News
Buenaventura and Newmont Unitize Peru Properties With Yanacocha and Settle A Long-Standing Dispute With BRGM
DENVER, Oct. 20 /PRNewswire/ -- Compania de Minas Buenaventura S.A.A. and
Newmont Mining Corporation (NYSE: NEM) have agreed in principle to unitize
their land holdings in northern Peru into their jointly-owned Minera Yanacocha
gold operation. At the same time they have reached a settlement in a long-
standing dispute with the Bureau de Recherches Geologiques et Minieres (BRGM),
a geologic and exploration agency of the French government, and Normandy
Mining Ltd. of Australia over ownership of Yanacocha and a separate Peruvian
mining concern, Cedimin.
"These two decisions significantly improve Newmont and Buenaventura's
ability to efficiently develop the potential of the Yanacocha district," said
Ronald C. Cambre, Newmont's chairman and CEO. "Our two companies now have
undisputed title and uniform ownership that will allow us to make capital and
operating decisions on a regional basis. Coupled with recent drilling
results, we are more convinced than ever that Yanacocha will be an outstanding
contributor to our companies, to the people of the Cajamarca region and to
Peru for decades to come," Cambre added.
Regarding settlement of the litigation, Alberto Benavides, chairman of
Buenaventura, said, "Both Newmont's and Buenaventura's management are, and
have been for some time, fully aware of the advantages of combining these
assets and thus being able to fully and expeditiously develop their potential.
The inability of the parties to resolve protracted legal issues, despite
having won judgments in our favor in the Peruvian courts and in an
international arbitration, limited us from achieving such objectives."
Located in the high Andes of Northern Peru, Yanacocha is the largest gold
mine in Latin America, with 1999 year-end reserves of 32.9 million ounces of
gold and anticipated 2000 production of 1.8 million ounces. It is also one of
the lowest cost mines in the world with cash operating costs of under $90 an
ounce. After the unitization, ownership in Yanacocha will remain
51.35 percent by Newmont, 43.65 percent by Buenaventura and 5 percent by the
International Finance Corporation.
Under the unitization plan, which is subject to final negotiation,
Yanacocha will acquire four separately held property units at agreed upon
prices. The transaction increases Yanacocha's land package in northern Peru
to 535 square miles from 100. Included in the proposal are:
-- Minas Conga, a copper-gold exploration property northeast of Yanacocha
that is owned 60 percent by Buenaventura and 40 percent by Newmont.
-- The Solitario property north of Yanacocha that was recently acquired
100 percent by Newmont.
-- Several exploration parcels west of Yanacocha known as the Northern
Peru Joint Venture, owned 65 percent by Newmont and 35 percent by
Buenaventura, and
-- Other Buenaventura-held properties in the region including a lime
facility.
Minera Yanacocha will pay approximately $50 million for these properties
of which Newmont will receive approximately $9 million with the balance paid
to Buenaventura. BMO Nesbitt Burns Inc. advised Newmont and Buenaventura on
the unitization.
Settlement of the ownership dispute with BRGM and Normandy resolves long-
standing legal battles fought on numerous fronts throughout the world. In
addition to sums previously received, BRGM and Normandy together will receive
$80 million, half from Newmont in the form of common shares and half from
Buenaventura in cash. In return, Newmont and Buenaventura will receive
undisputed title to BRGM's former 24.7 percent interest in Yanacocha and
Buenaventura will receive undisputed title to BRGM's 65 percent interest in
Cedimin, which originally owned 40 percent of Minas Conga and other Peruvian
assets.
In November 1993, the French government announced its intention to
privatize its mining interests, including BRGM's holdings in Yanacocha and
Cedimin. In 1994, after BRGM announced its intention to transfer those assets
to Normandy, Newmont and Buenaventura initiated legal action to enforce their
preemptive rights in Yanacocha. In 1995, Buenaventura filed a similar suit to
enforce its rights in Cedimin.
In 1998, the Peruvian Supreme Court resolved the Yanacocha proceedings in
favor of Newmont and Buenaventura and ruled the preemptive rights had been
triggered in 1993. Accordingly, the court set a purchase price for BRGM's
shares at $109.3 million based on 1993 market values. The same court later
resolved the Cedimin issue in favor of Buenaventura and set a purchase price
for those shares at $13 million.
The Cedimin case was also subject to an arbitration proceeding. In 1995,
BRGM asked the International Chamber of Commerce in Zurich to rule that the
preemptive rights had not been triggered by the proposed sale. In July 1999,
that panel ruled against BRGM, but said the purchase price for Cedimin would
have to be determined in a separate phase of the arbitration proceeding. That
issue was still pending.
Despite the Peruvian court's ruling regarding Yanacocha, BRGM in 1998
filed a request for arbitration against the Republic of Peru with the
International Centre for Settlement of Investment Disputes, an affiliate of
the World Bank. BRGM claimed that the Peruvian courts had wrongfully deprived
it of its shares in Yanacocha and sought compensation of $560 million based on
the mine's 1998 market value. The arbitration has not proceeded beyond the
initial naming of party arbitrators. Although Newmont and Buenaventura were
not parties to the arbitration, there is no precedent to determine what
effect, if any, an adverse decision might have had on them or on Yanacocha's
operations.
Under the settlement, all pending litigation and arbitration claims will
be dismissed, as will claims by BRGM against the government of Peru. The
settlement is subject to customary closing conditions and is expected to close
late this year.
SOURCE Newmont Mining Corporation
Web site: newmont.com
Company News On-Call: prnewswire.com fax, 800-758-5804, ext. 615675
CONTACT: media, Doug Hock, 303-837-5812, or investors, WendyYang, 303-837-6141, both of Newmont Mining Corporation; or Denisede Garrido of Buenaventura, 011-511-471-8337
prnewswire.com |
