<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HOMESTAKE MINING COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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 state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(4) Date Filed:
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<PAGE> 2
HOMESTAKE & PLUTONIC
Plutonic Resources Limited
January 1998
<PAGE> 3
Statements in this presentation regarding future or estimated reserves
and other mineralization; projected quantities and periods of future production;
production rates; production, capital and other costs; and other estimates of
future results or activity are forward looking statements that involve risks and
uncertainties that could cause actual results to differ from estimated results.
Actual results could differ materially depending on political events, labor
relations, currency fluctuations and other general economic conditions, market
prices for the Company's products, timing of permits and other government
approvals and requirements, changes in expected operating conditions, lower than
expected ore grades, unexpected ground and mining conditions, availability and
cost of materials and equipment, and risks generally inherent in the ownership
and operation of mining properties and investments in foreign countries. See the
Company's Preliminary Proxy Statement filed with the Securities and Exchange
Commission on January 26, 1998, "CAUTIONARY STATEMENTS," for a more detailed
discussion of factors that may impact on expected future results.
<PAGE> 4
Corporate Strategy
- - Long Term View of the Gold Industry and Pursue Value Adding Growth by
Exploration and/or Acquisition to Achieve:
- Lower cash cost
- Improved growth profile
- Improved exploration acreage
- Allowance in application of mining and metallurgical expertise
- - Plutonic Fits This Criteria
- - Homestake Will Continue to Monitor Acquisition Opportunities in North
America and Around the World As They Arise
<PAGE> 5
Transaction Background
- - Homestake Approached MMC in April 1997 Regarding a Combination Involving
Plutonic
- - Homestake Revisited MMC in September and November 1997 Following the Decline
in the Gold Price
- - Merger Agreement was Signed on December 21, 1997
<PAGE> 6
Transaction Summary
Corporate Name: Homestake Mining Company
Structure: Pooling of Interests/Scheme of Arrangement
Terms: 0.34 Homestake Share for Each Share of Plutonic
Fixed Exchange Ratio - No Collar
<PAGE> 7
Transaction Summary
Current Value: A $4.57 per Plutonic Share
Premium: 63% to December 19, 1997 Closing Price
Expected Closing: By April/May 1998
Recommendation: Unanimously Approved by Directors of Both
Companies
<PAGE> 8
Due Diligence
- - Homestake has undertaken extensive due diligence on Plutonic's assets having
examined:
- Geological data
- Metallurgical data
- Mine sites
- Budgets and mine plans
- - Homestake is satisfied with the quality of the assets, including its ability
to meet:
- Future production rates
- Cash cost reductions
- Conversion of mineralized material into reserves
<PAGE> 9
Why Now?
- - Valuable Assets for Attractive Price
- Similar to 1992 International Corona Acquisition
- - Improves Homestake Growth Profile, Lowers Cash Production Costs and Is
Immediately Accretive to Homestake Shareholders
- - Currency/Share Market Movements Allow Favorable Terms for Plutonic
Shareholders
<PAGE> 10
Why Now?
[Graph of US-Australian Dollar Exchange Rates from January to December 1997]
<PAGE> 11
Why Now?
[Graph of Australian Stock Exchange Gold Index from January to December 1997]
<PAGE> 12
Why Now?
[Graph of Plutonic and Homestake Share Prices in US Dollars from January 2 to
December 18, 1997]
<PAGE> 13
Why Now?
[Graph of Historical Homestake/Plutonic Share Exchange Ratio from August 1985
through December 1997]
<PAGE> 14
Homestake & Plutonic
IDEAL ACQUISITION:
- - Lower Cash Cost Per Ounce
- - Potential for Reserve/Production Growth
- - Attractive Exploration Portfolio
- - Synergies in Mining Skills and G&A Savings
<PAGE> 15
Homestake & Plutonic
- - Creates Third Largest North American Based Gold Producer
- - Australian Operations Second Largest in that Country With Approximately 1
Million Ounces of Annual Production
- - Lower Cash Operating Costs
- - Young, High Quality, Long-Life Assets with Low Political Risk
<PAGE> 16
Homestake & Plutonic
[Graph of Annual Gold Production (in Millions of Ounces) from 1975 through 1999]
<PAGE> 17
Homestake & Plutonic
5 Year Impact: 1998 - 2002
- - Plutonic to Contribute Two of the Top Eight Mines in Homestake
Homestake & Plutonic
Gold Production: 11.5 Million Ounces at $227 per Ounce
[Pie Chart Showing Percentage of Production from Each Mine
Super Pit 13%
Plutonic 14%
Darlot/Centenary 6%
Homestake 11%
Round Mountain 5%
Other 21%
McLaughlin 4%
Williams 8%
Eskay Creek 17%]
<PAGE> 18
Low Political Risk Profile*
[Pie Chart Showing Location of Production by Country
U.S. 32%
Australia 53%
Canada 14%
Other 1%]
* Based on Reserves and Mineralized Material
<PAGE> 19
Ranking of North American Gold Producers
Ranking by Gold Production
[Bar Chart of Production
Newmont*
Barrick*
Homestake & Plutonic
Placer Dome*
Homestake]
* Based on information compiled by Homestake
<PAGE> 20
Homestake Cost Reductions
Total Cash Cost Per Ounce of Gold
[Graph of Total Cash Cost Per Ounce from 1981 to 1997]
<PAGE> 21
World Cost Curve
Western World Cash Cost for Gold Production
[Graph of Western World Cash Cost for Gold Production for 1986 and 1996, showing
Homestake position in 1986 and 1997, Darlot mine and Plutonic mine]
<PAGE> 22
5 Year Impact: 1998 - 2002
<TABLE>
<CAPTION>
Homestake Homestake Percent
Alone & Plutonic Change
--------- ---------- -------
<S> <C> <C> <C>
Gold Production -
Million Ounces 8.91 11.5 25%
Cash Cost - US
Dollars Per Ounce $237 $227 (4%)
</TABLE>
<PAGE> 23
Key Facts
- - Increases Reserves & Mineralized Material by 30%
- - Strong Exploration Potential at Existing Mines
- - Adds 6,000 Square Miles (15,000 Square Kilometers) of Mineral Lands
- Mostly in Yilgarn Where 30 Million Ounces Have Been Found in Recent
Years
- Key Plutonic Tenements are Free of Native Title Issues
<PAGE> 24
Financial Rationale
- - Immediately Accretive to Earnings Per Share
- - Immediately Accretive to Cash Flow Per Share
- - $20 Million in Annual G & A, Exploration Synergies
STRONGER/LOWER COST COMPANY
<PAGE> 25
Homestake & Plutonic
- - Plutonic Ends Up With 30% of New Company But Contributes More Over Next Five
Years:
- 73% of Earnings
- 38% of Cash Flow From Operations
<PAGE> 26
Plutonic Shareholders
- - Attractive Premium to Plutonic's Historical Average Stock Price
- - Sizable Premium to December 21, 1997 Price
- - Provides North American Premiums to Australian Assets
- - Logical Step in Consolidating Industry
- Will own 30% of top tier international gold company
- Access to Homestake's wider operational skills
<PAGE> 27
Is Price Too High?
- - High Premium a Short Term Phenomenon
- - Premium to Historical Average Share Price Ratio
- 47% for 12 months prior to offer
- 30% for 36 months prior to offer
- - Paying Only $65 Per Ounce for Low Production Cost Reserves and Mineralized
Material
- Quality Assets
- Lots of Exploration Potential
- - Strongly Accretive to Earnings and Cash Flow Per Share
<PAGE> 28
Transaction Premiums
<TABLE>
<CAPTION>
ENTERPRISE VALUE TO
----------------------------------------
Reserves & Latest
Total Mineralized 12 Months
Reserves Material Production
-------- ----------- ----------
(US $ Per Ounce)
<S> <C> <C> <C>
*Comparable Gold
Company Transactions
US Median $213 $154 $3,095
Australian Median 204 63 1,437
*Plutonic At Offer
Price of A $5.20 226 65 1,376
Plutonic at Offer (A$)
A$4.75 209 58 1,275
A$4.50 200 55 1,218
A$4.25 191 53 1,162
A$4.00 182 50 1,105
</TABLE>
* From SBC Warburg Dillon Reed Report.
<PAGE> 29
Transaction Premiums
<TABLE>
<CAPTION>
BID PREMIUM BASED ON
----------------------------------------
1 Day 6 Months 12 Months
Prior Prior Prior
-------- ----------- ----------
<S> <C> <C> <C>
Comparable Gold
Company Transactions
US Median 31% 57% 63%
Australian Median 26% 43% 20%
Plutonic At Offer
Price of A$5.20 86% 4% (25%)
Plutonic at Offer (A$)
A$4.75 70% (5%) (31%)
A$4.50 61% (10%) (35%)
A$4.25 52% (15%) (39%)
A$4.00 43% (20%) (42%)
</TABLE>
<PAGE> 30
Pricing of Acquisition
- - Quality Assets
- - Value Enhancement Cost Savings and Application of Homestake's Mining
and Metallurgical Expertise
- - Historical Share Exchange Ratio
- - Favorable Arbitrage between Australia and North America
- - Secured Unanimous Agreement From the Board of Plutonic
<PAGE> 31
Plutonic Locations
[Map of Australia]
<PAGE> 32
Western Australian Gold Province
[Map of Western Australia Showing Location of Plutonic Mines]
<PAGE> 33
Plutonic Mine
- - An Outstanding, High-Quality, Long Life Mine
- - 320,000 Ounces of Production at Cash Cost of $195 Per Ounce
- - Substantial Exploration Upside
- Reserves: 1,127,600 Ounces
- Mineralized Material:28,520,000 tons at 0.217 oz/ton
<PAGE> 34
Plutonic Mine
Area 54
Estimated
True Width Grade
(m) (g/t Au)
4.0 7.9
3.0 10.3
1.5 3.9
5.0 13.9
5.0 8.5
2.0 6.3
1.9 3.1
7.8 22.2
6.0 18.5
5.5 17.2
4.0 35.3
Weighted
Average 4.1 15.7
[Map of Zone 125 and Area 54]
<PAGE> 35
Darlot/Centenary
- - Centenary Is One of the Best Australian Discoveries of Decade
- Large, high quality, high grade deposit
- Discovered in 1996 next to Darlot Mine
- High potential to expand in size
- - Low Cost Underground Operations
- $175 per ounce cash production forecast by 1999
Reserves: 1,565,000 Ounces
Mineralized Material: 3,244,000 tons
at 0.206 oz/ton
<PAGE> 36
Darlot/Centenary
Centenary Project
[Map of Centenary Project]
<PAGE> 37
Centenary Deposit Drill Plan
[Map of Drill Holes]
<PAGE> 38
Synergies
- - Homestake's 30 Plus Years' Operating Presence in Australia
- - Kalgoorlie Super Pit
- - Mining and Processing Experience
- Homestake can use underground technology and expertise to capitalize on
Plutonic, Darlot/Centenary and new sites
- Apply Homestake's technical refractory ore processing experience to
similar challenges at Plutonic sites
<PAGE> 39
Synergies
- - Strengthens Homestake's Capabilities in Australia
- Will expand operations group in Perth
- Leverage complementary technological expertise
- Plutonic's highly successful exploration team
- - Achieve Over $20 Million in Annual Cost Savings By End of 1998
- Will close corporate office and consolidate in Perth
- Reduction in exploration expenditures from elimination of
redundant/duplicate functions and general reduction in budget
<PAGE> 40
Attractive Exploration Opportunities
- - Homestake Will Have a Large Number of Attractive Exploration Prospects in
Western Australia
- Australia's most prolific gold province where Plutonic and Homestake
have significant operations and experience
- Will allow shift from grassroots emphasis to more advanced projects in
Plutonic's portfolio
- - Exploration Potential at Existing Operations
- Finding cost in recent years around US$10/oz
<PAGE> 41
Homestake & Plutonic
- - Larger, Stronger Company
- - Accretive
- - Synergies/Operations
- - Exploration Potential
<PAGE> 42
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT. This
document contains forward looking statements that are based on management's
expectations and assumptions. They include statements preceded by the words
"believe," "estimate," "expect," "intend," "will," and similar expressions, and
estimates of reserves, future production and mine life, costs per ounce,
reclamation and remediation costs, dates of construction completion, costs of
capital projects and commencement of operations, exploration costs, and taxes.
Actual results may differ materially from expectations.
Among the important factors that could cause actual results to differ materially
are the following. Reserve estimation is an interpretive process based on
drilling results and past experience as well as estimates of ore characteristics
and mining dilution, prices, costs of mining and processing, capital
expenditures and many other factors. Actual quality and characteristics of ore
deposits cannot be known until ore is actually mined. Reserves change over time
to reflect actual experience. Grades of ore processed at any time may also vary
from reserve estimates due to geologic variations within areas mined. Production
and mine lives may vary from estimates for particular properties and for the
Company as a whole because of changes in reserves, variation in ore mined from
estimated grade and metallurgical characteristics, unexpected ground conditions,
mining dilution, labor actions, and government restrictions. Cash costs may vary
due to changes from reserve and production estimates, unexpected mining
conditions, and changes in estimated costs of equipment, supplies, utilities,
labor costs and exchange rates. Noncash cost estimates, based on total capital
costs and reserve estimates, change based on actual amounts of unamortized
capital and changes in reserves. Cost savings estimates are based on expected
ability to eliminate duplicative expenses, anticipated reduction in
administrative facilities and relocation of certain personnel. Actual cost
savings may be lower than estimated and realization of savings may be lower than
expected.
<PAGE> 43
HOMESTAKE & PLUTONIC
Plutonic Resources Limited
January 1998
