Newmont Announces Second Quarter Net Income from Continuing Operations of $0.56 per Share Quarterly Dividend of $0.35 per share up 17% from Prior Year Quarter

This release should be read in conjunction with Newmont's Second Quarter 2012 Form 10-Q filed with the Securities and Exchange Commission on July 26, 2012 (available at www.newmont.com).

DENVER, July 26, 2012 /PRNewswire/ -- Newmont Mining Corporation (NYSE: NEM) ("Newmont" or the "Company") today reported attributable net income from continuing operations of $279 million, or $0.56 per share, down 47% from $523 million, or $1.06 per share in the second quarter of 2011. Adjusted net income(1) was $294 million, or $0.59 per share, compared with $445 million, or $0.90 per share, for the prior year quarter.

Quarter Highlights:

  • Sales revenue of $2.2 billion, a decrease of 6% from the prior year quarter;
  • Average realized gold and copper price of $1,598 per ounce and $2.85 per pound, up 6% and down 25%, respectively, from the prior year quarter;
  • Attributable gold and copper production of 1.18 million ounces and 38 million pounds, down 3% and 10%, respectively, from the prior year quarter; attributable gold and copper sales of 1.14 million ounces and 29 million pounds, down 6% and 35%, respectively, from the prior year quarter;
  • Gold and copper costs applicable to sales ("CAS") of $681 per ounce and $2.35 per pound, up 17% and 75%, respectively, from the prior year quarter;
  • Cash flow from continuing operations of $351 million, down 15% from the prior year quarter;
  • Third quarter gold price-linked dividend payable of $0.35 per share, up 17% from the prior year quarter; and
  • 2012 attributable gold production outlook narrowed to 5.0 to 5.1 million ounces, maintaining CAS outlook of $625 to $675 per ounce, and reducing outlook for attributable capital expenditures to $2.7 billion to $3.0 billion.

"Globally, our portfolio continues to perform in line with our budget.  As expected, our second quarter gold production was impacted by annual planned mill maintenance in Nevada and lower gold and copper production from Batu Hijau in Indonesia, as we continue with the planned stripping of Phase 6," said Richard O'Brien, Chief Executive Officer.  "Our capital expenditures are expected to be approximately $300 million lower than originally planned for the year, largely as a result of our slower development timetable at Conga in Peru.  We also expect our advanced projects, exploration and G&A expenditures to collectively be approximately $100 million lower this year.  As we continue to optimize and refine our plans, we expect to deliver further efficiencies and cost savings for 2013 and beyond," added Mr. O'Brien.

(1) Non-GAAP measure. See page 10 for reconciliation.

Newmont is narrowing its previously announced 2012 outlook for attributable gold production to 5.0 to 5.1 million ounces (from 5.0 to 5.2 million ounces), and narrowing its outlook on attributable copper production to 145 to 165 million pounds (from 150 to 170 million pounds). The lower attributable gold production outlook is due to lower tons mined at Tanami.  The Company is maintaining its original outlook for gold and copper CAS of between $625 and $675 per ounce (on a co-product basis) and $1.80 and $2.20 per pound, respectively.

Newmont is also revising its 2012 attributable capital expenditure outlook to $2.7 to $3.0 billion (from $3.0 to $3.3 billion), or $3.3 to $3.6 billion (from $3.7 to $4.0 billion) on a consolidated basis.  This revision is primarily due to the deferral of development of the Conga project in Peru.  As previously disclosed, the Company will take a slower development approach on the Conga project with a focus on the construction of reservoirs for downstream communities. Construction of Conga and the implementation of the independent EIA review recommendations will continue provided it can be done in a safe manner with risk-adjusted returns that justify future investment.

As previously announced, Newmont's Board of Directors approved a third quarter gold price-linked dividend payable of $0.35 per share(2) based upon the average London P.M. Gold Fix for the second quarter. 

Operations

North America

Nevada – Attributable gold production in Nevada was 378,000 ounces at CAS of $718 per ounce during the second quarter. Gold production increased 6% from the prior year quarter due to higher throughput at Mill 6, partially offset by lower grade at Midas and Phoenix.  CAS per ounce increased 13% due to higher underground mining costs, higher royalties and lower by-product credits. The Company is narrowing its outlook for 2012 attributable gold production from Nevada to 1.730 to 1.775 million ounces, and continues to expect CAS of between $575 and $625 per ounce.

La Herradura – Attributable gold production at La Herradura in Mexico was 59,000 ounces at CAS of $569 per ounce during the second quarter.  Gold production increased 11% from the prior year quarter due to higher leach placement as Noche Buena commenced production during the first quarter of 2012.  CAS increased 11% from the prior year quarter due to higher waste tons mined, higher diesel and higher employee profit sharing costs. The Company is narrowing its outlook for 2012 attributable gold production from La Herradura to 220,000 to 230,000 ounces at CAS of between $460 and $510 per ounce.

South America

Yanacocha – Attributable gold production at Yanacocha in Peru was 200,000 ounces at CAS of $466 per ounce during the second quarter. Gold production increased 14% from the prior year quarter due to higher mill grade and recovery, partially offset by lower leach placement. CAS per ounce decreased 14% from the prior year quarter due to higher production and lower mining costs, partially offset by higher workers' participation costs and lower by-product credits. The Company is narrowing its outlook for 2012 attributable gold production from Yanacocha to 675,000 to 700,000 ounces at CAS of between $475 and $525 per ounce.

La Zanja – Attributable gold production during the second quarter at La Zanja in Peru was approximately 13,000 ounces.  The Company is narrowing its outlook for 2012 attributable gold production from La Zanja to 50,000 to 60,000 ounces.

(2) Payable on September 28, 2012 to shareholders of record as of September 6, 2012.

Asia Pacific

Boddington – Attributable gold and copper production during the second quarter at Boddington in Australia was 180,000 ounces and 18 million pounds, respectively, at CAS of $947 per ounce and $2.79 per pound, respectively.  Gold ounces produced were 10% lower than the prior year due to lower mill grade and recovery, partially offset by higher mill throughput.  Gold CAS increased 48% due to lower gold production and higher milling costs. Copper pounds produced increased 20% from the prior year quarter due to higher mill throughput and grade, partially offset by lower recovery.  CAS per pound increased 44% from the prior year quarter due to higher milling costs, partially offset by higher copper production. The Company is narrowing its outlook for 2012 attributable gold production to 750,000 to 775,000 ounces at CAS of between $800 and $850 per ounce and is maintaining outlook for attributable copper production of 70 to 80 million pounds at CAS of between $2.00 and $2.25 per pound. 

Batu Hijau – Attributable gold and copper production during the second quarter at Batu Hijau in Indonesia was 8,000 ounces and 20 million pounds, respectively, at CAS of $943 per ounce and $2.20 per pound, respectively. Gold and copper production decreased 68% and 25%, respectively, from the prior year quarter due to processing lower grade stockpile ore. Waste tons mined increased 14% as Phase 6 waste removal continues as planned. CAS per ounce and per pound increased 92% and 79%, respectively, due to lower production and higher waste mining costs, partially offset by an increase in concentrate inventory. The Company is narrowing its outlook for 2012 attributable gold production to 30,000 to 40,000 ounces at CAS of between $925 and $975 per ounce and attributable copper production of 75 to 85 million pounds at CAS of between $1.80 and $2.20 per pound.

Other Australia/New Zealand – Attributable gold production during the second quarter was 207,000 ounces at CAS of $880 per ounce. Attributable gold ounces produced decreased 15% from the prior year quarter due to lower underground mining rates at Tanami and a delay in open pit ore production at Waihi, partially offset by higher throughput and grade at Jundee. CAS per ounce increased 38% from the prior year quarter due to lower production, higher operating costs driven by higher power prices and a stronger Australian dollar, net of hedging gains. The Company is narrowing its outlook for 2012 attributable gold production to 950,000 to 990,000 ounces at CAS of between $810 and $860 per ounce.

Africa

Ahafo – Attributable gold production during the first quarter at Ahafo in Ghana was 132,000 ounces at CAS of $583 per ounce. Gold production decreased 10% from the prior year quarter due to lower mill throughput and grade, partially offset by higher recovery.  CAS per ounce increased 31% from the prior year quarter due to lower production and higher labor, diesel and mine maintenance costs.  The Company is narrowing its outlook for 2012 attributable gold production to 555,000 to 570,000 ounces at CAS of between $550 and $600 per ounce.

Capital Update

Consolidated capital expenditures were $882 million during the second quarter. Newmont is revising its 2012 attributable capital expenditure outlook to $2.7 to $3.0 billion (from $3.0 to $3.3 billion), or $3.3 to $3.6 billion (from $3.7 to $4.0 billion) on a consolidated basis.  This revision is primarily due to the deferral of development on the Conga project in Peru. For the remainder of the year, 50% of 2012 consolidated capital expenditures are expected to be associated with major projects, while the remaining 50% is expected to be sustaining capital.

2012 Outlook- Q2 Update

2012 Production, CAS and Capital Outlook


Attributable Production

Consolidated CAS

Consolidated Capital

Attributable Capital

Region

(Kozs, Mlbs)

($/oz, $/lb)

Expenditures ($M)

Expenditures ($M)






Nevada

1,730 - 1,775

$575 - $625

$750 - $800

$750 - $800

La Herradura 

220 - 230

$460 - $510

$80 - $130

$80 - $130

  North America

1,950 - 2,005

$570 - $630

$850 - $900

$850 - $900

Yanacocha

675 - 700

$475 - $525

$530 - $580

$270 - $310

La Zanja

50 - 60

n/a

-

-

Conga

-

-

$500 - $600

$250 - $300

  South America

725 - 760

$475 - $525

$1,100 - $1,200

$550 - $600

Boddington

750 - 775

$800 - $850

$150 - $200

$150 - $200

Other Australia/NZ  

950 - 990

$810 - $860

$325 - $375

$325 - $375

Batu Hijaud

30 - 40

$925 - $975

$200 - $225

$100 - $125

  Asia Pacific

1,730 - 1,805

$800 - $850

$700 - $800

$600 - $700

Ahafo

555 - 570

$550 - $600

$240 - $270

$240 - $270

Akyem

-

-

$370 - $420

$370 - $420

  Africa

555 - 570

$550 - $600

$600 - $700

$600 - $700

Corporate/Other

-

-

$55 - $65

$55 - $65

Total Gold

5,000 - 5,100

$625 - $675 a,b

$3,300 - $3,600 c

$2,700 - $3,000

Boddington 

70 - 80

$2.00 - $2.25

-

-

Batu Hijaud

75 - 85

$1.80 - $2.20

-

-

Total Copper

145 - 165

$1.80 - $2.20



a 2012 Attributable CAS Outlook is $640 - $690 per ounce.

b 2012 Net Attributable CAS Outlook (inclusive of by-product credits) is $600 - $650 per ounce.

cIncludes capitalized interest of approximately $140 million.

d Assumes Batu Hijau economic interest of 48.5% for 2012, subject to final divestiture obligations.

 

2012 Outlook and Assumptions

Description

Consolidated Expenses

($M)

Attributable Expenses

($M)




General & Administrative

$200 - $220

$200 - $220

Interest Expense

$240 - $260

$230 - $250

DD&A

$1,050 - $1,080

$890 - $920

Exploration Expense

$360 - $390

$320 - $350

Advanced Projects & R&D

$425 - $475

$375 - $400

Tax Rate

30% - 32%

30% - 32%

Assumptions



Gold Price ($/ounce)

$1,500

$1,500

Copper Price ($/pound)

$3.50

$3.50

Oil Price ($/barrel)

$90

$90

AUD Exchange Rate

$1.00

1.00

 















NEWMONT MINING CORPORATION















CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in millions except per share)


















Three Months Ended


Six Months Ended




June 30,


June 30,




2012


2011


2012


2011















Sales  

$

2,229


$

2,384


$

4,912


$

4,849















Costs and expenses  













Costs applicable to sales


1,002



917



2,019



1,857


Amortization   


248



250



479



506


Reclamation and remediation  


16



43



32



57


Exploration    


106



89



194



151


Advanced projects, research and development   


82



86



184



154


General and administrative    


57



50



111



95


Other expense, net  


126



87



246



160





1,637



1,522



3,265



2,980

Other income (expense)  













Other income, net  


36



48



69



79


Interest expense, net    


(71)



(63)



(123)



(128)





(35)



(15)



(54)



(49)

Income before income and mining tax and other items  


557



847



1,593



1,820

Income and mining tax expense  


(175)



(187)



(518)



(492)

Equity income (loss) of affiliates    


(11)



-



(30)



2

Income from continuing operations    


371



660



1,045



1,330

Loss from discontinued operations  


-



(136)



(71)



(136)

Net income    


371



524



974



1,194

Net income attributable to noncontrolling interests  


(92)



(137)



(205)



(293)

Net income attributable to Newmont stockholders    

$

279


$

387


$

769


$

901















Net income attributable to Newmont stockholders:  














Continuing operations    

$

279


$

523


$

840


$

1,037



Discontinued operations    


-



(136)



(71)



(136)




$

279


$

387


$

769


$

901

Income per common share   













Basic:  














Continuing operations    

$

0.56


$

1.06


$

1.69


$

2.10



Discontinued operations    


-



(0.28)



(0.14)



(0.28)




$

0.56


$

0.78


$

1.55


$

1.82


Diluted:  














Continuing operations    

$

0.56


$

1.04


$

1.67


$

2.07



Discontinued operations    


-



(0.27)



(0.14)



(0.27)




$

0.56


$

0.77


$

1.53


$

1.80















Cash dividends declared per common share    

$

0.35


$

0.20


$

0.70


$

0.35

















 

NEWMONT MINING CORPORATION



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)



Three Months Ended June 30,


Six Months Ended June 30,



2012


2011




2012



2011



























Operating activities:















Net income


$

371


$

524



$

974


$

1,194


Adjustments:















Amortization 



248



250




479



506


Loss from discontinued operations



-



136




71



136


Reclamation and remediation



16



43




32



57


Deferred income taxes 



67



(5)




12



(38)


Stock based compensation and other non-cash benefits



19



25




36



44


Impairment of marketable securities



8



1




32



1


Gain on asset sales, net



-



(50)




(10)



(53)


Other operating adjustments and write-downs



34



51




106



96


Net change in operating assets and liabilities



(412)



(561)




(768)



(540)


Net cash provided from continuing operations  



351



414




964



1,403


Net cash used in discontinued operations  



(4)



(2)




(8)



(2)


Net cash provided from operations  



347



412




956



1,401


Investing activities:















Additions to property, plant and mine development 



(882)



(618)




(1,578)



(1,020)


Sale of marketable securities



106



55




106



55


Purchases of marketable securities



(53)



(3)




(196)



(15)


Acquisitions, net



(11)



(2,284)




(22)



(2,291)


Proceeds from sale of other assets



1



-




13



6


Other  



(20)



(12)




(37)



(15)


Net cash used in investing activities



(859)



(2,862)




(1,714)



(3,280)


Financing activities:















Proceeds from debt, net



(3)



775




3,343



775


Repayment of debt  



(34)



(942)




(1,941)



(973)


Payment of conversion premium on debt



-



-




(172)



-


Dividends paid to common stockholders  



(174)



(99)




(347)



(173)


Dividends paid to noncontrolling interests



(3)



(2)




(3)



(17)


Proceeds from stock issuance, net  



13



5




15



8


Other  



1



-




(1)



-


Net cash provided from (used in) financing activities



(200)



(263)




894



(380)


Effect of exchange rate changes on cash