Newmont Mining Corporation (NYSE: NEM) (Newmont or the Company)
announced full year and fourth quarter 2017 results that
demonstrated improved operational and financial performance.
Full Year 2017 Summary
- Net income (loss): Delivered
full year GAAP net income (loss) from continuing operations
attributable to stockholders of $(60) million or $(0.11) per
diluted share; delivered adjusted net income1 of $780 million or
$1.46 per diluted share, up 26 percent compared to the prior
year
- EBITDA: Generated $2.7 billion
in adjusted EBITDA2, up 12 percent compared to the prior year
- Cash flow: Reported consolidated
operating cash flow from continuing operations of $2.4 billion, up
22 percent from the prior year, and free cash flow3 of $1.5
billion, up 88 percent from the prior year
- Gold costs applicable to sales
(CAS)4: Reported CAS of $691 per ounce, in line with
full year guidance
- Gold all-in sustaining costs
(AISC)5: Reported AISC of $924 per ounce, in line with
full year guidance
- Attributable gold production:
Produced 5.3 million ounces of gold, up eight percent from the
prior year, in line with full year guidance
- Portfolio improvements: Declared
commercial production at the Tanami Expansion Project and approved
the Tanami Power Project in Australia; achieved a full year of
underground operation at Northwest Exodus and mined first ore at
the Twin Creeks Underground mine in Nevada; approved and progressed
expansion of the Ahafo Mill and produced first gold at Subika
Underground in Africa; completed first full year of operations at
Merian in Suriname; approved Quecher Main and increased ownership
in Yanacocha in Peru; invested in early stage development projects
in the Canadian Yukon, Colombia, Guiana Shield and the Andes;
declared gold reserves of 68.5 million ounces, fully replacing
depletion at a constant gold price, and increased gold resources6
to 48.2 million ounces
- Financial strength: Reduced net
debt to $0.8 billion, ending the year with $3.3 billion cash on
hand, and an industry leading, investment-grade credit profile;
fourth quarter dividend declared raised to $0.14 per share, nearly
three times higher than the prior year quarter
- Outlook: Released improved 2018
guidance at Investor Day for attributable production, CAS per ounce
and AISC per ounce; increased 2018 capital outlook by $300 million7
following approval of the Tanami Power Project and the Turquoise
Ridge Joint Venture Mine Optimization Project
“Newmont continued its steady trajectory of improving
operational and financial performance in 2017, and built a stronger
base for long-term value creation,” said Gary J. Goldberg,
President and Chief Executive Officer. “We improved adjusted EBITDA
by 12 percent to $2.7 billion and free cash flow by 88 percent to
$1.5 billion on the back of lower cost production from newer mines
and ongoing productivity improvements across the portfolio. This
performance gave us the means to invest in five new projects, raise
our dividend by 87 percent, and increase our investment in
exploration – an investment that paid off as we added 6.4 million
ounces of gold to our Reserve base, offsetting depletion for the
first time in five years.”
Fourth Quarter 2017 Summary
- Net income (loss): Delivered
GAAP Net income (loss) from continuing operations attributable to
stockholders of $(534) million or $(0.99) diluted share; adjusted
net income was $216 million or $0.40 per diluted share, up 60
percent from the prior year quarter
- EBITDA: Generated $736 million
in adjusted EBITDA, up 17 percent from the prior year quarter
- Cash flow: Increased
consolidated operating cash flow from continuing operations to $754
million, up 28 percent from the prior year quarter; and increased
free cash flow to $445 million, up 54 percent from the prior year
quarter
- Gold CAS per ounce: Rose two
percent to $693 per ounce
- Gold AISC per ounce: Rose five
percent to $968 per ounce
- Production: Produced 1.3 million
attributable gold ounces
- Shareholder returns: Nearly
tripled the fourth quarter dividend declared to $0.14 per share
compared to the prior year quarter
Full Year and Fourth Quarter 2017 Results
GAAP Net income (loss) from continuing operations
attributable to stockholders for the full year was $(60) million or
$(0.11) per diluted share, compared to a loss of $(220) million or
$(0.41) per diluted share in the prior year primarily due to higher
gold production, higher average realized gold prices and a prior
year impairment at Yanacocha partially offset by the impact of
changes in U.S. tax legislation. Net loss for the quarter was
$(534) million or $(0.99) per diluted share, compared to a loss of
$(391) million or $(0.73) per diluted share in the prior year
quarter for similar reasons.
Adjusted net income for the full year was $780 million or
$1.46 per diluted share, compared to $619 million or $1.16 per
diluted share in the prior year. Adjusted net income for the
quarter was $216 million or $0.40 per diluted share, up 60 percent
from $133 million or $0.25 per share in the prior year quarter. The
principal adjustments to fourth quarter net income included $1.30
per diluted share of net tax adjustments, including non-cash
charges of $346 million related to the re-measurement of U.S.
deferred tax assets and liabilities and $395 million related to tax
restructuring, following the enactment of the Tax Cuts and Jobs
Act, and $0.11 per share for reclamation and remediation expense at
the Company’s former historic mining operations.
Revenue rose nine percent to $7,348 million for the full
year, and fourth quarter revenue rose eight percent to $1,935
million, on increased sales volumes and higher average realized
gold prices.
Average realized price8 for gold was one percent higher
for the full year at $1,255 per ounce and six percent higher for
the quarter at $1,270 per ounce compared to the prior year. The
average realized price for copper for the full year was 32 percent
higher at $2.83 per pound and was 29 percent higher for the quarter
at $3.20 per pound.
Attributable gold production increased eight percent to
5.27 million ounces for the full year compared to the prior year
primarily due to new production at Merian and Long Canyon,
partially offset by lower grade at Twin Creeks, Yanacocha and
Tanami, and adverse weather conditions at Yanacocha and Tanami;
production for the fourth quarter rose one percent to 1.34 million
ounces on higher throughput and grade at Merian and Tanami and a
full quarter of production at Long Canyon which offset lower grade
and recovery at CC&V, harder ore at Akyem and lower grade at
Boddington.
Gold CAS rose nine percent to $3,875 million for the full
year, and rose three percent to $1,009 million for the quarter on
higher production. Gold CAS per ounce rose one percent to $691 per
ounce for the full year due to higher direct operating costs,
partially offset by higher gold ounces sold and lower leach pad
inventory adjustments and rose two percent to $693 per ounce for
the quarter on higher mill maintenance costs at Boddington.
Gold AISC rose one percent to $924 per ounce for the full
year primarily on higher unit CAS and rose five percent to $968 per
ounce for the quarter on higher unit CAS, increased sustaining
capital and higher advanced projects and exploration costs.
Attributable copper production was six percent lower at
51,000 tonnes for the full year and 15 percent lower at 11,000
tonnes for the quarter as mining focused on gold bearing zones at
Phoenix. Copper CAS was 28 percent lower at $163 million for
the full year and was 27 percent lower at $44 million for the
quarter. Copper CAS per pound improved 25 percent to $1.47 per
pound for the full year due to lower co-product allocation of costs
to copper and similarly improved 14 percent to $1.62 per pound for
the quarter. Copper AISC improved 22 percent to $1.80 per
pound for the full year and improved 10 percent to $2.08 per pound
for the quarter on improved unit CAS.
Capital expenditures9 decreased 24 percent to $866
million for the full year due to completion of projects at Long
Canyon and Merian, partially offset by increased investment in the
Ahafo expansions, but rose three percent in the fourth quarter to
$309 million with increased investment at the Ahafo expansions,
infrastructure for hard rock mining at Merian and the development
of Twin Underground.
Consolidated operating cash flow from continuing
operations increased 22 percent to $2,350 million for the full
year and increased 28 percent to $754 million for the quarter on
higher net income and favorable working capital movement. Free cash
flow for the year increased 88 percent to $1,484 million and
increased 54 percent to $445 million for the quarter on higher
adjusted EBITDA and favorable working capital partially offset by
higher capital expenditures.
Portfolio Improvements Minera Yanacocha SRL (MYSRL), the
owner of Yanacocha, purchased the International Finance
Corporation’s five percent equity stake in Yanacocha for $48
million in December 2017. The transaction10 increased Newmont’s
ownership in Yanacocha from 51.35 percent to 54.05 percent and was
structured as a share buyback, with MYSRL purchasing the interest
using existing cash balances.
Balance sheet improved as Newmont ended the quarter with
$3.3 billion cash on hand, a leverage ratio of 0.3x net debt to
adjusted EBITDA and one of the best credit ratings in the mining
sector. Since 2013, Newmont has streamlined its balance sheet and
reduced gross debt by over 33 percent and net debt by over 83
percent. The Company is committed to maintaining an investment
grade credit profile.
Projects update
Newmont’s capital-efficient project pipeline supports stable
production with improving margins and mine life. Near-term
development capital projects are presented below. Funding for
Subika Underground, Ahafo Mill Expansion, Twin Underground, Quecher
Main and Tanami Power projects has been approved and these projects
are in execution. Additional projects represent incremental
improvements to production and cost guidance. Internal rates of
return (IRR) on these projects are calculated at a $1,200 gold
price.
- Subika
Underground (Africa) leverages existing infrastructure and
an optimized approach to develop Ahafo’s most promising underground
resource. First production was achieved in June 2017 with
commercial production expected in the second half of 2018. The
project is expected to increase average annual gold production by
between 150,000 and 200,000 ounces per year for the first five
years beginning in 2019 with an initial mine life of approximately
11 years. Capital costs for the project are estimated at between
$160 and $200 million with expenditure of between $80 and $90
million in 2018. The project has an IRR of more than 20
percent.
- Ahafo Mill
Expansion (Africa) is designed to maximize resource value by
improving production margins and accelerating stockpile processing.
The project also supports profitable development of Ahafo’s highly
prospective underground resources. First production is expected in
the first half of 2019 with commercial production expected in the
second half of 2019. The expansion is expected to increase average
annual gold production by between 75,000 and 100,000 ounces per
year for the first five years beginning in 2020. Capital costs for
the project are estimated at between $140 and $180 million with
expenditure of approximately $75 to $85 million in 2018. The
project has an IRR of more than 20 percent.Together the Ahafo
expansion projects (Ahafo Mill Expansion and Subika Underground)
improve Ahafo’s production to between 550,000 and 650,000 ounces
per year for the first five full years of production (2020 to
2024). During this period Ahafo’s CAS is expected to be between
$650 and $750 per ounce and AISC is expected to be between $800 and
$900 per ounce. This represents average production improvement of
between 200,000 and 300,000 ounces at CAS improvement of between
$150 and $250 per ounce and AISC improvement of $250 to $350 per
ounce, compared to 2016 actuals.
- Twin
Underground (North America) is a portal mine beneath Twin
Creek’s Vista surface mine with similar mineralization. First
production was achieved in August 2017 with commercial production
expected mid-2018. The expansion is expected to average between
30,000 and 40,000 ounces per year for the first five years (2018 to
2022). During this period CAS is expected to be between $525 and
$625 per ounce and AISC between $650 and $750 per ounce. Capital
costs are expected to be between $45 and $55 million with
expenditure of $15 to $25 million in 2018. The project IRR is
expected to be about 20 percent.
- Quecher
Main (South America) will add oxide production at Yanacocha,
leverage existing infrastructure and enable potential future growth
at Yanacocha. First production is expected in early 2019 with
commercial production in the fourth quarter of 2019. Quecher Main
extends the life of the Yanacocha operation to 2027 with average
annual gold production of approximately 200,000 ounces per year
between 2020 and 2025 (100 percent basis). During the same period
incremental CAS is expected to be between $750 and $850 per ounce
and AISC between $900 and $1,000 per ounce. Capital costs for the
project are expected to be between $250 and $300 million with
expenditure of $80 to $90 million in 2018. The project IRR is
expected to be greater than 10 percent.
- Tanami
Power (Australia) will lower Tanami power costs by
approximately 20 percent beginning in 2019, mitigate fuel supply
risk and reduce carbon emissions by 20 percent. The project
includes a 450 kilometer natural gas pipeline to be constructed
connecting the Tanami site to the Amadeus Gas Pipeline, and
construction and operation of two on-site power stations. The gas
supply, gas transmission and power purchase agreements are for a 10
year term with options to extend. The project is expected to result
in net cash savings of approximately $34 per ounce beginning in
2019. Capital costs are estimated at between $225 and $275 million
with annual cash lease payments over a 10 year term beginning in
2019 with approximately $10 million of owner’s costs paid in 2018.
The project IRR is expected to be greater than 50 percent at $0.75
AUD.
Outlook
Newmont’s outlook reflects stable gold production and ongoing
investment in its operating assets and most promising growth
prospects. Newmont does not include development projects that have
not yet been funded or reached execution stage in its outlook,
which represents upside to production and cost guidance.
Attributable gold production is expected to be between
4.9 and 5.4 million ounces in 2018 and 2019, mainly driven by Full
Potential mine plan, throughput and recovery improvements. Longer
term production is expected to remain stable at between 4.6 and 5.1
million ounces per year through 2022 excluding development projects
which have yet to be approved.
- North America production is expected to
be between 2.0 and 2.2 million ounces in 2018 with production from
Northwest Exodus, Twin Underground and the Silverstar pit
offsetting higher stripping at Carlin and Twin Creeks and lower
grade ore at Cripple Creek & Victor. Production declines
slightly in 2019 to between 1.8 and 2.0 million ounces due to
planned stripping at Carlin and then increases to between 1.9 and
2.1 million ounces in 2020 due to higher grades at Twin Creeks,
Cripple Creek & Victor and Long Canyon. The Company continues
to pursue profitable growth opportunities at Carlin and Long
Canyon.
- South America production is expected to
be between 615,000 and 675,000 ounces in 2018 as Merian delivers
mine and mill productivity improvements that partially offset
Yanacocha’s lower production resulting from lower grades and
recoveries from deep transitional ore. Production is expected to be
between 590,000 and 690,000 ounces in 2019 with the addition of
Quecher Main and between 475,000 and 575,000 ounces per year in
2020 as Yanacocha laybacks are mined out and Merian transitions
from saprolite to hard rock. The Company continues to advance
near-mine growth opportunities at Merian and both oxide and sulfide
potential at Yanacocha.
- Australia production is expected to be
between 1.5 and 1.7 million ounces in 2018 due to higher grade,
recovery and throughput improvements at Tanami and KCGM which
offset increased stripping at Boddington. Production is expected to
be between 1.4 and 1.6 million ounces in 2019 and 2020. In 2020,
Boddington completes stripping and accesses higher grade ore which
offsets the impact of processing lower grade stockpiles at KCGM.
The Company continues to advance studies for a second expansion at
Tanami.
- Africa production is expected to be
between 815,000 and 875,000 ounces in 2018 as Full Potential mining
improvements at the Subika open pit and a full year of Subika
underground production offset the effects of harder, lower grade
ore at Akyem. Production is expected to be between 1.1 and 1.2
million ounces in 2019 as the Ahafo Mill expansion reaches
commercial production and between 880,000 and 980,000 ounces in
2020 as both Ahafo and Akyem reach lower open pit grade. The
company continues to advance the Ahafo North project and other
prospective surface and underground opportunities.
Gold cost outlook – CAS is expected to be between
$700 and $750 per ounce in 2018 following production increases in
North America and Africa and Full Potential cost and efficiency
improvements across the portfolio. CAS is expected to be between
$620 and $720 per ounce for 2019 and between $650 and $750 per
ounce longer term through 2022. AISC is expected to be between $965
and $1,025 per ounce in 2018 as improved CAS offsets increases in
exploration and advanced projects spend. AISC is expected to be
between $870 and $970 per ounce in 2019 and longer-term through
2022. Further Full Potential savings and profitable ounces from
projects that are not yet approved represent additional upside not
currently captured in guidance.
- North America CAS is expected to be
between $760 and $810 per ounce in 2018 with Full Potential
efficiency and cost improvements. CAS is expected to be between
$680 and $780 per ounce in 2019 and between $655 and $755 per ounce
in 2020 on higher production at Twin Creeks, Cripple Creek &
Victor and Long Canyon. AISC is expected to be between $945 and
$1,020 per ounce in 2018 on improved unit CAS. AISC is expected to
be between $870 and $970 per ounce in 2019 and between $825 and
$925 in 2020.
- South America CAS is expected to be
between $705 and $765 per ounce in 2018 due to lower production and
increased costs from processing deeper transitional ore at
Yanacocha. CAS is expected to be between $560 and $660 per ounce in
2019 as Quecher Main reaches commercial production and be between
$690 and $790 per ounce in 2020. AISC is expected to be between
$945 and $1,045 per ounce in 2018 on higher unit CAS and increased
sustaining capital for additional haul trucks at Merian. AISC is
expected to be between $810 and $910 per ounce in 2019 on improved
unit CAS and be between $970 and $1,070 per ounce in 2020.
- Australia CAS is expected to be between
$675 and $725 per ounce in 2018 with Full Potential mine plan,
throughput and recovery improvements. CAS is expected to be between
$670 and $770 per ounce in 2019 and 2020. AISC is expected to be
between $830 and $890 per ounce in 2018 on improved unit CAS. AISC
is expected to be between $840 and $940 per ounce in 2019 and
2020.
- Africa CAS is expected to be between
$680 and $730 per ounce in 2018 with Full Potential mine plan,
throughput and recovery improvements. CAS is expected to be between
$520 and $620 per ounce in 2019 and between $610 and $710 per ounce
in 2020. AISC is expected to be between $865 and $925 per ounce in
2018 as Subika Underground reaches commercial production. AISC is
expected to be between $700 and $800 per ounce in 2019 as the Ahafo
Mill expansion reaches commercial production and between $775 and
$875 per ounce in 2020.
Copper – Attributable production is expected to remain
between 40,000 and 60,000 tonnes in 2018 and 2019, increasing to
between 45,000 and 65,000 tonnes longer term through 2022 as
Phoenix moves into higher copper zones. CAS is expected to be
between $1.65 and $1.85 per pound in 2018 due to lower grades at
Boddington and increasing costs at Phoenix as the mine plan focuses
on gold producing zones. CAS is expected to be between $1.80 and
$2.20 per pound in 2019 before falling to between $1.40 and $1.80
per pound longer term as Phoenix moves into higher copper zones.
AISC is expected to be between $2.00 and $2.20 per pound in 2018 on
increased unit CAS. AISC is expected to be between $2.25 and $2.55
per pound in 2019 and between $1.80 and $2.10 per pound longer
term.
Capital – Total capital is expected to increase to
between $1,200 and $1,300 million for 2018 with the approval of the
Tanami Power Project6 and the TRJV Mine Optimization Project and is
expected to remain between $730 and $830 million for 2019 as
expenditures related to Quecher Main are offset by sustaining
capital savings across the portfolio. Primary development capital
includes expenditure on the Ahafo Mill and Subika Underground
expansions in Africa, Twin Underground in North America and Quecher
Main in South America. Sustaining capital is expected to be between
$600 and $700 million in 2018, between $600 and $700 million for
2019 and between $550 and $650 million per year longer term to
cover infrastructure, equipment and ongoing mine development.
Consolidated expense outlook – Interest expense for 2018
is expected to be between $175 and $215 million due to lower debt
balances while investment in exploration and advanced projects is
expected to be between $350 and $400 million. 2018 outlook for
general & administrative costs remains unchanged at between
$215 and $240 million and guidance for depreciation and
amortization remains unchanged at between $1,225 and $1,325
million.
Assumptions and sensitivities – Newmont’s outlook assumes
$1,200 per ounce gold price, $2.50 per pound copper price, $0.75
USD/AUD exchange rate and $55 per barrel WTI oil price. A $100 per
ounce increase in gold price would deliver an expected $335 million
improvement in attributable free cash flow. Similarly, a $10 per
barrel reduction in the price of oil and a $0.05 favorable change
in the Australian dollar would deliver an expected $25 million and
$45 million improvement in attributable free cash flow,
respectively. These estimates exclude current hedge programs;
please refer to Newmont’s Form 10-K which was filed with the SEC on
February 22, 2018 for further information on hedging positions.
1
Non-GAAP measure. See end of this release
for reconciliation to Net income (loss) attributable to Newmont
stockholders.
2
Non-GAAP measure. See end of this release
for reconciliation to Net income (loss) attributable to Newmont
stockholders.
3
Non-GAAP measure. See end of this release
for reconciliation to Net cash provided by operating
activities.
4
Non-GAAP measure. See end of this release
for reconciliation to Costs applicable to sales.
5
Non-GAAP measure. See end of this release
for reconciliation to Costs applicable to sales.
6
See Cautionary Statement Regarding
Reserves and Resources at the end of this release.
7
Includes $225-$275M for a capital lease
related to the Tanami Power Project paid over a 10 year term
beginning in 2019.
8
See end of this release for reconciliation
to Sales.
9
Capital expenditures refers to Additions
to property plant and mine development from the Consolidated
Statements of Cash Flows later in this release.
10
For further information on this
transaction see Note 12 to the Consolidated Financial Statements in
the 2017 Form 10-K.
2018 Outlooka
Consolidated All-in Consolidated
Consolidated Attributable Consolidated
Sustaining Total Capital Production
Production CAS Costsb
Expenditures (Koz, Kt)
(Koz, Kt) ($/oz, $/lb)
($/oz, $/lb) ($M)
North America Carlin 950 – 1,015 950 – 1,015 775 – 825 980 –
1,040 155 – 190 Phoenixc 210 – 230 210 – 230 810 – 860 990 – 1,050
20 – 30 Twin Creeksd 340 – 370 340 – 370 675 – 725 835 – 885 80 –
100 CC&V 345 – 395 345 – 395 875 – 935 965 – 1,025 20 – 30 Long
Canyon 130 – 170 130 – 170 510 – 560 605 – 655 10 – 20 Other North
America
10 – 20
Total
2,010 – 2,170 2,010 –
2,170 760 – 810 945 –
1,020 300 – 380 South
America Yanacochae 470 – 545 240 – 280 975 – 1,025 1,205 –
1,275 110 – 140 Meriane 485 – 540 365 – 405 455 – 495 580 – 630 55
– 95 Other South America
Total 970 – 1,070
615 – 675 705 – 765
945 – 1,045 170 – 230
Australia Boddington 665 – 715 665 – 715 820 – 870
950 – 1,000 60 – 75 Tanami 440 – 515 440 – 515 535 – 605 705 – 775
300i – 380i Kalgoorlief 390 – 440 390 – 440 580 – 630 695 – 745 20
– 30 Other Australia
5 – 15
Total 1,530 – 1,670 1,530
– 1,670 675 – 725 830
– 890 400i – 480i
Africa Ahafo 435 – 465 435 – 465 710 – 765 875 – 955
195 – 240 Akyem 380 – 410 380 – 410 640 – 680 765 – 815 30 – 40
Other Africa
Total 815 – 875 815
– 875 680 – 730 865
– 925 225 – 275
Corporate/Other
10 –
15 Total Goldg
5,300
– 5,800 4,900 –
5,400 700 – 750
965 – 1,025
1,200i – 1,300i Phoenix
10 – 20 10 – 20 1.50 – 1.70 1.85 – 2.05 Boddington
30 – 40 30 – 40 1.75 – 1.95
2.05 – 2.25
Total Copper 40 –
60 40 – 60
1.65 – 1.85 2.00 –
2.20 2018
Consolidated Expense Outlookh General & Administrative
$ 215 – $ 240 Interest Expense $
175 – $ 215 Depreciation and Amortization $ 1,225 – $ 1,325
Advanced Projects & Exploration $ 350 – $ 400 Sustaining
Capital $ 600 – $ 700 Tax Rate 28%
– 34%
a
2018 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,
2018 Outlook assumes $1,200/oz Au, $2.50/lb Cu, $0.75 USD/AUD
exchange rate and $55/barrel WTI; AISC and CAS estimates do not
include inflation, for the remainder of the year. Production, CAS,
AISC and capital estimates exclude projects that have not yet been
approved. 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.
b
All-in sustaining costs or AISC as used in
the Company’s Outlook is a non-GAAP metric defined as the sum of
costs applicable to sales (including all direct and indirect costs
related to current production incurred to execute on the current
mine plan), reclamation 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 the end of this release.
c
Includes Lone Tree operations.
d
Includes TRJV operations.
e
Consolidated production for Yanacocha and
Merian is presented on a total production basis for the mine site;
attributable production represents a 54.05% interest for Yanacocha
and a 75% interest for Merian.
f
Both consolidated and attributable
production are shown on a pro-rata basis with a 50% ownership for
Kalgoorlie.
g
Production outlook does not include equity
production from stakes in TMAC (28.79%) or La Zanja (46.94%).
h
Consolidated 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.
i
Includes $225-$275M for a capital lease
related to the Tanami Power Project paid over a 10 year term
beginning in 2019.
Three Months Ended December 31, Years Ended December
31, Operating Results
2017 2016
% Change 2017
2016 % Change
Attributable Sales (koz, kt)
Attributable gold ounces sold 1,351 1,331 2 % 5,216 4,865 7 %
Attributable copper tonnes sold 13 14 (7 ) % 51 52 (2 ) %
Average Realized Price ($/oz, $/lb) Average realized gold
price $ 1,270 $ 1,193 6 % $ 1,255 $ 1,243 1 % Average realized
copper price $ 3.20
$ 2.49 29 %
$ 2.83 $ 2.15 32 %
Attributable Production (koz, kt) North America 556
551 1 % 2,211 2,024 9 % South America 188 166 13 % 660 414 59 %
Australia 406 396 3 % 1,573 1,641 (4 ) % Africa
191 210
(9 ) % 822
819 - %
Total Gold
1,341
1,323 1 %
5,266
4,898 8 % North America 3
4 (25 ) % 15 19 (21 ) % Australia
8 9 (11 ) %
36 35
3 %
Total Copper
11
13 (15 ) %
51 54
(6 ) %
CAS Consolidated ($/oz, $/lb) North
America $ 720 $ 721 - % $ 710 $ 702 1 % South America $ 577 $ 631
(9 ) % $ 709 $ 759 (7 ) % Australia $ 710 $ 642 11 % $ 672 $ 630 7
% Africa $ 755 $
768 (2 ) % $ 655
$ 666 (2 ) %
Total Gold
$ 693
$ 681 2 %
$ 691 $
682 1 %
Total Gold
(by-product) $ 664
$ 668 (1 )
%
$ 664
$ 677 (2 ) % North
America $ 1.84 $ 2.44 (25 ) % $ 1.73 $ 2.48 (30 ) % Australia
$ 1.57 $ 1.68
(7 ) % $ 1.37
$ 1.67 (18 ) %
Total
Copper $ 1.62
$ 1.88 (14 ) %
$ 1.47
$ 1.95 (25 ) %
AISC
Consolidated ($/oz, $/lb) North America $ 931 $ 884 5 % $ 895 $
869 3 % South America $ 871 $ 844 3 % $ 959 $ 1,052 (9 ) %
Australia $ 905 $ 844 7 % $ 823 $ 786 5 % Africa
$ 954 $ 929
3 % $ 823 $ 833
(1 ) %
Total Gold
$ 968 $ 918
5 %
$
924 $ 912
1 %
Total Gold (by-product)
$ 944 $
914 3 %
$ 903 $ 915
(1 ) % North America $ 2.38 $ 2.80 (15 ) % $
2.09 $ 2.88 (27 ) % Australia $ 2.01
$ 2.09 (4 ) %
$ 1.69 $ 2.00
(16 ) %
Total Copper
$ 2.08 $ 2.31
(10 ) %
$
1.80 $ 2.30
(22 ) %
NEWMONT MINING CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited, in millions except per
share)
Three Months Ended Years Ended December
31, December 31, 2017 2016 2017
2016 Sales $ 1,935 $ 1,789 $ 7,348 $ 6,711
Costs and expenses
Costs applicable to sales(1)
1,053 1,036 4,038 3,772 Depreciation and amortization 321 328 1,249
1,220 Reclamation and remediation 74 112 177 179 Exploration 44 41
179 148 Advanced projects, research and development 44 29 143 134
General and administrative 66 55 237 233 Impairment of long-lived
assets 11 974 14 977 Other expense, net 3 7
32 58 1,616
2,582 6,069 6,721 Other income
(expense) Other income, net 22 (24 ) 54 69 Interest expense, net
(54 ) (69 ) (241 ) (273 ) (32 )
(93 ) (187 ) (204 ) Income (loss) before
income and mining tax and other items 287 (886 ) 1,092 (214 )
Income and mining tax benefit (expense) (776 ) (8 ) (1,125 ) (563 )
Equity income (loss) of affiliates (12 ) (5 )
(16 ) (13 ) Income (loss) from continuing operations (501 )
(899 ) (49 ) (790 ) Income (loss) from discontinued operations
7 92 (38 ) (133 ) Net
income (loss) (494 ) (807 ) (87 ) (923 ) Net loss (income)
attributable to noncontrolling interests Continuing operations (33
) 508 (11 ) 570 Discontinued operations — (45
) — (274 ) (33 ) 463
(11 ) 296 Net income (loss) attributable to
Newmont stockholders $ (527 ) $ (344 ) $ (98 ) $ (627 ) Net
income (loss) attributable to Newmont stockholders: Continuing
operations $ (534 ) $ (391 ) $ (60 ) $ (220 ) Discontinued
operations 7 47 (38 )
(407 ) $ (527 ) $ (344 ) $ (98 ) $ (627 ) Income (loss) per common
share Basic: Continuing operations $ (0.99 ) $ (0.73 ) $ (0.11 ) $
(0.41 ) Discontinued operations 0.01 0.08
(0.07 ) (0.77 ) $ (0.98 ) $ (0.65 ) $ (0.18 )
$ (1.18 ) Diluted: Continuing operations $ (0.99 ) $ (0.73 ) $
(0.11 ) $ (0.41 ) Discontinued operations 0.01
0.08 (0.07 ) (0.77 ) $ (0.98 ) $ (0.65 ) $
(0.18 ) $ (1.18 ) Cash dividends declared per common share $
0.075 $ 0.050 $ 0.250 $ 0.125
(1)
Excludes Depreciation and amortization and
Reclamation and remediation.
NEWMONT MINING CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited, in millions)
Three Months Ended Years Ended December
31, December 31, 2017 2016 2017
2016 Operating activities: Net income (loss) $ (494 ) $ (807
) $ (87 ) $ (923 ) Adjustments: Depreciation and amortization 321
328 1,249 1,220 Stock-based compensation 17 16 70 70 Reclamation
and remediation 68 108 165 168 Loss (income) from discontinued
operations (7 ) (92 ) 38 133 Impairment of long-lived assets 11 974
14 977 Deferred income taxes 698 (22 ) 795 434 Gain on asset and
investment sales, net (2 ) 1 (23 ) (108 ) Write-downs of inventory
and stockpiles and ore on leach pads 54 91 212 298 Other operating
adjustments 20 51 91 138 Net change in operating assets and
liabilities 68 (58 ) (174 ) (484
) Net cash provided by (used in) operating activities of continuing
operations 754 590 2,350 1,923
Net cash provided by (used in) operating
activities of discontinued operations(1)
(3 ) 43 (15 ) 869 Net
cash provided by (used in) operating activities 751
633 2,335 2,792 Investing
activities: Additions to property, plant and mine development (309
) (301 ) (866 ) (1,133 ) Purchases of investments (17 ) (15 ) (130
) (15 ) Proceeds from sales of investments 1 11 35 195
Acquisitions, net (6 ) (6 ) (15 ) (6 ) Proceeds from sales of other
assets — 1 5 9 Proceeds from sale of Batu Hijau — 920 — 920 Other
(3 ) 17 10 (4 ) Net cash
provided by (used in) investing activities of continuing operations
(334 ) 627 (961 ) (34 ) Net cash provided by (used in) investing
activities of discontinued operations — (5 )
— (46 ) Net cash provided by (used in)
investing activities $ (334 ) $ 622 $ (961 ) $ (80 )
Financing activities: Repayment of debt $ (1 ) $ (535 ) $ (580 ) $
(1,312 ) Distributions to noncontrolling interests (59 ) (3 ) (178
) (3 ) Dividends paid to common stockholders (40 ) (26 ) (134 ) (67
) Funding from noncontrolling interests 24 8 94 66 Acquisition of
noncontrolling interests (48 ) — (48 ) (19 ) Payments for
withholding of employee taxes related to stock-based compensation —
— (13 ) (6 ) Dividends paid to noncontrolling interests — — — (146
) Other (1 ) 3 (5 ) 1 Net
cash provided by (used in) financing activities of continuing
operations (125 ) (553 ) (864 ) (1,486 ) Net cash provided by (used
in) financing activities of discontinued operations —
(2 ) — (331 ) Net cash provided by
(used in) financing activities (125 ) (555 )
(864 ) (1,817 ) Effect of exchange rate changes on cash,
cash equivalents and restricted cash 2 (4 )
6 2 Net change in cash, cash
equivalents and restricted cash 294 696 516 897 Less net cash
provided by (used in) Batu Hijau discontinued operations —
39 — 503 294 657
516 394 Cash, cash equivalents and restricted cash at beginning of
period 3,004 2,125 2,782
2,388 Cash, cash equivalents and restricted cash at
end of period $ 3,298 $ 2,782 $ 3,298 $ 2,782
Reconciliation of cash, cash equivalents and
restricted cash: Cash and cash equivalents $ 3,259 $ 2,756 $ 3,259
$ 2,756 Restricted cash included in Other current assets 1 1 1 1
Restricted cash included in Other noncurrent assets 38
25 38 25 Total
cash, cash equivalents and restricted cash $ 3,298 $ 2,782
$ 3,298 $ 2,782 (1)
Net cash provided by operating activities
of discontinued operations includes $- and $(3) related to closing
costs for the sale of Batu Hijau during the three months and year
ended December 31, 2017, respectively; $46 and $880 related to the
operating activities of Batu Hijau during the three months and year
ended December 31, 2016, respectively; and $(3), $(3), $(12) and
$(11) during the three months and years ended December 31, 2017 and
2016, respectively, related to the Holt royalty obligation, all of
which were paid out of Cash and cash equivalents.
NEWMONT MINING CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited, in millions)
At December 31, At December 31, 2017
2016 ASSETS Cash and cash equivalents $ 3,259 $ 2,756
Trade receivables 124 160 Other accounts receivables 113 183
Investments 62 56 Inventories 679 617 Stockpiles and ore on leach
pads 676 763 Other current assets 153 142
Current assets 5,066 4,677 Property, plant and mine
development, net 12,267 12,485 Investments 280 207 Stockpiles and
ore on leach pads 1,848 1,864 Deferred income tax assets 537 1,331
Other non-current assets 565 467 Total
assets $ 20,563 $ 21,031
LIABILITIES
Debt $ 4 $ 566 Accounts payable 375 320 Employee-related benefits
309 304 Income and mining taxes payable 248 153 Other current
liabilities 459 407 Current liabilities
1,395 1,750 Debt 4,061 4,049 Reclamation and remediation
liabilities 2,154 2,029 Deferred income tax liabilities 595 592
Employee-related benefits 386 411 Other non-current liabilities
342 326 Total liabilities 8,933
9,157
EQUITY Common stock
853 849 Additional paid-in capital 9,564 9,490 Accumulated other
comprehensive income (loss) (292 ) (334 ) Retained earnings
484 716 Newmont stockholders' equity 10,609
10,721 Noncontrolling interests 1,021 1,153
Total equity 11,630 11,874 Total
liabilities and equity $ 20,563 $ 21,031
Non-GAAP Financial Measures
Non-GAAP financial measures are intended to provide additional
information only and do not have any standard meaning prescribed by
U.S. 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.
Unless otherwise noted, we present the Non-GAAP financial measures
of our continuing operations in the tables below. For additional
information regarding our discontinued operations, see Note 3 to
the Company’s Consolidated Financial Statements.
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 sale of
products, by excluding certain items that have a disproportionate
impact on our results for a particular period. Adjustments to
continuing operations are presented before tax and net of our
partners’ noncontrolling interests, when applicable. The tax
effect of adjustments is presented in the Tax effect of adjustments
line and is generally calculated using the Company’s statutory
effective tax rate of 35%. 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
Years Ended December 31, December 31,
2017 2016 2017
2016 Net income (loss) attributable to Newmont
stockholders $ (527 ) $ (344 ) $ (98 ) $ (627 )
Net loss (income) attributable to Newmont
stockholders from discontinued operations(1)
(7 ) (47 ) 38 407 Net
income (loss) attributable to Newmont stockholders from continuing
operations (534 ) (391 ) (60 ) (220 )
Reclamation and remediation charges,
net(2)
61 51 64 51
Loss (gain) on asset and investment
sales(3)
(2 ) 1 (23 ) (108 )
Restructuring and other, net(4)
1 3 9 27
Impairment of long-lived assets,
net(5)
11 513 13 516
Acquisition cost adjustments(6)
— (1 ) 2 10
Loss on debt repayment(7)
— 51 — 55
La Quinua leach pad revision, net(8)
— — — 26
Tax effect of adjustments(9)
(25 ) (214 ) (22 ) (238 )
Adjustment to equity method
investment(10)
7 — 7 —
Re-measurement due to the Tax Cuts and
Jobs Act(11)
306 — 306 —
Tax restructuring related to the Tax Cuts
and Jobs Act(12)
395 — 395 —
Valuation allowance and other tax
adjustments(13)
(4 ) 120 89 500
Adjusted net income (loss) $ 216 $ 133 $ 780 $
619 Net income (loss) per share, basic $ (0.98 ) $
(0.65 ) $ (0.18 ) $ (1.18 ) Net loss (income) attributable to
Newmont stockholders from discontinued operations (0.01 )
(0.08 ) 0.07 0.77 Net income
(loss) attributable to Newmont stockholders from continuing
operations (0.99 ) (0.73 ) (0.11 ) (0.41 ) Reclamation and
remediation charges, net 0.11 0.09 0.12 0.09 Loss (gain) on asset
and investment sales — 0.01 (0.04 ) (0.20 ) Restructuring and
other, net — — 0.01 0.05 Impairment of long-lived assets, net 0.01
0.97 0.01 0.97 Acquisition cost adjustments — — — 0.02 Loss on debt
repayment — 0.10 — 0.11 La Quinua leach pad revision, net — — —
0.05 Tax effect of adjustments (0.04 ) (0.41 ) (0.03 ) (0.46 )
Adjustment to equity method investment 0.01 — 0.01 — Re-measurement
due to the Tax Cuts and Jobs Act 0.57 — 0.57 — Tax restructuring
related to the Tax Cuts and Jobs Act 0.74 — 0.74 — Valuation
allowance and other tax adjustments (0.01 ) 0.22
0.18 0.95
Adjusted net income (loss) per share,
basic(14)
$ 0.40 $ 0.25 $ 1.46 $ 1.17 Net
income (loss) per share, diluted $ (0.98 ) $ (0.65 ) $ (0.18 ) $
(1.18 ) Net loss (income) attributable to Newmont stockholders from
discontinued operations (0.01 ) (0.08 ) 0.07
0.77 Net income (loss) attributable to Newmont
stockholders from continuing operations (0.99 ) (0.73 ) (0.11 )
(0.41 ) Reclamation and remediation charges, net 0.11 0.09 0.12
0.09 Loss (gain) on asset and investment sales — 0.01 (0.04 ) (0.20
) Restructuring and other, net — — 0.01 0.05 Impairment of
long-lived assets, net 0.01 0.97 0.01 0.97 Acquisition cost
adjustments — — — 0.02 Loss on debt repayment — 0.10 — 0.11 La
Quinua leach pad revision, net — — — 0.05 Tax effect of adjustments
(0.04 ) (0.41 ) (0.03 ) (0.46 ) Adjustment to equity method
investment 0.01 — 0.01 — Re-measurement due to the Tax Cuts and
Jobs Act 0.57 — 0.57 — Tax restructuring related to the Tax Cuts
and Jobs Act 0.74 — 0.74 — Valuation allowance and other tax
adjustments (0.01 ) 0.22 0.18
0.94
Adjusted net income (loss) per share,
diluted(14)
$ 0.40 $ 0.25 $ 1.46 $ 1.16
Weighted average common shares (millions): Basic 533 531 533 530
Diluted 536 534 535 532 (1) Net loss (income)
from discontinued operations relates to (i) adjustments in our Holt
royalty obligation, presented net of tax expense (benefit) of $1,
$13, $(24) and $(19), respectively, and (ii) Batu Hijau operations,
presented net of tax expense (benefit) of $-, $51, $- and $309,
respectively, and loss (income) attributable to noncontrolling
interests of $-, $(45), $- and $(274), respectively, (iii)
adjustments to our Batu Hijau Contingent Consideration, presented
net of tax expense (benefit) of $4, $-, $4 and $-, respectively,
and (iv) the loss on sale of Batu Hijau, which has been recorded on
an attributable basis. For additional information regarding our
discontinued operations, see Note 3 to our Consolidated Financial
Statements. (2)
Reclamation and remediation charges,
included in Reclamation and remediation, represent revisions to
reclamation and remediation plans and cost estimates at the
Company’s former historic mining operations. The 2017 charges
include adjustments at the Rain, Midnite, Resurrection and San Luis
remediation and closure sites in December 2017. The 2016 charges
include adjustments to reclamation liabilities associated with the
review of the Yanacocha long-term mining and closure plans in
December 2016. Amounts are presented net of income (loss)
attributable to noncontrolling interests of $-, $(37), $- and
$(37), respectively.
(3)
Loss (gain) on asset and investment sales,
included in Other income, net, primarily represents a gain from the
exchange of our interest in the Fort á la Corne joint venture for
equity ownership in Shore Gold in June 2017, the sale of our
holdings in Regis in March 2016 and income recorded in September
2016 associated with contingent consideration from the sale of
certain properties in Nevada during the first quarter of 2015.
(4)
Restructuring and other, included in Other
expense, net, primarily represents certain costs associated with
severance and outsourcing costs and system integration costs during
2016 related to our acquisition of CC&V in August 2015. Amounts
are presented net of income (loss) attributable to noncontrolling
interests of $(3), $(3), $(5) and $(5), respectively.
(5)
Impairment of long-lived assets, included
in Impairment of long-lived assets, represents non-cash write-downs
of long-lived assets. The 2016 impairments include $970 related to
long-lived assets in Yanacocha in December 2016. Amounts are
presented net of income (loss) attributable to noncontrolling
interests of $-, $(460), $(1) and $(461), respectively. See Note 7
to our Consolidated Financial Statements for further
information.
(6)
Acquisition cost adjustments, included in
Other expense, net, represent net adjustments to the contingent
consideration and related liabilities associated with the
acquisition of the final 33.33% interest in Boddington in June
2009.
(7)
Loss on debt repayment, included in Other
income, net, represents the impact from the debt tender offer on
our 2019 Senior Notes and 2039 Senior Notes in March 2016 and the
debt tender offer on our 2022 Senior Notes in November 2016.
(8)
La Quinua leach pad revision, included in
Costs applicable to sales and Depreciation and amortization,
represents a significant write-down of the estimated recoverable
ounces at Yanacocha in September 2016. Amounts are presented net of
income (loss) attributable to noncontrolling interests of $-, $-,
$- and $(25), respectively.
(9)
The tax effect of adjustments, included in
Income and mining tax benefit (expense), represents the tax effect
of adjustments in footnotes (2) through (8), as described above,
and are calculated using the Company's statutory tax rate of
35%.
(10)
Adjustment to equity method investment,
included in Equity income (loss) of affiliates and presented net of
tax expense (benefit) of $(3), $-, $(3) and $-, respectively,
represents non-cash write-downs of long-lived assets recorded at
Minera La Zanja S.R.L. (“La Zanja”) in December 2017. For further
information about our equity method investment in La Zanja, see
Note 11 to our Consolidated Financial Statements.
(11)
Re-measurement due to the Tax Cuts and
Jobs Act, included in Income and mining tax benefit (expense),
represents the provisional re-measurement of our U.S. deferred tax
assets and liabilities from 35% to the reduced tax rate of 21% of
$346 and $8 for changes in executive compensation deductions,
partially offset by the release of a valuation allowance on
alternative minimum tax credits of $48. For further information
about the impact of the Tax Cuts and Jobs Act, see Note 10 to our
Consolidated Financial Statements.
(12)
Tax restructuring related to the Tax Cuts
and Jobs Act, included in Income and mining tax benefit (expense),
represents provisional changes resulting from restructuring our
holding of non-U.S. operations for U.S. federal income tax
purposes. For further information about the impact of the Tax Cuts
and Jobs Act, see Note 10 to our Consolidated Financial
Statements.
(13)
Valuation allowance and other tax
adjustments, included in Income and mining tax benefit (expense),
predominantly represent adjustments to remove the impact of our
valuation allowances for items such as foreign tax credits,
alternative minimum tax credits, capital losses and disallowed
foreign losses. We believe that these valuation allowances cause
significant fluctuations in our financial results that are not
indicative of our underlying financial performance. The adjustments
during the three and twelve months ended December 31, 2017 are due
to increases (decreases) to the valuation allowance on credit
carryovers of $(1) and $94, respectively, a decrease to the
valuation allowance carried on the deferred tax asset for
investments of $12 during the fourth quarter and other tax
adjustments of $9 and $7, respectively. The adjustments during the
three and twelve months ended December 31, 2016 are due to an
increase to the valuation allowance on the deferred tax asset
related to the investment in Yanacocha of $288 during the fourth
quarter, a tax restructuring of $170 during the first quarter, a
decrease in the valuation allowance on capital loss carryover of
$169 during the fourth quarter, a carryback of 2015 tax loss to
prior years of $124 during the second quarter, increases to
valuation allowance on tax credit carryovers of $2 and $70,
respectively, and other tax adjustments of ($1) and $17,
respectively.
(14) Per share measures may not recalculate due to rounding.
Earnings before interest, taxes and depreciation and
amortization and Adjusted earnings before interest, taxes and
depreciation and amortization
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 income (loss), operating income (loss), or cash
flow from operations as those terms are defined by GAAP, and do 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
Years Ended December 31, December 31,
2017 2016 2017
2016 Net income (loss) attributable to Newmont
stockholders $ (527 ) $ (344 ) $ (98 ) $ (627 ) Net income (loss)
attributable to noncontrolling interests 33 (463 ) 11 (296 )
Net loss (income) from discontinued
operations(1)
(7 ) (92 ) 38 133 Equity loss (income) of affiliates 12 5 16 13
Income and mining tax expense (benefit) 776 8 1,125 563
Depreciation and amortization 321 328 1,249 1,220 Interest expense,
net 54 69 241 273
EBITDA $ 662 $ (489 ) $ 2,582 $ 1,279
Adjustments:
Reclamation and remediation charges(2)
$ 61 $ 88 $ 64 $ 88
Loss (gain) on asset and investment
sales(3)
(2 ) 1 (23 ) (108 )
Restructuring and other(4)
4 6 14 32
Impairment of long-lived assets(5)
11 973 14 977
Acquisition cost adjustments(6)
— (1 ) 2 10
Loss on debt repayment(7)
— 51 — 55
La Quinua leach pad revision(8)
— — — 32
Adjusted EBITDA $ 736 $ 629 $ 2,653 $ 2,365
(1) Net loss (income) from discontinued
operations relates to (i) adjustments in our Holt royalty
obligation, presented net of tax expense (benefit) of $1, $13,
$(24) and $(19), respectively, and (ii) Batu Hijau operations,
presented net of tax expense (benefit) of $-, $51, $- and $309,
respectively, (iii) adjustments to our Batu Hijau Contingent
Consideration, presented net of tax expense (benefit) of $4, $-, $4
and $-, respectively, and (iv) the loss on sale of Batu Hijau,
which has been recorded on an attributable basis. For additional
information regarding our discontinued operations, see Note 3 to
our Consolidated Financial Statements. (2)
Reclamation and remediation charges,
included in Reclamation and remediation, represent revisions to
reclamation and remediation plans and cost estimates at the
Company’s former historic mining operations. The 2017 charges
include adjustments at the Rain, Midnite, Resurrection and San Luis
remediation and closure sites in December 2017. The 2016 charges
include adjustments to reclamation liabilities associated with the
review of the Yanacocha long-term mining and closure plans in
December 2016.
(3)
Loss (gain) on asset and investment sales,
included in Other income, net, primarily represents a gain from the
exchange of our interest in the Fort á la Corne joint venture for
equity ownership in Shore Gold in June 2017, the sale of our
holdings in Regis in March 2016 and income recorded in September
2016 associated with contingent consideration from the sale of
certain properties in Nevada during the first quarter of 2015.
(4)
Restructuring and other, included in Other
expense, net, primarily represents certain costs associated with
severance and outsourcing costs and system integration costs during
2016 related to our acquisition of CC&V in August 2015.
(5)
Impairment of long-lived assets, included
in Impairment of long-lived assets, represents non-cash write-downs
of long-lived assets. The 2016 impairments include $970 related to
long-lived assets in Yanacocha in December 2016. See Note 7 to our
Consolidated Financial Statements for further information.
(6)
Acquisition cost adjustments, included in
Other expense, net, represent net adjustments to the contingent
consideration and related liabilities associated with the
acquisition of the final 33.33% interest in Boddington in June
2009.
(7)
Loss on debt repayment, included in Other
income, net, represents the impact from the debt tender offer on
our 2019 Senior Notes and 2039 Senior Notes in March 2016 and the
debt tender offer on our 2022 Senior Notes in November 2016.
(8)
La Quinua leach pad revision, included in
Costs applicable to sales, represents a significant write-down of
the estimated recoverable ounces at Yanacocha in September
2016.
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 (used in) operating activities less Net cash provided
by (used in) operating activities of discontinued operations less
Additions to property, plant and mine development as presented on
the Consolidated Statements of Cash Flows. 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
Consolidated Statements of Cash Flows.
The following table sets forth a reconciliation of Free Cash
Flow, a non-GAAP financial measure, to Net cash provided by (used
in) 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 provided by (used in)
investing activities and Net cash provided by (used in) financing
activities.
Three Months Ended
Years Ended December 31, December 31,
2017 2016 2017
2016 Net cash provided by (used in) operating
activities $ 751 $ 633 $ 2,335 $ 2,792 Less: Net cash used in
(provided by) operating activities of discontinued operations
3 (43 ) 15 (869 ) Net
cash provided by (used in) operating activities of continuing
operations 754 590 2,350 1,923 Less: Additions to property, plant
and mine development (309 ) (301 ) (866 )
(1,133 ) Free Cash Flow $ 445 $ 289 $ 1,484
$ 790
Net cash provided by (used in) investing
activities(1)
$ (334 ) $ 622 $ (961 ) $ (80 ) Net cash provided by (used in)
financing activities $ (125 ) $ (555 ) $ (864 ) $ (1,817 )
(1)
Net cash provided by (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 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
Years Ended December 31, December 31,
2017 2016 2017
2016
Costs applicable to sales(1)
$ 1,009 $ 976 $ 3,875 $ 3,547 Gold sold (thousand ounces) 1,454
1,433 5,605 5,199
Costs applicable to sales per ounce(2)
$ 693 $ 681 $ 691 $ 682 (1) Includes
by-product credits of $9 and $51 during the three months and year
ended December 31, 2017, respectively, and $13 and $44 during the
three months and year ended December 31, 2016, respectively. (2)
Per ounce and per pound measures may not recalculate due to
rounding.
Costs applicable to sales per pound
Three Months Ended
Years Ended December 31, December 31,
2017 2016 2017
2016
Costs applicable to sales(1)
$ 44 $ 60 $ 163 $ 225 Copper sold (million pounds) 27 32 111 116
Costs applicable to sales per pound(2)
$ 1.62 $ 1.88 $ 1.47 $ 1.95 (1) Includes
by-product credits of $1 and $4 during the three months and year
ended December 31, 2017, respectively, and $2 and $6 during the
three months and year ended December 31, 2016, respectively. (2)
Per ounce and per pound measures may not recalculate due to
rounding.
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
our continuing 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 production. Therefore, we believe
that all-in sustaining costs is a non-GAAP measure that provides
additional information to management, investors and analysts that
aids 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:
Costs applicable to sales. Includes all direct and indirect
costs related to current production incurred to execute the current
mine plan. We exclude certain exceptional or unusual amounts
from Costs applicable to sales (“CAS”), such as significant
revisions to recovery amounts. 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 Depreciation and
amortization and Reclamation and remediation, which is
consistent with our presentation of CAS on the Consolidated
Statements of Operations. 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 Consolidated
Statements of Operations less the amount of CAS attributable to the
production of copper at our Phoenix and Boddington mines. The
copper CAS at those mine sites is disclosed in Note 5 to the
Consolidated Financial Statements. The allocation of CAS between
gold and copper at the Phoenix and Boddington mines is based upon
the relative sales value of gold and copper produced during the
period.
Reclamation costs. Includes accretion expense related to Asset
Retirement Obligation (“ARO”) and the amortization of the related
Asset Retirement Cost (“ARC”) for the Company’s operating
properties. Accretion related to the ARO and the amortization of
the ARC assets for reclamation does not reflect annual cash
outflows but are calculated in accordance with GAAP. The accretion
and amortization reflect the periodic costs of reclamation
associated with current 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 and Boddington mines.
Advanced projects, research and development and exploration.
Includes incurred expenses related to projects that are designed to
increase or enhance current production and 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 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
Consolidated Statements of Operations less the amount attributable
to the production of copper at our Phoenix and Boddington 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 Phoenix and Boddington mines.
General and administrative. Includes costs related to
administrative tasks not directly related to current production,
but rather related to support our corporate structure and fulfill
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. We exclude certain exceptional or unusual
expenses from Other expense, net, such as restructuring, as
these are not indicative to sustaining our current operations.
Furthermore, this adjustment to Other expense, net is
also consistent with the nature of the adjustments made to Net
income (loss) attributable to Newmont stockholders 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 and Boddington 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 on our Consolidated Statements of Operations.
Sustaining capital. We determined sustaining capital as those
capital expenditures that are necessary to maintain current
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 production or
reserves, are generally considered development. We determined the
classification of sustaining and development capital projects 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 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 Phoenix and Boddington mines.
Advanced Projects, Research and
Treatment All-In Costs Development
General Other and All-In Ounces
Sustaining Three Months Ended Applicable
Reclamation and and Expense,
Refining Sustaining Sustaining
(000)/Pounds Costs per December 31, 2017
to Sales(1)(2)(3)
Costs(4)
Exploration(5)
Administrative
Net(6)
Costs
Capital(7)
Costs (millions) Sold
oz/lb(8)
Gold Carlin $ 216 $ 1 $ 4 $ — $ — $ — $ 48 $ 269 278 $ 971
Phoenix 44 1 — — — 1 8 54 55 1,000 Twin Creeks 59 — 2 — — — 11 72
87 833 Long Canyon 17 — — — — — 1 18 42 439 CC&V 66 — 1 — — 1
16 84 96 884 Other North America — — 16
— (1 ) — 5 20 — — North
America 402 2 23 — (1 ) 2
89 517 558 931 Yanacocha 101 17
12 1 — — 9 140 131 1,088 Merian 64 1 3 — — — 19 87 156 556 Other
South America — — 18 3 —
— — 21 — — South America
165 18 33 4 — — 28
248 287 871 Boddington 163 1 1 — — 5 28
198 205 966 Tanami 71 — 1 1 — — 22 95 119 794 Kalgoorlie 63 1 3 — —
— 7 74 94 794 Other Australia — — 7 3
— — 1 11 — —
Australia 297 2 12 4 —
5 58 378 418 905 Ahafo 75
1 2 1 1 — 15 95 89 1,068 Akyem 70 4 — — — — 9 83 102 807 Other
Africa — — 5 1 — —
— 6 — — Africa 145 5
7 2 1 — 24 184 191
954 Corporate and Other — —
13 55 (1 ) — 8 75 —
— Total Gold $ 1,009 $ 27 $ 88 $ 65 $ (1 ) $ 7 $ 207
$ 1,402 1,454 $ 968
Copper Phoenix $ 10 $ 1 $
— $ 1 $ — $ — $ 2 $ 14 5 $ 2.38 Boddington 34 —
— — — 4 6 44 22
2.01 Total Copper $ 44 $ 1 $ — $ 1 $ — $ 4 $ 8
$ 58 27 $ 2.08
Consolidated $ 1,053 $ 28 $ 88 $ 66 $ (1 ) $ 11 $ 215 $
1,460 (1)
Excludes Depreciation and amortization and
Reclamation and remediation.
(2) Includes by-product credits of $10 and excludes co-product
copper revenues of $88. (3) Includes stockpile and leach pad
inventory adjustments of $17 at Carlin, $9 at Twin Creeks, $1 at
Yanacocha, $9 at Ahafo and $16 at Akyem. (4) Reclamation costs
include operating accretion and amortization of asset retirement
costs of $21 and $7, respectively, and exclude non-operating
accretion and reclamation and remediation adjustments of $5 and
$48, respectively. (5)
Advanced projects, research and
development and Exploration of $7 at Long Canyon, $6 at Yanacocha,
$4 at Tanami and $1 at Akyem are recorded in “Other” of the
respective region for development projects.
(6)
Other expense, net is adjusted for
restructuring and other costs of $4.
(7) Excludes development capital expenditures, capitalized interest
and changes in accrued capital, totaling $94. The following are
major development projects: Long Canyon, Merian, Quecher Main,
Tanami Expansions, Tanami Power, Subika Underground and Ahafo Mill
Expansion. (8) Per ounce and per pound measures may not recalculate
due to rounding.
Advanced
Projects, Research and Treatment All-In
Costs Development General Other
and All-In Ounces Sustaining Three
Months Ended Applicable Reclamation and
and Expense, Refining Sustaining
Sustaining (000)/Pounds Costs per December
31, 2016
to Sales(1)(2)(3)
Costs(4)
Exploration(5)
Administrative
Net(6)
Costs
Capital(7)
Costs (millions) Sold
oz/lb(8)
Gold Carlin $ 212 $ 1 $ 5 $ — $ — $ — $ 58 $ 276 261 $ 1,057
Phoenix 46 2 — — 1 1 4 54 55 982 Twin Creeks 64 1 2 — — — 7 74 108
685 Long Canyon 4 — — — — — 1 5 22 227 CC&V 60 1 4 1 — — 4 70
108 648 Other North America — — 6 —
2 — 3 11 — — North
America 386 5 17 1 3
1 77 490 554 884
Yanacocha 129 14 9 — (2 ) — 16 166 158 1,051 Merian 34 — 3 — — — —
37 99 374 Other South America — — 12 2
— — — 14 — — South
America 163 14 24 2 (2 )
— 16 217 257 844 Boddington 139
2 1 — — 6 19 167 206 811 Tanami 58 1 3 — — — 27 89 102 873
Kalgoorlie 68 2 1 — — 3 6 80 103 777 Other Australia —
— 3 3 1 — 4
11 — — Australia 265 5 8
3 1 9 56 347 411
844 Ahafo 101 1 8 — — — 15 125 85 1,471 Akyem 61 2 — — — — 7
70 126 556 Other Africa — — — 1
— — — 1 — — Africa
162 3 8 1 — — 22
196 211 929 Corporate and Other
— — 13 47 1 — 4
65 — — Total Gold $ 976 $ 27 $ 70 $ 54 $ 3
$ 10 $ 175 $ 1,315 1,433 $ 918
Copper
Phoenix $ 23 $ 1 $ — $ 1 $ — $ 1 $ 2 $ 28 10 $ 2.80 Boddington
37 — — — — 4
5 46 22 2.09 Total Copper $ 60 $ 1 $ —
$ 1 $ — $ 5 $ 7 $ 74 32 $ 2.31
Consolidated $ 1,036 $ 28 $ 70 $ 55 $ 3
$ 15 $ 182 $ 1,389 (1)
Excludes Depreciation and amortization and
Reclamation and remediation.
(2) Includes by-product credits of $15 and excludes co-product
copper revenues of $79. (3) Includes stockpile and leach pad
inventory adjustments of $26 at Carlin, $7 at Twin Creeks, $46 at
Yanacocha and $37 at Ahafo. (4) Reclamation costs include operating
accretion and amortization of asset retirement costs of $16 and
$12, respectively, and exclude non-operating accretion and
reclamation and remediation adjustments of $4 and $92,
respectively. (5)
Advanced projects, research and
development and Exploration of $3 at Long Canyon are recorded in
“Other” of the respective region for development projects.
(6)
Other expense, net is adjusted for
restructuring costs and other of $6 and acquisition cost
adjustments of $(1).
(7) Excludes development capital expenditures, capitalized interest
and changes in accrued capital, totaling $119. The following are
major development projects during the period: Merian, Long Canyon,
Tanami Expansion and CC&V Expansion. (8) Per ounce and per
pound measures may not recalculate due to rounding.
Advanced Projects, Research and
Treatment All-In Costs Development
General Other and All-In Ounces
Sustaining Years Ended Applicable
Reclamation and and Expense,
Refining Sustaining Sustaining
(000)/Pounds Costs per December 31, 2017
to Sales(1)(2)(3)
Costs(4)
Exploration(5) Administrative
Net(6)
Costs
Capital(7)
Costs (millions) Sold
oz/lb(8)
Gold Carlin $ 795 $ 6 $ 18 $ 3 $ — $ — $ 174 $ 996 967 $
1,030 Phoenix 181 5 4 1 1 9 17 218 210 1,034 Twin Creeks 226 3 9 2
1 — 38 279 369 756 Long Canyon 59 1 — — — — 3 63 174 364 CC&V
285 3 10 1 — 1 33 333 457 729 Other North America — —
49 — 1 — 9 59 —
— North America 1,546 18 90
7 3 10 274 1,948 2,177
895 Yanacocha 504 66 25 4 4 — 38 641 537 1,194
Merian 238 2 14 — — — 37 291 509 572 Other South America —
— 59 12 — — —
71 — — South America 742 68
98 16 4 — 75 1,003
1,046 959 Boddington 562 6 2 — — 21 66 657 787
835 Tanami 251 2 4 1 — — 63 321 408 787 Kalgoorlie 234 3 9 — — 1 19
266 363 734 Other Australia — — 25 10
(1 ) — 4 38 — — Australia
1,047 11 40 11 (1 ) 22
152 1,282 1,558 823 Ahafo 268 6
16 1 3 — 43 337 350 961 Akyem 272 13 3 — 1 — 26 315 474 664 Other
Africa — — 21 6 —
— — 27 — — Africa 540 19
40 7 4 — 69 679
824 823 Corporate and Other — —
53 195 6 — 10 264
— — Total Gold $ 3,875 $ 116 $ 321 $ 236 $ 16
$ 32 $ 580 $ 5,176 5,605 $ 924
Copper Phoenix
$ 55 $ 2 $ 1 $ 1 $ — $ 1 $ 7 $ 67 32 $ 2.09 Boddington 108
1 — — — 12 13
134 79 1.69 Total Copper $ 163 $ 3 $ 1 $ 1 $ —
$ 13 $ 20 $ 201 111 $ 1.80
Consolidated $ 4,038 $ 119 $ 322 $ 237
$ 16 $ 45 $ 600 $ 5,377 (1)
Excludes Depreciation and amortization and
Reclamation and remediation.
(2) Includes by-product credits of $55 and excludes co-product
copper revenues of $315. (3) Includes stockpile and leach pad
inventory adjustments of $65 at Carlin, $30 at Twin Creeks, $53 at
Yanacocha, $22 at Ahafo and $28 at Akyem. (4) Reclamation costs
include operating accretion and amortization of asset retirement
costs of $84 and $35, respectively, and exclude non-operating
accretion and reclamation and remediation adjustments of $21 and
$72, respectively. (5)
Advanced projects, research and
development and Exploration of $23 at Long Canyon, $16 at
Yanacocha, $17 at Tanami, $8 at Ahafo and $7 at Akyem are recorded
in “Other” of the respective region for development projects.
(6)
Other expense, net is adjusted for
restructuring and other costs of $14 and acquisition cost
adjustments of $2.
(7) Excludes development capital expenditures, capitalized interest
and changes in accrued capital, totaling $266. The following are
major development projects: Long Canyon, Merian, Quecher Main,
Tanami Expansions, Tanami Power, Subika Underground and Ahafo Mill
Expansion. (8) Per ounce and per pound measures may not recalculate
due to rounding.
Advanced
Projects, Research and Treatment All-In
Costs Development General Other
and All-In Ounces Sustaining Years
Ended Applicable Reclamation and
and Expense, Refining Sustaining
Sustaining (000)/Pounds Costs per December
31, 2016
to Sales(1)(2)(3)
Costs(4)
Exploration(5) Administrative
Net(6)
Costs
Capital(7)
Costs (millions) Sold
oz/lb(8)
Gold Carlin $ 797 $ 5 $ 19 $ 5 $ — $ — $ 163 $ 989 944 $
1,048 Phoenix 164 5 1 1 1 8 12 192 205 937 Twin Creeks 234 3 8 1 —
— 33 279 455 613 Long Canyon 4 — — — — — 1 5 22 227 CC&V 216 4
11 2 — — 10 243 391 621 Other North America — —
32 — 5 — 7 44 —
— North America 1,415 17 71 9
6 8 226 1,752 2,017 869
Yanacocha 493 57 35 7 — — 82 674 637 1,058 Merian 34 — 3 — —
— — 37 99 374 Other South America — — 57
6 — — — 63 — —
South America 527 57 95 13 —
— 82 774 736 1,052
Boddington 530 6 1 — — 22 51 610 787 775 Tanami 238 3 13 — — — 85
339 459 739 Kalgoorlie 257 5 5 — — 7 19 293 378 775 Other Australia
— — 8 15 5 — 6
34 — — Australia 1,025 14
27 15 5 29 161 1,276 1,624
786 Ahafo 313 6 28 — 1 — 54 402 349 1,152
Akyem 235 8 8 — 1 — 24 276 473 584 Other Africa — —
2 5 — — — 7 —
— Africa 548 14 38 5 2
— 78 685 822 833
Corporate and Other — — 51 190 3
— 10 254 — — Total Gold $ 3,515
$ 102 $ 282 $ 232 $ 16 $ 37 $ 557 $ 4,741 5,199 $ 912
Copper Phoenix $ 99 $ 3 $ — $ 1 $ — $ 3 $ 9 $ 115 40 $ 2.88
Boddington 126 1 — — — 13
12 152 76 2.00 Total Copper $ 225 $ 4 $
— $ 1 $ — $ 16 $ 21 $ 267 116 $ 2.30
Consolidated $ 3,740 $ 106 $ 282 $ 233
$ 16 $ 53 $ 578 $ 5,008 (1)
Excludes Depreciation and amortization and
Reclamation and remediation.
(2) Includes by-product credits of $50 and excludes co-product
copper revenues of $250. (3) Includes stockpile and leach pad
inventory adjustments of $77 at Carlin, $18 at Twin Creeks, $117 at
Yanacocha and $71 at Ahafo. Total stockpile and leach pad inventory
adjustments at Yanacocha of $151 were adjusted above by $32 related
to a significant write-down of recoverable ounces at the La Quinua
Leach Pad in the third quarter of 2016. (4) Reclamation costs
include operating accretion and amortization of asset retirement
costs of $64 and $42, respectively, and exclude non-operating
accretion and reclamation and remediation adjustments of $16 and
$99, respectively. (5)
Advanced projects, research and
development and Exploration of $20 at Long Canyon and $21 at Merian
are recorded in “Other” of the respective region for development
projects.
(6)
Other expense, net is adjusted for
restructuring costs and other of $32 and acquisition cost
adjustments of $10.
(7) Excludes development capital expenditures, capitalized interest
and changes in accrued capital, totaling $555. The following are
major development projects during the period: Merian, Long Canyon,
Tanami Expansion and CC&V Expansion. (8) Per ounce and per
pound measures may not recalculate due to rounding.
Similar to the historical AISC amounts presented above, AISC
outlook is also a non-GAAP financial measure. A reconciliation of
the 2018 Gold AISC outlook range to the 2018 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.
2018 Outlook – Gold Outlook
range Low High
Costs Applicable to Sales1,2
$ 3,700 $ 4,250
Reclamation Costs3
130 150 Advance Projects and Exploration 350 400 General and
Administrative 215 240 Other Expense 5 30 Treatment and Refining
Costs 20 40
Sustaining Capital4
600 700 All-in
Sustaining Costs $ 5,100 $ 5,800 Ounces (000) Sold 5,300
5,800 All-in Sustaining
Costs per Oz $ 965 $ 1,025
(1)
Excludes Depreciation and amortization and
Reclamation and remediation.
(2) Includes stockpile and leach pad inventory adjustments. (3)
Reclamation costs include operating accretion and amortization of
asset retirement costs. (4) Excludes development capital
expenditures, capitalized interest and change in accrued capital.
(5) The reconciliation above is provided for illustrative purposes
in order to better describe management’s estimates of the
components of the calculation. Ranges for each component of the
forward-looking All-in sustaining costs per ounce are independently
calculated and, as a result, the total All-in sustaining costs and
the All-in sustaining costs per ounce may not sum to the component
ranges. While a reconciliation to the most directly comparable GAAP
measure has been provided for 2018 AISC Gold Outlook on a
consolidated basis, a reconciliation has not been provided on an
individual site-by-site basis or for longer-term outlook in
reliance on Item 10(e)(1)(i)(B) of Regulation S-K because such
reconciliation is not available without unreasonable efforts. See
the Cautionary Statement at the end of this news release for
additional information.
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 Years Ended
December 31, December 31, 2017 2016
2017 2016 Sales $ 1,935 $ 1,789 $ 7,348 $ 6,711
Consolidated copper sales, net (88 ) (79 )
(315 ) (250 ) Consolidated gold sales, net $ 1,847 $ 1,710 $
7,033 $ 6,461 Consolidated gold sales: Gross before
provisional pricing $ 1,854 $ 1,731 $ 7,055 $ 6,485 Provisional
pricing mark-to-market 1 (11 ) 10
13 Gross after provisional pricing 1,855 1,720
7,065 6,498 Treatment and refining charges (8 ) (10 )
(32 ) (37 ) Net $ 1,847 $ 1,710 $ 7,033
$ 6,461 Consolidated gold ounces sold (thousands)
1,454 1,433 5,605 5,199 Average realized gold price (per ounce):
Gross before provisional pricing $ 1,275 $ 1,208 $ 1,259 $ 1,247
Provisional pricing mark-to-market — (8 )
2 3 Gross after provisional pricing
1,275 1,200 1,261 1,250 Treatment and refining charges (5 )
(7 ) (6 ) (7 ) Net $ 1,270 $ 1,193
$ 1,255 $ 1,243
Three Months
Ended Years Ended December 31, December
31, 2017 2016 2017 2016 Sales $
1,935 $ 1,789 $ 7,348 $ 6,711 Consolidated gold sales, net
(1,847 ) (1,710 ) (7,033 ) (6,461 )
Consolidated copper sales, net $ 88 $ 79 $ 315 $ 250
Consolidated copper sales: Gross before provisional pricing $ 86 $
78 $ 314 $ 261 Provisional pricing mark-to-market 5
5 14 5 Gross after
provisional pricing 91 83 328 266 Treatment and refining charges
(3 ) (4 ) (13 ) (16 ) Net $ 88 $
79 $ 315 $ 250 Consolidated copper pounds sold
(millions) 27 32 111 116 Average realized copper price (per pound):
Gross before provisional pricing $ 3.12 $ 2.46 $ 2.83 $ 2.25
Provisional pricing mark-to-market 0.20 0.16
0.12 0.04 Gross after
provisional pricing 3.32 2.62 2.95 2.29 Treatment and refining
charges (0.12 ) (0.13 ) (0.12 ) (0.14 )
Net $ 3.20 $ 2.49 $ 2.83 $ 2.15
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
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 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 Ended Years Ended
December 31, December 31, 2017 2016
2017 2016 Consolidated gold sales, net $ 1,847 $
1,710 $ 7,033 $ 6,461 Consolidated copper sales, net 88
79 315 250 Sales $
1,935 $ 1,789 $ 7,348 $ 6,711
Costs applicable to sales $ 1,053 $ 1,036 $ 4,038 $ 3,772 Less:
Consolidated copper sales, net (88 ) (79 )
(315 ) (250 ) By-Product costs applicable to sales $ 965
$ 957 $ 3,723 $ 3,522 Gold sold
(thousand ounces) 1,454 1,433
5,605 5,199 Total Gold CAS per ounce
(by-product) $ 664 $ 668 $ 664 $ 677
Total AISC $ 1,460 $ 1,389 $ 5,377 $ 5,008 Less:
Consolidated copper sales, net (88 ) (79 )
(315 ) (250 ) By-Product AISC $ 1,372 $ 1,310
$ 5,062 $ 4,758 Gold sold (thousand ounces)
1,454 1,433 5,605 5,199
Total Gold AISC per ounce (by-product) $ 944 $ 914
$ 903 $ 915
Conference call information
Newmont Mining Corporation (NYSE: NEM) announced it will report
full year and fourth quarter 2017 operations and financial results
before the market opens on Thursday, February 22, 2018 and
will hold a conference call at 10:00 a.m. Eastern Time (8:00
a.m. Mountain Time) the same day. The earnings call will also
be carried on the Company’s website.
Conference Call Details
Dial-In Number
855.209.8210 Intl Dial-In Number 412.317.5213 Conference
Name Newmont Mining Replay Number 877.344.7529 Intl Replay Number
412.317.0088 Replay Access Code 10111922
Webcast Details
URL:
https://event.on24.com/wcc/r/1465046/5D5E816654DAF237AECB789DBB666F1D
The full year and fourth quarter 2017 results will be available
before the market opens on Thursday, February 22, 2018 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 production
and sales; (ii) estimates of future costs applicable to sales and
all-in sustaining costs; (iii) estimates of future capital
expenditures; (iv) estimates of future cost reductions and
efficiencies; (v) expectations regarding the development, growth
and potential of the Company’s operations, projects and investment,
including, without limitation, expected returns, life of mine,
commercial start and first production and upside; (vi) expectations
regarding future debt repayments; and (vii) expectations regarding
future free cash flow generation, liquidity and balance sheet
strength. 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; (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; and (viii) other assumptions noted herein.
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 2017 Annual Report on Form 10-K, filed on February 22,
2018, with the Securities and Exchange Commission (SEC), and 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.
Cautionary Statement Regarding Reserves and
Resources:
U.S. investors are reminded that reserves were prepared in
compliance with Industry Guide 7 published by the SEC. Whereas, the
term resource, measured resource, indicated resources and inferred
resources are not SEC recognized terms. Newmont has determined that
such resources would be substantively the same as those prepared
using the Guidelines established by the Society of Mining,
Metallurgy and Exploration and defined as Mineral Resource.
Estimates of resources are subject to further exploration and
development, are subject to additional risks, and no assurance can
be given that they will eventually convert to future reserves.
Inferred resources, in particular, have a great amount of
uncertainty as to their existence and their economic and legal
feasibility. Investors are cautioned not to assume that any part or
all of the inferred resource exists, or is economically or legally
mineable. Inventory and upside potential have a greater amount of
uncertainty. As such, investors are cautioned against relying upon
those estimates. For more information regarding the Company’s
reserves and mineralized material, see the Company’s Annual Report
filed with the SEC on February 22, 2018 for the Proven and Probable
reserve tables prepared in compliance with the SEC’s Industry Guide
7, which is available at www.sec.gov or on the Company’s website.
Investors are further reminded that the reserve and resource
estimates used herein are estimates as of December 31, 2017.
Investors are reminded that this news release should be read in
conjunction with Newmont’s Form 10-K filed on February 22, 2018
with the SEC (also available at www.newmont.com).
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180222005124/en/
Newmont Mining CorporationInvestor
ContactJessica Largent,
303.837.5484jessica.largent@newmont.comorMedia ContactOmar Jabara,
303.837.5114omar.jabara@newmont.com
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