
improved results reflect an increase in the grade of ore shipped and higher
productivity. Construction of a small gravity and flotation mill has commenced
at Eskay Creek and is scheduled for completion by year end. The mill will
improve profit margins on ore currently directly shipped to third-party smelters
and allow for the treatment of some lower-grade ores that otherwise could not be
processed economically. The capital cost of the mill is estimated to be $12
million. The mill will add approximately 30,000 ounces to Eskay Creek's annual
production. Prime Resources Group Inc. ("Prime"), Homestake's 50.6%-owned
subsidiary, became the sole owner of the Snip mine on April 30, 1996 when it
purchased Cominco Ltd.'s 60% interest in this mine for $39.3 million. Prime's
share of Snip production during the second quarter of 1997 was 31,300 ounces
compared to 21,200 ounces produced during the second quarter of 1996. Total cash
costs increased to $216 per ounce during the 1997 second quarter from $192 per
ounce during the 1996 second quarter, due to additional transportation charges
to reduce the level of on-site concentrate inventory and to increased
utilization of conventional mining rather than lower cost mechanized mining due
to the configuration of the remaining stopes to be mined. Homestake's share of
production from the Williams mine totaled 42,800 ounces during the second
quarter of 1997 compared to 51,400 ounces produced during the second quarter of
1996. The decline in production is attributable to ground control problems that
restricted access to higher-grade stopes, resulting in the processing of
additional lower-grade ore. As a result, total cash costs increased to $272 per
ounce during the 1997 second quarter compared to $225 per ounce in the prior
year's second quarter. Homestake's share of production at the David Bell mine
was 20,800 ounces during the second quarter of 1997 compared to 29,700 ounces
produced during the second quarter of 1996, primarily reflecting an expected
reduction in ore grades. Total cash costs increased to $213 per ounce during the
1997 second quarter from $134 per ounce during the 1996 second quarter.
Homestake Gold of Australia Limited's ("HGAL") share of gold production at the
Kalgoorlie operations totaled 107,000 ounces during the second quarter of 1997
at a total cash cost of $279
9
<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
per ounce compared to 77,200 ounces produced during the second quarter of 1996
at a total cash cost of $344 per ounce. The improved results primarily reflect a
21% increase in the ore grade and a 12% increase in tons milled. Construction of
a 1.6 mile decline from the northern end of the Super Pit to the Mt. Charlotte
mine has begun. This decline will provide access to ore in the upper levels of
the Mt. Charlotte orebody and should further improve the economics of the mine.
Homestake's 50% share of the cost is estimated to be $6 million. Completion of
the decline is scheduled for the first quarter of 1998.
The new Agua de la Falda mine (51% owned by Homestake, 49% by Codelco) commenced
mining operations late in 1996 and the first gold was poured in April 1997. Gold
production during the 1997 second quarter was 8,300 ounces. Both the average ore
grade and mine production to date have been higher than expected. As a result,
total cash costs of $203 per ounce for the second quarter of 1997 were well
below projections. Estimated gold production for the Agua de la Falda mine in
1997 is 27,000 ounces.
The Company's consolidated total cash cost per ounce increased slightly to $249
during the 1997 second quarter compared to $246 during the 1996 second quarter.
Year-to-date revenues from gold and ore sales totaled $324.7 million during the
first six months of 1997 compared to $370.2 million during the first six months
of 1996, reflecting significantly lower average realized prices and slightly
lower sales volumes. During the first half of 1997, 975,900 equivalent ounces of
gold were sold at an average realized price of $348 per ounce compared to
998,100 equivalent ounces of gold sold at an average realized price of $395 per
ounce during the first half of 1996. The lower sales volumes primarily are due
to lower production following the cessation of mining operations at the
McLaughlin and Nickel Plate mines. Total cash costs per ounce decreased to $247
during the first six months of 1997 from $252 during the comparable period for
the previous year.
The Company's share of revenues from the Main Pass 299 operations in the Gulf of
Mexico declined to $6.8 million during the second quarter of 1997 from $7.4
million in the second quarter of 1996, and operating losses were $0.4 million
during the 1997 second quarter compared to operating earnings of $0.8 million
during the 1996 second quarter. Sulfur sales increased to 76,700 long tons
during the 1997 second quarter from 71,500 long tons in the prior year's second
quarter. However, the average realized sulfur price declined to $60 per ton
during the second quarter compared to $64 per ton during the second quarter of
1996. Oil sales also declined due to reduced production and lower prices.
Year-to-date 1997 revenues from Main Pass 299 totaled $13.8 million compared to
year-to-date 1996 revenues of $15.8 million, and year-to-date 1997 operating
losses were $1 million compared to operating earnings of $1.1 million for the
1996 year-to-date period.
At June 30, 1997 the carrying value of the Company's investment in the Main Pass
299 sulfur mine was $109 million. In accordance with the Company's accounting
policy for reviewing the recoverability of its investments in operating mines,
the Company has estimated future Main Pass undiscounted net cash flows based on
its share of proven reserves, estimated future sales prices (considering
historical and current prices, price trends and related factors), production
costs and operating capital and reclamation costs. In estimating its future
undiscounted net cash flows, the Company has assumed an average future sales
price for sulfur of approximately $70 per ton over the expected remaining 30
year life of the mine. Although the current market for sulfur is depressed,
during the past 10 years the market for sulfur has been cyclical with prices
ranging between $55 and $142 per ton and averaging over $96 per ton (Tampa
market). During the six months ended June 30, 1997, the Company realized a price
of $59 per ton, and for the years ended December 31, 1996 and 1995, the Company
realized prices of $60 and $68 per ton, respectively. The Company does not
expect significant improvement in sulfur prices during the remainder of 1997.
However, the Company believes that future prices over the life of the mine will
10
<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
be sufficient to recover its investment. This view is based on the historical
volatility of sulfur prices and on the Main Pass mine's low operating cost
structure.
Estimates of future cash flows are subject to risks and uncertainties and it is
possible that changes could occur in the near term which may affect the
recoverability of the Company's investment in the Main Pass operations. If the
sulfur market remains depressed for a period of time, the Company may not be
able to recover all of its investment in the Main Pass mine and future
write-downs of up to $109 million may be required.
In the past, the Company's general policy has been to sell its gold production
at current prices and not to hedge its gold production except in special
circumstances, such as the Nickel Plate and McLaughlin mine programs entered
into in prior years. These programs were entered into in recognition that both
mining operations were near the end of their economic life. Recently, the Board
of Directors authorized the Company to implement strategies to provide a floor
price for a portion of annual production and enter into forward sales
arrangements if deemed appropriate. Homestake now has the flexibility to hedge a
significant portion of its gold production if it chooses to do so.
In the fourth quarter of 1996, the Company entered into forward sales
commitments for 680,100 ounces expected to be produced from the McLaughlin mine
stockpiles from 1997 through 2003. In addition, during the second quarter of
1997 the Company entered into forward sales commitments for 20,000 ounces of
gold to be produced in 2001 and 2002. Gold sales for the three and six months
ended June 30, 1997 include sales of 30,000 ounces and 60,000 ounces at average
prices of $383 per ounce and $381 per ounce, respectively. At June 30, 1997
forward sales for 640,100 ounces at an average price of $430 per ounce remain
outstanding.
A significant portion of the Company's operating expenses is incurred in
Australian and Canadian currencies. The Company's profitability is impacted by
fluctuations in these currencies' exchange rates relative to the United States
dollar. Under the Company's foreign currency protection program, the Company has
entered into a series of foreign currency option contracts which establish
trading ranges within which the United States dollar may be exchanged for
Australian and Canadian dollars. At June 30, 1997 the Company had a net
unrealized loss of $2.6 million on open contracts under this program.
Exploration expense for the three and six months ended June 30, 1997 was $13.7
million and $22 million, respectively, compared to exploration expense for the
three and six months periods ended June 30, 1996 of $11.5 million and $17.6
million, respectively. The higher exploration expenses reflect increased
activity as the Company pursues numerous prospective exploration targets and
prospects. The Company expects to spend over $40 million for exploration in
1997.
Income and mining tax expense for the six months ended June 30, 1997 was $33.2
million compared to $28.6 million for the six months ended June 30, 1996. The
increase reflects taxes of $15.7 million provided on the termination fee
received from Santa Fe upon Santa Fe's termination of the merger agreement with
Homestake. In addition, a $2.6 million credit was recorded during the first half
of 1996 with respect to a litigation recovery relating to previously paid income
taxes. The Company's income and mining tax rate was 46% in the 1997 first half
compared to 49% in the 1996 first half. The Company's consolidated effective
income and mining tax rate will fluctuate depending on the geographical mix of
pretax income.
Minority interests in the income of consolidated subsidiaries decreased to $6.1
million during the first six months of 1997 from $9.1 million during the first
six months of 1996. The decrease is primarily attributable to lower income due
to lower gold prices realized by Prime and higher exploration expenses incurred
during the first half by the Company's 51%-owned subsidiary, Agua de la Falda
S.A., which was formed in July 1996.
11
<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
The following chart details Homestake's gold production and total cash costs per
ounce by location, and consolidated revenue and production costs per ounce.
<TABLE>
<CAPTION>
Production
(Ounces in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
Mine (Percentage interest) 1997 1996 1997 1996
- -------------------------- ------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Homestake (100) 97.9 103.2 204.3 208.5
McLaughlin (100) 30.9 60.7 62.5 114.8
Round Mountain (25) 32.5 28.8 60.6 48.7
Pinson (50) (1) 6.2 2.6 12.6 4.8
Marigold (33) 7.1 5.9 14.3 12.8
------------- ------------- ------------- -------------
Total United States 174.6 201.2 354.3 389.6
Eskay Creek (100) (2,3) 100.9 94.8 195.5 194.2
Williams (50) 42.8 51.4 94.2 95.0
David Bell (50) 20.8 29.7 43.8 52.5
Quarter Claim (25) 2.8 2.8 5.6 5.6
Snip (100) (3,4) 31.3 21.2 59.5 33.0
Nickel Plate (100) - 25.1 - 51.8
------------- ------------- ------------- -------------
Total Canada 198.6 225.0 398.6 432.1
Kalgoorlie, Australia (50) 107.0 77.2 215.3 167.4
Agua de la Falda (100) 8.3 - 8.3 -
El Hueso (100) - 2.5 0.5 4.9
------------- ------------- ------------- -------------
Total Chile 8.3 2.5 8.8 4.9
------------- ------------- ------------- -------------
Total Production 488.5 505.9 977.0 994.0
Less Minority Interests (69.4) (57.3) (130.0) (112.2)
------------- ------------- ------------- -------------
Homestake's Share 419.1 448.6 847.0 881.8
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Total Cash Costs
(Dollars per ounce)
Three Months Ended Six Months Ended
June 30, June 30,
Mine (Percentage interest) 1997 1996 1997 1996
- -------------------------- ------------------------------ ------------------------------
<S> <C> <C> <C> <C>
United States
Homestake (100) $330 $300 $323 $296
McLaughlin (100) 254 200 249 237
Round Mountain (25) 204 230 219 254
Pinson (50) (1) 372 370 342 419
Marigold (33) 257 288 243 263
Canada
Eskay Creek (100) (2,3) 157 173 161 167
Williams (50) 272 225 251 246
David Bell (50) 213 134 203 158
Quarter Claim (25) 172 167 174 167
Snip (100) (3,4) 216 192 210 190
Nickel Plate (100) - 329 - 329
Kalgoorlie, Australia (50) 279 344 276 322
Chile
Agua de la Falda (100) 203 - 203 -
El Hueso (100) - 222 310 231
Weighted Average $249 $246 $247 $252
</TABLE>
12
<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
Per Ounce of Gold 1997 1996 1997 1996
- ----------------- ------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Revenue $344 $389 $348 $395
============================== ==============================
Per Ounce Costs
Cash Operating Costs (5) $245 $238 $242 $244
Other Cash Costs (6) 4 8 5 8
------------------------------ ------------------------------
Total Cash Costs 249 246 247 252
Noncash Costs (7) 54 57 54 55
------------------------------ ------------------------------
Total Production Costs $303 $303 $301 $307
============================== ==============================
<FN>
(1) Homestake increased its interest in the Pinson mine from 26.3% to 50% in
December 1996.
(2) Gold and silver are accounted for as co-products at Eskay Creek. Silver is
converted to gold equivalent using the ratio of the silver market price to
the gold market price. These ratios were 72 ounces and 74 ounces of silver
equals one ounce of gold for the three months ended June 30, 1997 and 1996,
respectively, and 71 and 73 ounces of silver equals one ounce of gold for
the six months ended June 30, 1997 and 1996, respectively. Eskay Creek
production includes 56,500 (51,700 in 1996) ounces of gold and 3.2 million
(3.2 million in 1996) ounces of silver contained in ore sold to smelters in
the second quarter and 110,900 (111,700 in 1996) ounces of gold and 6
million (6 million in 1996) ounces of silver contained in ore sold to
smelters in the year-to-date period.
(3) For comparison purposes, total cash costs per ounce include estimated
third-party costs incurred by smelter owners and others to produce
marketable gold and silver.
(4) Includes ounces of gold contained in dore and concentrates. Prime's
ownership percentage in the Snip mine increased from 40% to 100% effective
April 30, 1996.
(5) Cash operating costs are costs directly related to the physical activities
of producing gold; includes mining, milling, third-party smelting and
in-mine drilling expenditures that are related to production.
(6) Other cash costs are costs that are not directly related to, but may result
from, gold production; includes production taxes and royalties.
(7) Noncash costs are costs that typically are accounted for ratably over the
life of an operation; includes depreciation, depletion, accruals for final
reclamation and the amortization of the economic cost of property
acquisitions, but excludes amortization of SFAS 109 deferred tax purchase
adjustments relating to property acquisitions.
</FN>
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations totaled $91.6 million during the first six months of
1997 compared to $109.3 million during the first six months of 1996. Working
capital at June 30, 1997 amounted to $292 million, including $251.6 in cash and
equivalents and short-term investments.
Capital additions of $63.1 million for the first half of 1997 include $30.9
million for construction and development work at the Ruby Hill mine, $8.3
million at the Round Mountain mine primarily for a new mill to process the
higher-grade sulfide material, $7.3 million at the Homestake mine primarily for
a tailings dam lift and improvements at the underground operations, and $6.3
million at the
13
<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Kalgoorlie operations primarily for a decline from surface and a ventilation
raise at the Mt. Charlotte mine.
On March 10, 1997 Santa Fe terminated its previously announced merger agreement
with Homestake and paid Homestake a $65 million termination fee. As a result,
the Company recorded a pretax gain of $62.9 million ($47.2 million after tax),
net of merger-related expenses of $2.1 million incurred in 1997.
Construction of the Ruby Hill mine near Eureka, Nevada, commenced immediately
after final permits were received in February of this year. Production is
scheduled to begin in the fourth quarter of 1997. Homestake estimates that Ruby
Hill production will be approximately 14,000 ounces in 1997, increasing to
between 105,000 and 110,000 ounces in 1998 at an estimated total cash cost of
$140 per ounce.
In February 1997, Homestake completed the sale of its interests in the George
Lake and Back River joint ventures in Canada to Arauco for $9.3 million in cash
and 3.6 million shares of Arauco common stock. As a result of this transaction,
the Company recorded a pretax gain of $13.5 million ($8.1 million after tax),
which is included in other income.
The Company has a United States/Canadian/Australian cross-border credit facility
providing a total availability of $275 million. The Company pays a commitment
fee of 0.15% per annum on the unused portion of this facility. The credit
facility is available through September 2001 and provides for borrowings in
United States, Canadian, or Australian dollars, or gold, or a combination of
these. The credit agreement requires a minimum consolidated net worth of $500
million. In June 1997, HGAL borrowed $3.7 million under this agreement.
In February 1997, the Company paid a cash dividend of 5 cents per share. In
March 1997, the Company reduced its annual dividend rate to 10 cents per share
from 20 cents per share and declared a semi-annual dividend of 5 cents per share
which was paid in May 1997.
In April 1997, the Company filed a shelf registration statement (effective date
- - April 21, 1997) with the Securities and Exchange Commission for the potential
sale of up to 20 million shares of Homestake common stock. The proceeds from any
such offering would be available for general corporate purposes, which could
include capital expenditures, repayment of debt and future acquisitions which
have the potential to add to the Company's gold reserves and future gold
production.
Future results will be impacted by such factors as the market price of gold,
silver and sulfur, the Company's ability to expand its ore reserves and the
fluctuations of foreign currency exchange rates. The Company believes that the
combination of cash, short-term investments, available lines of credit and
future cash flows from operations will be sufficient to meet normal operating
requirements, planned capital expenditures, and anticipated dividends.
14
<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Part II - OTHER INFORMATION
Item 1 - Legal Proceedings
On July 23, 1997, the Company received a letter from the Mountain-Prairie Region
of the United States Fish and Wildlife Service stating that the "Department [of
the Interior] intends to file suit, subject to final approval by the Department
of Justice, against your company to recover natural resource damages and
assessment costs" in respect of Whitewood Creek, South Dakota, under the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act and other applicable laws. The letter stated that other federal
agencies may participate in such litigation and also stated that the Cheyenne
River Sioux Tribe intended to file such an action. The letter invited Homestake
to participate in discussions with the Department of the Interior and the Tribe
over the next 60 days and indicated that absent an agreement, "the Department
intends to request that the Department of Justice file a lawsuit for natural
resource damages against Homestake upon the expiration of the 60-day notice
period."
Whitewood Creek was a site where mining companies operating in the Black Hills
of South Dakota, including Homestake, discharged mining tailings beginning in
the nineteenth century. The stream was legally designated as a disposal stream
for mine tailings and for disposal of raw sewage and other municipal waste. In
response to changes in legal requirements, Homestake ceased discharging mine
tailings into Whitewood Creek and for many years the Homestake mine has
impounded all mine tailings that are not redeposited in the mine.
As previously reported in the Company's Form 10-K Annual Reports, an 18-mile
stretch of land along Whitewood Creek on which tailings were deposited was
designated as a superfund site and placed on the National Priorities List
("NPL") in 1983. During the period from 1982 through 1990 extensive studies of
the superfund site were conducted to identify any public health and
environmental issues related to the site and appropriate remedial action. In
August 1990, Homestake Mining Company of California ("HMCC") signed a consent
decree with the United States Environmental Protection Agency ("EPA") in United
States of America v. Homestake Mining Company of California, U.S. Dist. Ct.,
W.D.S.D., Civ. Action No. 90-5101. Under the Consent Decree, HMCC conducted
remedial work at its expense and also reimbursed the EPA for its oversight
costs. Remedial field work was completed in 1993. The decree also provided for
the three counties in which the property is located to enact institutional
controls which would limit the future use of the property included within the
area of the superfund site. Institutional controls were adopted in all three
counties. In addition, HMCC offered to purchase all properties along Whitewood
Creek that were affected by the institutional controls. Approximately $3 million
has been spent to date to acquire property along Whitewood Creek and the Company
estimates that the total cost for purchasing all of the remaining affected
property would be an additional $3 million.
The Consent Decree was terminated by the Court on January 10, 1996. The
Whitewood Creek site was deleted from the NPL on August 13, 1996. In the
deletion notice, the EPA stated that "EPA, in consultation with the State of
South Dakota, have determined that the Site poses no significant threat to
public health or the environment."
In the opinion of management, there is no basis for a natural resource damage
claim against HMCC, and the Company does not believe that resolution of the
above matters will have a material effect on the business or financial condition
or results of operations of the Company.
15
<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Item 4 - Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders held on July 25, 1997, shareholders voted
on and approved (i) the election of four Class I directors to serve until the
2000 Annual Meeting and one Class III director to serve until the 1999 Annual
Meeting, and (ii) the appointment of Coopers & Lybrand L.L.P. as independent
auditors for 1997. Shareholder votes were as follows:
(i) Election of four Class I directors and one Class III director:
Votes For Votes Withheld
--------- --------------
Class I Directors
-----------------
M. Norman Anderson 109,134,376 2,025,323
Robert H. Clark, Jr. 109,162,654 1,997,045
Douglas W. Fuerstenau 109,114,076 2,045,623
Jeffrey L. Zelms 109,072,062 2,087,637
Class III Director
------------------
Richard R. Burt 108,645,047 2,514,652
In addition to the aforementioned directors, the following directors
continued in office: Harry M. Conger, G. Robert Durham, Henry G.
Grundstedt, John Neerhout, Jr., Stuart T. Peeler, Carol A. Rae, and Jack E.
Thompson. On July 25, 1997, William A. Humphrey, Robert K. Jaedicke and
Berne A. Schepman retired as directors.
(ii) Approval of the appointment of Coopers & Lybrand L.L.P. as independent
auditors:
Votes For Votes Against Abstain
--------- ------------- -------
110,078,888 368,502 712,309
Item 5 - Other Information
(a) Amendment to Bylaws
On July 24, 1997 the Board of Directors reduced the number of
directors from 13 to 12. See Exhibit 3.4 filed herewith.
(b) CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
Certain statements contained in this Form 10-Q that are not statements
of historical facts are "forward looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such
statements are based on beliefs of management, as well as assumptions
made by and information currently available to management. Forward
looking statements include those preceded by the words "believe,"
"estimate," "expect," "intend," "will," and similar expressions, and
include estimates of future production, costs per ounce, dates of
construction completion, costs of capital projects and commencement of
operations. Forward looking statements are subject to risks,
uncertainties and other factors that could cause actual results to
differ materially from expected results. Some important factors and
assumptions that could cause actual results to differ materially from
expected results are discussed below. Those listed are not exclusive.
Estimates of future production for particular properties and for the
Company as a whole are derived from annual mine plans that have been
developed based on mining experience, reserve estimates, assumptions
regarding ground conditions and physical characteristics of ore (such
as hardness and metallurgical characteristics), expected rates
16
<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
and costs of production, and estimated future sales prices. Actual
production may vary for a variety of reasons, such as the factors
described above, ore mined varying from estimates of grade and
metallurgical and other characteristics, mining dilution, actions by
labor, and government imposed restrictions. Estimates of production
from properties and facilities not yet in production are based on
similar factors but there is a greater likelihood that actual results
will vary from estimates due to a lack of actual experience. Cash cost
estimates are based on such things as past experience, reserve and
production estimates, anticipated mining conditions, estimated costs of
materials, supplies and utilities, and estimated exchange rates.
Noncash cost estimates are based on capital costs and reserve
estimates, changes based on actual amounts of unamortized capital,
changes in reserve estimates, and changes in estimates of final
reclamation. Estimates of future capital costs are based on a variety
of factors and include past operating experience, estimated levels of
future production, estimates by and contract terms with third-party
suppliers, expectations as to government and legal requirements,
feasibility reports by Company personnel and outside consultants, and
other factors. Capital cost estimates for new projects are subject to
greater uncertainties than additional capital costs for existing
operations. Estimated time for completion of capital projects is based
on such factors as the Company's experience in completing capital
projects, and estimates provided by and contract terms with
contractors, engineers, suppliers and others involved in design and
construction of projects. Estimates reflect assumptions about factors
beyond the Company's control, such as the time government agencies take
in processing applications, issuing permits and otherwise completing
processes required under applicable laws and regulations. Actual time
to completion can vary significantly from estimates.
See the Company's Form 10-K Report for the year ended December 31,
1996, Part IV, "FORWARD LOOKING STATEMENTS" and "RISK FACTORS," for a
more detailed discussion of factors that may impact expected future
results.
Item 6.
(a) Exhibits Method of Filing
-------- ----------------
3.4 - Bylaws (as amended through July 24, 1997), Filed herewith
reducing the number of directors from electronically
13 to 12.
11 - Computation of Earnings Per Share Filed herewith
electronically
27 - Financial Data Schedule Filed herewith
electronically
(b) Reports on Form 8-K
Two reports on Form 8-K were filed during the quarter ended June 30,
1997.
The report on Form 8-K dated May 21, 1997 was submitted in order to
file the Registrant's Bylaws (as amended through May 13, 1997).
The report on Form 8-K dated June 18, 1997 was submitted in order to
file to file the First Amendment and Waiver to Credit Agreement dated
as of April 3, 1997.
17
<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HOMESTAKE MINING COMPANY
Date: August 13, 1997 By /s/David W. Peat
--------------- ------------------
David W. Peat
Vice President and Controller
(Chief Accounting Officer)
18
EXHIBIT 11
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Computation of Earnings Per Share (unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
PRIMARY 1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Earnings:
Net income (loss) applicable to primary earnings
per share calculation $ (16,222) $ 6,776 $ 33,638 $ 20,429
============= ============= ============= =============
Weighted average number of shares outstanding 146,728 146,662 146,705 145,949
============= ============= ============= =============
Net income (loss) per share - primary $ (0.11) $ 0.05 $ 0.23 $ 0.14
============= ============= ============= =============
FULLY DILUTED
Earnings:
Net income (loss) $ (16,222) $ 6,776 $ 33,638 $ 20,429
Add: Interest relating to 5.5% convertible
subordinated notes, net of tax 1,629 1,629 3,259 3,259
Amortization of issuance costs relating
to 5.5% convertible subordinated notes,
net of tax 110 110 221 221
------------- ------------- ------------- -------------
Net income (loss) applicable to fully diluted
earnings per share calculation $ (14,483) $ 8,515 $ 37,118 $ 23,909
============= ============= ============= =============
Weighted average number of shares outstanding:
Common shares 146,728 146,662 146,705 145,949
Additional shares relating to conversion of
5.5% convertible subordinated notes 6,505 6,505 6,505 6,505
------------- ------------- ------------- -------------
153,233 153,167 153,210 152,454
============= ============= ============= =============
Net income (loss) per share - fully diluted (a) $ (0.09) $ 0.06 $ 0.24 $ 0.16
============= ============= ============= =============
<FN>
(a) This calculation is submitted in accordance with Regulation S-K item 601
(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an anti-dilutive result.
</FN>
</TABLE>
EXHIBIT 3.4
HOMESTAKE MINING COMPANY
(A DELAWARE CORPORATION)
BYLAWS
As amended through July 24, 1997
ARTICLE I
MEETING OF STOCKHOLDERS
SECTION 1. The annual meeting of the Company shall be held on such day
and at such time as the Board of Directors shall determine, for the election of
Directors and the transaction of such other business as properly come before
such meeting.
SECTION 2. Special meetings of the stockholders may be called at any
time by the Chairman of the Board, by the President, by the Board of Directors
of the Company, by a committee of the Board of Directors which has been duly
designated by the Board of Directors and whose powers and authority, as provided
in a resolution of the Board of Directors or in the Bylaws of the Company
include the power to call such meetings, or by stockholders having not less than
seventy-five percent (75%) of the total voting power of all outstanding shares
of stock of the Company, but such special meetings may not be called by any
other person or persons; provided, however, that if and to the extent that any
special meeting of stockholders may be called by any other person or persons
specified in any provisions of the Restated Certificate of Incorporation or any
amendment thereto, or any certificate filed under Section 151(g) of the General
Corporation Law of Delaware (or its successor statute as in effect from time to
time hereafter), then such special meeting may also be called by the person or
persons in the manner, at the times and for the purposes so specified.
SECTION 3. All notices of meetings of stockholders shall be sent or
otherwise given in accordance with Section 4 of this Article I not less than ten
(10) nor more than sixty (60) days before the date of the meeting. The notice
shall specify the place, date and hour of the meeting and (1) in the case of a
special meeting, the general nature of the business to be transacted, and no
other business may be transacted, or (2) in the case of the annual meeting,
those matters which the Board of Directors, at the time of giving the notice,
intends to present for action by the stockholders, and (3) in the case of any
meeting at which directors are to be elected, the names of the nominees intended
at the time of the mailing of the notice to be presented by management for
election.
SECTION 4. Notice of any meeting of stockholders shall be given either
personally or by mail or other written communication, charges prepaid, addressed
to the stockholder at the address of the stockholder appearing on the books of
the Company, or given by the stockholder to the Company for the purpose of
notice. If no such address appears on the Company's books or
<PAGE>
is given, notice shall be deemed to have been given if sent to that stockholder
by mail or other written communication to the Company's principal executive
office, or, if published at least once in a newspaper of general circulation in
the county where that office is located. Notice shall be deemed to have been
given at the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.
If any notice addressed to a stockholder at the address of that
stockholder appearing on the books of the Company is returned to the Company by
the United States Postal Service marked to indicate that the United States
Postal Service is unable to deliver the notice to the stockholder at that
address, all future notices or reports shall be deemed to have been duly given
without further mailing if these shall be available to the stockholder on
written demand of the stockholder at the principal executive office of the
Company for a period of one year from the date of the giving of the notice. An
affidavit of the mailing or other means of giving any notice of any
stockholders' meeting may be executed by the Secretary, any Assistant Secretary,
or any transfer agent of the Company giving the notice, and if executed shall be
filed and maintained in the minute book of the Company.
SECTION 5. Every annual meeting and every special meeting of the
stockholders shall be held at such place within or without the State of Delaware
as may be designated as the place for holding such meeting by the Board of
Directors. In the absence of any such designation, stockholders' meetings shall
be held at the principal executive office of the Company.
SECTION 6. Except as otherwise provided by statute of by the Restated
Certificate of Incorporation, the presence in person or by proxy of the holders
of a majority in interest of the Common Stock of the Company at the time issued
and outstanding at any meeting shall constitute a quorum for the transaction of
business. The stockholders present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment notwithstanding
the withdrawal of enough stockholders to leave less than a quorum, if any action
taken (other than adjournment) is approved by at least a majority of the shares
required to constitute a quorum. If such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have the power to
adjourn the meeting from time to time until a quorum shall by present or
represented. At any adjourned meeting at which a quorum shall be present or
represented any business which might have been transacted at the meeting which
was adjourned may be transacted and with the same effect. If after the
adjournment a new record date is fixed for the adjourned meeting or if the
adjournment is for more than thirty (30) days, notice of the adjourned meeting
shall be given as in the case of an original meeting, but otherwise no further
notice of the time and place of the adjourned meeting need be given other than
by announcement at the meeting at which such adjournment is taken.
SECTION 7. Except as otherwise provided by statute or by the Restated
Certificate of Incorporation, every stockholder of record shall be entitled at
any meeting of stockholders to one
2
<PAGE>
vote on each matter submitted to a vote of the stockholders for every share of
stock standing in the name of such person on the books of the Company and
qualified to vote. The stockholders' vote shall be by written ballot unless the
requirement therefor is dispensed with by the Board of Directors. On any matter
other than elections of directors, any stockholder may vote part of the shares
in favor of the proposal and refrain from voting the remaining shares or vote
them against the proposal, but, if the stockholder fails to specify the number
of shares which the stockholder is voting affirmatively, it will be conclusively
presumed that the stockholder's approving vote is with respect to all shares
that the stockholder is entitled to vote. If a quorum is present, the
affirmative vote of the majority of the shares present in person or represented
by proxy and entitled to vote on any matter shall be the act of the
stockholders, unless the vote of a greater number or voting by classes is
required by statute or by the Restated Certificate of Incorporation.
SECTION 8. In the event the Board of Directors fixes a day for the
determination of stockholders of record entitled to vote as provided in Section
I of Article XIV of these Bylaws, then only persons in whose names shares
entitled to vote stand on the stock records of the Company on such day shall be
entitled to vote.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the business day next preceding the day notice is
given or, if notice is waived, at the close of business on the business day next
preceding the day on which the meeting is held.
If no record date is fixed, the record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting
unless the Board of Directors fixes a new record date for the adjourned meeting,
but the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 9. At all meetings of the stockholders, stockholders may vote
either in person or by one or more agents authorized by a written proxy signed
by the stockholder and filed with the Secretary of the Company. A validly
executed proxy which does not state that it is irrevocable shall continue in
full force and effect unless (1) revoked by the person executing it, before the
vote pursuant to that proxy, by a writing delivered to the Company stating that
the proxy is revoked, or by a subsequent proxy executed by, or attendance at the
meeting and voting in person by, the person executing the proxy, or (2) written
notice of the death or incapacity of the maker of that proxy is received by the
Company before the vote pursuant to that proxy is counted; provided, however,
that no proxy shall be valid after the expiration of three (3) years from the
date of the proxy, unless otherwise provided in the proxy. The revocability of a
proxy that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(c)
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of the General Corporation Law of Delaware (or its successor statute as in
effect from time to time hereafter).
SECTION 10. The transactions of any meeting of stockholders, however
called and noticed, and wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after a meeting, each person
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or a consent to a holding of the meeting, or an approval of
minutes of the meeting. The waiver of notice or consent need not specify either
the business to be transacted or the purpose of any annual or special meeting of
stockholders. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened, and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by law to be
included in the notice of meeting but not so included if that objection is
expressly made at the meeting.
SECTION 11. No action shall be taken by the stockholders except at an
annual or special meeting of the stockholders.
SECTION 12. At any annual meeting of stockholders, only such business
shall be conducted as shall have been brought before the annual meeting (1) by
or at the direction of the chairman of the meeting or (2) by any stockholder who
is a holder of record at the time of the giving of the notice provided for in
this Section 12, who is entitled to vote at the meeting, and who complies with
the procedures set forth in this Section 12.
For business properly to be brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in proper
written form to the Secretary. To be timely, a stockholder's notice must be
received at the principal executive offices of the Company not less than 75 days
nor more than 180 days prior to the anniversary date of the immediately
preceding annual meeting; provided, however, that in the event that the date of
the annual meeting is more than 30 days earlier or more than 30 days later than
such anniversary date, notice by the stockholder to be timely must be so
received not earlier than the 180th day prior to such annual meeting and not
later than the close of business on the later of the 75th day prior to such
annual meeting or the 10th day following the day on which public announcement of
the date of such meeting is first made. To be in proper written form, a
stockholder's notice to the Secretary shall set forth in writing as to each
matter the stockholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting; and (ii) the
name and address, as they appear on the Company's books, of the stockholder
proposing such business.
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The foregoing notice requirements shall also be deemed satisfied by a
stockholder if the stockholder has notified the Company of his or her intention
to present a proposal at an annual meeting and such stockholder's proposal has
been included in a proxy statement that has been prepared by management of the
Company to solicit proxies for such annual meeting; provided, however, that if
such stockholder does not appear or send a qualified representative to present
such proposal at such annual meeting, the Company need not present such proposal
for a vote at such meeting, notwithstanding that proxies in respect of such vote
may have been received by the Company.
ARTICLE II
DIRECTORS
SECTION 1. Subject to the limitations prescribed by statute or by the
Restated Certificate of Incorporation or these Bylaws as to action to be
authorized or approved by the stockholders, all the powers, rights and
privileges of the Company shall be exercised by or under the direction of, and
the business and affairs of the Company shall be managed under the direction of,
its Board of Directors. Directors shall be elected by the stockholders of the
Company, and at each election the persons receiving the greatest number of
votes, up to the number of directors then to be elected, shall be the persons
then elected. The election of directors is subject to any provisions in the
Restated Certificate of Incorporation relating thereto, including any provisions
for a classified Board.
SECTION 2. Except as otherwise provided by statute or by the Restated
Certificate of Incorporation, any vacancy in the Board of Directors may be
filled by a majority of the remaining directors, though less than a quorum, or
by a sole remaining director, and each director so elected shall hold office
until his successor is elected and qualified.
SECTION 3. All meetings of the Board of Directors shall be held at the
principal office of the Company or at any other place within or without the
State of Delaware as the Board of Directors may from time to time fix therefor.
Any meeting of the Board of Directors, regular or special, may be held by
conference telephone or similar communication equipment, so long as all
directors participating in the meeting can hear one another, and all such
directors shall be deemed to be present in person at the meeting.
SECTION 4. A regular meeting of the Board of Directors shall be
required to be given, shall be held, if a quorum be present, in each and every
year immediately after the adjournment of the annual meeting of stockholders for
the purpose of electing officers and transacting such other business as might be
transacted at any regular meeting of the Board. Regular meetings of the Board of
Directors, of which no notice shall be required to be given, shall be held in
every odd-numbered month in accordance with a schedule established by the Board
of Directors from
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time to time, except that the scheduled date of any meeting may be changed by
the Chairman of the Board or the President, in the discretion of either,
provided that notice of such change shall be given to all directors personally
or by mail, telegraph or telephone at least one (1) week prior to such scheduled
date and at least four (4) days prior to the date upon which such meeting is to
be held.
SECTION 5. Special meetings of the Board of Directors shall be called
by the Secretary at the direction of the Chairman of the Board, the President,
or a majority of the directors. Notice of the time and place of any special
meeting of the Board of Directors shall be given by serving the same personally
or by telephone or by telegram addressed to each director at his post office
address as the same shall appear on the books of the Company at least two (2)
hours before such meeting. Each member of the Board of Directors shall, by
writing filed with the Secretary, designate his post office address to which
notices of meetings of the Board of Directors of this Company shall be directed,
and in the event of any change therein shall likewise designate his new post
office address.
SECTION 6. At all meetings of the Board of Directors a majority of the
directors shall be necessary and sufficient to constitute a quorum for the
transaction of business, and every act and decision done or made by a majority
of the directors present at a regular meeting or a duly called special meeting
held at which a quorum is present shall be the act of the Board of Directors,
unless a greater number is required by statute or by the Restated Certificate of
Incorporation. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting. In the absence of a quorum, a majority of the directors present at any
meeting may adjourn the meeting from time to time until and not past the time
fixed for the next regular meeting of the Board of Directors. Notice of the time
and place of holding an adjourned meeting need not be given to directors absent
from the meeting which was adjourned if the time and place of the adjourned
meeting are fixed at the meeting which was adjourned.
SECTION 7. By resolution of the Board of Directors, a fixed sum may be
allowed each director attending a meeting of the Board of Directors. Members of
the Executive Committee or other committees may likewise be allowed fixed sums
as determined by the Board of Directors. All directors shall be reimbursed for
any reasonable expenses which they incur as such for attendance at meetings of
the Board of Directors or committees or otherwise. Directors who are not also
officers or employees of the Company may receive such compensation for their
services as directors as may be fixed or determined by the Board of Directors.
Except as provided herein, no director shall be compensated for his services as
a director, but any director may serve the Company in any other capacity and
receive compensation therefor.
SECTION 8. The transactions of any meeting of the Board of Directors,
however called and notices, and wherever held, shall be as valid as though had
at a meeting duly held after
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regular call and notice, if a quorum be present and if, either before or after
the meeting, each of the directors not present signs a written waiver of notice
and consent to holding the meeting or an approval of the minutes thereof, which
waiver, consent, or approval shall be filed with the corporate records or made a
part of the minutes of the meeting. Notice of a meeting shall also be deemed
given to any director who attends the meeting without protesting before or at
its commencement, the lack of notice to that director. Any action required or
permitted to be taken by the Board of Directors may be taken without a meeting,
if all members of the Board shall individually or collectively consent in
writing to such action. Such written consent or consents shall be filed with the
minutes of the proceedings of the Board of Directors.
SECTION 9. The authorized number of Directors is hereby set at twelve
until such number is changed by a Bylaw or amendment thereof duly adopted by the
stockholders in accordance with the Restated Certificate of Incorporation or by
the Board of Directors amending this Section Nine. The Board of Directors shall
be divided into three classes of directors elected for terms of three years
each. Until so changed, Class I shall consist of four directors, Class II shall
consist of four directors, and Class III shall consist of four directors.
SECTION 10. The Board of Directors may from time to time designate from
one to three former directors of this Company as Consultants to the Board of
Directors. The term of office of each such Consultant to the Board of Directors
shall terminate immediately after the adjournment of each annual meeting of
stockholders of the Company, or at such other time as may be determined by the
Board of Directors. A Consultant to the Board of Directors may attend meetings
of the Board of Directors with the privilege of participating in all
discussions, but without the right to vote, and shall be eligible for
appointment as Consultant to committees of the Board of Directors, but with no
right to vote. Consultants shall not be included in determining the presence of
a quorum. Other rights, privileges and duties of Consultants to the Board of
Directors and any compensation to be paid to Consultants to the Board of
Directors may be provided from time to time by resolution of the Board of
Directors.
ARTICLE III
EXECUTIVE AND OTHER COMMITTEES
SECTION 1. The Board of Directors may, by resolution or resolutions
passed by a majority of the authorized number of directors, appoint from their
number an Executive Committee of one or more directors, who shall make
recommendations to the Board. The Executive Committee, to the extent provided in
the resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors including, without limitation,
the power and authority to declare a dividend, to authorize the issuance of
stock and to adopt a certificate of ownership and merger pursuant to Section 253
of the General Corporation Law of Delaware (or its successor statute as in
effect from time to time hereafter); but shall not
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have the power or authority to: (a) amend the Restated Certificate of
Incorporation (except that a committee may, to the extent authorized in
resolutions providing for the issuances of stock adopted by the Board of
Directors as provided in Section 151(a) of the General Corporation Law of
Delaware (or its successor statute as in effect from time to time hereafter),
fix any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, distribution of assets of the Company, or the
conversion into or the exchange of such shares for shares of any other class or
classes or any other series of the same of any other class or classes of stock
of the Company), (b) adopt an agreement of merger or consolidation under Section
251 or 252 of the General Corporation Law of Delaware (or its successor statute
as in effect from time to time hereafter), (c) recommend to the stockholders the
sale, lease or exchange of all or substantially all of the Company's property
and assets, (d) recommend to the stockholders a dissolution of the Company or a
revocation of a dissolution, or (e) amend the Bylaws of the Company. The Board
of Directors shall elect a Chairman of the Executive Committee, and in his
absence the Chairman of the Board shall act as Chairman of the Executive
Committee, ex officio, in his place, and in the absence of the Chairman of the
Executive Committee and the Chairman of the Board, the President of the Company
shall act as Chairman of the Executive Committee, ex officio, in their places.
SECTION 2. A majority of the Executive Committee shall constitute a
quorum for the transaction of business at any meeting thereof duly called and
held. The Board of Directors shall have the power to provide by resolution for
regular meetings of the Executive Committee and to specify the time and place of
holding such regular meetings. Special meetings of the Executive Committee may
be called at any time by the Chairman of the Board, the President, or by a
majority of the members of the Executive Committee and notice of all such
special meetings shall be given in the manner provided in Section 5 of Article
II. Meetings of the Executive Committee may be held at the principal office of
the Company, or, if authorized by resolution of the Board of Directors, such
meetings may, by unanimous consent of the members of the committee, be held at
any other place. The Board of Directors shall have the power to prescribe rules
for the government of the Executive Committee not inconsistent with the
provision of these Bylaws. In the absence of any such prescription by the Board
of Directors of by the Bylaws, the regular and special meetings and other
actions of the Executive Committee shall be governed by the provisions of
Article II applicable to meetings and actions of the Board, with such changes in
the context of these Bylaws as are necessary to substitute the Executive
Committee and its members for the Board of Directors and its members.
SECTION 3. The Board of Directors may, by resolution or resolutions
passed by a majority of the authorized number of directors, appoint from their
number such other committees consisting of one or more directors as the Board of
Directors may deem advisable. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent member at the
meeting of the committee. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have all the authority of the Board
of Directors,
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except with respect to the matters set forth in (a) through (e) of Section 1 of
this Article III and shall be governed in accordance with Section 2 of this
Article III.
SECTION 4. The Executive and other committees shall keep records of
their proceedings and report the same to the Board of Directors whenever so
required.
ARTICLE IV
OFFICERS
SECTION 1. The officers of this Company shall be a Chairman of the
Board, a President, a Vice President, a Secretary, a Treasurer and a Controller,
who shall be elected by and hold office at the pleasure of the Board of
Directors. The Board of Directors may also elect such additional officers, if
any, as it shall deem expedient, including, without limitation, one or more
Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice
Presidents and one or more assistant officers. Only members of the Board of
Directors shall be eligible for the office of the Chairman of the Board and the
office of President, but no other officer need be a member of the Board of
Directors. Any two or more offices may be held by the same person. The
compensation of officers shall be fixed and determined by the Board of Directors
from time to time.
SECTION 2. The Board of Directors, at its first meeting after each
annual meeting of stockholders, shall elect a Chairman of the Board, a
President, a Vice President, a Secretary, a Treasurer and a Controller and at
such time or from time to time may elect or appoint such other officers and
agents as it shall deem expedient.
SECTION 3. Except as otherwise provided by law, or in these Bylaws, or
by resolutions of the Board of Directors, each of such officers shall serve
until the date appointed by these Bylaws for the next annual meeting of
stockholders and until his successor is elected or appointed and shall have
qualified. If the office of any officer becomes vacant for any reason, the
vacancy may be filled by the Board of Directors.
SECTION 4. The Board of Directors, in its discretion, may require any
officer, agent or employee of the Company to give security for the faithful
performance of his duties in such form and amount and with or without one or
more of such sureties as the Board of Directors may determine.
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SECTION 5. Nothing in this Article IV or elsewhere in these Bylaws
shall prevent the Board of Directors from authorizing, or the Company from
executing, a contract for the employment of a person as an officer of the
Company for a period of more than one year.
ARTICLE V
CHAIRMAN OF THE BOARD AND PRESIDENT
SECTION 1. The Chairman of the Board shall, if present, preside at all
meetings of the stockholders and of the Board of Directors, and shall have such
other powers and duties as shall be prescribed by the Board of Directors or by
law. He shall be a member ex officio of all committees, except the Audit,
Compensation and Nominating Committees.
SECTION 2. The President shall, if present and in the absence of the
Chairman of the Board, preside at all meetings of the stockholders and of the
Board of Directors, and shall have such other powers and duties as shall be
prescribed by the Board of Directors or by law. He shall be a member ex officio
of all committees, except the Audit, Compensation and Nominating Committees.
ARTICLE VI
POWERS AND DUTIES OF THE CHIEF EXECUTIVE OFFICER
AND HEAD OF THE COMPANY
Either the Chairman of the Board or the President, as may be determined
from time to time by the Board of Directors, shall have the powers and duties of
the Chief Executive Officer and head of the Company. Such powers and duties
shall include the general control and management of the business and affairs of
the Company; the responsibility for seeing that all orders and resolutions of
the Board of Directors are carried into effect; the exclusive authority to
execute bonds, mortgages and other contracts requiring a seal, under the seal of
the Company, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Company; and membership ex officio in all committees, except the Audit,
Compensation and Nominating Committees.
ARTICLE VII
EXECUTIVE VICE PRESIDENTS AND VICE PRESIDENTS
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SECTION 1. Executive Vice Presidents, if any shall have been elected
and be in office, shall have and may exercise the powers and duties of the
President in the absence or inability of the latter and such other powers and
duties as may be assigned to him by the Board of Directors.
SECTION 2. The Vice President or Vice Presidents (including any Senior
Vice Presidents) shall have and exercise the powers and duties of the Executive
Vice President in the absence or inability of the President and the Executive
Vice Presidents and such other powers and duties as may be assigned to them
respectively by the Board of Directors.
SECTION 3. The Vice President, Finance shall be the Chief Financial
Officer of the Company.
ARTICLE VIII
SECRETARY AND ASSISTANT SECRETARIES
SECTION 1. The Secretary shall have custody of the seal of the Company,
and when authorized by the Board of Directors, he shall affix the same to any
instrument requiring it, and when so affixed it shall be attested by his
signature or by the signature of the Treasurer or an Assistant Secretary. He
shall attend all meetings of the stockholders and of the Board of Directors and
keep the minutes of all proceedings in a book or books to be kept for that
purpose at the principal office of the Company or at such other place as the
Board of Directors may from time to time determine, and he shall perform like
duties for the Executive and other committees when required. He shall attend to
the giving and serving of all notices of the Company, and he shall perform such
other duties as may be incidental to his office or as may be assigned to him by
the Board of Directors, the Chairman of the Board, the President, or the officer
under whose supervision he shall be.
SECTION 2. It shall be the duty of the Assistant Secretaries, if any
shall have been elected and be in office, to aid the Secretary in the discharge
of his duties and to perform such other duties as may be assigned to them by the
Board of Directors, the Chairman of the Board, the President, the Vice
President, Finance, or the Secretary.
ARTICLE IX
TREASURER AND ASSISTANT TREASURER
SECTION 1. The Treasurer shall have the care and custody of the funds
and securities of the Company, except as otherwise determined by the Board of
Directors, and shall deposit all such funds and securities of the Company in the
name and to the credit of the Company in such depositories and places and
subject to withdrawal in such manner as these Bylaws or the Board
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of Directors may determine. Within established lines of authority, he shall be
responsible for the administration of the Company's securities portfolio,
pension plans, insurance and employee benefit programs, the keeping of the stock
certificate book and such other books and records as the Board of Directors may
direct. He shall also have charge of a stock book containing the names of the
stockholders and their addresses, the number of shares of stock held by them
respectively, the name and date of the certificates issued for the same, and the
number and date of cancellation of every certificate surrendered for
cancellation, and shall have such other powers and perform such other duties as
may be conferred upon or assigned to him by the Board of Directors, the Chairman
of the Board, the President, the Vice President, Finance, or the officer under
whose supervision he shall be.
SECTION 2. It shall be the duty of the Assistant Treasurer, if one
shall have been elected and be in office, to aid the Treasurer in the discharge
of his duties and perform such other duties as may be assigned to him by the
Board of Directors, the Chairman of the Board, the President, the Vice
President, Finance, or the Treasurer.
ARTICLE X
CONTROLLER AND ASSISTANT CONTROLLER
SECTION 1. The Controller shall keep or cause to be kept adequate and
correct accounts of the corporate properties and business transactions in books
belonging to the Company, and he shall disburse the funds of the Company as
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors,
whenever they may require it, an account of all of his transactions and the
financial condition of the Company. He shall be responsible for the
administration of programs providing for financial management and budgetary
controls of the Company, development of accounting policies and procedures, and
use of data processing equipment and the preparation, review and filing of all
tax and other financial reports and returns, and he shall have such other powers
and perform such other duties as may be conferred upon or assigned to him by the
Board of Directors, the Chairman of the Board, the President, the Vice
President, Finance, or the officer under whose direct supervision he shall be.
SECTION 2. It shall be the duty of the Assistant Controller, if one
shall have been elected and be in office, to aid the Controller in the discharge
of his duties and to perform such other duties as may be assigned to him by the
Board of Directors, the Chairman of the Board, the President, the Vice
President, Finance, or the Controller.
SECTION 3. The Controller shall be the Chief Accounting Officer of the
Company.
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ARTICLE XI
GENERAL MANAGER
SECTION 1. The Board of Directors may appoint a General Manager who
shall not be an officer of the Company unless the Board shall otherwise
determine.
SECTION 2. Subject to the supervision and direction of the Chairman of
the Board or the President, and in accordance with the policies determined by
the Board of Directors, the General Manager shall have power and authority to do
and transact and supervise and direct such of the usual and ordinary business of
the Company as may be designated by the Chairman of the Board or the President.
SECTION 3. The Board of Directors may also appoint an Assistant General
Manager to aid the General Manager in the performance of his duties and to
perform such other duties as may be required of him by the Chairman of the Board
or the President.
SECTION 4. The Chairman of the Board or the President may, with the
approval of the Board of Directors, appoint managers or superintendents for
specific operations that are not related to or included in those assigned to the
General Manager, with duties and responsibilities as may be designated by the
Chairman of the Board or the President.
ARTICLE XII
REMOVALS, RESIGNATIONS AND VACANCIES OF DIRECTORS AND OFFICERS
SECTION 1. No member of the Board of Directors may be removed without
cause and except in compliance with the Company's Restated Certificate of
Incorporation.
SECTION 2. Any director or officer may resign his office at any time,
such resignation to be made in writing and to take effect from the time of its
receipt by the Company, unless a different time be fixed in the resignation, and
in that event, from the time so fixed. The acceptance of a resignation shall not
be required to make it effective.
SECTION 3. Any officer elected or appointed by the Board of Directors
may be removed at any time with or without cause by the Board of Directors. Any
other officer or employee of the Company may be removed at any time with of
without cause by the Board of Directors or by any committee or superior officer
upon who such power of removal may be conferred by the Bylaws or by the Board of
Directors.
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SECTION 4. If the office of any director becomes vacant for any cause
other than his removal or the expiration of his term of office, or if the office
of any officer, agent or employee becomes vacant for any cause (other than the
expiration of his term of office), such vacancy may be filled for the unexpired
portion of the term, if any, by a majority of the remaining directors, though
less than a quorum, or by a sole remaining director.
ARTICLE XIII
CERTIFICATES OF STOCK
SECTION 1. Form of Certificate. Certificates for shares of stock of the
Company shall be in such form and of such design as the Board of Directors shall
prescribe and each certificate for shares issued by the Company shall be signed
by the Chairman of the Board, or the President or the Executive Vice President
or a Vice President and the Secretary or an Assistant Secretary. Any or all of
the signatures on the certificate may be facsimile. If any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the Company
with the same effect as if such person were an officer, transfer agent or
registrar at the date of issue. The certificates for shares shall be numbered
and registered as they are issued. They shall exhibit the number, date of
issuance, name of person to whom issued, designation, if any, the class or
series of shares represented thereby, the par value of the shares or a statement
that such shares are without par value.
SECTION 2. Transfer of Shares. Upon surrender to the Secretary or
Transfer Agent of the Company of a certificate for shares, duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto and
the old certificate canceled and the transaction recorded upon the books of the
Company.
SECTION 3. Lost Certificates. The Chairman of the Board or the
President and the Secretary or the Assistant Secretary may in their discretion
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Company alleged to have
been lost or destroyed upon the production by the person claiming the
certificate for shares to be lost or destroyed of satisfactory evidence of the
loss or destruction of such certificate or certificates and of the claimant's
ownership of the shares of stock represented thereby, together with a bond in
favor of the Company, with a surety satisfactory to said officers, in the amount
of the then current market value of the stock represented by such allegedly lost
certificate or certificates, conditioned upon such claimant and surety
indemnifying and saving harmless the Company from all and every cost, charge,
expense and liability which it may in any manner incur by reason of the issuance
of such new certificate or certificates, and further conditioned upon their
surrendering to the Company for cancellation such allegedly lost certificate or
certificates in
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the event of their subsequent discovery; or the Chairman of the Board or
President or Secretary may refer any such application for the issuance of a new
certificate or certificates to the Board of Directors which shall have the power
to direct the issuance of a new certificate or certificates upon submission of
such proof and upon such guarantee on the part of the applicant as the Board of
Directors may deem satisfactory.
ARTICLE XIV
GENERAL PROVISIONS
SECTION 1. Fixing of Record Date or Closing of Transfer Books. The
Board of Directors may fix a time in the future as a record date for the
determination of the stockholders entitled to notice of and to vote at any
meeting or entitled to receive any dividend or distribution or any allotment of
rights or to exercise any rights in respect of any other lawful action. The
record date so fixed shall not be more than sixty (60) nor less than ten (10)
days prior to the date of such meeting and no more than sixty (60) days prior to
any other action. When a record date is so fixed, then, subject to the
provisions of the General Corporation Law of Delaware, only stockholders of
record at that date shall be entitled to notice of and to vote at the meeting or
to receive the dividend, distribution or allotment of rights or to exercise the
rights, as the case may be, notwithstanding any transfer of any shares on the
books of the Company after the record date. The Board of Directors may close the
books of the Company against transfer of shares during the whole or any part of
the period of not more than sixty (60) days prior to the date of a stockholders'
meeting, the date when the right to any distribution or allotment of rights
vests, or the effective date of any change, conversion or exchange of shares.
SECTION 2. Dividends. Subject to the provisions of the Restated
Certificate of Incorporation relating thereto, if any, dividends may be declared
by the Board of Directors at any regular or special meeting of the Board of
Directors pursuant to law. Dividends may be paid in cash, in property, or in
shares of capital stock, subject to any provisions of the Restated Certificate
of Incorporation.
SECTION 3. Reserves. Before payment of any dividend there may be set
aside out of any funds of the Company available for dividends such sum or sums
as the Board of Directors from time to time in their absolute discretion think
appropriate as a reserve fund to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Company, or for
such other purposes as the Board of Directors shall think conducive to the
interests of the Company, and the Board of Directors may abolish any such
reserve in the manner in which it was created.
SECTION 4. Annual Report. The Board of Directors shall cause an annual
report to be sent to the stockholders not later than one hundred twenty (120)
days after the close of each fiscal
15
<PAGE>
year of the Company and at least fifteen (15) days prior to the annual meeting
of stockholders to be held during the ensuing fiscal year.
SECTION 5. Checks, Drafts and Notes. All checks, drafts and demands for
money and notes of the Company shall be signed by such individual or individuals
as the Board of Directors may from time to time designate.
SECTION 6. Representation of Shares of Other Corporations. The chief
executive officer or any other officer or officers authorized by the Board of
Directors or the President are each authorized to vote represent, and exercise
on behalf of the Company all rights incident to any and all shares of any other
corporation or corporations standing in the name of the Company. The authority
herein granted may be exercised either by any such officer in person or by any
other person authorized so to do by proxy or power of attorney duly executed by
said officer.
SECTION 7. Seal. The seal of the Company shall consist of a circle
bearing on its surface the inscription,
"Homestake Mining Company
Delaware
Incorporated November 28, 1983"
SECTION 8. Indemnification.
(a) Right of Indemnification. To the fullest extent permitted by the
General Corporation Law of Delaware, the Company shall indemnify each
director and officer and may indemnify each employee or other agent of
the Company against expenses, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with any action,
suit or proceeding arising by reason of the fact that any such person
is or was a director, officer, employee or other agent of the company
or is or was serving at the request of the Company as a director,
officer, employee or other agent of another corporation, partnership,
joint venture, trust or other enterprise.
(b) Advances of Expenses. Expenses incurred by an officer or director
in defending a civil or criminal action, suit or proceeding arising by
reason of the fact that such director or officer is or was a director
or officer of the Company or was serving at the request of the Company
as a director, officer, employee or other agent of another corporation,
partnership, joint venture, trust or other enterprise shall be paid by
the Company in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled
to be indemnified by the Company as authorized in this Section 8. Such
expenses incurred by
16
<PAGE>
other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate. The
Board of Directors may, with the consent of such director, officer,
employee or other agent of the Company, authorize the legal counsel of
the Company to represent such person, in any action, suit or
proceeding, whether or not the Company is a part to such action, suit
or proceeding.
(c) Procedure for Indemnification. Any indemnification or advance of
expenses required hereunder shall be made promptly, and in any event
within sixty (60) days after a written request therefor by a director
or officer. The right to indemnification or advances as granted by this
Section 8 shall be enforceable by a director or officer in any court of
competent jurisdiction, if the Company denies such request, in whole or
in part, or if no disposition thereof is made within sixty (60) days.
The director's or officer's expenses incurred in connection with
successfully establishing his right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Company. It
shall be a defense to any such action (other than an action brought to
enforce a claim for the advance of expenses where the required
undertaking, if any, has been received by the Company) that the
claimant has not met the standard of conduct required by law, but the
failure of the Company (including its Board of Directors, its
independent legal counsel and its stockholders) to have made a
determination as to whether indemnification of the claimant is proper
in the circumstances because he has met the applicable standard of
conduct shall not be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(d) Other Rights. The indemnification and advancement of expenses
provided by or granted pursuant to this Section 8 shall not be deemed
exclusive of any other rights to which a person seeking indemnification
may be entitled under any law (common or statutory), agreement, vote of
stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while
holding office. All rights to indemnification under this Section 8
shall be deemed to be a contract between the Company and each director
and officer who serves or served in such capacity at any time while
this Section 8 is in effect, and any repeal or modification of this
Section 8 or relevant provision of the General Corporation Law of
Delaware or any other applicable law shall not in any way diminish any
rights to indemnification of such director or officer, or the
obligations of the Company arising hereunder prior to such modification
or repeal.
(e) Insurance. The Company may, but shall not be required to, purchase
and maintain insurance on behalf of any person who is or was a director
or officer of the Company against any liability asserted against such
person and incurred by him or on his behalf in such capacity or as a
director, officer, employee or other agent of another corporation,
partnership, joint venture, trust or other enterprise, for which such
person is or was serving at the request of the Company, or arising out
of his status as such, whether or not
17
<PAGE>
the Company would have the power to indemnify him against such
liability under the provisions of this Section 8, all as the Board of
Directors may from time to time deem appropriate.
(f) Definitions. For purposes of this Section 8:
(i) service as a director, officer, employee or other agent of
any corporation, partnership, joint venture, trust or other
enterprise in which the Company, directly or indirectly, holds
an interest shall be deemed to be service at the request of
the Company;
(ii) "the Company" shall include in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors,
officers, employees or other agents, so that any person who is
or was a director, officer, employee or other agent of such
constituent corporation, or is or was serving at the request
of such constituent corporation, as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same
position under the provision of this Section 8 with respect to
the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate
existence had continued;
(iii) "other enterprise" shall include without limitation
employee benefit plans; "fines" shall include without
limitation any excise taxes assessed on a person with respect
to an employee benefit plan; and "serving at the request of
the Company" shall include without limitation any service as a
director, officer, employee or other agent of the Company
which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an
employee benefit plan, its participants or beneficiaries;
(iv) the indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 8 shall, unless other
wise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors
and administrators of such a person;
(v) "expenses" shall include all direct and indirect costs,
charges and attorneys' fees; and
18
<PAGE>
(vi) "action, suit or proceeding" shall include any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, and
any appeal therefrom.
(g) Effect of Advances. Advances of expenses by the Company as required
or authorized by this Section 8 shall not be deemed or interpreted as
ratifying, approving or condoning any act or omission by any director,
officer or employee of the Company in violation of standards of conduct
required by law.
(h) Savings Clause. If this Section 8 or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then
the Company shall nevertheless indemnify each director and officer of
the Company as to expenses, judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding to the
fullest extent permitted by any applicable portion of this Section 8
that shall not have been invalidated and to the fullest extent
permitted by applicable law.
19
<PAGE>
ARTICLE XV
AMENDMENT OF BYLAWS
These Bylaws may be amended or repealed, or new bylaws may be adopted,
(a) by the affirmative vote of the stockholders entitled to exercise a majority
of the voting power of the Company or (b) by the affirmative vote of the
majority of the Board of Directors at any regular or special meeting. Any Bylaw
adopted or amended by the stockholders may be amended or repealed by the Board
of Directors.
20
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet at June 30, 1997 and the related Condensed
Statement of Consolidated Operations for the six months ended June 30, 1997 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 87,840
<SECURITIES> 163,788
<RECEIVABLES> 37,789
<ALLOWANCES> 0
<INVENTORY> 88,579
<CURRENT-ASSETS> 395,701
<PP&E> 2,016,633
<DEPRECIATION> 1,022,514
<TOTAL-ASSETS> 1,471,988
<CURRENT-LIABILITIES> 103,735
<BONDS> 188,730
0
0
<COMMON> 146,728
<OTHER-SE> 614,265
<TOTAL-LIABILITY-AND-EQUITY> 1,471,988
<SALES> 338,460
<TOTAL-REVENUES> 418,846
<CGS> 295,448<F1>
<TOTAL-COSTS> 314,942<F2>
<OTHER-EXPENSES> 25,440<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,433
<INCOME-PRETAX> 73,031
<INCOME-TAX> 33,244
<INCOME-CONTINUING> 33,638
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,638
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0
<FN>
<F1> Includes Production costs and Depreciation, depletion and amortization from
Condensed Statement of Consolidated Operations.
<F2> Incluees Production costs and Depreciation, depletion and amortization and
Administrative and general expense from Condensed Statement of Consolidated
Operations.
<F3> Includes Exploration expense and Other expense from Condensed Statement of
Consolidated Operations.
</FN>
</TABLE>
