As filed with the Securities and Exchange Commission on February 3, 1997
===========================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
HOMESTAKE MINING COMPANY
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and show how it was determined):
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(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously.
Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filings:
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
The following is the text of Press Release issued by Homestake on
February 3, 1997.
<PAGE>
HOMESTAKE MINING COMPANY
650 California St.
San Francisco, CA 94108
Contact:
Gene G. Elam
Vice President, Finance and
Chief Financial Officer
415-983-8106
Michael A. Steeves
Director, Investor Relations
415-983-8169
HOMESTAKE MINING'S MAJORITY OWNED SUBSIDIARY
PRIME RESOURCES GROUP REPORTS RESERVE AND MINERALIZED
MATERIAL GROWTH OF 27% IN 1996
San Francisco, CA, February 3, 1997-- Homestake Mining Company
(NYSE:HM) said today that its 50.6% owned subsidiary, Prime Resources
Group Inc. (TSE,VSE:PRU), which owns the Eskay Creek and Snip gold
mines in northwestern British Columbia, announced that Prime's 1996
year end ore reserves and geological mineralized material calculations
have been completed. As of December 31, 1996 Prime has reserves and
geological mineralized material of 2.8 million ounces of gold and 120
million ounces of silver, or 4.4 million ounces of gold equivalent.
Over one million ounces of gold equivalent were added to Prime's
reserves and mineralized material during 1996 at a cost of
approximately US $40 per equivalent ounce, including Snip mine
acquisition costs. This includes a 34% increase in proven and probable
reserves compared to December 31, 1995, before considering production
in 1996. The growth in reserves was the result of the success of the
aggressive surface and in-mine exploration programs at Eskay Creek and
the acquisition of the 60% of the Snip mine the Company did not
already own.
The December 31, 1996 reserve and mineralized material calculations
include the results of the recently completed underground in-fill
drilling programs at both the Snip and Eskay Creek mines. The 1995
exploration program at Eskay Creek
<PAGE>
identified geological mineralized material containing 364,000 gold
equivalent ounces in the NEX and Hangingwall Zones. During 1996,
418,000 gold equivalent ounces in these zones were upgraded to proven
and probable reserves. At the Snip mine, all 101,000 ounces of gold
that were previously reported as geological mineralized material have
now been converted to ore reserves.
When asked to comment on 1996's reserve and mineralized material
growth, Ronald D. Parker, President and CEO of Prime said: "Two of our
key objectives in 1996 were to replace all the reserves we mined and
to grow Prime's overall reserve base through exploration and
acquisition. Clearly we have met these objectives. Even more
significant than the overall improvement in reserves and mineralized
material is the fact that all of the growth was in the proven and
probable reserve category. Approximately 1.2 million equivalent ounces
were added to proven and probable reserves in 1996."
DETAILED ORE RESERVES AND GEOLOGICAL MINERALIZED MATERIAL: Consistent
with good mining practice, Prime updates its reserve and geological
mineralized material estimates in January of each year. The proven and
probable ore reserve category reflects estimated tonnage and grades of
in-situ deposits the Company believes can be recovered and sold at
prices sufficient to cover future costs of production and the
Company's investment in the operation. An allowance for mining
dilution has been included in the reserve calculations.
Geological mineralized material is an estimate of tonnage and grade of
a mineral deposit with potential economic merit. Estimates of tonnage
and grade are made on the basis of continuity, size, and shape of the
mineralization. Estimates include a provision for mining dilution.
PROVEN AND PROBABLE ORE RESERVES DECEMBER 31:
ESKAY CREEK MINE:
1996 1995
Tons Grade Contained Tons Grade Contained
(000) (OPT) Oz(000) (000) (OPT) Oz (000)
======================= ========================
Gold: 1,397 1,732 2,418 1,124 1,875 2,108
Silver: 79.3 110,810 83.4 93,752
<PAGE>
SNIP MINE:
1996 1995
Tons Grade Contained Tons Grade Contained
(000) (OPT) Oz(000) (000) (OPT) Oz (000)
======================== ========================
Gold: 369 0.722 267 153 0.776 119
Total Gold and
Gold Equivalent (1) 4,124 3,445
GEOLOGICAL MINERALIZED MATERIAL, DECEMBER 31:
ESKAY CREEK MINE:
1996 1995
Tons Grade Tons Grade
(000) (OPT) (000) (OPT)
=================== =====================
Gold: 278 0.541 227 0.879
Silver: 31.6 56.2
SNIP MINE:
1996 1995
Tons Grade Tons Grade
(000) (OPT) (000) (OPT)
=================== =====================
Gold: 19 0.555 58 0.688
Note 1: Silver is converted to gold equivalent using the ratio of
the silver market price to gold market price. For the
purposes of the reserve calculations, this ratio was 77
ounces of silver equals one ounce of gold for both 1996 and
1995.
Prime is a precious metals mining company which owns the Eskay Creek
and Snip gold mines located in northwestern British Columbia.
Homestake Canada Inc., a wholly owned subsidiary of Homestake Mining
Company (San Francisco, NYSE:HM), owns approximately 51% of Prime's
shares and has been contracted by Prime to provide exploration
management, managerial and administrative services.
<PAGE>
Homestake Mining Company is an international gold mining company with
substantial operations in the U.S., Canada and Australia. Homestake
also has active exploration programs in the Andes, Venezuela, French
Guiana, Brazil and elsewhere in Latin America, and development and/or
evaluation projects in Chile, Russia and Bulgaria.
Statements contained in this press release which are not historical
facts are forward-looking statements as that item is defined in the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks and uncertainties which could cause
actual results to differ materially from estimated results. Such risks
and uncertainties are detailed in the companies' filings with the
Securities and Exchange Commission.
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS
OF HOMESTAKE MINING COMPANY AND OTHER REPRESENTATIVES
OF HOMESTAKE MINING COMPANY WHO MAY COMMUNICATE WITH
HOMESTAKE AND SANTA FE PACIFIC GOLD CORPORATION
SHAREHOLDERS
The following is information concerning the directors and
executive officers of Homestake Mining Company and other
representatives of Homestake ("Homestake") who may communicate with
Homestake and Santa Fe Pacific Gold Corporation ("Santa Fe")
shareholders with respect to (i) Homestake's planned combination with
Santa Fe pursuant to which Santa Fe will become a wholly-owned
subsidiary of Homestake and each outstanding share of Santa Fe Common
Stock, $0.01 par value, will be converted into the right to receive
1.115 shares of Homestake Common Stock, $1.00 par value (the
"Combination") and (ii) the proposed offer by Newmont Mining
Corporation ("Newmont") disclosed in the preliminary prospectus
contained in the Registration Statement on Form S-4 of Newmont that
was filed with the Securities and Exchange Commission on January 7,
1997 (Registration No. 333-19335), to exchange each outstanding share
of Santa Fe Common Stock for 0.40 of a share of Newmont Common Stock,
$1.60 par value. Newmont's proposed offer has not been commenced.
Newmont's Registration Statement states that its principal executive
offices are located at 1700 Lincoln Street, Denver, Colorado 80203.
Santa Fe's principal executive offices are located at 6200 Uptown
Boulevard NE, Suite 400, Albuquerque, New Mexico 87110.
<PAGE>
Directors and Officers of Homestake
Name and Business Address Present Position with Homestake or
Other Principal Occupation or Employment
M. Norman Anderson
N Anderson & Associates 502-455 Granville Street
Vancouver, V6C1V2
Director, Homestake Mining Company; Former Chairman
International Corona Corporation; Mining Industry
Consultant.
Jan P. Berger
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Treasurer, Homestake Mining Company.
Michael L. Carroll
Homestake Mining Company 650 California Street
San Francisco, CA 94108-2788
Director of Taxes and Assistant Secretary,
Homestake Mining Company.
Robert H. Clark, Jr.
529 Fifth Avenue Suite 1600 New York, NY 10017
Director, Homestake Mining Company; President and Chief
Executive Officer, Case, Pomeroy & Company, Inc.
Harry M. Conger
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Director and Chairman of the Board,Homestake Mining Company.
G. Robert Durham
943 Seddon Cove Way
Tampa, FL 33602
Director, Homestake Mining Company; Former Chairman and
Chief Executive Officer of Walters Industries, Inc. and
Former Chairman and President of Phelps Dodge Corporation.
Gene G. Elam
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Vice President, Finance and Chief Financial Officer,
Homestake Mining Company.
<PAGE>
Douglas W. Fuerstenau
University of California, Berkeley 477 Evans Hall No. 1760
Berkeley, CA 94720
Director, Homestake Mining Company; Professor in the
Graduate School, Department of Materials Science and
Mineral Engineering, University of California, Berkeley.
Dennis B. Goldstein
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Corporate Counsel and Assistant Secretary,
Homestake Mining Company.
Lee A. Graber
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Vice President, Corporate Development,
Homestake Mining Company.
Henry G. Grundstedt
P.O. Box 105 Umpqua, OR 97486-0105
Director, Homestake Mining Company; Former Senior Vice
President, Capital Guardian Trust.
Fred Hewett
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Assistant Controller, Homestake Mining Company.
William A. Humphrey
Homestake Mining Company
650 California StreetSan Francisco, CA 94108-2788
Director, Vice Chairman of the Board, Former President and
Chief Operating Officer, Homestake Mining Company.
Robert K. Jaedicke
Graduate School of Business
Stanford University
Stanford, CA 94305-5015
Director, Homestake Mining Company; Professor (Emeritus) of
Accounting Graduate School of Business, Stanford University.
Wayne Kirk
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Vice President, General Counsel and Corporate Secretary,
Homestake Mining Company.
<PAGE>
Gillyeard J. Leathley
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Vice President, Operations, Homestake Mining Company.
William F. Lindqvist
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Vice President, Exploration, Homestake Mining Company.
John Neerhout, Jr.
15 Peninsula Road
Belvedere, CA 94920
Director, Homestake Mining Company; Former Executive Vice
President and Director of Bechtel Group Inc.
Ronald D. Parker
1000-700 W. Pender Street
Vancouver, BC V6C 168
CANADA
Vice President, Canada, Homestake Mining Company.
David W. Peat
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Vice President and Controller, Homestake Mining Company.
Stuart T. Peeler
Casa Codorniz
POB 35852
Tucson, AZ 85740
Director, Homestake Mining Company;
Petroleum Industry Consultant.
Carol A. Rae
13117 N. Creekview Road
Rapid City, SD 57702
Director, Homestake Mining Company;
Former President and Chief Executive Officer, Magnum Diamond
Corporation.
Berne A. Schepman
The Adair Company
1670 South Amphlett Blvd.
Suite 214 San Mateo, CA 94402
Director, Homestake Mining Company; President,The Adair
Company and Russian Technology Group.
<PAGE>
Richard A. Tastula
9th Floor
2 Mill Street
Perth, WA 6000
Vice President, Australia, Homestake Mining Company.
Jack E. Thompson
Homestake Mining Company
650 California StreetSan Francisco, CA 94108-2788
Director, President and Chief Executive Officer,
Homestake Mining Company.
Thomas H. Wong
Homestake Mining Company
650 California Street San Francisco, CA 94108-2788
Assistant Treasurer and Assistant Secretary,
Homestake Mining Company.
On November 17, 1996, Homestake and Santa Fe entered into a
confidentiality agreement pursuant to which, among other things, each
party agreed to protect the confidential and proprietary information
and data provided to each other in connection with the evaluation of
one or more business transactions. On December 8, 1996, Homestake,
Santa Fe and HMGLD Corp, a wholly-owned subsidiary of Homestake,
entered into an Agreement and Plan of Merger pursuant to which the
Combination will be consummated. On January 9, 1997, Homestake
purchased 100 shares of Santa Fe common stock. In addition, the
following individuals named above own the following shares of Santa Fe
common stock, all of which has been owned by such individuals for more
than 60 days: Mr. Peeler - 10,300 shares; Mr. Elam - 2,000 shares; and
Mr. Graber - 1,000 shares.
At the effective time (the "Effective Time") of the Combination,
five members of the Homestake Board will continue as directors of
Homestake. The other eight members of the Homestake Board will
voluntarily resign as directors of Homestake. The Agreement provides
that at the Effective Time, Mr. Thompson will become Homestake's
Chairman of the Board and Chief Executive Officer.
A total of ten Homestake management personnel, including Messrs.
Thompson, Elam, Kirk, Leathley and Lindqvist, have severance
agreements with Homestake under which they are entitled to receive
benefits in the event of a change of control followed by certain
events. The
<PAGE>
Combination is a change of control for purposes of these severance
agreements. Under the severance agreements, entitlement to benefits
arises if, within three years following the consummation of the
Combination, such person's employment is terminated or such person
elects to terminate his employment following (i) a reduction in salary
or certain benefits, (ii) a change in location of employment, (iii) a
change in position, duties, responsibilities or status inconsistent
with such person's prior position, or (iv) a reduction in
responsibilities, title or office as in effect just before the
consummation of the Combination. Benefits consist of (i) a lump sum
payment equal to two times such person's highest annual salary and
bonus (including deferred compensation) during the three years prior
to termination, (ii) continuation of participation in insurance and
certain other fringe benefits for two years, (iii) continued vesting
of stock options, and (iv) relocation assistance. Such benefits are in
lieu of severance benefits otherwise payable under Homestake's general
severance policy.
The same ten management personnel are also participants in
Homestake's Executive Supplemental Retirement Plan (the "Homestake
ESRP"). The Homestake ESRP provides that participating employees
accrue retirement benefits at the rate of 4 1/3% times years of
service up to a maximum of 15 years. Service credit is then multiplied
by average monthly compensation during the 36 consecutive months of
highest compensation (salary and bonus) to determine a monthly
retirement benefit. Benefits are payable on retirement at age 62 after
10 continuous years of service, with provision for early retirement
between ages 55 and 62. Within two years following the Combination, if
any participant's employment is terminated by Homestake or by the
participant for any reason, such participant will fully vest in the
maximum benefits payable under the Homestake ESRP to the extent such
participant is not already fully vested, and will be entitled to
commence receiving such benefits at age 55. Benefits payable under the
Homestake ESRP are reduced to the extent of retirement benefits
otherwise payable under any other Homestake retirement plan (except
the Homestake Mining Company Savings Plan).
Homestake has a deferred compensation plan under which 23
eligible employees and the directors are entitled to defer receipt of
compensation. Deferred compensation earns interest at rates determined
under the plan, with a higher rate equal to 120% of the regular rate
(the "Preferred
<PAGE>
Rate") for persons who have been participants for more than five
years. Under the deferred compensation plan, following the
Combination, all deferred compensation will earn interest at the
Preferred Rate.
Other Representatives of Homestake Who May Communicate
with Homestake and Santa Fe Shareholders
Name and Business Address
Present Principal Occupation or Employment
Robert A. Pilkington
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, NY 10022
Managing Director
Homestake has retained Dillon, Read & Co. Inc. ("Dillon Read") to
act as its financial advisor in connection with the Combination and
related matters. Pursuant to an engagement letter dated as of November
21, 1996, between Homestake and Dillon Read, Homestake has agreed to
pay Dillon Read a fee of 0.33% of the equity consideration in the
Combination, subject to a maximum fee of $6,500,000, for services
provided in connection with the Combination. Of this amount,
$2,250,000 was paid upon the announcement by Homestake of the
execution of the Agreement; the payment of the balance is contingent
upon the consummation of the merger. Homestake has also agreed to
reimburse Dillon Read for the expenses reasonably incurred by it in
connection with its engagement (including reasonable counsel fees) and
to indemnify Dillon Read and its officers, directors, employees,
agents and controlling persons against certain expenses, losses,
claims, damages or liabilities in connection with its services,
including those arising under the federal securities laws.
This letter is being furnished by Homestake to Homestake and
Santa Fe shareholders pursuant to Rule 14a-12 under the Securities
Exchange Act of 1934, as amended, in response to the proposed Newmont
exchange offer and Newmont's proposed solicitation of proxies. This
letter is not being furnished by Santa Fe or its Board of Directors.
<PAGE>
The following is an updated description of the representatives of
Homestake who may communicate with Homestake and Santa Fe shareholders.
<PAGE>
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS
OF HOMESTAKE MINING COMPANY AND OTHER REPRESENTATIVES
OF HOMESTAKE MINING COMPANY WHO MAY COMMUNICATE WITH
HOMESTAKE AND SANTA FE PACIFIC GOLD CORPORATION SHAREHOLDERS
The following is information concerning the directors and
executive officers of Homestake Mining Company and other representatives of
Homestake ("Homestake") who may communicate with Homestake and Santa Fe
Pacific Gold Corporation ("Santa Fe") shareholders with respect to (i)
Homestake's planned combination with Santa Fe pursuant to which Santa Fe
will become a wholly-owned subsidiary of Homestake and each outstanding
share of Santa Fe Common Stock, $0.01 par value, will be converted into the
right to receive 1.115 shares of Homestake Common Stock, $1.00 par value
(the "Combination") and (ii) the proposed offer by Newmont Mining
Corporation ("Newmont") disclosed in the preliminary prospectus contained
in the Registration Statement on Form S-4 of Newmont that was filed with
the Securities and Exchange Commission on January 7, 1997 (Registration No.
333-19335), to exchange each outstanding share of Santa Fe Common Stock for
0.40 of a share of Newmont Common Stock, $1.60 par value. Newmont's
proposed offer has not been commenced. Newmont's Registration Statement
states that its principal executive offices are located at 1700 Lincoln
Street, Denver, Colorado 80203. Santa Fe's principal executive offices are
located at 6200 Uptown Boulevard NE, Suite 400, Albuquerque, New Mexico
87110.
Directors and Officers of Homestake
Present Position with Homestake of Other
Name and Business Address Principal Occupation or Employment
- ------------------------- ----------------------------------------
M. Norman Anderson............. Director, Homestake Mining Company; Former
N Anderson & Associates Chairman International Corona Corporation;
502-455 Granville Street Mining Industry Consultant.
Vancouver, V6C1V2
Jan P. Berger.................. Treasurer, Homestake Mining Company.
Homestake Mining Company
650 California Street
San Francisco, CA 94108-
2788
<PAGE>
Michael L. Carroll............. Director of Taxes and Assistant Secretary,
Homestake Mining Company Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
Robert H. Clark, Jr............ Director, Homestake Mining Company;
529 Fifth Avenue President and Chief Executive Officer,
Suite 1600 Case, Pomeroy & Company, Inc.
New York, NY 10017
Harry M. Conger................ Director and Chairman of the Board,
Homestake Mining Company Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
G. Robert Durham............... Director, Homestake Mining Company.
943 Seddon Cove Way Former Chairman and Chief Executive
Tampa, FL 33602 Officer of Walters Industries, Inc. and
former Chairman and President of Phelps
Dodge Corporation.
Gene G. Elam................... Vice President, Finance and Chief
Homestake Mining Company Financial Officer, Homestake Mining
650 California Street Company.
San Francisco, CA 94108-
2788
Douglas W. Fuerstenau.......... Director, Homestake Mining Company;
University of California, Professor in the Graduate School,
Berkeley Department ofMaterials Science and
477 Evans Hall Mineral Engineering, University of
No. 1760 California,Berkeley.
Berkeley, CA 94720
Dennis B. Goldstein............ Corporate Counsel and Assistant
Homestake Mining Company Secretary, Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
Lee A. Graber.................. Vice President, Corporate Development,
Homestake Mining Company Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
Henry G. Grundstedt............ Director, Homestake Mining Company;
P.O. Box 105 Former Senior Vice President, Capital
Umpqua, OR 97486-0105 Guardian Trust.
Fred Hewett.................... Assistant Controller, Homestake Mining
Homestake Mining Company Company.
650 California Street
San Francisco, CA 94108-
2788
<PAGE>
William A. Humphrey............ Director, Vice Chairman of the Board,
Homestake Mining Company Former President and Chief Operating
650 California Street Officer,Homestake Mining Company.
San Francisco, CA 94108-
2788
Robert K. Jaedicke............. Director, Homestake Mining Company;
Graduate School of Business Professor (Emeritus) of Accounting
Stanford University Graduate School of Business, Stanford
Stanford, CA 94305-5015 University.
Wayne Kirk..................... Vice President, General Counsel and
Homestake Mining Company Corporate Secretary, Homestake Mining
650 California Street Company.
San Francisco, CA 94108-
2788
Gillyeard J. Leathley.......... Vice President, Operations, Homestake
Homestake Mining Company Mining Company.
650 California Street
San Francisco, CA 94108-
2788
William F. Lindqvist........... Vice President, Exploration, Homestake
Homestake Mining Company Mining Company.
650 California Street
San Francisco, CA 94108-
2788
John Neerhout, Jr.............. Director, Homestake Mining Company.
15 Peninsula Road Former Exective Vice President and
Belvedere, CA 94920 Director of Bechtel Group Inc.
Ronald D. Parker............... Vice President, Canada, Homestake Mining
1000-700 W. Pender Street Company.
Vancouver, BC V6C 168
CANADA
David W. Peat.................. Vice President and Controller,
Homestake Mining Company Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
Stuart T. Peeler............... Director, Homestake Mining Company;
Casa Codorniz Petroleum Industry Consultant.
POB 35852
Tucson, AZ 85740
Carol A. Rae................... Director, Homestake Mining Company;
13117 N. Creekview Road Former President and Chief Executive
Rapid City, SD 57702 Officer, Magnum Diamond Corporation.
Berne A. Schepman.............. Director, Homestake Mining Company;
The Adair Company President, The Adair Company and Russian
1670 South Amphlett Blvd. Technology Group.
Suite 214
San Mateo, CA 94402
Richard A. Tastula............. Vice President, Australia, Homestake
9th Floor Mining Company.
2 Mill Street
Perth, WA 6000
<PAGE>
Jack E. Thompson............... Director, President and Chief Executive
Homestake Mining Company Officer, Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
Thomas H. Wong................. Assistant Treasurer and Assistant
Homestake Mining Company Secretary, Homestake Mining Company.
650 California Street
San Francisco, CA 94108-
2788
On November 17, 1996, Homestake and Santa Fe entered into a
confidentiality agreement pursuant to which, among other things, each party
agreed to protect the confidential and proprietary information and data
provided to each other in connection with the evaluation of one or more
business transactions. On December 8, 1996, Homestake, Santa Fe and HMGLD
Corp, a wholly- owned subsidiary of Homestake, entered into an Agreement
and Plan of Merger pursuant to which the Combination will be consummated.
On January 9, 1997, Homestake purchased 100 shares of Santa Fe common
stock. In addition, the following individuals named above own the following
shares of Santa Fe common stock, all of which has been owned by such
individuals for more than 60 days: Mr. Peeler - 10,300 shares; Mr. Elam -
2,000 shares; and Mr. Graber - 1,000 shares.
At the effective time (the "Effective Time") of the Combination,
five members of the Homestake Board will continue as directors of
Homestake. The other eight members of the Homestake Board will voluntarily
resign as directors of Homestake. The Agreement provides that at the
Effective Time, Mr. Thompson will become Homestake's Chairman of the Board
and Chief Executive Officer.
A total of ten Homestake management personnel, including Messrs.
Thompson, Elam, Kirk, Leathley and Lindqvist, have severance agreements
with Homestake under which they are entitled to receive benefits in the
event of a change of control followed by certain events. The Combination is
a change of control for purposes of these severance agreements. Under the
severance agreements, entitlement to benefits arises if, within three years
following the consummation of the Combination, such person's employment is
terminated or such person elects to terminate his employment following (i)
a reduction in salary or certain benefits, (ii) a change in location of
employment, (iii) a change in position, duties, responsibilities or status
inconsistent with such person's prior position, or (iv) a reduction in
responsibilities, title or office as in effect just before the consummation
of the Combination. Benefits consist of (i) a lump sum payment equal to two
times such person's highest annual salary and bonus (including deferred
compensation) during the three years prior to termination, (ii)
continuation of participation in insurance and certain other fringe
benefits for two years, (iii) continued vesting of stock options, and (iv)
relocation assistance. Such benefits are in lieu of severance benefits
otherwise payable under Homestake's general severance policy.
<PAGE>
The same ten management personnel are also participants in
Homestake's Executive Supplemental Retirement Plan (the "Homestake ESRP").
The Homestake ESRP provides that participating employees accrue retirement
benefits at the rate of 4 1/3% times years of service up to a maximum of 15
years. Service credit is then multiplied by average monthly compensation
during the 36 consecutive months of highest compensation (salary and bonus)
to determine a monthly retirement benefit. Benefits are payable on
retirement at age 62 after 10 continuous years of service, with provision
for early retirement between ages 55 and 62. Within two years following the
Combination, if any participant's employment is terminated by Homestake or
by the participant for any reason, such participant will fully vest in the
maximum benefits payable under the Homestake ESRP to the extent such
participant is not already fully vested, and will be entitled to commence
receiving such benefits at age 55. Benefits payable under the Homestake
ESRP are reduced to the extent of retirement benefits otherwise payable
under any other Homestake retirement plan (except the Homestake Mining
Company Savings Plan).
Homestake has a deferred compensation plan under which 23
eligible employees and the directors are entitled to defer receipt of
compensation. Deferred compensation earns interest at rates determined
under the plan, with a higher rate equal to 120% of the regular rate (the
"Preferred Rate") for persons who have been participants for more than five
years. Under the deferred compensation plan, following the Combination, all
deferred compensation will earn interest at the Preferred Rate.
<PAGE>
Other Representatives of Homestake Who May Communicate
with Homestake and Santa Fe Shareholders
Present Principal
Name and Business Address Occupation or Employment
- ------------------------- ------------------------
Robert A. Pilkington........... Managing Director
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, NY 10022
James C. Katzman............... Vice President
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, NY 10022
Homestake has retained Dillon, Read & Co. Inc. ("Dillon Read") to
act as its financial advisor in connection with the Combination and related
matters. Pursuant to an engagement letter dated as of November 21, 1996,
between Homestake and Dillon Read, Homestake has agreed to pay Dillon Read
a fee of 0.33% of the equity consideration in the Combination, subject to a
maximum fee of $6,500,000, for services provided in connection with the
Combination. Of this amount, $2,250,000 was paid upon the announcement by
Homestake of the execution of the Agreement; the payment of the balance is
contingent upon the consummation of the merger. Homestake has also agreed
to reimburse Dillon Read for the expenses reasonably incurred by it in
connection with its engagement (including reasonable counsel fees) and to
indemnify Dillon Read and its officers, directors, employees, agents and
controlling persons against certain expenses, losses, claims, damages or
liabilities in connection with its services, including those arising under
the federal securities laws. In the past, Dillon Read has provided
investment banking services to Homestake and has received customary
compensation for such services. In the ordinary course of business, Dillon
Read trades the securities of Homestake and Santa Fe for its own account
and the accounts of its customers and, accordingly, may at any time hold a
long or short position in such securities.
This information is being furnished by Homestake to Homestake and
Santa Fe shareholders pursuant to Rule 14a-12 under the Securities Exchange
Act of 1934, as amended, in response to the proposed Newmont exchange offer
and Newmont's proposed solicitation of proxies. This information is not
being furnished by Santa Fe or its Board of Directors.
