-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T4UCFxvPpNspcDlOYJIVXTnARuVLvAbkmnCgPCUQ3jdsbaYw1Of7vPZoaKj0QsE/ Tzu4/RKjpoIk+y6bbjF6vA== 0000950157-97-000094.txt : 19970221 0000950157-97-000094.hdr.sgml : 19970221 ACCESSION NUMBER: 0000950157-97-000094 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19970210 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOMESTAKE MINING CO /DE/ CENTRAL INDEX KEY: 0000743872 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 942934609 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08736 FILM NUMBER: 97521179 BUSINESS ADDRESS: STREET 1: 650 CALIFORNIA ST-9TH FL STREET 2: 9TH FL CITY: SAN FRANCISCO STATE: CA ZIP: 94108-2788 BUSINESS PHONE: 4159818150 DEFA14A 1 SCHEDULE 14A INFORMATION As filed with the Securities and Exchange Commission on February 7, 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): (4) Proposed maximum aggregate value of transaction: (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: The following is the text of Press Release issued by Homestake on February 7, 1997. EX-99 2 PRESS RELEASE NEWS RELEASE HOMESTAKE HOMESTAKE MINING COMPANY 650 California Street 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 COMPANY REPORTS FOURTH QUARTER AND FULL YEAR 1996 EARNINGS AND RECORD 1996 GOLD PRODUCTION ================================================================= HIGHLIGHTS o Net income was $30.3 million in both 1996 and 1995. Operating earnings before income taxes and nonrecurring items reached $88.7 million in 1996 compared to $76.4 million in 1995, a 16% increase. o Record gold production of almost two million ounces in 1996 exceeded the previous record in 1993 by 3%. o Cash production costs were reduced from $257 per ounce to $248 per ounce. o Revenues from gold and ore sales increased 5% to $712.2 million. o In December, Homestake announced an agreement to acquire Santa Fe Pacific Gold Corporation in a stock transaction currently valued at approximately $2.1 billion. ================================================================= San Francisco, CA, February 7, 1997 -- Homestake Mining Company (NYSE:HM) today reported net income of $30.3 million or $.21 per share in 1996 compared to net income of $30.3 million or $.22 per share in 1995. Earnings in 1996 include $10.4 million ($.07 per share) of net nonrecurring gains while earnings in 1995 included $6.7 million ($.05 per share) of similar gains. Net income in the fourth quarter of 1996 was $2.4 million or $.02 per share compared to net income of $7.6 million or $.05 per share in 1995. Pretax charges to fourth quarter earnings in 1996 include a writedown of $9 million in the carrying value of investments in mining companies, recognition of an $8.7 million foreign exchange loss related to the Company's investment in its wholly-owned Canadian subsidiary, and $3.4 million of costs related to the Company's proposed merger with Santa Fe Pacific Gold Corporation. Offsetting these charges were net credits of $23.2 million, principally from a reduction of prior years' income tax accruals for certain contingencies which have now been resolved. Net income in the fourth quarter of 1995 includes net nonrecurring gains of $3.7 million or $.03 per share. Homestake increased its gold production to a record level of 1,968,000 ounces in 1996, 5% more than the 1,877,000 ounces it produced in 1995. Significantly higher production from the Eskay Creek and Snip mines in British Columbia and from the Super Pit in Western Australia more than compensated for lower production at the McLaughlin mine in California, where low-grade stockpiles are being processed, and the Nickel Plate mine in Canada, which is now closed and being reclaimed. Total cash production costs were reduced by 4% to $248 per ounce in 1996 compared to $257 per ounce in 1995. Revenues from gold and ore sales increased 5% to $712.2 million in 1996 compared to $675.2 million in 1995. The increase was due to an increase in the number of ounces sold and to a slightly higher realized gold price. The Company sold 1,952,000 ounces of gold in 1996 at an average price of $389 per ounce. In 1995, Homestake sold 1,873,000 ounces of gold at an average price of $386 per ounce. Jack E. Thompson, President and Chief Executive Officer said "We are very pleased with the performance of all of our operations during 1996. Increased production and lower production costs in the fourth quarter compared to 1995 continued the favorable trend we established earlier in the year. We continue to generate significant cash flow to fund a growing exploration program and necessary capital investments. These operations provide a solid base for future growth, which we expect to accelerate by the acquisition of Santa Fe Pacific Gold. This acquisition will create a new leading international gold company with the asset base, financial strength and operating skills to pursue an aggressive growth strategy." Homestake's operating earnings in 1996 increased by 16% to $88.7 million as a result of higher realized gold prices, an increase in the number of ounces of gold sold and a decrease in per-ounce cash production costs. This increase occured despite higher depreciation charges, a sharp increase in exploration spending and reduced earnings from sulphur operations. Exploration expenses increased by 65% to $45.4 million as the Company continued to place a high priority on evaluating high- quality exploration prospects and potential mine development projects. Significant amounts continue to be spent at the Agua de la Falda property in Chile, at the Ruby Hill mine in Nevada and on a number of other promising prospects. The Company reported an effective income and mining tax rate of 37% in 1996 compared to a rate of 46% in 1995. The lower tax rate in 1996 primarily was due to a $24 million reduction in the Company's accrual for prior years' income taxes, partially offset by the effect of incurring substantial exploration expenses, primarily in South America, which are not deductible for United States income tax purposes and for which a foreign income tax benefit cannot be recognized currently. Homestake's proven and probable gold reserves declined by 5% during 1996 to 20.4 million contained ounces. Reserve additions occurred at Kalgoorlie in Western Australia and at the Snip mine in Canada, where the Company's 51% owned subsidiary Prime Resources Group, Inc. purchased an additional interest in this operation. Exploration success at the Eskay Creek mine also added to reserves. However, these additions were not sufficient to replace all of the ounces which were mined by the Company during the year. In addition to its proven and probable gold reserves, Homestake added significantly to the amount of gold contained in its mineralized material not yet classified as reserves. Gold in mineralized material increased 11% to 13.1 million ounces in 1996 from 11.8 million ounces in 1995. GOLD OPERATIONS Production of precious metals continued at a high level at the Company's Eskay Creek mine in British Columbia. During 1996, the mine sold 116,000 tons of ore containing 211,000 ounces of gold and 12,054,000 ounces of silver, equivalent to approximately 372,000 ounces of gold. In 1995, 104,000 tons of ore containing 197,000 ounces of gold and 9,945,000 ounces of silver, or 331,000 ounces of gold equivalent, were shipped to smelters. Total cash costs, including third-party smelter charges, were $170 per equivalent ounce of gold in 1996 compared to $185 per equivalent ounce in 1995. Homestake's share of gold production from the Super Pit and the Mt. Charlotte mines in Australia increased by 57,000 ounces in 1996, primarily as the result of a 19% increase in tons of ore milled. During the year, the new Fimiston mill facilities were integrated successfully with the existing plant, and are now operating in excess of design capacity. Production at the McLaughlin mine in Northern California declined by 56,000 ounces to 186,000 ounces during 1996. Mining at the open pit ceased in June as the orebody has been mined out. Production of gold from low-grade stockpiles will continue for another seven years. During 1996, the Company sold for future delivery 680,000 ounces of the gold it expects to produce from the stockpiles. The average price to be realized from these sales will be $426 per ounce, including $385 per ounce for the 120,000 ounces sold for delivery in 1997. The forward sales were made to ensure recovery of cash production costs, remaining capital costs and reclamation expenses. Production of gold from the Snip mine in British Columbia increased by 51,000 ounces compared to 1995, principally as a result of Prime Resources' April, 1996 purchase of the 60% of the mine it did not own already. Homestake Mining Company is an international gold mining company with substantial operations and exploration in the United States, 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 Company's filings with the Securities and Exchange Commission. Homestake Mining Company Statements of Consolidated Income (in thousands, except per share amounts) Three Months Ended Year Ended December 31, December 31, 1996 1995 1996 1995 Revenues Gold and ore sales $ 170,495 $ 172,921 $ 712,186 $675,222 Sulphur and oil sales 7,744 8,919 30,749 40,620 Interest 3,808 4,051 15,054 16,737 Equity earnings 902 471 1,588 2,155 Other (3,996) 3,053 7,359 11,631 178,953 189,415 766,936 746,365 Costs and expenses Production costs 113,829 126,261 475,333 481,886 Deprec.& depl 28,814 25,736 112,353 99,602 Admin. & general 9,161 8,306 36,965 37,283 Exploration 15,855 8,154 45,382 27,541 Interest expense 2,670 2,973 10,644 11,297 Other 13,271 1,135 14,575 3,290 183,600 172,565 695,252 660,899 Income before taxes and minority int (4,647) 16,850 71,684 85,466 Income & mining taxes 11,376 (6,050) (26,333) (39,141) Minority interests (4,304) (3,157) (15,070) (15,998) Net income $ 2,425 $ 7,643 $ 30,281 $ 30,327 Net income per share $ 0.02 $ 0.05 $ 0.21 $ 0.22 Average shares outstanding 146,672 138,793 146,311 138,117 Homestake Mining Company Consolidated Balance Sheets (in thousands) December 31, December 31, 1996 1995 Assets Cash and short-term investments $ 219,757 $ 212,373 Other current assets 159,591 156,344 Property, plant and equipment-net 1,007,030 846,776 Other assets 95,730 106,140 Total $1,482,108 $1,321,633 Liabilities and Shareholders' Equity Current liabilities $ 116,731 $ 98,421 Long-term debt 185,000 185,000 Other long-term liabilities 114,168 120,418 Deferred income and mining taxes 201,454 189,925 Minority interests 96,203 92,012 Shareholders' equity 768,552 635,857 Total $1,482,108 $1,321,633 Homestake Mining Company Statements of Consolidated Cash Flow (in thousands) Year Ended December 31, 1996 1995 Net income $ 30,281 $ 30,327 Reconciliation to net cash provided by operations: Depreciation, depletion and amortization 112,353 99,602 Deferred taxes, minority interests and other 22,893 32,891 Gains on asset disposals (3,836) (1,969) Effect of changes in operating working capital items 18,687 (7,394) Net cash flows provided by operations 180,378 153,457 Capital additions (105,923) (80,979) Proceeds from asset sales 16,141 13,295 Change in short-term investments (63,742) 33,063 Purchase of HGAL minority interests (6,435) (16,714) Purchase of interest in Snip mine (39,279) - Investments in mining companies (12,224) (37,314) Other 3,264 3,296 Total investment activities (208,198) (85,353) Dividends paid - Homestake (29,341) (27,587) Dividends paid - Prime minority interests (2,205) - Common stock issued 2,599 2,886 Total financing activities (28,947) (24,701) Effect of exchange rate changes on cash 409 (3,147) Net increase (decrease) in cash and equivalents $ (56,358) $ 40,256 Homestake Mining Company Gold Production (including Minority Interests) Ounces in Thousands Ownership Percentage in (parenthesis) Three Months Ended Year Ended December 31, December 31, 1996 1995 1996 1995 UNITED STATES Homestake (100) 100.8 111.4 407.3 402.9 McLaughlin (100) 32.2 63.0 185.5 241.8 Round Mountain (25) 24.3 22.4 102.7 86.1 Pinson (50) (a) 4.4 3.5 12.1 12.6 Marigold (33) 7.7 5.7 24.5 23.2 Santa Fe (100) - 1.3 - 16.7 CANADA Eskay Creek (100)(b) 90.6 86.2 372.3 331.3 Williams (50) 56.2 49.7 205.5 202.6 David Bell (50) 25.5 19.7 97.7 79.4 Quarter Claim (25) 2.9 1.5 11.4 7.1 Nickel Plate (100) 2.3 26.5 70.2 91.4 Snip (100) (c) 32.0 11.8 101.8 51.3 AUSTRALIA Kalgoorlie (50) 109.5 72.7 368.8 311.4 CHILE El Hueso (100) 1.6 3.1 8.3 19.6 TOTAL PRODUCTION 490.0 478.5 1,968.1 1,877.4 Minority Interests (60.5) (60.9) (234.2) (245.7) HOMESTAKE'S SHARE 429.5 417.6 1,733.9 1,631.7 (a) Homestake increased its interest in the Pinson mine from 26.3% to 50% in December 1996. (b) Ounces produced are expressed on a gold equivalent basis and include 51,200 (44,500 in 1995) payable ounces of gold and 3.1 million (3.0 million in 1995) payable ounces of silver contained in ore sold to smelters in the fourth quarter, and 211,300 (196,500 in 1995) payable ounces of gold and 12.1 million (9.9 million in 1995) payable ounces of silver contained in ore sold to smelters in the year-to-date period. (c) 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. Homestake Mining Company Total Cash Costs (a) (Dollars per Ounce) Three Months Ended Year Ended December 31, December 31, 1996 1995 1996 1995 UNITED STATES Homestake $320 $304 $304 $303 McLaughlin 283 256 250 242 Round Mountain 265 264 256 254 Pinson 329 314 369 322 Marigold 236 282 267 254 Santa Fe - 99 - 139 CANADA Eskay Creek (b) 171 187 170 185 Williams 206 220 222 222 David Bell 176 217 172 203 Quarter Claim 169 168 167 167 Nickel Plate 526 391 347 379 Snip (b) 222 179 190 176 AUSTRALIA Kalgoorlie 269 344 291 296 CHILE El Hueso 298 403 275 403 TOTAL HOMESTAKE $248 $270 $248 $257 (a) Effective January 1, 1996 Homestake adopted the "Gold Institute Production Cost Standard" for reporting per ounce production costs. (b) 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. Homestake Mining Company Proven And Probable Gold Reserves (a) December 31,1996 Grade Contained Tons Ounces Ounces (000) Per Ton (000) UNITED STATES Homestake 23,754 0.196 4,662 Round Mountain 119,127 0.019 2,263 McLaughlin 16,627 0.063 1,048 Ruby Hill 7,616 0.099 755 Other 7,304 0.040 295 CANADA Williams 17,725 0.146 2,585 Eskay Creek 707 1.732 1,224 David Bell 2,787 0.291 811 Other 420 0.464 195 AUSTRALIA Mt. Charlotte 13,169 0.070 924 Super Pit and other 85,126 0.065 5,522 CHILE Agua de la Falda 526 0.181 95 ------- 20,379 ======= (a) Homestake's proportionate interest, excluding minority interests. Homestake Mining Company Mineralized Material - Gold (a)(b) December 31,1996 Grade Contained Tons Ounces Ounces (000) Per Ton (000) UNITED STATES Homestake 23,993 0.173 4,148 Round Mountain 26,479 0.015 391 Ruby Hill 9,200 0.067 614 CANADA Williams 4,313 0.121 524 Eskay Creek 141 0.541 76 George Lake (c) 2,572 0.322 829 AUSTRALIA Mt. Charlotte 14,235 0.074 1,054 Super Pit and other 68,647 0.073 5,003 CHILE Agua de la Falda 3,054 0.158 483 ------ 13,122 ====== 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 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. 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. 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. 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 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 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 Present Principal 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 Madisoin 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. -----END PRIVACY-ENHANCED MESSAGE-----