Newmont Mining Corporation (NYSE:NEM) (Newmont or the Company)
announced second quarter results.
- Net income: Reported GAAP net
income attributable to shareholders from continuing operations of
$50 million, or $0.09 per share, compared to $63 million, or $0.13
per share in the prior year quarter; achieved adjusted net income1
of $231 million, or $0.44 per basic share, compared to $131 million
or $0.26 per share in the prior year quarter
- EBITDA: Achieved adjusted
EBITDA2 of $804 million in the second quarter, compared to $692
million in the prior year quarter
- Cash flow: Generated net cash
from continuing operating activities of $780 million and free cash
flow3 of $486 million, compared to $441 million and $119 million in
the prior year quarter
- Attributable production:
Produced 1.3 million ounces and 38,000 tonnes of attributable gold
and copper, respectively, compared to 1.2 million ounces and 42,000
tonnes in the prior year quarter
- Costs applicable to sales (CAS):
Improved gold CAS to $637 per ounce4 compared to $642 per ounce in
the prior year quarter, and reported copper CAS of $1.21 per pound
unchanged from the prior year quarter
- All-in sustaining costs
(AISC)5: Improved gold AISC to $876 per ounce compared
to $909 per ounce in the prior year quarter, and improved copper
AISC to $1.53 per pound compared to $1.61 per pound in the prior
year quarter
- Outlook: Improved 2016 outlook
and long term cost outlook; updated outlook excludes Batu
Hijau
- Portfolio: Merian, Long Canyon,
Cripple Creek & Victor (CC&V) and Tanami projects
progressing on schedule and at or below budget. Northwest Exodus
has been approved and is expected to reach first gold production in
Q3 2016; announced agreement to sell Newmont’s ownership stake in
PTNNT
- Shareholder returns: Maintained
second quarter dividend of $0.025 per share6
“Newmont’s strong second quarter results included delivering
adjusted EBITDA of more than $800 million, free cash flow of $486
million, and announcing the sale of our 48.5 percent stake in PTNNT
for total consideration of $1.3 billion including $920 million cash
at close.” said Gary Goldberg, President and Chief Executive
Officer. “Consistently strong operational performance has given us
the means to strengthen our portfolio and balance sheet, and
position Newmont to continue outperforming. We progressed
construction of two new mines, and are now building three higher
margin expansion projects including Northwest Exodus – on time and
at or below budget. We have also been able to reduce our net debt
by nearly 50% since 2013.”
____________________________________
1 Non-GAAP measure. See end of release for reconciliation to net
income attributable to Newmont stockholders.2 Non-GAAP measure. See
end of release for reconciliation to net income attributable to
Newmont stockholders.3 Non-GAAP measure. See end of release for
reconciliation to net cash provided by operating activities.4
Non-GAAP measure. See end of release for reconciliation to costs
applicable to sales.5 Non-GAAP measure. See end of release for
reconciliation to cost applicable to sales.6 Such policy is
non-binding; declaration of future dividends remains subject to
approval and discretion of the Board of Directors.
Second Quarter Summary Results
GAAP Net income attributable to Newmont stockholders from
continuing operations was $50 million, or $0.09 per share, compared
to $63 million or $0.13 per share in the prior year quarter.
Adjusted Net Income was $231 million or $0.44 per share, compared
to $131 million or $0.26 per share in the prior year quarter. The
primary adjustment to net income in the second quarter is a $174
million movement in tax valuation allowances and tax adjustments
related to prior period earnings.
Revenue totaled $2.0 billion in the quarter, in line with
$1.9 billion in the second quarter of 2015 as higher gold volumes
and pricing offset lower copper volumes and pricing.
Average net realized gold and copper price7 was
$1,260 per ounce and $1.94 per pound, respectively, compared with
$1,179 per ounce and $2.41 per pound in the prior year quarter.
Attributable production totaled 1.3 million ounces,
compared to 1.2 million ounces in the second quarter of 2015.
During the quarter, new production from CC&V and higher
production at Tanami, Kalgoorlie and Ahafo more than offset
declining production at Yanacocha and the sale of Waihi.
Attributable copper production totaled 38,000 tonnes compared to
42,000 tonnes in the prior year period due to slightly lower grade
and throughput at Batu Hijau.
CAS Total costs applicable to sales of $1,059 million and
$637 per ounce in the second quarter compared to $1,027 million and
$642 per ounce in the prior year quarter. Second quarter CAS per
ounce improvements were led by Kalgoorlie and the inclusion of
CC&V. Higher production offset processing lower grade and deep
transitional ore at Yanacocha. Copper CAS was $1.21 per pound in
the second quarter, no change from the prior year quarter.
AISC was $876 per ounce and $1.53 per pound,
respectively, compared to $909 per ounce and $1.61 per pound in the
prior year quarter. AISC benefitted from production and CAS
improvements detailed above and further improved due to
timing-related reductions in sustaining capital. Full year
sustaining capital is expected to be slightly lower due to ongoing
cost and efficiency improvements.
Capital expenditures8 for the second quarter were
$294 million, including $155 million of sustaining capital,
compared to $322 million in the prior year quarter, including $170
million sustaining capital. Sustaining capital for the quarter
declined slightly due to timing of spend. Development capital was
used to construct projects, including new mines at Merian and Long
Canyon, and expansions at CC&V and Tanami.
Net cash provided by continuing operating
activities was $780 million in the second quarter, compared to
$441 million in the prior year quarter primarily due to increased
gold pricing and volumes, assisted by lower costs. Free cash flow
was $486 million in the second quarter, compared to $119 million in
the prior year quarter. The company held $2,902 million of
consolidated cash on its balance sheet at the end of the second
quarter.
Newmont has also generated approximately $1.9 billion in asset
sales since 2013 while maintaining steady attributable gold
production. Gross proceeds from asset sales would increase further
with the expected sale of Batu Hijau.
On June 30, Newmont announced an agreement to sell its interests
in PTNNT, which operates the Batu Hijau copper and gold mine in
Indonesia. The total consideration of $1.3 billion for Newmont’s
48.5 percent economic interest includes cash proceeds of $920
million expected to be paid at closing and contingent payments of
$403 million tied to metal price upside and development of the
Elang deposit.
7 Non-GAAP measure. See end of release for reconciliation to
sales.8 Capital expenditures refers to Additions to property plant
and mine development from the statements of consolidated cash
flows.
Three Months Ended
June 30, Six Months Ended June 30,
2016 2015 % Change
2016 2015 % Change
Attributable Sales (koz, kt) Attributable gold ounces sold
1,279 1,157 11 % 2,491 2,351 6 % Attributable copper tonnes sold 33
37 (11) % 76 75 1 %
Average Realized Price ($/oz,
$/lb) Average realized gold price $ 1,260 $ 1,179 7 % $ 1,226 $
1,192 3 % Average realized copper price $ 1.94 $ 2.41
(19) % $ 1.98 $ 2.37 (16) %
Attributable Production (koz, kt) North America 477 377 27 %
933 782 19 % South America 81 111 (27) % 173 238 (27) % Asia
Pacific 522 520 - % 1,001 958 4 % Africa 205
195 5 % 407 411
(1) %
Total Gold 1,285
1,203 7
% 2,514
2,389 5 % North America 5 6 (17) % 10
11 (9) % Asia Pacific 33 36 (8)
% 66 68 (3) %
Total
Copper 38 42
(10) %
76 79 (4)
% CAS Consolidated ($/oz, $/lb) North America
$ 700 $ 764 (8) % $ 716 $ 726 (1) % South America 773 635 22 % 743
543 37 % Asia Pacific 577 618 (7) % 573 648 (12) % Africa
560 488 15 % 558
481 16 %
Total Gold $ 637
$ 642 (1)
% $
638 $ 628 2
% Total
Gold (by-product) $ 577 $
518 11 %
$ 550 $
515 7 % North America $ 2.02 $ 1.83 10 % $
2.07 $ 1.89 10 % Asia Pacific 1.13 1.17
(3) % 1.04 1.23 (15) %
Total
Copper $ 1.21 $ 1.21
- %
$ 1.12 $ 1.28
(13)
% AISC Consolidated ($/oz, $/lb)
North America $ 884 $ 973 (9) % $ 880 $ 931 (5) % South America
1,260 1,000 26 % 1,123 844 33 % Asia Pacific 706 771 (8) % 695 796
(13) % Africa 733 711 3 %
716 672 7 %
Total Gold
$ 876 $ 909 (4)
%
$ 852 $ 879 (3)
% Total Gold (by-product) $ 843
$ 826 2 %
$ 795
$ 806 (1) % North America $ 2.27
$ 2.44 (7) % $ 2.38 $ 2.32 3 % Asia Pacific 1.46
1.55 (6) % 1.34
1.61 (17) %
Total Copper $ 1.53
$ 1.61 (5)
% $
1.42 $ 1.67 (15)
%
Projects Update
Cripple Creek & Victor (CC&V)
expansion includes a new leach pad, recovery plant and mill.
Leach pad construction finished ahead of schedule with first
production in March 2016. The recovery plant remains on schedule to
be completed later this year. Gold production for 2016 is expected
to be between 350,000 and 400,000 ounces at CAS of between $500 and
$550 per ounce and AISC of between $600 and $650 per ounce, with
production weighted toward the latter part of the year. CC&V
development capital is forecasted at approximately $185 million,
with $70 million to be spent in 2016.
Merian is a new mine in Suriname
expected to deliver more than a decade of profitable production and
accretive returns. Construction is approximately 90% complete. The
project remains $100 million below initial budget and is on track
to reach commercial production in the second half of 2016. Merian
will produce between 400,000 and 500,000 ounces (on a 100% basis)
of gold annually during its first five years at CAS of between $575
and $675 per ounce and AISC of between $650 and $750 per ounce.
Newmont’s 75% share of development capital is estimated at between
$575 million and $625 million, with an expenditure of between $170
million and $210 million in 2016.
Long Canyon is an oxide ore body
that provides significant exploration upside potential in an
emerging district. The Phase 1 project is approximately 80%
complete and remains on budget and on schedule to reach commercial
production in the first quarter of 2017. This first phase of
development includes an open pit mine and heap leach operation.
Production is expected to average between 100,000 and 150,000
ounces per year at CAS of between $400 and $500 per ounce and AISC
of between $500 and $600 per ounce over an eight year mine life.
Approximately half of the total capital costs of between $250
million and $300 million will be spent in 2016 with minimal
spending in 2017.
Tanami Expansion Project includes
constructing a second decline in the mine and building incremental
capacity in the plant to increase profitable production and serve
as a platform for future expansion. The project is on budget and on
schedule to deliver additional production beginning in 2017. The
expansion expects to maintain annual gold production of between
425,000 and 475,000 ounces per year at CAS of between $550 and $600
per ounce and AISC of between $700 and $750 per ounce for the first
five years. The expansion will also increase mine life by three
years. Capital costs for the project are estimated at between $100
million and $120 million with approximately half of that amount
spent in 2016.
Northwest Exodus is a sustaining
capital underground extension in the Carlin North Area that is
expected to extend mine life by seven years, to produce incremental
gold production between 50,000 and 75,000 ounces per year in the
first five years, and to improve Carlin’s CAS by an average of $20
per ounce and AISC by an average of $25 per ounce. The project will
produce first gold in Q3 2016.
Ahafo Mill Expansion and Subika
Underground represent opportunities not currently included
in Newmont’s outlook. The two projects would increase profitable
production at Ahafo while lowering costs and offsetting the impacts
of lower grades and harder ore. Both projects will be reviewed in
the second half of 2016.
Outlook
Outlook excludes Batu Hijau for all periods for illustrative
purposes. The transaction is expected to close in the third quarter
following receipt of regulatory approvals and satisfaction of other
conditions precedent.
Attributable gold production is expected to increase from
between 4.7 and 5.0 million ounces in 2016 to between 4.9 and 5.4
million ounces in 2017, and remain stable at between 4.5 and 5.0
million ounces through 2020. New production at CC&V, Long
Canyon Phase 1, Northwest Exodus, Tanami and Merian is expected to
offset the impacts of maturing operations at Yanacocha and the sale
of Batu Hijau. Projects that are not yet approved, including Ahafo
Mill Expansion and Subika Underground, represent production upside
of between 200,000 and 300,000 ounces of gold beginning in
2018.
Attributable copper production is expected to be between
40,000 and 60,000 tonnes in 2016 and between 40,000 and 65,000
tonnes in 2017 and 2018, with stable production expected at Phoenix
Copper Leach and Boddington.
Gold cost outlook – CAS is expected to be between $630
and $680 per ounce in 2016, and remain stable at between $650 and
$750 per ounce in 2017 and 2018. Costs benefit from higher grades
at Carlin underground mines through 2017, and from lower cost
production at Tanami and Merian through 2018. Ongoing cost and
efficiency improvements are expected to offset lower grades and
throughput at Ahafo and maturing operations at Yanacocha. Full
Potential savings and lower cost ounces from projects that have yet
to be approved could further improve costs in 2017 and beyond.
AISC is expected to improve to between $870 and $930 per ounce
in 2016, holding relatively steady at between $850 and $950 per
ounce in 2017. Long term AISC guidance is improved to between $880
and $980 per ounce based on inclusion of Northwest Exodus and
improved oil price assumptions.
Copper cost outlook – Copper CAS is expected to be
between $1.80 and $2.00 per pound in 2016 and 2017 rising
temporarily to between $2.30 and $2.50 per pound in 2018 due to
stripping at Boddington. Copper AISC is expected to average between
$2.20 and $2.40 per pound in 2016 increasing to between $2.30 and
$2.60 in 2017 due to timing on sustaining capital spend. Copper
AISC is expected to increase to between $2.75 and $2.95 per pound
in 2018 due to stripping at Boddington.
Capital – 2016 capital is expected to be between $1.1 and
$1.3 billion including between $650 and $700 million of sustaining
capital. Sustaining capital is expected to increase to between $800
and $900 million in 2017 to cover equipment rebuilds, water
treatment and tailings storage facilities. Technical and
operational cost and efficiency improvements represent further
upside. Long-term sustaining capital is expected to remain stable
at between $700 and $800 million to cover infrastructure, equipment
and ongoing mine development.
Debt – The company expects approximately $260 to
$280 million of interest expense in 2016. Year-to-date, Newmont has
reduced debt by more than $600 million in 2016. The Company remains
on track to repay $800 million to $1.3 billion of debt between 2016
and 2018, targeting the highest rates and nearest-term maturities
first.
2016 Outlooka
Consolidated
Attributable Consolidated
Consolidated All-in
Sustaining
ConsolidatedTotal
Capital
Production Production CAS Costsb
Expenditures (Koz, Kt) (Koz,
Kt) ($/oz, $/lb) ($/oz, $/lb)
($M) North America Carlin 1,040 – 1,100 1,040
– 1,100 $750 – $800 $950 – $980 $190 – $210 Phoenixc 180 – 200 180
– 200 $825 – $875 $975 – $1,025 $20 – $30 Twin Creeksd 400 – 430
400 – 430 $550 – $600 $650 – $700 $25 – $35 CC&V 350 – 400 350
– 400 $500 – $550 $600 – $650 $80 – $90 Long Canyon $140 – $160
Other North America
$5 – $15
Total 1,970 –
2,130 1,970 – 2,130 $650
– $700 $825 – $900 $460
– $540 South America Yanacochae 630 –
660 310 – 350 $820 – $870 $1,100 – $1,170 $70 – $90 Merian
120 – 140 90 – 100 $430 – $460 $650 – $700
$210 – $250
Total 750 – 800
400 – 450 $760 – $810
$1,050 – $1,150 $280 –
$340 Asia Pacific Boddington 725 – 775 725 –
775 $660 – $700 $750 – $800 $60 – $70 Tanami 400 – 475 400 – 475
$500 – $550 $750 – $800 $150 – $160 Kalgoorlief 350 – 400 350 – 400
$650 – $700 $725 – $775 $10 – $20 Other Asia Pacific
$5 – $15
Total 1,475 – 1,650 1,475
– 1,650 $600 – $650 $760
– $820 $225 – $265
Africa Ahafo 330 – 360 330 – 360 $760 – $810 $990 – $1,070
$60 – $80 Akyem 430 – 460 430 – 460 $500 –
$540 $600 – $650 $20 – $30
Total 760
– 820 760 – 820 $615
– $665 $780 – $830 $80
– $110 Corporate/Other
$10 – $15
Total
Goldg
5,000 – 5,350
4,700 – 5,000 $630 –
$680 $870 – $930
$1,055 – $1,270 Batu Hijauh 525
– 575 250 – 275 $500 – $550 $650 – $700
$50 – $60
Total Gold with Batu 5,525 –
5,925 4,950 – 5,275
$625 – $675 $870 –
$930 $1,105 – $1,330
Phoenix 15 – 25 15 – 25 $1.90 – $2.10 $2.30 – $2.40 Boddington
25 – 35 25 – 35 $1.80 – $2.00 $2.20 –
$2.30
Total Copper 40 –
60 40 – 60 $1.80
– $2.00 $2.20 – $2.40
Batu Hijauh 170 – 190 80 – 100
$1.00 – $1.20 $1.40 – $1.60
Total
Copper with Batu 210 – 250
120 – 160 $1.20 –
$1.40 $1.50 – $1.70
Consolidated Expense Outlooki General
& Administrative $ 225 – $ 275 Interest Expense $ 260 – $ 280
DD&A $ 1,100 – $
1,175
Exploration and Projects $ 275 – $ 300 Sustaining Capital $ 650 – $
700 Tax Rate 33% – 37%
a2016 Outlook in the table above are considered “forward-looking
statements” and are based upon certain assumptions, including, but
not limited to, metal prices, oil prices, certain exchange rates
and other assumptions. For example, 2016 Outlook assumes $1,300/oz
Au, $2.00/lb Cu, $0.75 USD/AUD exchange rate and $50/barrel WTI;
AISC and CAS cost estimates do not include inflation, for the
remainder of the year. Production, AISC and capital estimates
exclude projects that have not yet been approved, (Twin
Underground, Batu Phase 7, Ahafo Mill Expansion and Subika
Underground). The potential impact on inventory valuation as a
result of lower prices, input costs, and project decisions are not
included as part of this Outlook. Such assumptions may prove to be
incorrect and actual results may differ materially from those
anticipated. See cautionary note at the end of the release.bAll-in
sustaining costs as used in the Company’s Outlook is a non-GAAP
metric defined as the sum of cost applicable to sales (including
all direct and indirect costs related to current gold production
incurred to execute on the current mine plan), remediation costs
(including operating accretion and amortization of asset retirement
costs), G&A, exploration expense, advanced projects and
R&D, treatment and refining costs, other expense, net of
one-time adjustments and sustaining capital. See reconciliation at
end of release.cIncludes Lone Tree operations.dIncludes TRJV
operations.eConsolidated production for Yanacocha is presented on a
total production basis for the mine site; attributable production
represents a 51.35% interest.fBoth consolidated and attributable
production are shown on a pro-rata basis with a 50% ownership for
Kalgoorlie.gProduction outlook does not include equity production
from stakes in TMAC (29.4%) or La Zanja (46.94%).hConsolidated
production for Batu Hijau is presented on a total production basis
for the mine site; whereas attributable production represents a
48.5% ownership interest in 2016 outlook. Outlook for Batu Hijau
remains subject to various factors, including, without limitation,
renegotiation of the CoW, issuance of future export approvals,
negotiations with the labor union, future in-country smelting
availability and regulations relating to export quotas, and certain
other factors.iConsolidated expense outlook is adjusted to exclude
extraordinary items. For example, the tax rate outlook above is a
consolidated adjusted rate, which assumes the exclusion of certain
tax valuation allowance adjustments. Beginning in 2016, regional
general and administrative expense is included in total general and
administrative expense (G&A) and community development cost is
included in CAS.
NEWMONT MINING
CORPORATIONSTATEMENTS OF CONSOLIDATED
INCOME(unaudited, in millions except per share)
Three Months Ended Six Months Ended June
30, June 30, 2016 2015
2016 2015 Sales $ 2,038 $ 1,908
$ 4,070 $ 3,880 Costs and expenses Costs applicable to sales
(1) 1,059 1,027 2,140 2,054 Depreciation and amortization 314 276
636 565 Reclamation and remediation 25 26 50 49 Exploration 38 48
68 81 Advanced projects, research and development 44 33 72 61
General and administrative 64 68 121 126 Other expense, net
19 27 37 44
1,563 1,505 3,124 2,980
Other income (expense) Other income, net — (23 ) 98 (12 )
Interest expense, net (71 ) (82 ) (150 )
(167 ) (71 ) (105 ) (52 ) (179 )
Income (loss) before income and mining tax and other items 404 298
894 721 Income and mining tax benefit (expense) (310 ) (152 ) (634
) (345 ) Equity income (loss) of affiliates (5 ) (7 )
(10 ) (16 ) Income (loss) from continuing operations
89 139 250 360 Income (loss) from discontinued operations
(27 ) 9 (53 ) 17 Net income
(loss) 62 148 197 377 Net loss (income) attributable to
noncontrolling interests (39 ) (76 ) (122 )
(122 ) Net income (loss) attributable to Newmont
stockholders $ 23 $ 72 $ 75 $ 255
Net income (loss) attributable to Newmont stockholders:
Continuing operations $ 50 $ 63 $ 128 $ 238 Discontinued operations
(27 ) 9 (53 ) 17 $ 23
$ 72 $ 75 $ 255 Income (loss) per
common share Basic: Continuing operations $ 0.09 $ 0.13 $ 0.24 $
0.48 Discontinued operations (0.05 ) 0.01
(0.10 ) 0.03 $ 0.04 $ 0.14 $
0.14 $ 0.51 Diluted: Continuing operations $ 0.09 $
0.13 $ 0.24 $ 0.48 Discontinued operations (0.05 )
0.01 (0.10 ) 0.03 $ 0.04 $ 0.14
$ 0.14 $ 0.51 Cash dividends declared
per common share $ 0.025 $ 0.025 $ 0.050 $ 0.050
(1) Excludes Depreciation and amortization
and Reclamation and remediation.
NEWMONT MINING
CORPORATIONSTATEMENTS OF CONSOLIDATED CASH
FLOWS(unaudited, in millions)
Three Months Ended Six Months
Ended June 30, June 30, 2016
2015 2016 2015 Operating
activities: Net income (loss) $ 62 $ 148 $ 197 $ 377 Adjustments:
Depreciation and amortization 314 276 636 565 Stock-based
compensation 21 20 37 40 Reclamation and remediation 24 24 48 47
Loss (income) from discontinued operations 27 (9 ) 53 (17 )
Impairment of investments — 16 — 73 Deferred income taxes 288 69
441 130 Gain on asset and investment sales, net — 1 (104 ) (43 )
Other operating adjustments and impairments 89 91 181 165 Net
change in operating assets and liabilities (45 ) (195
) (185 ) (268 ) Net cash provided by continuing
operating activities 780 441 1,304 1,069 Net cash used in
discontinued operations (3 ) (3 ) (5 )
(6 ) Net cash provided by operating activities 777
438 1,299 1,063 Investing
activities: Additions to property, plant and mine development (294
) (322 ) (591 ) (606 ) Proceeds from sales of investments — — 184
29 Proceeds from sales of other assets 2 — 8 44 Other (2 )
(3 ) (6 ) (6 ) Net cash used in investing
activities (294 ) (325 ) (405 ) (539 )
Financing activities: Repayment of debt (142 ) (76 ) (641 ) (281 )
Proceeds from stock issuance, net — 675 — 675 Proceeds from sale of
noncontrolling interests — — — 37 Funding from noncontrolling
interests 38 15 50 62 Dividends paid to noncontrolling interests —
— (146 ) (3 ) Dividends paid to common stockholders (14 ) (11 ) (27
) (23 ) Increase in restricted cash, net 78 (4 ) (13 ) (59 ) Other
— (3 ) (1 ) (8 ) Net cash (used
in) provided by financing activities (40 ) 596
(778 ) 400 Effect of exchange rate changes on
cash (2 ) 1 4 (19 ) Net
change in cash and cash equivalents 441 710 120 905 Cash and cash
equivalents at beginning of period 2,461 2,598
2,782 2,403 Cash and cash
equivalents at end of period $ 2,902 $ 3,308 $ 2,902
$ 3,308
NEWMONT MINING
CORPORATIONCONSOLIDATED BALANCE SHEETS(unaudited, in
millions)
At June 30, At December 31, 2016
2015 ASSETS Cash and cash equivalents $
2,902 $ 2,782 Trade receivables 315 260 Other accounts receivables
194 185 Investments 46 19 Inventories 728 710 Stockpiles and ore on
leach pads 953 896 Other current assets 156
131 Current assets 5,294 4,983 Property, plant and mine
development, net 14,234 14,303 Investments 237 402 Stockpiles and
ore on leach pads 2,956 3,000 Deferred income tax assets 1,264
1,718 Other non-current assets 718 730
Total assets $ 24,703 $ 25,136
LIABILITIES Debt $ 196 $ 149 Accounts payable 348 396
Employee-related benefits 211 293 Income and mining taxes payable
126 38 Other current liabilities 479 540
Current liabilities 1,360 1,416 Debt 5,375 6,041 Reclamation
and remediation liabilities 1,835 1,800 Deferred income tax
liabilities 926 840 Employee-related benefits 463 437 Other
non-current liabilities 361 310 Total
liabilities 10,320 10,844
EQUITY Common stock 849 847 Additional paid-in capital 9,457
9,427 Accumulated other comprehensive income (loss) (341 ) (334 )
Retained earnings 1,458 1,410 Newmont
stockholders' equity 11,423 11,350 Noncontrolling interests
2,960 2,942 Total equity 14,383
14,292 Total liabilities and equity $ 24,703 $
25,136
Regional Operating Statistics
Consolidated gold Attributable
gold ounces produced ounces produced
(thousands): (thousands): Three Months Ended
Three Months Ended June 30, June 30,
2016 2015 2016 2015 North
America Carlin
204 200
204 200 Phoenix
45
52
45 52 Twin Creeks
114 125
114 125 CC&V
114 —
114 —
477 377
477 377
South America Yanacocha
156 216
81 111
156 216
81 111
Asia Pacific Boddington
192 201
192 201 Tanami
142 116
142 116
Waihi
— 33
— 33 Kalgoorlie
96 83
96 83
Batu Hijau
189 181
92 87
619 614
522
520
Africa Ahafo
90 74
90 74 Akyem
115
121
115 121
205 195
205 195
1,457 1,402
1,285 1,203
Consolidated copper pounds produced
(millions): Phoenix
10 12
10 12 Boddington
19 20
19 20 Batu Hijau
115 125
56 60
144 157
85 92
Consolidated copper tonnes produced
(thousands): Phoenix
5 6
5 6 Boddington
8
9
8 9 Batu Hijau
53 57
25 27
66 72
38 42
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.
Adjusted net income (loss)
Management uses Adjusted net income (loss) to evaluate the
Company’s operating performance, and for planning and forecasting
future business operations. The Company believes the use of
Adjusted net income (loss) allows investors and analysts to
understand the results of the continuing operations of the Company
and its direct and indirect subsidiaries relating to the production
and sale of minerals, by excluding certain items that have a
disproportionate impact on our results for a particular period. The
net income (loss) adjustments are presented net of tax generally at
the Company’s statutory effective tax rate of 35% and net of our
partners’ noncontrolling interests when applicable. The impact
of the adjustments through the Company’s Valuation allowance is
shown separately. The tax adjustment includes items such as
foreign tax credits, alternative minimum tax credits, capital
losses and disallowed foreign losses. Management’s determination of
the components of Adjusted net income (loss) are evaluated
periodically and based, in part, on a review of non-GAAP financial
measures used by mining industry analysts. Net income (loss)
attributable to Newmont stockholders is reconciled to Adjusted net
income (loss) as follows:
Three Months Ended Six Months
Ended June 30, June 30, 2016 2015
2016 2015 Net income (loss)
attributable to Newmont stockholders $ 23 $ 72 $ 75 $ 255 Loss
(income) from discontinued operations (1) 27 (9 )
53 (17 ) Net income (loss) attributable to
Newmont stockholders from continuing operations 50 63 128 238
Impairment of investments (2) — 10 — 47 Impairment of long-lived
assets (3) 2 2 2 2 Restructuring and other (4) 4 5 11 7 Acquisition
costs (5) 1 5 1 5 Loss (gain) on asset and investment sales (6) — 1
(104 ) (27 ) Loss on debt repayment (7) — — 2 — Tax adjustments (8)
174 45 373 89
Adjusted net income (loss) $ 231 $ 131 $ 413 $ 361
Net income (loss) per share, basic $ 0.04 $ 0.14 $
0.14 $ 0.51 Loss (income) from discontinued operations, net of
taxes 0.05 (0.01 ) 0.10 (0.03 )
Net income (loss) attributable to Newmont stockholders from
continuing operations 0.09 0.13 0.24 0.48 Impairment of
investments, net of taxes — 0.02 — 0.09 Impairment of long-lived
assets, net of taxes — — — — Restructuring and other, net of taxes
0.01 0.01 0.02 0.01 Acquisition costs, net of taxes — 0.01 — 0.01
Loss (gain) on asset and investment sales, net of taxes — — (0.20 )
(0.05 ) Loss on debt repayment, net of taxes — — — — Tax
adjustments 0.34 0.09 0.72
0.18 Adjusted net income (loss) per share, basic $
0.44 $ 0.26 $ 0.78 $ 0.72 Net income
(loss) per share, diluted $ 0.04 $ 0.14 $ 0.14 $ 0.51 Loss (income)
from discontinued operations, net of taxes 0.05 (0.01
) 0.10 (0.03 ) Net income (loss) attributable
to Newmont stockholders from continuing operations 0.09 0.13 0.24
0.48 Impairment of investments, net of taxes — 0.02 — 0.09
Impairment of long-lived assets, net of taxes — — — — Restructuring
and other, net of taxes 0.01 0.01 0.02 0.01 Acquisition costs, net
of taxes — 0.01 — 0.01 Loss (gain) on asset and investment sales,
net of taxes — — (0.20 ) (0.05 ) Loss on debt repayment, net of
taxes — — — — Tax adjustments 0.34 0.09
0.72 0.18 Adjusted net income (loss) per
share, diluted $ 0.44 $ 0.26 $ 0.78 $ 0.72 (1)
Loss (income) from discontinued operations relates to
adjustments in our Holt property royalty and is presented net of
tax expense (benefit) of $(12), $4, $(23) and $8, respectively. (2)
Impairment of investments, included in Other income, net,
represents other-than-temporary impairments on equity and cost
method investments and does not relate to our core operations.
Amounts are presented net of tax expense (benefit) of $-, $(6), $-
and $(26), respectively. (3) Impairment of long-lived assets,
included in Other expense, net, represents non-cash write-downs
that do not impact our core operations. Amounts are presented net
of tax expense (benefit) of $(1), $-, $(1) and $(1), respectively,
and amounts attributed to noncontrolling interest income (expense)
of $(1), $-, $(1) and $-, respectively. (4) Restructuring and
other, included in Other expense, net, represents certain costs
associated with the Full Potential initiative announced in 2013, a
one-time payment to PT Freeport Indonesia for engineering studies
related to their smelter project in the second quarter of 2016,
accrued legal costs in our Africa region during 2016 as well as
system integration costs related to our acquisition of CC&V.
Amounts are presented net of tax expense (benefit) of $(3), $(3),
$(8) and $(5), respectively, and amounts attributed to
noncontrolling interest income (expense) of $(2), $(1), $(3) and
$(2), respectively. (5) Acquisition costs, included in Other
expense, net, represents adjustments made in the second quarter of
2016 to the contingent consideration liability from the acquisition
of Boddington and costs associated with the acquisition of CC&V
in 2015. Amounts are presented net of tax expense (benefit) of
$(1), $(3), $(1) and $(3), respectively. (6) Loss (gain) on asset
and investment sales, included in Other income, net, primarily
represents the sale of our holdings in Regis Resources Ltd. in the
first quarter of 2016 and land sales of Hemlo mineral rights in
Canada and the Relief Canyon mine in Nevada during the first
quarter of 2015. Amounts are presented net of tax expense (benefit)
of $-, $-, $- and $16, respectively. (7) Loss on debt repayment,
included in Other income, net and Interest expense, net, represents
the impact of the debt tender offer on our 2019 Notes and 2039
Notes during the first quarter of 2016. Amounts are presented net
of tax expense (benefit) of $-, $-, $(1) and $-, respectively. (8)
Tax adjustments include movements in tax valuation allowance and
tax adjustments not related to core operations. Second quarter and
year to date tax adjustments were primarily the result of a tax
restructuring and a loss carryback, both of which resulted in an
increase in the Company’s valuation allowance on credits.
Adjusted Earnings Before Interest, Taxes, Depreciation, and
Amortization (Adjusted EBITDA)
Management uses Earnings before interest, taxes and depreciation
and amortization (“EBITDA”) and EBITDA adjusted for non-core or
certain items that have a disproportionate impact on our results
for a particular period (“Adjusted EBITDA”) as non-GAAP measures to
evaluate the Company’s operating performance. EBITDA and Adjusted
EBITDA do not represent, and should not be considered an
alternative to, net earnings (loss), operating earnings (loss), or
cash flow from operations as those terms are defined by GAAP, and
does not necessarily indicate whether cash flows will be sufficient
to fund cash needs. Although Adjusted EBITDA and similar measures
are frequently used as measures of operations and the ability to
meet debt service requirements by other companies, our calculation
of Adjusted EBITDA is not necessarily comparable to such other
similarly titled captions of other companies. The Company believes
that Adjusted EBITDA provides useful information to investors and
others in understanding and evaluating our operating results in the
same manner as our management and board of
directors. Management’s determination of the components
of Adjusted EBITDA are evaluated periodically and based,
in part, on a review of non-GAAP financial measures used by mining
industry analysts. Net income (loss) attributable to Newmont
stockholders is reconciled
to EBITDA and Adjusted EBITDA as follows:
Three Months Ended Six Months
Ended June 30, June 30, 2016 2015
2016 2015 Net income (loss)
attributable to Newmont stockholders $ 23 $ 72 $ 75 $ 255 Net
income (loss) attributable to noncontrolling interests 39 76 122
122 Loss (income) from discontinued operations 27 (9 ) 53 (17 )
Equity loss (income) of affiliates 5 7 10 16 Income and mining tax
expense (benefit) 310 152 634 345 Depreciation and amortization 314
276 636 565 Interest expense, net 71 82
150 167 EBITDA $ 789 $ 656 $ 1,680 $ 1,453
Adjustments: Impairment of investments (1) $ — $ 16 $ — $ 73
Impairment of long-lived assets (2) 4 2 4 3 Restructuring and other
(3) 9 9 22 14 Acquisitions costs (4) 2 8 2 8 Loss on debt repayment
(5) — — 3 — Loss (gain) on asset and investment sales (6) —
1 (104 ) (43 ) Adjusted EBITDA $ 804 $
692 $ 1,607 $ 1,508 (1) Impairment of
investments, included in Other income, net, represents
other-than-temporary impairments on equity and cost method
investments and does not relate to our core operations. (2)
Impairment of long-lived assets, included in Other expense, net,
represents non-cash write-downs that do no impact our core
operations. (3) Restructuring and other, included in Other expense,
net, represents certain costs associated with the Full Potential
initiative announced in 2013, a one-time payment to PT Freeport
Indonesia for engineering studies related to their smelter project
in the second quarter of 2016, accrued legal costs in our Africa
region during 2016 as well as system integration costs related to
our acquisition of CC&V. (4) Acquisition costs, included in
Other expense, net represents adjustments made in the second
quarter of 2016 to the contingent consideration liability from the
acquisition of Boddington, and costs associated with the
acquisition of CC&V in 2015. (5) Loss on debt repayment,
included in Other income, net and Interest expense, net, represents
the impact of the debt tender offer on our 2019 Notes and 2039
Notes during the first quarter of 2016. (6) Loss (gain) on asset
and investment sales, included in Other income, net, represents
primarily the sale of our holdings in Regis Resources Ltd. in the
first quarter of 2016 and land sales of Hemlo mineral rights in
Canada and the Relief Canyon mine in Nevada during the first
quarter of 2015.
Free Cash Flow
Management uses Free Cash Flow as a non-GAAP measure to analyze
cash flows generated from operations. Free Cash Flow is Net cash
provided by operating activities plus Net cash used in discontinued
operations less Additions to property, plant and mine development
as presented on the Condensed Consolidated Statements of Cash Flow.
The Company believes Free Cash Flow is also useful as one of the
bases for comparing the Company’s performance with its competitors.
Although Free Cash Flow and similar measures are frequently used as
measures of cash flows generated from operations by other
companies, the Company’s calculation of Free Cash Flow is not
necessarily comparable to such other similarly titled captions of
other companies.
The presentation of non-GAAP Free Cash Flow is not meant to be
considered in isolation or as an alternative to net income as an
indicator of the Company’s performance, or as an alternative to
cash flows from operating activities as a measure of liquidity as
those terms are defined by GAAP, and does not necessarily indicate
whether cash flows will be sufficient to fund cash needs. The
Company’s definition of Free Cash Flow is limited in that it does
not represent residual cash flows available for discretionary
expenditures due to the fact that the measure does not deduct the
payments required for debt service and other contractual
obligations or payments made for business acquisitions. Therefore,
the Company believes it is important to view Free Cash Flow as a
measure that provides supplemental information to the Company’s
Condensed Consolidated Statements of Cash Flow.
The following table sets forth a reconciliation of Free Cash
Flow, a non-GAAP financial measure, to Net cash provided by
operating activities, which the Company believes to be the GAAP
financial measure most directly comparable to Free Cash Flow, as
well as information regarding net cash used in investing activities
and net cash used in financing activities.
Three Months Ended Six Months
Ended June 30, June 30, 2016
2015 2016 2015 Net cash
provided by operating activities $ 777 $ 438 $ 1,299 $ 1,063 Plus:
Net cash used in discontinued operations 3 3
5 6 Net cash provided by
continuing operating activities 780 441
1,304 1,069 Less: Additions to
property, plant and mine development (294 ) (322 )
(591 ) (606 ) Free Cash Flow $ 486 $ 119
$ 713 $ 463 Net cash (used in)
investing activities (1) $ (294 ) $ (325 ) $ (405 ) $ (539 ) Net
cash (used in) provided by financing activities $ (40 ) $ 596 $
(778 ) $ 400 (1)
Net cash used in investing activities
includes Additions to property, plant and mine development, which
is included in the Company’s computation of Free Cash Flow.
Costs applicable to sales per ounce/pound
Costs applicable to sales per ounce/pound are non-GAAP financial
measures. These measures are calculated by dividing the costs
applicable to sales of gold and copper by gold ounces or copper
pounds sold, respectively. These measures are calculated on a
consistent basis for the periods presented on a consolidated basis.
Costs applicable to sales per ounce/pound statistics are intended
to provide additional information only and do not have any
standardized meaning prescribed by GAAP and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. The measures are not
necessarily indicative of operating profit or cash flow from
operations as determined under GAAP. Other companies may calculate
these measures differently.
The following tables reconcile these non-GAAP measures to the
most directly comparable GAAP measures.
Costs applicable to sales per ounce
Three Months Ended Six Months
Ended June 30, June 30, 2016 2015
2016 2015 Costs applicable to sales (1) $ 912 $ 858 $
1,818 $ 1,698 Gold sold (thousand ounces) 1,429 1,337 2,850 2,704
Costs applicable to sales per ounce $ 637 $ 642 $ 638 $ 628
(1)
Includes by-product credits of $14 and $27 during the three
and six months ended June 30, 2016, respectively, and $12 and $26
during the three and six months ended June 30, 2015, respectively.
Costs applicable to sales per pound
Three Months Ended Six Months
Ended June 30, June 30, 2016 2015
2016 2015 Costs applicable to sales (1) $ 147 $ 169 $
322 $ 356 Copper sold (million pounds) 122 139 289 278 Costs
applicable to sales per pound $ 1.21 $ 1.21 $ 1.12 $ 1.28
(1)
Includes by-product credits of $6 and $13 during the three
and six months ended June 30, 2016, respectively, and $5 and $11
during the three and six months ended June 30, 2015, respectively.
All-In Sustaining Costs
Newmont has worked to develop a metric that expands on GAAP
measures such as cost of goods sold and non-GAAP measures, such as
Costs applicable to sales per ounce, to provide visibility into the
economics of our mining operations related to expenditures,
operating performance and the ability to generate cash flow from
operations.
Current GAAP-measures used in the mining industry, such as cost
of goods sold, do not capture all of the expenditures incurred to
discover, develop, and sustain gold production. Therefore, we
believe that all-in sustaining costs is a non-GAAP measure that
provides additional information to management, investors, and
analysts that aid in the understanding of the economics of our
operations and performance compared to other producers and in the
investor’s visibility by better defining the total costs associated
with production.
All-in sustaining cost (“AISC”) amounts are intended to provide
additional information only and do not have any standardized
meaning prescribed by GAAP and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with GAAP. The measures are not necessarily
indicative of operating profit or cash flow from operations as
determined under GAAP. Other companies may calculate these measures
differently as a result of differences in the underlying accounting
principles, policies applied and in accounting frameworks such as
in International Financial Reporting Standards (“IFRS”), or by
reflecting the benefit from selling non-gold metals as a reduction
to AISC. Differences may also arise related to definitional
differences of sustaining versus development capital activities
based upon each company’s internal policies.
The following disclosure provides information regarding the
adjustments made in determining the all-in sustaining costs
measure:
Cost Applicable to Sales - Includes all direct and indirect
costs related to current gold production incurred to execute the
current mine plan. Costs Applicable to Sales (“CAS”)
includes by-product credits from certain metals obtained during the
process of extracting and processing the primary ore-body. CAS is
accounted for on an accrual basis and
excludes Amortization and Reclamation and
remediation, which is consistent with our presentation of CAS on
the Statement of Consolidated Income. In determining AISC, only the
CAS associated with producing and selling an ounce of gold is
included in the measure. Therefore, the amount of gold CAS included
in AISC is derived from the CAS presented in the Company’s
Statement of Consolidated Income less the amount of CAS
attributable to the production of copper at our Phoenix, Boddington
and Batu Hijau mines. The copper CAS at those mine sites is
disclosed in Note 4 to the Condensed Consolidated Financial
Statements. The allocation of CAS between gold and copper at the
Phoenix, Boddington and Batu Hijau mines is based upon the relative
sales percentage of copper and gold sold during the period.
Remediation Costs - Includes accretion expense related to asset
retirement obligations (“ARO”) and the amortization of the related
Asset Retirement Cost (“ARC”) for the Company’s operating
properties recorded as an ARC asset. Accretion related to ARO and
the amortization of the ARC assets for reclamation and remediation
do not reflect annual cash outflows but are calculated in
accordance with GAAP. The accretion and amortization reflect the
periodic costs of reclamation and remediation associated with
current gold production and are therefore included in the measure.
The allocation of these costs to gold and copper is determined
using the same allocation used in the allocation of CAS between
gold and copper at the Phoenix, Boddington and Batu Hijau
mines.
Advanced Projects and Exploration - Includes incurred expenses
related to projects that are designed to increase or enhance
current gold production and gold exploration. We note that as
current resources are depleted, exploration and advanced projects
are necessary for us to replace the depleting reserves or enhance
the recovery and processing of the current reserves. As this
relates to sustaining our gold production, and is considered a
continuing cost of a mining company, these costs are included in
the AISC measure. These costs are derived from the Advanced
projects, research and
development and Exploration amounts presented in the
Company’s Statement of Consolidated Income less the amount
attributable to the production of copper at our Phoenix, Boddington
and Batu Hijau mines. The allocation of these costs to gold and
copper is determined using the same allocation used in the
allocation of CAS between gold and copper at the Batu Hijau,
Boddington and Phoenix mines.
General and Administrative - Includes cost related to
administrative tasks not directly related to current gold
production, but rather related to support our corporate structure
and fulfilling our obligations to operate as a public company.
Including these expenses in the AISC metric provides visibility of
the impact that general and administrative activities have on
current operations and profitability on a per ounce basis.
Other expense, net - Includes administrative costs to support
current gold production. We exclude certain exceptional or unusual
expenses from Other expense, net, such as restructuring, as
these are not indicative to sustaining our current gold operations.
Furthermore, this adjustment to Other expense, net is
also consistent with the nature of the adjustments made to Net
income (loss) as disclosed in the Company’s non-GAAP financial
measure Adjusted net income (loss). The allocation of these costs
to gold and copper is determined using the same allocation used in
the allocation of CAS between gold and copper at the Phoenix,
Boddington and Batu Hijau mines.
Treatment and Refining Costs - Includes costs paid to smelters
for treatment and refining of our concentrates to produce the
salable metal. These costs are presented net as a reduction
of Sales.
Sustaining Capital - We determined sustaining capital as those
capital expenditures that are necessary to maintain current gold
production and execute the current mine plan. Capital expenditures
to develop new operations, or related to projects at existing
operations where these projects will enhance gold production or
reserves, are considered development. We determined the breakout of
sustaining and development capital costs based on a systematic
review of our project portfolio in light of the nature of each
project. Sustaining capital costs are relevant to the AISC metric
as these are needed to maintain the Company’s current gold
operations and provide improved transparency related to our ability
to finance these expenditures from current operations. The
allocation of these costs to gold and copper is determined using
the same allocation used in the allocation of CAS between gold and
copper at the Batu Hijau, Boddington and Phoenix mines.
Advanced Treatment All-In Costs
Projects General Other and
All-In Ounces Sustaining Three Months
Ended Applicable Reclamation and
and Expense, Refining Sustaining
Sustaining (000)/Pounds Costs per June 30,
2016 to Sales (1)(2)(3) Costs (4)
Exploration Administrative Net (5)
Costs Capital (6) Costs (millions)
Sold oz/lb Gold Carlin $ 184 $ 1 $ 4 $ 2 $ — $ —
$ 38 $ 229 203 $ 1,128 Phoenix 39 1 1 1 — 2 3 47 50 940 Twin Creeks
58 1 2 — — — 12 73 115 635 Long Canyon — — 7 — — — — 7 — — CC&V
(7) 58 1 1 1 — — 2 63 115 548 Other North America — —
5 — — 1 2 8 — —
North America 339 4 20 4 —
3 57 427 483 884 Yanacocha 120
14 11 2 1 1 24 173 154 1,123 Merian — — 11 — — — — 11 — — Other
South America — — 10 — —
— — 10 — — South America 120 14
32 2 1 1 24 194 154
1,260 Boddington 141 2 — — — 5 10 158 198 798 Tanami
64 — 3 — — — 20 87 144 604 Kalgoorlie 67 1 2 — — 2 5 77 96 802 Batu
Hijau 65 4 — 1 — 8 4 82 148 554 Other Asia Pacific —
— 2 5 2 — 1 10 — —
Asia Pacific 337 7 7 6 2
15 40 414 586 706 Ahafo 60 1 7 — — — 16
84 91 923 Akyem 56 2 3 — — — 5 66 115 574 Other Africa —
— — 1 — — — 1 —
— Africa 116 3 10 1 —
— 21 151 206 733 Corporate and
Other — — 13 50 1 —
2 66 — — Total Gold $ 912 $ 28 $ 82 $ 63 $ 4 $
19 $ 144 $ 1,252 1,429 $ 876
Copper Phoenix $ 22 $ —
$ — $ — $ — $ 1 $ 2 $ 25 11 $ 2.27 Boddington 33 — — — — 3 2 38 18
2.11 Batu Hijau 92 6 — 1 —
18 7 124 93 1.33 Asia Pacific
125 6 — 1 — 21 9
162 111 1.46 Total Copper $ 147 $ 6 $ — $ 1 $ — $ 22 $ 11 $
187 122 $ 1.53
Consolidated $ 1,059 $ 34 $ 82 $ 64 $ 4 $ 41 $ 155 $ 1,439 (1)
Excludes Depreciation and amortization and
Reclamation and remediation.
(2) Includes by-product credits of $20. (3) Includes stockpile and
leach pad inventory adjustments of $23 at Carlin, $8 at Twin Creeks
and $26 at Yanacocha. (4) Reclamation costs include operating
accretion of $23 and amortization of asset retirement costs of $11.
(5) Other expense, net is adjusted for restructuring costs of $9,
acquisition costs of $2 and write-downs of $4. (6) Excludes
development capital expenditures, capitalized interest and the
increase in accrued capital of $139. The following are major
development projects: Merian, Long Canyon, and the CC&V and the
Tanami expansion. (7) The Company acquired the CC&V gold mining
business on August 3, 2015.
Advanced Treatment
All-In Costs Projects
General Other and All-In Ounces
Sustaining Three Months Ended Applicable
Reclamation and and Expense,
Refining Sustaining Sustaining
(000)/Pounds Costs per June 30, 2015 to
Sales (1)(2)(3) Costs (4)
Exploration Administrative Net (5)
Costs Capital (6) Costs (millions)
Sold oz/lb Gold Carlin $ 187 $ 1 $ 4 $ 2 $ — $ —
$ 38 $ 232 204 $ 1,137 Phoenix 32 2 — — — 1 5 40 43 930 Twin Creeks
65 — 3 1 — — 12 81 125 648 Long Canyon — — 3 — — — — 3 — — Other
North America — — 4 — 1 —
1 6 — — North America 284 3
14 3 1 1 56 362 372
973 Yanacocha 130 24 8 6 1 — 19 188 204 922 Merian —
— 3 — — — — 3 — — Other South America — — 12
— 1 — — 13 — — South
America 130 24 23 6 2 —
19 204 204 1,000 Boddington 122 2 — 1 —
4 15 144 175 823 Tanami 59 1 2 — — — 23 85 117 726 Waihi (7) 18 — 1
— — — 1 20 33 606 Kalgoorlie 78 2 1 — — 1 4 86 86 1,000 Batu Hijau
73 3 2 — — 9 7 94 156 603 Other Asia Pacific — —
1 3 2 — 2 8 — —
Asia Pacific 350 8 7 4 2
14 52 437 567 771 Ahafo 43 3 5 — 1 — 17
69 72 958 Akyem 51 1 4 1 — — 8 65 122 533 Other Africa —
— 1 3 — — — 4 —
— Africa 94 4 10 4 1
— 25 138 194 711 Corporate and
Other — — 24 49 1 —
— 74 — — Total Gold $ 858 $ 39 $ 78 $ 66 $ 7 $
15 $ 152 $ 1,215 1,337 $ 909
Copper Phoenix $ 17 $ —
$ 1 $ — $ — $ 2 $ 2 $ 22 9 $ 2.44 Boddington 29 1 — — — 3 3 36 18
2.00 Batu Hijau 123 5 2 2 1
20 13 166 112 1.48 Asia Pacific
152 6 2 2 1 23 16
202 130 1.55 Total Copper $ 169 $ 6 $ 3 $ 2 $ 1 $ 25 $ 18 $
224 139 $ 1.61
Consolidated $ 1,027 $ 45 $ 81 $ 68 $ 8 $ 40 $ 170 $ 1,439 (1)
Excludes Depreciation and amortization and
Reclamation and remediation.
(2) Includes by-product credits of $17. (3) Includes stockpile and
leach pad inventory adjustments of $27 at Carlin, $3 at Twin Creeks
and $18 at Yanacocha. (4) Reclamation costs include operating
accretion of $21 and amortization of asset retirement costs of $24.
(5) Other expense, net is adjusted for restructuring costs of $9,
acquisition costs of $8 and write-downs of $2. (6) Excludes
development capital expenditures, capitalized interest and the
increase in accrued capital of $152. The following are major
development projects: Turf Vent Shaft, Merian, and Conga. (7) On
October 29, 2015, the Company sold the Waihi mine.
Advanced Treatment
All-In Costs
Projects General Other and
All-In Ounces Sustaining Six Months
Ended Applicable Reclamation and
and Expense, Refining Sustaining
Sustaining (000)/Pounds Costs per June 30,
2016 to Sales (1)(2)(3) Costs (4)
Exploration Administrative Net (5)
Costs Capital (6) Costs (millions)
Sold oz/lb Gold Carlin $ 373 $ 2 $ 7 $ 3 $ — $ —
$ 70 $ 455 411 $ 1,107 Phoenix 88 2 1 1 — 5 5 102 103 990 Twin
Creeks 118 2 4 — — — 18 142 251 566 Long Canyon — — 13 — — — — 13 —
— CC&V (7) 91 2 4 1 — — 2 100 170 588 Other North America
— — 6 — 2 1 2
11 — — North America 670 8 35
5 2 6 97 823 935 880
Yanacocha 248 28 20 5 2 1 38 342 333 1,027 Merian — — 14 — —
— — 14 — — Other South America — — 16 2
— — — 18 — — South America
248 28 50 7 2 1 38
374 333 1,123 Boddington 252 3 — — — 10 19 284
361 787 Tanami 123 1 6 — — — 34 164 245 669 Kalgoorlie 132 2 3 — —
3 8 148 184 804 Batu Hijau 165 8 1 4 — 19 8 205 384 534 Other Asia
Pacific — — 3 8 3 —
1 15 — — Asia Pacific 672 14
13 12 3 32 70 816 1,174
695 Ahafo 117 3 12 — — — 26 158 178 888 Akyem 111 4 4
— — — 12 131 230 570 Other Africa — — 1
2 — — — 3 — — Africa 228
7 17 2 — — 38 292
408 716 Corporate and Other — —
25 93 2 — 4 124 — — Total
Gold $ 1,818 $ 57 $ 140 $ 119 $ 9 $ 39 $ 247 $ 2,429 2,850 $ 852
Copper Phoenix $ 44 $ 1 $ — $ — $ — $ 2 $ 3 $ 50 21 $
2.38 Boddington 56 — — — — 6 4 66 33 2.00 Batu Hijau 222
11 — 2 — 46 12 293
235 1.25 Asia Pacific 278 11 — 2
— 52 16 359 268 1.34 Total
Copper $ 322 $ 12 $ — $ 2 $ — $ 54 $ 19 $ 409 289 $ 1.42
Consolidated $ 2,140 $ 69
$ 140 $ 121 $ 9 $ 93 $ 266 $ 2,838 (1)
Excludes Depreciation and amortization and
Reclamation and remediation.
(2) Includes by-product credits of $40. (3) Includes stockpile and
leach pad inventory adjustments of $43 at Carlin, $10 at Twin
Creeks and $54 at Yanacocha. (4) Reclamation costs include
operating accretion of $46 and amortization of asset retirement
costs of $23. (5) Other expense, net is adjusted for restructuring
costs of $22, acquisition costs of $2 and write-downs of $4. (6)
Excludes development capital expenditures, capitalized interest and
the increase in accrued capital of $325. The following are major
development projects: Merian, Long Canyon, and the CC&V and the
Tanami expansion. (7) The Company acquired the CC&V gold mining
business on August 3, 2015.
Advanced Treatment
All-In Costs Projects
General Other and All-In Ounces
Sustaining Six Months Ended Applicable
Reclamation and and Expense,
Refining Sustaining Sustaining
(000)/Pounds Costs per June 30, 2015 to
Sales (1)(2)(3) Costs (4)
Exploration Administrative Net (5)
Costs Capital (6) Costs (millions)
Sold oz/lb Gold Carlin $ 365 $ 2 $ 7 $ 4 $ — $ —
$ 75 $ 453 431 $ 1,051 Phoenix 73 3 1 1 — 2 9 89 95 937 Twin Creeks
124 1 5 1 — — 30 161 247 652 Long Canyon — — 6 — — — — 6 — — Other
North America — — 6 — 3 —
2 11 — — North America 562 6
25 6 3 2 116 720 773
931 Yanacocha 245 49 13 10 1 — 34 352 450 782 Merian
— — 5 — — — — 5 — — Other South America — — 22
— 1 — — 23 — — South
America 245 49 40 10 2 —
34 380 450 844 Boddington 279 5 1 1 —
11 24 321 377 851 Tanami 117 2 3 — — — 37 159 215 740 Waihi (7) 37
1 2 — — — 1 41 74 554 Kalgoorlie 138 3 1 — — 2 11 155 147 1,054
Batu Hijau 124 5 2 1 — 18 13 163 260 627 Other Asia Pacific
— — 2 6 5 — 2 15 —
— Asia Pacific 695 16 11 8
5 31 88 854 1,073 796
Ahafo 99 4 11 — 1 — 29 144 172 837 Akyem 97 2 4 — 1 — 19 123 236
521 Other Africa — — 2 5 —
— — 7 — — Africa 196 6
17 5 2 — 48 274 408
672 Corporate and Other — — 45
94 7 — 3 149 — — Total
Gold $ 1,698 $ 77 $ 138 $ 123 $ 19 $ 33 $ 289 $ 2,377 2,704 $ 879
Copper Phoenix $ 42 $ 1 $ 1 $ 1 $ — $ 1 $ 5 $ 51 22 $
2.32 Boddington 68 1 — — — 7 5 81 38 2.13 Batu Hijau 246
9 3 2 — 44 27 331
218 1.52 Asia Pacific 314 10 3 2
— 51 32 412 256 1.61 Total
Copper $ 356 $ 11 $ 4 $ 3 $ — $ 52 $ 37 $ 463 278 $ 1.67
Consolidated $ 2,054 $ 88
$ 142 $ 126 $ 19 $ 85 $ 326 $ 2,840 (1)
Excludes Depreciation and amortization and
Reclamation and remediation.
(2) Includes by-product credits of $37. (3) Includes stockpile and
leach pad inventory adjustments of $51 at Carlin, $5 at Twin
Creeks, $22 at Yanacocha and $18 at Boddington. (4) Reclamation
costs include operating accretion of $42 and amortization of asset
retirement costs of $46. (5) Other expense, net is adjusted for
restructuring costs of $14, acquisition costs of $8 and write-downs
of $3. (6) Excludes development capital expenditures, capitalized
interest and the increase in accrued capital of $280. The following
are major development projects: Turf Vent Shaft, Conga, Long Canyon
and Merian. (7) On October 29, 2015, the Company sold the Waihi
mine.
Similar to the historical AISC amounts presented above, AISC
outlook is also a non-GAAP financial measure. A reconciliation of
the 2016 Gold AISC outlook range to the 2016 CAS outlook range is
provided below. The estimates in the table below are considered
“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. See the Cautionary Statement on page 22 for
additional information.
2016 Outlook - Gold Outlook range Low
High Costs Applicable to Sales 1,2 $ 3,700 $ 4,050
Reclamation Costs 3 75 150
Advanced Projects and Exploration
250 300 General and Administrative 200 250 Other Expense 20 50
Treatment and Refining Costs 50 100 Sustaining Capital 4 600
700 All-in Sustaining Costs $ 4,850 $ 5,500 Ounces (000)
Sold 5,525 5,925 All-in Sustaining Costs per oz $ 870
$ 930 (1)
Excludes Depreciation and amortization and
Reclamation and remediation.
(2) Includes stockpile and leach pad inventory adjustments. (3)
Remediation costs include operating accretion and amortization of
asset retirement costs. (4) Excludes development capital
expenditures, capitalized interest and increase in accrued capital.
Net average realized price per ounce/ pound
Average realized price per ounce/ pound are non-GAAP financial
measures. The measures are calculated by dividing the Net
consolidated gold and copper sales by the consolidated gold ounces
or copper pounds sold, respectively. These measures are calculated
on a consistent basis for the periods presented on a consolidated
basis. Average realized price per ounce/ pound statistics are
intended to provide additional information only, do not have any
standardized meaning prescribed by GAAP and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. The measures are not
necessarily indicative of operating profit or cash flow from
operations as determined under GAAP. Other companies may calculate
these measures differently.
The following tables reconcile these non-GAAP measures to the
most directly comparable GAAP measure:
Three Months Ended Six Months
Ended June 30, June 30, 2016
2015 2016 2015 Sales $
2,038 $ 1,908 $ 4,070 $ 3,880 Consolidated copper sales, net
(235 ) (334 ) (573 ) (661 ) Consolidated gold
sales, net $ 1,803 $ 1,574 $ 3,497 $ 3,219 Gross before
provisional pricing $ 1,808 $ 1,588 $ 3,493 $ 3,252 Provisional
pricing mark-to-market 10 1 40
— Gross after provisional pricing 1,818 1,589
3,533 3,252 Treatment and refining charges (15 ) (15
) (36 ) (33 ) Net $ 1,803 $ 1,574 $
3,497 $ 3,219 Consolidated gold ounces sold
(thousands): 1,429 1,337 2,850 2,704 Average realized gold price
(per ounce): Gross before provisional pricing $ 1,264 $ 1,190 $
1,225 $ 1,204 Provisional pricing mark-to-market 7
1 14 — Gross after
provisional pricing 1,271 1,191 1,239 1,204 Treatment and refining
charges (11 ) (12 ) (13 ) (12 ) Net $
1,260 $ 1,179 $ 1,226 $ 1,192
Three Months Ended Six Months Ended
June 30, June 30, 2016 2015
2016 2015 Sales $ 2,038 $ 1,908
$ 4,070 $ 3,880 Consolidated gold sales, net (1,803 )
(1,574 ) (3,497 ) (3,219 ) Consolidated copper sales,
net $ 235 $ 334 $ 573 $ 661 Consolidated copper sales: Gross
before provisional pricing $ 266 $ 377 $ 622 $ 747 Provisional
pricing mark-to-market (8 ) (18 ) 6
(34 ) Gross after provisional pricing 258 359 628 713
Treatment and refining charges (23 ) (25 ) (55
) (52 ) Net $ 235 $ 334 $ 573 $ 661
Consolidated copper pounds sold (millions): 122 139 289 278
Average realized copper price (per pound): Gross before provisional
pricing $ 2.18 $ 2.71 $ 2.15 $ 2.68 Provisional pricing
mark-to-market (0.06 ) (0.13 ) 0.02
(0.12 ) Gross after provisional pricing 2.12 2.58 2.17 2.56
Treatment and refining charges (0.18 ) (0.17 )
(0.19 ) (0.19 ) Net $ 1.94 $ 2.41 $ 1.98
$ 2.37
Gold By-Product Metrics
Copper is a by-product often obtained during the process of
extracting and processing the primary ore-body. In our GAAP
Condensed Consolidated Financial Statements, the value of these
by-products is recorded as a credit to our CAS and the value of the
primary ore is recorded as Sales. In certain instances, copper is a
co-product, or significant resource in the primary ore-body, and
the revenue is recorded as Sales in our GAAP Condensed Consolidated
Financial Statements.
Gold By-Product Metrics are non-GAAP financial measures that
serve as a basis for comparing the Company’s performance with
certain competitors. As Newmont’s operations are primarily focused
on gold production, “Gold By-Product Metrics” were developed to
allow investors to view Sales, CAS per ounce and AISC per ounce
calculations that classify all copper production as a by-product,
even when copper is the primary ore-body. These metrics are
calculated by subtracting copper sales recognized from Sales and
including these amounts as offsets to CAS.
Gold By-Product Metrics are calculated on a consistent basis for
the periods presented on a consolidated basis. These metrics are
intended to provide supplemental information only, do not have any
standardized meaning prescribed by GAAP and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. Other companies may
calculate these measures differently as a result of differences in
the underlying accounting principles, policies applied and in
accounting frameworks, such as in IFRS.
The following tables reconcile these non-GAAP measures to the
most directly comparable GAAP measures:
Three Months EndedJune
30,
Six Months EndedJune 30,
2016 2015 2016
2015 Consolidated gold sales, net $ 1,803 $ 1,574 $
3,497 $ 3,219 Consolidated copper sales, net 235
334 573 661 Sales $ 2,038
$ 1,908 $ 4,070 $ 3,880 Costs
applicable to sales $ 1,059 $ 1,027 $ 2,140 $ 2,054 Less:
Consolidated copper sales, net (235 ) (334 )
(573 ) (661 ) By-Product costs applicable to sales $ 824
$ 693 $ 1,567 $ 1,393 Gold sold
(thousand ounces) 1,429 1,337
2,850 2,704 Total Gold CAS per ounce
(by-product) $ 577 $ 518 $ 550 $ 515
Total AISC $ 1,439 $ 1,439 $ 2,838 $ 2,840 Less:
Consolidated copper sales, net (235 ) (334 )
(573 ) (661 ) By-Product AISC $ 1,204 $ 1,105
$ 2,265 $ 2,179 Gold sold (thousand ounces)
1,429 1,337 2,850 2,704
Total Gold AISC per ounce (by-product) $ 843 $ 826
$ 795 $ 806
Conference call information
A conference call will be held on Thursday, July 21, 2016
at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time); it
will also be carried on the Company’s website.
Conference Call Details
Dial-In Number
800.857.6428 Intl Dial-In Number 517.623.4916 Leader Meredith Bandy
Passcode Newmont Replay Number 800.925.0851 Intl Replay Number
402.220.3075 Replay Passcode 2016
Webcast DetailsURL:
http://event.on24.com/wcc/r/1203160/7D2C07F959EE2899B0229E9C377BB39E
The second quarter 2016 results will be available after the
market closes on Wednesday, July 20, 2016 on the “Investor
Relations” section of the Company’s website, www.newmont.com.
Additionally, the conference call will be archived for a limited
time on the Company’s website.
Cautionary Statement Regarding Forward-Looking Statements,
Including Outlook:
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
consolidated and attributable production and sales; (ii) estimates
of future costs applicable to sales and All-in sustaining costs;
(iii) estimates of future consolidated and attributable capital
expenditures; (iv) our efforts to continue delivering reduced costs
and efficiency; (v) expectations regarding the development, growth
and potential of the Company’s operations, projects and
investments; (vi) expectations regarding future debt repayments;
and (vii) expectations regarding the completion of the sale of Batu
Hijau, including, without limitation, the timing of closing of the
sale transaction, future receipt of contingent payments, expected
use of proceeds, expected accounting impacts resulting from the
proposed transaction, future operation and transition of Batu Hijau
(including Phase 7) and future development of Elang. 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 operations and projects being
consistent with current expectations and mine plans, including
without limitation receipt of export approvals; (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; (vii) the accuracy of
our current mineral reserve and mineralized material estimates;
(viii) the acceptable outcome of negotiation of the amendment to
the Contract of Work and/or resolution of export issues in
Indonesia; and (ix) other assumptions noted herein. Investors are
cautioned that no assurances can be made with respect to the
closing of the pending sale of the Company’s interest in
PTNNT,which remains contingent on the receipt of regulatory
approvals, buyer shareholder approval, and satisfaction of other
conditions precedent, including, without limitation, government
approval of the PTNNT share transfer, maintenance of valid export
license at closing, the concurrent closing of the PTMDB sale of its
24 percent stake to the buyer, resolution of certain tax matters,
and no occurrence of material adverse events that would
substantially impact the future value of Batu Hijau. Potential
additional risks include other political, regulatory or legal
challenges and community and labor issues. The amount of contingent
payment will also remain subject to risks and uncertainties,
including copper prices and future production and development at
Batu Hijau and Elang. 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”. Other
risks relating to forward looking statements in regard to the
Company’s business and future performance may 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, community relations, conflict resolution and
outcome of projects or oppositions and governmental regulation and
judicial outcomes. For a more detailed discussion of such risks and
other factors, see the Company’s 2015 Annual Report on Form 10-K,
filed on February 17, 2016, with the Securities and Exchange
Commission (SEC), 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.
Investors are reminded that this news release should be read in
conjunction with Newmont’s Form 10-Q expected to be filed on or
about July 20, 2016 with the SEC (also available at
www.newmont.com).
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160720006413/en/
Newmont Mining CorporationInvestor
ContactMeredith Bandy,
303-837-5143meredith.bandy@newmont.comorMedia
ContactOmar Jabara, 303-837-5114omar.jabara@newmont.com
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