FILE PHOTO: Senior refinery technician Vicente Sandoval pours liquid gold to form gold dore bars at Newmont Mining's Carlin gold mine operation near Elko, Nevada May 21, 2014. The dore bars contain approximately 90 percent gold, 8 percent silver and 2 percent trace material. REUTERS/Rick Wilking/File Photo
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Barrick Gold has dropped an $18bn hostile bid for Newmont Mining after agreeing a deal to combine operations in the US state of Nevada.

Under the deal, Barrick will operate a new joint venture company and take a 61.5 per cent stake, with Newmont holding the remainder. As a standalone business, it will be the world’s biggest producer of gold, with 4.1m ounces of production a year.

The deal marks the end of a fierce bid battle by Barrick that descended into each side attacking the other’s management. It also caps 20 years of efforts by the two rival companies to work together in Nevada.

On Monday, both companies rushed to claim victory for the creation of the partnership, which had originally been proposed by Newmont.

Mark Bristow, Barrick’s South African chief executive, said the two sides had come to an agreement after he had dinner with Gary Goldberg, Newmont’s chief executive, at the Four Seasons in New York on Tuesday. That progressed to talks in Toronto on Thursday and an agreement that was signed in Elko, Nevada, on Sunday, he said.

“I’ve managed to convince Gary that this was a do-able thing and he got to the same point very quickly,” Mr Bristow told the Financial Times. “It’s a completely deliverable transaction.”

Mr Bristow said the deal would create value for Barrick shareholders without “issuing a single share”.

Last week Newmont formally rejected Barrick’s all-share bid, with Mr Goldberg calling it “egocentric”. It countered with a proposal for a joint venture with a 55 per cent share for Barrick, which Mr Bristow also quickly dismissed.

“Nevada JV is not the right path forward,” Barrick said in a hastily assembled presentation at the time.

But the mood changed after some of Newmont and Barrick’s largest shareholders indicated their preference for a joint venture over a takeover of Newmont. Barrick has only just completed its $6bn acquisition of Randgold and some shareholders worried that another deal would be taking on too much, too quickly.

Tom Palmer, Newmont’s incoming chief, who will take over from Mr Goldberg this year, said the deal came about due to the encouragement of the company’s shareholders.

“I think it was the combination of us putting out a constructive proposal to realise the synergies that everyone knew were there in Nevada, and listening to shareholders,” he said.

The two sides agreed on the ownership split based on the valuation ascribed to the assets by analysts, he added. Barrick will have three seats on the board and Newmont two.

Mr Bristow won a victory by becoming the operator of the joint venture. Newmont had previously proposed that key management roles be jointly appointed.

Barrick and Newmont said the venture would generate an estimated $500m in annual pre-tax synergies in its first five full years.

Other terms of the deal, which were criticised by Mr Bristow a week ago, have not materially changed.

Barrick’s increased shareholding reflects the fact that Newmont has not included its Cripple Creek & Victor gold mine in Colorado, which was included in its original proposal.

Also not included is Barrick’s Fourmile exploration asset in Nevada, which can be placed in the joint venture if it meets certain targets.

Mr Bristow refused to say whether this had been Barrick’s plan all along. “At the end of the day, we have reached an agreement,” he said.

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