Newmont's Income Increases 38% to $537 Million ($1.09 per share) on Record Revenues of $2.6 Billion for the Third Quarter

DENVER, Nov. 2, 2010 /PRNewswire-FirstCall/ -- Newmont Mining Corporation (NYSE: NEM) ("Newmont" or the "Company") today announced record quarterly revenue of $2.6 billion for the third quarter compared to $2.0 billion in the prior year quarter.  Net income attributable to Newmont stockholders increased 38% to $537 million ($1.09 per share), compared to $388 million ($0.79 per share) in the prior year quarter.  Adjusted net income(1) rose 38% to $534 million ($1.08 per share) from $387 million ($0.79 per share) in the third quarter of 2009, while the Company's gold operating margin(2) expanded to 61%($744 per ounce) from 58% ($560 per ounce).

Third Quarter 2010 Highlights:

• Equity gold and copper production of 1.4 million ounces and 83 million pounds, respectively;
• Average realized gold and copper price of $1,221 per ounce and $3.67 per pound, respectively;
• Costs applicable to sales for gold and copper of $477 per ounce on a co-product basis and $0.73 per pound, respectively;
• Adjusted net income of $534 million ($1.08 per share) and reported net income of $537 million ($1.09 per share);
• Operating cash flow of $854 million; and
• Cash and cash equivalents on September 30, 2010 of approximately $4 billion.

"With the substantial free cash flow that we continue to generate in the current metal price environment, we remain focused on progressing the development of our next generation of mining projects," stated Richard O'Brien, President and Chief Executive Officer.  "This includes Conga in Peru, Akyem in Ghana, and Hope Bay in Canada, as well as a series of satellite deposits in Nevada.  Of the $1.3-$1.5 billion in capital we expect to spend this year, approximately 40% will be invested in our development pipeline, with increasing reinvestment expected over the next several years."

With three quarters of production completed, the Company is narrowing its previously announced 2010 outlook for equity gold production from 5.3 to 5.5 million ounces to 5.3 to 5.4 million ounces.  In addition, Newmont is updating its 2010 outlook for costs applicable to sales from between $460 and $480 per ounce to between $485 and $500 per ounce, based on the higher gold price and weaker US dollar.  

Regional Operations

In the third quarter of 2010, the Company reported equity gold production of 1.4 million ounces at costs applicable to sales of $477 per ounce on a co-product basis.  Costs applicable to sales increased 18% from the prior year quarter due to higher waste mining and royalty costs, a stronger Australian dollar, the addition of higher cost production at Boddington and lower production in South America, partially offset by higher production in Africa.

North America

Nevada – Nevada produced 453,000 equity ounces of gold at costs applicable to sales of $575 per ounce during the third quarter.  Gold production decreased 7% from the prior year quarter due to lower leach tons placed at Twin Creeks and Carlin, lower Gold Quarry ore feed to Mill 5 due to the slope failure which occurred in late 2009 and the completion of underground mining at Deep Post in 2009.  Costs applicable to sales increased 6% from the prior year quarter due to lower production, partially offset by higher by-product credits.

The Company now expects 2010 equity gold production from Nevada of between 1.71 to 1.75 million ounces at costs applicable to sales of between $590 and $610 per ounce.

La Herradura – Equity gold production at La Herradura in Mexico during the third quarter was 42,000 ounces at costs applicable to sales of $464 per ounce.  Gold production increased 75% from the prior year quarter due to the commencement of production from the Soledad and Dipolos pits in January 2010. Costs applicable to sales per ounce increased 32% from the prior year quarter due to higher mining costs associated with waste removal from the two new pits.

The Company now expects La Herradura equity gold production of between 155,000 to 165,000 ounces in 2010 at costs applicable to sales of between $405 and $420 per ounce.  

South America

Yanacocha – Equity gold production during the third quarter at Yanacocha in Peru was 182,000 ounces at costs applicable to sales of $420 per ounce.  Gold production decreased 35% from the prior year quarter due to mine sequencing resulting in lower leach tons placed, transitional ore stockpiling at La Quinua and lower mill grade and recovery. Costs applicable to sales increased 43% from the prior year quarter due to lower production, higher waste mining and higher diesel and royalty costs, partially offset by higher silver by-product credits.

The Company now expects 2010 equity gold production at Yanacocha of between 760,000 and 770,000 ounces at costs applicable to sales of between $400 and $420 per ounce.

Other South America – Approximately 15,000 equity ounces of production is expected in 2010 at La Zanja, which began commercial production in the third quarter.

Asia Pacific

Boddington – Boddington produced 180,000 ounces of gold and 14 million pounds of copper during the third quarter at costs applicable to sales of $617 per ounce ($487 per ounce on a by-product(3) basis) and $1.81 per pound, respectively.   Unplanned mill maintenance resulted in lower throughput and production for July and August, while higher mill grades resulted in higher gold and copper production in September.   Compared to the second quarter of 2010, gold and copper production decreased by 2% and 12%, respectively. Commercial production was declared at Boddington during the fourth quarter 2009, thus it is compared on a quarter over quarter, rather than year over year basis.  

Gold production for 2010 is now expected to be between 700,000 and 750,000 ounces at costs applicable to sales of between $575 to $595 per ounce.  Copper production for 2010 is now expected to be between 50 to 60 million pounds, at costs applicable to sales of between $1.75 and $1.95 per pound.

Batu Hijau – Equity gold and copper production during the third quarter at Batu Hijau in Indonesia was 106,000 ounces and 69 million pounds, respectively, at costs applicable to sales of $211 per ounce and $0.65 per pound, respectively.   Equity gold and copper production increased 14% and 9%, respectively, from the prior year quarter due to higher mill throughput, partially offset by lower recovery.  Costs applicable to sales for gold and copper increased 19% and 30%, respectively, from the prior year quarter due to higher waste mining costs.  Phase 5 mining and Phase 6 waste removal were delayed during the quarter due to abnormally high "dry season" rainfall, which restricted access to the bottom of the pit and resulted in processing a higher proportion of stockpiled ore.

The Company now expects 2010 equity gold and copper production at Batu Hijau of between 310,000 and 340,000 ounces, and between 250 and 265 million pounds, respectively.  The Company expects 2010 gold and copper costs applicable to sales of between $250 and $270 per ounce and $0.65 and $0.75 per pound, respectively.  

In the fourth quarter 2010, the company plans to suspend mining at the bottom of Phase 5 and begin processing ore from stockpiles as mining will be primarily for Phase 6 waste removal.  The Company expects Phase 6 ore to become the primary ore feed commencing in 2014.  

Other Australia/New Zealand - Equity gold production at our other Australia/New Zealand operations during the third quarter was 284,000 ounces at costs applicable to sales of $552 per ounce.  Gold production decreased slightly from the prior year quarter due to lower mill grade at Jundee and Waihi, partially offset by higher mill grade and recovery at Kalgoorlie and Tanami. Costs applicable to sales increased 5% from the prior year quarter due to lower production and a stronger Australian dollar.

The Company now expects 2010 equity gold production at the Company's other Australia/New Zealand operations of between 1.09 and 1.11 million ounces at costs applicable to sales of between $550 to $570 per ounce.

Africa

Ahafo – Gold production during the third quarter at Ahafo in Ghana was 156,000 ounces at costs applicable to sales of $422 per ounce.  Gold production increased 8% from the prior year quarter due to higher grade ore, partially offset by lower throughput. Costs applicable to sales per ounce decreased 5% from the prior year quarter due to higher production and increases in ore stockpiles, partially offset by higher diesel and royalty costs.

Third quarter 2010 production included 16,000 incremental start-up ounces from the Amoma pit, resulting in net sales of $13 million included in Other income, net.  Commercial production for the Amoma pit occurred on October 1.  

The Company expects 2010 gold production at Ahafo of between 520,000 and 540,000 ounces at costs applicable to sales of between $430 and $470 per ounce.  

Capital Update

Consolidated capital expenditures were $344 million during the third quarter, down from $404 million in the third quarter of 2009 as the Boddington capital spend was substantially completed at the end of 2009.  The Company is lowering its 2010 consolidated capital expenditure outlook to $1.3 billion to $1.5 billion, with approximately 30% to be invested in each of the North America and Asia Pacific regions, and the remaining 40% at other locations.  Approximately 40% of 2010 consolidated capital expenditures are expected to be related to major project initiatives, including further development of the Akyem project in Ghana, the Conga project in Peru, Hope Bay in Canada, and the Nevada project portfolio, while the remaining 60% is expected to be for maintenance and sustaining expenditures.

2010 Outlook – Q3 Update(4)

Our current outlook for 2010 equity production, CAS and consolidated capital expenditures is as follows:  

(1)  See reconciliation to GAAP net income on page 11.

(2)  Gold operating margin calculated as average realized gold price per ounce, less gold cost applicable to sales per ounce, divided by average realized gold price per ounce.

(3)  See reconciliation from by-product costs applicable to sales to GAAP costs applicable to sales on page 12.

(4)  Outlook referenced in the table above and elsewhere in this release is based upon management's good faith estimates as of November 2, 2010 and are considered "forward-looking statements."   References to outlook guidance are based on current mine plans, assumptions noted above and current geotechnical, metallurgical, hydrological and other physical conditions, which are subject to risk and uncertainty as discussed in the "Cautionary Statement" on page 13.

Condensed Statements of Consolidated Income (unaudited, in millions)

Condensed Statements of Consolidated Cash Flow (unaudited, in millions)

Condensed Consolidated Balance Sheets (unaudited, in millions)

Production Statistics

CAS and Capital Expenditures

Supplemental Information

Non-GAAP Financial Measures

Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles ("GAAP"). These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Reconciliation of Adjusted Net Income to GAAP Net Income

Management of the Company uses the non-GAAP financial measure Adjusted net income to evaluate the Company's operating performance, and for planning and forecasting future business operations.  The Company believes the use of Adjusted net income allows investors and analysts to compare the results of the continuing operations of the Company and its direct and indirect subsidiaries relating to the production and sale of minerals to similar operating results of other mining companies, by excluding exceptional or unusual items, income or loss from discontinued operations and the permanent impairment of assets, including marketable securities and goodwill.  Management's determination of the components of Adjusted net income are evaluated periodically and based, in part, on a review of non-GAAP financial measures used by mining industry analysts.  

Net income attributable to Newmont stockholders is reconciled to Adjusted net income as follows:

Reconciliation of Co-Product Costs Applicable to Sales to By-Product Costs Applicable to Sales

Sales and Costs applicable to sales for Boddington are presented in the Condensed Consolidated Financial Statements for both gold and copper due to the significant portion of copper production (approximately 15-20% of total revenue based on the latest life-of-mine plan and metal price assumptions). The co-product method allocates costs applicable to sales to each metal based on specifically identifiable costs where applicable and on a relative proportion of sales values for other costs. Management also assesses the performance of the Boddington mine on a by-product basis due to the majority of sales being derived from gold and to determine contingent consideration payments to AngloGold. The by-product method deducts copper sales from costs applicable to sales as shown in the following table:

To view complete financial disclosure, including regional mine statistics, Results of Consolidated Operations, Liquidity and Capital Resources, Management's Discussion & Analysis, the Form 10-Q, and a complete outline of the 2010 Operating and Financial guidance by region, please see www.newmont.com.  

The Company's third quarter and earnings conference call and web cast presentation will be held on Tuesday, November 2, 2010 beginning at 11:30 a.m. Eastern Time (9:30 a.m. Mountain Time).  To participate:

The conference call also will be simultaneously carried on our web site at www.newmont.com under Investor Relations/Presentations and will be archived there for a limited time.

Cautionary Statement

This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended which are intended to be covered by the safe harbor created by such sections and other applicable laws.  Such forward-looking statements may include, without limitation: (i) estimates of future mineral production and sales; (ii) estimates of future costs applicable to sales; (iii) estimates of future capital expenditures; and (iv) expectations regarding the development, growth and exploration potential of the Company's projects.  Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect.  Such assumptions, include, but are not limited to: (i) there being no significant change to current geotechnical, metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company's projects being consistent with current expectations and mine plans; (iii) political developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) certain exchange rate assumptions for the Australian dollar to the U.S. dollar, as well as other the exchange rates being approximately consistent with current levels; (v) certain price assumptions for gold, copper and oil; (vi) prices for key supplies being approximately consistent with current levels; and (vii) the accuracy of our current mineral reserve and mineral resource estimates. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis.  However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the "forward-looking statements".  Such risks include, but are not limited to, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, political and operational risks in the countries in which we operate, and governmental regulation and judicial outcomes.  For a more detailed discussion of such risks and other factors, see the Company's 2009 Annual Report on Form 10-K, filed on February 25, 2010, with the Securities and Exchange Commission, as well as the Company's other SEC filings.  The Company does not undertake any obligation to release publicly revisions to any "forward-looking statement," including, without limitation, outlook, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.  Investors should not assume that any lack of update to a previously issued "forward-looking statement" constitutes a reaffirmation of that statement. Continued reliance on "forward-looking statements" is at investors' own risk.

SOURCE Newmont Mining Corporation