Barrick Gold and Newmont Mining have signed an implementation agreement that should see the two companies’ Nevada mining operations, assets, reserves, and talent combine under a joint venture.

The joint venture will, according to the two companies, allow them to capture an estimated $500 million in average annual pre-tax synergies in the first five full years of the combination, which is projected to total $5 billion pre-tax net present value over a 20-year period.

“The joint venture is an historic accord between the two gold mining companies, which have operated independently in Nevada for decades, but have previously been unable to agree terms for cooperation,” they said.

Barrick Gold had previously made an offer to take over Newmont, which itself is in the middle of trying to complete the acquisition of fellow gold miner Goldcorp. The company has agreed to withdraw this offer, in addition to proposals for the Newmont annual general meeting that it submitted on February 22. These included, according to Newmont, an amendment to Newmont’s by-laws to lower the share ownership threshold necessary to requisition shareholder meetings to 15% from the current 25% and to repeal all by-law amendments implemented since October 24, 2018.

Barrick President and Chief Executive Officer, Mark Bristow, said the Nevada agreement marked the successful culmination of a deal that had been more than 20 years in the making. “We listened to our shareholders and agreed with them that this was the best way to realise the enormous potential of the Nevada goldfields’ unequalled mineral endowment, and to maximise the returns from our operations there.

“We are finally taking down the fences to operate Nevada as a single entity in order to deliver full value to both sets of shareholders, as well as to all our stakeholders in the state, by securing the long-term future of gold mining in Nevada.”

Gary Goldberg, Chief Executive Officer of Newmont, said the logic of combining the two companies’ operations was compelling. “This agreement represents an innovative and effective way to generate long-term value from our joint assets in Nevada, and represents an important step forward in expanding value creation for our shareholders. Through the joint venture, we will also continue to pursue the highest standards in safety, along with responsible and meaningful engagement with our employees, communities, and other stakeholders,” he said.

Following the completion of the joint venture, the Nevada complex will be the world’s single-largest gold producer, with a pro-forma output of more than 4 Moz in 2018, three Tier One assets, potentially another one in the making, and 48 Moz of reserves.

The establishment of the joint venture is subject to the usual conditions, including regulatory approvals, and is expected to be completed in the coming months.

The joint venture will exclude Barrick’s Fourmile project and Newmont’s Fiberline and Mike deposits, pending the determination of their commercial feasibility.