NEWMONT CORP /DE/
10-Qs and 10-Ks
PROXIES
Table of Contents
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
Washington, D.C. 20549
Form 10-K
| (Mark One) | ||
|
þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the Fiscal Year Ended December 31, 2009 | ||
|
or
|
||
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the Transition Period From to | ||
Commission File Number
001-31240
Newmont Mining
Corporation
(Exact Name of Registrant as
Specified in Its Charter)
|
Delaware
(State or Other Jurisdiction of Incorporation or Organization) |
84-1611629
(I.R.S. Employer Identification No.) |
|
|
6363 South Fiddler’s Green Circle
Greenwood Village, Colorado (Address of Principal Executive Offices) |
80111
(Zip Code) |
Registrant’s
telephone number, including area code
(303) 863-7414
Securities registered pursuant to Section 12(b) of the Act:
(303) 863-7414
Securities registered pursuant to Section 12(b) of the Act:
|
Title of Each Class
|
Name of Each Exchange on Which Registered
|
|
| Common Stock, $1.60 par value | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
þ
No
o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Exchange
Act. Yes
o
No
þ
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes
þ
No
o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K.
o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule
12b-2
of the
Exchange Act. (Check one):
|
Large accelerated filer
þ
|
Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
| (Do not check if a smaller reporting company) | ||||||
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes
o
No
þ
At June 30, 2009, the aggregate market value of the
registrant’s voting and non-voting common equity held by
non-affiliates of the registrant was $20,005,983,973 based on
the closing sale price as reported on the New York Stock
Exchange. There were 483,029,539 shares of common stock
outstanding (and 7,957,841 exchangeable shares exchangeable into
Newmont Mining Corporation common stock on a
one-for-one
basis) on February 17, 2010.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of Registrant’s definitive Proxy Statement
submitted to the Registrant’s stockholders in connection
with our 2010 Annual Stockholders Meeting to be held on
April 23, 2010, are incorporated by reference into
Part III of this report.
Table of Contents
TABLE OF
CONTENTS
i
Table of Contents
ii
Table of Contents
This document (including information incorporated herein by
reference) contains “forward-looking statements”
within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of
1934, which involve a degree of risk and uncertainty due to
various factors affecting Newmont Mining Corporation and our
affiliates and subsidiaries. For a discussion of some of these
factors, see the discussion in Item 1A, Risk Factors, of
this report.
PART I
| ITEM 1. | BUSINESS (dollars in millions except per share, per ounce and per pound amounts) |
Introduction
Newmont Mining Corporation is primarily a gold producer with
significant assets or operations in the United States,
Australia, Peru, Indonesia, Ghana, Canada, New Zealand and
Mexico. At December 31, 2009, Newmont had proven and
probable gold reserves of 91.8 million equity ounces and an
aggregate land position of approximately 33,400 square
miles (86,500 square kilometers). Newmont is also engaged
in the production of copper, principally through its Batu Hijau
operation in Indonesia and Boddington operation in Australia.
Newmont Mining Corporation’s original predecessor
corporation was incorporated in 1921 under the laws of Delaware.
Newmont’s corporate headquarters are in Greenwood Village,
Colorado, USA. In this report, “Newmont,” the
“Company,” “our” and “we” refer to
Newmont Mining Corporation
and/or
our
affiliates and subsidiaries.
Newmont’s net revenues and long-lived assets are
geographically distributed as follows:
| Revenues | Long-Lived Assets | |||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
|
United States
|
25 | % | 32 | % | 29 | % | 21 | % | 26 | % | 29 | % | ||||||||||||
|
Peru
|
26 | % | 26 | % | 20 | % | 10 | % | 13 | % | 13 | % | ||||||||||||
|
Australia/New Zealand
|
16 | % | 17 | % | 15 | % | 33 | % | 20 | % | 15 | % | ||||||||||||
|
Indonesia
|
24 | % | 17 | % | 29 | % | 14 | % | 17 | % | 17 | % | ||||||||||||
|
Canada
|
— | — | — | 13 | % | 14 | % | 16 | % | |||||||||||||||
|
Ghana
|
7 | % | 7 | % | 6 | % | 8 | % | 9 | % | 9 | % | ||||||||||||
|
Mexico
|
2 | % | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||
In September 2009, the Company completed a two part public
offering of $900 and $1,100 senior notes maturing on
October 1, 2019 and October 1, 2039, respectively. Net
proceeds from the 2019 and 2039 notes were $895 and $1,080,
respectively. The 2019 notes pay interest semi-annually at a
rate of 5.13% per annum and the 2039 notes pay semi-annual
interest of 6.25% per annum.
In June 2009, the Company completed the acquisition of the
remaining 33.33% interest in Boddington from AngloGold Ashanti
Australia Limited (“AngloGold”). The valuation date
for the transaction was January 1, 2009, and closing
adjustments were made to reflect Newmont’s economic
ownership from that date. Consideration for the acquisition
consisted of $750 less an $8 closing adjustment paid in cash at
closing, $240 paid in cash in December 2009, and a contingent
royalty capped at $100, equal to 50% of the average realized
operating margin (Revenue less
Costs applicable to sales
on a by-product basis), if any, exceeding $600 per ounce,
payable quarterly on one-third of gold sales from Boddington
beginning in the second quarter of 2010. See Item 1A, Risk
Factors, Risks Related to Newmont Operations, below.
In February 2009, we issued $518 of convertible senior notes,
maturing on February 15, 2012. The notes pay interest
semi-annually at a rate of 3.00% per annum. The notes are
convertible, at the holder’s option, equivalent to a
conversion price of $46.25 per share of common stock.
Additionally, on February 3, 2009, we issued
34,500,000 shares of common stock at a price of $37.00,
less an
1
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underwriting discount of $1.17 per share. Net proceeds for the
convertible senior notes and common stock offering were $504 and
$1,234, respectively.
The February and September 2009 offerings were made pursuant to
our automatic shelf registration statement on
Form S-3.
See Item 7, Management’s Discussion and Analysis of
Consolidated Financial Condition and Results of Operations.
Segment
Information, Export Sales, etc.
Our operating segments include North America, South America,
Asia Pacific and Africa. Our North America segment consists
primarily of Nevada, La Herradura in Mexico and Hope Bay in
Canada. Our South America segment consists primarily of
Yanacocha and Conga in Peru. Our Asia Pacific segment consists
primarily of Batu Hijau in Indonesia, Boddington in Australia
and other smaller operations in Australia/New Zealand. Our
Africa segment consists primarily of Ahafo and Akyem in Ghana.
See Item 1A, Risk Factors, Risks Related to Newmont
Operations, below and Note 31 to the Consolidated Financial
Statements for information relating to our operating segments,
domestic and export sales, and lack of dependence on a limited
number of customers.
Products
Gold
General.
We had consolidated gold sales of
6.5 million ounces (5.3 million equity ounces) in
2009, 6.2 million ounces (5.2 million equity ounces)
in 2008 and 6.1 million ounces (5.3 million equity
ounces) in 2007. For 2009, 2008 and 2007, 83%, 88% and 78%,
respectively, of our net revenues were attributable to gold. Of
our 2009 consolidated gold sales, approximately 32% came from
North America, 32% from South America, 28% from Asia Pacific and
8% from Africa. References in this report to “equity
ounces” or “equity pounds” mean that portion of
gold or copper produced, sold or included in proven and probable
reserves that is attributable to our ownership or economic
interest.
Most of our net revenue comes from the sale of refined gold in
the international market. The end product at our gold
operations, however, is generally doré bars. Doré is
an alloy consisting primarily of gold but also containing silver
and other metals. Doré is sent to refiners to produce
bullion that meets the required market standard of 99.95% gold.
Under the terms of our refining agreements, the doré bars
are refined for a fee, and our share of the refined gold and the
separately-recovered silver are credited to our account or
delivered to buyers. Gold sold from Batu Hijau in Indonesia and
a portion of the gold from Boddington in Australia, Phoenix in
Nevada and Yanacocha in Peru, is contained in a saleable
concentrate containing other metals such as copper or silver.
Gold Uses.
Gold is generally used for
fabrication or investment. Fabricated gold has a variety of end
uses, including jewelry, electronics, dentistry, industrial and
decorative uses, medals, medallions and official coins. Gold
investors buy gold bullion, official coins and jewelry.
Gold Supply.
A combination of current mine
production and draw-down of existing gold stocks held by
governments, financial institutions, industrial organizations
and private individuals make up the annual gold supply. Based on
public information available for the years 2006 through 2009, on
average, current mine production has accounted for approximately
71% of the annual gold supply.
2
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Gold Price.
The following table presents the
annual high, low and average daily afternoon fixing prices for
gold over the past ten years on the London Bullion Market
($/ounce).
|
Year
|
High | Low | Average | |||||||||
|
2000
|
$ | 313 | $ | 264 | $ | 279 | ||||||
|
2001
|
$ | 293 | $ | 256 | $ | 271 | ||||||
|
2002
|
$ | 349 | $ | 278 | $ | 310 | ||||||
|
2003
|
$ | 416 | $ | 320 | $ | 363 | ||||||
|
2004
|
$ | 454 | $ | 375 | $ | 410 | ||||||
|
2005
|
$ | 536 | $ | 411 | $ | 444 | ||||||
|
2006
|
$ | 725 | $ | 525 | $ | 604 | ||||||
|
2007
|
$ | 841 | $ | 608 | $ | 695 | ||||||
|
2008
|
$ | 1,011 | $ | 713 | $ | 872 | ||||||
|
2009
|
$ | 1,213 | $ | 810 | $ | 972 | ||||||
|
2010 (through February 17, 2010)
|
$ | 1,153 | $ | 1,058 | $ | 1,106 | ||||||
Source: Kitco, Reuters and the London Bullion Market Association
On February 17, 2010, the afternoon fixing gold price on
the London Bullion Market was $1,119 per ounce and the spot
market gold price on the New York Commodity Exchange was $1,120
per ounce.
We generally sell our gold at the prevailing market price during
the month in which the gold is delivered to the customer. We
recognize revenue from a sale when the price is determinable,
the gold has been delivered, the title has been transferred and
collection of the sales price is reasonably assured.
Copper
General.
We had consolidated copper sales of
507 million pounds (226 million equity pounds) in
2009, 290 million pounds (130 million equity pounds)
in 2008 and 428 million pounds (200 million equity
pounds) in 2007. For 2009, 2008 and 2007, 17%, 12% and 22%,
respectively, of our net revenues were attributable to copper.
Copper production at Batu Hijau, in Indonesia, and Boddington,
in Australia, is in the form of saleable concentrate that is
sold to smelters for further treatment and refining. At
December 31, 2009, we had a 35.44% ownership interest but
reported a 52.44% economic interest in the Batu Hijau operation
in Indonesia, which began production in 1999. Copper production
began in 2009 at Boddington.
Copper Uses.
Refined copper is incorporated
into wire and cable products for use in the construction,
electric utility, communications and transportation industries.
Copper is also used in industrial equipment and machinery,
consumer products and a variety of other electrical and
electronic applications and is also used to make brass. Copper
substitutes include aluminum, plastics, stainless steel and
fiber optics. Refined, or cathode, copper is also an
internationally traded commodity.
Copper Supply.
A combination of current mine
production and recycled scrap material make up the annual copper
supply.
3
Table of Contents
Copper Price.
The copper price is quoted on
the London Metal Exchange in terms of dollars per metric ton of
high grade copper. The following table presents the dollar per
pound equivalent of the annual high, low and average daily
prices of high grade copper on the London Metal Exchange over
the past ten years ($/pound):
|
Year
|
High | Low | Average | |||||||||
|
2000
|
$ | 0.91 | $ | 0.73 | $ | 0.82 | ||||||
|
2001
|
$ | 0.83 | $ | 0.60 | $ | 0.72 | ||||||
|
2002
|
$ | 0.77 | $ | 0.64 | $ | 0.71 | ||||||
|
2003
|
$ | 1.05 | $ | 0.70 | $ | 0.81 | ||||||
|
2004
|
$ | 1.49 | $ | 1.06 | $ | 1.30 | ||||||
|
2005
|
$ | 2.11 | $ | 1.39 | $ | 1.67 | ||||||
|
2006
|
$ | 3.99 | $ | 2.06 | $ | 3.05 | ||||||
|
2007
|
$ | 3.77 | $ | 2.37 | $ | 3.24 | ||||||
|
2008
|
$ | 4.08 | $ | 1.26 | $ | 3.15 | ||||||
|
2009
|
$ | 3.33 | $ | 1.38 | $ | 2.36 | ||||||
|
2010 (through February 17, 2010)
|
$ | 3.49 | $ | 2.83 | $ | 3.23 | ||||||
Source: London Metal Exchange
On February 17, 2010, the high grade copper closing price
on the London Metal Exchange was $3.23 per pound. Our historic
ability to sell copper at market prices was limited in some
cases by hedging activities, more particularly described in
Note 15 to the Consolidated Financial Statements.
Gold and
Copper Processing Methods
Gold is extracted from naturally-oxidized ores by either heap
leaching or milling, depending on the amount of gold contained
in the ore, the amenability of the ore to treatment and related
capital and operating costs. Higher grade oxide ores are
generally processed through mills, where the ore is ground into
a fine powder and mixed with water in slurry, which then passes
through a
carbon-in-leach
circuit. Lower grade oxide ores are generally processed using
heap leaching. Heap leaching consists of stacking crushed or
run-of-mine
ore on impermeable pads, where a weak cyanide solution is
applied to the surface of the heap to dissolve the gold. In both
cases, the gold-bearing solution is then collected and pumped to
process facilities to remove the gold by collection on carbon or
by zinc precipitation.
Gold contained in ores that are not naturally oxidized can be
directly milled if the gold is amenable to cyanidation,
generally known as free milling sulfide ores. Ores that are not
amenable to cyanidation, known as refractory ores, require more
costly and complex processing techniques than oxide or free
milling ore. Higher-grade refractory ores are processed through
either roasters or autoclaves. Roasters heat finely ground ore
to a high temperature, burn off the carbon and oxidize the
sulfide minerals that prevent efficient leaching. Autoclaves use
heat, oxygen and pressure to oxidize sulfide ores.
Some sulfide ores may be processed through a flotation plant or
by bio-milling. In flotation, ore is finely ground, turned into
slurry, then placed in a tank known as a flotation cell.
Chemicals are added to the slurry causing the gold-containing
sulfides to attach to air bubbles and float to the top of the
tank. The sulfides are removed from the cell and converted into
a concentrate that can then be processed in an autoclave or
roaster to recover the gold. Bio-milling incorporates patented
technology that involves inoculation of suitable crushed ore on
a leach pad with naturally occurring bacteria strains, which
oxidize the sulfides over a period of time. The ore is then
processed through an oxide mill.
At Batu Hijau, ore containing copper and gold is crushed to a
coarse size at the mine and then transported from the mine via
conveyor to a concentrator, where it is finely ground and then
treated by
4
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successive stages of flotation, resulting in a concentrate
containing approximately 30% copper. The concentrate is
dewatered and stored for loading onto ships for transport to
smelters.
At Boddington, ore containing copper and gold is crushed to a
coarse size at the mine and then transported via conveyor to a
process plant, where it is further crushed and then finely
ground as a slurry. The ore is initially treated by flotation
which produces a copper/gold concentrate containing
approximately 18% copper. Flotation concentrates are processed
via a gravity circuit to recover fine liberated gold and then
dewatered and stored for loading onto ships for transport to
smelters. The flotation tailing has a residual gold content that
is recovered in a
carbon-in-leach
circuit.
At Phoenix, a process similar to that followed at Boddington is
used to process a concentrate containing approximately 20%
copper, which is loaded onto rail cars for transport to the
smelter.
Hedging
Activities
Our strategy is to provide shareholders with leverage to changes
in the gold and copper prices by selling our gold and copper
production at current market prices. Consequently, we do not
hedge our gold and copper sales. We continue to manage risks
associated with commodity input costs, interest rates and
foreign currencies using the derivative market.
For additional information, see Hedging in Item 7A,
Quantitative and Qualitative Disclosures about Market Risk, and
Note 15 to the Consolidated Financial Statements.
Gold and Copper
Reserves
At December 31, 2009 we had 91.8 million equity ounces
of proven and probable gold reserves. We added 6.4 million
equity ounces to proven and probable reserves, and depleted
6.8 million equity ounces during 2009. We also added
8.2 million equity ounces to proven and probable reserves
through acquisitions and divested 1.0 million equity
ounces. 2009 reserves were calculated at a gold price assumption
of $800, A$1,000 or NZ$1,200 per ounce, respectively. A
reconciliation of the changes in proven and probable gold
reserves during the past three years follows:
| 2009 | 2008 | 2007 | ||||||||||
| (millions of equity ounces) | ||||||||||||
|
Opening balance
|
85.0 | 86.5 | 93.9 | |||||||||
|
Depletion
|
(6.8 | ) | (6.7 | ) | (7.3 | ) | ||||||
|
Additions
(1)
|
6.4 | 5.2 | 0.8 | |||||||||
|
Acquisitions
(2)
|
8.2 | — | — | |||||||||
|
Other
divestments
(3)
|
(1.0 | ) | — | (0.9 | ) | |||||||
|
Closing balance
|
91.8 | 85.0 | 86.5 | |||||||||
| (1) | The impact of the change in gold price assumption on reserve additions was approximately 1.7 million, 1.9 million and 0.7 million equity ounces in 2009, 2008 and 2007, respectively. | |
| (2) | In June 2009 reserves were increased by 6.7 million equity ounces through the acquisition of the remaining 33.33% interest in Boddington. In December 2009 our economic interest in reserves increased by 1.5 million equity ounces as a result of transactions with a noncontrolling partner at Batu Hijau, which increased our economic interest to 52.44%. | |
| (3) | In November and December 2009 our ownership in Batu Hijau decreased from 45% to 35.44% as a result of the divestiture required under the Contract of Work. In July 2009 we sold the Kori Kollo operation in Bolivia. In December 2007 we sold the Pajingo operation. In May 2007 our economic interest in Batu Hijau was reduced from 52.88% to 45% when a noncontrolling partner fully repaid a loan from a Newmont subsidiary. |
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A reconciliation of the changes in proven and probable gold
reserves for 2009 by region is as follows:
|
North
|
South
|
Asia
|
||||||||||||||
| America | America | Pacific | Africa | |||||||||||||
| (millions of equity ounces) | ||||||||||||||||
|
Opening balance
|
30.0 | 13.0 | 25.0 | 17.0 | ||||||||||||
|
Depletion
|
(2.7 | ) | (1.5 | ) | (1.9 | ) | (0.7 | ) | ||||||||
|
Additions
|
3.0 | 0.4 | 2.5 | 0.5 | ||||||||||||
|
Acquisitions
(1)
|
— | — | 8.2 | — | ||||||||||||
|
Other
divestments
(2)
|
— | (0.1 | ) | (0.9 | ) | — | ||||||||||
|
Closing balance
|
30.3 | 11.8 | 32.9 | 16.8 | ||||||||||||
| (1) | In June 2009 reserves were increased by 6.7 million equity ounces through the acquisition of the remaining 33.33% interest in Boddington. In December 2009 our economic interest in reserves increased by 1.5 million equity ounces as a result of transactions with a noncontrolling partner at Batu Hijau, which increased our economic interest to 52.44%. | |
| (2) | In November and December 2009 our ownership in Batu Hijau decreased from 45% to 35.44% as a result of the divestiture required under the Contract of Work. In July 2009 we sold the Kori Kollo operation in Bolivia. |
At December 31, 2009 we had 9,120 million equity
pounds of proven and probable copper reserves. We added
400 million equity pounds to proven and probable reserves
and depleted 310 million equity pounds during 2009. We also
added 2,040 million equity pounds to proven and probable
reserves through acquisitions and divested 790 million
equity pounds. 2009 reserves were calculated at a copper price
of $2.00 or A$2.40 per pound. A reconciliation of the changes in
proven and probable copper reserves during the past three years
is as follows:
| 2009 | 2008 | 2007 | ||||||||||
| (millions of equity pounds) | ||||||||||||
|
Opening balance
|
7,780 | 7,550 | 7,990 | |||||||||
|
Depletion
|
(310 | ) | (210 | ) | (310 | ) | ||||||
|
Additions
(1)
|
400 | 440 | 560 | |||||||||
|
Acquisitions
(2)
|
2,040 | — | — | |||||||||
|
Other
divestments
(3)
|
(790 | ) | — | (690 | ) | |||||||
|
Closing balance
|
9,120 | 7,780 | 7,550 | |||||||||
| (1) | The impact of the change in copper price assumption on reserve additions was 290 million, 300 million and 1,650 million equity pounds in 2009, 2008 and 2007, respectively. | |
| (2) | In June 2009 reserves were increased by 640 million equity pounds through the acquisition of the remaining 33.33% interest in Boddington. In December 2009 our economic interest in reserves increased by 1,400 million equity pounds as a result of transactions with a noncontrolling partner at Batu Hijau, which increased our economic interest to 52.44%. | |
| (3) | In November and December 2009 our ownership in Batu Hijau decreased from 45% to 35.44% as a result of the divestiture required under the Contract of Work. In May 2007 our economic interest in Batu Hijau was reduced from 52.88% to 45% when a noncontrolling partner fully repaid a loan from a Newmont subsidiary. |
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A reconciliation of changes in proven and probable copper
reserves for 2009 by region is as follows:
|
North
|
South
|
Asia
|
||||||||||
| America | America | Pacific | ||||||||||
| (millions of equity pounds) | ||||||||||||
|
Opening balance
|
890 | 1,660 | 5,230 | |||||||||
|
Depletion
|
(50 | ) | — | (260 | ) | |||||||
|
Additions
|
60 | — | 340 | |||||||||
|
Acquisitions
(1)
|
— | — | 2,040 | |||||||||
|
Other
divestments
(2)
|
— | — | (790 | ) | ||||||||
|
Closing balance
|
900 | 1,660 | 6,560 | |||||||||
| (1) | In June 2009 reserves were increased by 640 million equity pounds through the acquisition of the remaining 33.33% interest in Boddington. In December 2009 our economic interest in reserves increased by 1,400 million equity pounds as a result of transactions with a noncontrolling partner at Batu Hijau, which increased our economic interest to 52.44%. | |
| (2) | In November and December 2009 our ownership in Batu Hijau decreased from 45% to 35.44% as a result of the divestiture required under the Contract of Work. |
Our exploration efforts are directed to the discovery of new
mineralized material and converting it into proven and probable
reserves. We conduct near-mine exploration around our existing
mines and greenfields exploration in other regions globally.
Near-mine exploration can result in the discovery of additional
deposits, which may receive the economic benefit of existing
operating, processing, and administrative infrastructures. In
contrast, the discovery of new mineralization through
greenfields exploration efforts will likely require capital
investment to build a separate, stand-alone operation. We
expensed $187 in 2009, $213 in 2008 and $177 in 2007 on
Exploration
.
For additional information, see Item 2, Properties, Proven
and Probable Reserves.
Licenses and
Concessions
Other than operating licenses for our mining and processing
facilities, there are no third party patents, licenses or
franchises material to our business. In many countries, however,
we conduct our mining and exploration activities pursuant to
concessions granted by, or under contract with, the host
government. These countries include, among others, Australia,
Canada, Ghana, Indonesia, Mexico, New Zealand and Peru. The
concessions and contracts are subject to the political risks
associated with foreign operations. See Item 1A, Risk
Factors, Risks Related to Newmont, below. For a more detailed
description of our Indonesian Contract of Work, see Item 2,
Properties, below.
Condition of
Physical Assets and Insurance
Our business is capital intensive and requires ongoing capital
investment for the replacement, modernization or expansion of
equipment and facilities. For more information, see Item 7,
Management’s Discussion and Analysis of Consolidated
Financial Condition and Results of Operations, Liquidity and
Capital Resources, below.
We maintain insurance policies against property loss and
business interruption and insure against risks that are typical
in the operation of our business, in amounts that we believe to
be reasonable. Such insurance, however, contains exclusions and
limitations on coverage, particularly with respect to
environmental liability and political risk. There can be no
assurance that claims would be paid under such insurance
policies in connection with a particular event. See
Item 1A, Risk Factors, Risks Related to Newmont, below.
7
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Environmental
Matters
Our United States mining and exploration activities are subject
to various federal and state laws and regulations governing the
protection of the environment, including the Clean Air Act; the
Clean Water Act; the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and
Community
Right-to-Know
Act; the Endangered Species Act; the Federal Land Policy and
Management Act; the National Environmental Policy Act; the
Resource Conservation and Recovery Act; and related state laws.
These laws and regulations are continually changing and are
generally becoming more restrictive. Our activities outside the
United States are also subject to governmental regulations for
the protection of the environment.
We conduct our operations so as to protect public health and the
environment and believe our operations are in compliance with
applicable laws and regulations in all material respects. Each
operating mine has a reclamation plan in place that meets all
applicable legal and regulatory requirements. We have made, and
expect to make in the future, expenditures to comply with such
laws and regulations. We have made estimates of the amount of
such expenditures, but cannot precisely predict the amount of
such future expenditures. Estimated future reclamation costs are
based principally on legal and regulatory requirements. At
December 31, 2009, $698 was accrued for reclamation costs
relating to current or recently producing properties.
In addition to legal and regulatory compliance, we have
developed programs to guide our company toward achieving
environmental and sustainable development objectives. Evidencing
our management’s commitment towards these objectives, in
2008, we moved our corporate headquarters to an environmentally
sustainable, LEED, gold-certified building. We are also
committed to managing climate change risks and responsibly
reduce our greenhouse gas emissions. We have reported our
greenhouse gas emissions annually to the Carbon Disclosure
Project since 2004, became a Founding Reporter on The Climate
Registry in 2008 and have committed to publicly reporting our
independently-verified greenhouse gas emissions in the future.
As a result of our efforts, we continue to achieve milestones,
such as being the first gold company listed on the Dow Jones
Sustainability Index World and receiving International Cyanide
Management Code certification at 100% of registered Newmont
sites as of the end of 2009.
We are also involved in several matters concerning environmental
obligations associated with former, primarily historic, mining
activities. Generally, these matters concern developing and
implementing remediation plans at the various sites. We believe
that the related environmental obligations associated with these
sites are similar in nature with respect to the development of
remediation plans, their risk profile and the activities
required to meet general environmental standards. Based upon our
best estimate of our liability for these matters, $161 was
accrued at December 31, 2009 for such obligations
associated with properties previously owned or operated by us or
our subsidiaries. These amounts are included in
Other current
liabilities
and
Reclamation and remediation liabilities.
Depending upon the ultimate resolution of these matters,
which is difficult to predict due to the legal and regulatory
uncertainty of the related matters, we believe that it is
reasonably possible that the liability for these matters could
be as much as 148% greater or 3% lower, than the amount accrued
at December 31, 2009. The amounts accrued for these matters
are reviewed periodically based upon facts and circumstances
available at the time. Changes in estimates are charged to costs
and expenses in the period when estimates are revised.
For a discussion of the most significant reclamation and
remediation activities, see Item 7, Management’s
Discussion and Analysis of Consolidated Financial Condition and
Results of Operations, and Notes 25 and 33 to the
Consolidated Financial Statements, below.
Employees and
Contractors
Approximately 14,500 people were employed by Newmont at
December 31, 2009. In addition, approximately
15,900 people were working as contractors in support of
Newmont’s operations.
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Forward-Looking
Statements
Certain statements contained in this report (including
information incorporated by reference) are “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, and are intended to
be covered by the safe harbor provided for under these sections.
Our forward-looking statements include, without limitation:
| • | Estimates regarding future earnings; | |
| • | Estimates of future mineral production and sales, for specific operations and on a consolidated or equity basis; | |
| • | Estimates of future costs applicable to sales, other expenses and taxes for specific operations and on a consolidated basis; | |
| • | Estimates of future cash flows; | |
| • | Estimates of future capital expenditures, construction, production or closure activities and other cash needs, for specific operations and on a consolidated basis, and expectations as to the funding or timing thereof; | |
| • | Estimates as to the projected development of certain ore deposits, including the timing of such development, the costs of such development and financing plans for these deposits; | |
| • | Estimates of reserves and statements regarding future exploration results and reserve replacement and the sensitivity of reserves to metal price changes; | |
| • | Statements regarding the availability, terms and costs related to future borrowing, debt repayment and financing; | |
| • | Estimates regarding future exploration expenditures, results and reserves; | |
| • | Statements regarding fluctuations in financial and currency markets; | |
| • | Estimates regarding potential cost savings, productivity, operating performance, and ownership and cost structures; | |
| • | Expectations regarding the completion and timing of acquisitions or divestitures; | |
| • | Expectations regarding the start-up time, design, mine life, production and costs applicable to sales and exploration potential of our projects; | |
| • | Statements regarding modifications to hedge and derivative positions; | |
| • | Statements regarding political, economic or governmental conditions and environments; | |
| • | Statements regarding future transactions; | |
| • | Statements regarding the impacts of changes in the legal and regulatory environment in which we operate; | |
| • | Estimates of future costs and other liabilities for certain environmental matters; and | |
| • | Estimates of pension and other post-retirement costs. |
Where we express 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, our
forward-looking 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 those forward-looking statements. Such risks include, but are
not limited to: the price of gold, copper and other commodities;
currency fluctuations; geological and metallurgical assumptions;
operating performance of equipment, processes and facilities;
labor relations; timing of receipt of necessary governmental
permits or
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approvals; domestic and foreign laws or regulations,
particularly relating to the environment and mining; domestic
and international economic and political conditions; our ability
to obtain or maintain necessary financing; and other risks and
hazards associated with mining operations. More detailed
information regarding these factors is included in Item 1,
Business, Item 1A, Risk Factors, and elsewhere throughout
this report. Given these uncertainties, readers are cautioned
not to place undue reliance on our forward-looking statements.
All subsequent written and oral forward-looking statements
attributable to Newmont or to persons acting on its behalf are
expressly qualified in their entirety by these cautionary
statements. Newmont disclaims any intention or obligation to
update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
may be required under applicable securities laws.
Available
Information
Newmont maintains an internet web site at
www.newmont.com.
Newmont makes available, free of charge,
through the Investor Information section of the web site, its
Annual Reports on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K,
Section 16 filings and all amendments to those reports, as
soon as reasonably practicable after such material is
electronically filed with the Securities and Exchange
Commission. Newmont’s Corporate Governance Guidelines, the
charters of key committees of its Board of Directors and its
Code of Business Ethics and Conduct are also available on the
web site.
| ITEM 1A. | RISK FACTORS (dollars in millions except per share, per ounce and per pound amounts) |
Our business activities are subject to significant risks,
including those described below. Every investor or potential
investor in our securities should carefully consider these
risks. If any of the described risks actually occurs, our
business, financial condition and results of operations could be
materially adversely affected. Such risks are not the only ones
we face and additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also affect
our business.
A substantial
or extended decline in gold or copper prices would have a
material adverse effect on Newmont.
Our business is dependent on the price of gold and copper, which
are affected by numerous factors beyond our control. Factors
tending to influence prices include:
| • | gold sales or leasing by governments and central banks or changes in their monetary policy, including gold inventory management and reallocation of reserves; | |
| • | speculative short positions taken by significant investors or traders in gold or copper; | |
| • | the strength of the U.S. dollar; | |
| • | recession or reduced economic activity in the United States and other industrialized or developing countries; | |
| • | decreased industrial, jewelry or investment demand; | |
| • | increased supply from production, disinvestment and scrap; | |
| • | forward sales by producers in hedging or similar transactions; and | |
| • | availability of cheaper substitute materials. |
Any decline in our realized gold or copper price adversely
impacts our revenues, net income and cash flows, particularly in
light of our strategy of not engaging in hedging transactions
with respect to
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gold or copper. We have recorded asset write-downs in the past
and may experience additional write-downs as a result of low
gold or copper prices in the future.
In addition, sustained lower gold or copper prices can:
| • | reduce revenues further through production declines due to cessation of the mining of deposits, or portions of deposits, that have become uneconomic at the then-prevailing gold or copper price; | |
| • | reduce or eliminate the profit that we currently expect from ore stockpiles and ore on leach pads; | |
| • | halt or delay the development of new projects; | |
| • | reduce funds available for exploration with the result that depleted reserves may not be replaced; and | |
| • | reduce existing reserves by removing ores from reserves that can no longer be economically processed at prevailing prices. |
Also see the discussion in Item 1, Business, Gold or Copper
Price.
We may be
unable to replace gold and copper reserves as they become
depleted.
Gold and copper producers must continually replace reserves
depleted by production to maintain production levels over the
long term and provide a return on invested capital. Depleted
reserves can be replaced in several ways, including by expanding
known ore bodies, by locating new deposits, or by acquiring
interests in reserves from third parties. Exploration is highly
speculative in nature, involves many risks and frequently is
unproductive. Our current or future exploration programs may not
result in new mineral producing operations. In addition, for the
year 2009, the global exploration budget was reduced
significantly as compared to prior years, which may adversely
affect the timing and extent of new mineral discoveries and the
future replacement of reserves. Even if significant
mineralization is discovered, it will likely take many years
from the initial phases of exploration until production, during
which time the economic feasibility of production may change.
We may consider, from time to time, the acquisition of ore
reserves related to development properties and operating mines.
Such acquisitions are typically based on an analysis of a
variety of factors including historical operating results,
estimates of and assumptions regarding the extent of ore
reserves, the timing of production from such reserves and cash
and other operating costs. Other factors that affect our
decision to make any such acquisitions may also include our
assumptions for future gold prices or other mineral prices and
the projected economic returns and evaluations of existing or
potential liabilities associated with the property and its
operations and projections of how these may change in the
future. In addition, in connection with future acquisitions we
may rely on data and reports prepared by third parties and which
may contain information or data that we are unable to
independently verify or confirm. Other than historical operating
results, all of these factors are uncertain and may have an
impact on our revenue, our cash and other operating issues, as
well as contributing to the uncertainties related to the process
used to estimate ore reserves. In addition, there may be intense
competition for the acquisition of attractive mining properties.
As a result of these uncertainties, our exploration programs and
any acquisitions which we may pursue may not result in the
expansion or replacement of our current production with new ore
reserves or operations, which could have a material adverse
effect on our business, prospects, results of operations and
financial condition.
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Estimates of
proven and probable reserves are uncertain and the volume and
grade of ore actually recovered may vary from our
estimates.
Estimates of proven and probable reserves are subject to
considerable uncertainty. Such estimates are, to a large extent,
based on the price of gold and interpretations of geologic data
obtained from drill holes and other exploration techniques.
Producers use feasibility studies to derive estimates of capital
and operating costs based upon anticipated tonnage and grades of
ore to be mined and processed, the predicted configuration of
the ore body, expected recovery rates of metals from the ore,
the costs of comparable facilities, the costs of operating and
processing equipment and other factors. Actual operating costs
and economic returns on projects may differ significantly from
original estimates. Further, it may take many years from the
initial phase of exploration before production and, during that
time, the economic feasibility of exploiting a discovery may
change.
In addition, if the price of gold or copper declines from recent
levels, if production costs increase or recovery rates decrease,
or if applicable laws and regulations are adversely changed, we
can offer no assurance that the indicated level of recovery will
be realized or that mineral reserves as currently reported can
be mined or processed profitably. If we determine that certain
of our ore reserves have become uneconomic, this may ultimately
lead to a reduction in our aggregate reported reserves.
Consequently, if our actual mineral reserves and resources are
less than current estimates, our business, prospects, results of
operations and financial condition may be materially impaired.
Increased
operating costs could affect our profitability.
Costs at any particular mining location are subject to variation
due to a number of factors, such as changing ore grade, changing
metallurgy and revisions to mine plans in response to the
physical shape and location of the ore body. In addition, costs
are affected by the price of input commodities, such as fuel,
electricity, labor, chemical reagents, explosives, steel and
concrete. Commodity costs are, at times, subject to volatile
price movements, including increases that could make production
at certain operations less profitable, and to changes in laws
and regulations affecting their price, use and transport.
Reported costs may also be affected by changes in accounting
standards. A material increase in costs at any significant
location could have a significant effect on our profitability
and operating cash flow.
We could have significant increases in capital and operating
costs over the next several years in connection with the
development of new projects in challenging jurisdictions and in
sustaining existing operations. Costs associated with capital
expenditures have escalated on an industry-wide basis over the
last several years, as a result of major factors beyond our
control, including the prices of oil, steel and other
commodities and labor. Increased costs for capital expenditures
may have an adverse effect on the profitability of existing
mining operations and economic returns anticipated from new
mining projects.
Estimates
relating to new development projects are uncertain and we may
incur higher costs and lower economic returns than
estimated.
Mine development projects typically require a number of years
and significant expenditures during the development phase before
production is possible. Our decision to develop a project is
typically based on the feasibility studies results which
estimate the anticipated economic returns of a project. The
actual project profitability or economic feasibility may differ
from such estimates as a result of any of the following factors,
among others:
| • | unanticipated changes in tonnage, grades and metallurgical characteristics of ore to be mined and processed; | |
| • | higher than anticipated input commodity and labor costs; | |
| • | the quality of the data on which engineering assumptions were made; | |
| • | unanticipated adverse geotechnical conditions; | |
| • | availability of adequate labor force and supply and cost of water and power; |
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| • | fluctuations in inflation and currency exchange rates; | |
| • | availability and terms of financing; | |
| • | delays in obtaining environmental or other government permits or changes in the laws and regulations related to those permits; | |
| • | unanticipated weather or severe climate impacts; and | |
| • | potential delays relating to social and community issues. |
Our future development activities may not result in the
expansion or replacement of current production with new
production, or one or more of these new production sites or
facilities may be less profitable than currently anticipated or
may not be profitable at all, any of which could have a material
adverse effect on our results of operations and financial
condition.
We may
experience increased costs or losses resulting from the hazards
and uncertainties associated with mining.
The exploration for natural resources and the development and
production of mining operations are activities that involve a
high level of uncertainty. These can be difficult to predict and
are often affected by risks and hazards outside of our control.
These factors include, but are not limited to:
| • | environmental hazards, including discharge of metals, pollutants or hazardous chemicals; | |
| • | industrial accidents including in connection with the operation of mining transportation equipment and accidents associated with the preparation and ignition of large-scale blasting operations; | |
| • | underground fires or floods; | |
| • | encountering unexpected geological formations; | |
| • | unanticipated ground and water conditions; | |
| • | fall-of-ground accidents in underground operations; | |
| • | failure of mining pit slopes and tailings dam walls; | |
| • | seismic activity; and | |
| • | other natural phenomena, such as floods or inclement weather conditions. |
The occurrence of one or more of these events in connection with
our mining operations may result in the death of, or personal
injury to, our employees or other personnel, the loss of mining
equipment, damage to or destruction of mineral properties or
production facilities, monetary losses, deferral or
unanticipated fluctuations in production, environmental damage
and potential legal liabilities, all of which may adversely
affect our business, prospects, results of operations and
financial condition.
Shortages of
critical parts, equipment and skilled labor may adversely affect
our operations and development projects.
The industry has been impacted by increased demand for critical
resources such as input commodities, drilling equipment, tires
and skilled labor. These shortages have, at times, caused
unanticipated cost increases and delays in delivery times,
thereby impacting operating costs, capital expenditures and
production schedules.
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Compliance
with the extensive and constantly changing environmental laws
and regulations affecting mining operations requires ongoing
expenditures from us, and actual or alleged non-compliance may
subject us to significant penalties or to the revocation of
existing or future exploration or mining rights.
Our exploration, mining and processing operations are regulated
in all countries in which we operate under various federal,
state, provincial and local laws relating to the protection of
the environment, which generally include air and water quality,
protection of protected species, hazardous waste management and
reclamation. Compliance with these laws and regulations imposes
substantial costs and burdens, and can cause delays in
obtaining, or failure to obtain, government permits and
approvals which may adversely impact our operations. The
regulatory environment in which we operate is constantly
changing and may change in ways that would substantially
increase costs to achieve compliance, or otherwise could have a
material adverse effect on our operations or financial position.
Additionally, our operations result in emissions of certain
greenhouse gases that may be subject to regulation under
legislative and regulatory measures recently enacted or in
discussion. Such measures, if implemented, could result in
increased costs to us and could adversely affect our business,
financial condition or results of operations. For a more
detailed discussion of potential environmental liabilities, see
the discussion in Environmental Matters, Note 33 to the
Consolidated Financial Statements.
Mine closure
and remediation costs for environmental liabilities may exceed
the provisions we have made.
Natural resource companies are required to close their
operations and rehabilitate the lands that they mine in
accordance with a variety of environmental laws and regulations.
Estimates of the total ultimate closure and rehabilitation costs
for gold and copper mining operations are significant and based
principally on current legal and regulatory requirements and
mine closure plans that may change materially. Any
underestimated or unanticipated rehabilitation costs could
materially affect our asset values, earnings and cash flows.
Environmental liabilities are accrued when they become known,
probable and can be reasonably estimated. Whenever a previously
unrecognized remediation liability becomes known, or a
previously estimated reclamation cost is increased, the amount
of that liability and additional cost will be recorded at that
time and could materially reduce our consolidated net income in
the related period. In addition, regulators are increasingly
requesting security in the form of cash collateral, credit, or
trust arrangements or guarantees to secure the performance of
environmental obligations, which could have an adverse effect on
our financial condition.
We have conducted extensive remediation work at two inactive
sites in the United States. We are conducting mill remediation
activities at a third site in the United States, an inactive
uranium mine and mill formerly operated by a subsidiary of
Newmont, but remediation at the mine is subject to dispute. In
late 2008, the EPA issued an order regarding water management at
the mine. The environmental standards that may ultimately be
imposed at this site remain uncertain and a risk exists that the
costs of remediation may exceed the financial accruals that have
been made for such remediation by a material amount. For a more
detailed discussion of potential environmental liabilities, see
the discussion in Environmental Matters, Note 33 to the
Consolidated Financial Statements.
Regulations
and pending legislation governing issues involving climate
change could result in increased operating costs which could
have a material adverse effect on our business.
A number of governments or governmental bodies have introduced
or are contemplating regulatory changes in response to the
potential impacts of climate change. The December 1997 Kyoto
Protocol, which ends in 2012, established a set of greenhouse
gas emission targets for developed countries that have ratified
the Protocol, which include Ghana, Australia and Peru. The
Conference of Parties 15 (“COP15”) of the United
Nations Framework Convention on Climate Change held in
Copenhagen, Denmark in December 2009 was to determine the path
forward after the Kyoto Protocol ends. COP15 resulted in the
Copenhagen Accord (the “Accord”), a non-binding
document calling for economy-wide
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emissions targets for 2020. Prior to the January 31, 2010
deadline, the United States, Australia, New Zealand and
Indonesia, Ghana and Peru re-affirmed their commitment to the
Accord. The U.S. Congress and several U.S. states have
initiated legislation regarding climate change that will affect
energy prices and demand for carbon intensive products. In
December 2009, the U.S. Environmental Protection Agency
issued an endangerment finding under the U.S. Clean Air Act
that current and projected concentrations of certain mixed
greenhouse gases, including carbon dioxide, in the atmosphere
threaten the public health and welfare. It is possible that
proposed regulation may be promulgated in the U.S. to
address the concerns raised by such endangerment finding.
Additionally, the Australian Government may potentially
reintroduce a national emissions trading scheme and mandatory
renewable energy targets. Legislation and increased regulation
regarding climate change could impose significant costs on us,
our venture partners and our suppliers, including increased
energy, capital equipment, environmental monitoring and
reporting and other costs to comply with such regulations. Any
adopted future climate change regulations could also negatively
impact our ability to compete with companies situated in areas
not subject to such limitations. Until the timing, scope and
extent of any future regulation becomes known, we cannot predict
the effect on our financial condition, operating performance and
ability to compete. Furthermore, even without such regulation,
increased awareness and any adverse publicity in the global
marketplace about potential impacts on climate change by us or
other companies in our industry could harm our reputation. The
potential physical impacts of climate change on our operations
are highly uncertain, and would be particular to the geographic
circumstances in areas in which we operate. These may include
changes in rainfall and storm patterns and intensities, water
shortages, changing sea levels and changing temperatures. These
impacts may adversely impact the cost, production and financial
performance of our operations.
Our
operations, particularly those outside North America and
Australia/New Zealand, are subject to risks of doing
business.
Exploration, development, production and mine closure
activities, particularly those outside of North America and
Australia/New Zealand, potentially are subject to political and
economic risks, including:
| • | disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the Foreign Corrupt Practices Act; | |
| • | changes in laws or regulations; | |
| • | royalty and tax increases or claims by governmental entities, including retroactive increases and claims and requests to renegotiate terms of existing royalties and taxes; | |
| • | delays in obtaining or the inability to obtain or maintain necessary governmental permits; | |
| • | expropriation or nationalization of property; | |
| • | currency fluctuations, particularly in countries with high inflation; | |
| • | foreign exchange controls; | |
| • | restrictions on the ability of local operating companies to sell gold offshore for U.S. dollars, or on the ability of such companies to hold U.S. dollars or other foreign currencies in offshore bank accounts; | |
| • | import and export regulations, including restrictions on the export of gold; | |
| • | restrictions on the ability to pay dividends offshore or to otherwise repatriate funds; | |
| • | risk of loss due to civil strife, acts of war, guerrilla activities, insurrection and terrorism; | |
| • | risk of loss due to disease and other potential endemic health issues; and | |
| • | other risks arising out of foreign sovereignty over the areas in which our operations are conducted, including risks inherent in contracts with government owned entities such as unilateral cancellation or renegotiation of contracts, licenses or other mining rights. |
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Consequently, our exploration, development and production
activities, particularly those outside of North America and
Australia/New Zealand, may be affected by these and other
factors, many of which are beyond our control, some of which
could materially adversely affect our financial position or
results of operations. Furthermore, if a dispute arises from
such activities, we may be subject to the exclusive jurisdiction
of courts outside North America or Australia/New Zealand, which
could adversely affect the outcome of a dispute.
Our Batu Hijau
operation in Indonesia is subject to political and economic
risks.
We have a substantial investment in Indonesia, a nation that
since 1997 has undergone financial crises and devaluation of its
currency, outbreaks of political and religious violence and acts
of terrorism, changes in national leadership, and the secession
of East Timor, one of its former provinces. These factors
heighten the risk of abrupt changes in the national policy
toward foreign investors, which in turn could result in
unilateral modification of concessions or contracts, increased
taxation, denial of permits or permit renewals or expropriation
of assets. Subsequent to the commencement of operations, the
government designated the land surrounding Batu Hijau as a
protection forest, which could make operating permits more
difficult to obtain. We have been in discussions with the
Indonesian government to obtain an additional forest use permit
necessary to make certain amendments to the Batu Hijau
environmental management plan and environmental monitoring plan,
including modifications with respect to the mine’s pit
slope stability. This permit is a key requirement to continue to
operate Batu Hijau efficiently and to the ultimate life of the
mine and recoverability of reserves. However, the permit has not
been received as of the date of this Annual Report. No
assurances can be made regarding when or whether the permit and
any related plan amendments will be approved. The resulting
delay may adversely impact the Batu Hijau mine plan, and may
adversely impact future operating and financial results,
including deferment or cancellation of future development and
operations.
Presidential and parliamentary elections recently took place,
and although the president was re-elected, new ministers or
members of parliament may have different (and potentially more
negative) views relating to mining in general, a preference for
national mining companies to own such countries mineral assets,
or relative to our assets and operations.
Violence committed by radical elements in Indonesia and other
countries, and the presence of U.S. forces in Iraq and
Afghanistan, may increase the risk that operations owned by
U.S. companies will be the target of violence. If our Batu
Hijau operation were so targeted it could have an adverse effect
on our business.
Our ownership
interest in PT Newmont Nusa Tenggara (“PTNNT”) in
Indonesia has been reduced in accordance with the Contract of
Work issued by the Indonesian Government. The Contract of Work
has been and may continue to be the subject of dispute, and
future reductions in our interest in PTNNT may result in our
loss of control over the Batu Hijau operations. Moreover the
Contract of Work is subject to termination if we do not comply
with our obligations, and loss of the Contract of Work would
result in loss of all or much of the value of Batu
Hijau.
We operate Batu Hijau and currently have a 35.44% ownership
interest, held through the Nusa Tenggara Partnership
(“NTP”) with an affiliate of Sumitomo Corporation of
Japan. We have a 56.25% interest in NTP and a Sumitomo affiliate
holds the remaining 43.75%. NTP in turn owns 63% of PTNNT, the
Indonesian subsidiary that owns Batu Hijau. In December 2009,
the Company entered into a transaction with P.T. Pukuafu
Indah (“PTPI”), an unrelated noncontrolling partner of
PTNNT, whereby we agreed to advance certain funds to PTPI in
exchange for a pledge of the noncontrolling partner’s 20%
share of PTNNT dividends, net of withholding tax, and the
assignment of its voting rights to the Company. As a result,
PTPI was determined to be a Variable Interest Entity
(“VIE”) as it has minimal equity capital and the
voting rights to its 20% interest in PTNNT reside with Newmont.
Based on the above transaction, the Company recognized an
additional 17% effective economic interest in PTNNT. Combined
with the Company’s 56.25% ownership in NTP, Newmont has a
52.44% effective economic interest in PTNNT and continues to
consolidate Batu Hijau in its Consolidated Financial Statements.
The remaining 17% in PTNNT is owned by PT Multi Daerah Bersaing
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(“PTMDB”), a consortium comprised of Indonesian
regional and local governments, and PT Multicapital, an
unrelated Indonesian company.
Under the Contract of Work executed in 1986 between the
Indonesian government and PTNNT, beginning in 2006 and
continuing through 2010, a portion of PTNNT’s shares must
be offered for sale, first, to the Indonesian government or,
second, to Indonesian nationals, such portion equal to the
difference between the following percentages and the percentage
of shares already owned by the Indonesian government or
Indonesian nationals (if such number is positive): 23% by
March 31, 2006; 30% by March 31, 2007; 37% by
March 31, 2008; 44% by March 31, 2009; and 51% by
March 31, 2010. The price at which such interest must be
offered for sale to the Indonesian parties is the highest of the
then-current replacement cost, the price at which shares would
be accepted for listing on the Jakarta Stock Exchange, or the
fair market value of such interest as a going concern, as agreed
with the Indonesian government. Pursuant to this provision, the
ownership interest in the Batu Hijau mine’s proven and
probable equity reserves may be reduced in the future to as low
as 27.56% and ownership interest of NTP in PTNNT could be
reduced to 49%, thus reducing our ability to control the
operation at Batu Hijau. In addition to affecting our level of
control over operations over PTNNT, such loss of control may
cause us to deconsolidate PTNNT for accounting purposes, which
would reduce our reported consolidated sales, cost applicable to
sales, amortization, total assets and operating cash flow
attributable to PTNNT. See Note 32 to the Consolidated
Financial Statements.
PTPI has owned and continues to own a 20% interest in PTNNT, and
therefore NTP was required to offer a 3% interest in the shares
of PTNNT for sale in 2006 and an additional 7% interest in each
of 2007, 2008 and 2009. In accordance with the Contract of Work,
an offer to sell a 3% interest was made to the Indonesia
government in 2006 and an offer for an additional 7% interest
was made in each of 2007, 2008 and 2009. Following notifications
from the Department of Energy and Mineral Resources (the
“DEMR”) alleging that PTNNT was in breach of its
divestiture requirements under the Contract of Work and
threatening to issue a notice to terminate the Contract of Work
if PTNNT did not agree to divest the 2006, 2007, and
2008 shares in accordance with the direction of the DEMR,
the matter was submitted to an international arbitration panel.
That panel ruled in March 2009 that the 2006, 2007 and
2008 shares were required to be transferred by the end of
September 2009, a deadline that was extended until
November 23, 2009 by agreement between PTNNT and the
Indonesian Government. In July 2009, the Company reached
agreement with the Indonesian government on the price of the
2008 7% interest and the 2009 7% interest and reoffered the 2008
7% interest and the 2009 7% interest to the Indonesian
government at this newly agreed price. In November and December
2009, sales agreements were concluded pursuant to which the
2006, 2007, and 2008 shares were transferred to PTMDB and
2009 shares were committed to be transferred to PTMDB.
Although the Indonesian government has acknowledged that PTNNT
is no longer in breach of the Contract of Work, future disputes
may arise as to the further divestiture of the shares. It is
uncertain who will acquire any future divestiture shares, and
the nature of our relations with the new owners of the 2006
through 2009 shares and any future divestiture shares
remain uncertain.
As part of the negotiation of the sale agreements with PTMDB,
the parties executed an operating agreement under which each
recognizes the right of NTP to operate Batu Hijau and binds the
parties to adhere to NTP’s standards for safety,
environmental stewardship and community responsibility. The
operating agreement becomes effective upon the completion of the
sale of the 2009 shares and continues for so long as NTP
owns more shares of PTNNT than PTMDB. If the operating agreement
terminates, then we will likely lose effective control over the
operations of Batu Hijau and will be at risk for operations
conducted in a manner that either detracts from value or results
in safety, environmental or social standards below those adhered
to by NTP. Moreover, there have been statements from time to
time by some within the Indonesian government who advocate
elimination of Contracts of Work and who may try to instigate
future disputes surrounding the Contract of Work, particularly
given that Batu Hijau is one of the largest businesses within
the country. Although any dispute under the Contract of Work is
subject to international arbitration, there can be no assurance
that we would prevail in any such dispute and any termination of
the Contract of Work could result in substantial diminution in
the value of our interests in PTNNT.
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Our Company
and the mining industry are facing continued geotechnical
challenges, which could adversely impact our production and
profitability.
Newmont and the mining industry are facing continued
geotechnical challenges due to a trend toward mining deeper pits
and more complex deposits. This leads to higher pit walls, more
complex underground environments and increased exposure to
geotechnical instability. As our operations are maturing, the
open pits at many of our sites are getting deeper and we have
experienced certain geotechnical failures at some of our mines,
including, without limitation, in Indonesia at the Batu Hijau
open-pit mine. In September 2009, our affiliate, PTNNT,
experienced a geotechnical failure of a portion of the west
wall. Batu Hijau utilizes an advanced monitoring system that
measures movement in the pit walls. As a result, no personnel
were in the pit at the time of the failure and no injuries
occurred. However, operations were temporarily suspended in
order to engage in geotechnical review. Following the completion
of remediation work, mining operations resumed at such location
again in October 2009. Subsequently, in January 2010, a failure
also occurred on a portion of the southeast wall causing a
slide, which regrettably resulted in a fatality of one of the
mine employees. Operations were temporarily suspended to conduct
investigations and operations have since recommenced.
No absolute assurances can be given that unanticipated adverse
geotechnical conditions, such a landslides and pit wall
failures, will not occur in the future or that such events will
be detected in advance. Geotechnical instabilities can be
difficult to predict and are often affected by risks and hazards
outside of our control, such as severe weather and considerable
rainfall, which may lead to periodic floods, mudslides and wall
instability, and seismic activity, which may result in slippage
of material or mud/topsoil slides.
Geotechnical failures could result in limited or restricted
access to mine sites, suspension of operations, government
investigations, increased monitoring costs, remediation costs,
loss of ore and other impacts, which could cause one or more of
our projects to be less profitable than currently anticipated
and could result in a material adverse effect on our results of
operations and financial condition.
Our operations
in Peru are subject to political risks.
During the last several years, Yanacocha, in which we own a
51.35% interest, has been the target of numerous local political
protests, including ones that blocked the road between the
Yanacocha mine complex and the City of Cajamarca in Peru. In
2004, local opposition to the Cerro Quilish project (which is
located adjacent to Yanacocha) became so pronounced that
Yanacocha decided to relinquish its drilling permit for Cerro
Quilish and the deposit was reclassified from proven and
probable reserves to non-reserve mineralization. In 2006 a road
blockade was carried out by members of the Combayo community.
This blockade was unrelated to Cerro Quilish and resulted in a
brief cessation of mining activities. We cannot predict whether
similar or more significant incidents will occur and the
recurrence of significant community opposition or protests could
adversely affect Yanacocha’s assets and operations. In
2007, 2008, 2009 and thus far in 2010, no material roadblocks or
protests occurred involving Yanacocha.
In December 2006, Yanacocha, along with other mining companies
in Peru, entered into a five-year agreement with the central
government to contribute 3.75% of net profits to fund social
development projects. Although the current government has
generally taken positions promoting private investment, we
cannot predict future government positions on foreign
investment, mining concessions, land tenure, environmental
regulation or taxation. National elections are scheduled in
April 2011 and a change in government positions on these issues
could adversely affect Yanacocha’s assets and operations,
which could have a material adverse effect on our consolidated
financial position and results of operations.
Our success
depends on our social and environmental
performance.
Our ability to operate successfully in communities around the
world will likely depend on our ability to develop, operate and
close mines in a manner that is consistent with the health and
safety of our employees, the protection of the environment, and
the creation of long-term economic and social opportunities in
the communities in which we operate. We have implemented a
management system
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designed to promote continuous improvement in health and safety,
environmental performance and community relations. However, our
ability to operate, and thus, our results of operations and our
financial condition, could be adversely affected by accidents or
events detrimental (or perceived to be detrimental) to the
health and safety of our employees, the environment or the
communities in which we operate.
Remediation
costs for environmental liabilities may exceed the provisions we
have made.
We have conducted extensive remediation work at two inactive
sites in the United States. We are conducting mill remediation
activities at a third site in the United States, an inactive
uranium mine and mill formerly operated by a subsidiary of
Newmont, but remediation at the mine is subject to dispute. In
late 2008 the EPA issued an order regarding water management at
the mine. The environmental standards that may ultimately be
imposed at this site remain uncertain and a risk exists that the
costs of remediation may exceed the financial accruals that have
been made for such remediation by a material amount. For a more
detailed discussion of potential environmental liabilities, see
the discussion in Environmental Matters, Note 33 to the
Consolidated Financial Statements.
Whenever a previously unrecognized remediation liability becomes
known, or a previously estimated reclamation cost is increased,
the amount of that liability and additional cost will be
recorded at that time and could materially reduce net income in
that period.
Currency
fluctuations may affect our costs.
Currency fluctuations may affect the costs that we incur at our
operations. Gold and copper is sold throughout the world based
principally on the U.S. dollar price, but a portion of our
operating expenses are incurred in local currencies. The
appreciation of those local currencies against the
U.S. dollar increases our costs of production in
U.S. dollar terms at mines located outside the
United States.
The foreign currency that primarily impacts our results of
operations is the Australian dollar. We estimate that every
$0.10 increase in U.S. dollar/Australian dollar exchange
rate increases annually the U.S. dollar
Costs applicable
to sales
by approximately $40 for each ounce of gold
produced from operations in Australia before taking into account
the impact of currency hedging. From December 31, 2008 to
December 31, 2009, the Australian dollar appreciated by
approximately $0.21 per U.S. dollar, or approximately 30%.
In mid-2007, we implemented derivative programs to hedge up to
85% of our future forecasted Australian dollar denominated
operating and capital expenditures to reduce the variability in
our Australian dollar denominated expenditures. At
December 31, 2009 we have hedged 60%, 37% and 13% of our
forecasted Australian denominated operating costs in 2010, 2011
and 2012, respectively. Our Australian dollar derivative
programs will limit the benefit to the Company of future
decreases if any, in the US dollar/Australian dollar exchange
rates. For additional information, see Item 7,
Management’s Discussion and Analysis of Consolidated
Financial Condition and Results of Operations, Results of
Consolidated Operations, Foreign Currency Exchange Rates, below.
For a more detailed description of how currency exchange rates
may affect costs, see discussion in Foreign Currency in
Item 7A, Quantitative and Qualitative Discussions About
Market Risk.
Our business
requires substantial capital investment and we may be unable to
raise additional funding on favorable terms.
The construction and operation of potential future projects
including the Akyem project in Ghana, the Conga project in Peru,
the Hope Bay project in Nunavut, Canada, and various exploration
projects will require significant funding. Our operating cash
flow and other sources of funding may become insufficient to
meet all of these requirements, depending on the timing and
costs of development of these and other projects. As a result,
new sources of capital may be needed to meet the funding
requirements of these investments, fund our ongoing business
activities and pay dividends. Our ability to raise and service
significant new sources of capital will be a function of
macroeconomic conditions, future gold and copper prices, our
operational performance and our current cash flow and debt
position, among other factors. In the event of lower gold and
copper prices, unanticipated operating or financial challenges,
or a further dislocation in the financial markets as experienced
in recent years, our ability to pursue new business
opportunities, invest in existing and new projects, fund our
ongoing operations, retire or service all outstanding debt and
pay dividends could be significantly constrained.
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Any downgrade
in the credit ratings assigned to our debt securities could
increase our future borrowing costs and adversely affect the
availability of new financing.
At December 31, 2009 Standard & Poor’s
Rating Services rated Newmont Mining Corporation BBB+, with a
stable outlook, and Moody’s Investors Service rated Newmont
Mining Corporation Baa2 with a stable outlook. There can be no
assurance that any rating assigned will remain for any given
period of time or that a rating will not be lowered if, in that
rating agency’s judgment, future circumstances relating to
the basis of the rating, so warrant. If we are unable to
maintain our outstanding debt and financial ratios at levels
acceptable to the credit rating agencies, or should our business
prospects deteriorate, our ratings could be downgraded by the
rating agencies, which could adversely affect the value of our
outstanding securities, our existing debt and our ability to
obtain new financing on favorable terms, if at all, and increase
our borrowing costs, which in turn could impair our results of
operations and financial condition. See also “Future
Funding Requirements may Affect our Business” and
“Current Global Financial Conditions could Adversely Affect
the Availability of New Financing and our Operations.”
To the extent
that we seek to expand our operations and increase our reserves
through acquisitions, we may experience issues in executing
acquisitions or integrating acquired operations.
From time to time, we may examine opportunities to make
selective acquisitions in order to expand our operations and
reported reserves. The success of any acquisition would depend
on a number of factors, including, but not limited to:
| • | identifying suitable candidates for acquisition and negotiating acceptable terms for any such acquisition; | |
| • | obtaining approval from regulatory authorities and potentially the Company’s shareholders; | |
| • | maintaining our financial and strategic focus and avoiding distraction of management during the process of integrating the acquired business; | |
| • | implementing our standards, controls, procedures and policies at the acquired business; and | |
| • | to the extent the acquired operations are in a country in which we have not operated historically, understanding the regulations and challenges of operating in that new jurisdiction. |
There can be no assurance that we will be able to conclude any
acquisitions successfully, or that any acquisition will achieve
the anticipated synergies or other positive results. Any
material problems that we encounter in connection with such an
acquisition could have a material adverse effect on our
business, operating results and financial condition.
Our operations
may be adversely affected by power shortages.
We have periodically experienced power shortages in Ghana
resulting primarily from drought, increasing demands for
electricity and insufficient hydroelectric or other generating
capacity which caused curtailment of production at our Ahafo
operations. As a result of the mining industry’s initiative
to construct and install an 80 mega-watt power plant during
2007, the Ghanaian government has agreed, if required, to
curtail power consumption as a result of power shortages and to
distribute available power proportionately between participating
mines and other industrial and commercial users. Alternative
sources of power may result in higher than anticipated costs,
which will affect operating costs. Continued power shortages and
increased costs may adversely affect our results of operations
and financial condition.
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Occurrence of
events for which we are not insured may affect our cash flow and
overall profitability.
We maintain insurance policies that mitigate against certain
risks related to our operations. This insurance is maintained in
amounts that we believe are reasonable depending upon the
circumstances surrounding each identified risk. However, we may
elect not to have insurance for certain risks because of the
high premiums associated with insuring those risks or for
various other reasons; in other cases, insurance may not be
available for certain risks. Some concern always exists with
respect to investments in parts of the world where civil unrest,
war, nationalist movements, political violence or economic
crises are possible. These countries may also pose heightened
risks of expropriation of assets, business interruption,
increased taxation or unilateral modification of concessions and
contracts. We do not maintain insurance policies against
political risk. Occurrence of events for which we are not
insured may affect our results of operations and financial
position.
Our business
depends on good relations with our employees.
Due to union activities or other employee actions, we could
experience labor disputes, work stoppages or other disruptions
in production that could adversely affect us. At
December 31, 2009 union represented employees constituted
approximately 54% of our worldwide work force. Currently, there
are labor agreements in effect for all of these workers. The
labor agreement for Yanacocha expires on February 28, 2010
and is currently being
re-negotiated.
There can be no assurance that any future disputes will be
resolved without disruptions to operations.
Title to some
of our properties may be defective or challenged.
Although we have conducted title reviews of our properties,
title review does not necessarily preclude third parties from
challenging our title or related property rights. While we
believe that we have satisfactory title to our properties, some
risk exists that some titles may be defective or subject to
challenge. In addition, certain of our Australian properties
could be subject to native title or traditional landowner
claims, but such claims would not deprive us of the properties.
For information regarding native title or traditional landowner
claims, see the discussion under the Australia/New Zealand
section of Item 2, Properties, below.
Competition
from other mining companies may harm our business.
We compete with other mining companies to attract and retain key
executives, skilled labor, contractors and other employees. We
compete with other mining companies for the services of skilled
personnel and contractors and for specialized equipment,
components and supplies, such as drill rigs, necessary for
exploration and development. We also compete with other mining
companies for rights to mine properties containing gold and
other minerals. We may be unable to continue to attract and
retain skilled and experienced employees, to obtain the services
of skilled personnel and contractors or specialized equipment or
supplies, or to acquire additional rights to mine properties.
Our ability to
recognize the benefits of deferred tax assets is dependent on
future cash flows and taxable income.
We recognize the expected future tax benefit from deferred tax
assets when the tax benefit is considered to be more likely than
not of being realized, otherwise, a valuation allowance is
applied against deferred tax assets. Assessing the
recoverability of deferred tax assets requires management to
make significant estimates related to expectations of future
taxable income. Estimates of future taxable income are based on
forecasted cash flows from operations and the application of
existing tax laws in each jurisdiction. To the extent that
future cash flows and taxable income differ significantly from
estimates, our ability to realize the deferred tax assets could
be impacted. Additionally, future changes in tax laws could
limit our ability to obtain the future tax benefits represented
by our deferred tax assets. At December 31, 2009 the
Company’s current and long-term deferred tax assets were
$215 and $937, respectively.
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Returns for
investments in pension plans are uncertain.
We maintain pension plans for certain employees which provide
for specified payments after retirement. The ability of the
pension plans to provide the specified benefits depends on our
funding of the plans and returns on investments made by the
plans. Returns, if any, on investments are subject to
fluctuations based on investment choices and market conditions.
A sustained period of low returns or losses on investments could
require us to fund the pension plans to a greater extent than
anticipated. During the second half of 2008 and early 2009, the
value of the investments in our pension plans decreased
significantly. While the plans have sufficient assets to meet
benefit payments in the near term, the plans are underfunded for
purposes of long-term sustainable payout to all employees.
During the later part of 2009, the value of the investments in
our pension plans improved, but not to the mid-2008 levels. If
the plan investment values do not recover sufficiently, we may
be required to increase the amount of future cash contributions.
For a more detailed discussion of the funding status and
expected benefit payments to plan participants, see the
discussion in Employee-Related Benefits, Note 22 to the
Consolidated Financial Statements.
| ITEM 2. | PROPERTIES (dollars in millions except per share, per ounce and per pound amounts) |
Production and
Development Properties
Newmont’s significant production properties are described
below. Operating statistics for each operation are presented in
a table in the next section of Item 2.
North
America
Nevada, USA.
We have been mining gold in
Nevada since 1965. Nevada operations include Carlin, located
west of the city of Elko on the geologic feature known as the
Carlin Trend, the Phoenix mine, located 10 miles south of
Battle Mountain, the Twin Creeks mine, located approximately
15 miles north of Golconda, and the Midas mine near the
town of the same name. We also participate in the Turquoise
Ridge joint venture with a subsidiary of Barrick Gold
Corporation (“Barrick”), which utilizes mill capacity
at Twin Creeks.
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Gold sales from Nevada totaled approximately 2.0 million
ounces for 2009 with ore mined from eight open pit and six
underground mines. At December 31, 2009 we reported
28.5 million equity ounces of gold reserves in Nevada, with
84% of those ounces in open pit mines and 16% in underground
mines. We are pursuing several development opportunities in
Nevada with significant reserve expansion potential.
The Nevada operations produce gold from a variety of ore types
requiring different processing techniques depending on economic
and metallurgical characteristics. To ensure the best use of
processing capacity, we use a linear programming model to guide
the flow of both mining sequence selection and routing of ore
streams to various plants. Refractory ores, which require more
complex, higher cost processing methods, generated 77% of
Nevada’s gold production in 2009, compared with 72% in
2008, and 75% in 2007. With respect to remaining reserves, we
estimate that approximately 82% are refractory ores and 18% are
oxide ores. Higher-grade oxide ores are processed by
conventional milling and cyanide leaching at Carlin (Mill
5) and Twin Creeks (Juniper). Lower-grade material with
suitable cyanide solubility is treated on heap leach pads at
Carlin and Twin Creeks. Higher-grade refractory ores are
processed through either a roaster at Carlin (Mill 6) or
autoclaves at Twin Creeks (Sage). Lower-grade refractory ores
are processed at Carlin by either bio-oxidation/flotation or
direct flotation at Mill 5. Mill 5 flotation concentrates are
then processed at the Carlin roaster or the Twin Creeks
autoclaves and additional gold is recovered from the flotation
tails by cyanide leaching. The Phoenix mill produces a gravity
gold concentrate and a copper/gold flotation concentrate and
recovers additional gold from cyanide leaching of the flotation
tails. Ore from the Midas mine is processed by conventional
milling and Merrill-Crowe zinc precipitation. Activated carbon
from the various leaching circuits is treated to produce gold
ore at the Carlin or Twin Creeks refineries. Zinc precipitate at
Midas is refined
on-site.
We own, or control through long-term mining leases and
unpatented mining claims, all of the minerals and surface area
within the boundaries of the present Nevada mining operations
(except for the Turquoise Ridge joint venture described below).
The long-term leases extend for at least the anticipated mine
life of those deposits. With respect to a significant portion of
the Gold Quarry mine at Carlin, we own a 10% undivided interest
in the mineral rights and lease the remaining 90%, on which we
pay a royalty equivalent to 18% of the mineral production. We
wholly-own or control the remainder of the Gold Quarry mineral
rights, in some cases subject to additional royalties. With
respect to certain smaller deposits in Nevada, we are obligated
to pay royalties on production to third parties that vary from
1% to 8% of production.
We have a 25% interest in a joint venture with Barrick in the
Turquoise Ridge mine. Newmont has an agreement to provide up to
2,000 tons per day of milling capacity at Twin Creeks to the
joint venture. Barrick is the operator of the joint venture.
Gold sales of 39,000 ounces in 2009, 50,100 ounces in 2008 and
62,800 ounces in 2007 were attributable to Newmont, based on our
25% ownership interest.
We have ore sale agreements with Barrick and Yukon-Nevada Gold
Corporation (“Yukon-Nevada”) to process the
Company’s ore. We recognized attributable gold sales, net
of treatment charges, of 700 ounces in 2009, 8,000 ounces in
2008 and 58,600 ounces in 2007, pursuant to these agreements.
During 2008, Yukon-Nevada discontinued operations; however,
during the second half of 2009, they resumed operations on a
limited basis.
We have sales and refining agreements with Gerald Metals,
Peñoles, Johnson Matthey, Just Refiners and Glencore to
process intermediate gold bearing product.
Mexico.
We have a 44% interest in
La Herradura, which is located in Mexico’s Sonora
desert. La Herradura is operated by Fresnillo PLC (which
owns the remaining 56% interest) and comprises open pit
operations with
run-of-mine
heap leach processing. La Herradura sold 112,500 ounces of
gold attributable to Newmont in 2009 and at December 31,
2009 we reported 1.8 million equity ounces of gold reserves
at La Herradura. La Herradura is currently developing
two new deposits, Soledad and Dipolos, for production scheduled
to begin in 2010.
Hope Bay, Canada.
We own 100% of the Hope Bay
project, a large undeveloped gold project in the Nunavut
Territory of Canada. Since acquiring this property in early
2008, we have made significant
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infrastructure improvements and identified an additional 45 new
drilling targets. The Company is currently evaluating an
underground operation to advance production.
South
America
Yanacocha, Peru.
The properties of Minera
Yanacocha S.R.L. (“Yanacocha”) are located
approximately 375 miles (604 kilometers) north of Lima and
30 miles (48 kilometers) north of the city of Cajamarca, in
Peru. Yanacocha began production in 1993. We hold a 51.35%
interest in Yanacocha with the remaining interests held by
Compañia de Minas Buenaventura, S.A.A.
(“Buenaventura”) (43.65%) and the International
Finance Corporation (5%).
Yanacocha has mining rights with respect to a large land
position consisting of concessions granted by the Peruvian
government to Yanacocha and a related entity. These mining
concessions provide for both the right to explore and exploit.
However, Yanacocha must first obtain the respective exploration
and exploitation permits, which are generally granted in due
course. Yanacocha may retain mining concessions indefinitely by
paying annual fees and, during exploitation, complying with
production obligations or paying assessed fines. Mining
concessions are freely assignable or transferable.
Yanacocha currently has three active open pit mines, Cerro
Yanacocha, La Quinua and Chaquicocha. Reclamation
and/or
backfilling activities at Carachugo, San José and
Maqui Maqui are currently underway. Yanacocha has four leach
pads, three processing facilities, and one mill, which began
commercial production in the second quarter of 2008.
Yanacocha’s gold sales for 2009 totaled 2.1 million
ounces (1.1 million equity ounces) and at December 31,
2009 we reported 5.4 million equity ounces of gold reserves
at Yanacocha.
Yanacocha, along with other mining companies in Peru, agreed
with the central government in December 2006 to contribute 3.75%
of its net profits to fund social development projects for a
period of up to five years, contingent upon metal prices
remaining high.
Conga, Peru.
The Conga project (51.35% owned)
is located within close proximity of existing operations at
Yanacocha. Feasibility studies on our preferred development
option were completed in late 2009 and a construction decision
is expected in the fourth quarter of 2010 assuming government
approval. The project is progressing into the development stage
with production expected in late 2014 to 2015. At
December 31, 2009 we reported 6.1 million equity
ounces of gold reserves and 1,660 million equity pounds of
copper reserves at Conga.
Asia
Pacific
Australia/New Zealand.
In Australia, mineral
exploration and mining titles are granted by the individual
states or territories. Mineral titles may also be subject to
native title legislation or, in the Northern Territory, to
Aboriginal freehold title legislation that entitles indigenous
persons to compensation calculated by reference to the gross
value of production. In 1992, the High Court of Australia held
that Aboriginal people who have maintained a continuing
connection with their land according to their traditions and
customs may hold certain rights in respect of the land (such
rights commonly referred to as “native title”). Since
the High Court’s decision, Australia has passed legislation
providing for the protection of native title and established
procedures for Aboriginal people to claim these rights. The fact
that native title is claimed with respect to an area, however,
does not necessarily mean that native title exists, and disputes
may be resolved by the courts.
Generally, under native title legislation, all mining titles
granted before January 1, 1994 are valid. Titles granted
between January 1, 1994 and December 23, 1996,
however, may be subject to invalidation if they were not
obtained in compliance with applicable legislative procedures,
though subsequent legislation has validated some of these
titles. After December 23, 1996, mining titles over areas
where native title is claimed to exist became subject to
legislative processes that generally give native title claimants
the “right to negotiate” with the title applicant for
compensation and other
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conditions. Native title holders do not have a veto over the
granting of mining titles, but if agreement cannot be reached,
the matter can be referred to the National Native
Title Tribunal for decision.
We do not expect that native title claims will have a material
adverse effect on any of our operations in Australia. The High
Court of Australia determined in an August 2002 decision, which
refined and narrowed the scope of native title, that native
title does not subsist in minerals in Western Australia and that
the rights granted under a mining title would, to the extent
inconsistent with asserted native title rights, operate to
extinguish those native title rights. Generally, native title is
only an issue for Newmont with respect to obtaining new mineral
titles or moving from one form of title to another, for example,
from an exploration title to a mining title. In these cases, the
requirements for negotiation and the possibility of paying
compensation may result in delay and increased costs for mining
in the affected areas. Similarly, the process of conducting
Aboriginal heritage surveys to identify and locate areas or
sites of Aboriginal cultural significance can result in
additional costs and delay in gaining access to land for
exploration and mining-related activities.
In Australia, various ad valorem royalties are paid to state and
territorial governments, typically based on a percentage of
gross revenues and earnings.
Boddington.
Boddington (100% owned) is located
81 miles (130 kilometers) southeast of Perth in Western
Australia. Boddington has been wholly owned since June 2009 when
Newmont acquired the final 33.33% interest from AngloGold
Ashanti Australia Limited (“AngloGold”). Boddington
poured its first gold on September 30, 2009, commenced
commercial production in November 2009 and expects a
12 month
ramp-up
period to design capacity. Boddington sold 103,300 ounces of
gold, including 8,200 incremental
start-up
ounces, and 9.0 million pounds of copper and at
December 31, 2009 we reported 21.0 million equity gold
ounces and 2,040 million equity copper pounds of reserves
at Boddington.
Jundee.
Jundee (100% owned) is situated
approximately 435 miles (700 kilometers) northeast of Perth
in Western Australia. We mined ore at Jundee solely from
underground sources in 2009, with mill feed supplemented from
oxide stockpiles for blending purposes. Jundee sold 412,300
ounces of gold in 2009 and at December 31, 2009 we reported
1.2 million equity ounces of gold reserves at Jundee.
Kalgoorlie.
Kalgoorlie (50% owned) comprises
the Fimiston open pit (commonly referred to as the Super Pit)
and Mt. Charlotte underground mine at Kalgoorlie-Boulder,
373 miles (600 kilometers) east of Perth in Western
Australia. The mines are managed by Kalgoorlie Consolidated Gold
Mines Pty Ltd for the joint venture owners, Newmont and Barrick.
The Super Pit is one of Australia’s largest gold mines in
terms of gold production and annual mining volume. During 2009,
the Kalgoorlie operations sold 335,800 equity ounces of gold and
at December 31, 2009 we reported 4.2 million equity
ounces of gold reserves at Kalgoorlie.
Tanami.
Tanami (100% owned) includes the
Granites treatment plant and associated mining operations, which
are located in the Northern Territory approximately
342 miles (550 kilometers) northwest of Alice Springs,
adjacent to the Tanami highway, and the Dead Bullock Soak mining
operations, approximately 25 miles (40 kilometers) west of
the Granites. Operations are predominantly focused on the Callie
underground mine at Dead Bullock Soak and ore is processed
through the Granites treatment plant. During 2009, the Tanami
operations sold 290,900 ounces of gold and at December 31,
2009 we reported 1.6 million equity ounces of gold reserves
at Tanami.
Waihi.
Waihi (100% owned) is located within
the town of Waihi, approximately 68 miles (110 kilometers)
southeast of Auckland, New Zealand and consists of the Favona
underground deposit and the Martha open pit. The Waihi operation
sold 118,200 ounces of gold in 2009 and at December 31,
2009 we reported 0.4 million equity ounces of gold reserves
at Waihi.
Batu Hijau, Indonesia.
Batu Hijau is located
on the island of Sumbawa, approximately 950 miles (1,529
kilometers) east of Jakarta. Batu Hijau is a large porphyry
copper/gold deposit, which Newmont discovered in 1990.
Development and construction activities began in 1997 and
start-up
occurred in
25
Table of Contents
late 1999. In 2009, copper sales were 497.7 million pounds
(217.0 million equity pounds), while gold sales were
550,500 ounces (239,700 equity ounces) and at December 31,
2009 we reported 4,520 million equity pounds of copper
reserves and 4.5 million equity ounces of gold reserves at
Batu Hijau.
We own 35.44% of the Batu Hijau mine through the Nusa Tenggara
Partnership (“NTP”) with an affiliate of Sumitomo
Corporation of Japan. We have a 56.25% interest in NTP and the
Sumitomo affiliate holds the remaining 43.75%. NTP in turn owns
63% of PT Newmont Nusa Tenggara (“PTNNT”), the
Indonesian subsidiary that owns Batu Hijau. In December 2009,
Newmont entered into a transaction with P.T. Pukuafu Indah
(“PTPI”), an unrelated noncontrolling partner of
PTNNT, whereby we agreed to advance certain funds to PTPI in
exchange for a pledge of the noncontrolling partner’s 20%
share of PTNNT dividends, net of withholding tax, and the
assignment of its voting rights to the Company. As a result,
PTPI was determined to be a Variable Interest Entity
(“VIE”) as it has minimal equity capital and the
voting rights to its 20% interest in PTNNT reside with Newmont.
As a result, our effective economic interest in PTNNT increased
by 17% to 52.44% at December 31, 2009. The remaining 17%
interest in PTNNT is owned by PTMDB, a consortium comprised of
regional and local governments near the Batu Hijau mine, and PT
Multicapital, an unrelated Indonesia company. We are currently
the operator of Batu Hijau.
In Indonesia, rights are granted to foreign investors to explore
for and to develop mineral resources within defined areas
through Contracts of Work entered into with the Indonesian
government. In 1986, PTNNT entered into a Contract of Work with
the Indonesian government covering Batu Hijau, under which PTNNT
was granted the exclusive right to explore in the contract area,
construct any required facilities, extract and process the
mineralized materials, and sell and export the minerals
produced, subject to certain requirements including Indonesian
government approvals and payment of royalties to the government.
Under the Contract of Work, PTNNT has the right to continue
operating the project for 30 years from operational
start-up,
or
longer if approved by the Indonesian government.
Under the Contract of Work executed in 1986 between the
Indonesian government and PTNNT, beginning in 2006 and
continuing through 2010, a portion of PTNNT’s shares must
be offered for sale, first, to the Indonesian government or,
second, to Indonesian nationals, such portion equal to the
difference between the following percentages and the percentage
of shares already owned by the Indonesian government or
Indonesian nationals (if such number is positive): 23% by
March 31, 2006; 30% by March 31, 2007; 37% by
March 31, 2008; 44% by March 31, 2009; and 51% by
March 31, 2010. The price at which such interest must be
offered for sale to the Indonesian parties is the highest of the
then-current replacement cost, the price at which shares would
be accepted for listing on the Jakarta Stock Exchange, or the
fair market value of such interest as a going concern, as agreed
with the Indonesian government. Pursuant to this provision, the
ownership interest in the Batu Hijau mine’s proven and
probable equity reserves may be reduced in the future to as low
as 27.56% and ownership interest of NTP in PTNNT could be
reduced to 49%, thus reducing our ability to control the
operation at Batu Hijau. In addition to affecting our level of
control over operations over PTNNT, such loss of control may
cause us to deconsolidate PTNNT for accounting purposes, which
would reduce our reported consolidated sales, cost applicable to
sales, amortization, total assets and operating cash flow
attributable to PTNNT. See Note 32 to the Consolidated
Financial Statements.
PTPI has owned and continues to own a 20% interest in PTNNT, and
therefore NTP (the Newmont-Sumitomo partnership) was required to
offer a 3% interest in PTNNT for sale in 2006 and an additional
7% interest in each of 2007, 2008 and 2009. In accordance with
the Contract of Work, an offer to sell a 3% interest was made to
the Indonesian government in 2006 and an offer for an additional
7% interest was made in each of 2007, 2008 and 2009. Following
notifications from the Department of Energy and Mineral
Resources (the “DEMR”) alleging that PTNNT was in
breach of its divestiture requirements under the Contract of
Work and threatening to issue a notice to terminate the Contract
of Work if PTNNT did not agree to divest the 2006, 2007 and
2008 shares in accordance with the direction of the DEMR,
the matter was submitted to an international arbitration panel.
That panel ruled in March 2009 that the 2006, 2007 and
2008 shares were required to be transferred by
26
Table of Contents
the end of September 2009, a deadline that was extended until
November 23, 2009 by agreement between PTNNT and the
Indonesian Government. In July 2009, the Company reached
agreement with the Indonesian government on the price of the
2008 7% interest and the 2009 7% interest and reoffered the 2008
7% interest and the 2009 7% interest to the Indonesian
government at this newly agreed price. In November and December
2009, sales agreements were concluded pursuant to which the
2006, 2007, and 2008 shares were transferred to PTMDB and
2009 shares were committed to be transferred to PTMDB.
Although the Indonesian government has acknowledged that PTNNT
is no longer in breach of the Contract of Work, future disputes
may arise as to the further divestiture of the shares. It is
uncertain who will acquire any future divestiture shares, and
the nature of our relations with the new owners of the
2006-2009 shares
and any future divestiture shares remain uncertain.
As part of the negotiation of the sale agreements with PTMDB,
the parties executed an operating agreement under which each
recognizes the right of NTP to operate Batu Hijau and binds the
parties to adhere to NTP’s standards for safety,
environmental stewardship and community responsibility. The
operating agreement becomes effective upon the completion of the
sale of the 2009 shares and continues for so long as NTP
owns more shares of PTNNT than PTMDB. If the operating agreement
terminates, then we will likely lose effective control over the
operations of Batu Hijau and will be at risk for operations
conducted in a manner that either detracts from value or results
in safety, environmental or social standards below those adhered
to by NTP.
The forest use permit was received on September 1, 2009 and
the permit renewal is valid until 2025. We have been in
discussions with the Indonesian government to obtain an
additional forest use permit necessary to make certain
amendments to the Batu Hijau environmental management plan and
environmental monitoring plan, including modifications with
respect to the mine’s pit slope stability. These permits
are key requirements to continue to operate Batu Hijau
efficiently and to the ultimate life of the mine and
recoverability of reserves. However, the additional forest use
permit has not been received as of the date of this Annual
Report. No assurances can be made regarding when or whether the
permit and any related plan amendments will be approved. The
resulting delay may adversely impact the Batu Hijau mine plan,
and may adversely impact future operating and financial results,
including deferment or cancellation of future development and
operations.
Africa
Ahafo.
Ahafo (100% owned) is located in the
Brong-Ahafo Region of Ghana, approximately 180 miles (290
kilometers) northwest of Accra. We currently operate three open
pits at Ahafo with reserves contained in 17 pits. Development of
a fourth pit, Amoma, is underway and production is expected to
begin in late 2010. The process plant consists of a conventional
mill and
carbon-in-leach
circuit. Ahafo sold 546,400 ounces of gold in 2009 and at
December 31, 2009 we reported 9.1 million equity
ounces of gold reserves at Ahafo.
In December 2003, Ghana’s Parliament unanimously ratified
an Investment Agreement between Newmont and the Government of
Ghana. The Agreement establishes a fixed fiscal and legal
regime, including fixed royalty and tax rates, for the life of
any Newmont project in Ghana. Under the Agreement, we will pay
corporate income tax at the Ghana statutory tax rate (presently
25% but not to exceed 32.5%) and fixed gross royalties on gold
production of 3.0% (3.6% for any production from forest reserve
areas). The Government of Ghana is also entitled to receive 10%
of a project’s net cash flow after we have recouped our
investment and may acquire up to 20% of a project’s equity
at fair market value on or after the 15th anniversary of such
project’s commencement of production. The Investment
Agreement also contains commitments with respect to job training
for local Ghanaians, community development, purchasing of local
goods and services and environmental protection. In 2009 the
Minister of Finance implemented the National Fiscal
Stabilization levy, which is an additional tax of profits.
Negotiations are ongoing with the commissioner of the Ghana
Internal Revenue Service on the applicability of the levy, given
Newmont’s Investment Agreement. While negotiations are
pending, we have paid and included $3 in
Income tax expense
to date under the levy.
27
Table of Contents
Akyem, Ghana.
Akyem (100% owned) is located
approximately 80 miles (125 kilometers) northwest of Accra.
We recently received the Environmental Permit and the Mining
Lease for Akyem and we are advancing the project towards a
development decision in the second half of 2010, which could
result in production in late 2013 to 2014. At December 31 2009
we reported 7.7 million equity ounces of gold reserves at
Akyem.
Operating
Statistics
The following tables detail operating statistics related to gold
production, sales and production costs.
| North America | South America | |||||||||||||||||||||||
|
Year Ended December 31,
|
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||
|
Tons mined (000 dry short tons):
|
||||||||||||||||||||||||
|
Open pit
|
239,102 | 222,222 | 237,933 | 197,559 | 211,525 | 208,871 | ||||||||||||||||||
|
Underground
|
2,740 | 2,500 | 1,942 | — | — | — | ||||||||||||||||||
|
Tons processed (000 dry short tons):
|
||||||||||||||||||||||||
|
Mill
|
24,702 | 24,755 | 25,526 | 6,242 | 4,196 | — | ||||||||||||||||||
|
Leach
|
19,697 | 26,210 | 19,313 | 136,293 | 97,823 | 98,319 | ||||||||||||||||||
|
Average ore grade (oz/ton):
|
||||||||||||||||||||||||
|
Mill
|
0.085 | 0.093 | 0.098 | 0.118 | 0.082 | — | ||||||||||||||||||
|
Leach
|
0.022 | 0.025 | 0.031 | 0.018 | 0.018 | 0.019 | ||||||||||||||||||
|
Average mill recovery rate
|
81.8 | % | 81.8 | % | 81.2 | % | 86.4 | % | 88.2 | % | — | |||||||||||||
|
Ounces produced (000):
|
||||||||||||||||||||||||
|
Mill
|
1,700 | 1,878 | 2,016 | 630 | 304 | — | ||||||||||||||||||
|
Leach
|
398 | 476 | 418 | 1,428 | 1,505 | 1,565 | ||||||||||||||||||
|
Incremental
start-up
(1)
|
1 | 1 | 6 | — | — | — | ||||||||||||||||||
| 2,099 | 2,355 | 2,440 | 2,058 | 1,809 | 1,565 | |||||||||||||||||||
|
Ounces sold (000):
|
||||||||||||||||||||||||
|
Consolidated
|
2,118 | 2,320 | 2,439 | 2,068 | 1,843 | 1,565 | ||||||||||||||||||
|
Less noncontrolling interests
|
— | — | — | (1,006 | ) | (897 | ) | (762 | ) | |||||||||||||||
|
Equity
(2)
|
2,118 | 2,320 | 2,439 | 1,062 | 946 | 803 | ||||||||||||||||||
|
Production costs per ounce:
|
||||||||||||||||||||||||
|
Direct mining and production costs
|
$ | 535 | $ | 461 | $ | 440 | $ | 319 | $ | 354 | $ | 310 | ||||||||||||
|
By-product credits
|
(55 | ) | (38 | ) | (26 | ) | (31 | ) | (27 | ) | (22 | ) | ||||||||||||
|
Royalties and production taxes
|
27 | 28 | 12 | 18 | 16 | 13 | ||||||||||||||||||
|
Other
|
6 | 6 | 6 | 5 | 3 | 12 | ||||||||||||||||||
|
Costs applicable to sales
|
513 | 457 | 432 | 311 | 346 | 313 | ||||||||||||||||||
|
Amortization
|
128 | 110 | 94 | 81 | 92 | 103 | ||||||||||||||||||
|
Reclamation/accretion expense
|
3 | 3 | 2 | 6 | 5 | 6 | ||||||||||||||||||
|
Total production costs
|
$ | 644 | $ | 570 | $ | 528 | $ | 398 | $ | 443 | $ | 422 | ||||||||||||
28
Table of Contents
| Asia Pacific | Africa | |||||||||||||||||||||||
|
Year Ended December 31,
|
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||
|
Tons mined (000 dry short tons):
|
||||||||||||||||||||||||
|
Open pit
|
204,814 | 244,220 | 301,166 | 51,971 | 50,567 | 44,235 | ||||||||||||||||||
|
Underground
|
3,778 | 3,896 | 3,547 | — | — | — | ||||||||||||||||||
|
Tons milled (000 dry short tons)
|
58,853 | 50,074 | 58,714 | 8,335 | 8,262 | 8,090 | ||||||||||||||||||
|
Average ore grade (oz/ton)
|
0.034 | 0.033 | 0.032 | 0.074 | 0.075 | 0.060 | ||||||||||||||||||
|
Average mill recovery rate
|
88.3 | % | 88.0 | % | 88.0 | % | 87.2 | % | 89.7 | % | 92.0 | % | ||||||||||||
|
Ounces produced (000):
|
||||||||||||||||||||||||
|
Mill
|
1,776 | 1,464 | 1,665 | 532 | 506 | 456 | ||||||||||||||||||
|
Incremental
start-up
(1)
|
56 | — | — | — | 19 | — | ||||||||||||||||||
| 1,832 | 1,464 | 1,665 | 532 | 525 | 456 | |||||||||||||||||||
|
Ounces sold (000):
|
||||||||||||||||||||||||
|
Consolidated
|
1,811 | 1,486 | 1,647 | 546 | 521 | 446 | ||||||||||||||||||
|
Less noncontrolling interests
|
(311 | ) | (164 | ) | (264 | ) | — | — | — | |||||||||||||||
|
Equity
(2)
|
1,500 | 1,322 | 1,383 | 546 | 521 | 446 | ||||||||||||||||||
|
Production costs per ounce:
|
||||||||||||||||||||||||
|
Direct mining and production costs
|
$ | 395 | $ | 502 | $ | 382 | $ | 414 | $ | 380 | $ | 355 | ||||||||||||
|
By-product credits
|
(10 | ) | (9 | ) | (6 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||||||
|
Royalties and production taxes
|
32 | 29 | 25 | 29 | 27 | 21 | ||||||||||||||||||
|
Other
|
1 | 2 | 4 | 2 | 2 | 1 | ||||||||||||||||||
|
Costs applicable to sales
|
418 | 524 | 405 | 444 | 408 | 376 | ||||||||||||||||||
|
Amortization
|
100 | 99 | 81 | 125 | 126 | 96 | ||||||||||||||||||
|
Reclamation/accretion expense
|
4 | 5 | 5 | 4 | 3 | 1 | ||||||||||||||||||
|
Total production costs
|
$ | 522 | $ | 628 | $ | 491 | $ | 573 | $ | 537 | 473 | |||||||||||||
| Total Gold | ||||||||||||
|
Year Ended December 31,
|
2009 | 2008 | 2007 | |||||||||
|
Ounces produced (000):
|
||||||||||||
|
Mill
|
4,638 | 4,152 | 4,137 | |||||||||
|
Leach
|
1,826 | 1,981 | 1,983 | |||||||||
|
Incremental
start-up
(1)
|
57 | 20 | 6 | |||||||||
| 6,521 | 6,153 | 6,126 | ||||||||||
|
Ounces sold (000):
|
||||||||||||
|
Consolidated
|
6,543 | 6,170 | 6,097 | |||||||||
|
Less noncontrolling interests
|
(1,317 | ) | (1,061 | ) | (1,026 | ) | ||||||
|
Discontinued
operations
(3)
|
33 | 75 | 247 | |||||||||
|
Equity
(2)
|
5,259 | 5,184 | 5,318 | |||||||||
|
Production costs per ounce:
|
||||||||||||
|
Direct mining and production costs
|
$ | 418 | $ | 432 | $ | 385 | ||||||
|
By-product credits
|
(30 | ) | (25 | ) | (18 | ) | ||||||
|
Royalties and production taxes
|
26 | 25 | 17 | |||||||||
|
Other
|
3 | 4 | 6 | |||||||||
|
Costs applicable to sales
|
417 | 436 | 390 | |||||||||
|
Amortization
|
105 | 103 | 93 | |||||||||
|
Reclamation/accretion expense
|
4 | 4 | 4 | |||||||||
|
Total production costs
|
$ | 526 | $ | 543 | $ | 487 | ||||||
| (1) | Incremental start-up includes the removal and production of de minimis saleable materials during development and is recorded as Other income , net of incremental mining and processing costs. |
29
Table of Contents
| (2) | Gold ounces sold attributable to Newmont after noncontrolling interests. | |
| (3) | Gold ounces sold attributable to Newmont from discontinued operations at Kori Kollo, Bolivia and Pajingo, Australia. |
The following table details operating statistics related to
copper production, sales and production costs.
| Asia Pacific | ||||||||||||
|
Year Ended December 31,
|
2009 | 2008 | 2007 | |||||||||
|
Tons milled (000 dry short tons)
|
47,087 | 37,818 | 46,782 | |||||||||
|
Average copper grade
|
0.60 | % | 0.47 | % | 0.60 | % | ||||||
|
Average copper recovery rate
|
89.2 | % | 80.6 | % | 86.1 | % | ||||||
|
Copper pounds produced (millions)
|
499 | 285 | 484 | |||||||||
|
Copper pounds sold (millions):
|
||||||||||||
|
Consolidated
|
507 | 290 | 428 | |||||||||
|
Less noncontrolling interests
|
(281 | ) | (160 | ) | (228 | ) | ||||||
|
Equity
(1)
|
226 | 130 | 200 | |||||||||
|
Production costs per pound:
|
||||||||||||
|
Costs applicable to sales
|
$ | 0.64 | $ | 1.38 | $ | 1.05 | ||||||
|
Amortization
|
0.16 | 0.28 | 0.22 | |||||||||
|
Reclamation/accretion expense
|
0.01 | 0.02 | 0.01 | |||||||||
|
Total production costs
|
$ | 0.81 | $ | 1.68 | $ | 1.28 | ||||||
| (1) | Equity copper pounds sold attributable to Newmont after noncontrolling interests. |
Proven and
Probable Equity Reserves
We had proven and probable gold reserves of 91.8 million
equity ounces at December 31, 2009, calculated at a gold
price assumption of $800, A$1,000 or NZ$1,200 per ounce,
respectively. Our 2009 reserves would decline by approximately
7% (6.6 million ounces), if calculated at a $750 per ounce
gold price. An increase in the gold price to $850 per ounce
would increase reserves by approximately 3% (3.1 million
ounces), all other assumptions remaining constant. For 2008,
reserves were calculated at a gold price assumption of $725,
A$850 or NZ$1,000 per ounce, respectively.
At December 31, 2009 our proven and probable gold reserves
in North America were 30.3 million equity ounces. Outside
of North America, year-end proven and probable gold reserves
were 61.5 million equity ounces, including
32.9 million equity ounces in Asia Pacific,
16.8 million equity ounces in Africa and 11.8 million
equity ounces in South America.
Our proven and probable copper reserves at December 31,
2009 were 9,120 million equity pounds. For 2009, reserves
were calculated at a copper price assumption of $2.00 or A$2.40
per pound, respectively, unchanged from 2008.
Under our current mining plans, all of our reserves are located
on fee property or mining claims or will be depleted during the
terms of existing mining licenses or concessions, or where
applicable, any assured renewal or extension periods for such
licenses or concessions.
Proven and probable equity reserves are based on extensive
drilling, sampling, mine modeling and metallurgical testing from
which we determined economic feasibility. The price sensitivity
of reserves depends upon several factors including grade,
metallurgical recovery, operating cost,
waste-to-ore
ratio and ore type. Metallurgical recovery rates vary depending
on the metallurgical properties of each deposit and the
production process used. The reserve tables below list the
average metallurgical recovery rate for each deposit, which
takes into account the several different processing
30
Table of Contents
methods that we use. The cut-off grade, or lowest grade of
mineralized material considered economic to process, varies with
material type, metallurgical recoveries, operating costs and co-
or by-product credits.
The proven and probable equity reserve figures presented herein
are estimates based on information available at the time of
calculation. No assurance can be given that the indicated levels
of recovery of gold and copper will be realized. Ounces of gold
or pounds of copper included in the proven and probable reserves
are calculated without regard to any losses during metallurgical
treatment. Reserve estimates may require revision based on
actual production. Market fluctuations in the price of gold and
copper, as well as increased production costs or reduced
metallurgical recovery rates, could render certain proven and
probable reserves containing relatively lower grades of
mineralization uneconomic to exploit and might result in a
reduction of reserves.
We publish reserves annually, and we will recalculate reserves
at December 31, 2010, taking into account metal prices,
changes, if any, in future production and capital costs,
divestments and depletion as well as any acquisitions and
additions to reserves during 2010.
31
Table of Contents
The following tables detail gold proven and probable equity
reserves(1) reflecting only those reserves owned by Newmont at
December 31, 2009 and 2008:
| December 31, 2009 (1) | ||||||||||||||||||||||||||||||||||||||||||||
| Proven Reserves | Probable Reserves | Proven and Probable Reserves | ||||||||||||||||||||||||||||||||||||||||||
|
Newmont
|
Grade
|
Grade
|
Grade
|
Metallurgical
|
||||||||||||||||||||||||||||||||||||||||
|
Deposits/Districts
|
Share | Tonnage (2) | (oz/ton) | Ounces (3) | Tonnage (2) | (oz/ton) | Ounces (3) | Tonnage (2) | (oz/ton) | Ounces (3) | Recovery (3) | |||||||||||||||||||||||||||||||||
| (000) | (000) | (000) | (000) | (000) | (000) | |||||||||||||||||||||||||||||||||||||||
|
North America
|
||||||||||||||||||||||||||||||||||||||||||||
|
Carlin Open Pits,
Nevada
(4)
|
100 | % | 24,400 | 0.067 | 1,640 | 234,900 | 0.042 | 9,760 | 259,300 | 0.044 | 11,400 | 74 | % | |||||||||||||||||||||||||||||||
|
Carlin Underground, Nevada
|
100 | % | 4,600 | 0.307 | 1,400 | 5,100 | 0.315 | 1,590 | 9,700 | 0.311 | 2,990 | 88 | % | |||||||||||||||||||||||||||||||
|
Midas,
Nevada
(5)
|
100 | % | 400 | 0.480 | 200 | 300 | 0.347 | 100 | 700 | 0.425 | 300 | 95 | % | |||||||||||||||||||||||||||||||
|
Phoenix,
Nevada
(6)
|
100 | % | — | — | — | 285,000 | 0.020 | 5,670 | 285,000 | 0.020 | 5,670 | 73 | % | |||||||||||||||||||||||||||||||
|
Twin Creeks, Nevada
|
100 | % | 9,300 | 0.097 | 900 | 40,900 | 0.072 | 2,950 | 50,200 | 0.077 | 3,850 | 80 | % | |||||||||||||||||||||||||||||||
|
Turquoise Ridge,
Nevada
(7)
|
25 | % | 1,100 | 0.480 | 550 | 1,500 | 0.527 | 810 | 2,600 | 0.507 | 1,360 | 92 | % | |||||||||||||||||||||||||||||||
|
Nevada
In-Process
(8)
|
100 | % | 33,800 | 0.021 | 730 | — | — | — | 33,800 | 0.021 | 730 | 65 | % | |||||||||||||||||||||||||||||||
|
Nevada
Stockpiles
(9)
|
100 | % | 27,000 | 0.079 | 2,140 | 2,500 | 0.028 | 70 | 29,500 | 0.075 | 2,210 | 79 | % | |||||||||||||||||||||||||||||||
|
Total
Nevada
(10)
|
100,600 | 0.075 | 7,560 | 570,200 | 0.037 | 20,950 | 670,800 | 0.042 | 28,510 | 77 | % | |||||||||||||||||||||||||||||||||
|
La Herradura,
Mexico
(11)
|
44 | % | 46,100 | 0.019 | 900 | 47,100 | 0.019 | 880 | 93,200 | 0.019 | 1,780 | 66 | % | |||||||||||||||||||||||||||||||
| 146,700 | 0.058 | 8,460 | 617,300 | 0.035 | 21,830 | 764,000 | 0.040 | 30,290 | 77 | % | ||||||||||||||||||||||||||||||||||
|
South America
|
||||||||||||||||||||||||||||||||||||||||||||
|
Conga,
Peru
(12)
|
51.35 | % | — | — | — | 317,200 | 0.019 | 6,080 | 317,200 | 0.019 | 6,080 | 79 | % | |||||||||||||||||||||||||||||||
|
Yanacocha, Peru Open
Pits
(13)
|
51.35 | % | 7,800 | 0.035 | 270 | 123,700 | 0.036 | 4,480 | 131,500 | 0.036 | 4,750 | 69 | % | |||||||||||||||||||||||||||||||
|
Yanacocha, Peru
In-Process
(8)(13)
|
51.35 | % | 26,400 | 0.025 | 660 | — | — | — | 26,400 | 0.025 | 660 | 74 | % | |||||||||||||||||||||||||||||||
|
Total Yanacocha, Peru
|
34,200 | 0.027 | 930 | 123,700 | 0.036 | 4,480 | 157,900 | 0.034 | 5,410 | 69 | % | |||||||||||||||||||||||||||||||||
|
La Zanja,
Peru
(14)
|
46.94 | % | — | — | — | 18,800 | 0.018 | 340 | 18,800 | 0.018 | 340 | 67 | % | |||||||||||||||||||||||||||||||
| 34,200 | 0.027 | 930 | 459,700 | 0.024 | 10,900 | 493,900 | 0.024 | 11,830 | 74 | % | ||||||||||||||||||||||||||||||||||
|
Asia Pacific
|
||||||||||||||||||||||||||||||||||||||||||||
|
Batu Hijau Open
Pit
(15)
|
52.44 | % | 201,100 | 0.015 | 2,970 | 167,700 | 0.005 | 810 | 368,800 | 0.010 | 3,780 | 76 | % | |||||||||||||||||||||||||||||||
|
Batu Hijau
Stockpiles
(9)(15)
|
52.44 | % | — | — | — | 193,800 | 0.004 | 720 | 193,800 | 0.004 | 720 | 70 | % | |||||||||||||||||||||||||||||||
|
Total Batu Hijau, Indonesia
|
201,100 | 0.015 | 2,970 | 361,500 | 0.004 | 1,530 | 562,600 | 0.008 | 4,500 | 75 | % | |||||||||||||||||||||||||||||||||
|
Boddington, Western
Australia
(16)
|
100 | % | 184,600 | 0.025 | 4,640 | 781,800 | 0.021 | 16,320 | 966,400 | 0.022 | 20,960 | 82 | % | |||||||||||||||||||||||||||||||
|
Jundee, Western
Australia
(17)
|
100 | % | 4,100 | 0.065 | 260 | 3,300 | 0.273 | 910 | 7,400 | 0.159 | 1,170 | 90 | % | |||||||||||||||||||||||||||||||
|
Kalgoorlie Open Pit and Underground
|
50 | % | 21,200 | 0.061 | 1,280 | 39,600 | 0.062 | 2,470 | 60,800 | 0.062 | 3,750 | 85 | % | |||||||||||||||||||||||||||||||
|
Kalgoorlie
Stockpiles
(9)
|
50 | % | 14,300 | 0.031 | 440 | — | — | — | 14,300 | 0.031 | 440 | 78 | % | |||||||||||||||||||||||||||||||
|
Total Kalgoorlie, Western
Australia
(18)
|
50 | % | 35,500 | 0.049 | 1,720 | 39,600 | 0.062 | 2,470 | 75,100 | 0.056 | 4,190 | 84 | % | |||||||||||||||||||||||||||||||
|
Waihi, New
Zealand
(19)
|
100 | % | — | — | — | 4,000 | 0.101 | 410 | 4,000 | 0.101 | 410 | 90 | % | |||||||||||||||||||||||||||||||
|
Tanami, Northern
Territories
(20)
|
100 | % | 5,200 | 0.160 | 830 | 7,900 | 0.102 | 810 | 13,100 | 0.125 | 1,640 | 96 | % | |||||||||||||||||||||||||||||||
| 430,500 | 0.024 | 10,420 | 1,198,100 | 0.019 | 22,450 | 1,628,600 | 0.020 | 32,870 | 82 | % | ||||||||||||||||||||||||||||||||||
|
Africa
|
||||||||||||||||||||||||||||||||||||||||||||
|
Ahafo Open
Pits
(21)
|
100 | % | — | — | — | 128,700 | 0.068 | 8,810 | 128,700 | 0.068 | 8,810 | 87 | % | |||||||||||||||||||||||||||||||
|
Ahafo
Stockpiles
(9)
|
100 | % | 9,300 | 0.034 | 320 | — | — | — | 9,300 | 0.034 | 320 | 87 | % | |||||||||||||||||||||||||||||||
|
Total Ahafo, Ghana
|
100 | % | 9,300 | 0.034 | 320 | 128,700 | 0.068 | 8,810 | 138,000 | 0.066 | 9,130 | 87 | % | |||||||||||||||||||||||||||||||
|
Akyem,
Ghana
(22)
|
100 | % | — | — | — | 147,200 | 0.052 | 7,660 | 147,200 | 0.052 | 7,660 | 89 | % | |||||||||||||||||||||||||||||||
| 9,300 | 0.033 | 320 | 275,900 | 0.060 | 16,470 | 285,200 | 0.059 | 16,790 | 88 | % | ||||||||||||||||||||||||||||||||||
|
Total Gold
|
620,700 | 0.032 | 20,130 | 2,551,000 | 0.028 | 71,650 | 3,171,700 | 0.029 | 91,780 | 80 | % | |||||||||||||||||||||||||||||||||
32
Table of Contents
| December 31, 2008 (1) | ||||||||||||||||||||||||||||||||||||||||||||
| Proven Reserves | Probable Reserves | Proven and Probable Reserves | ||||||||||||||||||||||||||||||||||||||||||
|
Newmont
|
Grade
|
Grade
|
Grade
|
Metallurgical
|
||||||||||||||||||||||||||||||||||||||||
|
Deposits/Districts
|
Share | Tonnage (2) | (oz/ton) | Ounces (3) | Tonnage (2) | (oz/ton) | Ounces (3) | Tonnage (2) | (oz/ton) | Ounces (3) | Recovery (3) | |||||||||||||||||||||||||||||||||
| (000) | (000) | (000) | (000) | (000) | (000) | |||||||||||||||||||||||||||||||||||||||
|
North America
|
||||||||||||||||||||||||||||||||||||||||||||
|
Carlin Open Pits, Nevada
|
100 | % | 12,000 | 0.072 | 860 | 190,400 | 0.043 | 8,190 | 202,400 | 0.045 | 9,050 | 74 | % | |||||||||||||||||||||||||||||||
|
Carlin Underground, Nevada
|
100 | % | 1,700 | 0.256 | 430 | 10,000 | 0.322 | 3,220 | 11,700 | 0.313 | 3,650 | 89 | % | |||||||||||||||||||||||||||||||
|
Midas, Nevada
|
100 | % | 600 | 0.498 | 280 | 300 | 0.332 | 110 | 900 | 0.436 | 390 | 95 | % | |||||||||||||||||||||||||||||||
|
Phoenix, Nevada
|
100 | % | — | — | — | 299,800 | 0.021 | 6,310 | 299,800 | 0.021 | 6,310 | 72 | % | |||||||||||||||||||||||||||||||
|
Twin Creeks, Nevada
|
100 | % | 9,200 | 0.098 | 900 | 42,500 | 0.072 | 3,060 | 51,700 | 0.077 | 3,960 | 80 | % | |||||||||||||||||||||||||||||||
|
Turquoise Ridge,
Nevada
(7)
|
25 | % | 1,900 | 0.507 | 970 | 700 | 0.483 | 360 | 2,600 | 0.500 | 1,330 | 92 | % | |||||||||||||||||||||||||||||||
|
Nevada
In-Process
(8)
|
100 | % | 36,000 | 0.026 | 940 | — | — | — | 36,000 | 0.026 | 940 | 66 | % | |||||||||||||||||||||||||||||||
|
Nevada
Stockpiles
(9)
|
100 | % | 32,000 | 0.075 | 2,400 | 2,200 | 0.030 | 60 | 34,200 | 0.072 | 2,460 | 78 | % | |||||||||||||||||||||||||||||||
|
Total Nevada
|
93,400 | 0.073 | 6,780 | 545,900 | 0.039 | 21,310 | 639,300 | 0.044 | 28,090 | 78 | % | |||||||||||||||||||||||||||||||||
|
La Herradura, Mexico
|
44 | % | 36,900 | 0.025 | 910 | 39,200 | 0.025 | 980 | 76,100 | 0.025 | 1,890 | 66 | % | |||||||||||||||||||||||||||||||
| 130,300 | 0.059 | 7,690 | 585,100 | 0.038 | 22,290 | 715,400 | 0.042 | 29,980 | 77 | % | ||||||||||||||||||||||||||||||||||
|
South America
|
||||||||||||||||||||||||||||||||||||||||||||
|
Conga, Peru
|
51.35 | % | — | — | — | 317,200 | 0.019 | 6,080 | 317,200 | 0.019 | 6,080 | 79 | % | |||||||||||||||||||||||||||||||
|
Yanacocha, Peru Open Pits
|
51.35 | % | 19,200 | 0.023 | 430 | 188,300 | 0.030 | 5,720 | 207,500 | 0.030 | 6,150 | 69 | % | |||||||||||||||||||||||||||||||
|
Yanacocha, Peru
In-Process
(8)
|
51.35 | % | 20,800 | 0.026 | 530 | — | — | — | 20,800 | 0.026 | 530 | 74 | % | |||||||||||||||||||||||||||||||
|
Total Yanacocha, Peru
|
40,000 | 0.024 | 960 | 188,300 | 0.030 | 5,720 | 228,300 | 0.029 | 6,680 | 69 | % | |||||||||||||||||||||||||||||||||
|
Kori Kollo,
Bolivia
(23)
|
88 | % | 9,100 | 0.018 | 160 | 2,400 | 0.014 | 30 | 11,500 | 0.017 | 190 | 52 | % | |||||||||||||||||||||||||||||||
| 49,100 | 0.023 | 1,120 | 507,900 | 0.023 | 11,830 | 557,000 | 0.023 | 12,950 | 74 | % | ||||||||||||||||||||||||||||||||||
|
Asia Pacific
|
||||||||||||||||||||||||||||||||||||||||||||
|
Batu Hijau Open
Pit
(15)
|
45 | % | 166,000 | 0.013 | 2,110 | 182,800 | 0.009 | 1,570 | 348,800 | 0.011 | 3,680 | 76 | % | |||||||||||||||||||||||||||||||
|
Batu Hijau
Stockpiles
(9)(15)
|
45 | % | — | — | — | 131,400 | 0.003 | 410 | 131,400 | 0.003 | 410 | 72 | % | |||||||||||||||||||||||||||||||
|
Total Batu Hijau, Indonesia
|
166,000 | 0.013 | 2,110 | 314,200 | 0.006 | 1,980 | 480,200 | 0.009 | 4,090 | 76 | % | |||||||||||||||||||||||||||||||||
|
Boddington, Western Australia
|
66.67 | % | 125,500 | 0.026 | 3,310 | 457,700 | 0.022 | 10,060 | 583,200 | 0.023 | 13,370 | 81 | % | |||||||||||||||||||||||||||||||
|
Jundee, Western Australia
|
100 | % | 3,500 | 0.096 | 340 | 2,800 | 0.337 | 930 | 6,300 | 0.202 | 1,270 | 91 | % | |||||||||||||||||||||||||||||||
|
Kalgoorlie Open Pit and Underground
|
50 | % | 23,100 | 0.061 | 1,410 | 40,600 | 0.063 | 2,560 | 63,700 | 0.062 | 3,970 | 85 | % | |||||||||||||||||||||||||||||||
|
Kalgoorlie
Stockpiles
(9)
|
50 | % | 14,400 | 0.031 | 450 | — | — | — | 14,400 | 0.031 | 450 | 76 | % | |||||||||||||||||||||||||||||||
|
Total Kalgoorlie, Western Australia
|
50 | % | 37,500 | 0.049 | 1,860 | 40,600 | 0.063 | 2,560 | 78,100 | 0.056 | 4,420 | 84 | % | |||||||||||||||||||||||||||||||
|
Waihi, New Zealand
|
100 | % | 300 | 0.267 | 80 | 2,600 | 0.107 | 280 | 2,900 | 0.124 | 360 | 89 | % | |||||||||||||||||||||||||||||||
|
Tanami Underground and Open Pits
|
100 | % | 4,000 | 0.167 | 660 | 5,600 | 0.136 | 760 | 9,600 | 0.149 | 1,420 | 96 | % | |||||||||||||||||||||||||||||||
|
Tanami
Stockpiles
(9)
|
100 | % | — | — | — | 1,900 | 0.029 | 60 | 1,900 | 0.030 | 60 | 94 | % | |||||||||||||||||||||||||||||||
|
Total Tanami, Northern Territory
|
100 | % | 4,000 | 0.167 | 660 | 7,500 | 0.108 | 820 | 11,500 | 0.129 | 1,480 | 96 | % | |||||||||||||||||||||||||||||||
| 336,800 | 0.025 | 8,360 | 825,400 | 0.020 | 16,630 | 1,162,200 | 0.022 | 24,990 | 82 | % | ||||||||||||||||||||||||||||||||||
|
Africa
|
||||||||||||||||||||||||||||||||||||||||||||
|
Ahafo, Ghana
|
100 | % | 5,900 | 0.039 | 230 | 119,200 | 0.077 | 9,150 | 125,100 | 0.075 | 9,380 | 87 | % | |||||||||||||||||||||||||||||||
|
Akyem, Ghana
|
100 | % | — | — | — | 147,200 | 0.052 | 7,660 | 147,200 | 0.052 | 7,660 | 89 | % | |||||||||||||||||||||||||||||||
| 5,900 | 0.039 | 230 | 266,400 | 0.063 | 16,810 | 272,300 | 0.063 | 17,040 | 88 | % | ||||||||||||||||||||||||||||||||||
|
Total Gold
|
522,100 | 0.033 | 17,400 | 2,184,800 | 0.031 | 67,560 | 2,706,900 | 0.031 | 84,960 | 80 | % | |||||||||||||||||||||||||||||||||
| (1) | The term “reserve” means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. | |
| The term “economically,” as used in the definition of reserve, means that profitable extraction or production has been established or analytically demonstrated in a full feasibility study to be viable and justifiable under reasonable investment and market assumptions. | ||
| The term “legally,” as used in the definition of reserve, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely |
33
Table of Contents
| resolved. However, for a reserve to exist, Newmont must have a justifiable expectation, based on applicable laws and regulations, that issuance of permits or resolution of legal issues necessary for mining and processing at a particular deposit will be accomplished in the ordinary course and in a timeframe consistent with Newmont’s current mine plans. | ||
| The term “proven reserves” means reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; (b) grade and/or quality are computed from the results of detailed sampling; and (c) the sites for inspection, sampling and measurements are spaced so closely and the geologic character is sufficiently defined that size, shape, depth and mineral content of reserves are well established. | ||
| The term “probable reserves” means reserves for which quantity and grade are computed from information similar to that used for proven reserves, but the sites for sampling are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. | ||
| References to “equity ounces” or “equity pounds” mean that portion of gold or copper produced, sold or included in proven and probable reserves that is attributable to our ownership or economic interest. | ||
| Proven and probable equity reserves were calculated using different cut-off grades. The term “cut-off grade” means the lowest grade of mineralized material considered economic to process. Cut-off grades vary between deposits depending upon prevailing economic conditions, mineability of the deposit, by-products, amenability of the ore to gold or copper extraction, and type of milling or leaching facilities available. | ||
| 2009 reserves were calculated at a gold price of $800, A$1,000 or NZ$1,200 per ounce unless otherwise noted. | ||
| 2008 reserves were calculated at a gold price of $725, A$850 or NZ$1,000 per ounce unless otherwise noted. | ||
| (2) | Tonnages include allowances for losses resulting from mining methods. Tonnages are rounded to the nearest 100,000. | |
| (3) | Ounces or pounds are estimates of metal contained in ore tonnages and do not include allowances for processing losses. Metallurgical recovery rates represent the estimated amount of metal to be recovered through metallurgical extraction processes. Ounces are rounded to the nearest 10,000. | |
| (4) | Includes undeveloped reserves at the Emigrant deposit of 1.2 million ounces. | |
| (5) | Also contains reserves of 4.6 million ounces of silver with a metallurgical recovery of 88%. | |
| (6) | Gold cut-off grade varies with level of copper credits. | |
| (7) | Reserve estimates provided by Barrick, the operator of the Turquoise Ridge joint venture. | |
| (8) | In-process material is the material on leach pads at the end of the year from which gold remains to be recovered. In-process material reserves are reported separately where tonnage or ounces are greater than 5% of the total site-reported reserves and ounces are greater than 100,000. | |
| (9) | Stockpiles are comprised primarily of material that has been set aside to allow processing of higher grade material in the mills. Stockpiles increase or decrease depending on current mine plans. Stockpile reserves are reported separately where tonnage or ounces are greater than 5% of the total site-reported reserves and ounces are greater than 100,000. | |
| (10) | Cut-off grades utilized in Nevada 2009 reserves were as follows: oxide leach material not less than 0.006 ounce per ton; oxide mill material not less than 0.025 ounce per ton; flotation material not less than 0.025 ounce per ton; and refractory mill material not less than 0.046 ounce per ton. | |
| (11) | Cut-off grade utilized in 2009 reserves not less than 0.006 ounce per ton. | |
| (12) | Deposit is currently undeveloped. Gold cut-off grade varies with level of copper credits. |
34
Table of Contents
| (13) | Reserves include the currently undeveloped deposit at Tapado Oeste (formerly called Corimayo), which contains reserves of 1.2 million equity ounces. Cut-off grades utilized in 2009 reserves were as follows: oxide leach material not less than 0.005 ounce per ton; and oxide mill material not less than 0.014 ounce per ton. | |
| (14) | Reserve estimates provided by Buenaventura, the operator of the La Zanja project. Cut-off grade utilized in 2009 reserves not less than 0.005 ounce per ton. | |
| (15) | Percentage reflects Newmont’s economic interest at December 31, 2009. In November and December 2009 our economic interest increased from 45% to 52.44% as a result of transactions with a noncontrolling partner, partially offset by the divestiture required under the Contract of Work. Gold cut-off grade varies with level of copper credits. | |
| (16) | Newmont acquired the remaining 33.33% of Boddington from AngloGold in June 2009. Gold cut-off grade varies with level of copper credits. | |
| (17) | Cut-off grade utilized in 2009 reserves not less than 0.020 ounce per ton. | |
| (18) | Cut-off grade utilized in 2009 reserves not less than 0.026 ounce per ton. | |
| (19) | Cut-off grade utilized in 2009 reserves not less than 0.020 ounce per ton. | |
| (20) | Cut-off grade utilized in 2009 reserves not less than 0.045 ounce per ton. | |
| (21) | Includes undeveloped reserves at eight pits in the Ahafo trend totaling 3.7 million ounces. Cut-off grade utilized in 2009 reserves not less than 0.016 ounce per ton. | |
| (22) | Deposit is undeveloped. Cut-off grade utilized in 2009 reserves not less than 0.012 ounce per ton. | |
| (23) | Newmont divested its interest in Kori Kollo in July 2009. |
The following tables detail copper proven and probable equity
reserves(1) reflecting only those reserves owned by Newmont at
December 31, 2009 and 2008:
| December 31, 2009 (1) | ||||||||||||||||||||||||||||||||||||||||||||
| Proven Reserves | Probable Reserves | Proven and Probable Reserves | ||||||||||||||||||||||||||||||||||||||||||
|
Newmont
|
Grade
|
Grade
|
Grade
|
Metallurgical
|
||||||||||||||||||||||||||||||||||||||||
|
Deposits/Districts
|
Share | Tonnage (2) | (Cu%) | Pounds (3) | Tonnage (2) | (Cu%) | Pounds(3) | Tonnage(2) | (Cu%) | Pounds(3) | Recovery (3) | |||||||||||||||||||||||||||||||||
| (000) | (millions) | (000) | (millions) | (000) | (millions) | |||||||||||||||||||||||||||||||||||||||
|
North America
|
||||||||||||||||||||||||||||||||||||||||||||
|
Phoenix,
Nevada
(4)
|
100 | % | — | — | — | 287,500 | 0.16 | % | 900 | 287,500 | 0.16 | % | 900 | 61 | % | |||||||||||||||||||||||||||||
|
South America
|
||||||||||||||||||||||||||||||||||||||||||||
|
Conga,
Peru
(5)
|
51.35 | % | — | — | — | 317,200 | 0.26 | % | 1,660 | 317,200 | 0.26 | % | 1,660 | 85 | % | |||||||||||||||||||||||||||||
|
Asia Pacific
|
||||||||||||||||||||||||||||||||||||||||||||
|
Batu Hijau Open
Pit
(6)
|
52.44 | % | 201,100 | 0.51 | % | 2,070 | 167,700 | 0.32 | % | 1,060 | 368,800 | 0.42 | % | 3,130 | 77 | % | ||||||||||||||||||||||||||||
|
Batu Hijau
Stockpiles
(6)(7)
|
52.44 | % | — | — | — | 193,800 | 0.36 | % | 1,390 | 193,800 | 0.36 | % | 1,390 | 66 | % | |||||||||||||||||||||||||||||
|
Total Batu Hijau, Indonesia
|
52.44 | % | 201,100 | 0.51 | % | 2,070 | 361,500 | 0.34 | % | 2,450 | 562,600 | 0.40 | % | 4,520 | 74 | % | ||||||||||||||||||||||||||||
|
Boddington, Western
Australia
(8)
|
100 | % | 184,600 | 0.11 | % | 400 | 781,800 | 0.10 | % | 1,640 | 966,400 | 0.11 | % | 2,040 | 84 | % | ||||||||||||||||||||||||||||
|
Total Asia Pacific
|
385,700 | 0.32 | % | 2,470 | 1,143,300 | 0.18 | % | 4,090 | 1,529,000 | 0.21 | % | 6,560 | 77 | % | ||||||||||||||||||||||||||||||
|
Total Copper
|
385,700 | 0.32 | % | 2,470 | 1,748,000 | 0.19 | % | 6,650 | 2,133,700 | 0.21 | % | 9,120 | 77 | % | ||||||||||||||||||||||||||||||
35
Table of Contents
| December 31, 2008 (1) | ||||||||||||||||||||||||||||||||||||||||||||
| Proven Reserves | Probable Reserves | Proven and Probable Reserves | ||||||||||||||||||||||||||||||||||||||||||
|
Newmont
|
Grade
|
Grade
|
Grade
|
Metallurgical
|
||||||||||||||||||||||||||||||||||||||||
|
Deposits/Districts
|
Share | Tonnage (2) | (Cu%) | Pounds (3) | Tonnage (2) | (Cu%) | Pounds (3) | Tonnage (2) | (Cu%) | Pounds (3) | Recovery (3) | |||||||||||||||||||||||||||||||||
| (000) | (millions) | (000) | (millions) | (000) | (millions) | |||||||||||||||||||||||||||||||||||||||
|
North America
|
||||||||||||||||||||||||||||||||||||||||||||
|
Phoenix, Nevada
|
100 | % | — | — | — | 302,000 | 0.15 | % | 890 | 302,000 | 0.15 | % | 890 | 61 | % | |||||||||||||||||||||||||||||
|
South America
|
||||||||||||||||||||||||||||||||||||||||||||
|
Conga, Peru
|
51.35 | % | — | — | — | 317,200 | 0.26 | % | 1,660 | 317,200 | 0.26 | % | 1,660 | 85 | % | |||||||||||||||||||||||||||||
|
Asia Pacific
|
||||||||||||||||||||||||||||||||||||||||||||
|
Batu Hijau Open Pit
|
45 | % | 166,000 | 0.48 | % | 1,600 | 182,800 | 0.40 | % | 1,460 | 348,800 | 0.44 | % | 3,060 | 77 | % | ||||||||||||||||||||||||||||
|
Batu Hijau
Stockpiles
(7)
|
45 | % | — | — | — | 131,400 | 0.34 | % | 890 | 131,400 | 0.34 | % | 890 | 67 | % | |||||||||||||||||||||||||||||
|
Total Batu Hijau, Indonesia
|
45 | % | 166,000 | 0.48 | % | 1,600 | 314,200 | 0.37 | % | 2,350 | 480,200 | 0.41 | % | 3,950 | 75 | % | ||||||||||||||||||||||||||||
|
Boddington, Western Australia
|
66.67 | % | 125,500 | 0.11 | % | 280 | 457,700 | 0.11 | % | 1,000 | 583,200 | 0.11 | % | 1,280 | 83 | % | ||||||||||||||||||||||||||||
|
Total Asia Pacific
|
291,500 | 0.11 | % | 1,880 | 771,900 | 0.11 | % | 3,350 | 1,063,400 | 0.11 | % | 5,230 | 83 | % | ||||||||||||||||||||||||||||||
|
Total Copper
|
291,500 | 0.32 | % | 1,880 | 1,391,100 | 0.21 | % | 5,900 | 1,682,600 | 0.23 | % | 7,780 | 77 | % | ||||||||||||||||||||||||||||||
| (1) | See footnote (1) to the Gold Proven and Probable Equity Reserves tables above. Copper reserves for 2009 and 2008 were calculated at a copper price of $2.00 or A$2.40 per pound. | |
| (2) | See footnote (2) to the Gold Proven and Probable Equity Reserves tables above. Tonnages are rounded to nearest 100,000. | |
| (3) | See footnote (3) to the Gold Proven and Probable Equity Reserves tables above. Pounds are rounded to the nearest 10 million. | |
| (4) | Copper cut-off grade varies with level of gold credits. | |
| (5) | Deposit is undeveloped. Copper cut-off grade varies with level of gold credits. | |
| (6) | Percentage reflects Newmont’s economic interest at December 31, 2009. In November and December 2009 our economic interest increased from 45% to 52.44% as a result of transactions with a noncontrolling partner, partially offset by the divestiture required under the Contract of Work. Copper cut-off grade varies with level of gold credits. | |
| (7) | Stockpiles are comprised primarily of material that has been set aside to allow processing of higher grade material in the mills. Stockpiles increase or decrease depending on current mine plans. Stockpiles are reported separately where tonnage or contained metal are greater than 5% of the total site reported reserves. | |
| (8) | Newmont acquired the remaining 33.33% of Boddington from AngloGold in June 2009. Copper cut-off grade varies with level of gold credits. |
The following table reconciles year-end 2009 and 2008 gold and
copper proven and probable equity reserves:
| Equity Ounces | Equity Pounds | |||||||
| (in millions) | (in millions) | |||||||
|
December 31, 2008
|
85.0 | 7,780 | ||||||
|
Depletion
(1)
|
(6.8 | ) | (310 | ) | ||||
|
Revisions and Additions,
net
(2)
|
6.4 | 400 | ||||||
|
Acquisitions
|
8.2 | 2,040 | ||||||
|
Other divestments
|
(1.0 | ) | (790 | ) | ||||
|
December 31, 2009
|
91.8 | 9,120 | ||||||
| (1) | Reserves mined and processed in 2009. | |
| (2) | Revisions and additions are due to reserve conversions, optimizations, model updates, metal price changes and updated operating costs and recoveries. |
36
Table of Contents
| ITEM 3. | LEGAL PROCEEDINGS |
For a discussion of legal proceedings, see Note 33 to the
Consolidated Financial Statements.
| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
No matters were submitted to a vote of security holders, through
the solicitation of proxies or otherwise, during the quarter
ended December 31, 2009.
| ITEM 4A. | EXECUTIVE OFFICERS OF THE REGISTRANT |
Newmont’s executive officers at February 17, 2010 were:
|
Name
|
Age
|
Office
|
||||
|
Richard T. O’Brien
|
55 | President and Chief Executive Officer | ||||
|
Russell Ball
|
41 | Executive Vice President and Chief Financial Officer | ||||
|
Alan R. Blank
|
53 | Executive Vice President, Legal and External Affairs | ||||
|
Randy Engel
|
43 | Executive Vice President, Strategic Development | ||||
|
Brian A. Hill
|
50 | Executive Vice President, Operations | ||||
|
Guy Lansdown
|
49 | Executive Vice President, Discovery and Development | ||||
|
Thomas Kerr
|
49 | Senior Vice President, North American Operations | ||||
|
Jeffrey R. Huspeni
|
54 | Senior Vice President, African Operations | ||||
|
Carlos Santa Cruz
|
54 | Senior Vice President, South American Operations | ||||
|
Tim Netscher
|
59 | Senior Vice President, Asia Pacific Operations | ||||
|
David Gutierrez
|
55 | Vice President, Planning and Tax | ||||
|
Roger Johnson
|
52 | Vice President and Chief Accounting Officer | ||||
|
Thomas P. Mahoney
|
54 | Vice President and Treasurer | ||||
There are no family relationships by blood, marriage or adoption
among any of the above executive officers or members of the
Board of Directors of Newmont. Each executive officer is elected
annually by the Board of Directors of Newmont to serve for one
year or until his respective successor is elected and qualified.
There is no arrangement or understanding between any of the
above executive officers and any other person pursuant to which
he was selected as an executive officer.
Mr. O’Brien
was elected President and Chief
Executive Officer in July 2007, having served as President and
Chief Financial Officer from April 2007 to July 2007, Executive
Vice President and Chief Financial Officer from September 2006
to April 2007 and Senior Vice President and Chief Financial
Officer during 2005 and 2006. Mr. O’Brien was
Executive or Senior Vice President and Chief Financial Officer
of AGL Resources from 2001 to 2005.
Mr. Ball
was elected Executive Vice President and
Chief Financial Officer in October 2008, having served as Senior
Vice President and Chief Financial Officer since July 2007.
Mr. Ball served as Vice President and Controller from 2004
to 2007. Previously, he served as Group Executive, Investor
Relations, from 2002 to 2004 and as Financial Director and
Controller for Newmont’s Indonesian business unit.
Mr. Ball joined Newmont in 1994 as senior internal auditor
after practicing as a Chartered Accountant (SA) with Coopers and
Lybrand in Durban, South Africa.
Mr. Blank
was elected Executive Vice President,
Legal and External Affairs, in October 2008, having served as
Senior Vice President, Legal and External Affairs since July
2008. Prior to joining Newmont, Mr. Blank was a partner at
the law firm of Stoel Rives LLP in Portland, Oregon, where he
practiced since 1988.
37
Table of Contents
Mr. Engel
was elected Executive Vice President,
Strategic Development, in October 2008, having served as Senior
Vice President, Strategy and Corporate Development, since July
2007. Mr. Engel served as Vice President, Strategic
Planning and Investor relations from 2006 to 2007; Group
Executive, Investor Relations from 2004 to 2006; and Assistant
Treasurer from 2001 to 2004. Mr. Engel has been with
Newmont since 1994, and has served in various capacities in the
areas of business planning, corporate treasury and human
resources.
Mr. Hill
was elected Executive Vice President,
Operations, in October 2008, having served as Vice President,
Asia Pacific Operations, since January 2008. Mr. Hill
previously served as Managing Director and Chief Executive
Officer of Norilsk Nickel Australia Pty Ltd in 2007; Managing
Director and Chief Executive Officer of Equatorial Mining Ltd
from 2004 to 2006; and Managing Director of Falconbridge
(Australia) Pty Ltd from 2000 to 2004.
Mr. Lansdown
was elected Executive Vice President,
Discovery and Development, in October 2008, having previously
served as Senior Vice President, Project Development and
Operations Services, since July 2007. Mr. Lansdown served
as Vice President, Project Engineering and Construction from
2006 to 2007; Project Executive, Boddington, from 2005 to 2006;
and Operations Manager, Yanacocha from 2003 to 2005.
Mr. Lansdown joined Newmont in 1993 after serving as an
associate with Knight Piesold and as the manager of projects
Group Five in South Africa.
Mr. Kerr
was elected Senior Vice President, North
American Operations, in December 2009, having served as Vice
President, Newmont USA Limited, North American Operations since
November 2008. Mr. Kerr previously served as Phoenix
Project Manager, Senior Manager-Surface Operations and General
Manager-Twin Creeks Operation from 2004 to 2008, Midas Site
Manager from 2003 to 2004 and Project Manager of Newmont’s
Corporate Development Transformation Project from 2002 to 2003.
Mr. Huspeni
was elected Senior Vice President,
African Operations, in October 2008, having served as Vice
President, African Operations, since January 2008.
Mr. Huspeni previously served as Vice President,
Exploration Business Development from 2005 to 2008 and Vice
President, Mineral District Exploration, from 2002 to 2005.
Mr. Santa Cruz
was named Senior Vice President,
South American Operations, in October 2008, having served as
Vice President, South American Operations, since 2001. He served
as General Manager of Minera Yanacocha S.R.L. from 1997 to 2001
after having previously served as Assistant General Manager from
1995 to 1997 and Operations Manager from 1992 to 1995.
Mr. Netscher
was elected Senior Vice President, Asia
Pacific Operations in May 2009. Prior to joining Newmont, he
held positions as Managing Director of Vale Australia from 2007
to 2008, Senior Vice President and Chief Operating Officer of PT
Inco in Indonesia from 2006 to 2007, Managing Director and Chief
Operating Officer of QNI Pty Limited from 2001 to 2005 and
Executive Director of Impala Platinum Limited from 1991 to 1997.
Mr. Gutierrez
was elected Vice President, Planning
and Tax in November 2009, having served as Vice President,
Accounting and Tax from 2007 to 2009 and Vice President, Tax
from 2005 to 2007. Prior to joining Newmont he was a partner
with KPMG LLP from 2002 to 2005, serving as the Denver office
Tax Managing Partner from 2003 to 2005.
Mr. Johnson
was elected Vice President and Chief
Accounting Officer in February 2008. Mr. Johnson previously
served as Controller and Chief Accounting Officer from July 2007
to February 2008; Assistant Controller from 2004 to 2007;
Operations Controller and Regional Controller, Australia from
2003 to 2004. Before joining Newmont, Mr. Johnson served as
Senior Vice President, Finance and Administration at Pasminco
Zinc, Inc.
Mr. Mahoney
was elected Vice President and Treasurer
of Newmont in 2002. He served as Treasurer of Newmont from 2001
to 2002. Previously, he served as Assistant Treasurer from 1997
to 2001. Mr. Mahoney joined Newmont as Assistant Treasurer,
International in 1994.
38
Table of Contents
PART II
| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES |
Our common stock is listed and principally traded on the New
York Stock Exchange (under the symbol “NEM”) and is
also listed in the form of CHESS Depositary Interests
(“CDIs”) (under the symbol “NEM”) on the
Australian Stock Exchange (“ASX”). In Australia,
Newmont is referred to as “Newmont Mining Corporation ARBN
099 065 997 organized in Delaware with limited liability.”
Since July 1, 2002, Newmont CDIs have traded on the ASX as
a Foreign Exempt Listing granted by the ASX, which provides an
ancillary trading facility to Newmont’s primary listing on
NYSE.
Holders of Australia CDIs were notified on November 9, 2009
that Newmont had elected to suspend the CDIs from trading on the
ASX on February 10, 2010 and to delist the CDIs at
February 17, 2010. The election was made in light of the
relatively low volume of Newmont CDIs now traded on the ASX in
comparison with other exchanges on which Newmont shares may be
traded, and the fact that investors in Australia seeking to
trade in Newmont common stock no longer must hold CDIs but may
instead trade in common shares on the New York Stock Exchange.
Following the delisting in February 2010, CDI holders can
convert their CDIs to the underlying Newmont common stock or
participate in a voluntary share sale facility of the underlying
Newmont common stock. If the CDI holders take no action the
underlying Newmont common stock will be sold in a compulsory
sale following the expiration of the voluntary share sale
facility.
Newmont Mining Corporation of Canada Limited’s exchangeable
shares (“Exchangeable Shares”) are listed on the
Toronto Stock Exchange (under the symbol “NMC”).
The following table sets forth, for the periods indicated, the
closing high and low sales prices per share of Newmont’s
common stock as reported on the New York Stock Exchange
Composite Tape.
| 2009 | 2008 | |||||||||||||||
|
High
|
Low
|
High
|
Low
|
|||||||||||||
|
First quarter
|
$ | 47.31 | $ | 34.40 | $ | 56.22 | $ | 45.30 | ||||||||
|
Second quarter
|
$ | 49.84 | $ | 37.54 | $ | 52.68 | $ | 42.93 | ||||||||
|
Third quarter
|
$ | 48.00 | $ | 36.77 | $ | 53.37 | $ | 33.73 | ||||||||
|
Fourth quarter
|
$ | 59.45 | $ | 41.45 | $ | 40.70 | $ | 21.54 | ||||||||
On February 17, 2010, there were outstanding
483,029,539 shares of Newmont’s common stock
(including shares represented by CDIs), which were held by
approximately 13,818 stockholders of record. A dividend of $0.10
per share of common stock outstanding was declared in each
quarter of 2009 and 2008, for a total of $0.40 during each year.
The determination of the amount of future dividends will be made
by Newmont’s Board of Directors from time to time and will
depend on Newmont’s future earnings, capital requirements,
financial condition and other relevant factors.
On February 17, 2010, there were outstanding 7,957,841
Exchangeable Shares, which were held by 43 holders of record.
The Exchangeable Shares are exchangeable at the option of the
holders into Newmont common stock. Holders of Exchangeable
Shares are therefore entitled to receive dividends equivalent to
those that Newmont declares on its common stock.
No shares or other units of any class of Newmont’s equity
securities registered pursuant to Section 12 of the
Exchange Act of 1934, as amended, were purchased by the Company,
or any affiliated purchaser, during the period October 1,
2009 to December 31, 2009.
39
Table of Contents
| ITEM 6. | SELECTED FINANCIAL DATA (dollars in millions, except per share) |
| Years Ended December 31, | ||||||||||||||||||||
| 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
|
Revenues
|
$ | 7,705 | $ | 6,124 | $ | 5,465 | $ | 4,805 | $ | 4,221 | ||||||||||
|
Income (loss) from continuing operations
|
$ | 2,109 | $ | 1,147 | $ | (580 | ) | $ | 900 | $ | 647 | |||||||||
|
Net income (loss)
|
$ | 2,093 | $ | 1,160 | $ | (1,485 | ) | $ | 1,154 | $ | 702 | |||||||||
|
Net income (loss) attributable to Newmont
stockholders
(1)
|
$ | 1,297 | $ | 831 | $ | (1,895 | ) | $ | 791 | $ | 322 | |||||||||
|
Income (loss) per common share attributable to Newmont
stockholders:
|
||||||||||||||||||||
|
Basic:
|
||||||||||||||||||||
|
Continuing operations
|
$ | 2.68 | $ | 1.80 | $ | (2.18 | ) | $ | 1.20 | $ | 0.60 | |||||||||
|
Discontinued operations
|
(0.02 | ) | 0.03 | (2.01 | ) | 0.56 | 0.12 | |||||||||||||
| $ | 2.66 | $ | 1.83 | $ | (4.19 | ) | $ | 1.76 | $ | 0.72 | ||||||||||
|
Diluted:
|
||||||||||||||||||||
|
Continuing operations
|
$ | 2.68 | $ | 1.80 | $ | (2.18 | ) | $ | 1.19 | $ | 0.60 | |||||||||
|
Discontinued operations
|
(0.02 | ) | 0.03 | (2.01 | ) | 0.56 | 0.12 | |||||||||||||
| $ | 2.66 | $ | 1.83 | $ | (4.19 | ) | $ | 1.75 | $ | 0.72 | ||||||||||
|
Dividends declared per common share
|
$ | 0.40 | $ | 0.40 | $ | 0.40 | $ | 0.40 | $ | 0.40 | ||||||||||
| At December 31, | ||||||||||||||||||||
| 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
|
Total assets
|
$ | 22,299 | $ | 15,727 | $ | 15,474 | $ | 15,601 | $ | 13,992 | ||||||||||
|
Long-term debt, including current portion
|
$ | 4,809 | $ | 3,237 | $ | 2,597 | $ | 1,911 | $ | 1,918 | ||||||||||
|
Newmont stockholders’ equity
|
$ | 10,703 | $ | 7,291 | $ | 7,759 | $ | 9,337 | $ | 8,376 | ||||||||||
| (1) | Net income (loss) attributable to Newmont stockholders includes income (loss) from discontinued operations for Kori Kollo, Merchant Banking, Pajingo, Zarafshan, Holloway and Golden Grove of ($11), $15, ($907), $251 and $53 net of tax in 2009, 2008, 2007, 2006 and 2005, respectively. |
40
Table of Contents
| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollars in millions, except per share, per ounce and per pound amounts) |
The following discussion provides information that management
believes is relevant to an assessment and understanding of the
consolidated financial condition and results of operations of
Newmont Mining Corporation and its subsidiaries (collectively,
“Newmont,” the “Company,” “our”
and “we”). We use certain non-GAAP financial
performance measures in our MD&A. For a detailed
description of each of the non-GAAP measures used in this
MD&A, please see the discussion under
“Non-GAAP Financial Performance Measures”
beginning on page 78. References to “A$” refer to
Australian currency, “C$” to Canadian currency,
“NZ$” to New Zealand currency, “IDR” to
Indonesian currency and “$” to United States currency.
This discussion addresses matters we consider important for an
understanding of our financial condition and results of
operations at and for the three years ended December 31,
2009, as well as our future results. It consists of the
following subsections:
| • | “Overview,” which provides a brief summary of our consolidated results and financial position and the primary factors affecting those results, as well as a summary of our expectations for 2010; | |
| • | “Accounting Developments,” which provides a discussion of recent changes to our accounting policies that have affected our consolidated results and financial position; | |
| • | “Critical Accounting Policies,” which provides an analysis of the accounting policies we consider critical because of their effect on the reported amounts of assets, liabilities, income and/or expenses in our consolidated financial statements and/or because they require difficult, subjective or complex judgments by our management; | |
| • | “Consolidated Financial Results,” which includes a discussion of our consolidated financial results for the last three years; | |
| • | “Results of Consolidated Operations,” which provides an analysis of the regional operating results for the last three years; | |
| • | “Liquidity and Capital Resources,” which contains a discussion of our cash flows and liquidity, investing activities and financing activities, contractual obligations and off-balance sheet arrangements; and | |
| • | “Non-GAAP Financial Measures,” which includes descriptions of the various non-GAAP financial performance measures used by management, the reasons for their usage and a tabular reconciliation of these measures to the closest equivalent US GAAP measure. |
This item should be read in conjunction with our consolidated
financial statements and the notes thereto included in this
annual report.
Overview
Newmont is one of the world’s largest gold producers and is
the only gold company included in the S&P 500 Index and
Fortune 500, and was the first gold company included in the Dow
Jones Sustainability Index-World. We are also engaged in the
exploration for and acquisition of gold and gold/copper
properties. We have significant assets or operations in the
United States, Australia, Peru, Indonesia, Ghana, Canada, New
Zealand and Mexico.
2009 was a year of execution as Newmont continued on its
journey of transformation and evolution. In our drive to be the
most valued and respected mining company through industry
leading performance, we have successfully executed on the key
benchmarks that we set out for the Company at the beginning of
the year.
41
Table of Contents
Delivered
strong operating performance.
| • | Consolidated gold sales of approximately 6.5 million ounces at Costs applicable to sales of $417 per ounce; | |
| • | Consolidated copper sales of approximately 507 million pounds at Costs applicable to sales of $0.64 per pound; | |
| • | Revenues of $7.7 billion, an increase of 26% over 2008; | |
| • | Gold operating margin (realized price per ounce less Costs applicable to sales per ounce) of $451 per ounce in 2009, an increase of 28% over 2008 compared to an increase of 12% in the realized gold price for the same period; | |
| • | Record net income attributable to Newmont stockholders of $2.66 per share; | |
| • | Record cash flow from continuing operations of $2.9 billion, an increase of 109%; and | |
| • | Net increase of 6.8 million equity ounces of gold reserves to report 91.8 million equity ounces at December 31, 2009. |
Added
significant new production capabilities with the successful
completion of the world-class Boddington project, which
will soon become Australia’s largest gold mine and a
cornerstone asset for the Company.
| • | Acquired the remaining 33.33% interest from AngloGold in June 2009; | |
| • | Achieved commercial production in November 2009, just three months after construction completion; | |
| • | Total gold reserves in excess of 20 million equity ounces and copper reserves in excess of 2,000 million equity pounds; and | |
| • | When fully operational, Boddington’s average annual production for the first five years will be approximately 1 million ounces at Costs applicable to sales of approximately $375 per ounce, on a co-product basis ($300 per ounce, on a by-product basis; see “Non-GAAP Financial Measures” on page 78). |
Advancing the
development of our project pipeline.
| • | Akyem, Ghana — Currently in the development phase with a construction decision expected in the second half of 2010. In January 2010 we received the Mining Lease from the government. This project is expected to be in production in late 2013 to 2014 producing between 480,000 and 550,000 ounces of gold per year for the first full five years at Costs applicable to sales of $350 to $450 per ounce; | |
| • | Conga, Peru — Feasibility studies on our preferred option were completed in late 2009 and a construction decision is expected in the fourth quarter of 2010 assuming government approval. Production is expected in late 2014 to 2015 with gold production of 650,000 to 750,000 ounces (330,000 to 385,000 equity ounces) per year for the first full five years (at Costs applicable to sales of $300 to $400 per ounce) and copper production of 160 million to 210 million pounds (80 to 108 million equity pounds) per year for the first full five years (at Costs applicable to sales of $0.95 to $1.25 per pound); | |
| • | Hope Bay, Nunavut, Canada — Made significant progress in locating gold mineralization and identified an additional 45 drilling targets. We are currently evaluating a small underground operation to quickly advance production, while enhancing valuable experience and knowledge about mining in the challenging arctic environment; and |
42
Table of Contents
| • | Nevada Growth — Leveraging our expertise and infrastructure in Nevada to potentially develop 4 to 7 million ounces in this historic and prolific gold district. |
Implemented
Business Excellence initiatives to further drive continuous
improvement and business efficiencies throughout our
organization.
| • | Continuing to deliver on expectations through a fully aligned and integrated Executive Leadership Team; | |
| • | Unhedged revenue streams; | |
| • | Creating deep alignment to maximize assets and control costs; | |
| • | Continuing evolution to a process-driven culture; | |
| • | Developing and cultivating a strong portfolio of new projects; | |
| • | Maintaining our industry-leading environmental, social and community relations commitments. | |
| • | Striving to remain a member of the Dow Jones Sustainability World Index; | |
| • | Continuing to improve our safety performance; and | |
| • | Investing in people and innovation. |
We are proud of our accomplishments to date, but remain focused
on continuing our pursuit of excellence in 2010 and beyond.
Summary of
Consolidated Financial and Operating Performance
The table below highlights key financial and operating results:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Revenues
|
$ | 7,705 | $ | 6,124 | $ | 5,465 | ||||||
|
Income (loss) from continuing operations
|
$ | 2,109 | $ | 1,147 | $ | (580 | ) | |||||
|
Net income (loss)
|
$ | 2,093 | $ | 1,160 | $ | (1,485 | ) | |||||
|
Net income attributable to Newmont stockholders
|
$ | 1,297 | $ | 831 | $ | (1,895 | ) | |||||
|
Per common share, basic
|
||||||||||||
|
Income (loss) from continuing operations attributable to Newmont
stockholders
|
$ | 2.68 | $ | 1.80 | $ | (2.18 | ) | |||||
|
Net income (loss) attributable to Newmont stockholders
|
$ | 2.66 | $ | 1.83 | $ | (4.19 | ) | |||||
|
Adjusted net
income
(1)
|
$ | 1,359 | $ | 792 | $ | 524 | ||||||
|
Adjusted net income per
share
(1)
|
$ | 2.79 | $ | 1.74 | $ | 1.16 | ||||||
|
Consolidated gold ounces sold
(thousands)
(2)
|
6,543 | 6,170 | 6,097 | |||||||||
|
Equity gold ounces sold
(thousands)
(3)(4)
|
5,259 | 5,184 | 5,318 | |||||||||
|
Consolidated copper pounds sold (millions)
|
507 | 290 | 428 | |||||||||
|
Equity copper pounds sold
(millions)
(4)
|
226 | 130 | 200 | |||||||||
|
Average price received,
net
(5)
|
||||||||||||
|
Gold (per ounce)
|
$ | 977 | $ | 874 | $ | 697 | ||||||
|
Copper (per pound)
|
$ | 2.60 | $ | 2.59 | $ | 2.86 | ||||||
|
Costs applicable to
sales
(6)
|
||||||||||||
|
Gold (per ounce)
|
$ | 417 | $ | 436 | $ | 390 | ||||||
|
Copper (per pound)
|
$ | 0.64 | $ | 1.38 | $ | 1.05 | ||||||
| (1) | See “Non-GAAP Financial Measures” on page 78. |
43
Table of Contents
| (2) | Includes incremental start-up ounces of 9, 20 and 6 in 2009, 2008 and 2007, respectively. Incremental start-up includes the removal and production of de minimis saleable materials during development and is recorded as Other income , net of incremental mining and processing costs. | |
| (3) | Includes sales from discontinued operations of 33, 75 and 247 ounces in 2009, 2008 and 2007, respectively. | |
| (4) | Equity gold ounces and copper pounds sold attributable to Newmont after noncontrolling interests. | |
| (5) | After treatment and refining charges and excluding settlement of price-capped forward sales contracts. | |
| (6) | Excludes Amortization , Accretion , the 2007 Loss on settlement of price-capped forward sales contracts and the 2007 Midas redevelopment . |
Consolidated
Financial Performance
Gold revenues increased in 2009 compared to 2008 primarily due
to an increase in the average realized price and consolidated
ounces sold. Gold sales increased to 6.5 million ounces in
2009 from 6.2 million ounces in 2008, primarily due to the
start-up
of
Boddington and higher production at Yanacocha and Batu Hijau,
partially offset by lower production in Nevada. Copper revenues
increased in 2009 from 2008 due to higher sales volume at Batu
Hijau and the
start-up
of
Boddington. In addition, our 2009 financial and operating
results were impacted by the following:
| • | Boddington acquisition costs and revaluation of contingent consideration ($90, pre-tax); | |
| • | Advanced projects, research and development expense ($135, primarily at Boddington, Hope Bay, Nevada growth and Ghana investments); and | |
| • | Loss on the sale of the Kori Kollo operations ($43, pre-tax). |
Liquidity
Our financial position was as follows:
| December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Total debt
|
$ | 4,809 | $ | 3,237 | ||||
|
Newmont stockholders’ equity
|
$ | 10,703 | $ | 7,291 | ||||
|
Cash and cash equivalents
|
$ | 3,215 | $ | 435 | ||||
|
Marketable equity securities
|
$ | 1,175 | $ | 621 | ||||
During 2009 our debt and liquidity positions were affected by
the following:
| • | Net cash provided from continuing operations of $2,914; | |
| • | Capital expenditures of $1,769; | |
| • | Issuance of debt of $1,568, net; | |
| • | Net proceeds of $1,234 from the public offering of 34,500,000 shares of common stock; | |
| • | Acquisition of the remaining 33.33% interest in Boddington for $996; | |
| • | Proceeds from the sale of Batu Hijau shares to noncontrolling interests of $638; | |
| • | Acquisition of Batu Hijau economic interest from noncontrolling interests for $287; | |
| • | Dividends paid to common shareholders of $196; and | |
| • | Dividends paid to noncontrolling interests of $394. |
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Looking
Forward
Certain key factors will affect our future financial and
operating results. These include, but are not limited to, the
following:
| • | Fluctuations in gold and copper prices; | |
| • | We expect 2010 consolidated gold production of approximately 6.3 to 6.8 million ounces, primarily as a result of the ramp-up of Boddington, partially offset by lower production at Nevada and Yanacocha; | |
| • | Costs applicable to sales — gold for 2010 are expected to be approximately $450 to $480 per ounce due to higher energy costs, labor and contracted services and lower expected production at Nevada and Yanacocha; | |
| • | We expect 2010 consolidated copper production of approximately 540 to 600 million pounds at Costs applicable to sales of approximately $0.85 to $0.95 per pound; | |
| • | We anticipate capital expenditures of approximately $1,400 to $1,600 in 2010, with approximately 30% invested in each of the North America and Asia Pacific regions and the remaining 40% at other locations. Approximately 60% of the 2010 capital budget is allocated to sustaining investments, with the remaining 40% allocated to project development, including the development of the Akyem project in Ghana and the Conga project in Peru; | |
| • | We expect 2010 exploration expenditures of approximately $190 to $220 and 2010 advanced projects, research and development expenditures of approximately $185 to $210; | |
| • | Our 2010 expectations, particularly with respect to production volumes and Costs applicable to sales per ounce or pound, may differ significantly from actual quarter and full year results due to variations in mine planning and sequencing, ore grades and hardness, metal recoveries, waste removal, commodity input prices and foreign currency exchange rates; and | |
| • | Potential future investments in the Hope Bay project in Canada, the Akyem project in Ghana and the Conga project in Peru will require significant funding. Our operating cash flow may become insufficient to meet the funding requirements of these investments, fund our ongoing business activities and pay dividends. Our ability to raise and service significant new sources of capital will be a function of macroeconomic conditions, future gold and copper prices and our operational performance, among other factors. In the event of lower gold and copper prices, unanticipated operating or financial challenges, or new funding limitations, our ability to pursue new business opportunities, invest in existing and new projects, fund our ongoing business activities and pay dividends could be significantly constrained. |
Accounting
Developments
For a discussion of Recently Adopted Accounting Pronouncements
and Recently Issued Accounting Pronouncements see Note 2 to
the Consolidated Financial Statements.
Critical
Accounting Policies
Listed below are the accounting policies that we believe are
critical to our financial statements due to the degree of
uncertainty regarding the estimates or assumptions involved and
the magnitude of the asset, liability, revenue or expense being
reported.
Carrying Value
of Goodwill
At December 31, 2009, the carrying value of goodwill was
approximately $188. Goodwill represents the excess of the
aggregate purchase price over the fair value of the identifiable
net assets. Goodwill was assigned to various mine site reporting
units in the Asia Pacific Segment. Our approach to allocating
goodwill was to identify those reporting units that we believed
had contributed
45
Table of Contents
to such excess purchase price. We then performed valuations to
measure the incremental increases in the fair values of such
reporting units that were attributable to the acquisitions, and
that were not already captured in the fair values assigned to
such units’ identifiable net assets.
We evaluate, on at least an annual basis during the fourth
quarter, the carrying amount of goodwill to determine whether
current events and circumstances indicate that such carrying
amount may no longer be recoverable. To accomplish this, we
compare the estimated fair value of our reporting units to their
carrying amounts. If the carrying value of a reporting unit
exceeds its estimated fair value, we compare the implied fair
value of the reporting unit’s goodwill to its carrying
amount, and any excess of the carrying value over the fair value
is charged to earnings. Our fair value estimates are based on
numerous assumptions and it is possible that actual fair value
will be significantly different than the estimates, as actual
future quantities of recoverable minerals, gold and other
commodity prices, production levels, operating costs and capital
requirements are each subject to significant risks and
uncertainties.
Mine Site
Goodwill
The assignment of goodwill to mine site reporting units was
based on synergies that have been incorporated into our
operations and business plans over time. The amount of goodwill
assigned to each segment or reporting unit was based on
discounted cash flow analyses that assumed risk-adjusted
discount rates over the remaining lives of the applicable mining
operations. We believe that triggering events with respect to
the goodwill assigned to mine site reporting units could
include, but are not limited to: (i) a significant decrease
in our long-term gold and copper price assumptions; (ii) a
decrease in reserves; (iii) a significant reduction in the
estimated fair value of mine site exploration potential; and
(iv) any event that might otherwise adversely affect mine
site production levels or costs. We performed our annual
impairment test of mine site goodwill at December 31, 2009
and determined that the fair value of each mine site reporting
unit was in excess of the relevant carrying value at
December 31, 2009. For more information on the discounted
cash flows used to value mine site reporting units, see Carrying
Value of Long-Lived Assets, below.
Exploration
Segment Goodwill
In the fourth quarter of 2007, the Exploration Segment was
impaired and the full value of goodwill was written-off. The
Exploration Segment was responsible for all activities, whether
near-mine or greenfield, associated with our efforts to discover
new mineralized material that could ultimately advance into
proven and probable reserves. As discussed in greater detail
below, when performing our Exploration Segment goodwill
impairment testing, we used historic additions to proven and
probable reserves as an indication of the expected future
performance of the Exploration Segment.
The Exploration Segment’s valuation model attributed all
cash flows expected to be derived from future greenfield
exploration discoveries, to the Exploration Segment. The
valuation model included management’s best estimates of
future reserve additions from exploration activities and all
revenues and costs associated with their discovery, development
and production. Historical proven and probable reserve
additions, excluding acquisitions, were used as an indicator of
the Exploration Segment’s ability to discover additional
reserves in the future. The valuation model assumed that we
would be able to perpetually develop and produce the assumed
additions to proven and probable reserves from future
discoveries at existing or new mine site reporting units. Actual
reserve additions have varied significantly from year to year
due to the time required to advance a deposit from initial
discovery to proven and probable reserves and based on the
timing of when proven and probable reserves can be reported
under the Securities and Exchange Commission Industry Guide 7.
In the fourth quarter of 2007, we performed an impairment test
of the Exploration Segment goodwill. Based on the Exploration
Segment’s historic additions to proven and probable
reserves and management’s best estimates of future reserve
additions from exploration activities and all revenues and costs
associated with their discovery, development and production, the
Exploration Segment’s
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estimated fair value was negligible. The decreased value
attributable to the Exploration Segment resulted primarily from
adverse changes in valuation assumptions and the application of
a revised industry definition of value beyond proven and
probable reserves (“VBPP”). The changes to valuation
assumptions included: (i) a significantly lower assumed
annual reserve growth rate (from 4% to 3%), (ii) a
significant change in the financial markets resulting in a
significant increase in the discount rate (from 8% to 10%), and
(iii) an increase in finding costs due to a combination of
increased spending and reduced exploration success. The revised
definition of VBPP ascribes more value to tangible mineral
interest than the original definition used. As a result of
applying the new definition of VBPP, the higher value ascribed
to the Exploration Segment’s tangible mineral interests
reduced the implied value of the Exploration Segment’s
goodwill to a negligible value. Based on the negligible
valuation, the Exploration Segment goodwill was impaired and the
full $1,122 of goodwill was recorded as a non-cash write-down at
December 31, 2007.
Merchant
Banking Goodwill
During June 2007, our Board of Directors approved a plan to
cease Merchant Banking activities, and Merchant Banking was
subsequently sold in December 2007. Merchant Banking previously
provided advisory services to assist in managing our portfolio
of operating and property interests. Merchant Banking was also
engaged in developing value optimization strategies for
operating and non-operating assets, business development
activities, merger and acquisition analysis and negotiations,
monetizing inactive exploration properties, capitalizing on
proprietary technology and know-how and acting as an internal
resource for other corporate groups to improve and maximize
business outcomes. As a result of the Board’s approval of
management’s plan to cease Merchant Banking activities, we
recorded a $1,665 non-cash charge to impair the goodwill
associated with the Merchant Banking Segment during the second
quarter of 2007.
Amortization
Expenditures for new facilities or equipment and expenditures
that extend the useful lives of existing facilities or equipment
are capitalized and amortized using the straight-line method at
rates sufficient to amortize such costs over the estimated
future lives of such facilities or equipment. These lives do not
exceed the estimated mine life based on proven and probable
reserves as the useful lives of these assets are considered to
be limited to the life of the relevant mine.
Costs incurred to develop new properties are capitalized as
incurred, where it has been determined that the property can be
economically developed based on the existence of proven and
probable reserves. At our surface mines, these costs include
costs to further delineate the ore body and remove overburden to
initially expose the ore body. At our underground mines, these
costs include the cost of building access ways, shaft sinking
and access, lateral development, drift development, ramps and
infrastructure development. All such costs are amortized using
the
units-of-production
(“UOP”) method over the estimated life of the ore body
based on estimated recoverable ounces to be produced from proven
and probable reserves.
Major development costs incurred after the commencement of
production are amortized using the UOP method based on estimated
recoverable ounces to be produced from proven and probable
reserves. To the extent that such costs benefit the entire ore
body, they are amortized over the estimated recoverable ounces
or pounds in proven and probable reserves of the entire ore
body. Costs incurred to access specific ore blocks or areas that
only provide benefit over the life of that block or area are
amortized over the estimated recoverable ounces or pounds in
proven and probable reserves of that specific ore block or area.
The calculation of the UOP rate of amortization, and therefore
the annual amortization charge to operations, could be
materially impacted to the extent that actual production in the
future is different from current forecasts of production based
on proven and probable reserves. This would generally occur to
the extent that there were significant changes in any of the
factors or assumptions used in
47
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determining reserves. These changes could include: (i) an
expansion of proven and probable reserves through exploration
activities; (ii) differences between estimated and actual
costs of production, due to differences in grade, metal recovery
rates and foreign currency exchange rates; and
(iii) differences between actual commodity prices and
commodity price assumptions used in the estimation of reserves.
If reserves decreased significantly, amortization charged to
operations would increase; conversely, if reserves increased
significantly, amortization charged to operations would
decrease. Such changes in reserves could similarly impact the
useful lives of assets depreciated on a straight-line basis,
where those lives are limited to the life of the mine, which in
turn is limited to the life of the proven and probable reserves.
The expected useful lives used in amortization calculations are
determined based on applicable facts and circumstances, as
described above. Significant judgment is involved in the
determination of useful lives, and no assurance can be given
that actual useful lives will not differ significantly from the
useful lives assumed for the purpose of amortization
calculations.
Carrying Value
of Stockpiles
Stockpiles represent ore that has been extracted from the mine
and is available for further processing. Stockpiles are measured
by estimating the number of tons added and removed from the
stockpile, the number of contained ounces or pounds (based on
assay data), and the estimated metallurgical recovery rates
(based on the expected processing method). Stockpile ore
tonnages are verified by periodic surveys. Costs are allocated
to stockpiles based on relative values of material stockpiled
and processed using current mining costs incurred up to the
point of stockpiling the ore, including applicable overhead and
amortization relating to mining operations. Costs are added to a
stockpile based on current mining costs and removed at each
stockpile’s average cost per recoverable ounce of gold or
pound of copper in the stockpile. Stockpiles are reduced as
material is removed and processed further. At December 31,
2009 and 2008, our stockpiles had a total carrying value of
$1,387 (Batu Hijau, $834; Nevada, $269; Other Australia/New
Zealand, $121; Boddington, $59; others, $104) and $990 (Batu
Hijau, $612; Nevada, $214; Other Australia/New Zealand, $95;
others, $69), respectively.
Costs that are incurred in or benefit from the productive
process are accumulated as stockpiles. We record stockpiles at
the lower of average cost or net realizable value
(“NRV”), and carrying values are evaluated at least
quarterly. NRV represents the estimated future sales price based
on short-term and long-term metals prices, less estimated costs
to complete production and bring the product to sale. The
primary factors that influence the need to record write-downs of
stockpiles include short-term and long-term metals prices and
costs for production inputs such as labor, fuel and energy,
materials and supplies, as well as realized ore grades and
actual production levels. The significant assumptions in
determining the NRV for each mine site reporting unit at
December 31, 2009 included production cost and capitalized
expenditure assumptions unique to each operation, a long-term
gold price of $900 per ounce, a long-term copper price of $2.50
per pound and U.S. to Australian dollar exchange rate of
$0.80 per A$1.00. If short-term and long-term metals prices
decrease, the value of the stockpiles decrease, and it may be
necessary to record a write-down of stockpiles to NRV. During
2009, 2008 and 2007, write-downs of stockpiles to NRV totaled
$nil, $2 and $14, respectively.
Cost allocation to stockpiles and the NRV measurement involves
the use of estimates and assumptions unique to each mining
operation regarding current and future operating and capital
costs, metal recoveries, production levels, commodity prices,
proven and probable reserve quantities, engineering data and
other factors. A high degree of judgment is involved in
determining such assumptions and estimates and no assurance can
be given that actual results will not differ significantly from
those estimates and assumptions.
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Carrying Value
of Ore on Leach Pads
Ore on leach pads represent ore that has been mined and placed
on leach pads where a weak cyanide solution is applied to the
surface of the heap to dissolve the gold. Costs are added to ore
on leach pads based on current mining costs, including
applicable amortization relating to mining operations. Costs are
removed from ore on leach pads as ounces are recovered based on
the average cost per estimated recoverable ounce of gold on the
leach pad.
Estimates of recoverable gold on the leach pads are calculated
from the quantities of ore placed on the leach pads (measured
tons added to the leach pads), the grade of ore placed on the
leach pads (based on assay data) and a recovery percentage
(based on ore type). In general, leach pads recover between 50%
and 95% of the recoverable ounces in the first year of leaching,
declining each year thereafter until the leaching process is
complete.
Although the quantities of recoverable gold placed on the leach
pads are reconciled by comparing the grades of ore placed on
pads to the quantities of gold actually recovered (metallurgical
balancing), the nature of the leaching process inherently limits
the ability to precisely monitor inventory levels. As a result,
the metallurgical balancing process is constantly monitored and
estimates are refined based on actual results over time.
Historically, our operating results have not been materially
impacted by variations between the estimated and actual
recoverable quantities of gold on its leach pads. Variations
between actual and estimated quantities resulting from changes
in assumptions and estimates that do not result in write-downs
to NRV are accounted for on a prospective basis. The significant
assumptions in determining the NRV for each mine site reporting
unit at December 31, 2009 apart from production cost and
capitalized expenditure assumptions unique to each operation,
included a long-term gold price of $900 per ounce. If short-term
and long-term metals prices decrease, the value of the ore on
leach pads decrease, and it may be necessary to record a
write-down of ore on leach pads to NRV.
Carrying Value
of Long-Lived Assets
We review and evaluate our long-lived assets for impairment when
events or changes in circumstances indicate that the related
carrying amounts may not be recoverable. An asset impairment is
considered to exist if the total estimated future cash flows on
an undiscounted basis are less than the carrying amount of the
asset, including goodwill, if any. An impairment loss is
measured and recorded based on discounted estimated future cash
flows. Future cash flows are estimated based on estimated
quantities of recoverable minerals, expected gold and other
commodity prices (considering current and historical prices,
trends and related factors), production levels, operating costs,
capital requirements and reclamation costs, all based on
life-of-mine
plans. The significant assumptions in determining the NRV for
each mine site reporting unit at December 31, 2009 apart
from production cost and capitalized expenditure assumptions
unique to each operation, included a long-term gold price of
$900 per ounce, a long-term copper price of $2.50 per pound and
U.S. to Australian dollar exchange rate of $0.80 per
A$1.00. During 2009, 2008 and 2007, we recorded write-downs of
$7, $137 and $10, respectively, to reduce the carrying value of
property, plant and mine development.
Existing proven and probable reserves and value beyond proven
and probable reserves, including mineralization other than
proven and probable reserves and other material that is not part
of the measured, indicated or inferred resource base, are
included when determining the fair value of mine site reporting
units at acquisition and, subsequently, in determining whether
the assets are impaired. The term “recoverable
minerals” refers to the estimated amount of gold or other
commodities that will be obtained after taking into account
losses during ore processing and treatment. Estimates of
recoverable minerals from such exploration stage mineral
interests are risk adjusted based on management’s relative
confidence in such materials. In estimating future cash flows,
assets are grouped at the lowest level for which there are
identifiable cash flows that are largely independent of future
cash flows from other asset groups.
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As discussed above under Amortization, various factors could
impact our ability to achieve our forecasted production
schedules from proven and probable reserves. Additionally,
production, capital and reclamation costs could differ from the
assumptions used in the cash flow models used to assess
impairment. The ability to achieve the estimated quantities of
recoverable minerals from exploration stage mineral interests
involves further risks in addition to those factors applicable
to mineral interests where proven and probable reserves have
been identified, due to the lower level of confidence that the
identified mineralized material could ultimately be mined
economically. Assets classified as exploration potential have
the highest level of risk that the carrying value of the asset
can be ultimately realized, due to the still lower level of
geological confidence and economic modeling.
Derivative
Instruments
With the exception of the Call Spread Transactions (as described
in Note 12 to the Consolidated Financial Statements), all
financial instruments that meet the definition of a derivative
are recorded on the balance sheet at fair market value. Changes
in the fair market value of derivatives are recorded in the
statements of consolidated income (loss), except for the
effective portion of the change in fair market value of
derivatives that are designated as a cash flow hedge and qualify
for cash flow hedge accounting. Management applies significant
judgment in estimating the fair value of instruments that are
highly sensitive to assumptions regarding commodity prices,
market volatilities, foreign currency exchange rates and
interest rates. Variations in these factors could materially
affect amounts credited or charged to earnings to reflect the
changes in fair market value of derivatives. Certain derivative
contracts are accounted for as cash flow hedges, whereby the
effective portion of changes in fair market value of these
instruments are deferred in
Accumulated other comprehensive
income (loss)
and will be recognized in the statements of
consolidated income (loss) when the underlying transaction
designated as the hedged item impacts earnings. The derivative
contracts accounted for as cash flow hedges are designated
against future foreign currency expenditures or future diesel
expenditures, where management believes the forecasted
transaction is probable of occurring. To the extent that
management determines that such future foreign currency or
diesel expenditures are no longer probable of occurring, gains
and losses deferred in
Accumulated other comprehensive income
(loss)
would be reclassified to the statements of
consolidated income (loss) immediately.
Reclamation
and Remediation Obligations (Asset Retirement
Obligations)
Reclamation costs are allocated to expense over the life of the
related assets and are periodically adjusted to reflect changes
in the estimated present value resulting from the passage of
time and revisions to the estimates of either the timing or
amount of the reclamation and remediation costs. The asset
retirement obligation is based on when the spending for an
existing environmental disturbance will occur. We review, on at
least an annual basis, the asset retirement obligation at each
mine site in accordance with guidance for accounting for asset
retirement obligations.
Future remediation costs for inactive mines are accrued based on
management’s best estimate of the costs expected to be
incurred at a site. Such cost estimates include, where
applicable, ongoing care, maintenance and monitoring costs.
Changes in estimates at inactive mines are reflected in earnings
in the period an estimate is revised.
Accounting for reclamation and remediation obligations requires
management to make estimates unique to each mining operation of
the future costs we will incur to complete the reclamation and
remediation work required to comply with existing laws and
regulations. Actual costs incurred in future periods could
differ from amounts estimated. Additionally, future changes to
environmental laws and regulations could increase the extent of
reclamation and remediation work required. Any such increases in
future costs could materially impact the amounts charged to
earnings for reclamation and remediation.
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Table of Contents
Income and
Mining Taxes
We recognize the expected future tax benefit from deferred tax
assets when the tax benefit is considered to be more likely than
not of being realized. Assessing the recoverability of deferred
tax assets requires management to make significant estimates
related to expectations of future taxable income. Estimates of
future taxable income are based on forecasted cash flows and the
application of existing tax laws in each jurisdiction. Refer
above under Carrying Value of Long-Lived Assets for a discussion
of the factors that could cause future cash flows to differ from
estimates. To the extent that future cash flows and taxable
income differ significantly from estimates, our ability to
realize deferred tax assets recorded at the balance sheet date
could be impacted. Additionally, future changes in tax laws in
the jurisdictions in which we operate could limit our ability to
obtain the future tax benefits represented by our deferred tax
assets recorded at the reporting date.
Our operations involve dealing with uncertainties and judgments
in the application of complex tax regulations in multiple
jurisdictions. The final taxes paid are dependent upon many
factors, including negotiations with taxing authorities in
various jurisdictions and resolution of disputes arising from
federal, state, and international tax audits. We recognize
potential liabilities and record tax liabilities for anticipated
tax audit issues in the U.S. and other tax jurisdictions
based on our estimate of whether, and the extent to which,
additional taxes will be due. At January 1, 2007, we
adopted income tax guidance to record these liabilities (refer
to Note 8 of the Consolidated Financial Statements for
additional information). We adjust these reserves in light of
changing facts and circumstances; however, due to the complexity
of some of these uncertainties, the ultimate resolution may
result in a payment that is materially different from our
current estimate of the tax liabilities. If our estimate of tax
liabilities proves to be less than the ultimate assessment, an
additional charge to expense would result. If an estimate of tax
liabilities proves to be greater than the ultimate assessment, a
tax benefit would result. We recognize interest and penalties,
if any, related to unrecognized tax benefits in income tax
expense.
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Table of Contents
Consolidated
Financial Results
Sales — gold, net
for 2009 increased $1,014
compared to 2008 due to a $103 per ounce increase in the average
realized price after treatment and refining charges and 384,000
additional ounces sold.
Sales — gold, net
for
2008 increased $1,128 compared to 2007 due to a $177 per ounce
increase in the average realized price after treatment and
refining charges and 59,000 additional ounces sold. For a
complete discussion regarding variations in gold volumes, see
Results of Consolidated Operations
below.
The following analysis summarizes the changes in consolidated
gold sales:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Consolidated gold sales:
|
||||||||||||
|
Gross before provisional pricing
|
$ | 6,397 | $ | 5,387 | $ | 4,258 | ||||||
|
Provisional pricing
mark-to-market
|
15 | (2 | ) | 13 | ||||||||
|
Gross after provisional pricing
|
6,412 | 5,385 | 4,271 | |||||||||
|
Less: Treatment and refining charges
|
(26 | ) | (13 | ) | (27 | ) | ||||||
|
Net
|
$ | 6,386 | $ | 5,372 | $ | 4,244 | ||||||
|
Consolidated gold ounces sold (thousands):
|
||||||||||||
|
Gross
|
6,543 | 6,170 | 6,097 | |||||||||
|
Less: Incremental
start-up
sales
(1)
|
(9 | ) | (20 | ) | (6 | ) | ||||||
|
Net
|
6,534 | 6,150 | 6,091 | |||||||||
|
Average realized gold price per ounce:
|
||||||||||||
|
Gross before provisional pricing
|
$ | 979 | $ | 876 | $ | 699 | ||||||
|
Provisional pricing
mark-to-market
|
2 | — | 2 | |||||||||
|
Gross after provisional pricing
|
981 | 876 | 701 | |||||||||
|
Less: Treatment and refining charges
|
(4 | ) | (2 | ) | (4 | ) | ||||||
|
Net
|
$ | 977 | $ | 874 | $ | 697 | ||||||
The change in consolidated gold sales is due to:
|
2009 vs.
|
2008 vs.
|
|||||||
| 2008 | 2007 | |||||||
|
Increase in consolidated ounces sold
|
$ | 337 | $ | 41 | ||||
|
Increase in average realized gold price
|
690 | 1,073 | ||||||
|
Decrease (increase) in treatment and refining charges
|
(13 | ) | 14 | |||||
| $ | 1,014 | $ | 1,128 | |||||
| (1) | Incremental start-up includes the removal and production of de minimis saleable materials during development and is recorded as Other income , net of incremental mining and processing costs. |
Sales — copper, net
increased in 2009 compared
to 2008 due to 217 million additional pounds sold.
Sales — copper, net
decreased in 2008 compared
to 2007 due to 138 million fewer pounds sold and lower
realized prices. For a complete discussion regarding variations
in copper volumes, see
Results of Consolidated Operations
below.
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The following analysis reflects the changes in consolidated
copper sales:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Consolidated copper sales:
|
||||||||||||
|
Gross before provisional pricing
|
$ | 1,283 | $ | 878 | $ | 1,409 | ||||||
|
Provisional pricing
mark-to-market
|
173 | (47 | ) | (34 | ) | |||||||
|
Hedging losses
|
— | — | (1 | ) | ||||||||
|
Gross after provisional pricing
|
1,456 | 831 | 1,374 | |||||||||
|
Less: Treatment and refining charges
|
(137 | ) | (79 | ) | (153 | ) | ||||||
|
Net
|
$ | 1,319 | $ | 752 | $ | 1,221 | ||||||
|
Consolidated copper pounds sold (millions)
|
507 | 290 | 428 | |||||||||
|
Average realized price per pound:
|
||||||||||||
|
Gross before provisional pricing
|
$ | 2.53 | $ | 3.03 | $ | 3.30 | ||||||
|
Provisional pricing
mark-to-market
|
0.33 | (0.16 | ) | (0.09 | ) | |||||||
|
Gross after provisional pricing
|
2.86 | 2.87 | 3.21 | |||||||||
|
Less: Treatment and refining charges
|
(0.26 | ) | (0.28 | ) | (0.35 | ) | ||||||
|
Net
|
$ | 2.60 | $ | 2.59 | $ | 2.86 | ||||||
The change in consolidated copper sales is due to:
|
2009 vs.
|
2008 vs.
|
|||||||
| 2008 | 2007 | |||||||
|
Increase (decrease) in consolidated pounds sold
|
$ | 623 | $ | (443 | ) | |||
|
Increase (decrease) in average realized copper price
|
2 | (100 | ) | |||||
|
Decrease (increase) in treatment and refining charges
|
(58 | ) | 74 | |||||
| $ | 567 | $ | (469 | ) | ||||
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The following is a summary of consolidated gold and copper
sales, net:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Gold
|
||||||||||||
|
North America:
|
||||||||||||
|
Nevada
|
$ | 1,943 | $ | 1,929 | $ | 1,616 | ||||||
|
La Herradura
|
113 | 83 | 60 | |||||||||
|
Other North America
|
— | — | 8 | |||||||||
| 2,056 | 2,012 | 1,684 | ||||||||||
|
South America:
|
||||||||||||
|
Yanacocha
|
2,013 | 1,613 | 1,093 | |||||||||
|
Asia Pacific:
|
||||||||||||
|
Batu Hijau
|
550 | 261 | 351 | |||||||||
|
Jundee
|
413 | 342 | 214 | |||||||||
|
Kalgoorlie
|
329 | 264 | 224 | |||||||||
|
Tanami
|
280 | 321 | 305 | |||||||||
|
Waihi
|
116 | 123 | 66 | |||||||||
|
Boddington
|
101 | — | — | |||||||||
| 1,789 | 1,311 | 1,160 | ||||||||||
|
Africa:
|
||||||||||||
|
Ahafo
|
528 | 435 | 306 | |||||||||
|
Corporate and other
|
— | 1 | 1 | |||||||||
| $ | 6,386 | $ | 5,372 | $ | 4,244 | |||||||
|
Copper
|
||||||||||||
|
Asia Pacific:
|
||||||||||||
|
Batu Hijau
|
$ | 1,292 | $ | 752 | $ | 1,221 | ||||||
|
Boddington
|
27 | — | — | |||||||||
| $ | 1,319 | $ | 752 | $ | 1,221 | |||||||
Costs applicable to sales — gold
increased in
2009 compared to 2008 due to higher sales volumes, higher
royalty and workers participation expenses, partially offset by
higher by-product sales and lower diesel costs. The increase in
2008 compared to 2007 was due to higher diesel costs and higher
royalty and workers participation expenses, partially offset by
lower waste removal costs at Batu Hijau and higher by-product
sales.
Costs applicable to sales — copper
decreased in 2009 from 2008 due to lower diesel and mining
costs, partially offset by higher labor costs and the
start-up
of
Boddington production. The decrease in 2008 from 2007 was due to
lower waste removal costs, partially offset by higher diesel,
labor and milling costs. For a complete discussion regarding
variations in operations, see
Results of Consolidated
Operations
below.
Amortization
increased in 2009 from 2008 due to the
start-up
of
Boddington, higher underground production at Nevada and Jundee,
development of North Lantern in Nevada, a full year’s
amortization of Hope Bay infrastructure and higher production at
Batu Hijau.
Amortization
increased in 2008 from 2007 due
to increased production at Jundee, Waihi and Ahafo, a larger
portion of Nevada production being sourced from the Phoenix and
Leeville operations and the
start-up
of
the gold mill at Yanacocha and the power plant in Nevada.
Amortization
expense fluctuates as capital expenditures
increase or decrease and as production levels increase or
decrease due to the use of the units-of production amortization
method for mineral interests and mine development. For a
complete discussion, see
54
Table of Contents
Results of Consolidated Operations
, below. We expect
Amortization
to increase to approximately $940 to $970 in
2010.
The following is a summary of
Costs applicable to sales
and
Amortization
by operation:
| Costs Applicable to Sales | Amortization | |||||||||||||||||||||||
| Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
|
Gold
|
||||||||||||||||||||||||
|
North America:
|
||||||||||||||||||||||||
|
Nevada
|
$ | 1,045 | $ | 1,022 | $ | 1,021 | $ | 261 | $ | 246 | $ | 220 | ||||||||||||
|
La Herradura
|
42 | 38 | 29 | 11 | 8 | 7 | ||||||||||||||||||
|
Other North America
|
— | — | 2 | — | — | — | ||||||||||||||||||
| 1,087 | 1,060 | 1,052 | 272 | 254 | 227 | |||||||||||||||||||
|
South America:
|
||||||||||||||||||||||||
|
Yanacocha
|
642 | 637 | 490 | 168 | 170 | 160 | ||||||||||||||||||
|
Asia Pacific:
|
||||||||||||||||||||||||
|
Batu Hijau
|
118 | 124 | 114 | 30 | 25 | 25 | ||||||||||||||||||
|
Jundee
|
136 | 149 | 138 | 49 | 34 | 26 | ||||||||||||||||||
|
Kalgoorlie
|
210 | 231 | 191 | 15 | 16 | 24 | ||||||||||||||||||
|
Tanami
|
189 | 220 | 181 | 47 | 39 | 37 | ||||||||||||||||||
|
Waihi
|
57 | 55 | 42 | 25 | 33 | 22 | ||||||||||||||||||
|
Boddington
|
45 | — | — | 15 | — | — | ||||||||||||||||||
| 755 | 779 | 666 | 181 | 147 | 134 | |||||||||||||||||||
|
Africa:
|
||||||||||||||||||||||||
|
Ahafo
|
242 | 205 | 168 | 68 | 63 | 43 | ||||||||||||||||||
| 2,726 | 2,681 | 2,376 | 689 | 634 | 564 | |||||||||||||||||||
|
Copper
|
||||||||||||||||||||||||
|
Asia Pacific:
|
||||||||||||||||||||||||
|
Batu Hijau
|
307 | 399 | 450 | 78 | 80 | 96 | ||||||||||||||||||
|
Boddington
|
16 | — | — | 4 | — | — | ||||||||||||||||||
| 323 | 399 | 450 | 82 | 80 | 96 | |||||||||||||||||||
|
Other
|
||||||||||||||||||||||||
|
Hope Bay
|
— | — | — | 12 | 1 | — | ||||||||||||||||||
|
Asia Pacific
|
— | — | — | 3 | 3 | 3 | ||||||||||||||||||
|
Corporate and Other
|
— | — | — | 20 | 20 | 22 | ||||||||||||||||||
| — | — | — | 35 | 24 | 25 | |||||||||||||||||||
| $ | 3,049 | $ | 3,080 | $ | 2,826 | $ | 806 | $ | 738 | $ | 685 | |||||||||||||
The
Loss on settlement of price-capped forward sales
contracts
of $531 in 2007 resulted from the elimination of
the 1.85 million ounces of forward sales contracts that
would have impacted results in 2008, 2009 and beyond.
Midas redevelopment
of $11 in 2007 resulted from
activities undertaken, during the period in which operations
were suspended, to regain entry into the mine in order to resume
commercial production following a fatal accident that occurred
in June 2007.
Exploration
decreased to $187 in 2009 from $213 in 2008
due to a reduced drilling program related to the Company’s
focus on net cash flow generation and a more selective and
strategic
55
Table of Contents
exploration program. We expect
Exploration
spending to
increase to approximately $190 to $220 in 2010.
During 2009, we added 6.4 million equity ounces to proven
and probable reserves, with 6.8 million equity ounces of
depletion. Reserve additions of 6.4 million equity ounces
were primarily due to conversion of mineralized material at Gold
Quarry (2.9 million equity ounces), Boddington
(1.3 million equity ounces), Tanami (0.5 million
equity ounces) and Ahafo (0.5 million equity ounces) with
most of the remaining additions coming from open pit and
underground sources in Australia and South America
(0.6 million equity ounces). Gold reserves were revised
down by 0.3 million equity ounces at Phoenix in Nevada,
primarily due to metallurgy, geology and modeling impacts. The
estimated impact of the change in gold price assumption on these
reserve additions was an increase of 1.7 million equity
ounces.
During 2008, we added 5.2 million equity ounces to proven
and probable reserves, with 6.7 million equity ounces of
depletion. Reserve additions from exploration of
4.4 million equity ounces were primarily due to conversion
of mineralized material at Boddington (1.6 million equity
ounces, 66.67% ownership), with most of the remaining additions
coming from several open pit and underground sites in Nevada
(totaling 1.2 million equity ounces) and from underground
sites in Australia (0.7 million equity ounces). Gold
reserves were revised down by 1.1 million equity ounces,
primarily due to metallurgy, geology and modeling impacts at
Phoenix in Nevada. The impact of the change in gold price
assumption on reserve additions was an increase of
1.9 million equity ounces.
During 2007, we added 0.8 million equity ounces to proven
and probable reserves, with 7.3 million equity ounces of
depletion. Reserve additions from exploration of
3.5 million equity ounces were primarily due to further
extension drilling at Boddington (66.67% ownership), Jundee and
Tanami in Australia (2.6 million equity ounces), with the
remaining additions from several opn pit and underground sites
in Nevada as well as La Herradura in Mexico. The impact of
the change in gold price assumption on reserve additions was an
increase of 0.7 million equity ounces.
Advanced projects, research and development
includes the
following:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Major projects:
|
||||||||||||
|
Boddington
|
$ | 25 | $ | 3 | $ | 3 | ||||||
|
Hope Bay
|
25 | 39 | — | |||||||||
|
Akyem
|
8 | 7 | 6 | |||||||||
|
Conga
|
4 | 4 | 3 | |||||||||
|
Other projects:
|
||||||||||||
|
Technical and project services
|
24 | 23 | 15 | |||||||||
|
Nevada growth
|
15 | 12 | 7 | |||||||||
|
Corporate
|
14 | 15 | 2 | |||||||||
|
Yanacocha sulfides
|
5 | 1 | 5 | |||||||||
|
Tanami optimization
|
4 | 4 | 3 | |||||||||
|
Fort a la Corne JV
|
1 | 26 | — | |||||||||
|
Euronimba
|
— | 15 | 7 | |||||||||
|
Other
|
10 | 17 | 11 | |||||||||
| $ | 135 | $ | 166 | $ | 62 | |||||||
Advanced projects, research and development
includes
project management costs, feasibility studies and certain
drilling costs. Significant projects include the
start-up
of
Boddington, the Hope Bay gold project in Nunavut, Canada, the
Akyem gold project in Ghana and the Conga copper and gold
56
Table of Contents
project in Peru. We expect
Advanced projects, research and
development
spending to be approximately $185 to $210 in
2010, an increase from 2009, with a focus on the major projects
above.
General and administrative
expense increased in 2009
compared to 2008 due to higher benefits, mainly pension and
other post retirement costs.
General and administrative
expense remained stable over the period from 2007 to 2008.
General and administrative
expense as a percentage of
revenues was 2.1% in 2009, compared to 2.4% and 2.6% in 2008 and
2007, respectively. We expect
General and administrative
expenses to be approximately $160 to $170 in 2010.
Write-down of goodwill
in 2007 was $1,122 ($nil for 2009
and 2008) and was related to the Exploration segment. The
impairment resulted primarily from adverse changes in valuation
assumptions and the application of a revised industry definition
of value beyond proven and probable reserves (“VBPP”).
The changes to valuation assumptions included: (i) a
significantly lower assumed annual reserve growth rate (from 4%
to 3%), (ii) a significant change in the financial markets
resulting in a significant increase in the discount rate (from
8% to 10%), and (iii) an increase in finding costs due to a
combination of increased spending and reduced exploration
success. The revised definition of VBPP ascribes more value to
tangible mineral interest than the original definition used by
the Company. As a result of applying the new definition of VBPP,
the higher value ascribed to the Exploration Segment’s
tangible mineral interests reduced the implied value of the
Exploration Segment’s goodwill to a negligible value.
Write-down of property, plant and mine development
totaled $7, $137 and $10 for 2009, 2008 and 2007,
respectively. The 2009 write-down primarily related to assets in
Asia Pacific and South America. The 2008 write-down primarily
related to mineral interests and other assets in North America
and Asia Pacific. In North America, the Fort a la Corne JV
assets were impaired based on 2008 geologic results and
potential project economics leading to our decision to cease
funding our share of project development costs. The 2007
write-down primarily related to assets in Asia Pacific.
For a discussion of our policy for assessing the carrying value
of goodwill and long-lived assets for impairment, see Critical
Accounting Policies, above.
Other expense, net
was $383, $351 and $243 for 2009, 2008
and 2007, respectively. The increase of $32, or 9%, in 2009 over
2008 is due to $90 of costs related to acquiring the remaining
interest in Boddington, a workforce reduction that impacted 3%
of our global workforce and an increase in expenses for the
Western Australian power plant, partially offset by higher
reclamation estimate revisions in 2008 and the recovery of bad
debts provided for in 2008. The increase of $108, or 44%, in
2008 over 2007 primarily relates to reclamation estimate
revisions for changes in environmental obligation estimates at
inactive mines including Mt. Leyshon in Australia and the
Midnite mine in Washington, USA.
Other income, net
was $88, $123 and $100 for 2009, 2008
and 2007, respectively. The decrease of $35, or 28%, in 2009
over 2008 is primarily related to a decrease in Canadian Oil
Sands Trust income due to lower oil prices in 2009 and higher
gains on sale of investments and exploration properties in 2008,
partially offset by the impairment of investments in Shore Gold
Inc. (“Shore”) and Gabriel Resources Ltd.
(“Gabriel”) in 2008. The increase of $23, or 23%, in
2008 over 2007 is primarily related to an increase in Canadian
Oil Sands Trust income due to significantly higher oil prices
through the majority of 2008 and gains on sales of investments
and exploration properties in 2008, partially offset by the
impairment of investments in Shore and Gabriel in 2008.
Interest expense, net of capitalized interest
was $120,
$135 and $118 for 2009, 2008 and 2007, respectively. Capitalized
interest totaled $111, $47 and $50 in each year, respectively.
Interest costs decreased in 2009 primarily due to higher
capitalized interest, partially offset by additional interest on
the $900 and $1,100 senior notes issued in September 2009 and
$518 convertible senior notes issued in February 2009.
Capitalized interest increased compared to the prior periods due
to the construction of Boddington. Interest costs increased in
2008 primarily due to increased borrowings under our revolving
credit facility and a full year of interest on the $1,150
convertible senior notes
57
Table of Contents
issued in July 2007, partially offset by the repayment of
borrowings at Batu Hijau and Australia. We expect
Interest
expense, net of capitalized interest
to be approximately
$270 to $290 in 2010 due to lower capitalized interest and
higher average levels of debt related to the senior notes issued
in 2009.
Income tax expense
was $788 in 2009, compared to $100 and
$190 in 2008 and 2007, respectively. The effective tax rates
were 27%, 8% and (49%) in 2009, 2008 and 2007, respectively.
Without the restructuring that resulted in a $159 tax benefit in
2008 and the $1,122 goodwill impairment charge in 2007 (which is
not deductible for tax purposes and for which no related income
tax benefit can be claimed), the effective tax rates for 2008
and 2007 would have been 21% and 26%. The factors that most
significantly impacted our effective tax rates for the three
periods are percentage depletion, the rate differential related
to foreign earnings indefinitely invested, valuation allowances
related to deferred tax assets, foreign earnings not
indefinitely reinvested net of foreign tax credits, earnings
attributable to noncontrolling interests in subsidiaries and
affiliated companies, changes in estimates of reserves for
income tax uncertainties, foreign currency translation gains and
losses, changes in tax laws, goodwill impairment and the impact
of certain specific transactions. Many of these factors are
sensitive to the average realized price of gold and other metals.
Percentage depletion allowances (tax deductions for depletion
that may exceed our tax basis in our mineral reserves) are
available to us under the income tax laws of the United States
for operations conducted in the United States or through
branches and partnerships owned by U.S. subsidiaries
included in our consolidated United States income tax return.
The deductions are highly sensitive to the price of gold and
other minerals produced by the Company. The tax benefits from
percentage depletion were $127, $130 and $70 in 2009, 2008 and
2007, respectively. The increase in 2008 compared to 2007
primarily is due to the increase in gold price.
We operate in various countries around the world that have tax
laws, tax incentives and tax rates that are significantly
different than those of the United States. Many of these
differences combine to move our overall effective tax rate
higher or lower than the United States statutory rate depending
on the mix of income relative to income earned in the United
States. The effect of these differences is shown in Note 8
to the Consolidated Financial Statements as either a foreign
rate differential or the effect of foreign earnings, net of
credits. Differences in tax rates and other foreign income tax
law variations make our ability to fully utilize all of our
available foreign income tax credits on a
year-by-year
basis highly dependent on the price of the gold and copper
produced by the Company and the costs of production, since lower
prices or higher costs can result in our having insufficient
sources of taxable income in the United States to utilize all
available foreign tax credits. Such credits have limited carry
back and carry forward periods and can only be used to reduce
the United States income tax imposed on our foreign earnings
included in our annual United States consolidated income tax
return. The effects of foreign earnings, net of allowable
credits, resulted in a decrease in income tax expense of $6 for
2009 and an increase in income tax expense of $nil and $13 in
2008 and 2007, respectively. The effect of different income tax
rates in countries where earnings are indefinitely reinvested
contributed to a decrease in our income tax expense of $4 for
2009 and an increase in our income tax expense of $20 and $7 in
2008 and 2007, respectively.
The tax effect of changes in local country tax laws, as shown in
our effective tax reconciliation in Note 8 to the
Consolidated Financial Statements, resulted in no tax effect in
2009 and 2008 and a net tax benefit of $4 in 2007. The net tax
benefit in 2007 is primarily related to a decrease in Canadian
federal and provincial statutory tax rates and a decrease in New
Zealand tax rates.
The need to record valuation allowances related to our deferred
tax assets (primarily attributable to net operating losses and
tax credits) is principally dependent on the following factors:
(i) the extent to which the net operating losses and tax
credits can be carried back and yield a tax benefit;
(ii) our long-term estimate of future average realized
minerals prices; and (iii) the degree to which many of the
tax laws and income tax agreements that apply to us and our
subsidiaries around the world tend to create significant tax
deductions early in the mining process. These up-front
deductions can give rise to net operating losses and tax credit
carry forwards in circumstances where future sources of
58
Table of Contents
taxable income may not coincide with available carry forward
periods even after taking into account all available tax
planning strategies. Furthermore, certain liabilities, accrued
for financial reporting purposes, may not be deductible for tax
purposes until such liabilities are actually funded which could
happen after mining operations have ceased, when sufficient
sources of taxable income may not be available. Changes to
valuation allowances decreased income tax expense by $32 and $17
in 2009 and 2007 and increased income tax expense by $31 in
2008. The reduction in valuation allowances in 2009 and 2007 are
a result of the increase in value of certain marketable
securities investments, and higher forecasted taxable income
from certain mining operations caused by the increase in the
average price of gold and the realization of capital loss
benefits. The valuation allowance also decreased in 2009 as a
result of a write off of Australian capital losses that had no
impact on the Company’s effective tax rate. The increase in
2008 primarily is related to losses recorded on the decrease in
value of certain marketable securities investments.
We consolidate certain subsidiaries of which we do not own 100%
of the outstanding equity. However, for tax purposes, we are
only responsible for the income taxes on the portion of the
taxable earnings attributable to our ownership interest of each
consolidated entity. Such noncontrolling interests contributed
$18, $19 and $4 in 2009, 2008 and 2007, respectively, as
reductions in our income tax expense.
Tax expense decreased by $38 and $69 in 2009 and 2008,
respectively, and increased by $3 in 2007 relating to the
reduction in income taxes resulting from revised estimates of
reserves for uncertain income tax positions recorded in
jurisdictions where either the statutes of limitations expired
or where uncertain income tax positions were settled.
Our tax expense decreased by $21 in 2008 due to the
U.S. income tax effect of realized translation losses
attributable to Canadian dollar-denominated debt instruments
that were converted to equity. Because we intend to indefinitely
reinvest earnings from Newmont Mining Corporation of Canada
Limited, the obligor on such debt instruments, no offsetting
United States deferred income tax effect can be recorded.
During 2008, tax expense decreased by $159 related to
restructuring the form of one of the Company’s non-US
subsidiaries. This transaction gave rise to a significant loss
that allowed the Company to recover income taxes paid in prior
years.
Based on the uncertainty and inherent unpredictability of the
factors influencing our effective tax rate and the sensitivity
of such factors to gold and other metals prices as discussed
above, the effective tax rate is expected to be volatile in
future periods. The effective tax rate is expected to be between
28% and 32% in 2010.
Net income attributable to noncontrolling interests
was
as follows:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Batu Hijau
|
$ | 445 | $ | 98 | $ | 299 | ||||||
|
Yanacocha
|
354 | 232 | 108 | |||||||||
|
Other
|
(3 | ) | (1 | ) | 3 | |||||||
| $ | 796 | $ | 329 | $ | 410 | |||||||
Net income attributable to noncontrolling interests
increased in 2009 from 2008 as a result of increased
earnings at Batu Hijau and Yanacocha (see Results of
Consolidated Operations, Batu Hijau Operations and Yanacocha
Operations) and divestiture of a portion of Batu Hijau in
accordance with the provisions of the Contract of Work. The 2008
decrease from 2007 resulted from lower earnings at Batu Hijau
partially offset by increased earnings at Yanacocha (see Results
of Consolidated Operations, Batu Hijau Operations and Yanacocha
Operations). See Note 11 to the Consolidated Financial
Statements for a discussion of the changes in our Batu Hijau
ownership.
59
Table of Contents
Equity income (loss) of affiliates
was as follows:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
AGR Matthey Joint Venture
|
$ | 5 | $ | (2 | ) | $ | 1 | |||||
|
Regis Resources NL
|
— | (3 | ) | (8 | ) | |||||||
|
European Gold Refineries
|
— | — | 6 | |||||||||
|
La Zanja
|
(4 | ) | — | — | ||||||||
|
Euronimba
|
(17 | ) | — | — | ||||||||
| $ | (16 | ) | $ | (5 | ) | $ | (1 | ) | ||||
Our interest in Regis Resources NL (“Regis Resources”)
was diluted in 2009 to a level where we no longer account for
our interest in Regis Resources pursuant to the equity method.
In 2008, Newmont purchased additional shares of European Gold
Refineries (“EGR”) resulting in our consolidation of
EGR. Beginning in 2009, we began accounting for our investments
in La Zanja (46.94%) and Euronimba (43.5%) on the equity
method.
Income (loss) from discontinued operations
was as follows:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Sales — gold, net
|
$ | 32 | $ | 75 | $ | 179 | ||||||
|
Income (loss) from operations:
|
||||||||||||
|
Kori Kollo
|
$ | 1 | $ | (9 | ) | $ | 22 | |||||
|
Royalty portfolio
|
— | 6 | 123 | |||||||||
|
Pajingo
|
— | — | 8 | |||||||||
| 1 | (3 | ) | 153 | |||||||||
|
Gain on sale of operations:
|
||||||||||||
|
Pajingo
|
— | 1 | 8 | |||||||||
|
Zarafshan
|
— | — | 77 | |||||||||
| — | 1 | 85 | ||||||||||
|
Gain on sale of royalty portfolio
|
— | — | 905 | |||||||||
|
Loss on impairment of goodwill and other assets
|
(44 | ) | — | (1,665 | ) | |||||||
|
Pre-tax loss
|
(43 | ) | (2 | ) | (522 | ) | ||||||
|
Income tax benefit (expense)
|
27 | 15 | (383 | ) | ||||||||
|
Income (loss) from discontinued operations
|
$ | (16 | ) | $ | 13 | $ | (905 | ) | ||||
Discontinued operations include the Kori Kollo operation sold in
July 2009 and the royalty portfolio and Pajingo operation, both
sold in December 2007 and the Zarafshan operation expropriated
by the Uzbekistan government in 2006.
60
Table of Contents
Gold ounces sold in discontinued operations were as follows:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Ounces sold (000):
|
||||||||||||
|
Kori Kollo
|
37 | 85 | 87 | |||||||||
|
Pajingo
|
— | — | 171 | |||||||||
|
Total
|
37 | 85 | 258 | |||||||||
|
Less noncontrolling interest
|
(4 | ) | (10 | ) | (11 | ) | ||||||
|
Equity
(1)
|
33 | 75 | 247 | |||||||||
| (1) | Gold ounces sold attributable to Newmont after noncontrolling interest. |
In July 2009, we sold our interest in the Kori Kollo operation
in Bolivia. As part of the transaction, a reclamation trust fund
was established with the proceeds to be made available
exclusively to pay for closure and reclamation costs when
operations eventually cease. We recorded a $13 liability for the
trust fund and recognized a $16 charge, net of tax benefits.
In December 2007, we sold substantially all of Pajingo’s
assets for cash and marketable equity securities totaling $23
resulting in a gain of $8. Additional Pajingo asset sales
resulted in a gain of $1 in 2008.
In June 2007, our Board of Directors approved a plan to cease
Merchant Banking activities. As part of this plan, we decided to
dispose our royalty portfolio assets and a portion of our
marketable equity securities portfolio and to cease further
investments in marketable equity securities that do not support
our core gold mining business. In June 2007, we recorded a
$1,665 non-cash charge to impair the goodwill associated with
the Merchant Banking Segment. In December 2007, we received net
cash proceeds of $1,187 and recognized a gain of $905 related to
the sale of the royalty portfolio. In 2008, we recognized
additional royalty portfolio revenue of $6 in excess of our 2007
estimate and recorded a $19 tax benefit related to the US tax
return
true-up
on
the sale of the royalty portfolio.
Our interest in the Zarafshan operation was expropriated by the
Uzbekistan government in 2006. In 2007, after pursuing
international arbitration, we received proceeds of $80 and
recognized a gain of $77 related to the settlement.
Other comprehensive income (loss),
net of tax was $882 in
2009 and included non-cash adjustments for a $418 gain in value
of marketable securities, a $264 gain on the translation of
subsidiaries with
non-U.S. dollar
functional currencies, a $14 net gain related to pension
and other post-retirement benefit adjustments and a
$186 net gain on derivatives designated as cash flow
hedges.
Other comprehensive income (loss),
net of tax was
$1,212 in 2008 and included a $573 loss in value of marketable
securities, a $387 loss on the translation of subsidiaries with
non-U.S. dollar
functional currencies, a $130 net loss related to pension
and other post-retirement benefit adjustments and a
$122 net loss on derivatives designated as cash flow
hedges.
Other comprehensive income (loss),
net of tax was
$288 in 2007 and included non-cash adjustments for a $113 gain
in value of marketable securities, a $138 gain on the
translation of subsidiaries with
non-U.S. dollar
functional currencies, a $33 gain related to pension and other
post-retirement benefit adjustments and a $4 net gain for
unrealized gains on derivatives designated as cash flow hedges.
61
Table of Contents
Results of
Consolidated Operations
| Gold or Copper Sold (1) | Costs Applicable to Sales (2) | Amortization | ||||||||||||||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||||||||||||
| (ounces in thousands) | ($ per ounce) | ($ per ounce) | ||||||||||||||||||||||||||||||||||
|
Gold
|
||||||||||||||||||||||||||||||||||||
|
North America
|
2,118 | 2,320 | 2,439 | $ | 513 | $ | 457 | $ | 432 | $ | 128 | $ | 110 | $ | 94 | |||||||||||||||||||||
|
South
America
(3)
|
2,068 | 1,843 | 1,565 | 311 | 346 | 313 | 81 | 92 | 103 | |||||||||||||||||||||||||||
|
Asia
Pacific
(3)(4)
|
1,811 | 1,486 | 1,647 | 418 | 524 | 405 | 100 | 99 | 81 | |||||||||||||||||||||||||||
|
Africa
|
546 | 521 | 446 | 444 | 408 | 376 | 125 | 126 | 96 | |||||||||||||||||||||||||||
|
Total/Weighted-Average
|
6,543 | 6,170 | 6,097 | $ | 417 | $ | 436 | $ | 390 | $ | 105 | $ | 103 | $ | 93 | |||||||||||||||||||||
|
Equity
(5)
|
5,226 | 5,109 | 5,071 | |||||||||||||||||||||||||||||||||
| (pounds in millions) | ($ per pound) | ($ per pound) | ||||||||||||||||||||||||||||||||||
|
Copper
|
||||||||||||||||||||||||||||||||||||
|
Asia
Pacific
(3)(4)
|
507 | 290 | 428 | $ | 0.64 | $ | 1.38 | $ | 1.05 | $ | 0.16 | $ | 0.28 | $ | 0.22 | |||||||||||||||||||||
|
Equity
(5)
|
226 | 130 | 200 | |||||||||||||||||||||||||||||||||
| (1) | Includes incremental start-up ounces of 9 primarily from Asia Pacific in 2009, 20 primarily from Africa in 2008, and 6 from North America in 2007. Incremental start-up sales include the removal and production of de minimis saleable materials during development and is recorded as Other income , net of incremental mining and processing costs. | |
| (2) | Excludes Amortization , Accretion , Loss on settlement of price-capped forward sales contracts and the 2007 Midas redevelopment. | |
| (3) | Consolidated gold ounces and copper pounds sold includes noncontrolling interests’ share for Yanacocha and Batu Hijau. | |
| (4) | Our ownership in Batu Hijau decreased to 35.44% from 45% as a result of the November and December 2009 divestiture transactions in accordance with the Contract of Work. Our economic interest in Batu Hijau decreased to 45% from 52.88% in May 2007 as a result of an unrelated shareholder redeeming their carried interest loan. See Note 11 to the Consolidated Financial Statements for a discussion of the changes in our ownership of Batu Hijau. | |
| (5) | Gold ounces and copper pounds sold attributable to Newmont after noncontrolling interests. |
Consolidated gold ounces sold increased 6% in 2009 from 2008 due
to:
| • | higher production from Asia Pacific due to higher ore grade and throughput at Batu Hijau and the start-up of Boddington; | |
| • | higher production from South America due to higher mill production from higher grade and throughput at Yanacocha; partially offset by | |
| • | lower production from North America due to lower grade and lower leach placement in Nevada. |
Consolidated gold ounces sold increased 1% in 2008 from 2007 due
to:
| • | higher production from South America due to start-up of milling operations; | |
| • | higher production from Africa due to higher ore grades; partially offset by | |
| • | lower production from Asia Pacific due to lower ore grades, throughput and recovery at Batu Hijau. |
Consolidated copper pounds sold increased 75% in 2009 from 2008
due to higher ore grades and throughput at Batu Hijau and the
start-up
of
Boddington. Consolidated copper pounds sold decreased 32% in
2008 from 2007 due to lower ore grades, throughput and recovery
at Batu Hijau.
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Table of Contents
Costs applicable to sales
per consolidated gold ounce
sold decreased 4% in 2009 compared to 2008 due to higher
production, lower diesel costs and higher by-product credits
partially offset by higher royalties and workers participation.
Costs applicable to sales
per consolidated gold ounce
sold increased 12% in 2008 compared to 2007 due to higher
diesel, royalty and labor costs, partially offset by higher
by-product sales and lower waste removal costs at Batu Hijau.
Costs applicable to sales
per consolidated copper pound
decreased 54% in 2009 compared to 2008 due to higher copper
production, lower waste removal costs at Batu Hijau, lower
diesel costs and a lower co-product allocation of costs to
copper at Batu Hijau.
Costs applicable to sales
per
consolidated copper pound increased 31% in 2008 compared to 2007
due to lower copper production.
We expect 2010 consolidated gold production of approximately 6.3
to 6.8 million ounces, primarily due to higher production
from Asia Pacific as a result of the
ramp-up
of
Boddington, partially offset by lower production in North
America and South America as a result of increased waste
stripping and lower ore grades.
Costs applicable to sales
per ounce for 2010 are expected to be approximately $450 to
$480 per ounce due to lower expected sales at Nevada and
Yanacocha, and higher oil prices, partially offset by the
ramp-up
of
lower cost Boddington production. We expect 2010 consolidated
copper production of approximately 540 to 600 million
pounds at
Costs applicable to sales
of approximately
$0.85 to $0.95 per pound as a result of higher expected oil
prices and the
ramp-up
of
slightly higher cost production at Boddington.
North America
Operations
| Gold Ounces Sold (1) | Costs Applicable to Sales (2) | Amortization | ||||||||||||||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||||||||||||
| (in thousands) | ($ per ounce) | ($ per ounce) | ||||||||||||||||||||||||||||||||||
|
Nevada
|
2,005 | 2,225 | 2,341 | $ | 521 | $ | 460 | $ | 437 | $ | 130 | $ | 111 | $ | 94 | |||||||||||||||||||||
|
La Herradura (44% owned)
|
113 | 95 | 86 | 372 | 397 | 340 | 95 | 86 | 77 | |||||||||||||||||||||||||||
|
Golden Giant
|
— | — | 12 | — | — | 177 | — | — | ||||||||||||||||||||||||||||
|
Total/Weighted-Average
|
2,118 | 2,320 | 2,439 | $ | 513 | $ | 457 | $ | 432 | $ | 128 | $ | 110 | $ | 94 | |||||||||||||||||||||
| (1) | Includes incremental start-up ounces of 1, 1 and 6 in 2009, 2008 and 2007, respectively, in Nevada. | |
| (2) | Excludes Amortization, Accretion , the 2007 Loss on settlement of price-capped forward sales contracts and the 2007 Midas redevelopment . |
2009 compared
to 2008
Nevada, USA.
Gold ounces sold decreased 10%
due to lower mill ore grades and lower leach placement. Open pit
ore mined decreased 21% to 29.6 million tons in 2009 due to
mine sequencing at Gold Quarry. Underground ore mined increased
10% to 2.7 million tons in 2009 due to higher tonnage at
Leeville as well as remnant mining at Carlin East. Mill ore
grade decreased 9% due to lower grades from Leeville as well as
ramping down and completion of production at Deep Post. Ore
placed on leach pads decreased 40% to 11.9 million tons in
2009, primarily as a result of mine sequencing at Gold Quarry,
partially offset by the
start-up
of
North Lantern.
Costs applicable to sales
per ounce
increased 13% in 2009 compared to 2008 due to lower production
and higher underground mining costs, partially offset by lower
fuel costs and higher by-product credits.
Amortization
per ounce increased 17% due to lower total production,
higher underground development costs and a full year of power
plant operations.
La Herradura, Mexico.
Gold ounces sold
increased 19% in 2009 from 2008, primarily due to higher leach
placement.
Costs applicable to sales
decreased 6% due to
higher production and lower fuel costs.
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Table of Contents
2008 compared
to 2007
Nevada, USA.
Gold ounces sold in Nevada
decreased 5% due to the completion of milling at Lone Tree,
lower production at Twin Creeks and reduced ore processing by
third parties experiencing operating and financial difficulties,
partially offset by higher production from Midas, Leeville and
leach pads. Open pit ore mined decreased 12% to
37.4 million tons due to mine sequencing at Twin Creeks and
Phoenix. Underground ore mined increased to 2.5 million
tons from 1.9 million tons due to an 80% increase at
Leeville. Ore milled decreased to 24.8 million tons from
25.5 million tons, while mill ore grade decreased 5% due to
processing lower grade Twin Creeks stockpiles. Ore placed on
leach pads increased to 19.8 million tons, up from
14.0 million tons, primarily as a result of mine sequencing
at Gold Quarry and the
start-up
of
Bobstar.
Costs applicable to sales
per ounce increased 5%
as lower production, increased diesel and other commodity costs,
increased underground mining costs, higher royalties and taxes
were partially offset by the completion of higher cost Carlin
East mining and Lone Tree processing,
start-up
of
the power plant and higher by-product credits.
Amortization
per ounce increased 18% due to more production being sourced
from Leeville, additional haul trucks at Phoenix and the
start-up
of
the power plant.
Our Midas operation was suspended from June to October 2007.
Mining activities
ramped-up
and returned to historic production levels during 2008.
La Herradura, Mexico.
Gold ounces sold
increased 10% primarily due to higher leach placement.
Costs
applicable to sales
increased 17% due to increased waste
removal and higher fuel costs.
Consolidated gold production for North America is expected to
decline to approximately 1.7 to 1.9 million ounces in 2010
and 2011 due to lower production from the Carlin operations and
the closure of Deep Post, partially offset by anticipated
increases at Leeville. Production from the Carlin operations is
expected to be impacted by a geotechnical event that occurred at
Gold Quarry in late December 2009, limiting access to ore that
was originally scheduled to be mined in 2010 and 2011. Following
a series of geotechnical, mine planning and ore blending
analyses conducted by the Company in January and February, up to
approximately 150,000 ounces of gold production are expected to
be deferred from Gold Quarry in 2010, with potential additional
ounces deferred in 2011. The Company continues to study
opportunities to safely accelerate the production of the ounces
currently scheduled to be produced in 2012 through 2013. 2010
cost applicable to sales
are expected to increase to
approximately $575 to $615 per ounce, primarily due to lower
production and higher expected diesel and input commodity
prices. Based on current mine plans, consolidated gold
production in the North America region in 2011 is expected to
remain at 2010 levels with the potential for slightly higher
production in 2012 primarily due to higher production from new
underground mines and open pits from the Nevada growth projects
as well as higher production from La Herradura and mining
of the deferred ounces at Gold Quarry in Nevada. Costs
applicable to sales in 2010 are expected to be approximately
$575 to $615 per ounce, primarily due to lower production and
higher expected diesel and input commodity prices.
Costs
applicable to sales
in 2011 and 2012 are expected to remain
near 2010 levels with the potential of decreasing with the
addition of the growth projects in Nevada and La Herradura
production.
64
Table of Contents
South America
Operations
| Gold Ounces Sold (1) | Costs Applicable to Sales (2) | Amortization | ||||||||||||||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||||||||||||
| (in thousands) | ($ per ounce) | ($ per ounce) | ||||||||||||||||||||||||||||||||||
|
Yanacocha, Peru
|
2,068 | 1,843 | 1,565 | $ | 311 | $ | 346 | $ | 313 | $ | 81 | $ | 92 | $ | 103 | |||||||||||||||||||||
|
Equity
(3)
|
1,062 | 946 | 804 | |||||||||||||||||||||||||||||||||
| (1) | Consolidated gold ounces sold includes noncontrolling interests’ share (51.35% owned). | |
| (2) | Excludes Amortization , Accretion and the 2007 Loss on settlement of price-capped forward sales contracts . | |
| (3) | Gold ounces sold attributable to Newmont after noncontrolling interests. |
2009 compared
to 2008
Consolidated gold ounces sold increased 12% due to higher mill
production, partially offset by lower leach production. Mill
production increased 326,200 ounces due to a full year of
operation and 44% higher mill ore grade. Leach production
decreased by 5% due to the timing of recovery from the leach
pads. Ore placed on the leach pads increased to
136.3 million tons from 97.8 million tons at a
consistent grade of 0.018 ounces per ton.
Costs applicable to
sales
decreased 10% due to higher production, lower diesel
costs and higher by-product credits, partially offset by higher
workers participation and royalty costs as a result of higher
gold prices.
Amortization
per ounce decreased 12% due to
higher production.
2008 compared
to 2007
Consolidated gold ounces sold increased 18% due to the
start-up
of
milling operations, partially offset by lower leach production.
Ore placed on the leach pads decreased to 97.8 million tons
from 98.3 million tons while leach ore grades decreased 5%
to 0.018 ounces per ton. Gold production increased by 16%
primarily due to 304,200 ounces from the new mill. Start up of
the mill occurred in late March and commercial production was
achieved in the second quarter of 2008.
Costs applicable to
sales
increased $33 per ounce due to higher diesel and
commodity costs and higher workers participation and royalty
costs as a result of higher gold prices, partially offset by
higher gold production and higher by-product credits.
Amortization
per ounce decreased 11% as a result of
higher gold production partially offset by amortization of the
new mill.
Consolidated gold production in South America is expected to
decrease in 2010 to approximately 1.5 to 1.6 million
ounces, primarily due to lower tonnage mined and lower grades.
Costs applicable to sales
are expected to increase in
2010 to approximately $360 to $400 per ounce, primarily due to
lower gold production and higher contracted services and
supplies. Based on current mine plans, assumptions and
conditions, consolidated gold production in the South America
region for 2011 through 2012 is expected to remain near 2010
levels. Over the same time period,
Costs applicable to sales
are expected to stabilize.
In 2009, 2008 and 2007, Yanacocha recorded $28, $18 and $10 to
Other expense, net
, respectively, related to an agreement
with the Peruvian government to provide for a royalty payment
for community improvements. The negotiated royalty is based on
3.75% of Yanacocha’s net income beginning January 1,
2006 for a period of up to five years.
The 2007 Collective Bargaining Agreement expires in February
2010 and negotiations on a new contract have begun.
65
Table of Contents
Asia Pacific
Operations
| Gold or Copper Sold (1) | Costs Applicable to Sales (2) | Amortization | ||||||||||||||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||||||||||||
| (ounces in thousands) | ($ per ounce) | ($ per ounce) | ||||||||||||||||||||||||||||||||||
|
Gold
|
||||||||||||||||||||||||||||||||||||
|
Jundee
|
413 | 377 | 298 | $ | 331 | $ | 395 | $ | 462 | $ | 120 | $ | 91 | $ | 88 | |||||||||||||||||||||
|
Kalgoorlie (50% owned)
|
336 | 304 | 323 | 624 | 760 | 591 | 43 | 52 | 74 | |||||||||||||||||||||||||||
|
Tanami
|
291 | 365 | 439 | 650 | 604 | 413 | 160 | 108 | 85 | |||||||||||||||||||||||||||
|
Waihi
|
118 | 141 | 93 | 481 | 390 | 451 | 215 | 234 | 226 | |||||||||||||||||||||||||||
|
Boddington
|
103 | — | — | 468 | — | — | 160 | — | — | |||||||||||||||||||||||||||
|
Batu
Hijau
(3)(4)
|
550 | 299 | 494 | 214 | 414 | 232 | 55 | 85 | 50 | |||||||||||||||||||||||||||
|
Total/Weighted-Average
|
1,811 | 1,486 | 1,647 | $ | 418 | $ | 524 | $ | 405 | $ | 100 | $ | 99 | $ | 81 | |||||||||||||||||||||
|
Equity
(5)
|
1,500 | 1,322 | 1,383 | |||||||||||||||||||||||||||||||||
| (pounds in millions) | ($ per pound) | ($ per pound) | ||||||||||||||||||||||||||||||||||
|
Boddington
|
9 | — | — | $ | 1.77 | — | — | $ | 0.46 | — | — | |||||||||||||||||||||||||
|
Batu
Hijau
(3)(4)
|
498 | 290 | 428 | $ | 0.62 | $ | 1.38 | $ | 1.05 | $ | 0.16 | $ | 0.28 | $ | 0.22 | |||||||||||||||||||||
|
Total/Weighted-Average
|
507 | 290 | 428 | $ | 0.64 | $ | 1.38 | $ | 1.05 | $ | 0.16 | $ | 0.28 | $ | 0.22 | |||||||||||||||||||||
|
Equity
(5)
|
226 | 130 | 200 | |||||||||||||||||||||||||||||||||
| (1) | Includes incremental start-up ounces of 8 at Boddington in 2009. | |
| (2) | Excludes Amortization , Accretion and the 2007 Loss on settlement of price-capped forward sales contracts . | |
| (3) | Consolidated gold ounces and copper pounds sold includes noncontrolling interests’ share. | |
| (4) | Our ownership in Batu Hijau decreased to 35.44% from 45% as a result of the November and December 2009 divestiture transactions in accordance with the Contract of Work. Our economic interest in Batu Hijau decreased to 45% from 52.88% in May 2007 as a result of an unrelated shareholder redeeming their carried interest loan. See Note 11 to the Consolidated Financial Statements for a discussion of the changes in our ownership of Batu Hijau. | |
| (5) | Gold ounces and copper pounds sold attributable to Newmont after noncontrolling interests. |
2009 compared
to 2008
Jundee, Australia.
Gold ounces sold increased
10% due to higher throughput as a result of increased mill
utilization and slightly higher grade as a result of more
underground ore processed.
Costs applicable to sales
per
ounce decreased 16%, due to higher production and movements in
the Australian dollar exchange rate, which decreased
Costs
applicable to sales
by approximately $14 per ounce,
partially offset by higher royalties.
Amortization
per
ounce increased 32% due to a higher proportion of underground
ore processed.
Kalgoorlie, Australia.
Gold ounces sold
increased 11% due to higher mill throughput, grade and recovery.
Grade was higher due to improved ore extraction and less
dilution.
Costs applicable to sales
per ounce decreased
18% due to higher production, lower diesel prices and movements
in the Australian dollar exchange rates, which decreased
Costs applicable to sales
by approximately $29 per ounce.
Tanami, Australia.
Gold ounces sold decreased
20% due to lower throughput as a result of unplanned mill
maintenance and lower grade.
Costs applicable to sales
per ounce increased 8%, due to lower production and higher
royalties, partially offset by lower mining costs and movements
in the
66
Table of Contents
Australian dollar exchange rates, which decreased
Costs
applicable to sales
by approximately $33 per ounce.
Amortization
per ounce increased 48% due to higher
capital expenditures and a negative mine life adjustment.
Waihi, New Zealand.
Gold ounces sold decreased
16% due to the temporary suspension of milling operations as a
result of an electrical fire in May, partially offset by higher
mill ore grade.
Costs applicable to sales
per ounce
increased by 23% due to lower production, higher royalties and
higher surface mining costs, partially offset by movements in
the New Zealand dollar exchange rates, which decreased
Costs
applicable to sales
by approximately $31 per ounce.
Boddington, Australia.
Commercial production
began effective November 19, 2009 and gold sales were
103,300 ounces at
Costs applicable to sales
of $468 per
ounce on a co-product basis ($352 per ounce on a by-product
basis; see “Non-GAAP Financial Measures” on
page 78). We expect Boddington to produce approximately
1 million ounces annually at
Costs applicable to sales
of approximately $300 per ounce after copper by-product
credits in the first five years.
Batu Hijau, Indonesia.
Consolidated copper
pounds and gold ounces sold increased 72% and 84%, respectively,
due to higher mill throughput, grade and recovery due to
processing higher grade softer Phase 5 ore compared to ore
sourced primarily from lower grade stockpiles in 2008.
Total
Costs applicable to sales
decreased $98 due to lower waste
mining, lower diesel prices and lower mining costs.
Costs
applicable to sales
decreased to $0.62 per pound of copper
and $214 per ounce of gold (55% and 48% lower, respectively), as
a result of higher production.
Costs applicable to
sales — gold
also decreased due to a higher
co-product allocation of costs to copper due to a higher
realized copper price.
Amortization
per pound of copper
and ounce of gold decreased 43% and 35%, respectively, due to
higher production.
At December 31, 2009, Batu Hijau had copper sales of
158.3 million pounds priced at an average of $3.34 per
pound subject to final pricing compared to 82.0 million
pounds priced at an average of $1.39 per pound at
December 31, 2008. At December 31, 2009, Boddington
had copper sales of 1.8 million pounds priced at an average
of $3.35 per pound subject to final pricing.
On September 18, 2009, Batu Hijau experienced a
geotechnical failure in a portion of the west wall of the open
pit. Batu Hijau utilizes a number of preventive measures,
including radar threshold alarms, to monitor movements in the
pit walls. As a result, mobile equipment and personnel were
evacuated from the pit prior to the wall failure. Operations
were suspended for approximately three weeks in the pit pending
a geotechnical review and development of a remediation plan to
recommence mining operations. Batu Hijau continued to process
lower grade ore from stockpiles during the suspension period.
Mining operations returned to normal on October 10, 2009.
The geotechnical failure will require the accelerated removal of
waste material displaced from the event as well as changes to
the balance of Phase 5 and the initiation of Phase 6. In
general, the Company expects delays in access to ore previously
anticipated in 2010 and 2011 with a marginal decrease in ore
mined from the ultimate Phase 6 pit.
2008 compared
to 2007
Jundee, Australia.
Gold ounces sold increased
27% due to higher grade and a change in the mining sequence
resulting in additional high grade ore mined from Westside,
partially offset by lower mill throughput.
Costs applicable
to sales
per ounce decreased 15%, attributable to higher
production and lower milling costs, partially offset by higher
fuel and power costs, and movements in the Australian dollar
exchange rate, which increased
Costs applicable to sales
by approximately $13 per ounce.
Kalgoorlie, Australia.
Gold ounces sold
decreased 6% due to a draw-down of gold inventories in 2007, not
repeated in 2008.
Costs applicable to sales
per ounce
increased 29%, due to lower production, higher fuel costs,
higher waste tons mined and movements in the Australian dollar
67
Table of Contents
exchange rate, which increased
Costs applicable to sales
by approximately $23 per ounce, partially offset by lower
milling and administrative costs.
Tanami, Australia.
Gold ounces sold decreased
17% due to a 15% decrease in mill ore grade.
Costs applicable
to sales
per ounce increased 46%, due to lower production,
higher contracted services costs, higher milling costs and
movements in the Australian dollar exchange rate, which
increased
Costs applicable to sales
by approximately $20
per ounce.
Waihi, New Zealand.
Gold ounces sold increased
52% due to significantly higher mill throughput as mill
maintenance was completed in the first quarter of 2007, and
milling more Favona underground ore partially offset by 12%
lower mill ore grade.
Costs applicable to sales
per ounce
were 14% lower due to higher production and higher by-product
credits.
Batu Hijau, Indonesia.
Consolidated copper
pounds and gold ounces sold decreased 32% and 39% respectively,
due to lower throughput, ore grade and recovery. Batu Hijau
experienced heavy rainfall during the first quarter of 2008
causing minor damage to pit infrastructure, as well as adding
significant amounts of water to the pit, delaying planned access
to higher grade Phase 4 ore in the bottom of the pit until late
in the third quarter of 2008. Mill throughput was 19% lower in
2008 compared to 2007 due to processing harder ores and blending
limitations as a majority of 2008 ore was sourced from
stockpiles and Phase 5 ore. Ore processed during 2008 was lower
in grade and contributed to lower recovery than ores processed
in 2007.
Costs applicable to sales
per pound of copper
and per ounce of gold increased 31% and 78%, respectively, as a
result of higher mining costs due to increased diesel, labor and
milling costs, partially offset by lower waste tons mined.
Costs applicable to sales
per ounce of gold also
increased as a higher co-product allocation of costs was made to
gold as a result of higher gold prices and lower copper prices.
Amortization
per pound of copper and ounce of gold
increased 27% and 70%, respectively, due to lower production.
Consolidated gold production for Asia Pacific is expected to
increase in 2010 to approximately 2.6 to 2.8 million
ounces, primarily as a result of the Boddington
ramp-up.
Costs applicable to sales
are expected to decrease to
approximately $400 to $440 per ounce in 2010, primarily driven
by the
ramp-up
of
Boddington production, partially offset by higher diesel price
and less favorable Australian dollar exchange rate assumptions.
We expect consolidated copper production for the Asia Pacific
operations of approximately 540 to 600 million pounds at
Costs applicable to sales
of approximately $0.85 to $0.95
per pound in 2010. Based on current mine plans, assumptions and
conditions, consolidated gold production for 2011 through 2012
is expected to remain at the 2010 levels primarily due to the
new production at Boddington and extended mine-life at Jundee
and Waihi offsetting declining production at Tanami and Batu
Hijau. Over the same time period,
Costs applicable to sales
are anticipated to increase slightly as lower cost
production from Boddington will be offset by higher operating
costs at Batu Hijau as the Company begins waste stripping Phase
6.
For information on the Batu Hijau Contract of Work and
divestiture requirements, see the discussion under Item 2
Properties, above and Note 33 to the Consolidated Financial
Statements.
Africa
Operations
| Gold Ounces Sold (1) | Costs Applicable to Sales (2) | Amortization | ||||||||||||||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||||||||||||
| (in thousands) | ($ per ounce) | ($ per ounce) | ||||||||||||||||||||||||||||||||||
|
Ahafo, Ghana
|
546 | 521 | 446 | $ | 444 | $ | 408 | $ | 376 | $ | 125 | $ | 126 | $ | 96 | |||||||||||||||||||||
| (1) | Includes incremental start-up ounces of 19 in 2008. | |
| (2) | Excludes Amortization , Accretion and the 2007 Loss on settlement of price-capped forward sales contracts . |
68
Table of Contents
2009 compared
to 2008
Gold ounces sold increased 5% due to a drawdown of finished
goods inventory, partially offset by lower mill recovery.
Costs applicable to sales
per ounce increased 9% due to
higher labor, contracted services, maintenance and power costs,
partially offset by lower diesel prices.
Amortization
per
ounce decreased slightly as higher production was mostly offset
by the use of additional mining equipment.
2008 compared
to 2007
Gold ounces sold increased 17% due to a 25% increase in mill ore
grade and higher throughput, partially offset by an increase in
in-process inventory. Total tons mined increased to
50.6 million tons from 44.2 million tons due to
equipment additions, increased mining efficiencies and the
operation of a third pit.
Costs applicable to sales
per
ounce increased 9% due to higher diesel, power, royalties,
maintenance and contract services costs, partially offset by
higher production.
Amortization
per ounce increased 31%
due to the use of additional equipment and the operation of a
third pit.
Gold production for the Africa operations is expected to
decrease to approximately 460,000 to 500,000 ounces in 2010 due
to mining additional waste material and lower ore grade.
Costs applicable to sales
of approximately $515 to $555
per ounce are expected for 2010, primarily as a result of lower
production, higher diesel prices and higher labor and royalty
costs. Based on current mine plans, assumptions and conditions,
consolidated gold production and
Costs applicable to sales
for 2011 through 2012 are expected to remain at the 2010
levels.
Development of the fourth pit, Amoma, is on schedule and
production is expected to commence during the fourth quarter of
2010. With the granting of the required mining license by the
Ghanaian authorities earlier this year, we are advancing the
development of our Akyem project, with completion anticipated in
the 2013 to 2014 timeframe.
Newmont and other gold companies with production in Ghana,
formed a consortium to import power generation equipment and
constructed an 80 mega-watt power plant. The plant was
commissioned in 2008 and transferred to the Volta River
Authority in 2009. As a result, the Ghanaian government has
agreed to distribute power proportionately between participating
mines and other industrial and commercial customers, if
required, to curtail power consumption as a result of power
shortages.
Foreign
Currency Exchange Rates
In addition to our domestic operations in the United States, we
have operations in Australia, New Zealand, Peru, Indonesia,
Ghana and other foreign locations. Our operations sell their
production based on U.S. dollar metal prices.
Fluctuations in foreign currency exchange rates in relation to
the U.S. dollar can increase or decrease profit margins and
Costs applicable to sales
to the extent costs are paid in
foreign currencies. Such fluctuations have not had a material
impact on our revenue since gold and copper are sold throughout
the world principally in U.S. dollars. Approximately 24%,
27% and 28% of our
Costs applicable to sales
were paid in
local currencies other than the U.S. dollar in 2009, 2008
and 2007, respectively. Our
Costs applicable to sales
are
most significantly impacted by variations in the Australian
dollar/U.S. dollar exchange rate. However, variations in
the Australian dollar/U.S. dollar exchange rate
historically have been strongly correlated to variations in the
U.S. dollar gold price over the long-term. Increases or
decreases in costs at Australian locations due to exchange rate
changes have therefore tended to be mitigated by changes in
sales reported in U.S. dollars at Australian locations. No
assurance, however, can be given that the Australian
dollar/U.S. dollar exchange rate will continue to be
strongly correlated to the U.S. dollar gold price in the
future.
Variations in the local currency exchange rates in relation to
the U.S. dollar at our foreign mining operations decreased
Costs applicable to sales
$41 in 2009 from 2008, and
increased
Costs applicable to sales
$11 in 2008 from
2007, primarily by movements in the Australian dollar.
69
Table of Contents
We have a program to hedge up to 85% of our forecasted
Australian dollar denominated operating expenditures. At
December 31, 2009, we have hedged 60%, 37% and 13% of our
forecasted Australian denominated operating costs in 2010, 2011
and 2012, respectively, at an average rate of 0.77, 0.75 and
0.78, respectively.
Foreign currency exchange rates in relation to the
U.S. dollar have not had a material impact on our
determination of proven and probable reserves in the past.
However, if a sustained weakening of the U.S. dollar in
relation to the Australian dollar,
and/or
to
other foreign currencies that impact our cost structure, were
not mitigated by offsetting increases in the U.S. dollar
gold price or by other factors, the amount of proven and
probable reserves in the applicable foreign country could be
reduced as certain proven and probable reserves may no longer be
economic. The extent of any such reduction would be dependent on
a variety of factors including the length of time of any such
weakening of the U.S. dollar, and management’s
long-term view of the applicable exchange rate. Future
reductions of proven and probable reserves would primarily
result in reduced gold or copper sales and increased
amortization and, depending on the level of reduction, could
also result in impairments of property, plant and mine
development, mineral interests
and/or
goodwill.
Liquidity and
Capital Resources
Cash Provided
from Operations
Net cash provided from continuing operations
was $2,914,
$1,397 and $528 for 2009, 2008 and 2007, respectively, and was
impacted by the following key factors:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Consolidated gold ounces sold (in
thousands)
(1)
|
6,543 | 6,170 | 6,097 | |||||||||
|
Average price received per ounce of gold,
net
(2)
|
$ | 977 | $ | 874 | $ | 697 | ||||||
|
Costs applicable to sales per ounce of gold
sold
(3)
|
$ | 417 | $ | 436 | $ | 390 | ||||||
|
Consolidated copper pounds sold (in millions)
|
507 | 290 | 428 | |||||||||
|
Average price received per pound of copper,
net
(2)
|
$ | 2.60 | $ | 2.59 | $ | 2.86 | ||||||
|
Costs applicable to sales per pound of copper
sold
(3)
|
$ | 0.64 | $ | 1.38 | $ | 1.05 | ||||||
| (1) | Includes incremental start-up ounces of 9, 20 and 6 in 2009, 2008 and 2007, respectively. Incremental start-up includes the removal and production of de minimis saleable materials during development and is recorded as Other income , net of incremental mining and processing costs. | |
| (2) | After treatment and refining charges and excluding settlement of price-capped forward sales contracts. | |
| (3) | Excludes Amortization , Accretion , the 2007 Loss on settlement of price-capped forward sales contracts and the 2007 Midas redevelopment . |
Net cash provided from continuing operations
increased
$1,517 compared to 2008. Cash flow provided from operations
during 2009 was impacted by higher realized gold and copper
prices and increased gold and copper sales volume, as discussed
above in
Consolidated Financial Results
, a $177 increase
in accounts payable and other accrued liabilities ($78 for
accrued tax liabilities, primarily in Asia Pacific, $74 for
employee-related liabilities, $58 for other short and long term
liabilities, primarily at Asia Pacific, partially offset by a
$33 decrease in accounts payable, primarily at Asia Pacific)
partially offset by a $378 increase in inventories, stockpiles
(primarily in Asia Pacific and North America) and ore on leach
pads. Cash flow provided from operations during 2008 was
impacted by significantly higher realized gold prices and
increased gold sales volume, partially offset by lower realized
copper prices and lower copper sales volume and a $343 increase
in inventories, stockpiles (primarily at Batu Hijau) and ore on
leach pads, a $198 increase in prepaid taxes and a $103 decrease
to fund reclamation activities. The 2007 results were negatively
impacted by the $578
70
Table of Contents
settlement of the price-capped forward sales contracts, $276
payment of pre-acquisition Australia income taxes of Normandy
and $174 from the final settlement of copper collar contracts.
We are currently planning to contribute at least $60 to our
retirement benefit programs in 2010 to bolster plan assets. For
additional discussion see Note 22 to the Consolidated
Financial Statements.
Investing
Activities
Net cash used in investing activities of continuing
operations
was $2,781 in 2009 compared to $2,146 and $2,472
in 2008 and 2007, respectively, for the reasons explained below.
Additions to property, plant and mine development
were
$1,769, $1,870 and $1,669 for continuing operations in 2009,
2008 and 2007, respectively, as follows:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
North America:
|
||||||||||||
|
Nevada
|
$ | 205 | $ | 299 | $ | 585 | ||||||
|
La Herradura
|
54 | 27 | 10 | |||||||||
|
Hope Bay
|
5 | 82 | — | |||||||||
| 264 | 408 | 595 | ||||||||||
|
South America:
|
||||||||||||
|
Yanacocha
|
119 | 202 | 238 | |||||||||
|
Conga
|
27 | 34 | 12 | |||||||||
| 146 | 236 | 250 | ||||||||||
|
Asia Pacific:
|
||||||||||||
|
Boddington
|
1,093 | 815 | 516 | |||||||||
|
Jundee
|
29 | 36 | 42 | |||||||||
|
Tanami
|
74 | 52 | 42 | |||||||||
|
Kalgoorlie
|
11 | 14 | 5 | |||||||||
|
Waihi
|
8 | 28 | 38 | |||||||||
|
Batu Hijau
|
44 | 83 | 80 | |||||||||
|
Other
|
3 | 2 | 5 | |||||||||
| 1,262 | 1,030 | 728 | ||||||||||
|
Africa:
|
||||||||||||
|
Ahafo
|
75 | 109 | 113 | |||||||||
|
Akyem
|
10 | 2 | 14 | |||||||||
| 85 | 111 | 127 | ||||||||||
|
Corporate and Other
|
16 | 20 | 12 | |||||||||
|
Accrual basis
|
1,773 | 1,805 | 1,712 | |||||||||
|
Decrease (increase) in accrual
|
(4 | ) | 65 | (43 | ) | |||||||
|
Cash basis
|
$ | 1,769 | $ | 1,870 | $ | 1,669 | ||||||
Capital expenditures in North America during 2009 included $54
for La Herradura development, $20 for Leeville/Turf
development, $71 for surface and underground development, $24
for reserve conversion and other capital drilling and $23 for
mine equipment in Nevada. Hope Bay expenditures included $5 for
project infrastructure. South America capital expenditures
included $27 for the Conga project, $37 for leach pad expansions
at Yanacocha and $32 for surface maintenance. Capital
71
Table of Contents
expenditures in Asia Pacific included $1,093 for Boddington and
$106 for surface and underground mine development in Other
Australia/New Zealand. Batu Hijau’s capital expenditures
included $10 for mine equipment purchases and $17 for mine
dewatering. Capital expenditures in Africa included $6 for
infrastructure and land, $28 for Amoma land acquisition and road
construction, $14 for tailings dams and $10 for the Akyem
project.
Capital expenditures in North America during 2008 included $40
for completion of the power plant, $73 for surface and
underground development, $55 for tailings dams and $19 for mine
equipment in Nevada. Hope Bay expenditures included $82 for
project infrastructure. South America capital expenditures
included $35 for completion of the gold mill, $61 for leach pad
expansions at Yanacocha and $34 for the Conga project. Capital
expenditures in Asia Pacific included $815 for continued
construction of the Boddington project and $59 for underground
mine development in Other Australia/New Zealand. Batu
Hijau’s capital expenditures included $42 for a tailings
pipeline, $16 for mine equipment purchases and $14 for mine
dewatering. Capital expenditures in Africa included $34 for
surface development, $28 for mine equipment purchases and $22
for infrastructure and land.
Capital expenditures in North America during 2007 included $280
for the power plant and $160 for mine equipment replacement in
Nevada. South America capital expenditures included $139 for
construction of the gold mill, $39 for leach pad expansions at
Yanacocha and $12 for the Conga project. Capital expenditures in
Asia Pacific included $516 for construction of the Boddington
project, $63 for underground mine development and $27 for
tailings dams construction in Other Australia/New Zealand. Batu
Hijau’s capital expenditures included $38 for mine
equipment purchases and $17 for mine dewatering. Capital
expenditures in Africa included $14 at Akyem and $14 for power
generation facilities, $21 for a cyanide recovery circuit, $28
for mine equipment and $12 for infrastructure and land at Ahafo.
During 2009, 2008 and 2007, $29, $18 and $19, respectively, of
drilling and related costs were capitalized and included in mine
development costs. These capitalized costs included $24 at North
America and $5 at Asia Pacific in 2009; $10 at Asia Pacific and
$8 at North America in 2008; and $11 at Asia Pacific, $6 at
North America and $1 at Africa and South America in 2007.
During 2009, 2008 and 2007, $26, $27 and $16, respectively, of
pre-stripping costs were capitalized and included in mine
development costs. Pre-stripping costs included the North
Lantern pit in Nevada in 2009, the Bobstar pit and North Lantern
pit in Nevada and the Awonsu and Amoma pits at Ahafo in 2008 and
the Bobstar pit in Nevada in 2007.
We anticipate capital expenditures of approximately $1,400 to
$1,600 in 2010, with approximately 30% invested in each of the
North America and Asia Pacific regions and the remaining 40% at
other locations. Approximately 60% of the 2010 capital budget is
allocated to sustaining investments, with the remaining 40%
allocated to project development, including the development of
the Akyem project in Ghana and the Conga project in Peru.
Acquisitions, net.
In 2009, we paid $981 (net
of $1 cash acquired) and paid $15 in acquisition costs to
acquire the remaining 33.33% interest in Boddington.
Consideration for the acquisition also includes contingent
payments capped at $100, equal to 50% of the average realized
operating margin (Revenue less
Costs applicable to sales
on a by-product basis), if any, exceeding $600 per ounce,
payable on one-third of gold sales from Boddington beginning in
the second quarter of 2010. Additionally, we paid $11 for a
mining property near the La Herradura, Mexico operation in
2009. During the last quarter of 2007 and the first quarter of
2008, we paid $953 and $318, respectively, to acquire the
remaining outstanding common shares of Miramar, resulting in
Miramar becoming a wholly-owned subsidiary. As a result of the
completed acquisition of Miramar, we control the Hope Bay
project, a large undeveloped gold property in Nunavut, Canada.
In April 2008, we purchased additional shares of EGR for $7, net
of cash acquired, bringing our ownership interest to 56.67% from
46.72%. In November 2008, EGR repurchased 6.55% of its own
shares from a noncontrolling shareholder bringing our ownership
to 60.64%.
72
Table of Contents
Sales and purchases of marketable
securities.
We had net proceeds of $nil, $nil and
$2 in 2009, 2008 and 2007, respectively, from auction rate
marketable debt securities. The auction rate marketable debt
securities in which we have invested have not traded in an
active market since August 2007 and there are currently no
market quotations available.
During 2009, we purchased marketable equity securities of Regis
Resources for $5 and we received cash of $17 for the sale of
Regis Resources and other marketable equity securities and the
redemption of asset backed commercial paper. During 2008, we
purchased marketable equity securities of Gabriel for $11 and
other marketable equity securities for $6 and we received cash
of $50 for the sale of marketable equity securities. During
2007, we purchased marketable equity securities of Gabriel for
$27 and other marketable equity securities for $9.
Financing
Activities
Net cash provided from financing activities of continuing
operations
was $2,572 in 2009, compared to $127 and $458 in
2008 and 2007, respectively, for the reasons explained below.
Proceeds from debt, net.
During 2009 we
received aggregate proceeds from debt of $4,299 comprised of:
$1,080 net proceeds from the issuance of senior notes due
in 2039, $895 net proceeds from the issuance of senior
notes due in 2019, $504 net proceeds from the issuance of
convertible senior notes due in 2012, $54 from short-term
borrowings at Batu Hijau, $10 under the Ahafo project facility
and $1,756 under our $2,000 revolving credit facility. At
December 31, 2009 we had no borrowings under our revolving
credit facility. The revolving credit facility is also used to
secure the issuance of letters of credit totaling $452,
primarily supporting reclamation obligations.
Repayment of debt.
During 2009 we repaid
$2,731 of debt: $86 for Batu Hijau project financing scheduled
debt repayments, $72 for short-term borrowings at Batu Hijau,
$24 related to the sale-leaseback of the refractory ore
treatment plant (classified as a capital lease), $2,513 under
our $2,000 revolving credit facility and $36 on other credit
facilities and other capital leases. Scheduled minimum debt
repayments are $157 in 2010, $334 in 2011, $608 in 2012, $116 in
2013, $535 in 2014 and $3,059 thereafter. We expect to be able
to fund maturities of debt from
Net cash provided from
operations
, cash balances, existing credit facilities,
proceeds of asset sales and financing alternatives available in
the public capital markets.
At December 31, 2009, we were in compliance with all
required debt covenants and other restrictions related to our
debt agreements.
Proceeds from stock issuance, net.
We received
proceeds of $1,278, $29 and $51 during 2009, 2008 and 2007,
respectively, from the February 2009 public offering and the
issuance of common stock related to the exercise of stock
options. In February 2009 we completed a public offering of
34,500,000 shares of common stock at a price of $37 per
share for net proceeds of $1,234.
Sale of subsidiary shares to noncontrolling
interests.
In November and December 2009, Nusa
Tenggara Partnership (“NTP”) completed the sale of 10%
and 7% of shares in PTNNT to a third party buyer, respectively.
These transactions reduced our ownership interest in PTNNT to
35.44%. Cash proceeds from the sale were $638, with our 56.25%
share being $359 and the balance of $279 was paid to our NTP
partner.
Acquisition of subsidiary shares from noncontrolling
interests.
In December 2009, we entered into a
transaction with P.T. Pukuafu Indah (“PTPI”), an
unrelated noncontrolling partner of PTNNT whereby we agreed to
advance certain funds to PTPI in exchange for a pledge of the
noncontrolling partner’s 20% share of PTNNT dividends, net
of withholding tax, and the assignment of its voting rights to
us. As a result, our effective economic interest in PTNNT
increased by 17% to 52.44% at December 31, 2009.
73
Table of Contents
Dividends paid to noncontrolling interests.
We
paid dividends of $394, $389 and $270 to noncontrolling
interests during 2009, 2008 and 2007, respectively. The 2009
dividends included $279 for our NTP partner’s share of the
sale of the 17% interest in Batu Hijau.
Dividends paid to common stockholders.
We paid
annual dividends of $0.40 per common share during 2009, 2008 and
2007. Additionally, Newmont Mining Corporation of Canada
Limited, a subsidiary of the Company, paid annual dividends of
C$0.46, C$0.43, and C$0.43 during 2009, 2008 and 2007,
respectively. On February 24, 2010, we declared a regular
quarterly dividend of $0.10 per share, payable March 30,
2010 to holders of record at the close of business on
March 12, 2010. The total paid to common stockholders was
$196, $182 and $181 for 2009, 2008 and 2007, respectively.
Discontinued
Operations
Net operating cash provided from (used in) discontinued
operations
was $33 in 2009, compared to $(104) and $137 in
2008 and 2007, respectively, as follows:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Kori Kollo
|
$ | 33 | $ | 7 | $ | (1 | ) | |||||
|
Royalty portfolio
|
— | (111 | ) | 90 | ||||||||
|
Pajingo
|
— | — | 48 | |||||||||
| $ | 33 | $ | (104 | ) | $ | 137 | ||||||
During 2008 we made tax payments of $153 related to the December
2007 royalty portfolio sale.
Net cash provided from (used in) investing activities of
discontinued operations
was $nil, $(11) and $1,359 in 2009,
2008 and 2007, respectively. Cash used in investing activities
of discontinued operations in 2008 included accrued expense
payments on the royalty portfolio sale of $11 and additions to
property, plant and mine development of $5 at Kori Kollo
partially offset by $5 in proceeds from the sale of assets at
Pajingo. Cash provided from investing activities of discontinued
operations in 2007 included proceeds from the sale of assets of
$1,205 ($1,187 from the sale of the royalty portfolio, $10 from
the sale of the Pajingo operation and $8 on the sale of Kori
Kollo assets), $88 from the sale of marketable equity securities
and cost investments and $77 net proceeds on the settlement
of the Zarafshan-Newmont Joint Venture dispute partially offset
by $11 in other investing activities.
Net cash provided from (used in) financing activities of
discontinued operations
was $(2) in 2009 for repayment of
debt at Kori Kollo, $(4) in 2008 for repayment of debt at Kori
Kollo and $7 in 2007 for debt proceeds at Kori Kollo.
Corporate
Revolving Credit Facility
The Company has an uncollateralized $2,000 revolving credit
facility with a syndicate of commercial banks, which matures in
April 2012. The facility contains a letter of credit
sub-facility.
Interest rates and facility fees vary based on the credit
ratings of the Company’s senior, uncollateralized,
long-term debt. Borrowings under the facilities bear interest at
an annual interest rate of LIBOR plus a margin of 0.28% or the
lead bank’s prime interest rate. Facility fees accrue at an
annual rate of 0.07% of the aggregate commitments. The Company
also pays a utilization fee of 0.05% on the amount of revolving
credit loans and letters of credit outstanding under the
facility for each day on which the sum of such loans and letters
of credit exceed 50% of the commitments under the facility. At
December 31, 2009 and 2008, the facility fees were 0.07% of
the commitment. There was $452 and $519 outstanding under the
letter of credit
sub-facility
at December 31, 2009 and 2008, respectively. At
December 31, 2009, $nil was borrowed under the facility.
74
Table of Contents
Debt
Covenants
The
5
7
/
8
%
and
8
5
/
8
% senior
notes, and sale-leaseback of the refractory ore treatment plant
debt facilities contain various covenants and default provisions
including payment defaults, limitation on liens, limitation on
sales and leaseback agreements and merger restrictions.
The Ahafo project facility contains a financial ratio covenant
requiring us to maintain a net debt (total debt net of cash and
cash equivalents) to EBITDA (earnings before interest expense,
income taxes, depreciation and amortization) ratio of less than
or equal to 4.0 and a net debt to total capitalization ratio of
less than or equal to 62.5%.
In addition to the covenants noted above, the corporate
revolving credit facility contains a financial ratio covenant
requiring us to maintain a net debt (total debt net of cash and
cash equivalents) to total capitalization ratio of less than or
equal to 62.5%. Furthermore, the corporate revolving credit
facility contains covenants limiting the sale of all or
substantially all of our assets, certain change of control
provisions and a negative pledge on certain assets.
Certain of our project debt facilities contain debt covenants
and default provisions including limitations on dividends
subject to certain debt service cover ratios, limitations on
sales of assets, negative pledges on certain assets, restricted
payments to partners, change of control provisions and
limitations of additional permitted debt.
At December 31, 2009, we were in compliance with all debt
covenants and provisions related to potential defaults.
Shelf
Registration Statement
In October 2007, we filed with the Securities and Exchange
Commission (the “SEC”) a shelf registration statement
on
Form S-3
which enables the Company to issue an indeterminate number or
amount of common stock, preferred stock, debt securities,
guarantees of debt securities and warrants from time to time at
indeterminate prices. It also included the resale of an
indeterminate amount of common stock, preferred stock and debt
securities from time to time upon exercise of warrants or
conversion of convertible securities. In accordance with SEC
rules and in advance of the expiration of the October 2007 shelf
registration statement, we filed a replacement registration
statement with the SEC in September 2009, which became
automatically effective upon filing.
Contractual
Obligations
Our contractual obligations at December 31, 2009 are
summarized as follows:
| Payments Due by Period | ||||||||||||||||||||
|
Less Than
|
1-3
|
4-5
|
More Than
|
|||||||||||||||||
|
Contractual Obligations
|
Total | 1 Year | Years | Years | 5 Years | |||||||||||||||
|
Debt
(1)
|
$ | 8,191 | $ | 333 | $ | 1,478 | $ | 854 | $ | 5,526 | ||||||||||
|
Capital lease
obligations
(1)
|
246 | 52 | 148 | 45 | 1 | |||||||||||||||
|
Remediation and reclamation
obligations
(2)
|
1,434 | 56 | 173 | 123 | 1,082 | |||||||||||||||
|
Employee-related
benefits
(3)
|
531 | 88 | 92 | 83 | 268 | |||||||||||||||
|
Uncertain income tax liabilities and
interest
(4)
|
38 | — | — | — | 38 | |||||||||||||||
|
Operating leases
|
88 | 12 | 31 | 16 | 29 | |||||||||||||||
|
Minimum royalty payments
|
231 | 23 | 68 | 45 | 95 | |||||||||||||||
|
Purchase
obligations
(5)
|
844 | 115 | 287 | 66 | 376 | |||||||||||||||
|
Other
(6)
|
398 | 129 | 236 | 9 | 24 | |||||||||||||||
| $ | 12,001 | $ | 808 | $ | 2,513 | $ | 1,241 | $ | 7,439 | |||||||||||
75
Table of Contents
| (1) | Amounts represent principal ($4,809) and estimated interest payments ($3,628) assuming no early extinguishment. | |
| (2) | Mining operations are subject to extensive environmental regulations in the jurisdictions in which they operate. Pursuant to environmental regulations, we are required to close our operations and reclaim and remediate the lands that operations have disturbed. The estimated undiscounted cash outflows of these remediation and reclamation obligations are reflected here. For more information regarding remediation and reclamation liabilities, see Note 25 to the Consolidated Financial Statements. | |
| (3) | Contractual obligations for Employee-related benefits include severance, workers’ participation, pension funding and other benefit plans. Pension plan funding beyond 2014 cannot be reasonably estimated given variable market conditions and actuarial assumptions and are not included. | |
| (4) | At December 31, 2009, our uncertain income tax liability, interest and penalty payable were $25 and $13, respectively. We are unable to reasonably estimate the timing of our uncertain income tax liabilities and interest payments beyond 2010 due to uncertainties in the timing of the effective settlement of tax positions. | |
| (5) | Purchase obligations are not recorded in the Consolidated Financial Statements. Purchase obligations represent contractual obligations for purchase of power, materials and supplies, consumables, inventories and capital projects. | |
| (6) | Other includes accrued Boddington contingent consideration of $85 and other obligations which are not reflected in our Consolidated Financial Statements including labor and service contracts. Payments related to derivative contracts cannot be reasonably estimated given variable market conditions. See Note 15 to the Consolidated Financial Statements. |
Off-Balance
Sheet Arrangements
We have the following off-balance sheet arrangements: operating
leases (as disclosed in the above table) and $1,073 of
outstanding letters of credit, surety bonds and bank guarantees
(see Note 33 to the Consolidated Financial Statements). We
also provide a contingent support line of credit to PT Newmont
Nusa Tenggara of which our pro rata share is $11.
We have sales agreements to sell copper concentrates at market
prices as follows, in thousands of tons:
| 2010 | 2011 | 2012 | 2013 | 2014 | Thereafter | |||||||||||||||||||
|
Batu Hijau
|
941 | 598 | 411 | 402 | 573 | — | ||||||||||||||||||
|
Boddington
|
215 | 254 | 231 | 243 | 254 | 904 | ||||||||||||||||||
|
Nevada
|
50 | 46 | — | — | — | — | ||||||||||||||||||
| 1,206 | 898 | 642 | 645 | 827 | 904 | |||||||||||||||||||
For information regarding these copper sales agreements, see
Item 7A, Quantitative and Qualitative Disclosures about
Market Risk-Hedging, Provisional Copper and Gold Sales, below.
Future Cash
Flows
We anticipate that significant capital expenditures in future
years (see Investing Activities, above), funding of exploration
and advanced projects, debt repayments and dividends to both
common shareholders and noncontrolling interests is expected to
impact
Net cash used in investing activities
and
Net
cash used in financing activities
exceeding
Net cash
provided by operations
. Our ability to raise and service
significant new sources of capital will be a function of
macroeconomic conditions, future gold and copper prices as well
as our operational performance, current cash flow and debt
position, among other factors. Although we currently carry a
large cash balance, we may determine that it may be necessary or
appropriate to issue additional equity or other securities,
defer projects or
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Table of Contents
sell assets. Additional financing may not be available when
needed or, if available, the terms of such financing may not be
favorable to us and, if raised by offering equity securities,
may involve substantial dilution to existing stockholders. In
the event of lower gold and copper prices, unanticipated
operating or financial challenges, or new funding limitations,
our ability to pursue new business opportunities, invest in
existing and new projects, fund our ongoing business activities,
retire or service all outstanding debt and pay dividends could
be significantly constrained. For information on our long-term
debt, capital lease obligations and operating leases, see
Note 21 to the Consolidated Financial Statements.
Cash flows are expected to be impacted by variations in the
realized spot price of gold and copper. For information on the
sensitivity of our
Net cash provided by operations
to
metal prices, see Item 7A, Quantitative and Qualitative
Disclosures about Market Risk.
Cash flows are also expected to be impacted by variations in
foreign currency exchange rates in relation to the
U.S. dollar, particularly with respect to the Australian
and New Zealand dollars. Accordingly, we have entered into
derivative instruments to reduce the volatility of
Costs
applicable to sales
in Asia Pacific. For information
concerning the sensitivity of our
Costs applicable to sales
to changes in foreign currency exchange rates, see Results
of Consolidated Operations, Foreign Currency Exchange Rates,
above. For information on the sensitivity of our
Net cash
provided from operations
to foreign currency exchange rates,
see Item 7A, Quantitative and Qualitative Disclosures about
Market Risk.
Net cash provided from operations
will also
be impacted in 2010 as a result of planned contributions of at
least $60 for our post-retirement benefit programs.
Based on expected production of between 6.3 and 6.8 million
ounces of gold and between 540 and 600 million pounds of
copper in 2010, we do not anticipate reasonably expected
variations in our production profile alone to influence our
ability to pay our debt and other obligations in 2010.
Environmental
Our mining and exploration activities are subject to various
federal and state laws and regulations governing the protection
of the environment. These laws and regulations are continually
changing and are generally becoming more restrictive. We conduct
our operations so as to protect the public health and
environment and believe our operations are in compliance with
applicable laws and regulations in all material respects. We
have made, and expect to make in the future, expenditures to
comply with such laws and regulations, but cannot predict the
full amount of such future expenditures. Estimated future
reclamation costs are based principally on legal and regulatory
requirements. At December 31, 2009 and 2008, $698 and $594,
respectively, were accrued for reclamation costs relating to
currently or recently producing mineral properties, of which $36
is classified as current liabilities expected to be spent in
2010.
In addition, we are involved in several matters concerning
environmental obligations associated with former mining
activities. Generally, these matters concern developing and
implementing remediation plans at the various sites involved. We
believe that the related environmental obligations associated
with these sites are similar in nature with respect to the
development of remediation plans, their risk profile and the
compliance required to meet general environmental standards.
Based upon our best estimate of our liability for these matters,
$161 and $163 were accrued for such obligations at
December 31, 2009 and 2008, respectively. Depending upon
the ultimate resolution of these matters, we believe that it is
reasonably possible that the liability for these matters could
be as much as 148% greater or 3% lower than the amount accrued
at December 31, 2009. The amounts accrued for these matters
are reviewed periodically based upon facts and circumstances
available at the time. Changes in estimates are charged to
Other expense, net
in the period estimates are revised.
We spent $20, $39 and $13 in 2009, 2008 and 2007, respectively,
for environmental obligations related to former, primarily
historic, mining activities, and have classified $18 as a
current liability expected to be spent in 2010. Expenditures for
2009 related primarily to Grass Valley in California, the Mt.
Leyshon property in Australia, which is a legacy Normandy site,
the Dawn mill site and the Con
77
Table of Contents
mine from the Miramar acquisition. Expenditures for 2008 related
primarily to Resurrection, a mine site in Leadville, Colorado as
well as the Mt. Leyshon property. Expenditures for 2007 related
primarily to legacy Normandy properties in Australia, the
McCoy/Cove property in Nevada and the Dawn mill site.
Included in capital expenditures were $131, $231 and $91 in
2009, 2008 and 2007, respectively, to comply with environmental
regulations. Ongoing costs to comply with environmental
regulations have not been a significant component of
Costs
applicable to sales
.
Included in
Other long-term assets
is $11 of restricted
cash that is legally restricted for purposes of settling asset
retirement obligations related to the Con mine from the Miramar
acquisition. Included in
Investments
are $10 and $5 of
long-term marketable debt securities and long-term marketable
equity securities, respectively, that are legally pledged for
purposes of settling asset retirement obligations related to the
San Jose Reservoir in Yanacocha.
For more information on the Company’s reclamation and
remediation liabilities, see Note 25 to the Consolidated
Financial Statements.
Forward-Looking
Statements
The foregoing discussion and analysis, as well as certain
information contained elsewhere in this Annual Report, contain
“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, and are intended to be covered by the safe harbor
created thereby. See the discussion in Forward-Looking
Statements in Item 1, Business.
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
Management of the Company uses the non-GAAP financial measure
Adjusted net income to evaluate the Company’s operating
performance, and for planning and forecasting future business
operations. The Company believes the use of Adjusted net income
allows investors and analysts to compare results of the
continuing operations of the Company and its direct and indirect
subsidiaries relating to the production and sale of minerals to
similar operating results of other mining companies, by
excluding exceptional or unusual items, income or loss from
discontinued operations and the permanent impairment of assets,
including marketable securities and goodwill. Management’s
determination of the components of Adjusted net income are
evaluated periodically and based, in part, on
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Table of Contents
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 as follows:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Net income (loss) attributable to Newmont stockholders
|
$ | 1,297 | $ | 831 | $ | (1,895 | ) | |||||
|
Boddington acquisition costs
|
44 | — | — | |||||||||
|
Boddington contingent consideration
|
15 | — | — | |||||||||
|
Impairment of assets
|
8 | 182 | 1,161 | |||||||||
|
Net gain on asset sales
|
(16 | ) | (47 | ) | (7 | ) | ||||||
|
Income tax estimate revisions
|
— | (159 | ) | — | ||||||||
|
Loss on settlement of gold contracts
|
— | — | 358 | |||||||||
|
Discontinued operations (income) loss
|
11 | (15 | ) | 907 | ||||||||
|
Adjusted net income
|
$ | 1,359 | $ | 792 | $ | 524 | ||||||
|
Adjusted net income per
share
(1)
|
$ | 2.79 | $ | 1.74 | $ | 1.16 | ||||||
| (1) | Calculated using weighted average number of shares outstanding, basic and diluted. |
By-product
costs applicable to sales
Revenue and
Costs applicable to sales
for Boddington are
presented in the Consolidated Financial Statements for both gold
and copper due to the significant portion of copper production
(approximately
15-20%
of
total revenue based on the latest
life-of-mine
plan and metal price assumptions). The co-product method
allocates costs applicable to sales to each metal based on
specifically identifiable costs where applicable and on a
relative proportion of revenue values for other costs.
Management also assesses the performance of the Boddington mine
on a by-product basis due to the majority of revenues being
derived from gold and to determine contingent consideration
payments that may be paid to AngloGold to acquire the remaining
33.33% interest in Boddington. The by-product method deducts
copper revenue from costs applicable to sales as shown in the
following table.
|
By-Product
|
||||||||||||||||
| Method | Co-Product Method | |||||||||||||||
| Gold | Gold | Copper | Total | |||||||||||||
|
Revenue, net
|
$ | 101 | $ | 101 | $ | 27 | $ | 128 | ||||||||
|
Production costs:
|
||||||||||||||||
|
Direct mining and production costs
|
58 | 46 | 12 | 58 | ||||||||||||
|
By-product credits
|
(28 | ) | (1 | ) | — | (1 | ) | |||||||||
|
Royalties and production taxes
|
5 | 4 | 1 | 5 | ||||||||||||
|
Other
|
(2 | ) | (5 | ) | 3 | (2 | ) | |||||||||
|
Costs applicable to sales
|
33 | 44 | 16 | 60 | ||||||||||||
|
Amortization and accretion
|
20 | 16 | 4 | 20 | ||||||||||||
|
Total production costs
|
53 | 60 | 20 | 80 | ||||||||||||
|
Gross margin
|
$ | 48 | $ | 41 | $ | 7 | $ | 48 | ||||||||
|
Gold ounces sold
(000)
(1)
|
95 | 95 | ||||||||||||||
|
Costs applicable to sales per ounce
|
$ | 352 | $ | 468 | ||||||||||||
|
Copper pounds sold (millions)
|
N/A | 9 | ||||||||||||||
|
Costs applicable to sales per pound
|
N/A | $ | 1.77 | |||||||||||||
| (1) | Excludes incremental start-up sales of 8 ounces. |
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Table of Contents
| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (dollars in millions except per share, per ounce and per pound amounts) |
Metal
Price
Changes in the market price of gold and copper significantly
affect our profitability and cash flow. Gold prices can
fluctuate widely due to numerous factors, such as demand;
forward selling by producers; central bank sales, purchases and
lending; investor sentiment; the relative strength of the
U.S. dollar and global mine production levels. Copper is
traded on established international exchanges and copper prices
generally reflect market supply and demand, but can also be
influenced by speculative trading in the commodity or by
currency exchange rates.
Foreign
Currency
Changes in the foreign currency exchange rates in relation to
the U.S. dollar may affect our profitability and cash flow.
Foreign currency exchange rates can fluctuate widely due to
numerous factors, such as supply and demand for foreign and
U.S. currencies and U.S. and foreign country economic
conditions. In addition to our operations in the United States,
we have assets or operations in Australia, Peru, Indonesia,
Canada, New Zealand, Ghana and Mexico. Our
non-U.S. operations
sell their metal production based on a U.S. dollar gold
price. Fluctuations in the local currency exchange rates in
relation to the U.S. dollar can increase or decrease profit
margins and
Costs applicable to sales
per ounce to the
extent costs are paid in local currency at foreign operations.
The Australian dollar/U.S. dollar exchange rate has had the
greatest impact on our
Costs applicable to sales
, as
measured in U.S. dollars. However, variations in the
Australian dollar/U.S. dollar exchange rate have
historically been strongly correlated to variations in the
U.S. dollar gold price over the long-term. Increases or
decreases in costs at Australian gold operations due to exchange
rate changes have therefore tended to be mitigated by changes in
sales reported in U.S. dollars for such locations. No
assurance can be given that the Australian
dollar/U.S. dollar exchange rate will continue to be
strongly correlated to the U.S. dollar gold price in the
future, or that short-term changes in the Australian
dollar/U.S. dollar exchange rate will not have an impact on
our profitability and cash flow. Foreign currency exchange rates
in relation to the U.S. dollar have not had a material
impact on our determination of proven and probable reserves in
the past. However, if a sustained weakening of the
U.S. dollar in relation to the Australian dollar,
and/or
to
other foreign currencies that impact our cost structure, were
not mitigated by offsetting increases in the U.S. dollar
gold price or by other factors, profitability, cash flows and
the amount of proven and probable reserves in the applicable
foreign country could be reduced. The extent of any such
reduction would be dependent on a variety of factors including
the length of time of any such weakening of the
U.S. dollar, and management’s long-term view of the
applicable exchange rate. For information concerning the
sensitivity of our
Costs applicable to sales
to changes
in foreign currency exchange rates, see Item 7,
Management’s Discussion and Analysis of Consolidated
Results of Operations and Financial Condition-Results of
Consolidated Operations-Foreign Currency Exchange Rates, above.
Hedging
Our strategy is to provide shareholders with leverage to changes
in the gold and copper prices by selling our gold and copper
production at current market prices. Consequently, we do not
hedge our gold and copper sales. We continue to manage risks
associated with commodity input costs, interest rates and
foreign currencies using the derivative market.
By using derivatives, we are affected by credit risk, market
risk and market liquidity risk. Credit risk is the risk that a
third party might fail to fulfill its performance obligations
under the terms of a financial instrument. We mitigate credit
risk by entering into derivatives with high credit quality
counterparties, limiting the amount of exposure to each
counterparty, and monitoring the financial condition of the
counterparties. Market risk is the risk that the fair value of a
derivative might be adversely affected by a change in underlying
commodity prices, interest rates, or currency exchange
80
Table of Contents
rates, and that this in turn affects our financial condition. We
manage market risk by establishing and monitoring parameters
that limit the types and degree of market risk that may be
undertaken. We mitigate this risk by establishing trading
agreements with counterparties under which we are not required
to post any collateral or make any margin calls on our
derivatives. Our counterparties cannot require settlement solely
because of an adverse change in the fair value of a derivative.
Market liquidity risk is the risk that a derivative cannot be
eliminated quickly, by either liquidating it or by establishing
an offsetting position. Under the terms of our trading
agreements, counterparties cannot require us to immediately
settle outstanding derivatives, except upon the occurrence of
customary events of default such as covenant breeches, including
financial covenants, insolvency or bankruptcy. We generally
mitigate market liquidity risk by spreading out the maturity of
our derivatives over time.
Cash Flow
Hedges
During the three years ended 2009, we entered into IDR/$ fixed
forward contracts to hedge a portion of our IDR/$ operating
expenditure exposure and $/A$ fixed forward contracts in Other
Australia/New Zealand and Boddington to hedge a portion of our
A$ operating expenditure exposure and our A$ capital expenditure
exposure related to the construction of Boddington. In 2008, we
began a similar $/NZ$ layered fixed forward contract program to
hedge a portion of our NZ$ denominated operating expenditures in
Other Australia/New Zealand. Also in 2008, we implemented a
program to hedge a portion of our operating cost exposure
related to diesel prices of fuel consumed at our Nevada
operations. All of the currency and diesel contracts have been
designated as cash flow hedges of future expenditures, and as
such, changes in the market value have been recorded in
Accumulated other comprehensive income (loss)
.
Given that the fair value of our derivative instruments are
based upon market rates and prices and that the volatility of
these rates and prices are dependent on many factors subject to
fluctuation, we are exposed to liquidity risks related to these
contracts. We cash settle the fair value of each contract upon
settlement with our counterparties. The settlement values of our
contracts could differ significantly from the current fair
values. As such, we are exposed to liquidity risk related to
unfavorable changes in the fair value of our derivative
contracts.
We had the following derivative instruments designated as hedges
with fair values at December 31, 2009 and December 31,
2008:
| Fair Values of Derivative Instruments | ||||||||||||||||
| At December 31, 2009 | ||||||||||||||||
|
Other
|
Other
|
Other
|
Other
|
|||||||||||||
|
Current
|
Long-Term
|
Current
|
Long-Term
|
|||||||||||||
| Assets | Assets | Liabilities | Liabilities | |||||||||||||
|
Foreign currency exchange contracts:
|
||||||||||||||||
|
IDR operating fixed forward contracts
|
$ | 1 | $ | — | $ | — | $ | — | ||||||||
|
NZ$ operating fixed forward contracts
|
5 | 1 | — | — | ||||||||||||
|
A$ operating fixed forward contracts
|
78 | 53 | — | 1 | ||||||||||||
|
Diesel fixed forward contracts
|
5 | 1 | — | — | ||||||||||||
|
Interest rate swap contracts
|
3 | 4 | — | — | ||||||||||||
|
Total derivative instruments
|
$ | 92 | $ | 59 | $ | — | $ | 1 | ||||||||
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Table of Contents
| Fair Values of Derivative Instruments | ||||||||||||||||
| At December 31, 2008 | ||||||||||||||||
|
Other
|
Other
|
Other
|
Other
|
|||||||||||||
|
Current
|
Long-Term
|
Current
|
Long-Term
|
|||||||||||||
| Assets | Assets | Liabilities | Liabilities | |||||||||||||
|
Foreign currency exchange contracts:
|
||||||||||||||||
|
IDR operating fixed forward contracts
|
$ | — | $ | — | $ | 4 | $ | — | ||||||||
|
NZ$ operating fixed forward contracts
|
— | — | 5 | 1 | ||||||||||||
|
A$ fixed forward contracts
|
3 | 1 | 87 | 42 | ||||||||||||
|
A$ call option contracts
|
1 | — | — | — | ||||||||||||
|
Diesel fixed forward contracts
|
— | — | 15 | — | ||||||||||||
|
Interest rate swap contracts
|
2 | 7 | — | — | ||||||||||||
|
Total derivative instruments
|
$ | 6 | $ | 8 | $ | 111 | $ | 43 | ||||||||
Foreign
Currency Exchange Risk
We utilize foreign currency contracts to reduce the variability
of the US dollar amount of forecasted foreign currency
expenditures caused by changes in currency exchange rates.
We hedge a portion of our IDR, A$, and NZ$ denominated operating
expenditures each period. The hedging instruments are fixed
forward contracts with expiration dates ranging up to three
years from the date of issue. The principal hedging objective is
reduction in the volatility of realized
period-on-period
foreign exchange rates. Beginning in 2010, we will not enter
into any additional IDR fixed forward contracts.
We hedged our A$ denominated capital expenditures related to the
construction of Boddington. The hedging instruments consisted of
a series of fixed forward contracts and bought call option
contracts with expiration dates ranging up to one year from the
date of issue. The $30 net realized loss associated with
the capital expenditure hedge program was recorded in
Accumulated other comprehensive income (loss)
net of tax
and will be recognized in
Amortization
over the life of
the related Boddington assets. At December 31, 2009, the
Company had no outstanding hedges for the Boddington capital
program.
All of the foreign currency contracts were designated as cash
flow hedges, and as such, the effective portion of unrealized
changes in market value have been recorded in
Accumulated
other comprehensive income (loss)
and are recorded in
earnings during the period in which the hedged transaction
affects earnings. Gains and losses from hedge ineffectiveness
are recognized in current earnings.
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Table of Contents
We had the following foreign currency derivative contracts
outstanding at December 31, 2009:
| Expected Maturity Date | ||||||||||||||||
|
Total/
|
||||||||||||||||
| 2010 | 2011 | 2012 | Average | |||||||||||||
|
IDR fixed forward contracts:
|
||||||||||||||||
|
$(millions)
|
$ | 38 | $ | — | $ | — | $ | 38 | ||||||||
|
Average rate (IDR/$)
|
9,863 | — | — | 9,863 | ||||||||||||
|
IDR notional (millions)
|
374,797 | — | — | 374,797 | ||||||||||||
|
A$ operating fixed forward contracts:
|
||||||||||||||||
|
$(millions)
|
$ | 572 | $ | 358 | $ | 130 | $ | 1,060 | ||||||||
|
Average rate ($/A$)
|
0.77 | 0.75 | 0.78 | 0.77 | ||||||||||||
|
A$ notional (millions)
|
736 | 476 | 166 | 1,378 | ||||||||||||
|
NZ$ operating fixed forward contracts:
|
||||||||||||||||
|
$(millions)
|
$ | 43 | $ | 18 | $ | — | $ | 61 | ||||||||
|
Average rate ($/NZ$)
|
0.65 | 0.67 | — | 0.66 | ||||||||||||
|
NZ$ notional (millions)
|
66 | 26 | — | 92 | ||||||||||||
Diesel Price
Risk
We hedge up to 66% of our operating cost exposure related to
diesel consumed at our Nevada operations to reduce the
variability in realized diesel prices. The hedging instruments
consist of a series of financially settled fixed forward
contracts with expiration dates of up to two years from the date
of issue. The contracts have been designated as cash flow hedges
of future diesel purchases, and as such, the effective portion
of unrealized changes in the market value have been recorded in
Accumulated other comprehensive income (loss)
and are
recorded in earnings during the period in which the hedged
transaction affects earnings. Gains and losses from hedge
ineffectiveness are recognized in current earnings.
We had the following diesel derivative contracts outstanding at
December 31, 2009:
| Expected Maturity Date | ||||||||||||
|
Total/
|
||||||||||||
| 2010 | 2011 | Average | ||||||||||
|
Diesel fixed forward contracts:
|
||||||||||||
|
$(millions)
|
$ | 41 | $ | 17 | $ | 58 | ||||||
|
Average rate ($/gallon)
|
1.94 | 2.17 | 2.00 | |||||||||
|
Diesel gallons (millions)
|
21 | 8 | 29 | |||||||||
Treasury Rate
Lock Contracts
In connection with the 2019 and 2039 notes issued in September
2009, we acquired treasury rate lock contracts to reduce the
variability of the proceeds realized from the bond issuances.
The treasury rate locks resulted in $6 and $5 unrealized gains
for the 2019 and 2039 notes, respectively. We previously
acquired treasury rate locks in connection with the issuance of
the 2035 notes that resulted in a $10 unrealized loss. The
gains/losses from these contracts are recognized in
Interest
expense, net
over the terms of the respective notes.
Fair Value
Hedges
Interest Rate
Risk
At December 31, 2009, we had $222 fixed to floating swap
contracts designated as a hedge against our
8
5
/
8
% senior
notes. The interest rate swap contracts assist in management of
our targeted mix of fixed and floating rate debt. Under the
hedge contract terms, we receive fixed-rate interest
83
Table of Contents
payments at 8.63% and pay floating-rate interest amounts based
on periodic London Interbank Offered Rate (“LIBOR”)
settings plus a spread, ranging from 2.60% to 7.63%. The
interest rate swap contracts were designated as fair value
hedges and, as such, changes in fair value have been recorded in
income in each period, consistent with recording changes to the
mark-to-market
value of the underlying hedged liability in income. Changes in
the
mark-to-market
value of the effective portion of the interest rate swap
contracts are recognized as a component of
Interest expense,
net.
The hedge contracts decreased
Interest expense, net
by $4, $2 and $nil during 2009, 2008 and 2007, respectively.
During 2009, 2008 and 2007, losses of $3 and gains of $4 and $3
were included in
Other income, net
for the ineffective
portion of these swap contracts designated as fair value hedges,
respectively.
Commodity Price
Risk
LME copper prices averaged $2.34 per pound during 2009, compared
with our recorded average provisional price of $2.53 per pound
before
mark-to-market
gains and treatment and refining charges. The applicable forward
copper price at the end of the year was $3.34 per pound. During
2009, increasing copper prices resulted in a provisional pricing
mark-to-market
gain of $173 ($0.33 per pound). At December 31, 2009, we
had copper sales of 160 million pounds priced at an average
of $3.34 per pound, subject to final pricing over the next
several months.
The average London P.M. gold fix was $973 per ounce during 2009,
compared with our recorded average provisional gold price of
$977 per ounce before
mark-to-market
gains and treatment and refining charges. The applicable forward
gold price at the end of the year was $1,094 per ounce. During
2009, changes in gold prices resulted in a provisional pricing
mark-to-market
gain of $15 ($2 per ounce). At December 31, 2009, we had
gold sales of 85,000 ounces priced at an average of $1,094 per
ounce, subject to final pricing over the next several months.
Fixed and
Variable Rate Debt
We have both fixed and variable rate debt. 93% and 66% of debt
was fixed and 7% and 34% was variable at December 31, 2009
and 2008, respectively. Fixed debt increased primarily due to
the issuance of the 2012, 2019 and 2039 notes, which had a
combined carrying value of $2,446 at December 31, 2009.
Variable rate debt decreased primarily due to the decreased
borrowings on the Corporate Revolving Credit facility, which was
$nil and $757 at December 31, 2009 and 2008, respectively.
We have managed some of our fixed rate debt exposure by entering
into interest rate swaps (see Interest Rate Swap Contracts
above). Our fixed rate debt exposure at December 31, 2009
and 2008 is summarized as follows:
| 2009 | 2008 | |||||||
|
Carrying value of fixed rate
debt
(1)
|
$ | 4,146 | $ | 1,961 | ||||
|
Fair value of fixed rate
debt
(1)
|
$ | 4,470 | $ | 1,909 | ||||
|
Pro forma fair value sensitivity of fixed rate debt of a
+/ −10 basis point interest rate
change
(2)
|
$ | +/−38 | $ | +/−8 | ||||
| (1) | Excludes specialized and hybrid debt instruments for which it is not practicable to estimate fair values and pro forma fair values or sensitivities. These instruments include the Sale-Leaseback of the Refractory Ore Treatment Plant, PTNNT project financing facility, Yanacocha project financing and certain capital leases. The estimated fair value quoted above may or may not reflect the actual trading value of these instruments. | |
| (2) | The pro forma information assumes a +/ −10 basis point change in market interest rates at December 31 of each year, and reflects the corresponding estimated change in the fair value of fixed rate debt outstanding at that date under that assumption. Actual changes in the timing and amount of interest rate variations may differ from the above assumptions. |
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Table of Contents
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of the Company is responsible for establishing
and maintaining adequate internal control over financial
reporting. Internal control over financial reporting is a
process designed by, or under the supervision of, the
Company’s principal executive and principal financial
officers and effected by the Company’s board of directors,
management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to risk that controls may become inadequate
because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
The Company’s management assessed the effectiveness of the
Company’s internal control over financial reporting at
December 31, 2009. In making this assessment, the
Company’s management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in
Internal Control-Integrated Framework
. Based
upon its assessment, management concluded that, at
December 31, 2009, the Company’s internal control over
financial reporting was effective.
The effectiveness of the Company’s assessment of internal
control over financial reporting at December 31, 2009 has
been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report
which appears herein.
85
Table of Contents
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Newmont Mining
Corporation:
In our opinion, the accompanying consolidated balance sheets and
the related consolidated statements of income (loss),
comprehensive income (loss), change in equity and cash flows
present fairly, in all material respects, the financial position
of Newmont Mining Corporation and its subsidiaries at
December 31, 2009 and 2008, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2009 in conformity with
accounting principles generally accepted in the United States of
America. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial
reporting at December 31, 2009, based on criteria
established in
Internal Control — Integrated
Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The
Company’s management is responsible for these financial
statements, for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness
of internal control over financial reporting, included in
Management’s Report on Internal Control Over Financial
Reporting appearing under Item 8. Our responsibility is to
express opinions on these financial statements and on the
Company’s internal control over financial reporting based
on our integrated audits. We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement and
whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the financial
statements included examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an
understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also
included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.
As discussed in Note 2 to the consolidated financial
statements, the Company changed its method of accounting for
uncertain tax positions effective January 1, 2007, which
did not require retrospective application, and changed its
methods of accounting for convertible debt and noncontrolling
interests all effective January 1, 2009, which required
retrospective application for all periods presented.
A company’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s
internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers
LLP
Denver, Colorado
February 24, 2010
86
Table of Contents
NEWMONT MINING
CORPORATION
STATEMENTS
OF CONSOLIDATED INCOME (LOSS)
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
| (in millions, except per share) | ||||||||||||
|
Revenues
|
||||||||||||
|
Sales — gold, net
|
$ | 6,386 | $ | 5,372 | $ | 4,244 | ||||||
|
Sales — copper, net
|
1,319 | 752 | 1,221 | |||||||||
| 7,705 | 6,124 | 5,465 | ||||||||||
|
Costs and expenses
|
||||||||||||
|
Costs applicable to sales —
gold
(1)
|
2,726 | 2,681 | 2,376 | |||||||||
|
Costs applicable to sales —
copper
(2)
|
323 | 399 | 450 | |||||||||
|
Loss on settlement of price-capped forward sales contracts
(Note 3)
|
— | — | 531 | |||||||||
|
Midas redevelopment (Note 4)
|
— | — | 11 | |||||||||
|
Amortization
|
806 | 738 | 685 | |||||||||
|
Accretion
|
34 | 31 | 27 | |||||||||
|
Exploration
|
187 | 213 | 177 | |||||||||
|
Advanced projects, research and development (Note 5)
|
135 | 166 | 62 | |||||||||
|
General and administrative
|
159 | 144 | 142 | |||||||||
|
Write-down of goodwill
|
— | — | 1,122 | |||||||||
|
Write-down of property, plant and mine development
|
7 | 137 | 10 | |||||||||
|
Other expense, net (Note 6)
|
383 | 351 | 243 | |||||||||
| 4,760 | 4,860 | 5,836 | ||||||||||
|
Other income (expense)
|
||||||||||||
|
Other income, net (Note 7)
|
88 | 123 | 100 | |||||||||
|
Interest expense, net of capitalized interest of $111, $47 and
$50, respectively
|
(120 | ) | (135 | ) | (118 | ) | ||||||
| (32 | ) | (12 | ) | (18 | ) | |||||||
|
Income (loss) from continuing operations before income tax and
other items
|
2,913 | 1,252 | (389 | ) | ||||||||
|
Income tax expense (Note 8)
|
(788 | ) | (100 | ) | (190 | ) | ||||||
|
Equity income (loss) of affiliates (Note 9)
|
(16 | ) | (5 | ) | (1 | ) | ||||||
|
Income (loss) from continuing operations
|
2,109 | 1,147 | (580 | ) | ||||||||
|
Income (loss) from discontinued operations (Note 10)
|
(16 | ) | 13 | (905 | ) | |||||||
|
Net income (loss)
|
2,093 | 1,160 | (1,485 | ) | ||||||||
|
Net income attributable to noncontrolling interests
(Note 11)
|
(796 | ) | (329 | ) | (410 | ) | ||||||
|
Net income (loss) attributable to Newmont stockholders
|
$ | 1,297 | $ | 831 | $ | (1,895 | ) | |||||
|
Net income (loss) attributable to Newmont stockholders:
|
||||||||||||
|
Continuing operations
|
$ | 1,308 | $ | 816 | $ | (988 | ) | |||||
|
Discontinued operations
|
(11 | ) | 15 | (907 | ) | |||||||
| $ | 1,297 | $ | 831 | $ | (1,895 | ) | ||||||
|
Income (loss) per common share (Note 12)
|
||||||||||||
|
Basic and diluted:
|
||||||||||||
|
Continuing operations
|
$ | 2.68 | $ | 1.80 | $ | (2.18 | ) | |||||
|
Discontinued operations
|
(0.02 | ) | 0.03 | (2.01 | ) | |||||||
| $ | 2.66 | $ | 1.83 | $ | (4.19 | ) | ||||||
|
Cash dividends declared per common share
|
$ | 0.40 | $ | 0.40 | $ | 0.40 | ||||||
| (1) | Exclusive of Loss on settlement of price-capped forward sales contracts, Midas redevelopment, Amortization and Accretion. | |
| (2) | Exclusive of Amortization and Accretion. |
The accompanying notes are an integral part of these
consolidated financial statements.
87
Table of Contents
NEWMONT MINING
CORPORATION
STATEMENTS
OF CONSOLIDATED CASH FLOWS
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
| (in millions) | ||||||||||||
|
Operating activities:
|
||||||||||||
|
Net income (loss)
|
$ | 2,093 | $ | 1,160 | $ | (1,485 | ) | |||||
|
Adjustments:
|
||||||||||||
|
Amortization
|
806 | 738 | 685 | |||||||||
|
Stock based compensation and other benefits
|
57 | 50 | 46 | |||||||||
|
Accretion of accumulated reclamation obligations (Note 25)
|
46 | 41 | 35 | |||||||||
|
Revaluation of contingent consideration (Note 13)
|
23 | — | — | |||||||||
|
Loss (income) from discontinued operations (Note 10)
|
16 | (13 | ) | 905 | ||||||||
|
Reclamation estimate revisions (Note 25)
|
13 | 101 | 29 | |||||||||
|
Write-down of property, plant and mine development
|
7 | 137 | 10 | |||||||||
|
Impairment of marketable securities (Note 16)
|
6 | 114 | 46 | |||||||||
|
Deferred income taxes
|
1 | (315 | ) | (156 | ) | |||||||
|
Write-down of goodwill
|
— | — | 1,122 | |||||||||
|
Gain on asset sales, net
|
(24 | ) | (72 | ) | (10 | ) | ||||||
|
Other operating adjustments and write-downs
|
97 | 83 | 30 | |||||||||
|
Net change in operating assets and liabilities (Note 28)
|
(227 | ) | (627 | ) | (729 | ) | ||||||
|
Net cash provided from continuing operations
|
2,914 | 1,397 | 528 | |||||||||
|
Net cash provided from (used in) discontinued operations
(Note 10)
|
33 | (104 | ) | 137 | ||||||||
|
Net cash provided from operations
|
2,947 | 1,293 | 665 | |||||||||
|
Investing activities:
|
||||||||||||
|
Additions to property, plant and mine development
|
(1,769 | ) | (1,870 | ) | (1,669 | ) | ||||||
|
Acquisitions, net (Note 13)
|
(1,007 | ) | (325 | ) | (953 | ) | ||||||
|
Sales of marketable securities
|
17 | 50 | 224 | |||||||||
|
Purchases of marketable securities
|
(5 | ) | (17 | ) | (258 | ) | ||||||
|
Repayment of noncontrolling partner loan (Note 11)
|
— | — | 161 | |||||||||
|
Other
|
(17 | ) | 16 | 23 | ||||||||
|
Net cash used in investing activities of continuing operations
|
(2,781 | ) | (2,146 | ) | (2,472 | ) | ||||||
|
Net cash provided from (used in) investing activities of
discontinued operations (Note 10)
|
— | (11 | ) | 1,359 | ||||||||
|
Net cash used in investing activities
|
(2,781 | ) | (2,157 | ) | (1,113 | ) | ||||||
|
Financing activities:
|
||||||||||||
|
Proceeds from debt, net
|
4,299 | 5,078 | 3,001 | |||||||||
|
Repayment of debt
|
(2,731 | ) | (4,483 | ) | (2,036 | ) | ||||||
|
Proceeds from stock issuance, net
|
1,278 | 29 | 51 | |||||||||
|
Sale of subsidiary shares to noncontrolling interests
(Note 11)
|
638 | — | — | |||||||||
|
Acquisition of subsidiary shares from noncontrolling interests
(Note 11)
|
(287 | ) | — | — | ||||||||
|
Dividends paid to noncontrolling interests
|
(394 | ) | (389 | ) | (270 | ) | ||||||
|
Dividends paid to common stockholders
|
(196 | ) | (182 | ) | (181 | ) | ||||||
|
Purchase of Company share call options (Note 12)
|
— | — | (366 | ) | ||||||||
|
Issuance of Company share warrants (Note 12)
|
— | — | 248 | |||||||||
|
Change in restricted cash and other
|
(35 | ) | 74 | 11 | ||||||||
|
Net cash provided from financing activities of continuing
operations
|
2,572 | 127 | 458 | |||||||||
|
Net cash provided from (used in) financing activities of
discontinued operations (Note 10)
|
(2 | ) | (4 | ) | 7 | |||||||
|
Net cash provided from financing activities
|
2,570 | 123 | 465 | |||||||||
|
Effect of exchange rate changes on cash
|
44 | (54 | ) | 50 | ||||||||
|
Net change in cash and cash equivalents
|
2,780 | (795 | ) | 67 | ||||||||
|
Cash and cash equivalents at beginning of period
|
435 | 1,230 | 1,163 | |||||||||
|
Cash and cash equivalents at end of period
|
$ | 3,215 | $ | 435 | $ | 1,230 | ||||||
| See Note 29 for supplemental cash flow information. |
The accompanying notes are an integral part of these
consolidated financial statements.
88
Table of Contents
NEWMONT MINING
CORPORATION
CONSOLIDATED
BALANCE SHEETS
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
| (in millions) | ||||||||
|
ASSETS
|
||||||||
|
Cash and cash equivalents
|
$ | 3,215 | $ | 435 | ||||
|
Trade receivables
|
438 | 104 | ||||||
|
Accounts receivable
|
102 | 214 | ||||||
|
Investments (Note 16)
|
56 | 12 | ||||||
|
Inventories (Note 17)
|
493 | 507 | ||||||
|
Stockpiles and ore on leach pads (Note 18)
|
403 | 290 | ||||||
|
Deferred income tax assets (Note 8)
|
215 | 284 | ||||||
|
Other current assets (Note 19)
|
900 | 455 | ||||||
|
Current assets
|
5,822 | 2,301 | ||||||
|
Property, plant and mine development, net (Note 20)
|
12,370 | 10,128 | ||||||
|
Investments (Note 16)
|
1,186 | 655 | ||||||
|
Stockpiles and ore on leach pads (Note 18)
|
1,502 | 1,136 | ||||||
|
Deferred income tax assets (Note 8)
|
937 | 1,039 | ||||||
|
Other long-term assets (Note 19)
|
482 | 395 | ||||||
|
Assets of operations held for sale (Note 10)
|
— | 73 | ||||||
|
Total assets
|
$ | 22,299 | $ | 15,727 | ||||
| LIABILITIES | ||||||||
|
Current portion of debt (Note 21)
|
$ | 157 | $ | 165 | ||||
|
Accounts payable
|
396 | 411 | ||||||
|
Employee-related benefits (Note 22)
|
250 | 170 | ||||||
|
Income and mining taxes (Note 8)
|
200 | 61 | ||||||
|
Other current liabilities (Note 24)
|
1,317 | 770 | ||||||
|
Current liabilities
|
2,320 | 1,577 | ||||||
|
Debt (Note 21)
|
4,652 | 3,072 | ||||||
|
Reclamation and remediation liabilities (Note 25)
|
805 | 699 | ||||||
|
Deferred income tax liabilities (Note 8)
|
1,341 | 1,051 | ||||||
|
Employee-related benefits (Note 22)
|
381 | 379 | ||||||
|
Other long-term liabilities (Note 24)
|
174 | 252 | ||||||
|
Liabilities of operations held for sale (Note 10)
|
13 | 36 | ||||||
|
Total liabilities
|
9,686 | 7,066 | ||||||
|
Commitments and contingencies (Note 33)
|
||||||||
|
EQUITY
|
||||||||
|
Common stock — $1.60 par value;
|
||||||||
|
Authorized — 750 million shares
|
||||||||
|
Issued and outstanding —
|
||||||||
|
Common: 482 million and 443 million shares issued,
less 270,000 and 264,000 treasury shares, respectively
|
770 | 709 | ||||||
|
Exchangeable: 56 million shares issued, less
47 million and 44 million redeemed shares, respectively
|
||||||||
|
Additional paid-in capital
|
8,158 | 6,831 | ||||||
|
Accumulated other comprehensive income (loss) (Note 26)
|
626 | (253 | ) | |||||
|
Retained earnings
|
1,149 | 4 | ||||||
|
Newmont stockholders’ equity
|
10,703 | 7,291 | ||||||
|
Noncontrolling interests
|
1,910 | 1,370 | ||||||
|
Total equity
|
12,613 | 8,661 | ||||||
|
Total liabilities and equity
|
$ | 22,299 | $ | 15,727 | ||||
The accompanying notes are an integral part of these
consolidated financial statements.
89
Table of Contents
NEWMONT MINING
CORPORATION
STATEMENTS
OF CONSOLIDATED CHANGES IN EQUITY
|
Accumulated
|
||||||||||||||||||||||||||||
|
Additional
|
Retained
|
Other
|
||||||||||||||||||||||||||
| Common Stock |
Paid-In
|
Earnings
|
Comprehensive
|
Noncontrolling
|
Total
|
|||||||||||||||||||||||
| Shares | Amount | Capital | (Deficit) | Income (Loss) | Interests | Equity | ||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||
|
Balance at December 31, 2006
|
451 | $ | 677 | $ | 6,703 | $ | 1,284 | $ | 673 | $ | 1,098 | $ | 10,435 | |||||||||||||||
|
Net income (loss)
|
— | — | — | (1,895 | ) | — | 410 | (1,485 | ) | |||||||||||||||||||
|
Other comprehensive income
|
— | — | — | — | 284 | 4 | 288 | |||||||||||||||||||||
|
Dividends paid
|
— | — | (90 | ) | (91 | ) | — | (270 | ) | (451 | ) | |||||||||||||||||
|
Uncertain tax positions
|
— | — | — | (108 | ) | — | 4 | (104 | ) | |||||||||||||||||||
|
Acquisition of Miramar Mining Corporation
|
— | — | — | — | — | 39 | 39 | |||||||||||||||||||||
|
Convertible debt issuance
|
— | — | 220 | — | — | — | 220 | |||||||||||||||||||||
|
Repayment of noncontrolling partner loan
|
— | — | — | — | — | 161 | 161 | |||||||||||||||||||||
|
Other
|
— | — | — | — | — | 3 | 3 | |||||||||||||||||||||
|
Stock based compensation and related share issuances
|
2 | 4 | 88 | — | — | — | 92 | |||||||||||||||||||||
|
Shares issued in exchange for exchangeable shares
|
— | 15 | (15 | ) | — | — | — | — | ||||||||||||||||||||
|
Warrants issued (Note 12)
|
— | — | 248 | — | — | — | 248 | |||||||||||||||||||||
|
Call options purchased (net of $128 deferred tax assets)
|
— | — | (238 | ) | — | — | — | (238 | ) | |||||||||||||||||||
|
Balance at December 31, 2007
|
453 | $ | 696 | $ | 6,916 | $ | (810 | ) | $ | 957 | $ | 1,449 | $ | 9,208 | ||||||||||||||
|
Net income
|
— | — | — | 831 | — | 329 | 1,160 | |||||||||||||||||||||
|
Other comprehensive loss
|
— | — | — | — | (1,210 | ) | (2 | ) | (1,212 | ) | ||||||||||||||||||
|
Dividends paid
|
— | — | (165 | ) | (17 | ) | — | (389 | ) | (571 | ) | |||||||||||||||||
|
Acquisition of subsidiary shares from noncontrolling interests
|
— | — | — | — | — | (17 | ) | (17 | ) | |||||||||||||||||||
|
Stock based compensation and related share issuances
|
2 | 2 | 91 | — | — | — | 93 | |||||||||||||||||||||
|
Shares issued in exchange for exchangeable shares
|
— | 11 | (11 | ) | — | — | — | — | ||||||||||||||||||||
|
Balance at December 31, 2008
|
455 | 709 | 6,831 | 4 | (253 | ) | 1,370 | 8,661 | ||||||||||||||||||||
|
Net income
|
— | — | — | 1,297 | — | 796 | 2,093 | |||||||||||||||||||||
|
Other comprehensive income
|
— | — | — | — | 879 | 3 | 882 | |||||||||||||||||||||
|
Dividends paid
|
— | — | (44 | ) | (152 | ) | — | (394 | ) | (590 | ) | |||||||||||||||||
|
Common stock issuance
|
34 | 55 | 1,179 | — | — | — | 1,234 | |||||||||||||||||||||
|
Convertible debt issuance
|
— | — | 46 | — | — | — | 46 | |||||||||||||||||||||
|
Sale of subsidiary shares to noncontrolling interests
|
— | — | 63 | — | — | 467 | 530 | |||||||||||||||||||||
|
Acquisition of subsidiary shares from noncontrolling interests
|
— | — | — | — | — | (332 | ) | (332 | ) | |||||||||||||||||||
|
Stock based compensation and related share issuances
|
2 | 3 | 86 | — | — | — | 89 | |||||||||||||||||||||
|
Shares issued in exchange for exchangeable shares
|
— | 3 | (3 | ) | — | — | — | — | ||||||||||||||||||||
|
Balance at December 31, 2009
|
491 | $ | 770 | $ | 8,158 | $ | 1,149 | $ | 626 | $ | 1,910 | $ | 12,613 | |||||||||||||||
The accompanying notes are an integral part of these
consolidated financial statements.
90
Table of Contents
NEWMONT MINING
CORPORATION
STATEMENTS
OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
| (in millions) | ||||||||||||
|
Net income (loss)
|
$ | 2,093 | $ | 1,160 | $ | (1,485 | ) | |||||
|
Other comprehensive income (loss):
|
||||||||||||
|
Unrealized gain (loss) on marketable securities, net of $(82),
$105 and $(19) tax benefit (expense), respectively
|
418 | (573 | ) | 113 | ||||||||
|
Foreign currency translation adjustments
|
264 | (387 | ) | 138 | ||||||||
|
Change in pension and other post-retirement benefits, net of
$(7), $69 and $(18) tax benefit (expense), respectively
|
||||||||||||
|
Net change from periodic valuations
|
4 | (139 | ) | 18 | ||||||||
|
Net amount reclassified to income
|
10 | 9 | 15 | |||||||||
|
Net unrecognized loss on pension and other post-retirement
benefits
|
14 | (130 | ) | 33 | ||||||||
|
Change in fair value of cash flow hedge instruments, net of
$(82), $53 and $(3) tax benefit (expense), respectively
|
||||||||||||
|
Net change from periodic revaluations
|
183 | (127 | ) | 5 | ||||||||
|
Net amount reclassified to income
|
3 | 5 | (1 | ) | ||||||||
|
Net unrecognized gain (loss) on derivatives
|
186 | (122 | ) | 4 | ||||||||
|
Other comprehensive income (loss)
|
882 | (1,212 | ) | 288 | ||||||||
|
Comprehensive income (loss)
|
$ | 2,975 | $ | (52 | ) | $ | (1,197 | ) | ||||
|
Comprehensive income (loss) attributable to:
|
||||||||||||
|
Newmont stockholders
|
$ | 2,176 | $ | (379 | ) | $ | (1,611 | ) | ||||
|
Noncontrolling interests
|
799 | 327 | 414 | |||||||||
| $ | 2,975 | $ | (52 | ) | $ | (1,197 | ) | |||||
The accompanying notes are an integral part of these
consolidated financial statements.
91
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(dollars in
millions, except per share, per ounce and per pound
amounts)
| NOTE 1 | THE COMPANY |
Newmont Mining Corporation and its affiliates and subsidiaries
(collectively, “Newmont” or the “Company”)
predominantly operates in the mining industry, focused on the
exploration for and production of gold and copper.
The Company has significant assets or operations in the United
States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand
and Mexico. The cash flow and profitability of the
Company’s operations are significantly affected by the
market price of gold, and to a lesser extent, copper. The prices
of gold and copper are affected by numerous factors beyond the
Company’s control.
The Company has evaluated all subsequent events through
February 24, 2010.
References to “A$” refers to Australian currency,
“C$” to Canadian currency, “NZ$” to
New Zealand currency, “IDR” to Indonesian
currency and “$” to United States currency.
| NOTE 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The Accounting
Standards Codification
In June 2009, the Financial Accounting Standards Board
(“FASB”) established the
FASB Accounting Standards
Codification
(“ASC”) as the single source of
authoritative generally accepted accounting principles
(“GAAP”) to be applied by nongovernmental entities.
The ASC is a new structure which took existing accounting
pronouncements and organized them by accounting topic. Relevant
authoritative literature issued by the Securities and Exchange
Commission (“SEC”) and select SEC staff
interpretations and administrative literature was also included
in the ASC. All other accounting guidance not included in the
ASC is non-authoritative. The ASC was effective for the
Company’s interim quarterly period beginning July 1,
2009. The adoption of the ASC did not have an impact on the
Company’s consolidated financial position, results of
operations or cash flows.
Use of
Estimates
The Company’s Consolidated Financial Statements have been
prepared in accordance with GAAP. The preparation of the
Company’s Consolidated Financial Statements requires the
Company to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the related
disclosure of contingent assets and liabilities at the date of
the Consolidated Financial Statements and the reported amounts
of revenues and expenses during the reporting period. The more
significant areas requiring the use of management estimates and
assumptions relate to mineral reserves that are the basis for
future cash flow estimates utilized in impairment calculations
and
units-of-production
amortization calculations; environmental, reclamation and
closure obligations; estimates of recoverable gold and other
minerals in stockpile and leach pad inventories; estimates of
fair value for certain reporting units and asset impairments
(including impairments of goodwill, long-lived assets and
investments); write-downs of inventory, stockpiles and ore on
leach pads to net realizable value; post-employment,
post-retirement and other employee benefit liabilities;
valuation allowances for deferred tax assets; reserves for
contingencies and litigation; and the fair value and accounting
treatment of financial instruments including marketable
securities and derivative instruments. The Company bases its
estimates on historical experience and on various other
assumptions that are believed to be reasonable under the
circumstances. Accordingly, actual results may differ
significantly from these estimates under different assumptions
or conditions.
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Principles of
Consolidation
The Consolidated Financial Statements include the accounts of
Newmont Mining Corporation and more-than-50%-owned subsidiaries
that it controls and entities over which control is achieved
through means other than voting rights. The Company also
includes its pro-rata share of assets, liabilities and
operations for unincorporated joint ventures in which it has an
interest. All significant intercompany balances and transactions
have been eliminated. The functional currency for the majority
of the Company’s operations, including the Australian
operations, is the U.S. dollar.
The Company follows the ASC guidance for identification and
reporting for entities over which control is achieved through
means other than voting rights. The guidance defines such
entities as Variable Interest Entities (“VIEs”).
Newmont identified the Nusa Tenggara Partnership
(“NTP”), a partnership between Newmont and an
affiliate of Sumitomo, that owns a 63% interest in PT Newmont
Nusa Tenggara (“PTNNT” or “Batu Hijau”), as
a VIE due to certain capital structures and contractual
relationships.
In December 2009, the Company entered into a transaction with
P.T. Pukuafu Indah (“PTPI”), an unrelated
noncontrolling partner of PTNNT whereby the Company agreed to
advance certain funds to PTPI in exchange for a pledge of the
noncontrolling partner’s 20% share of PTNNT dividends, net
of withholding tax, and the assignment of its voting rights to
the Company. As a result, PTPI was determined to be a VIE as it
has minimal equity capital and the voting rights to its 20%
interest in PTNNT reside with Newmont.
Based on the above transaction, the Company recognized an
additional 17% effective economic interest in PTNNT. Combined
with the Company’s 56.25% ownership in NTP, Newmont has a
52.44% effective economic interest in PTNNT and continues to
consolidate Batu Hijau in its Consolidated Financial Statements.
Cash and Cash
Equivalents
Cash and cash equivalents consist of all cash balances and
highly liquid investments with an original maturity of three
months or less. Because of the short maturity of these
investments, the carrying amounts approximate their fair value.
Cash and cash equivalents are invested in United States Treasury
securities and money market securities. Restricted cash is
excluded from cash and cash equivalents and is included in other
current and long-term assets.
Investments
Management determines the appropriate classification of its
investments in equity securities at the time of purchase and
reevaluates such determinations at each reporting date.
Investments in incorporated entities in which the Company’s
ownership is greater than 20% and less than 50%, or which the
Company does not control through majority ownership or means
other than voting rights, are accounted for by the equity method
and are included in long-term assets. The Company accounts for
its equity security investments as available for sale securities
in accordance with ASC guidance on accounting for certain
investments in debt and equity securities. The Company
periodically evaluates whether declines in fair values of its
investments below the Company’s carrying value are
other-than-temporary
in accordance with guidance for the meaning of
other-than-temporary
impairment and its application to certain investments. The
Company’s policy is to generally treat a decline in the
investment’s quoted market value that has lasted
continuously for more than six months as an
other-than-temporary
decline in value. The Company also monitors its investments for
events or changes in circumstances that have occurred that may
have a significant adverse effect on the fair value of the
investment and evaluates qualitative and quantitative factors
regarding the severity and
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duration of the unrealized loss and the Company’s ability
to hold the investment until a forecasted recovery occurs to
determine if the decline in value of an investment is
other-than-temporary.
Declines in fair value below the Company’s carrying value
deemed to be
other-than-temporary
are charged to earnings. Additional information concerning the
Company’s equity method and security investments is
included in Note 16.
Stockpiles,
Ore on Leach Pads and Inventories
As described below, costs that are incurred in or benefit the
productive process are accumulated as stockpiles, ore on leach
pads and inventories. Stockpiles, ore on leach pads and
inventories are carried at the lower of average cost or net
realizable value. Net realizable value represents the estimated
future sales price of the product based on current and long-term
metals prices, less the estimated costs to complete production
and bring the product to sale. Write-downs of stockpiles, ore on
leach pads and inventories, resulting from net realizable value
impairments, are reported as a component of
Costs applicable
to sales
. The current portion of stockpiles, ore on leach
pads and inventories is determined based on the expected amounts
to be processed within the next 12 months. Stockpiles, ore
on leach pads and inventories not expected to be processed
within the next 12 months are classified as long-term. The
major classifications are as follows:
Stockpiles
Stockpiles represent ore that has been extracted from the mine
and is available for further processing. Stockpiles are measured
by estimating the number of tons added and removed from the
stockpile, the number of contained ounces or pounds (based on
assay data) and the estimated metallurgical recovery rates
(based on the expected processing method). Stockpile ore
tonnages are verified by periodic surveys. Costs are allocated
to stockpiles based on relative values of material stockpiled
and processed using current mining costs incurred up to the
point of stockpiling the ore, including applicable overhead and
amortization relating to mining operations, and removed at each
stockpile’s average cost per recoverable unit.
Ore on Leach
Pads
The recovery of gold from certain gold oxide ores is achieved
through the heap leaching process. Under this method, oxide ore
is placed on leach pads where it is treated with a chemical
solution, which dissolves the gold contained in the ore. The
resulting gold-bearing solution is further processed in a plant
where the gold is recovered. Costs are added to ore on leach
pads based on current mining costs, including applicable
amortization relating to mining operations. Costs are removed
from ore on leach pads as ounces are recovered based on the
average cost per estimated recoverable ounce of gold on the
leach pad.
The estimates of recoverable gold on the leach pads are
calculated from the quantities of ore placed on the leach pads
(measured tons added to the leach pads), the grade of ore placed
on the leach pads (based on assay data) and a recovery
percentage (based on ore type). In general, leach pads recover
between 50% and 95% of the recoverable ounces in the first year
of leaching, declining each year thereafter until the leaching
process is complete.
Although the quantities of recoverable gold placed on the leach
pads are reconciled by comparing the grades of ore placed on
pads to the quantities of gold actually recovered (metallurgical
balancing), the nature of the leaching process inherently limits
the ability to precisely monitor inventory levels. As a result,
the metallurgical balancing process is constantly monitored and
estimates are refined based on actual results over time.
Historically, the Company’s operating results have not been
materially impacted by variations between the estimated and
actual recoverable quantities of gold on its leach
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pads. Variations between actual and estimated quantities
resulting from changes in assumptions and estimates that do not
result in write-downs to net realizable value are accounted for
on a prospective basis.
In-process
Inventory
In-process inventories represent materials that are currently in
the process of being converted to a saleable product. Conversion
processes vary depending on the nature of the ore and the
specific processing facility, but include mill in-circuit, leach
in-circuit, flotation and column cells, and carbon in-pulp
inventories. In-process material is measured based on assays of
the material fed into the process and the projected recoveries
of the respective plants. In-process inventories are valued at
the average cost of the material fed into the process
attributable to the source material coming from the mines,
stockpiles
and/or
leach
pads plus the in-process conversion costs, including applicable
amortization relating to the process facilities incurred to that
point in the process.
Precious Metals
Inventory
Precious metals inventories include gold doré
and/or
gold
bullion. Precious metals that result from the Company’s
mining and processing activities are valued at the average cost
of the respective in-process inventories incurred prior to the
refining process, plus applicable refining costs.
Concentrate
Inventory
Concentrate inventories represent copper and gold concentrate
available for shipment. The Company values concentrate inventory
at the average cost, including an allocable portion of support
costs and amortization. Costs are added and removed to the
concentrate inventory based on tons of concentrate and are
valued at the lower of average cost or net realizable value.
Materials and
Supplies
Materials and supplies are valued at the lower of average cost
or net realizable value. Cost includes applicable taxes and
freight.
Property,
Plant and Mine Development
Facilities and
equipment
Expenditures for new facilities or equipment and expenditures
that extend the useful lives of existing facilities or equipment
are capitalized and recorded at cost. The facilities and
equipment are amortized using the straight-line method at rates
sufficient to amortize such costs over the estimated productive
lives, which do not exceed the related estimated mine lives, of
such facilities based on proven and probable reserves.
Mine
Development
Mine development costs include engineering and metallurgical
studies, drilling and other related costs to delineate an ore
body, the removal of overburden to initially expose an ore body
at open pit surface mines and the building of access ways,
shafts, lateral access, drifts, ramps and other infrastructure
at underground mines. Costs incurred before mineralization is
classified as proven and probable reserves are expensed and
classified as
Exploration
or
Advanced projects,
research and development
expense. Capitalization of mine
development project costs, that meet the definition of an asset,
begins once mineralization is classified as proven and probable
reserves.
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Drilling and related costs are capitalized for an ore body where
proven and probable reserves exist and the activities are
directed at obtaining additional information on the ore body or
converting non-reserve mineralization to proven and probable
reserves and the benefit is expected to be realized over a
period beyond one year. All other drilling and related costs are
expensed as incurred. Drilling costs incurred during the
production phase for operational ore control are allocated to
inventory costs and then included as a component of
Costs
applicable to sales
.
The cost of removing overburden and waste materials to access
the ore body at an open pit mine prior to the production phase
are referred to as “pre-stripping costs.”
Pre-stripping costs are capitalized during the development of an
open pit mine. Where multiple open pits exist at a mining
complex utilizing common processing facilities, pre-stripping
costs are capitalized at each pit. The removal and production of
de minimis saleable materials may occur during development and
are recorded as
Other income
, net of incremental mining
and processing costs.
The production phase of an open pit mine commences when saleable
minerals, beyond a de minimis amount, are produced. Stripping
costs incurred during the production phase of a mine are
variable production costs that are included as a component of
inventory to be recognized in
Costs applicable to sales
in the same period as the revenue from the sale of inventory.
The Company’s definition of a mine and the mine’s
production phase may differ from that of other companies in the
mining industry resulting in incomparable allocations of
stripping costs to deferred mine development and production
costs. Other mining companies may expense pre-stripping costs
associated with subsequent pits within a mining complex.
Mine development costs are amortized using the
units-of-production
(“UOP”) method based on estimated recoverable ounces
or pounds in proven and probable reserves. To the extent that
these costs benefit an entire ore body, they are amortized over
the estimated life of the ore body. Costs incurred to access
specific ore blocks or areas that only provide benefit over the
life of that area are amortized over the estimated life of that
specific ore block or area.
Mineral
Interests
Mineral interests include acquired interests in production,
development and exploration stage properties. The mineral
interests are capitalized at their fair value at the acquisition
date, either as an individual asset purchase or as part of a
business combination.
The value of such assets is primarily driven by the nature and
amount of mineralized material believed to be contained in such
properties. Production stage mineral interests represent
interests in operating properties that contain proven and
probable reserves. Development stage mineral interests represent
interests in properties under development that contain proven
and probable reserves. Exploration stage mineral interests
represent interests in properties that are believed to
potentially contain mineralized material consisting of
(i) mineralized material such as inferred material within
pits; measured, indicated and inferred material with
insufficient drill spacing to qualify as proven and probable
reserves; and inferred material in close proximity to proven and
probable reserves; (ii) around-mine exploration potential
such as inferred material not immediately adjacent to existing
reserves and mineralization, but located within the immediate
mine area; (iii) other mine-related exploration potential
that is not part of measured, indicated or inferred material and
is comprised mainly of material outside of the immediate mine
area; (iv) greenfields exploration potential that is not
associated with any other production, development or exploration
stage property, as described above; or (v) any acquired
right to explore or extract a potential mineral deposit. The
Company’s mineral rights generally are enforceable
regardless of whether proven and probable reserves have been
established. In certain limited situations, the nature of a
mineral right changes from an exploration
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right to a mining right upon the establishment of proven and
probable reserves. The Company has the ability and intent to
renew mineral interests where the existing term is not
sufficient to recover all identified and valued proven and
probable reserves
and/or
undeveloped mineralized material.
Asset
Impairment
Long-lived
Assets
The Company reviews and evaluates its long-lived assets for
impairment when events or changes in circumstances indicate that
the related carrying amounts may not be recoverable. An
impairment is considered to exist if the total estimated future
cash flows on an undiscounted basis are less than the carrying
amount of the assets, including goodwill, if any. An impairment
loss is measured and recorded based on discounted estimated
future cash flows. Future cash flows are estimated based on
quantities of recoverable minerals, expected gold and other
commodity prices (considering current and historical prices,
trends and related factors), production levels, operating costs,
capital requirements and reclamation costs, all based on
life-of-mine
plans. Existing proven and probable reserves and value beyond
proven and probable reserves, including mineralization that is
not part of the measured, indicated or inferred resource base,
are included when determining the fair value of mine site
reporting units at acquisition and, subsequently, in determining
whether the assets are impaired. The term “recoverable
minerals” refers to the estimated amount of gold or other
commodities that will be obtained after taking into account
losses during ore processing and treatment. Estimates of
recoverable minerals from such exploration stage mineral
interests are risk adjusted based on management’s relative
confidence in such materials. In estimating future cash flows,
assets are grouped at the lowest level for which there are
identifiable cash flows that are largely independent of future
cash flows from other asset groups. The Company’s estimates
of future cash flows are based on numerous assumptions and it is
possible that actual future cash flows will be significantly
different than the estimates, as actual future quantities of
recoverable minerals, gold and other commodity prices,
production levels and operating costs of production and capital
are each subject to significant risks and uncertainties.
Goodwill
The Company evaluates, on at least an annual basis during the
fourth quarter, the carrying amount of goodwill to determine
whether current events and circumstances indicate that such
carrying amount may no longer be recoverable. To accomplish
this, the Company compares the estimated fair value of its
reporting units to their carrying amounts. If the carrying value
of a reporting unit exceeds its estimated fair value, the
Company compares the implied fair value of the reporting
unit’s goodwill to its carrying amount, and any excess of
the carrying value over the fair value is charged to earnings.
The Company’s fair value estimates are based on numerous
assumptions and it is possible that actual fair value will be
significantly different than the estimates, as actual future
quantities of recoverable minerals, gold and other commodity
prices, production levels, operating costs and capital
requirements are each subject to significant risks and
uncertainties.
Revenue
Recognition
Revenue is recognized, net of treatment and refining charges,
from a sale when persuasive evidence of an arrangement exists,
the price is determinable, the product has been delivered, the
title has been transferred to the customer and collection of the
sales price is reasonably assured. Revenues from by-product
sales are credited to
Costs applicable to sales
as a
by-product credit.
Concentrate sales are initially recorded based on 100% of the
provisional sales prices. Until final settlement occurs,
adjustments to the provisional sales prices are made to take
into account the
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mark-to-market
changes based on the forward prices for the estimated month of
settlement. For changes in metal quantities upon receipt of new
information and assay, the provisional sales quantities are
adjusted as well. The principal risks associated with
recognition of sales on a provisional basis include metal price
fluctuations between the date initially recorded and the date of
final settlement. If a significant decline in metal prices
occurs between the provisional pricing date and the final
settlement date, it is reasonably possible that the Company
could be required to return a portion of the sales proceeds
received based on the provisional invoice.
The Company’s sales based on a provisional price contain an
embedded derivative that is required to be separated from the
host contract for accounting purposes. The host contract is the
receivable from the sale of the concentrates at the forward
exchange price at the time of sale. The embedded derivative,
which does not qualify for hedge accounting, is marked to market
through earnings each period prior to final settlement.
Income and
Mining Taxes
The Company accounts for income taxes using the liability
method, recognizing certain temporary differences between the
financial reporting basis of the Company’s liabilities and
assets and the related income tax basis for such liabilities and
assets. This method generates either a net deferred income tax
liability or asset for the Company, as measured by the statutory
tax rates in effect. The Company derives its deferred income tax
charge or benefit by recording the change in either the net
deferred income tax liability or asset balance for the year.
Mining taxes represent Canadian provincial taxes levied on
mining operations and are classified as income taxes; as such
taxes are based on a percentage of mining profits. With respect
to the earnings that the Company derives from the operations of
its consolidated subsidiaries, in those situations where the
earnings are indefinitely reinvested, no deferred taxes have
been provided on the unremitted earnings (including the excess
of the carrying value of the net equity of such entities for
financial reporting purposes over the tax basis of such equity)
of these consolidated companies.
The Company’s deferred income tax assets include certain
future tax benefits. The Company records a valuation allowance
against any portion of those deferred income tax assets when it
believes, based on the weight of available evidence, it is more
likely than not that some portion or all of the deferred income
tax asset will not be realized.
The Company’s operations involve dealing with uncertainties
and judgments in the application of complex tax regulations in
multiple jurisdictions. The final taxes paid are dependent upon
many factors, including negotiations with taxing authorities in
various jurisdictions and resolution of disputes arising from
federal, state, and international tax audits. The Company
recognizes potential liabilities and records tax liabilities for
anticipated tax audit issues in the U.S. and other tax
jurisdictions based on its estimate of whether, and the extent
to which, additional taxes will be due. At January 1, 2007,
the Company adopted guidance for accounting for uncertainty in
income taxes to record these liabilities (refer to Note 8
for additional information). The Company adjusts these reserves
in light of changing facts and circumstances; however, due to
the complexity of some of these uncertainties, the ultimate
resolution may result in a payment that is materially different
from the Company’s current estimate of the tax liabilities.
If the Company’s estimate of tax liabilities proves to be
less than the ultimate assessment, an additional charge to
expense would result. If the estimate of tax liabilities proves
to be greater than the ultimate assessment, a tax benefit would
result. The Company recognizes interest and penalties, if any,
related to unrecognized tax benefits in income tax expense.
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Reclamation
and Remediation Costs (Asset Retirement Costs and
Obligations)
Asset retirement obligations are recognized when incurred and
recorded as liabilities at fair value. The liability is accreted
over time through periodic charges to earnings. In addition, the
asset retirement cost is capitalized as part of the asset’s
carrying value and amortized over the life of the related asset.
Reclamation costs are periodically adjusted to reflect changes
in the estimated present value resulting from the passage of
time and revisions to the estimates of either the timing or
amount of the reclamation and abandonment costs. The asset
retirement obligation is based on when spending for an existing
environmental disturbance will occur. The Company reviews, on an
annual basis, unless otherwise deemed necessary, the asset
retirement obligation at each mine site in accordance with ASC
guidance for accounting for asset retirement obligations.
Future remediation costs for inactive mines are accrued based on
management’s best estimate at the end of each period of the
costs expected to be incurred at a site. Such cost estimates
include, where applicable, ongoing care, maintenance and
monitoring costs. Changes in estimates at inactive mines are
reflected in earnings in the period an estimate is revised.
Foreign
Currency
The functional currency for the majority of the Company’s
operations, including the Australian operations, is the
U.S. dollar. All monetary assets and liabilities where the
functional currency is the U.S. dollar are translated at
current exchange rates and the resulting adjustments are
included in
Other income, net
. All monetary assets and
liabilities recorded in functional currencies other than
U.S. dollars are translated at current exchange rates and
the resulting adjustments are charged or credited directly to
Accumulated other comprehensive income (loss)
in
Equity.
Revenues and expenses in foreign currencies are
translated at the weighted-average exchange rates for the period.
Derivative
Instruments
Newmont has fixed forward contracts designated as cash flow
hedges in place to hedge against changes in foreign exchanges
rates, fixed forward contracts designated as cash flow hedges in
place to hedge against changes in diesel prices and fixed to
floating interest rate swap contracts designated as fair value
hedges to provide balance to the Company’s mix of fixed and
floating rate debt. The fair value of derivative contracts
qualifying as cash flow hedges are reflected as assets or
liabilities in the balance sheet. To the extent these hedges are
effective in offsetting forecasted cash flows from production
costs (the “effective portion”), changes in fair value
are deferred in Accumulated other comprehensive income (loss).
Amounts deferred in
Accumulated other comprehensive income
(loss)
are reclassified to
Costs applicable to sales
,
as applicable, when the hedged transaction has occurred. The
ineffective portion of the change in the fair value of the
derivative is recorded in
Other income, net
in each
period. Cash transactions related to the Company’s
derivative contracts accounted for as hedges are classified in
the same category as the item being hedged in the statement of
cash flows.
When derivative contracts qualifying as cash flow hedges are
settled, accelerated or restructured before the maturity date of
the contracts, the related amount in
Accumulated other
comprehensive income (loss)
at the settlement date is
deferred and reclassified to
Costs applicable to sales
,
as applicable, when the originally designated hedged transaction
impacts earnings.
The fair value of derivative contracts qualifying as fair value
hedges are reflected as assets or liabilities in the balance
sheet. Changes in fair value are recorded in income in each
period, consistent with recording changes to the
mark-to-market
value of the underlying hedged asset or liability in income.
Changes in the
mark-to-market
value of the effective portion of interest rate swaps utilized
by
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the Company to swap a portion of its fixed rate interest rate
risk to floating rate risk are recognized as a component of
Interest expense, net
.
Newmont assesses the effectiveness of the derivative contracts
periodically using either regression analysis or the dollar
offset approach, both retrospectively and prospectively, to
determine whether the hedging instruments have been highly
effective in offsetting changes in the fair value of the hedged
items. The Company defines highly effective as the hedge
contract and the item being hedged being between 0.8 and 1.25
correlated, and the Company measures the amount of any hedge
ineffectiveness. The Company will also assess periodically
whether the hedging instruments are expected to be highly
effective in the future. If a hedging instrument is not expected
to be highly effective, the Company will stop hedge accounting
prospectively. In those instances, the gains or losses remain in
Accumulated other comprehensive income (loss)
until the
hedged item affects earnings.
Net Income
(Loss) per Common Share
Basic and diluted income (loss) per share are presented for
Net income (loss) attributable to Newmont stockholders
and for
Income (loss) from continuing operations
attributable to Newmont stockholders
. Basic income (loss)
per share is computed by dividing income available to common
shareholders by the weighted-average number of outstanding
common shares for the period, including the exchangeable shares
(see Notes 12 and 21). Diluted income per share reflects
the potential dilution that could occur if securities or other
contracts that may require the issuance of common shares in the
future were converted. Diluted income per share is computed by
increasing the weighted-average number of outstanding common
shares to include the additional common shares that would be
outstanding after conversion and adjusting net income for
changes that would result from the conversion. Only those
securities or other contracts that result in a reduction in
earnings per share are included in the calculation.
Comprehensive
Income (Loss)
In addition to
Net income (loss), Comprehensive income (loss)
includes all changes in equity during a period, such as
adjustments to minimum pension liabilities, foreign currency
translation adjustments, the effective portion of changes in
fair value of derivative instruments that qualify as cash flow
hedges and cumulative unrecognized changes in fair value of
marketable securities
available-for-sale
or other investments, except those resulting from investments by
and distributions to owners.
Reclassifications
Certain amounts in prior years have been reclassified to conform
to the 2009 presentation. The Company retrospectively adopted
ASC guidance for convertible debt instruments which requires an
allocation of convertible debt proceeds between the liability
component and the embedded conversion option (i.e., the equity
component). The Company also adopted the ASC guidance for
noncontrolling interests, which requires the noncontrolling
interests to be classified as a separate component of net income
and equity.
Recently
Adopted Accounting Pronouncements
Subsequent
Events
In May 2009, the ASC guidance for subsequent events was updated
to establish accounting and reporting standards for events that
occur after the balance sheet date but before financial
statements
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are issued or are available to be issued. The update sets forth:
(i) the period after the balance sheet date during which
management of a reporting entity should evaluate events or
transactions that may occur for potential recognition or
disclosure in the financial statements, (ii) the
circumstances under which an entity should recognize events or
transactions occurring after the balance sheet in its financial
statements, and (iii) the disclosures that an entity should
make about events or transactions occurring after the balance
sheet date in its financial statements. The Company adopted the
updated guidance for the interim period ended June 30,
2009. The adoption had no impact on the Company’s
consolidated financial position, results of operations or cash
flows. See Note 35.
Post-retirement
Benefit Plans
In December 2008, the ASC guidance for retirement benefits was
updated to expand the requirements of employers’
disclosures about post-retirement benefit plan assets in a
defined benefit pension or other post-retirement plan. The
objective is to require more detailed disclosures about
employers’ plan assets, including employers’
investment strategies, major categories of plan assets,
concentrations of risk within plan assets, and valuation
techniques used to measure the fair value of plan assets. The
Company adopted the updated guidance on January 1, 2009.
These disclosures are not required for earlier periods that are
presented for comparative purposes. See Note 22 for the
Company’s disclosure of its post-retirement benefit plan
assets.
Equity Method
Investments
In November 2008, the ASC guidance for equity method and joint
venture investments was updated to clarify the accounting for
certain transactions and impairment considerations involving
equity method investments. The intent is to provide guidance on:
(i) determining the initial measurement of an equity method
investment, (ii) recognizing
other-than-temporary
impairments of an equity method investment and
(iii) accounting for an equity method investee’s
issuance of shares. The updated guidance was effective for the
Company’s fiscal year beginning January 1, 2009 and
was applied prospectively. The adoption had no impact on the
Company’s consolidated financial position or results of
operations.
Equity-Linked
Financial Instruments
In June 2008, the ASC guidance for derivatives and hedging when
accounting for contracts in an entity’s own equity was
updated to clarify the determination of whether an instrument
(or embedded feature) is indexed to an entity’s own stock
which would qualify as a scope exception from hedge accounting.
The updated guidance was effective for the Company’s fiscal
year beginning January 1, 2009. The adoption had no impact
on the Company’s consolidated financial position or results
of operations.
Accounting for
Convertible Debt Instruments
In May 2008, the ASC guidance was updated for convertible debt
instruments that, by their stated terms, may be settled in cash
(or other assets) upon conversion, including partial cash
settlement, unless the embedded conversion option is required to
be separately accounted for as a derivative. The update requires
that the liability and equity components of convertible debt
instruments within the scope be separately accounted for in a
manner that reflects the entity’s nonconvertible debt
borrowing rate. This requires an allocation of convertible debt
proceeds between the liability component and the embedded
conversion option (i.e., the equity component). The difference
between the principal amount of the debt and the amount of the
proceeds allocated to the liability component is reported as a
debt discount and subsequently amortized to earnings over the
instrument’s expected life using the
101
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
effective interest method. The updated guidance required
retrospective application to all periods presented.
During July 2007, the Company completed an offering of $1,150
convertible senior notes due 2014 and 2017, each in the amount
of $575. The 2014 notes maturing on July 15, 2014 pay
interest semi-annually at a rate of 1.25% per annum, and the
2017 notes maturing on July 15, 2017 pay interest
semi-annually at a rate of 1.63% per annum. The notes are
convertible, at the holder’s option, equivalent to a
conversion price of $46.21 per share of common stock
(24,887,956 shares of common stock). In connection with the
convertible senior notes offering, the Company entered into
convertible note hedge transactions and warrant transactions
(“Call Spread Transactions”). The Call Spread
Transactions included the purchase of call options and the sale
of warrants. As a result of the Call Spread Transactions, the
conversion price of $46.21 was effectively increased to $60.27.
At December 31, 2009, with the inclusion of the Call Spread
Transactions, the if-converted value did not exceed the
principal amounts.
During February 2009, the Company completed an offering of $518
convertible senior notes due on February 15, 2012. The
notes will pay interest semi-annually at a rate of 3.00% per
annum. The notes are convertible, at the holder’s option,
equivalent to a conversion price of $46.25 per share of common
stock (11,189,189 shares of common stock). At
December 31, 2009, the if-converted value exceeded the
principal amount by $12.
The Company’s Consolidated Balance Sheets reports the
following related to the convertible senior notes:
| At December 31, 2009 | At December 31, 2008 | |||||||||||||||||||||||
| Convertible Senior Notes Due | Convertible Senior Notes Due | |||||||||||||||||||||||
| 2012 | 2014 | 2017 | 2012 | 2014 | 2017 | |||||||||||||||||||
|
Additional paid-in capital
|
$ | 46 | $ | 97 | $ | 123 | $ | — | $ | 97 | $ | 123 | ||||||||||||
|
Principal amount
|
$ | 518 | $ | 575 | $ | 575 | $ | — | $ | 575 | $ | 575 | ||||||||||||
|
Unamortized debt discount
|
(55 | ) | (107 | ) | (158 | ) | — | (127 | ) | (174 | ) | |||||||||||||
|
Net carrying amount
|
$ | 463 | $ | 468 | $ | 417 | $ | — | $ | 448 | $ | 401 | ||||||||||||
As a result of adopting the updated guidance, the effective
interest rates increased by approximately 5 percentage
points to 8.5%, 6.0% and 6.25% for the 2012, 2014 and 2017
notes, respectively, for the non-cash amortization of the debt
discount over the lives of the notes.
Interest expense, net
was increased by $33 and $13 which decreased the
Company’s
Income from continuing operations
and
Net income
by $22 ($0.04 per share) and increased the
Company’s
Loss from continuing operations
and
Net
loss
by $9 ($0.02 per share) for the years ended
December 31, 2008 and December 31, 2007, respectively.
As a result of the adoption, the Company has adjusted how it
recorded its fourth quarter 2008 dividends from
Retained
earnings
to
Additional paid-in capital
due to the
deficit in
Retained earnings
. Cash flows from operations
were not impacted by the adoption of the updated guidance. The
impact on the Company’s 2009 opening balance in
Retained
earnings
was as follows:
|
At December 31,
|
||||
| 2008 | ||||
|
Balance before application of updated guidance
|
$ | 7 | ||
|
Impact of adoption of updated guidance
|
(31 | ) | ||
|
Dividend adjustment to
Additional paid-in capital
|
28 | |||
|
Balance after application of updated guidance
|
$ | 4 | ||
102
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
For the year ended December 31, 2009, the Company recorded
$30 and $56 of interest expense for the contractual interest
coupon and amortization of the debt discount, respectively,
related to the convertible senior notes. The remaining
unamortized debt discount is amortized over the remaining 3, 5
and 8 year periods of the 2012, 2014 and 2017 convertible
senior notes, respectively.
Accounting for
the Useful Life of Intangible Assets
In April 2008, the ASC guidance for Goodwill and Other
Intangibles was updated to amend the factors that should be
considered in developing renewal or extension assumptions used
to determine the useful life of a recognized intangible asset.
The intent of this update is to improve the consistency between
the useful life of a recognized intangible asset and the period
of expected cash flows used to measure the fair value of the
asset under guidance for business combinations. The updated
guidance was effective for the Company’s fiscal year
beginning January 1, 2009 and was applied prospectively to
intangible assets acquired after the effective date. The
adoption had no impact on the Company’s consolidated
financial position, results of operations or cash flows.
Derivative
Instruments
In March 2008, the ASC guidance for derivatives and hedging was
updated for enhanced disclosures about how and why an entity
uses derivative instruments, how derivative instruments and the
related hedged items are accounted for, and how derivative
instruments and the related hedged items affect an entity’s
financial position, financial performance and cash flows. The
Company adopted the updated guidance on January 1, 2009.
The adoption had no impact on the Company’s consolidated
financial position, results of operations or cash flows. See
Note 15 for the Company’s derivative instruments
disclosure.
Business
Combinations
In December 2007, the ASC guidance for business combinations was
updated to provide new guidance for recognizing and measuring
identifiable assets and goodwill acquired, liabilities assumed,
and any noncontrolling interests in the acquiree. The updated
guidance also provides disclosure requirements to enable users
of the financial statements to evaluate the nature and financial
effects of the business combination. The Company adopted the
updated guidance on January 1, 2009 and applied it to the
acquisition of the remaining 33.33% interest in the Boddington
project completed on June 25, 2009 (see Note 13).
In April 2009, the guidance was updated to address application
issues on initial recognition and measurement, subsequent
measurement and accounting, and disclosure of assets and
liabilities arising from contingencies in a business
combination. This update is effective for assets or liabilities
arising from contingencies in business combinations for which
the acquisition date is on or after January 1, 2009. The
adoption of the updated guidance did not have any impact on the
Company’s acquisition of the remaining 33.33% interest in
the Boddington project completed on June 25, 2009 (see
Note 13).
Noncontrolling
Interests
In December 2007, the ASC guidance for noncontrolling interests
was updated to establish accounting and reporting standards
pertaining to: (i) ownership interests in subsidiaries held
by parties other than the parent (“noncontrolling
interests”), (ii) the amount of net income
attributable to the parent and to the noncontrolling interests,
(iii) changes in a parent’s ownership interest, and
(iv) the valuation of any retained noncontrolling equity
investment when a subsidiary is deconsolidated. If a subsidiary
is deconsolidated, any retained noncontrolling equity investment
in the former subsidiary is
103
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
measured at fair value and a gain or loss is recognized in net
income based on such fair value. For presentation and disclosure
purposes, the guidance requires noncontrolling interests to be
classified as a separate component of equity. The Company
adopted the updated guidance on January 1, 2009. Except for
presentation changes, the adoption had no impact on the
Company’s consolidated financial position, results of
operations or cash flows. The Company applied the updated
guidance when accounting for the Company’s required
divestiture obligations of PTNNT which resulted in after-tax
gains of $63 that have been recorded to
Additional paid in
capital
in 2009. See Note 12.
In January 2010, the guidance for noncontrolling interests was
further updated to clarify the scope and to require additional
disclosure when a subsidiary is deconsolidated. The Company
adopted the updated guidance for the period ended
December 31, 2009. The adoption had no impact on the
Company’s consolidated financial position, results of
operations or cash flows.
Fair Value
Accounting
In September 2006, the ASC guidance for fair value measurements
and disclosure was updated to define fair value, establish a
framework for measuring fair value, and expand disclosures about
fair value measurements. The Company adopted the updated
guidance for assets and liabilities measured at fair value on a
recurring basis on January 1, 2008. In February 2008, the
FASB staff issued an update to the guidance which delayed the
effective date for nonfinancial assets and nonfinancial
liabilities that are recognized or disclosed at fair value in
the financial statements on a nonrecurring basis. The Company
adopted the updated guidance for the Company’s nonfinancial
assets and liabilities measured at fair value on a nonrecurring
basis on January 1, 2009.
In October 2008, the guidance was updated for determining the
fair value of a financial asset when the market for that asset
is not active. The intent of this update was to provide guidance
on how the fair value of a financial asset is to be determined
when the market for that financial asset is inactive. The
updated guidance states that determining fair value in an
inactive market depends on the facts and circumstances, requires
the use of significant judgment and in some cases, observable
inputs may require significant adjustment based on unobservable
data. Regardless of the valuation technique used, an entity must
include appropriate risk adjustments that market participants
would make for nonperformance and liquidity risks when
determining fair value of an asset in an inactive market. The
update was effective upon issuance. The Company has incorporated
the guidance in determining the fair value of financial assets
when the market for those assets is not active, specifically its
marketable debt securities.
In April 2009, the guidance was further updated to provide
additional guidance on determining fair value when the volume
and level of activity for the asset or liability have
significantly decreased and identifying circumstances that
indicate when a transaction is not orderly. In April 2009, the
guidance for investments in debt and equity securities was
updated to: (i) clarify the interaction of the factors that
should be considered when determining whether a debt security is
other than temporarily impaired, (ii) provide guidance on
the amount of an
other-than-temporary
impairment recognized for a debt security in earnings and other
comprehensive income and (iii) expand the disclosures
required for
other-than-temporary
impairments for debt and equity securities. Also in April 2009,
the guidance for financial instruments was updated to require
disclosures about the fair value of financial instruments for
interim reporting periods of publicly traded companies as well
as in annual financial statements. Adoption of this updated
guidance was required for the Company’s interim reporting
period beginning April 1, 2009 with early adoption
permitted. The Company adopted the updated guidance for the
interim period ended March 31, 2009.
In August 2009, the guidance for fair value measurements and
disclosure was updated to further define fair value of
liabilities. This update provides clarification for
circumstances in which: (i) a quoted
104
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
price in an active market for the identical liability is not
available, (ii) the liability has a restriction that
prevents its transfer, and (iii) the identical liability is
traded as an asset in an active market in which no adjustments
to the quoted price of an asset are required. Adoption of this
guidance was required for the Company’s interim reporting
period beginning October 1, 2009. The adoption had no
impact on the Company’s consolidated financial position,
results of operations or cash flows.
In February 2007, guidance to elect the fair value option for
financial assets and financial liabilities was issued. The
guidance permits entities to choose to measure many financial
instruments and certain other items at fair value, with the
objective of improving financial reporting by mitigating
volatility in reported earnings caused by measuring related
assets and liabilities differently without having to apply
complex hedge accounting provisions. The updated guidance was
adopted January 1, 2008. The Company did not elect the fair
value option for any of its financial assets or liabilities, and
therefore, the adoption had no impact on the Company’s
consolidated financial position, results of operations or cash
flows. Refer to Note 14 for further details regarding the
Company’s assets and liabilities measured at fair value.
Variable Interest
Entities
In December 2008, the ASC guidance for disclosures by public
entities (enterprises) about transfers of financial assets and
interests in variable interest entities was updated to require
public entities to provide additional disclosures about
transfers of financial assets. The updated guidance also
requires public enterprises to provide additional disclosures
about their involvement with VIEs. The updated guidance was
effective for the Company’s fiscal year ending
December 31, 2008. Newmont has adopted the disclosure
requirements in the Company’s VIE disclosures.
Accounting for
Income Tax Benefits of Dividends on Share-Based Payment
Awards
In June 2007, the ASC guidance for accounting for income tax
benefits of dividends on share-based payment awards was updated.
The updated guidance requires that the tax benefit related to
dividends and dividend equivalents paid on equity-classified
nonvested shares and nonvested share units, which are expected
to vest, be recorded as an increase to additional paid-in
capital. The updated guidance was applied prospectively for tax
benefits on dividends declared in the Company’s fiscal year
beginning January 1, 2008. The adoption had an
insignificant impact on the Company’s consolidated
financial position, results of operations or cash flows.
Income
Taxes
On January 1, 2007, the Company adopted updated ASC
guidance which clarifies the accounting and reporting for
uncertainties in the application of the income tax laws to the
Company’s operations. The interpretation prescribes a
comprehensive model for the financial statement recognition,
measurement, presentation and disclosure of uncertain tax
provisions taken or expected to be taken in income tax returns.
The cumulative effects of applying this interpretation were
recorded as a decrease in retained earnings of $108, an increase
of $5 in goodwill, an increase of $4 in noncontrolling
interests, a decrease in net deferred tax assets of $37
(primarily, as a result of utilization of foreign tax credits
and net operating losses as part of the measurement process,
offset, in part, by the impact of the interaction of the
Alternative Minimum Tax rules) and an increase of $72 in the net
liability for unrecognized income tax benefits. Refer to
Note 8.
The Company’s continuing practice is to recognize interest
and/or
penalties related to unrecognized tax benefits as part of its
income tax expense. At December 31, 2009 and 2008, the
total amount of accrued income-tax-related interest and
penalties included in the Consolidated Balance Sheets was $13
and $37, respectively. During 2009, 2008, and 2007 the Company
accrued through
105
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
the Statements of Consolidated Income (Loss) an additional $9,
$31, and $27 of interest and penalties, paid $nil, $13, and $12
of interest, and released $35, $18, and $4 as a result of the
expiration of statute of limitations
and/or
settlements of audit-related issues. The Company also released
$8 in 2007 as a result of a change in the tax law.
The Company or one of its subsidiaries files income tax returns
in the U.S. federal jurisdiction, various states and in
foreign jurisdictions. With limited exception, the Company is no
longer subject to U.S. federal, state and local income or
non-U.S. income
tax audits by taxing authorities for years before 2005.
Recently
Issued Accounting Pronouncements
Variable Interest
Entities
In June 2009, the ASC guidance for consolidation accounting was
updated to require an entity to perform a qualitative analysis
to determine whether the enterprise’s variable interest
gives it a controlling financial interest in a VIE. This
analysis identifies a primary beneficiary of a VIE as the entity
that has both of the following characteristics: (i) the
power to direct the activities of a VIE that most significantly
impact the entity’s economic performance and (ii) the
obligation to absorb losses or receive benefits from the entity
that could potentially be significant to the VIE. The updated
guidance also requires ongoing reassessments of the primary
beneficiary of a VIE. The updated guidance is effective for the
Company’s fiscal year beginning January 1, 2010. The
Company is evaluating the potential impact of adopting this
guidance on the Company’s consolidated financial position,
results of operations and cash flows.
Fair Value
Accounting
In January 2010, the ASC guidance for fair value measurements
and disclosure was updated to require additional disclosures
related to: i) transfers in and out of level 1 and 2
fair value measurements and ii) enhanced detail in the
level 3 reconciliation. The guidance was amended to provide
clarity about: i) the level of disaggregation required for
assets and liabilities and ii) the disclosures required for
inputs and valuation techniques used to measure fair value for
both recurring and nonrecurring measurements that fall in either
level 2 or level 3. The updated guidance is effective
for the Company’s fiscal year beginning January 1,
2010, with the exception of the level 3 disaggregation
which is effective for the Company’s fiscal year beginning
January 1, 2011. The Company is evaluating the potential
impact of adopting this guidance on the Company’s
consolidated financial position, results of operations and cash
flows.
| NOTE 3 | PRICE-CAPPED FORWARD SALES CONTRACTS |
In 2001, the Company entered into transactions that closed out
certain call options. The options were replaced with a series of
forward sales contracts requiring physical delivery of the same
quantity of gold over slightly extended future periods. Under
the terms of the contracts, the Company would realize the lower
of the spot price on the delivery date or the capped price,
ranging from $381 to $392 per ounce. The forward sales contracts
were accounted for as normal sales contracts in accordance with
ASC guidance for derivative instruments. The initial fair value
of the forward sales contracts was recorded as deferred revenue,
and the fair value of these contracts was not included on the
Consolidated Balance Sheets.
In June 2007, the Company paid $578 to settle the
1.85 million ounce price-capped forward sales contracts.
The Company reported a $531 pre-tax loss on the early settlement
of the contracts, after a $47 reversal of previously recognized
deferred revenue.
106
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 4 | MIDAS REDEVELOPMENT |
In June 2007, a fatal accident occurred at the Midas mine in
Nevada, which resulted in a temporary suspension of operations
at the mine to initiate rescue and subsequent recovery efforts.
As a result, the Mine Safety and Health Administration
(“MSHA”) issued an order requiring operations to
temporarily cease at the mine. During the third and fourth
quarters of 2007, activities were undertaken, at the direction
of MSHA, to regain entry into the mine in order to resume
commercial production which restarted in October 2007. The
redevelopment and holding costs of $11 in 2007 included access
development, inspection, preventative repairs and road and mill
maintenance.
| NOTE 5 | ADVANCED PROJECTS, RESEARCH AND DEVELOPMENT |
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Major projects:
|
||||||||||||
|
Boddington
|
$ | 25 | $ | 3 | $ | 3 | ||||||
|
Hope Bay
|
25 | 39 | — | |||||||||
|
Akyem
|
8 | 7 | 6 | |||||||||
|
Conga
|
4 | 4 | 3 | |||||||||
|
Other projects:
|
||||||||||||
|
Technical and project services
|
24 | 23 | 15 | |||||||||
|
Nevada growth
|
15 | 12 | 7 | |||||||||
|
Corporate
|
14 | 15 | 2 | |||||||||
|
Yanacocha sulfides
|
5 | 1 | 5 | |||||||||
|
Tanami optimization
|
4 | 4 | 3 | |||||||||
|
Fort a la Corne JV
|
1 | 26 | — | |||||||||
|
Euronimba
|
— | 15 | 7 | |||||||||
|
Other
|
10 | 17 | 11 | |||||||||
| $ | 135 | $ | 166 | $ | 62 | |||||||
107
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 6 | OTHER EXPENSE, NET |
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Boddington acquisition costs (Note 13)
|
$ | 67 | $ | — | $ | — | ||||||
|
Regional administration
|
55 | 48 | 38 | |||||||||
|
Community development
|
52 | 65 | 58 | |||||||||
|
Western Australia power plant
|
37 | 18 | 11 | |||||||||
|
Peruvian royalty
|
28 | 18 | 10 | |||||||||
|
Revaluation of contingent consideration (Note 13)
|
23 | — | — | |||||||||
|
Workforce reduction
|
14 | — | — | |||||||||
|
Reclamation estimate revisions (Note 25)
|
13 | 101 | 29 | |||||||||
|
Batu Hijau divestiture and arbitration
|
12 | 15 | 3 | |||||||||
|
Accretion, non-operating (Note 25)
|
12 | 10 | 8 | |||||||||
|
World Gold Council dues
|
11 | 10 | 11 | |||||||||
|
Pension settlement loss (Note 22)
|
— | 13 | 17 | |||||||||
|
Buyat Bay settlement and other (Note 33)
|
(3 | ) | 3 | 12 | ||||||||
|
Provision for bad debts
|
(6 | ) | 9 | 1 | ||||||||
|
Other
|
68 | 41 | 45 | |||||||||
| $ | 383 | $ | 351 | $ | 243 | |||||||
| NOTE 7 | OTHER INCOME, NET |
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Canadian Oil Sands Trust income
|
$ | 26 | $ | 110 | $ | 47 | ||||||
|
Interest income
|
16 | 29 | 50 | |||||||||
|
Gain on sale of exploration property
|
14 | 32 | — | |||||||||
|
Refinery income
|
14 | 4 | — | |||||||||
|
Gain on sale of investments, net
|
8 | 30 | — | |||||||||
|
Royalty income
|
5 | 3 | — | |||||||||
|
Income from development projects, net
|
4 | 12 | 3 | |||||||||
|
Gain on other asset sales, net
|
2 | 10 | 10 | |||||||||
|
Gain (loss) on ineffective portion of derivative instruments,
net (Note 15)
|
(6 | ) | 10 | 4 | ||||||||
|
Impairment of marketable securities (Note 16)
|
(6 | ) | (114 | ) | (46 | ) | ||||||
|
Foreign currency exchange gains (losses), net
|
(1 | ) | (12 | ) | 25 | |||||||
|
Other
|
12 | 9 | 7 | |||||||||
| $ | 88 | $ | 123 | $ | 100 | |||||||
108
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 8 | INCOME TAXES |
The Company’s
Income tax (expense)
benefit consisted
of:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Current:
|
||||||||||||
|
United States
|
$ | (5 | ) | $ | (62 | ) | $ | 121 | ||||
|
Foreign
|
(782 | ) | (353 | ) | (467 | ) | ||||||
| (787 | ) | (415 | ) | (346 | ) | |||||||
|
Deferred:
|
||||||||||||
|
United States
|
42 | 246 | 4 | |||||||||
|
Foreign
|
(43 | ) | 69 | 152 | ||||||||
| (1 | ) | 315 | 156 | |||||||||
| $ | (788 | ) | $ | (100 | ) | $ | (190 | ) | ||||
The Company’s
Income (loss) from continuing operations
before income tax expense and other items
consisted of:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
United States
|
$ | 262 | $ | 531 | $ | (169 | ) | |||||
|
Foreign
|
2,651 | 721 | (220 | ) | ||||||||
| $ | 2,913 | $ | 1,252 | $ | (389 | ) | ||||||
The Company’s income tax expense differed from the amounts
computed by applying the United States statutory corporate
income tax rate for the following reasons:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Income (loss) from continuing operations before income tax
expense and other items
|
$ | 2,913 | $ | 1,252 | $ | (389 | ) | |||||
|
United States statutory corporate income tax rate
|
35 | % | 35 | % | 35 | % | ||||||
|
Income tax (expense) benefit computed at United States statutory
corporate income tax rate
|
(1,020 | ) | (438 | ) | 136 | |||||||
|
Reconciling items:
|
||||||||||||
|
Percentage depletion
|
127 | 130 | 70 | |||||||||
|
Change in valuation allowance on deferred tax assets
|
32 | (31 | ) | 17 | ||||||||
|
Effect of foreign earnings, net of allowable credits
|
6 | — | (13 | ) | ||||||||
|
U.S. tax effect of noncontrolling interest attributable to
non-U.S.
investees
|
18 | 19 | 4 | |||||||||
|
Rate differential for foreign earnings indefinitely reinvested
|
4 | (20 | ) | (7 | ) | |||||||
|
Resolution of prior years’ uncertain income tax matters
|
38 | 69 | (3 | ) | ||||||||
|
Foreign currency translation of monetary assets
|
— | 21 | — | |||||||||
|
Tax effect of changes in tax laws
|
— | — | 4 | |||||||||
|
Tax effect of impairment of goodwill
|
— | — | (393 | ) | ||||||||
|
Tax effect of loss generated on change in form of a
non-U.S.
subsidiary
|
— | 159 | — | |||||||||
|
Other
|
7 | (9 | ) | (5 | ) | |||||||
|
Income tax expense
|
$ | (788 | ) | $ | (100 | ) | $ | (190 | ) | |||
109
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Components of the Company’s deferred income tax assets
(liabilities) are as follows:
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Deferred income tax assets:
|
||||||||
|
Exploration costs
|
$ | 72 | $ | 65 | ||||
|
Depreciation
|
21 | 49 | ||||||
|
Net operating losses and tax credits
|
980 | 890 | ||||||
|
Retiree benefit and vacation accrual costs
|
124 | 138 | ||||||
|
Remediation and reclamation costs
|
132 | 138 | ||||||
|
Derivative instruments
|
— | 5 | ||||||
|
Foreign currency exchange
|
— | 2 | ||||||
|
Investment in partnerships
|
57 | 101 | ||||||
|
Other
|
64 | 64 | ||||||
| 1,450 | 1,452 | |||||||
|
Valuation allowances
|
(437 | ) | (513 | ) | ||||
| 1,013 | 939 | |||||||
|
Deferred income tax liabilities:
|
||||||||
|
Net undistributed earnings of subsidiaries
|
(218 | ) | (24 | ) | ||||
|
Unrealized gain on investments
|
(137 | ) | (44 | ) | ||||
|
Depletable and amortizable costs associated with mineral rights
|
(826 | ) | (602 | ) | ||||
|
Derivative instruments
|
(37 | ) | (5 | ) | ||||
|
Foreign currency exchange
|
(1 | ) | — | |||||
| (1,219 | ) | (675 | ) | |||||
|
Net deferred income tax assets (liabilities)
|
$ | (206 | ) | $ | 264 | |||
Net deferred income tax assets and liabilities consist of:
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Current deferred income tax assets
|
$ | 215 | $ | 284 | ||||
|
Long-term deferred income tax assets
|
937 | 1,039 | ||||||
|
Current deferred income tax liabilities (Note 24)
|
(17 | ) | (8 | ) | ||||
|
Long-term deferred income tax liabilities
|
(1,341 | ) | (1,051 | ) | ||||
| $ | (206 | ) | $ | 264 | ||||
These balances include net deferred income tax assets that have
been reclassified to
Assets of Operations Held for Sale
of:
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Long-term deferred income tax assets
|
$ | — | $ | 2 | ||||
| $ | — | $ | 2 | |||||
110
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
On January 1, 2007, the Company began recognizing and
measuring tax positions taken or expected to be taken in a tax
return that directly or indirectly affect amounts reported in
the financial statements under the ASC income tax guidance. At
December 31, 2009, 2008 and 2007, the Company had $130,
$181 and $230 of total gross unrecognized tax benefits,
respectively. A reconciliation of the beginning and ending
amount of gross unrecognized tax benefits is as follows:
| 2009 | 2008 | 2007 | ||||||||||
|
Total amount of gross unrecognized tax benefits at
beginning of year |
$ | 181 | $ | 230 | $ | 267 | ||||||
|
Additions for tax positions of prior years
|
(21 | ) | 29 | 18 | ||||||||
|
Additions for tax positions of current year
|
3 | 50 | 14 | |||||||||
|
Reductions due to settlements with taxing authorities
|
(27 | ) | (57 | ) | (9 | ) | ||||||
|
Reductions due to lapse of statute of limitations
|
(6 | ) | (71 | ) | (14 | ) | ||||||
|
Reductions due to change in legislation
|
— | — | (30 | ) | ||||||||
|
Reclassification of net interest out of gross unrecognized tax
benefits balance
|
— | — | (16 | ) | ||||||||
|
Total amount of gross unrecognized tax benefits at end of year
|
$ | 130 | $ | 181 | $ | 230 | ||||||
At December 31, 2009, 2008 and 2007, $63, $116 and $84,
respectively, represents the amount of unrecognized tax benefits
that, if recognized, would impact the Company’s effective
income tax rate.
The Company operates in numerous countries around the world and
accordingly it is subject to, and pays annual income taxes
under, the various income tax regimes in the countries in which
it operates. Some of these tax regimes are defined by
contractual agreements with the local government, and others are
defined by the general corporate income tax laws of the country.
The Company has historically filed, and continues to file, all
required income tax returns and paid the taxes reasonably
determined to be due. The tax rules and regulations in many
countries are highly complex and subject to interpretation. From
time to time the Company is subject to a review of its historic
income tax filings and in connection with such reviews, disputes
can arise with the taxing authorities over the interpretation or
application of certain rules to the Company’s business
conducted within the country involved.
On June 25, 2008, the United States Tax Court issued an
opinion for Santa Fe Pacific Gold Company and Subsidiaries
(“Santa Fe”), by and through its successor in
interest, Newmont USA Limited, a member of the Newmont Mining
Corporation affiliated group. The Tax Court issued the ruling
for the tax years 1994 through 1997, which were years prior to
Newmont’s acquisition of Santa Fe. The Tax Court ruled
unfavorably on certain issues relating to the method in which
Santa Fe was calculating adjustments related to percentage
depletion in its Alternative Minimum Tax calculation. On
April 27, 2009, the United States Tax Court issued a
decision in favor of Santa Fe, with respect to the
$65 million Homestake
break-up
fee
deducted by Santa Fe in tax year 1997. Following procedural
rules, the Internal Revenue Service was given 90 days from
the date the decision was entered in which to file an appeal.
The entry of decision was made on July 16, 2009. The
Internal Revenue Service did not file an appeal, and as a
result, as of October 15, 2009 the decision stands. The
result of this decision resulted in overpayments for each of the
tax years 1994 through 1997.
The Company or one of its subsidiaries files income tax returns
in the U.S. federal jurisdiction, and various state and
foreign jurisdictions. With few exceptions, the Company is no
longer subject to U.S. Federal, state and local, and
non-U.S. income
tax examinations by tax authorities for years before 2005. As a
result of (i) statute of limitations that will begin to
expire within the next 12 months in
111
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
various jurisdictions, and (ii) possible settlements of
audit-related issues with taxing authorities in various
jurisdictions with respect to which none of the issues are
individually significant, the Company believes that it is
reasonably possible that the total amount of its net
unrecognized income tax benefits will decrease between $12 to
$15 in the next 12 months.
The Company’s continuing practice is to recognize interest
and/or
penalties related to unrecognized tax benefits as part of its
income tax expense. At December 31, 2009 and 2008, the
total amount of accrued income-tax-related interest and
penalties included in the Consolidated Balance Sheets was $13
and $37, respectively. During 2009, 2008, and 2007 the Company
accrued through the Statements of Consolidated Income (Loss) an
additional $9, $31, and $27 of interest and penalties, paid
$nil, $13, and $12 of interest, and released $35, $18, and $4 as
a result of the expiration of statute of limitations
and/or
settlements of audit-related issues. The Company also released
$8 in 2007 as a result of a change in the tax law.
Newmont intends to indefinitely reinvest earnings from certain
foreign operations. Accordingly, U.S. and
non-U.S. income
and withholding taxes for which deferred taxes might otherwise
be required, have not been provided on a cumulative amount of
temporary differences (including, for this purpose, any
difference between the tax basis in the stock of a consolidated
subsidiary and the amount of the subsidiary’s net equity
determined for financial reporting purposes) related to
investments in foreign subsidiaries of approximately $117 and
$434 at December 31, 2009 and 2008, respectively. The
additional U.S. and
non-U.S. income
and withholding tax that would arise on the reversal of the
temporary differences could be offset in part, by tax credits.
Because the determination of the amount of available tax credits
and the limitations imposed on the annual utilization of such
credits are subject to a highly complex series of calculations
and expense allocations, it is impractical to estimate the
amount of net income and withholding tax that might be payable
if a reversal of temporary differences occurred.
At December 31, 2009 and December 31, 2008, the
Company had (i) $1,213 and $1,362 of net operating loss
carry forwards, respectively; and (ii) $279 and $154 of tax
credit carry forwards, respectively. At December 31, 2009
and 2008, $1,020 and $1,231, respectively, of net operating loss
carry forwards are attributable to operations in Australia,
Ghana and France for which current tax law provides no
expiration period. The remaining net operating losses available
are attributable to entities that have various temporal and
other limitations that may restrict the ultimate realization of
the tax benefits of such tax attributes.
Tax credit carry forwards for 2009 and 2008 of $158 and $76
consist of foreign tax credits available in the United States;
substantially all such credits not utilized will expire at the
end of 2014. Other credit carry forwards at the end of 2009 and
2008 in the amounts of $121 and $78, respectively, represent
alternative minimum tax credits attributable to the
Company’s U.S. operations for which the current tax
law provides no period of expiration.
The Company reviews the measurement of its deferred tax assets
at each balance sheet date. All available evidence, both
positive and negative, is considered in determining whether,
based upon the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax asset will not
be realized. The Company decreased the valuation allowance
related to deferred tax assets by $32 during 2009. Additionally,
the valuation allowance was also decreased in 2009 by $45
primarily for capital losses in Australia that were written off
during the year that had no impact on the Company’s
effective tax rate. In addition, $44 of the valuation allowance,
when recognized, will not reduce the Company’s effective
tax rate, but will be recorded directly to equity. The valuation
allowance remaining at the end of 2009 primarily is attributable
to
non-U.S. subsidiaries
tax loss carryforwards.
112
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 9 | EQUITY INCOME (LOSS) OF AFFILIATES |
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
AGR Matthey Joint Venture
|
$ | 5 | $ | (2 | ) | $ | 1 | |||||
|
Regis Resources NL
|
— | (3 | ) | (8 | ) | |||||||
|
European Gold Refineries
|
— | — | 6 | |||||||||
|
La Zanja
|
(4 | ) | — | — | ||||||||
|
Euronimba
|
(17 | ) | — | — | ||||||||
| $ | (16 | ) | $ | (5 | ) | $ | (1 | ) | ||||
AGR Matthey
Joint Venture
Newmont holds a 40% interest in the AGR Matthey Joint Venture
(“AGR”), a gold refinery, with Johnson Matthey
(Australia) Ltd. and the West Australian Mint holding the
remaining interests. Newmont has no guarantees related to this
investment. Newmont received dividends of $2, $nil and $2 during
2009, 2008 and 2007, respectively, from its interests in AGR.
See also Note 27 for details of Newmont’s transactions
with AGR.
Regis
Resources NL
Prior to December 2009, Newmont held a 23.15% interest in Regis
Resources NL (“Regis Resources”), a gold exploration
company with substantial landholdings in Western Australia.
Newmont has no guarantees related to this investment. On
December 22, 2009, Regis Resources issued common shares
through a rights issue. As a result, Newmont’s ownership
interest in Regis Resources was diluted to 14.82% and we
discontinued equity accounting for our investment in Regis
Resources.
European Gold
Refineries
Prior to May 1, 2008, Newmont held a 46.72% interest in
European Gold Refineries (“EGR”), sole owner of
Valcambi SA, a London Good Delivery precious metals refiner and
manufacturer of precious metal coins, medallions and luxury
watch components. See Note 13 for a discussion of the
acquisition of additional shares resulting in the consolidation
of EGR in 2008.
La Zanja
Newmont holds a 46.94% interest in La Zanja, a gold project
near the city of Cajamarca, Peru. The remaining interests are
held by CompanTHORNia de Minas Buenaventura, S.A.A.
(“Buenaventura”). The mine is being developed by and
will be operated by Buenaventura. The construction of
La Zanja is approximately 50% complete and production is
expected to begin in the third quarter of 2010. The site will
consist of two small open pits and one oxide leach pad that will
produce approximately 450,000 ounces of gold (Newmont’s
share will be approximately 210,000 ounces) over its seven year
life.
Euronimba
Newmont holds a 43.5% interest in Euronimba, an iron ore project
located in the Republic of Guinea. The remaining interests are
held by BHP Billiton (43.5%) and Areva (13%). Euronimba is in
the early stages of development and it is currently estimated
that production will begin in 2018. Approximately
600 million tons of iron ore, mainly hematite, will be
mined over the project’s 20 plus year estimated life.
113
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 10 | DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE |
Discontinued operations include the Kori Kollo operation sold in
July 2009, the royalty portfolio and Pajingo operation, both
sold in December 2007 and the Zarafshan operation expropriated
by the Uzbekistan government in 2006.
In July 2009, the Company sold its interest in the Kori Kollo
operation in Bolivia. As part of the transaction, a reclamation
trust fund was established with the proceeds to be made
available exclusively to pay for closure and reclamation costs
when operations eventually cease. The Company recorded a $13
liability for the trust fund and recognized a $16 charge, net of
tax benefits.
In December 2007, the Company sold substantially all of
Pajingo’s assets for cash and marketable equity securities
totaling $23 resulting in a gain of $8. Additional Pajingo asset
sales resulted in a gain of $1 in 2008.
In June 2007, the Company’s Board of Directors approved a
plan to cease Merchant Banking activities. As part of this plan,
Newmont decided to dispose of the royalty portfolio assets and a
portion of the marketable equity securities portfolio and to
cease further investments in marketable equity securities that
do not support the core gold mining business. In June 2007,
Newmont recorded a $1,665 non-cash charge to impair the goodwill
associated with the Merchant Banking Segment. In December 2007,
Newmont received net cash proceeds of $1,187 and recognized a
gain of $905 related to the sale of the royalty portfolio. In
2008, Newmont recognized additional royalty portfolio revenue of
$6 in excess of the 2007 estimate and recorded a $19 tax benefit
related to the US tax return
true-up
on
the sale of the royalty portfolio.
The Company’s interest in the Zarafshan operation was
expropriated by the Uzbekistan government in 2006. In 2007,
after pursuing international arbitration, Newmont received
proceeds of $80 and recognized a gain of $77 related to the
settlement.
Newmont has accounted for these dispositions in accordance with
accounting guidance for the impairment or disposal of long-lived
assets. The Company has reclassified the balance sheet amounts
and the income statement results from the historical
presentation to
Assets
and
Liabilities of operations
held for sale
on the Consolidated Balance Sheets and to
Income (loss) from discontinued operations
in the
Consolidated Statements of Income (Loss) for all periods
presented. The Consolidated Statements of Cash Flows have been
reclassified for assets held for sale and discontinued
operations for all periods presented.
114
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table details selected financial information
included in the
Income (loss) from discontinued operations
in the Consolidated Statements of Income (Loss):
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Sales — gold, net
|
$ | 32 | $ | 75 | $ | 179 | ||||||
|
Income (loss) from operations:
|
||||||||||||
|
Kori Kollo
|
$ | 1 | $ | (9 | ) | $ | 22 | |||||
|
Royalty portfolio
|
— | 6 | 123 | |||||||||
|
Pajingo
|
— | — | 8 | |||||||||
| 1 | (3 | ) | 153 | |||||||||
|
Gain on sale of operations:
|
||||||||||||
|
Pajingo
|
— | 1 | 8 | |||||||||
|
Zarafshan
|
— | — | 77 | |||||||||
| — | 1 | 85 | ||||||||||
|
Gain on sale of royalty portfolio
|
— | — | 905 | |||||||||
|
Loss on impairment of goodwill and other assets
|
(44 | ) | — | (1,665 | ) | |||||||
|
Pre-tax income (loss)
|
(43 | ) | (2 | ) | (522 | ) | ||||||
|
Income tax benefit (expense)
|
27 | 15 | (383 | ) | ||||||||
|
Income (loss) from discontinued operations
|
$ | (16 | ) | $ | 13 | $ | (905 | ) | ||||
The major classes of
Assets
and
Liabilities of
operations held for sale
in the consolidated balance sheets
are as follows:
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Assets:
|
||||||||
|
Accounts receivable
|
$ | — | $ | 9 | ||||
|
Inventories
|
— | 12 | ||||||
|
Stockpiles and ore on leach pads
|
— | 43 | ||||||
|
Property, plant and mine development
|
— | 4 | ||||||
|
Deferred income tax assets
|
— | 2 | ||||||
|
Other assets
|
— | 3 | ||||||
| $ | — | $ | 73 | |||||
|
Liabilities:
|
||||||||
|
Current and long-term debt
|
$ | — | $ | 4 | ||||
|
Accounts payable
|
— | 1 | ||||||
|
Employee-related benefits
|
— | 8 | ||||||
|
Reclamation and remediation liabilities
|
— | 17 | ||||||
|
Other liabilities
|
13 | 6 | ||||||
| $ | 13 | $ | 36 | |||||
115
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table details selected financial information
included in
Net cash provided from (used in) discontinued
operations
and
investing activities
and
financing
activities of discontinued operations
:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Net cash provided from (used in) discontinued operations:
|
||||||||||||
|
Income (loss) from discontinued operations
|
$ | (16 | ) | $ | 13 | $ | (905 | ) | ||||
|
Amortization
|
3 | 9 | 56 | |||||||||
|
Deferred income taxes
|
(28 | ) | 4 | 54 | ||||||||
|
Impairment of assets held for sale
|
44 | — | — | |||||||||
|
Gain on asset sales, net
|
— | — | (996 | ) | ||||||||
|
Gain on sale of investments, net
|
— | — | (46 | ) | ||||||||
|
Loss on impairment of goodwill
|
— | — | 1,665 | |||||||||
|
Other operating adjustments and write-downs
|
7 | 19 | 20 | |||||||||
|
Increase (decrease) in net operating liabilities
|
23 | (149 | ) | 289 | ||||||||
| $ | 33 | $ | (104 | ) | $ | 137 | ||||||
|
Net cash provided from (used in) investing activities of
discontinued operations:
|
||||||||||||
|
Proceeds from asset sales, net
|
$ | — | $ | (6 | ) | $ | 1,282 | |||||
|
Sales of marketable securities
|
— | — | 90 | |||||||||
|
Additions to property, plant and mine development
|
— | (5 | ) | (9 | ) | |||||||
|
Purchases of marketable securities
|
— | — | (2 | ) | ||||||||
|
Other
|
— | — | (2 | ) | ||||||||
| $ | — | $ | (11 | ) | $ | 1,359 | ||||||
|
Net cash provided from (used in) financing activities of
discontinued operations:
|
||||||||||||
|
Repayment of debt
|
$ | (2 | ) | $ | (4 | ) | $ | — | ||||
|
Proceeds from debt, net
|
— | — | 7 | |||||||||
| $ | (2 | ) | $ | (4 | ) | $ | 7 | |||||
| NOTE 11 | NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS |
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Batu Hijau
|
$ | 445 | $ | 98 | $ | 299 | ||||||
|
Yanacocha
|
354 | 232 | 108 | |||||||||
|
Other
|
(3 | ) | (1 | ) | 3 | |||||||
| $ | 796 | $ | 329 | $ | 410 | |||||||
In November and December 2009, Newmont, through NTP, completed
the sale and transfer of shares for a 17% interest in PTNNT, the
Indonesian subsidiary that operates Batu Hijau, to PT Multi
Daerah Bersaing (“PTMDB”) in compliance with
divestiture obligations under the Contract of Work, reducing
NTP’s ownership interest to 63% from 80%. Newmont has a
56.25% interest in NTP, with an affiliate of Sumitomo
Corporation of Japan (“Sumitomo”) holding the
remaining 43.75%. Newmont
116
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
identified NTP as a VIE as a result of certain capital
structures and contractual relationships. The share transfers
resulted in gains of approximately $63 (after tax of $115) that
have been recorded in
Additional paid in capital
. As a
result of the sale, Newmont’s ownership in Batu Hijau was
reduced from 45% to 35.44%.
In December 2009, Newmont entered into a transaction with
P.T. Pukuafu Indah (“PTPI”), an unrelated
noncontrolling partner of PTNNT, whereby the Company agreed to
advance certain funds to PTPI in exchange for a pledge of the
noncontrolling partner’s 20% share of PTNNT dividends, net
of withholding tax, and the assignment of its voting rights to
the Company. As a result, PTPI was determined to be a VIE as it
has minimal equity capital and the voting rights to its 20%
interest in PTNNT reside with Newmont.
Based on the above transaction, the Company recognized an
additional 17% effective economic interest in PTNNT. Combined
with the Company’s 56.25% ownership in NTP, Newmont has a
52.44% effective economic interest in PTNNT and continues to
consolidate Batu Hijau in its Consolidated Financial Statements.
In 2007, because PTPI had been advanced a loan by NTP and was
not obligated to absorb the expected losses of PTNNT,
PTPI’s interest was considered a carried interest and
Newmont reported a 52.88% economic interest in Batu Hijau, which
reflected Newmont’s actual economic interest in the mine
until such time as the loan was fully repaid (including accrued
interest). On May 25, 2007, PTPI fully repaid the loan
(including accrued interest) from NTP. As a result of the loan
repayment, Newmont’s economic interest in Batu Hijau was
reduced from 52.88% to 45% and
Net income attributable to
noncontrolling interests
increased by $25 (after-tax) in the
second quarter of 2007.
Newmont has a 51.35% ownership interest in Minera Yanacocha
SR.L. (“Yanacocha”), with the remaining interests held
by Compañia de Minas Buenaventura, S.A.A. (43.65%) and the
International Finance Corporation (5%).
| NOTE 12 | NEWMONT EQUITY AND INCOME (LOSS) PER SHARE |
Newmont Common
Stock
In October 2007, Newmont filed a shelf registration statement on
Form S-3
under which it can issue an indeterminate number or amount of
common stock, preferred stock, debt securities, guarantees of
debt securities and warrants from time to time at indeterminate
prices. It also included the resale of an indeterminate amount
of common stock, preferred stock and debt securities from time
to time upon exercise of warrants or conversion of convertible
securities.
The Company paid common stock dividends of $0.40 per share in
2009, 2008 and 2007.
Treasury
Stock
Treasury stock is acquired by the Company when certain
restricted stock awards vest or are forfeited (see
Note 23). At vesting, a participant has a tax liability
and, pursuant to the participant’s award agreement, may
elect withholding of restricted stock to satisfy tax withholding
obligations. The withheld or forfeited stock is accounted for as
treasury stock and carried at the par value of the related
common stock.
Exchangeable
Shares
In connection with the acquisition of Franco-Nevada Corporation
(“Franco”) in February 2002, certain holders of Franco
common stock received 0.8 of an exchangeable share of Newmont
Mining Corporation of Canada Limited (formerly Franco) for each
share of common stock held. These exchangeable shares are
convertible, at the option of the holder, into shares of Newmont
common stock on a
one-for-one
basis, and entitle holders to dividends and other rights
economically equivalent
117
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
to holders of Newmont common stock. At December 31, 2009
and 2008, the value of these no-par shares was included in
Additional paid-in capital
.
Call Spread
Transactions
In connection with the issuance of $1,150 of convertible notes
in July 2007 (see Note 21), the Company entered into
separate convertible note hedge transactions and separate
warrant transactions with respect to the Company’s common
stock to minimize the impact of the potential dilution upon
conversion of the convertible notes. The Company purchased call
options in private transactions to cover 24,887,956 shares
of the Company’s common stock at a strike price of $46.21
per share, subject to adjustment in certain circumstances, for
approximately $366. The call options generally allow the Company
to receive shares of the Company’s common stock from
counterparties equal to the number of shares of common stock
payable to the holders of the notes upon conversion. The Company
also sold warrants in private transactions permitting the
purchasers to acquire up to 24,887,956 shares of the
Company’s common stock at an exercise price of $60.27,
subject to adjustments in certain circumstances, for total
proceeds of approximately $248.
The Company has analyzed the Call Spread Transactions under ASC
guidance for derivative financial instruments indexed to and
potentially settled in a company’s own stock and other
relevant literature, and determined that they meet the criteria
for classification as equity transactions. As a result, the
Company recorded the purchase of the call options as a reduction
in additional paid-in capital and the proceeds of the warrants
as an addition to paid-in capital, and the Company will not
recognize subsequent changes in fair value of the instruments.
Net Income
(Loss) per Common Share
Basic income (loss) per common share is computed by dividing
income available to common shareholders by the weighted average
number of common shares outstanding for the period. Diluted
income (loss) per common share is computed similarly to basic
income per common share except that the weighted average number
of common shares outstanding is increased to include the number
of additional common shares that would have been outstanding if
the potentially dilutive common shares had been issued.
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Net income (loss) attributable to Newmont stockholders:
|
||||||||||||
|
Continuing operations
|
$ | 1,308 | $ | 816 | $ | (988 | ) | |||||
|
Discontinued operations
|
(11 | ) | 15 | (907 | ) | |||||||
| $ | 1,297 | $ | 831 | $ | (1,895 | ) | ||||||
|
Weighted average common shares (millions):
|
||||||||||||
|
Basic
|
487 | 454 | 452 | |||||||||
|
Effect of employee stock based awards
|
— | 1 | — | |||||||||
|
Diluted
|
487 | 455 | 452 | |||||||||
|
Net income (loss) attributable to Newmont stockholders per
common share
|
||||||||||||
|
Basic and diluted:
|
||||||||||||
|
Continuing operations
|
$ | 2.68 | $ | 1.80 | $ | (2.18 | ) | |||||
|
Discontinued operations
|
(0.02 | ) | 0.03 | (2.01 | ) | |||||||
| $ | 2.66 | $ | 1.83 | $ | (4.19 | ) | ||||||
118
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Options to purchase 4.2 million, 4.4 million and
1.7 million shares of common stock at average exercise
prices of $46.58, $47.63 and $52.76 were outstanding at
December 31, 2009, 2008 and 2007, respectively, but were
not included in the computation of diluted weighted average
number of common shares because their effect would have been
anti-dilutive under the treasury stock method. Other outstanding
options to purchase 1.4 million shares of common stock were
not included in the computation of diluted weighted average
common shares in 2007 because their effect would have been
anti-dilutive.
In February 2009, the Company completed a public offering of
34,500,000 shares of common stock at $37 per share for net
proceeds of $1,234.
In February 2009 and July 2007, Newmont issued $518 and $1,150,
respectively, of convertible notes that, if converted in the
future, would have a potentially dilutive effect on the
Company’s stock. Under the indentures for the convertible
notes, upon conversion Newmont is required to settle the
principal amount of the convertible notes in cash and may elect
to settle the remaining conversion obligation (stock price in
excess of the conversion price) in cash, shares or a combination
thereof. The effect of contingently convertible instruments on
diluted earnings per share is calculated under the net share
settlement method in accordance with accounting guidance for
earnings per share. Under the net share settlement method, the
Company includes the amount of shares it would take to satisfy
the conversion obligation, assuming that all of the convertible
notes are surrendered. The average closing price of the
Company’s common stock for each of the periods presented is
used as the basis for determining dilution. The average price of
the Company’s common stock for all periods presented did
not exceed the conversion price of $46.25 and $46.21 for the
notes issued in 2009 and 2007, respectively, and therefore, did
not have a dilutive effect on earnings per share.
In connection with the 2007 convertible senior notes offering,
the Company entered into Call Spread Transactions. These
transactions included the purchase of call options and the sale
of warrants. As a result of the Call Spread Transactions, the
conversion price of $46.21 was effectively increased to $60.27.
Should the warrant transactions become dilutive to the
Company’s earnings per share (i.e. Newmont’s share
price exceeds $60.27) the underlying shares will be included in
the computation of diluted income per common share.
The
Net income (loss) attributable to Newmont stockholders
and transfers from noncontrolling interests was:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Net income (loss) attributable to Newmont stockholders
|
$ | 1,297 | $ | 831 | $ | (1,895 | ) | |||||
|
Transfers from the noncontrolling interests:
|
||||||||||||
|
Increase in Additional paid in capital from sale of PTNNT
shares, net of tax of $115
|
63 | — | — | |||||||||
|
Net income attributable to Newmont stockholders and transfers
from the noncontrolling interests
|
$ | 1,360 | $ | 831 | $ | (1,895 | ) | |||||
| NOTE 13 | ACQUISITIONS |
On June 25, 2009 the Company completed the acquisition of
the remaining 33.33% interest in Boddington from AngloGold
Ashanti Australia Limited (“AngloGold”). The valuation
date for the transaction was January 1, 2009, and closing
adjustments were made to reflect Newmont’s economic
ownership from that date. Consideration for the acquisition
consisted of $750 less an $8 closing adjustment paid in cash at
closing, $240 paid in cash in December 2009, and a contingent
royalty
119
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
capped at $100, equal to 50% of the average realized operating
margin (Revenue less
Costs applicable to sales
on a
by-product basis), if any, exceeding $600 per ounce, payable
quarterly beginning in the second quarter of 2010 on one-third
of gold sales from Boddington.
The following table summarizes the original consideration to
acquire the remaining interest in Boddington:
|
Cash paid in June 2009
|
$ | 742 | ||
|
Cash paid in December 2009
|
240 | |||
|
Contingent consideration (fair value)
|
62 | |||
| $ | 1,044 | |||
At the acquisition date, the Company estimated that the fair
value of the contingent consideration was approximately $62, and
recognized this as part of the purchase price. At
December 31, 2009, the fair value of the contingent
consideration was revalued to approximately $85 and the increase
in fair value of $23 was recorded to
Other expense, net
.
Amounts are payable under the contingent royalty beginning in
the second quarter of 2010. The range of undiscounted amounts
the Company could pay is between $0 and $100. The fair value of
the contingent royalty recognized was estimated by applying the
income approach. See Note 14 for a description of the key
inputs used in deriving fair value.
In connection with the acquisition, Newmont incurred transaction
costs of $67 (shown in Note 6,
Other expense, net)
,
including Australian stamp duties; only $15 of these costs were
paid at December 31, 2009. Additionally, in June 2009,
Newmont paid $182 to reimburse AngloGold for its share of
capital and other project expenditures from January 1, 2009
to June 25, 2009. The reimbursement of capital expenditures
is included in
Property, plant and mine development, net
,
and as
Additions to property, plant and mine development
on the cash flow statement.
The Boddington purchase price allocation based on the estimated
fair values of assets acquired and liabilities assumed is as
follows:
|
Assets:
|
||||
|
Cash
|
$ | 1 | ||
|
Property, plant and mine development, net
|
1,073 | |||
|
Inventories and stockpiles
|
7 | |||
|
Deferred income tax asset
|
28 | |||
|
Other assets
|
11 | |||
| $ | 1,120 | |||
|
Liabilities:
|
||||
|
Accrued liabilities
|
$ | 33 | ||
|
Reclamation liabilities
|
15 | |||
|
Deferred income tax liability
|
28 | |||
| 76 | ||||
|
Net assets acquired
|
$ | 1,044 | ||
In the first quarter of 2009, La Herradura (of which
Newmont owns 44%) purchased a mining property near its Mexico
operation for cash consideration of $11 (Newmont’s 44%
share).
The pro forma impact of all 2009 acquisitions on
Net Income
was not material.
120
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
In April 2008, the Company purchased 15,960 additional shares of
EGR for $11 in cash bringing its ownership interest to 56.67%
from 46.72%. EGR owns 100% of Valcambi SA
(“Valcambi”), a London Good Delivery precious metals
refiner and manufacturer of precious metal coins, medallions and
luxury watch components. The additional interest resulted in the
consolidation of EGR at May 1, 2008 and increased
Other
current assets
and
Other current liabilities
by $229
and $206, respectively. EGR’s revenue and expenses are
included in
Other income, net
reflecting the service fee
and secondary nature of EGR’s business to the
Company’s core operations. Prior to consolidation, the
Company accounted for EGR using the equity method of accounting.
In November 2008, EGR repurchased 6.55% of its own shares from a
noncontrolling shareholder bringing Newmont’s ownership to
60.64%.
In December 2007, the Company purchased approximately 70% of the
common shares of Miramar Mining Corporation
(“Miramar”), which, in addition to the shares
previously owned, brought the Company’s interest in Miramar
to approximately 78%. During the first quarter of 2008, the
Company completed the acquisition of the remaining shares of
Miramar bringing its interest to 100%. All shares were purchased
for C$6.25 per share in cash.
With the completion of the Miramar acquisition, the Company
controls the Hope Bay project, a large undeveloped gold property
in Nunavut, Canada. The acquisition and development of the Hope
Bay project is consistent with the Company’s strategic
focus on generating value through exploration and project
development and was acquired with the intention of adding higher
grade ore reserves and developing a new core gold mining
district in a AAA-rated country.
The Miramar purchase price paid has been allocated to the assets
acquired and liabilities assumed based upon their estimated fair
values on the respective closing dates as follows:
|
Assets:
|
||||
|
Cash and cash equivalents
|
$ | 38 | ||
|
Property, plant and mine development, net
|
1,880 | |||
|
Investments
|
40 | |||
|
Deferred income tax assets
|
94 | |||
|
Other assets
|
35 | |||
| 2,087 | ||||
|
Liabilities:
|
||||
|
Accrued liabilities
|
53 | |||
|
Deferred income tax liabilities
|
681 | |||
| 734 | ||||
|
Net assets acquired
|
$ | 1,353 | ||
| NOTE 14 | FAIR VALUE ACCOUNTING |
Fair value accounting establishes a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure
fair value. The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest
priority
121
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
to unobservable inputs (Level 3 measurements). The three
levels of the fair value hierarchy are described below:
|
Level 1
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; | |
|
Level 2
|
Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and | |
|
Level 3
|
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). |
The following table sets forth the Company’s assets and
liabilities measured at fair value on a recurring basis (at
least annually) by level within the fair value hierarchy. As
required by accounting guidance, assets and liabilities are
classified in their entirety based on the lowest level of input
that is significant to the fair value measurement.
| Fair Value at December 31, 2009 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
|
Assets:
|
||||||||||||||||
|
Cash equivalents
|
$ | 1,812 | $ | 1,812 | $ | — | $ | — | ||||||||
|
Marketable equity securities
|
1,175 | 1,175 | — | — | ||||||||||||
|
Marketable debt securities:
|
||||||||||||||||
|
Asset backed commercial paper
|
18 | — | — | 18 | ||||||||||||
|
Auction rate securities
|
5 | — | — | 5 | ||||||||||||
|
Corporate
|
10 | 10 | — | — | ||||||||||||
|
Trade receivable from provisional copper and gold concentrate
sales, net
|
346 | 346 | — | — | ||||||||||||
|
Derivative instruments, net
|
150 | — | 150 | — | ||||||||||||
| $ | 3,516 | $ | 3,343 | $ | 150 | $ | 23 | |||||||||
|
Liabilities:
|
||||||||||||||||
|
8
5
/
8
% senior
notes ($222 hedged portion)
|
$ | 242 | $ | — | $ | 242 | $ | — | ||||||||
|
Boddington contingent consideration
|
85 | — | — | 85 | ||||||||||||
| $ | 327 | $ | — | $ | 242 | $ | 85 | |||||||||
The Company’s cash equivalent instruments are classified
within Level 1 of the fair value hierarchy because they are
valued using quoted market prices. The cash equivalent
instruments that are valued based on quoted market prices in
active markets are primarily money market securities and
U.S. Treasury securities.
The Company’s marketable equity securities are valued using
quoted market prices in active markets and as such are
classified within Level 1 of the fair value hierarchy. The
fair value of the marketable equity securities is calculated as
the quoted market price of the marketable equity security
multiplied by the quantity of shares held by the Company.
The Company’s corporate marketable debt securities are
valued using quoted market prices in active markets and as such
are classified within Level 1 of the fair value hierarchy.
The Company’s other marketable debt securities include
investments in asset backed commercial paper and auction rate
securities. In January 2009, the investments in asset backed
commercial paper were restructured
122
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
under court order. The restructuring allowed a return of a
portion of the investment and interest distribution to be made
to investors. The Company estimated the fair value of the asset
backed commercial paper using a probability of return to each
class of notes reflective of information reviewed regarding the
separate classes of securities. The auction rate securities are
traded in markets that are not active, trade infrequently and
have little price transparency. The Company estimated the fair
value of the auction rate securities based on weighted average
risk calculations. The asset backed commercial paper and auction
rate securities are classified within Level 3 of the fair
value hierarchy.
The Company’s net trade receivable from provisional copper
and gold concentrate sales is valued using quoted market prices
based on the forward London Metal Exchange (“LME”)
(copper) and the London Bullion Market Association P.M. fix
(“London P.M. fix”) (gold) and, as such, is classified
within Level 1 of the fair value hierarchy.
The Company’s derivative instruments are valued using
pricing models and the Company generally uses similar models to
value similar instruments. Where possible, the Company verifies
the values produced by its pricing models to market prices.
Valuation models require a variety of inputs, including
contractual terms, market prices, yield curves, credit spreads,
measures of volatility, and correlations of such inputs. The
Company’s derivatives trade in liquid markets, and as such,
model inputs can generally be verified and do not involve
significant management judgment. Such instruments are classified
within Level 2 of the fair value hierarchy.
The Company has fixed to floating swap contracts to hedge the
interest rate risk exposure of its
8
5
/
8
%
uncollateralized senior notes due May 2011. The hedged portion
of the Company’s
8
5
/
8
% senior
notes is valued using pricing models which require inputs,
including risk-free interest rates and credit spreads. Because
the inputs are derived from observable market data, the hedged
portion of the
8
5
/
8
% senior
notes is classified within Level 2 of the fair value
hierarchy.
The Company has recorded a contingent consideration liability
related to the acquisition of the remaining 33.33% interest in
Boddington (Note 13). The value of the contingent
consideration was determined using a valuation model which
simulates future gold and copper prices and costs applicable to
sales to estimate fair value. The contingent consideration
liability is classified within Level 3 of the fair value
hierarchy.
The table below sets forth a summary of changes in the fair
value of the Company’s Level 3 financial assets and
liabilities at December 31, 2009.
|
Boddington
|
||||||||||||||||
|
Auction Rate
|
Asset Backed
|
Contingent
|
||||||||||||||
| Securities | Commercial Paper | Consideration | Total | |||||||||||||
|
Balance at beginning of period
|
$ | 5 | $ | 22 | $ | — | $ | 27 | ||||||||
|
Settlements
|
— | (4 | ) | — | (4 | ) | ||||||||||
|
Transfers in
|
— | — | 62 | 62 | ||||||||||||
|
Revaluation
|
— | — | 23 | 23 | ||||||||||||
|
Balance at end of period
|
$ | 5 | $ | 18 | $ | 85 | $ | 108 | ||||||||
The revaluation on the Boddington contingent consideration
liability of $23 was recorded in
Other expense, net
(Note 6).
At December 31, 2009, the assets and liabilities classified
within Level 3 of the fair value hierarchy represent 1% and
26% of the total assets and liabilities measured at fair value,
respectively.
123
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 15 | DERIVATIVE INSTRUMENTS |
Our strategy is to provide shareholders with leverage to changes
in the gold and copper prices by selling our gold and copper
production at current market prices. Consequently, we do not
hedge our gold and copper sales. We continue to manage risks
associated with commodity input costs, interest rates and
foreign currencies using the derivative market.
Cash Flow
Hedges
Foreign Currency
Contracts
Newmont utilizes foreign currency contracts to reduce the
variability of the US dollar amount of forecasted foreign
currency expenditures caused by changes in exchange rates.
Newmont hedges up to 80% of the Company’s IDR denominated
operating expenditures which results in a blended IDR/$ rate
realized each period. The hedging instruments are fixed forward
contracts with expiration dates ranging up to one year from the
date of issue. The principal hedging objective is reduction in
the volatility of realized
period-on-period
IDR/$ rates. During 2009, 2008 and 2007, the IDR/$ fixed forward
contracts increased Batu Hijau
Costs applicable to sales
by $nil and $2, and reduced Batu Hijau
Costs applicable
to sales
by $4, respectively. At December 31, 2009, the
Company has hedged 32% of its expected 2010 IDR operating
expenditures.
The Company hedges up to 85% of the Company’s A$
denominated operating expenditures with fixed forward contracts
that have expiration dates ranging up to three years from the
date of issue. The principal hedging objective is reduction in
the volatility of realized
period-on-period
$/A$ rates. Each month, fixed forward contracts are obtained to
hedge 1/36th of the forecasted monthly A$ operating cost
exposure in the rolling three-year hedge period resulting in a
blended $/A$ rate realized. During 2009, 2008 and 2007, the A$
operating hedging instruments increased Other Australia/New
Zealand
Costs applicable to sales
by $7 and $13, and
reduced Other Australia/New Zealand
Costs applicable to sales
by $1, respectively. During 2009, the A$ operating hedge
instruments decreased Boddington
Costs applicable to sales
by $2. At December 31, 2009, the Company has hedged
60%, 37% and 13% of its expected 2010, 2011 and 2012 A$
operating expenditures, respectively.
The Company hedges up to 75% of the Company’s NZ$
denominated operating expenditures with fixed forward contracts
that have expiration dates ranging up to two years from the date
of issue. The principal hedging objective is reduction in the
volatility of realized
period-on-period
$/NZ$ rates. Each month, fixed forward contracts are obtained to
hedge 1/24th of the forecasted monthly NZ$ operating cost
exposure in the rolling two-year hedge period resulting in a
blended $/NZ$ rate realized. During 2009, 2008 and 2007, the NZ$
operating hedging instruments increased Other Australia/New
Zealand
Costs applicable to sales
by $2, $2 and $nil. At
December 31, 2009, the Company has hedged 61% and 21% of
its expected 2010 and 2011 NZ$ operating expenditures,
respectively.
The Company hedged A$ denominated capital expenditures related
to the construction of Boddington. The hedging instruments
consisted of a series of fixed forward contracts and bought call
option contracts with expiration dates ranging up to one year
from the date of issue. The $30 net realized loss
associated with the capital expenditure hedge program was
recorded in
Accumulated other comprehensive income (loss)
net of tax and will be recognized in
Amortization
over the life of the related Boddington assets. During 2009,
the A$ capital expenditure hedge program increased Boddington
Amortization
by $nil. At December 31, 2009, the
Company had no outstanding hedges for the Boddington capital
program.
124
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
All of the foreign currency contracts were designated as cash
flow hedges, and as such, the effective portion of unrealized
changes in market value have been recorded in
Accumulated
other comprehensive income (loss)
and are recorded in
earnings during the period in which the hedged transaction
affects earnings. Gains and losses from hedge ineffectiveness
are recognized in current earnings.
Newmont had the following foreign currency derivative contracts
outstanding at December 31, 2009:
| Expected Maturity Date | ||||||||||||||||
|
Total/
|
||||||||||||||||
| 2010 | 2011 | 2012 | Average | |||||||||||||
|
IDR operating fixed forward contracts:
|
||||||||||||||||
|
$(millions)
|
$ | 38 | $ | — | $ | — | $ | 38 | ||||||||
|
Average rate (IDR/$)
|
9,863 | — | — | 9,863 | ||||||||||||
|
IDR notional (millions)
|
374,797 | — | — | 374,797 | ||||||||||||
|
A$ operating fixed forward contracts:
|
||||||||||||||||
|
$(millions)
|
$ | 572 | $ | 358 | $ | 130 | $ | 1,060 | ||||||||
|
Average rate ($/A$)
|
0.77 | 0.75 | 0.78 | 0.77 | ||||||||||||
|
A$ notional (millions)
|
736 | 476 | 166 | 1,378 | ||||||||||||
|
NZ$ operating fixed forward contracts:
|
||||||||||||||||
|
$(millions)
|
$ | 43 | $ | 18 | $ | — | $ | 61 | ||||||||
|
Average rate ($/NZ$)
|
0.65 | 0.67 | — | 0.66 | ||||||||||||
|
NZ$ notional (millions)
|
66 | 26 | — | 92 | ||||||||||||
Diesel Fixed
Forward Contracts
Newmont hedges up to 66% of its operating cost exposure related
to diesel consumed at its Nevada operations to reduce the
variability in realized diesel prices. The hedging instruments
consist of a series of financially settled fixed forward
contracts with expiration dates ranging up to two years from the
date of issue. During 2009, 2008 and 2007, the Nevada diesel
hedge program increased Nevada
Costs applicable to sales
by $11, $4 and $nil, respectively. The contracts have been
designated as cash flow hedges of future diesel purchases, and
as such, the effective portion of unrealized changes in the
market value have been recorded in
Accumulated other
comprehensive income (loss)
and are recorded in earnings
during the period in which the hedged transaction affects
earnings. Gains and losses from hedge ineffectiveness are
recognized in current earnings. At December 31, 2009, the
Company has hedged 55% and 20% of its expected 2010 and 2011
Nevada diesel expenditures, respectively.
Newmont had the following diesel derivative contracts
outstanding at December 31, 2009:
| Expected Maturity Date | ||||||||||||
|
Total/
|
||||||||||||
| 2010 | 2011 | Average | ||||||||||
|
Diesel fixed forward contracts:
|
||||||||||||
|
$(millions)
|
$ | 41 | $ | 17 | $ | 58 | ||||||
|
Average rate ($/gallon)
|
1.94 | 2.17 | 2.00 | |||||||||
|
Diesel gallons (millions)
|
21 | 8 | 29 | |||||||||
125
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Treasury Rate
Lock Contracts
In connection with the 2019 and 2039 notes issued in September
2009, Newmont acquired treasury rate lock contracts to reduce
the variability of the proceeds realized from the bond
issuances. The treasury rate locks resulted in $6 and $5
unrealized gains for the 2019 and 2039 notes, respectively. The
Company previously acquired treasury rate locks in connection
with the issuance of the 2035 notes that resulted in a $10
unrealized loss. The gains/losses from these contracts are
recognized in
Interest expense, net
over the terms of the
respective notes.
Copper Collar
Contracts
Prior to 2007, the Company entered into copper collar contracts
to hedge the copper price realized during those periods. Final
delivery under the copper collar contracts occurred in February
2007. Changes in the fair value related to the effective portion
of the hedges were recorded in
Accumulated other
comprehensive (loss) income
.
Fair Value
Hedges
Interest Rate
Swap Contracts
At December 31, 2009, Newmont had $222 fixed to floating
swap contracts designated as a hedge against its
8
5
/
8
% senior
notes due 2011. The interest rate swap contracts assist in
management of the Company’s targeted mix of fixed and
floating rate debt. Under the hedge contract terms, the Company
receives fixed-rate interest payments at 8.63% and pays
floating-rate interest amounts based on periodic London
Interbank Offered Rate (“LIBOR”) settings plus a
spread, ranging from 2.60% to 7.63%. The interest rate swap
contracts were designated as fair value hedges and, as such,
changes in fair value have been recorded in income in each
period, consistent with recording changes to the mark- to-market
value of the underlying hedged liability in income. Changes in
the
mark-to-market
value of the effective portion of the interest rate swap
contracts are recognized as a component of
Interest expense,
net.
The hedge contracts decreased
Interest expense, net
by $4, $2 and $nil during 2009, 2008 and 2007, respectively.
During 2009, 2008 and 2007, losses of $3 and gains of $4 and $3
were included in
Other income, net
for the ineffective
portion of these swap contracts designated as fair value hedges,
respectively.
Derivative
Instrument Fair Values
Newmont had the following derivative instruments designated as
hedges with fair values at December 31, 2009 and
December 31, 2008:
| Fair Values of Derivative Instruments | ||||||||||||||||
| At December 31, 2009 | ||||||||||||||||
|
Other
|
Other
|
Other
|
Other
|
|||||||||||||
|
Current
|
Long-Term
|
Current
|
Long-Term
|
|||||||||||||
| Assets | Assets | Liabilities | Liabilities | |||||||||||||
|
Foreign currency exchange contracts:
|
||||||||||||||||
|
IDR operating fixed forward contracts
|
$ | 1 | $ | — | $ | — | $ | — | ||||||||
|
NZ$ operating fixed forward contracts
|
5 | 1 | — | — | ||||||||||||
|
A$ operating fixed forward contracts
|
78 | 53 | — | 1 | ||||||||||||
|
Diesel fixed forward contracts
|
5 | 1 | — | — | ||||||||||||
|
Interest rate swap contracts
|
3 | 4 | — | — | ||||||||||||
|
Total derivative instruments (Notes 19 and 24)
|
$ | 92 | $ | 59 | $ | — | $ | 1 | ||||||||
126
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| Fair Values of Derivative Instruments | ||||||||||||||||
| At December 31, 2008 | ||||||||||||||||
|
Other
|
Other
|
Other
|
Other
|
|||||||||||||
|
Current
|
Long-Term
|
Current
|
Long-Term
|
|||||||||||||
| Assets | Assets | Liabilities | Liabilities | |||||||||||||
|
Foreign currency exchange contracts:
|
||||||||||||||||
|
IDR operating fixed forward contracts
|
$ | — | $ | — | $ | 4 | $ | — | ||||||||
|
NZ$ operating fixed forward contracts
|
— | — | 5 | 1 | ||||||||||||
|
A$ fixed forward contracts
|
3 | 1 | 87 | 42 | ||||||||||||
|
A$ call option contracts
|
1 | — | — | — | ||||||||||||
|
Diesel fixed forward contracts
|
— | — | 15 | — | ||||||||||||
|
Interest rate swap contracts
|
2 | 7 | — | — | ||||||||||||
|
Total derivative instruments (Notes 19 and 24)
|
$ | 6 | $ | 8 | $ | 111 | $ | 43 | ||||||||
The following tables show the location and amount of gains
(losses) reported in the Company’s Consolidated Financial
Statements related to the Company’s cash flow and fair
value hedges and the gains (losses) recorded for the hedged item
related to the fair value hedges.
| Foreign Currency Exchange Contracts | Diesel Forward Contracts | |||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
|
Cash flow hedging relationships:
|
||||||||||||||||||||||||
|
For the year ended December 31,
|
||||||||||||||||||||||||
|
Gain (loss) recognized in other comprehensive income (effective
portion)
|
245 | (166 | ) | (1 | ) | 7 | (18 | ) | — | |||||||||||||||
|
Gain (loss) reclassified from Accumulated other comprehensive
income (loss) into income (effective
portion)
(1)
|
(6 | ) | (17 | ) | 5 | (11 | ) | (4 | ) | — | ||||||||||||||
| Treasury Rate Lock Contracts | Copper Collar Contracts | |||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
|
Cash flow hedging relationships:
|
||||||||||||||||||||||||
|
For the year ended December 31,
|
||||||||||||||||||||||||
|
Gain (loss) recognized in other comprehensive income (effective
portion)
|
11 | — | — | — | — | 11 | ||||||||||||||||||
|
Gain (loss) reclassified from Accumulated other comprehensive
income (loss) into income (effective
portion)
(1)
|
— | — | — | — | — | (1 | ) | |||||||||||||||||
| (1) | The gain (loss) for the effective portion of foreign exchange and diesel cash flow hedges reclassified from Accumulated other comprehensive income (loss) is recorded in Costs applicable to sales . The gain for the effective portion of treasury rate lock cash flow hedges reclassified from Accumulated other comprehensive income (loss) is recorded in Interest expense, net . The loss for the effective portion of the copper collar contracts reclassified from Accumulated other comprehensive income (loss) is recorded in Sales — copper, net . |
127
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The amount to be reclassified from
Accumulated other
comprehensive income (loss)
, net of tax to income for
derivative instruments during the next 12 months is a gain
of approximately $62.
| Interest Rate Swap Contracts | 8 5 / 8 % Senior Notes (Hedged Portion) | |||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
|
Fair value hedging relationships:
|
||||||||||||||||||||||||
|
For the year ended December 31,
|
||||||||||||||||||||||||
|
Gain (loss) recognized in income (effective
portion)
(1)
|
4 | 2 | — | (1 | ) | (2 | ) | (1 | ) | |||||||||||||||
|
Gain (loss) recognized in income (ineffective
portion
(2)
|
(3 | ) | 4 | 3 | (3 | ) | 6 | 1 | ||||||||||||||||
| (1) | The gain (loss) recognized for the effective portion of fair value hedges and the underlying hedged debt is included in Interest expense, net . | |
| (2) | The ineffective portion recognized for fair value hedges and the underlying hedged debt is included in Other income, net . |
Provisional
Copper and Gold Sales
LME copper prices averaged $2.34 per pound during 2009, compared
with the Company’s recorded average provisional price of
$2.53 per pound before
mark-to-market
gains and treatment and refining charges. The applicable forward
copper price at the end of the year was $3.34 per pound. During
2009, increasing copper prices resulted in a provisional pricing
mark-to-market
gain of $173 ($0.33 per pound). At December 31, 2009, the
Company had copper sales of 160 million pounds priced at an
average of $3.34 per pound, subject to final pricing over the
next several months.
The average London P.M. gold fix was $973 per ounce during 2009,
compared with the Company’s recorded average provisional
gold price of $977 per ounce before
mark-to-market
gains and treatment and refining charges. The applicable forward
gold price at the end of the year was $1,094 per ounce. During
2009, changes in gold prices resulted in a provisional pricing
mark-to-market
gain of $15 ($2 per ounce). At December 31, 2009, the
Company had gold sales of 85,000 ounces priced at an average of
$1,094 per ounce, subject to final pricing over the next several
months.
Price-capped
Forward Sales Contracts
In June 2007, we paid $578 to settle all of the
1.85 million ounce price-capped forward sales contracts
which were accounted for as normal sales contracts under
accounting for derivative instruments. We reported a $531
pre-tax loss on the early settlement of the contracts, after a
$47 reversal of previously recognized deferred revenue in 2007.
See Note 3 to the Consolidated Financial Statements for
additional details.
128
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 16 | INVESTMENTS |
| At December 31, 2009 | ||||||||||||||||
|
Cost/Equity
|
Unrealized |
Fair/Equity
|
||||||||||||||
| Basis | Gain | Loss | Basis | |||||||||||||
|
Current:
|
||||||||||||||||
|
Marketable Equity Securities:
|
||||||||||||||||
|
Regis Resources
|
$ | 5 | $ | 29 | $ | — | $ | 34 | ||||||||
|
Other
|
10 | 12 | — | 22 | ||||||||||||
| $ | 15 | $ | 41 | $ | — | $ | 56 | |||||||||
|
Long-term:
|
||||||||||||||||
|
Marketable Debt Securities:
|
||||||||||||||||
|
Asset backed commercial paper
|
$ | 24 | $ | — | $ | (6 | ) | $ | 18 | |||||||
|
Auction rate securities
|
7 | — | (2 | ) | 5 | |||||||||||
|
Corporate
|
8 | 2 | — | 10 | ||||||||||||
| 39 | 2 | (8 | ) | 33 | ||||||||||||
|
Marketable Equity Securities:
|
||||||||||||||||
|
Canadian Oil Sands Trust
|
292 | 584 | — | 876 | ||||||||||||
|
Gabriel Resources Ltd.
|
74 | 136 | — | 210 | ||||||||||||
|
Shore Gold Inc.
|
4 | 11 | — | 15 | ||||||||||||
|
Other
|
11 | 7 | — | 18 | ||||||||||||
| 381 | 738 | — | 1,119 | |||||||||||||
|
Other investments, at cost
|
6 | — | — | 6 | ||||||||||||
|
Investment in Affiliates (Note 9):
|
||||||||||||||||
|
AGR Matthey Joint Venture
|
20 | — | — | 20 | ||||||||||||
|
La Zanja
|
8 | — | — | 8 | ||||||||||||
| $ | 454 | $ | 740 | $ | (8 | ) | $ | 1,186 | ||||||||
| At December 31, 2008 | ||||||||||||||||
|
Cost/Equity
|
Unrealized |
Fair/Equity
|
||||||||||||||
| Basis | Gain | Loss | Basis | |||||||||||||
|
Current:
|
||||||||||||||||
|
Marketable Equity Securities
|
$ | 14 | $ | 1 | $ | (3 | ) | $ | 12 | |||||||
|
Long-term:
|
||||||||||||||||
|
Marketable Debt Securities:
|
||||||||||||||||
|
Asset backed commercial paper
|
$ | 25 | $ | — | $ | (3 | ) | $ | 22 | |||||||
|
Auction rate securities
|
7 | — | (2 | ) | 5 | |||||||||||
| 32 | — | (5 | ) | 27 | ||||||||||||
|
Marketable Equity Securities:
|
||||||||||||||||
|
Canadian Oil Sands Trust
|
251 | 283 | — | 534 | ||||||||||||
|
Gabriel Resources Ltd.
|
64 | — | — | 64 | ||||||||||||
|
Shore Gold Inc.
|
6 | — | — | 6 | ||||||||||||
|
Other
|
8 | — | (3 | ) | 5 | |||||||||||
| 329 | 283 | (3 | ) | 609 | ||||||||||||
|
Other investments, at cost
|
7 | — | — | 7 | ||||||||||||
|
Investment in Affiliates (Note 9):
|
||||||||||||||||
|
AGR Matthey Joint Venture
|
12 | — | — | 12 | ||||||||||||
| $ | 380 | $ | 283 | $ | (8 | ) | $ | 655 | ||||||||
129
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
During 2009, the Company purchased marketable equity securities
of Regis Resources for $5. During 2008, the Company purchased
marketable equity securities of Gabriel Resources for $11 and
other marketable equity securities for $6.
Included in
Investments
at December 31, 2009, are
$10 and $5 of long-term marketable debt securities and long-term
marketable equity securities, respectively, that are legally
pledged for purposes of settling asset retirement obligations
related to the San Jose Reservoir at Yanacocha.
During 2009, the Company recognized impairments for
other-than-temporary
declines in value of $2 for Shore Gold Inc. and $4 for other
marketable equity securities. During 2008, the Company
recognized impairments for other-than- temporary declines in
value of $67 for Shore Gold Inc., $23 for Gabriel Resources Ltd.
and $24 for other marketable equity securities.
The following tables present the gross unrealized losses and
fair value of the Company’s investments with unrealized
losses that are not deemed to be
other-than-temporarily
impaired, aggregated by length of time that the individual
securities have been in a continuous unrealized loss position:
| Less Than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
|
Unrealized
|
Unrealized
|
Unrealized
|
||||||||||||||||||||||
|
At December 31, 2009
|
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | ||||||||||||||||||
|
Asset backed commercial paper
|
$ | — | $ | — | $ | 18 | $ | 6 | $ | 18 | $ | 6 | ||||||||||||
|
Auction rate securities
|
— | — | 5 | 2 | 5 | 2 | ||||||||||||||||||
| $ | — | $ | — | $ | 23 | $ | 8 | $ | 23 | $ | 8 | |||||||||||||
| Less Than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
|
Unrealized
|
Unrealized
|
Unrealized
|
||||||||||||||||||||||
|
At December 31, 2008
|
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | ||||||||||||||||||
|
Marketable equity securities
|
$ | 6 | $ | 6 | $ | — | $ | — | $ | 6 | $ | 6 | ||||||||||||
|
Asset backed commercial paper
|
22 | 3 | — | — | 22 | 3 | ||||||||||||||||||
|
Auction rate securities
|
— | — | 5 | 2 | 5 | 2 | ||||||||||||||||||
| $ | 28 | $ | 9 | $ | 5 | $ | 2 | $ | 33 | $ | 11 | |||||||||||||
The unrealized loss of $8 and $11 in 2009 and 2008,
respectively, relate to the Company’s investments in
marketable equity securities, auction rate securities and asset
backed commercial paper as listed in the December 31, 2009
and 2008 tables above. While the fair values of these
investments are below their respective cost, the Company views
these declines as temporary. Generally the Company’s policy
is to treat a decline in a marketable equity security’s
quoted market value that has lasted continuously for more than
six months as an
other-than-temporary
decline in value. The Company intends to hold its investment in
auction rate securities and asset backed commercial paper until
maturity or such time that the market recovers and therefore
considers these losses temporary.
130
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 17 | INVENTORIES |
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
In-process
|
$ | 80 | $ | 53 | ||||
|
Concentrate
|
10 | 54 | ||||||
|
Precious metals
|
9 | 20 | ||||||
|
Materials, supplies and other
|
394 | 380 | ||||||
| $ | 493 | $ | 507 | |||||
The Company recorded aggregate write-downs of $9, $5 and $3 for
2009, 2008 and 2007, respectively, to reduce the carrying value
of inventories to net realizable value. Write-downs in 2009 and
2008 were related to Nevada and Batu Hijau. Write-downs in 2007
were related to Kalgoorlie, Waihi and Jundee in Asia Pacific.
Inventory write-downs are classified as components of
Costs
applicable to sales
.
| NOTE 18 | STOCKPILES AND ORE ON LEACH PADS |
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Current:
|
||||||||
|
Stockpiles
|
$ | 206 | $ | 117 | ||||
|
Ore on leach pads
|
197 | 173 | ||||||
| $ | 403 | $ | 290 | |||||
|
Long-term:
|
||||||||
|
Stockpiles
|
$ | 1,181 | $ | 873 | ||||
|
Ore on leach pads
|
321 | 263 | ||||||
| $ | 1,502 | $ | 1,136 | |||||
At December 31, 2009, stockpiles were primarily located at
Batu Hijau ($834), Nevada ($269), Ahafo ($72), Boddington ($59)
and Other Australia/New Zealand ($121) while leach pads were
primarily located at Yanacocha ($337) and Nevada ($176). The
Company recorded aggregate write-downs of $nil, $2 and $14 for
2009, 2008 and 2007, respectively, to reduce the carrying value
of stockpiles and leach pads to net realizable value.
Write-downs in 2008 were related to Jundee in Asia Pacific.
Write-downs in 2007 were primarily related to Yanacocha in South
America and Jundee and Waihi in Asia Pacific. Stockpile and ore
on leach pads write-downs are classified as components of
Costs applicable to sales
.
131
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 19 | OTHER ASSETS |
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Other current assets:
|
||||||||
|
Refinery metal inventory and receivable
|
$ | 671 | $ | 168 | ||||
|
Derivative instruments (Note 15)
|
92 | 6 | ||||||
|
Other prepaid assets
|
64 | 43 | ||||||
|
Notes receivable
|
11 | 8 | ||||||
|
Prepaid income and mining taxes
|
6 | 187 | ||||||
|
Other
|
56 | 43 | ||||||
| $ | 900 | $ | 455 | |||||
|
Other long-term assets:
|
||||||||
|
Goodwill
|
$ | 188 | $ | 188 | ||||
|
Restricted cash
|
70 | 33 | ||||||
|
Derivative instruments (Note 15)
|
59 | 8 | ||||||
|
Debt issuance costs
|
50 | 29 | ||||||
|
Prepaid royalties
|
34 | 19 | ||||||
|
Other intangible assets
|
29 | 6 | ||||||
|
Other receivables
|
16 | 17 | ||||||
|
Corporate-owned life insurance
|
13 | 26 | ||||||
|
Prepaid maintenance costs
|
10 | 13 | ||||||
|
PTPI loan receivable
|
— | 21 | ||||||
|
Other
|
13 | 35 | ||||||
| $ | 482 | $ | 395 | |||||
| NOTE 20 | PROPERTY, PLANT AND MINE DEVELOPMENT |
|
Depreciable
|
At December 31, 2009 | At December 31, 2008 | ||||||||||||||||||||||||||
|
Life
|
Accumulated
|
Net Book
|
Accumulated
|
Net Book
|
||||||||||||||||||||||||
| (In years) | Cost | Amortization | Value | Cost | Amortization | Value | ||||||||||||||||||||||
|
Land
|
— | $ | 111 | $ | — | $ | 111 | $ | 101 | $ | — | $ | 101 | |||||||||||||||
|
Facilities and equipment
|
1 - 27 | 12,099 | (4,816 | ) | 7,283 | 9,044 | (4,297 | ) | 4,747 | |||||||||||||||||||
|
Mine development
|
1 - 27 | 2,696 | (1,181 | ) | 1,515 | 2,054 | (923 | ) | 1,131 | |||||||||||||||||||
|
Mineral interests
|
1 - 27 | 3,380 | (608 | ) | 2,772 | 2,765 | (561 | ) | 2,204 | |||||||||||||||||||
|
Asset retirement cost
|
1 - 27 | 462 | (210 | ) | 252 | 374 | (181 | ) | 193 | |||||||||||||||||||
|
Construction-in-progress
|
— | 437 | — | 437 | 1,752 | — | 1,752 | |||||||||||||||||||||
| $ | 19,185 | $ | (6,815 | ) | $ | 12,370 | $ | 16,090 | $ | (5,962 | ) | $ | 10,128 | |||||||||||||||
|
Leased assets included above in facilities and equipment
|
2 - 25 | $ | 421 | $ | (275 | ) | $ | 146 | $ | 421 | $ | (264 | ) | $ | 157 | |||||||||||||
132
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| At December 31, 2009 | At December 31, 2008 | |||||||||||||||||||||||||||
|
Amortization
|
Gross
|
Gross
|
||||||||||||||||||||||||||
|
Period
|
Carrying
|
Accumulated
|
Net Book
|
Carrying
|
Accumulated
|
Net Book
|
||||||||||||||||||||||
|
Mineral Interests
|
(in years) | Value | Amortization | Value | Value | Amortization | Value | |||||||||||||||||||||
|
Production stage
|
1 - 27 | $ | 1,207 | $ | (601 | ) | $ | 606 | $ | 802 | $ | (554 | ) | $ | 248 | |||||||||||||
|
Development stage
|
— | 155 | — | 155 | 372 | — | 372 | |||||||||||||||||||||
|
Exploration stage
|
1 - 27 | 2,018 | (7 | ) | 2,011 | 1,591 | (7 | ) | 1,584 | |||||||||||||||||||
| $ | 3,380 | $ | (608 | ) | $ | 2,772 | $ | 2,765 | $ | (561 | ) | $ | 2,204 | |||||||||||||||
Construction-in-progress
for 2009 of $437 included $168 at Africa primarily related to
the Akyem project, the development of the Amoma pit at Ahafo and
other infrastructure in Ahafo, $103 at Asia Pacific primarily
related to Boddington and infrastructure at Tanami, $85 at South
America primarily related to project infrastructure, a water
treatment plant and a tailings pipeline and $65 at North America
primarily related to tailings dam expansion at Twin Creeks and
an underground truck shop and equipment purchases at Carlin.
Construction-in-progress
for 2008 of $1,752 included $1,334 at Asia Pacific primarily
related to the Boddington project, $139 at Africa primarily
related to the Akyem project, the development of the Amoma pit
at Ahafo and other infrastructure in Ahafo, $133 at North
America primarily related to tailings dam expansions at Carlin
and Twin Creeks and a truck shop at Carlin and $132 at South
America primarily related to project infrastructure, a water
treatment plant and leach pad expansions.
Write-down of property, plant and mine development totaled $7,
$137 and $10 for 2009, 2008 and 2007, respectively. The 2009
write-down primarily related to assets in Asia Pacific and South
America. The 2008 write-down primarily related to mineral
interests and other assets in North America and Asia Pacific. In
North America, the Fort a la Corne JV assets were impaired
based on 2008 geologic results and potential project economics
leading to a decision by Newmont to cease funding its share of
project development costs. The 2007 write-down primarily related
to assets in Asia Pacific.
133
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 21 | DEBT |
| At December 31, | ||||||||||||||||
| 2009 | 2008 | |||||||||||||||
| Current | Non-Current | Current | Non-Current | |||||||||||||
|
Sale-leaseback of refractory ore treatment plant
|
$ | 24 | $ | 164 | $ | 24 | $ | 188 | ||||||||
|
8
5
/
8
% senior
notes, net of discount (due 2011)
|
— | 218 | — | 214 | ||||||||||||
|
Corporate revolving credit facility (due 2012)
|
— | — | — | 757 | ||||||||||||
|
2012 convertible senior notes, net of discount
|
— | 463 | — | — | ||||||||||||
|
2014 convertible senior notes, net of discount
|
— | 468 | — | 448 | ||||||||||||
|
2017 convertible senior notes, net of discount
|
— | 417 | — | 401 | ||||||||||||
|
5
1
/
8
% senior
notes, net of discount (due 2019)
|
— | 896 | — | — | ||||||||||||
|
5
7
/
8
% senior
notes, net of discount (due 2035)
|
— | 597 | — | 597 | ||||||||||||
|
6
1
/
4
% senior
notes, net of discount (due 2039)
|
— | 1,087 | — | — | ||||||||||||
|
PTNNT project financing facility
|
87 | 133 | 87 | 219 | ||||||||||||
|
PTNNT shareholder loans
|
— | — | 18 | — | ||||||||||||
|
Yanacocha credit facility
|
14 | 48 | 14 | 62 | ||||||||||||
|
Yanacocha senior notes
|
8 | 92 | — | 100 | ||||||||||||
|
Ahafo project facility
|
10 | 65 | 9 | 66 | ||||||||||||
|
Other project financings and capital leases
|
14 | 4 | 13 | 20 | ||||||||||||
| $ | 157 | $ | 4,652 | $ | 165 | $ | 3,072 | |||||||||
Scheduled minimum debt repayments are $157 in 2010, $334 in
2011, $608 in 2012, $116 in 2013; $535 in 2014 and $3,059
thereafter.
Sale-Leaseback
of Refractory Ore Treatment Plant
In September 1994, the Company entered into a sale and leaseback
agreement for its refractory ore treatment plant located in
Carlin, Nevada. The lease term is 21 years and aggregate
future minimum lease payments, which include interest, were $226
and $263 at December 31, 2009 and 2008, respectively.
Future minimum lease payments are $36 in 2010, $39 in 2011, $70
in 2012, $36 in 2013, $36 in 2014 and $9 thereafter. The lease
includes purchase options during and at the end of the lease at
predetermined prices. The interest rate on this sale-leaseback
transaction is 6.36%. In connection with this transaction, the
Company entered into certain interest rate hedging contracts
that were settled for a gain of $11, which is recognized as a
reduction of interest expense over the term of the lease.
Including this gain, the effective interest rate on the
borrowing is 6.15%. The related asset is specialized, therefore
it is not practicable to estimate the fair value of this debt.
8
5
/
8
% Senior
Notes
Newmont has outstanding uncollateralized senior notes with a
principal amount of $223 due May 2011 bearing an annual interest
rate of 8.63%. Interest is paid semi-annually in May and
November and the senior notes are redeemable prior to maturity
under certain conditions. Newmont has contracts to hedge the
interest rate risk exposure on $222 of these senior notes. The
Company receives fixed-rate interest payments at 8.63% and pays
floating-rate interest based on periodic London Interbank
Offered Rate (“LIBOR”) settings plus a spread, ranging
from 2.60% to 7.63% (see Note 15). Using prevailing
interest rates on similar instruments, the estimated fair value
of these senior notes was $242 and $225 at December 31,
2009, and 2008, respectively. The foregoing fair
134
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
value estimate was prepared with the assistance of an
independent third party and may or may not reflect the actual
trading value of this debt.
Corporate
Revolving Credit Facility
The Company has an uncollateralized $2,000 revolving credit
facility with a syndicate of commercial banks, which matures in
April 2012. The facility contains a letter of credit
sub-facility.
Interest rates and facility fees vary based on the credit
ratings of the Company’s senior, uncollateralized,
long-term debt. Borrowings under the facilities bear interest at
an annual interest rate of LIBOR plus a margin of 0.28% or the
lead bank’s prime interest rate. The margin adjusts as the
Company’s credit rating changes. Facility fees accrue at an
annual rate of 0.07% of the aggregate commitments. The Company
also pays a utilization fee of 0.05% on the amount of revolving
credit loans and letters of credit outstanding under the
facility for each day on which the sum of such loans and letters
of credit exceed 50% of the commitments under the facility. At
December 31, 2009 and 2008, the facility fees were 0.07% of
the commitment. There was $452 and $519 outstanding under the
letter of credit
sub-facility
at December 31, 2009 and 2008, respectively. At
December 31, 2009, $nil was borrowed under the facility.
2012
Convertible Senior Notes
In February 2009, the Company issued $518 of convertible senior
notes maturing on February 15, 2012 for net proceeds of
$504. The notes pay interest semi-annually at a rate of 3.0% per
annum and the effective interest rate is 8.5%. The notes are
convertible, at the holder’s option, equivalent to a
conversion price of $46.25 per share of common stock. Upon
conversion, the principle amount and all accrued interest will
be repaid in cash and any conversion premium will be settled in
shares of our common stock or, at our election, cash or any
combination of cash and shares of our common stock. When the
conversion premium becomes dilutive to the Company’s
earnings per share (Newmont’s share price exceeds $46.25)
the shares will be included in the computation of diluted income
per common share. The Company is not entitled to redeem the
notes prior to their stated maturity dates. Using prevailing
interest rates on similar instruments, the estimated fair value
of these senior notes was $580 at December 31, 2009. The
foregoing fair value estimates were prepared with the assistance
of an independent third party and may or may not reflect the
actual trading value of this debt.
2014 and 2017
Convertible Senior Notes
In July 2007, the Company issued $1,150 convertible senior notes
due in 2014 and 2017, each with a principal amount of $575 for
net proceeds of $1,126. The 2014 Notes, maturing on
July 15, 2014, pay interest semi-annually at a rate of
1.25% per annum, and the 2017 Notes, maturing on July 15,
2017, pay interest semi-annually at a rate of 1.63% per annum.
The effective interest rates are 6.0% and 6.25% for the 2014 and
2017 notes, respectively. The Notes are convertible, at the
holder’s option, at a conversion price of $46.21 per share
of common stock. Upon conversion, the principle amount and all
accrued interest will be repaid in cash and any conversion
premium will be settled in shares of our common stock or, at our
election, cash or any combination of cash and shares of our
common stock. In connection with the convertible senior notes
offering, the Company entered into convertible note hedge
transactions and warrant transactions (“Call Spread
Transactions”). The Call Spread Transactions included the
purchase of call options and the sale of warrants. As a result
of the Call Spread Transactions, the conversion price of $46.21
was effectively increased to $60.27. When the conversion premium
and call spread transactions become dilutive to the
Company’s earnings per share (Newmont’s share price
exceeds $46.21 and $60.27, respectively) the underlying shares
will be included in the computation of diluted income per common
share. The Company is not
135
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
entitled to redeem the notes prior to their stated maturity
dates. Using prevailing interest rates on similar instruments,
the estimated fair value of the 2014 and 2017 senior notes was
$584 and $517, respectively, at December 31, 2009. The
foregoing fair value estimates were prepared with the assistance
of an independent third party and may or may not reflect the
actual trading value of this debt.
2019 and 2039
Senior Notes
In September 2009, the Company completed a two part public
offering of $900 and $1,100 senior notes maturing on
October 1, 2019 and October 1, 2039, respectively. Net
proceeds from the 2019 and 2039 notes were $895 and $1,080,
respectively. The 2019 notes pay interest semi-annually at a
rate of 5.13% per annum and the 2039 notes pay semi-annual
interest of 6.25% per annum. Using prevailing interest rates on
similar instruments, the estimated fair value of the 2019 and
2039 senior notes was $901 and $1,080, respectively, at
December 31, 2009. The foregoing fair value estimates were
prepared with the assistance of an independent third party and
may or may not reflect the actual trading value of this debt.
5
7
/
8
% Senior
Notes
In March 2005, Newmont issued uncollateralized senior notes with
a principal amount of $600 due April 2035 bearing an annual
interest rate of
5
7
/
8
%.
Interest on the notes is paid semi-annually in April and
October. Using prevailing interest rates on similar instruments,
the estimated fair value of these senior notes was $566 and $449
at December 31, 2009 and 2008, respectively. The foregoing
fair value estimate was prepared with the assistance of an
independent third party and may or may not reflect the actual
trading value of this debt.
Project
Financings
PTNNT Project
Financing Facility
PTNNT has a project financing facility with a syndicate of
banks. The scheduled repayments of this debt are semi-annual
installments of $43 through November 2010 and $22 from May 2011
through November 2013. Amounts outstanding under the project
financing were $220 and $306 at December 31, 2009 and 2008.
The Company provided letters of credit to the Senior Lenders to
secure 56.25% of the PTNNT project financing facility and
substantially all of PTNNT’s assets are pledged as
collateral. The carrying value of the property, plant and mine
development was $1,275 and $1,359 at December 31, 2009 and
2008, respectively. Under the terms of the project financing
facility, PTNNT maintains an escrow account for the next
interest and principal installment due. Such amounts totaled $47
and $nil at December 31, 2009 and 2008, respectively, and
was included in other long-term assets.
The interest rate is based on blended fixed and floating rates.
At market rates on December 31, 2009, the weighted average
interest rate for the floating rate portion approximated LIBOR
plus 1.2%. The fixed rate portion had an interest rate of 7.7%.
The total weighted average interest rates including the fixed
and floating rate portions were 4.2%, 5.6% and 6.9% during 2009,
2008 and 2007, respectively, and the interest rates were 2.9%
and 4.9% at December 31, 2009 and 2008, respectively. The
fair market value cannot be practicably determined due to the
lack of available market information for this type of debt.
Through mid-October 2009, the Company provided a joint and
several guarantee for the payment of principal and interest
amounts associated with the PTNNT project financing facility,
which was non-recourse to Newmont at December 31, 2008. On
October 21, 2009, the Company provided letters of
136
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
credit to the Senior Lenders to secure 56.25% of the PTNNT
project financing facility, and as a result, the Company no
longer provides a separate corporate guarantee in support of the
financing.
PTNNT Shareholder
Loans
PTNNT has shareholder subordinated loan agreements
(“Shareholder Loans”) with Newmont Indonesia Limited
(“NIL”), a wholly-owned subsidiary of Newmont, and
Nusa Tenggara Mining Corporation (“NTMC”), an
affiliate of Sumitomo Corporation, with substantially the same
terms for each shareholder. The loan principal and interest was
fully paid on November 23, 2009. Accordingly, total
principal outstanding under these Shareholder Loans was $nil and
$41 at December 31, 2009 and 2008, respectively. Payments
of $72 and $nil were made to NTMC during 2009 and 2008,
respectively. Borrowings under the Shareholder Loans were
guaranteed by Nusa Tenggara Partnership (“NTP”) and
payable on demand, subject to the Senior Debt subordination
terms. The 2008 Shareholder Loans are based on the
six-month London Interbank Offering Rate (“LIBOR”)
plus 8% for principal and LIBOR rate plus 9% for any unpaid
accrued interest. The weighted average interest rates were 9.4%,
10.6% and 8.4% during 2009, 2008 and 2007, respectively, and the
interest rates were 9.2% and 10.6% at December 31, 2009 and
2008, respectively.
Newmont and NTMC provided a contingent support line of credit to
PTNNT. Funding of $124 and $41 provided in 2009 and 2008,
respectively, was under this contingent agreement. In November
2009, the loan principal and interest were fully paid and
Newmont is no longer committed to provide this contingent
support. Finally, subject to certain conditions, there is
additional contingent support from NTP of $20 (Newmont’s
pro-rata share is $11) in respect of Senior Debt obligations
payable during 2009 and 2010, resulting from any debt service
shortfall, if applicable.
Yanacocha
Credit Facility.
During 2006, Yanacocha
entered into an uncollateralized $100 bank financing with a
syndicate of Peruvian commercial banks. Quarterly repayments
commenced in May 2007 with final maturity May 2014. Payments of
$14 and $14 were made in 2009 and 2008, respectively. Borrowings
under the facility bear interest at a rate of LIBOR plus 1.88%.
The loan is uncollateralized and non-recourse to Newmont. The
estimated fair value of this credit facility approximates the
carrying value at December 31, 2009.
Senior Notes.
During 2006, Yanacocha issued
$100 of senior notes into the Peruvian capital markets under a
$200 senior note program. The issuance is comprised of $42 of
floating interest rate senior notes bearing interest at a rate
of LIBOR plus 1.44% and $58 of fixed rate senior notes bearing
an annual interest of 7.0%. Quarterly repayments commence in
July 2010 for six years. The senior notes are uncollateralized
and are non-recourse to Newmont. The estimated fair value of
these senior notes approximates the carrying value at
December 31, 2009.
$24 from Banco de Credito del Peru
Leasing.
During 2007, Yanacocha acquired nine
haul trucks through a capital lease agreement with Banco de
Credito del Peru. Monthly repayments began in January 2008 and
continue for three years. The lease bears interest at an annual
fixed rate of 6.10%.
$16 from Bank of Nova Scotia Leasing.
During
2007, Yanacocha signed a $16 capital lease agreement with the
Scotia Bank to acquire six haul trucks. At December 2009 and
2008, as per the lease agreement, Yanacocha was committed to the
bank for $16. Monthly repayments began in February 2008 and
continue for three years. The lease bears interest at an annual
fixed rate of 6.00%.
137
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Ahafo
Newmont Ghana Gold Limited (“NGGL”) has an $85 project
financing agreement with the International Finance Corporation
(“IFC”) ($75) and a commercial lender ($10). NGGL
borrowed $75 from the IFC in December 2008 and borrowed the
remaining $10 in February 2009. Amounts borrowed are guaranteed
by Newmont. Semi-annual payments through April 2017 are
required. Borrowings bear interest of LIBOR plus 3.5%.
Debt
Covenants
The Company’s senior notes and sale-leaseback of the
refractory ore treatment plant debt facilities contain various
covenants and default provisions including payment defaults,
limitation on liens, limitation on sales and leaseback
agreements and merger restrictions.
The Ahafo project facility contains a financial ratio covenant
requiring the Company to maintain a net debt (total debt net of
cash and cash equivalents) to EBITDA (earnings before interest
expense, income taxes, depreciation and amortization) ratio of
less than or equal to 4.0 and a net debt to total capitalization
ratio of less than or equal to 62.5%.
In addition to the covenants noted above, the corporate
revolving credit facility contains a financial ratio covenant
requiring the Company to maintain a net debt (total debt net of
cash and cash equivalents) to total capitalization ratio of less
than or equal to 62.5%. Furthermore, the corporate revolving
credit facility contains covenants limiting the sale of all or
substantially all of the Company’s assets, certain change
of control provisions and a negative pledge on certain assets.
Certain of the Company’s project debt facilities contain
debt covenants and default provisions including limitations on
dividends subject to certain debt service cover ratios,
limitations on sales of assets, negative pledges on certain
assets, restricted payments to partners, change of control
provisions and limitations of additional permitted debt.
At December 31, 2009, the Company and its related entities
were in compliance with all debt covenants and provisions
related to potential defaults.
138
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 22 | EMPLOYEE-RELATED BENEFITS |
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Current:
|
||||||||
|
Accrued payroll and withholding taxes
|
$ | 152 | $ | 86 | ||||
|
Peruvian workers’ participation
|
59 | 35 | ||||||
|
Employee pension benefits
|
4 | 5 | ||||||
|
Other post-retirement plans
|
4 | 4 | ||||||
|
Accrued severance
|
3 | 1 | ||||||
|
Other employee-related payables
|
28 | 39 | ||||||
| $ | 250 | $ | 170 | |||||
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Long-term:
|
||||||||
|
Employee pension benefits
|
$ | 204 | $ | 235 | ||||
|
Other post-retirement benefit plans
|
91 | 85 | ||||||
|
Accrued severance
|
57 | 39 | ||||||
|
Peruvian workers’ participation
|
17 | 10 | ||||||
|
Other employee-related payables
|
12 | 10 | ||||||
| $ | 381 | $ | 379 | |||||
Pension
Plans
The Company’s pension plans include: (1) two qualified
non-contributory defined benefit plans (for salaried employees
and substantially all domestic hourly union employees);
(2) one non-qualified plan (for salaried employees whose
benefits under the qualified plan are limited by federal
legislation); (3) two qualified plans for salaried and
hourly Canadian employees; (4) one non-qualified plan for
employees of PTNNT; (5) an international plan for select
employees who are not eligible to participate in the
U.S.-based
plans because of citizenship; (6) one non-qualified plan
for certain members of the board of directors; (7) one
non-qualified plan for former employees under terminated plans;
and (8) two qualified plans for salaried and hourly
employees of the former Miramar operations, acquired in December
2007. The vesting period for plans identified in (1) and
(2) is five years of service. These plans’ benefit
formulas are based on an employee’s years of credited
service and either (i) such employee’s highest
consecutive five years average pay (salaried plan/final average
pay formula) (ii) such employees annual salary (salaried
plan/stable value formula) or (iii) a flat dollar amount
adjusted by a service-weighted multiplier (hourly plan). The
Canadian plan provides for full vesting of benefits upon
remittance and the benefit formula is based on a percentage of
annual pay. The PTNNT plan is based on Indonesian Labor Law and
provides for benefits to employees at age 55 or if
employment is terminated at mine closing. The benefits formula
under the Indonesian Labor Law is based on an employee’s
current salary and years of service prior to retirement or
termination of employment at mine closing. The international
retirement plan’s basic and savings accounts have a graded
vesting schedule and are fully vested after four years of
service. The international retirement plan’s supplemental
account is vested after attaining age 55 with 10 years
of service or attaining age 62. The plan’s benefit
formula is based on a percentage of compensation as defined in
the plan document. The Company amended the international
retirement plan in 2009 such that only individuals
139
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
who were in the plan at December 31, 2009 are eligible for
benefits and no additional contributions or credits will be made
to any participant in the plan. Participants may elect to
receive a distribution of the vested value in the
participant’s account either at retirement or as an
in-service distribution. The Company recorded an insignificant
decrease to
Other income, net
as a result of the plan
curtailment. The former Miramar operation’s plans will
continue for current retired members and no additional employees
will become eligible for benefits under these plans.
Pension costs are determined annually by independent actuaries
and pension contributions to the qualified plans are made based
on funding standards established under the Employee Retirement
Income Security Act of 1974, as amended.
Other Benefit
Plans
The Company provides defined medical and life insurance benefits
to selected qualified U.S. and Canadian retirees (generally
salaried employees and to a limited extent their eligible
dependents). In general, participants become eligible for these
benefits upon retirement directly from the Company if they are
at least 55 years old and, for U.S. employees, the
combination of their age and years of service with the Company
equals 75 or more. This benefit is not provided to employees who
joined the Company after January 1, 2003.
Defined medical benefits cover most of the reasonable and
customary charges for hospital, surgical, diagnostic and
physician services and prescription drugs. Life insurance
benefits are based on a percentage of final base annual salary
and decline over time after retirement commences. The majority
of the costs of these medical and life insurance benefits are
paid by the Company. In 2003, the Company began a strategy to
more equitably share costs with retirees and at
December 31, 2009, 75% of retiree medical coverage cost is
paid by the Company. Qualified retirees that became eligible
after January 1, 2003 are required to contribute additional
amounts to the medical coverage.
Under the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the “Act”), beginning in
2006, the Act provides a prescription drug benefit under
Medicare Part D, as well as a federal subsidy to plan
sponsors of retiree healthcare plans that provide a prescription
drug benefit to their participants that is at least actuarially
equivalent to the benefit that is available under Medicare. The
Company sponsors retiree health care plans that provide
prescription drug benefits to eligible retirees that our plan
actuaries have determined are actuarially equivalent to Medicare
Part D. The effect of the Act was to decrease
post-retirement projected accumulated benefit obligation by $7
and $8 at December 31, 2009 and 2008, respectively.
140
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following tables provide a reconciliation of changes in the
plans’ benefit obligations and assets’ fair values for
2009 and 2008:
| Pension Benefits | Other Benefits | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
|
Change in Benefit Obligation:
|
||||||||||||||||
|
Benefit obligation at beginning of year
|
$ | 518 | $ | 447 | $ | 89 | $ | 68 | ||||||||
|
Service cost-benefits earned during the year
|
18 | 15 | 2 | 2 | ||||||||||||
|
Interest cost
|
32 | 29 | 5 | 5 | ||||||||||||
|
Actuarial loss
|
29 | 74 | 1 | 17 | ||||||||||||
|
Foreign currency exchange loss (gain)
|
5 | (8 | ) | 1 | — | |||||||||||
|
Settlement payments
|
(1 | ) | (21 | ) | — | — | ||||||||||
|
Benefits paid
|
(21 | ) | (18 | ) | (3 | ) | (3 | ) | ||||||||
|
Projected benefit obligation at end of year
|
$ | 580 | $ | 518 | N/A | N/A | ||||||||||
|
Accumulated Benefit Obligation
|
$ | 465 | $ | 421 | $ | 95 | $ | 89 | ||||||||
|
Change in Fair Value of Assets:
|
||||||||||||||||
|
Fair value of assets at beginning of year
|
$ | 278 | $ | 341 | $ | — | $ | — | ||||||||
|
Actual return on plan assets
|
61 | (94 | ) | — | — | |||||||||||
|
Employer contributions
|
55 | 73 | 3 | 3 | ||||||||||||
|
Foreign currency exchange loss
|
— | (3 | ) | — | — | |||||||||||
|
Settlement payments
|
(1 | ) | (21 | ) | — | — | ||||||||||
|
Benefits paid
|
(21 | ) | (18 | ) | (3 | ) | (3 | ) | ||||||||
|
Fair value of assets at end of year
|
$ | 372 | $ | 278 | $ | — | $ | — | ||||||||
The Company’s qualified pension plans are funded with cash
contributions in compliance with Internal Revenue Service
(“IRS”) rules and regulations. The Company’s
non-qualified and other benefit plans are currently not funded,
but exist as general corporate obligations. The information
contained in the above tables indicates the combined funded
status of qualified and non-qualified plans, in accordance with
accounting pronouncements. Assumptions used for IRS purposes
differ from those used for accounting purposes. The funded
status shown above compares the projected benefit obligation
(“PBO”) of all plans, which is an actuarial present
value of obligations that takes into account assumptions as to
future compensation levels of plan participants, to the fair
value of the assets held in trust for the qualified plans.
Accumulated benefit obligation (“ABO”), which is an
actuarial present value of benefits (whether vested or
nonvested) attributed to employees based on employee service and
compensation prior to the end of the period presented, is also
shown above. The Company is currently planning to contribute at
least $60 to its retirement benefit programs in 2010.
141
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following is the funding status of the plans’ deficit
of benefit obligation at December 31:
| 2009 | 2008 | |||||||||||||||||||||||
|
Market Value of
|
Funded
|
Market Value of
|
Funded
|
|||||||||||||||||||||
| PBO | Plan Assets | Status | PBO | Plan Assets | Status | |||||||||||||||||||
|
Qualified plan — salaried employees
|
$ | 436 | $ | 314 | $ | (122 | ) | $ | 395 | $ | 232 | $ | (163 | ) | ||||||||||
|
Non-qualified plan — salaried employees
|
37 | — | (37 | ) | 30 | — | (30 | ) | ||||||||||||||||
|
Qualified plan — hourly employees
|
47 | 46 | (1 | ) | 44 | 36 | (8 | ) | ||||||||||||||||
|
Non-qualified plan — Indonesian employees
|
30 | — | (30 | ) | 19 | — | (19 | ) | ||||||||||||||||
|
Other plans
|
30 | 12 | (18 | ) | 30 | 10 | (20 | ) | ||||||||||||||||
| $ | 580 | $ | 372 | $ | (208 | ) | $ | 518 | $ | 278 | $ | (240 | ) | |||||||||||
The following table provides the net amounts recognized in the
consolidated balance sheets at December 31:
| Pension Benefits | Other Benefits | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
|
Accrued employee benefit liability
|
$ | 208 | $ | 240 | $ | 95 | $ | 89 | ||||||||
|
Accumulated other comprehensive income (loss):
|
||||||||||||||||
|
Net actuarial loss (gain)
|
$ | 240 | $ | 261 | $ | (8 | ) | $ | (9 | ) | ||||||
|
Prior service cost (credit)
|
7 | 9 | (5 | ) | (6 | ) | ||||||||||
| 247 | 270 | (13 | ) | (15 | ) | |||||||||||
|
Less: Income taxes
|
(86 | ) | (94 | ) | 4 | 5 | ||||||||||
| $ | 161 | $ | 176 | $ | (9 | ) | $ | (10 | ) | |||||||
The following table provides the components of the net periodic
pension and other benefit costs for the years ended December 31:
| Pension Benefit Costs | Other Benefit Costs | |||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
|
Service cost
|
$ | 18 | $ | 15 | $ | 18 | $ | 2 | $ | 2 | $ | 3 | ||||||||||||
|
Interest cost
|
32 | 29 | 27 | 5 | 5 | 5 | ||||||||||||||||||
|
Expected return on plan assets
|
(29 | ) | (28 | ) | (22 | ) | — | — | — | |||||||||||||||
|
Amortization of loss (gain)
|
15 | 3 | 6 | — | (2 | ) | — | |||||||||||||||||
|
Amortization of prior service cost (credit)
|
1 | 1 | 1 | (1 | ) | (1 | ) | (1 | ) | |||||||||||||||
|
Settlements
|
— | 13 | 17 | — | — | — | ||||||||||||||||||
| $ | 37 | $ | 33 | $ | 47 | $ | 6 | $ | 4 | $ | 7 | |||||||||||||
Prior service costs (credits) are amortized on a straight-line
basis over the average remaining service period of active
participants. Gains and losses in excess of 10% of the greater
of the benefit obligation or the market-related value of assets
are amortized over the average remaining service
142
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
period of active participants. The following table provides the
components recognized in
Other comprehensive income (loss)
for the years ended December 31:
|
Pension
|
Other
|
|||||||||||||||||||||||
| Benefits | Benefits | |||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
|
Net (gain) loss
|
$ | (7 | ) | $ | 196 | $ | (9 | ) | $ | 1 | $ | 17 | $ | (19 | ) | |||||||||
|
Amortization of net (loss) gain
|
(15 | ) | (16 | ) | (23 | ) | — | 2 | — | |||||||||||||||
|
Amortization of prior service (cost) credit
|
(1 | ) | (1 | ) | (1 | ) | 1 | 1 | 1 | |||||||||||||||
|
Total recognized in Other comprehensive (income) loss
|
$ | (23 | ) | $ | 179 | $ | (33 | ) | $ | 2 | $ | 20 | $ | (18 | ) | |||||||||
|
Total recognized in net periodic benefit cost and Other
comprehensive loss (income)
|
$ | 14 | $ | 212 | $ | 14 | $ | 7 | $ | 24 | $ | (11 | ) | |||||||||||
The following table provides the components of the expected
recognition in 2010 of amounts in
Accumulated other
comprehensive income (loss)
:
| Pension Benefits | Other Benefits | |||||||
|
Net actuarial loss
|
$ | 18 | $ | — | ||||
|
Prior service cost (credit)
|
1 | (1 | ) | |||||
| $ | 19 | $ | (1 | ) | ||||
Significant assumptions were as follows:
| Pension Benefits | Other Benefits | |||||||||||||||
| At December 31, | At December 31, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
|
Weighted-average assumptions used in measuring the
Company’s benefit obligation:
|
||||||||||||||||
|
Discount rate
|
6.10 | % | 6.05 | % | 6.10 | % | 6.05 | % | ||||||||
|
Rate of compensation increase
|
5.0 | % | 5.0 | % | 5.0 | % | 5.0 | % | ||||||||
| Pension Benefits | Other Benefits | |||||||||||||||||||||||
| Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
| 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
|
Weighted-average assumptions used in measuring the net periodic
pension benefit cost:
|
||||||||||||||||||||||||
|
Discount long-term rate
|
6.05 | % | 6.8 | % | 5.9 | % | 6.05 | % | 6.8 | % | 5.9 | % | ||||||||||||
|
Expected return on plan assets
|
8.0 | % | 8.0 | % | 8.0 | % | N/A | N/A | N/A | |||||||||||||||
|
Rate of compensation increase
|
5.0 | % | 5.0 | % | 4.0 | % | 5.0 | % | 5.0 | % | 4.0 | % | ||||||||||||
Yield curves matching our benefit obligations were derived using
a cash flow analysis under the Citigroup above median pension
discount curve. The Citigroup above median pension discount
curve shows the relationship between interest rates and duration
for hypothetical zero coupon investments. Under this approach,
Treasury par curve data is used to set the shape of the yield
curve and calculate the AA corporate spot yield at each
maturity. The resulting curve was used to identify a discount
rate for the Company of 6.10% and 6.05% in 2009 and 2008,
respectively, based on the timing of future benefit payments.
The decision to use 8% as the expected long-term return on plan
assets was made
143
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
based on an analysis of the actual plan asset returns over
multiple time horizons and review of assumptions used by other
U.S. corporations with defined benefit plans of similar
size and investment strategy and is reviewed periodically by the
audit committee. The average actual return on plan assets during
the 21 years ended December 31, 2009 approximated 8%.
The pension plans employ several independent investment firms
which invest the assets of the plan in certain approved funds
that correspond to specific asset classes with associated target
allocations. Depending upon actual sector performance, the
assets in the plan are periodically rebalanced to match the
established target levels for the asset classes. The goal of the
pension fund investment program is to achieve prudent actuarial
funding ratios while maintaining acceptable risk levels. The
investment performance of the plan and that of the individual
investment firms is measured against recognized market indices.
This performance is monitored by an investment committee
comprised of members of the Company’s management, which is
advised by an independent investment consultant. The performance
of the plan is reviewed at least annually with the Audit
Committee of the Company’s board of directors. With the
exception of global capital market economic risks, the Company
has identified no significant portfolio risks associated to
asset classes. The following is a summary of the target asset
allocations for 2009 and the actual asset allocation at
December 31, 2009.
|
Actual at
|
||||||||
|
December 31,
|
||||||||
|
Asset Allocation
|
Target | 2009 | ||||||
|
U.S. equity investments
|
35 | % | 37 | % | ||||
|
International equity investments
|
30 | % | 24 | % | ||||
|
Fixed income investments
|
30 | % | 33 | % | ||||
|
Cash equivalents
|
5 | % | 6 | % | ||||
The following table sets forth the Company’s pension plan
assets measured at fair value by level within the fair value
hierarchy. As required by accounting guidance, assets are
classified in their entirety based on the lowest level of input
that is significant to the fair value measurement.
| Fair Value at December 31, 2009 | ||||||||||||||||||||
|
Fair Value at
|
||||||||||||||||||||
|
December 31,
|
||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | 2008 | ||||||||||||||||
|
Plan Assets:
|
||||||||||||||||||||
|
Cash and cash equivalents
|
$ | 21 | $ | — | $ | — | $ | 21 | $ | 25 | ||||||||||
|
Commingled funds
|
— | 351 | — | 351 | 253 | |||||||||||||||
| $ | 21 | $ | 351 | $ | — | $ | 372 | $ | 278 | |||||||||||
The Company’s cash and cash equivalents are classified
within Level 1 of the fair value hierarchy because they are
valued using quoted market prices. The cash equivalent
instruments that are valued based on quoted market prices in
active markets are primarily money market securities and
U.S. Treasury securities.
The Company’s commingled fund investments are classified
within Level 2. The funds are managed by several fund
managers and are valued at the net asset value per share for
each fund. Although the majority of underlying assets in the
funds consist of actively traded equity securities and bonds,
the unit of account is considered to be at the fund level, and
therefore, the investments are classified as Level 2. At
December 31, 2009, the underlying assets of the commingled
funds consist of U.S. equity investments (40%),
international equity investments (25%) and fixed income
investments (35%).
144
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The assumed health care cost trend rate to measure the expected
cost of benefits was 8.5% for 2010, 7.8% for 2011, 7.1% for
2012, 6.4% for 2013, 5.7% for 2014, 5.0% for 2015 and each year
thereafter. Assumed health care cost trend rates have a
significant effect on amounts reported for the health care
plans. A one-percentage-point change in assumed health care cost
trend rates would have the following effects:
|
One-Percentage-
|
One-Percentage-
|
|||||||
|
Point
|
Point
|
|||||||
| Increase | Decrease | |||||||
|
Effect on total of service and interest cost components of net
periodic post-retirement health care benefit cost
|
$ | 1 | $ | (1 | ) | |||
|
Effect on the health care component of the accumulated
post-retirement benefit obligation
|
$ | 14 | $ | (12 | ) | |||
Cash
Flows
Benefit payments expected to be paid to plan participants are as
follows:
|
Pension
|
Other Benefit
|
|||||||
| Benefits | Plans | |||||||
|
2010
|
$ | 25 | $ | 4 | ||||
|
2011
|
30 | 4 | ||||||
|
2012
|
23 | 4 | ||||||
|
2013
|
25 | 5 | ||||||
|
2014
|
28 | 5 | ||||||
|
2015 through 2019
|
200 | 31 | ||||||
| $ | 331 | $ | 53 | |||||
Savings
Plans
The Company has two qualified defined contribution savings
plans, one that covers salaried and non-union hourly employees
and one that covers substantially all hourly union employees. In
addition, the Company has one non-qualified supplemental savings
plan for salaried employees whose benefits under the qualified
plan are limited by federal regulations. When an employee meets
eligibility requirements, the Company matches 100% of employee
contributions of up to 6% of base salary for the salaried and
hourly plans. Effective March 2008, the Company makes a
contribution between 5.0% and 7.5% (based on continuous years of
service) to each non-union employee’s retirement
contribution account at its sole discretion. Matching
contributions are made with Newmont stock; however, no holding
restrictions are placed on such contributions, which totaled $15
in 2009, $14 in 2008 and $13 in 2007.
| NOTE 23 | STOCK BASED COMPENSATION |
The Company has stock incentive plans for executives and
eligible employees. Stock incentive awards include options to
purchase shares of stock with exercise prices not less than fair
market value of the underlying stock at the date of grant and
restricted stock units. At December 31, 2009,
12,078,606 shares were available for future stock incentive
plan awards. The Company also maintains prior stock incentive
plans, but no longer grants awards under these plans.
145
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Employee Stock
Options
Stock options granted under the Company’s stock incentive
plans vest over periods of three years or more and are
exercisable over a period of time not to exceed 10 years
from the grant date. The value of each option award is estimated
at the grant date using the Black-Scholes option-pricing model.
The Black-Scholes option-pricing model requires the input of
subjective assumptions, including the expected term of the
option award and stock price volatility. The expected term of
options granted is derived from historical data on employee
exercise and post-vesting employment termination experience.
Expected volatility is based on the historical volatility of our
stock at the grant date. These estimates involve inherent
uncertainties and the application of management’s judgment.
In addition, we are required to estimate the expected forfeiture
rate and only recognize expense for those options expected to
vest. As a result, if other assumptions had been used, our
recorded stock based compensation expense would have been
different from that reported. The Black-Scholes option-pricing
model used the following assumptions:
| 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
|
Weighted-average risk-free interest rate
|
2.0 | % | 3.1 | % | 4.6 | % | 4.9 | % | 4.2 | % | ||||||||||
|
Dividend yield
|
1.0 | % | 1.0 | % | 1.0 | % | 0.7 | % | 1.0 | % | ||||||||||
|
Expected life in years
|
5 | 5 | 5 | 5 | 4 | |||||||||||||||
|
Volatility
|
36 | % | 30 | % | 32 | % | 34 | % | 38 | % | ||||||||||
The following table summarizes annual activity for all stock
options for each of the three years ended December 31:
| 2009 | 2008 | 2007 | ||||||||||||||||||||||
|
Weighted-
|
Weighted-
|
Weighted-
|
||||||||||||||||||||||
|
Average
|
Average
|
Average
|
||||||||||||||||||||||
|
Number of
|
Exercise
|
Number of
|
Exercise
|
Number of
|
Exercise
|
|||||||||||||||||||
| Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
|
Outstanding at beginning of year
|
6,463,004 | $ | 42.17 | 6,234,814 | $ | 41.09 | 7,503,608 | $ | 39.08 | |||||||||||||||
|
Granted
|
1,157,825 | $ | 39.99 | 1,416,963 | $ | 40.77 | 1,066,500 | $ | 42.06 | |||||||||||||||
|
Exercised
|
(1,204,836 | ) | $ | 36.24 | (931,741 | ) | $ | 30.88 | (1,706,303 | ) | $ | 29.93 | ||||||||||||
|
Forfeited and expired
|
(273,920 | ) | $ | 50.20 | (257,032 | ) | $ | 49.17 | (628,991 | ) | $ | 46.30 | ||||||||||||
|
Outstanding at end of year
|
6,142,073 | $ | 42.65 | 6,463,004 | $ | 42.17 | 6,234,814 | $ | 41.09 | |||||||||||||||
|
Options exercisable at year-end
|
3,880,866 | $ | 44.39 | 4,464,475 | $ | 42.01 | 4,687,127 | $ | 39.15 | |||||||||||||||
|
Weighted-average fair value of options granted during the year
|
$ | 12.88 | $ | 11.96 | $ | 13.36 | ||||||||||||||||||
146
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table summarizes information about stock options
outstanding and exercisable at December 31, 2009:
| Options Outstanding | Options Exercisable | |||||||||||||||||||
|
Weighted-
|
||||||||||||||||||||
|
Average
|
||||||||||||||||||||
|
Remaining
|
Weighted-
|
Weighted-
|
||||||||||||||||||
|
Contractual
|
Average
|
Average
|
||||||||||||||||||
|
Number
|
Life
|
Exercise
|
Number
|
Exercise
|
||||||||||||||||
|
Range of Exercise Prices
|
Outstanding | (in years) | Price | Exercisable | Price | |||||||||||||||
|
$0 to $20
|
12,150 | 0.9 | $ | 13.22 | 12,150 | $ | 13.22 | |||||||||||||
|
$20 to $30
|
862,777 | 4.8 | $ | 26.77 | 562,777 | $ | 26.70 | |||||||||||||
|
$30 to $40
|
1,422,897 | 8.5 | $ | 39.56 | 300,869 | $ | 38.08 | |||||||||||||
|
$40 to $50
|
3,028,749 | 6.4 | $ | 44.69 | 2,189,570 | $ | 45.01 | |||||||||||||
|
$50+
|
815,500 | 6.3 | $ | 57.71 | 815,500 | $ | 57.71 | |||||||||||||
| 6,142,073 | 6.6 | $ | 42.65 | 3,880,866 | $ | 44.39 | ||||||||||||||
At December 31, 2009 there was $19 of unrecognized
compensation cost related to 2,261,207 unvested stock options.
This cost is expected to be recognized over a weighted-average
period of approximately 2.1 years. The total intrinsic
value of options exercised in 2009, 2008 and 2007 was $16, $15
and $31, respectively. At December 31, 2009 the aggregate
intrinsic value of outstanding stock options was $38 and the
aggregate intrinsic value of exercisable options was $21 at
December 31, 2009.
The following stock options vested in each of the three years
ended December 31:
| 2009 | 2008 | 2007 | ||||||||||
|
Stock options vested
|
795,566 | 835,982 | 1,484,732 | |||||||||
|
Weighted-average exercise price
|
$ | 46.86 | $ | 47.21 | $ | 47.05 | ||||||
Other Stock
Based Compensation
The Company grants restricted stock units to executives and
eligible employees upon achievement of certain financial and
operating results. Restricted stock units vest over periods of
three years or more. Prior to vesting, holders of restricted
stock units do not have the right to vote the underlying shares;
however, executives accrue dividend equivalents on their
restricted stock units, which are paid at the time the
restricted stock units vest. The restricted stock units are
subject to forfeiture risk and other restrictions. Upon vesting,
the employee is entitled to receive one share of the
Company’s common stock for each restricted stock unit. In
2009, 2008 and 2007 the Company granted 450,195, 16,360 and
20,212 restricted stock units, respectively, at a
weighted-average fair market value of $42, $39 and $45,
respectively, per underlying share of the Company’s common
stock. The increase in restricted stock units granted during
2009 compared to previous years is due to the restructuring of
other stock based compensation programs discussed below. At
December 31, 2009, 420,383, 7,527 and nil shares remain
unvested for the 2009, 2008 and 2007 grants, respectively.
Beginning in 2009, the Company grants financial performance
stock bonuses to eligible executives upon achievement of certain
financial and operating results, based on a targeted number of
shares at the beginning of each performance period. At the end
of the performance period, one third of the bonus is paid in
common stock and two-thirds of the bonus is paid in restricted
stock units that vest in equal annual increments at the second
and third anniversaries of the start of the performance period.
In 2009, the Company granted 40,078 common shares and 80,172
restricted stock units included in the restricted stock unit
grants above at a fair market value of $43 per underlying share
of the Company’s common stock under the financial
performance stock bonus plan.
147
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Prior to 2009, the Company granted restricted stock awards to
executives and deferred stock awards to eligible employees upon
achievement of certain financial and operating results. Shares
of restricted stock and deferred stock vest over periods of
three years or more from the grant date and are subject to
certain restrictions related to ownership and transferability
prior to vesting. The Company no longer grants restricted stock
or deferred stock. In 2009, 2008 and 2007, nil, 218,697 and
175,114 shares of restricted stock, respectively, were
granted at a weighted-average fair market value of $39 and $44
per underlying share of the Company’s common stock,
respectively. At December 31, 2009, 158,376 and
30,362 shares remained unvested for the 2008 and 2007
restricted stock awards, respectively. In 2008 and 2007, the
Company granted 394,095 and 365,776 shares of deferred
stock, respectively, at a weighted-average fair market value of
$44 and $42 per underlying share of the Company’s common
stock, respectively. At December 31, 2009, 225,587 and
94,634 shares remained unvested for the 2008 and 2007
deferred stock awards, respectively.
In 2009, 475,577 other stock based compensation awards vested.
The total fair value of other stock based compensation awards
that vested in 2009, 2008 and 2007 was $19, $14 and $21,
respectively. At December 31, 2009, there was $27 of
unrecognized compensation costs related to the unvested other
stock based compensation awards. This cost is expected to be
recognized over a weighted-average period of approximately
2.2 years.
The Company recognized stock based compensation as follows:
| Year Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Stock options
|
$ | 14 | $ | 16 | $ | 17 | ||||||
|
Restricted stock units
|
6 | — | 1 | |||||||||
|
Common stock
|
3 | — | — | |||||||||
|
Restricted stock
|
4 | 6 | 4 | |||||||||
|
Deferred stock
|
13 | 12 | 9 | |||||||||
| $ | 40 | $ | 34 | $ | 31 | |||||||
148
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 24 | OTHER LIABILITIES |
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Other current liabilities:
|
||||||||
|
Refinery metal payable
|
$ | 671 | $ | 168 | ||||
|
Accrued operating costs
|
131 | 137 | ||||||
|
Accrued capital expenditures
|
115 | 107 | ||||||
|
Interest
|
72 | 35 | ||||||
|
Royalties
|
58 | 28 | ||||||
|
Reclamation and remediation costs (Note 25)
|
54 | 58 | ||||||
|
Boddington acquisition costs (Note 13)
|
52 | — | ||||||
|
Peruvian royalty
|
28 | 18 | ||||||
|
Taxes other than income and mining
|
21 | 39 | ||||||
|
Deferred income tax
|
17 | 8 | ||||||
|
Boddington contingent consideration (Note 13)
|
16 | — | ||||||
|
Derivative instruments (Note 15)
|
— | 111 | ||||||
|
Other
|
82 | 61 | ||||||
| $ | 1,317 | $ | 770 | |||||
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Other long-term liabilities:
|
||||||||
|
Boddington contingent consideration (Note 13)
|
$ | 69 | $ | — | ||||
|
Income and mining taxes
|
38 | 167 | ||||||
|
Derivative instruments (Note 15)
|
1 | 43 | ||||||
|
Other
|
66 | 42 | ||||||
| $ | 174 | $ | 252 | |||||
| NOTE 25 | RECLAMATION AND REMEDIATION LIABILITIES (ASSET RETIREMENT OBLIGATIONS) |
The Company’s mining and exploration activities are subject
to various federal and state laws and regulations governing the
protection of the environment. These laws and regulations are
continually changing and are generally becoming more
restrictive. The Company conducts its operations to protect
public health and the environment and believes its operations
are in compliance with applicable laws and regulations in all
material respects. The Company has made, and expects to make in
the future, expenditures to comply with such laws and
regulations, but cannot predict the full amount of such future
expenditures. Estimated future reclamation costs are based
principally on legal and regulatory requirements.
At December 31, 2009 and 2008, $698 and $594, respectively,
were accrued for reclamation obligations relating to currently
or recently producing mineral properties. In addition, the
Company is involved in several matters concerning environmental
obligations associated with former, primarily historic, mining
activities. Generally, these matters concern developing and
implementing remediation plans at the various sites involved. At
December 31, 2009 and 2008, $161 and $163, respectively,
149
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
were accrued for such obligations. These amounts are also
included in
Reclamation and remediation liabilities
.
Included in
Other long-term assets
at December 31,
2009 and 2008 is $11 and $23, respectively, of restricted cash
that is legally restricted for purposes of settling asset
retirement obligations related to the Con mine from the Miramar
acquistion. Included in
Investments
at December 31,
2009, are $10 and $5 of long-term marketable debt securities and
long-term marketable equity securities, respectively, that are
legally pledged for purposes of settling asset retirement
obligations related to the San Jose Reservoir in Yanacocha.
The following is a reconciliation of the total liability for
reclamation and remediation:
|
Balance January 1, 2008
|
$ | 672 | ||
|
Additions, change in estimates and other
|
147 | |||
|
Liabilities settled
|
(103 | ) | ||
|
Accretion expense
|
41 | |||
|
Balance December 31, 2008
|
757 | |||
|
Additions, change in estimates and other
|
105 | |||
|
Liabilities settled
|
(49 | ) | ||
|
Accretion expense
|
46 | |||
|
Balance December 31, 2009
|
$ | 859 | ||
The current portions of
Reclamation and remediation
liabilities
of $54 and $58 at December 31, 2009 and
2008, respectively, are included in
Other current
liabilities
.
The Company’s reclamation and remediation expenses
consisted of:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Asset retirement cost amortization
|
$ | 29 | $ | 25 | $ | 25 | ||||||
|
Accretion, operating
|
34 | 31 | 27 | |||||||||
|
Accretion, non-operating (Note 6)
|
12 | 10 | 8 | |||||||||
|
Reclamation estimate revisions (Note 6)
|
13 | 101 | 29 | |||||||||
| $ | 88 | $ | 167 | $ | 89 | |||||||
Asset retirement cost amortization is a component of
Amortization
on the Statements of Consolidated Income
(Loss).
Additions to the reclamation liability in 2009 of $105 include
currently or recently producing properties of $90 for Batu Hijau
due to increased disturbance area related to waste dumps,
Kalgoorlie due to post-mine backfilling of underground
operations and an increase in the tailings area, increased
backfill at Phoenix and the acquisition of the remaining
one-third of Boddington. Additions to the reclamation liability
in 2009 also include $15 for former mining operations for
additional water management costs, property acquisition and
other related activities.
Additions to the reclamation liability in 2008 of $147 include
currently or recently producing mineral properties of $71
primarily for Yanacocha due to a need for additional water
treatment associated with the San Jose reservoir, the
Phoenix mine at Nevada and Ahafo due to increased disturbance
area related to mine expansion and the Golden Giant mine site
related to additional water treatment costs, as well as
additions relating to former mining operations of $76, primarily
for Mt.
150
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Leyshon due to site characterization, stabilization and
long-term surface water management due to overflow discharge
from heavy rain, the Midnite mine site in light of the recent
decisions made in the U.S. District Court for the Eastern
District of Washington, additions to the Grass Valley,
California mine site from the settlement of the water treatment
dispute, and the Con mine site from the Miramar acquisition,
from a better understanding of the site conditions including
soil cover materials, contractor services and water treatment
costs.
| NOTE 26 | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Unrealized gain on marketable securities, net of $138 and $55
tax expense, respectively
|
$ | 635 | $ | 218 | ||||
|
Foreign currency translation adjustments
|
57 | (206 | ) | |||||
|
Pension liability adjustments, net of $86 and $94 tax benefit,
respectively
|
(161 | ) | (176 | ) | ||||
|
Other post-retirement benefit adjustments, net of $4 and $5 tax
expense, respectively
|
9 | 10 | ||||||
|
Changes in fair value of cash flow hedge instruments, net of tax
benefit (expense) and noncontrolling interests of $(38) and $44,
respectively
|
86 | (99 | ) | |||||
| $ | 626 | $ | (253 | ) | ||||
| NOTE 27 | RELATED PARTY TRANSACTIONS |
Newmont had transactions with EGR and AGR, as follows:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Gold and silver sales:
|
||||||||||||
|
AGR
|
$ | 10 | $ | 10 | $ | 9 | ||||||
|
EGR
|
$ | — | $ | — | $ | 135 | ||||||
|
Refining fees paid:
|
||||||||||||
|
AGR
|
$ | 3 | $ | 3 | $ | 2 | ||||||
|
EGR
|
$ | — | $ | — | $ | 2 | ||||||
During 2008, Newmont increased its investment in EGR to 60.64%,
and the additional interest resulted in the consolidation of
EGR. See Notes 9 and 13 for a discussion of Newmont’s
investments in AGR and EGR, respectively.
151
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 28 | NET CHANGE IN OPERATING ASSETS AND LIABILITIES |
Net cash provided from operations
attributable to the net
change in operating assets and liabilities is composed of the
following:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Decrease (increase) in operating assets:
|
||||||||||||
|
Trade and accounts receivable
|
$ | 42 | $ | 81 | $ | 12 | ||||||
|
Inventories, stockpiles and ore on leach pads
|
(378 | ) | (343 | ) | (77 | ) | ||||||
|
EGR refinery assets
|
(508 | ) | 38 | — | ||||||||
|
Other assets
|
(19 | ) | (208 | ) | 8 | |||||||
|
Increase (decrease) in operating liabilities:
|
||||||||||||
|
Accounts payable and other accrued liabilities
|
177 | (54 | ) | (620 | ) | |||||||
|
EGR refinery liabilities
|
508 | (38 | ) | — | ||||||||
|
Reclamation liabilities
|
(49 | ) | (103 | ) | (52 | ) | ||||||
| $ | (227 | ) | $ | (627 | ) | $ | (729 | ) | ||||
The decrease in accounts payable and other accrued liabilities
in 2007 includes $276 from the settlement of pre-acquisition
Australian income taxes of Normandy and $174 from the final
settlement of copper collar contracts.
| NOTE 29 | SUPPLEMENTAL CASH FLOW INFORMATION |
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Income taxes, net of refunds
|
$ | 371 | $ | 785 | $ | 313 | ||||||
|
Pension plan contributions
|
$ | 58 | $ | 76 | $ | 101 | ||||||
|
Interest, net of amounts capitalized
|
$ | 121 | $ | 96 | $ | 88 | ||||||
Noncash
Investing Activities and Financing Activities
Minera Yanacocha entered into mining equipment leases that
resulted in non-cash increases to
Property, plant and mine
development, net
and
Long-term debt
of $12 in 2008.
In 2008, Nevada entered into warehouse equipment leases that
resulted in non-cash increases to
Property, plant and mine
development, net
and
Long-term debt
of $2.
In March 2007, the Company completed an agreement with Oxiana
Resources (“Oxiana”) and Agincourt Resources
(“Agincourt”) in connection with Oxiana’s offer
to acquire Agincourt. The transaction followed the
Company’s sale in 2006 of the Martabe project to Agincourt
in exchange for Agincourt shares, and as a result, the Company
received Oxiana shares classified as marketable equity
securities valued at $64 in return for its 43 million
Agincourt shares classified as marketable equity securities.
Newmont sold its Pajingo operation for total consideration of
$23 which included $9 received in marketable equity securities.
| NOTE 30 | OPERATING LEASE COMMITMENTS |
The Company leases certain assets, such as equipment and
facilities, under operating leases expiring at various dates
through 2020. Future minimum annual lease payments are $12 in
2010 and 2011, $10 in 2012, $9 in 2013, $8 in 2014 and $36
thereafter, totaling $87. Rent expense for 2009, 2008 and 2007
was $48, $36 and $32, respectively.
152
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 31 | SEGMENT AND RELATED INFORMATION |
Newmont predominantly operates in a single industry, namely
exploration for and production of gold. The Company’s
reportable segments are based upon the Company’s management
organization structure that is focused on the geographic region
for the company’s operations and include North America,
South America, Asia Pacific, Africa and Corporate and Other.
Newmont’s major operations include Nevada, Yanacocha,
Boddington, Other Australia/New Zealand, Batu Hijau and Ahafo.
The Company identifies its reportable segments as those
consolidated mining operations or functional groups that
represent more than 10% of the combined revenue, profit or loss
or total assets of all reported operating segments. Consolidated
mining operations or functional groups not meeting this
threshold are aggregated at the applicable geographic region or
corporate level for segment reporting purposes. Earnings from
operations do not reflect general corporate expenses, interest
(except project-specific interest) or income taxes (except for
equity investments). Intercompany revenue and expense amounts
have been eliminated within each segment in order to report on
the basis that management uses internally for evaluating segment
performance.
Segment results for 2009, 2008 and 2007 reflect an
organizational change, effective in the first quarter of 2009,
that (i) moved the results of the La Herradura
operation in Mexico to North America from Other and
(ii) combined the management of exploration and advanced
projects, research and development activities under one
executive and assigned the legacy exploration segment to the
regional reportable segments. As a result of management’s
decision to dispose of the Kori Kollo operation in Bolivia, Kori
Kollo has been reclassified to discontinued operations.
|
Costs
|
Advanced
|
|||||||||||||||||||||||||||
|
Applicable to
|
Projects and
|
Pre-Tax
|
Total
|
Capital
|
||||||||||||||||||||||||
| Sales | Sales | Amortization | Exploration | Income | Assets (1) | Expenditures (1) | ||||||||||||||||||||||
|
Year Ended December 31, 2009
|
||||||||||||||||||||||||||||
|
Nevada
|
$ | 1,943 | $ | 1,045 | $ | 261 | $ | 54 | $ | 557 | $ | 3,236 | $ | 205 | ||||||||||||||
|
La Herradura
|
113 | 42 | 11 | 3 | 57 | 137 | 54 | |||||||||||||||||||||
|
Hope Bay
|
— | — | 12 | 66 | (77 | ) | 1,862 | 5 | ||||||||||||||||||||
|
Other North America
|
— | — | — | 2 | (7 | ) | 55 | — | ||||||||||||||||||||
|
North America
|
2,056 | 1,087 | 284 | 125 | 530 | 5,290 | 264 | |||||||||||||||||||||
|
Yanacocha
|
2,013 | 642 | 168 | 23 | 1,089 | 2,472 | 146 | |||||||||||||||||||||
|
Other South America
|
— | — | — | 23 | 1 | 32 | — | |||||||||||||||||||||
|
South America
|
2,013 | 642 | 168 | 46 | 1,090 | 2,504 | 146 | |||||||||||||||||||||
|
Boddington:
|
||||||||||||||||||||||||||||
|
Gold
|
101 | 45 | 15 | |||||||||||||||||||||||||
|
Copper
|
27 | 16 | 4 | |||||||||||||||||||||||||
|
Total Boddington
|
128 | 61 | 19 | 32 | (59 | ) | 3,975 | 1,093 | ||||||||||||||||||||
|
Other Australia/New Zealand
|
1,138 | 592 | 136 | 21 | 359 | 870 | 122 | |||||||||||||||||||||
|
Batu Hijau:
|
||||||||||||||||||||||||||||
|
Gold
|
550 | 118 | 30 | |||||||||||||||||||||||||
|
Copper
|
1,292 | 307 | 78 | |||||||||||||||||||||||||
|
Total Batu Hijau
|
1,842 | 425 | 108 | — | 1,242 | 3,129 | 44 | |||||||||||||||||||||
|
Other Asia Pacific
|
— | — | 3 | 12 | (50 | ) | 256 | 3 | ||||||||||||||||||||
|
Asia Pacific
|
3,108 | 1,078 | 266 | 65 | 1,492 | 8,230 | 1,262 | |||||||||||||||||||||
|
Africa
|
528 | 242 | 68 | 23 | 171 | 1,187 | 85 | |||||||||||||||||||||
|
Corporate and Other
|
— | — | 20 | 63 | (370 | ) | 5,088 | 16 | ||||||||||||||||||||
|
Consolidated
|
$ | 7,705 | $ | 3,049 | $ | 806 | $ | 322 | $ | 2,913 | $ | 22,299 | $ | 1,773 | ||||||||||||||
| (1) | Accrual basis includes an increase in accrued capital expenditures of $4. Consolidated capital expenditures on a cash basis are $1,769. |
153
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
|
Costs
|
Advanced
|
|||||||||||||||||||||||||||
|
Applicable to
|
Projects and
|
Pre-Tax
|
Total
|
Capital
|
||||||||||||||||||||||||
| Sales | Sales | Amortization | Exploration | Income | Assets (1) | Expenditures (2) | ||||||||||||||||||||||
|
Year Ended December 31, 2008
|
||||||||||||||||||||||||||||
|
Nevada
|
$ | 1,929 | $ | 1,022 | $ | 246 | $ | 50 | $ | 562 | $ | 3,215 | $ | 299 | ||||||||||||||
|
La Herradura
|
83 | 38 | 8 | 6 | 32 | 90 | 27 | |||||||||||||||||||||
|
Hope Bay
|
— | — | 1 | 59 | (59 | ) | 1,621 | 82 | ||||||||||||||||||||
|
Other North America
|
— | — | — | 29 | (163 | ) | 52 | — | ||||||||||||||||||||
|
North America
|
2,012 | 1,060 | 255 | 144 | 372 | 4,978 | 408 | |||||||||||||||||||||
|
Yanacocha
|
1,613 | 637 | 170 | 28 | 694 | 1,902 | 236 | |||||||||||||||||||||
|
Other South America
|
— | — | — | 38 | (8 | ) | 30 | — | ||||||||||||||||||||
|
South America
|
1,613 | 637 | 170 | 66 | 686 | 1,932 | 236 | |||||||||||||||||||||
|
Boddington
|
— | — | — | 10 | (13 | ) | 1,735 | 815 | ||||||||||||||||||||
|
Other Australia/New Zealand
|
1,050 | 655 | 122 | 24 | 255 | 819 | 130 | |||||||||||||||||||||
|
Batu Hijau:
|
||||||||||||||||||||||||||||
|
Gold
|
261 | 124 | 25 | |||||||||||||||||||||||||
|
Copper
|
752 | 399 | 80 | |||||||||||||||||||||||||
|
Total Batu Hijau
|
1,013 | 523 | 105 | 2 | 301 | 2,371 | 83 | |||||||||||||||||||||
|
Other Asia Pacific
|
— | — | 3 | 16 | (101 | ) | 87 | 2 | ||||||||||||||||||||
|
Asia Pacific
|
2,063 | 1,178 | 230 | 52 | 442 | 5,012 | 1,030 | |||||||||||||||||||||
|
Africa
|
435 | 205 | 63 | 49 | 114 | 1,181 | 111 | |||||||||||||||||||||
|
Corporate and
Other
(1)
|
1 | — | 20 | 68 | (362 | ) | 2,624 | 20 | ||||||||||||||||||||
|
Consolidated
|
$ | 6,124 | $ | 3,080 | $ | 738 | $ | 379 | $ | 1,252 | $ | 15,727 | $ | 1,805 | ||||||||||||||
| (1) | Corporate and Other includes $73 of Assets held for sale (Note 10). | |
| (2) | Accrual basis includes a decrease in accrued capital expenditures of $65. Consolidated capital expenditures on a cash basis are $1,870. |
154
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
|
Costs
|
Advanced
|
|||||||||||||||||||||||||||
|
Applicable to
|
Projects and
|
Pre-Tax
|
Total
|
Capital
|
||||||||||||||||||||||||
| Sales | Sales | Amortization | Exploration | Income | Assets (1) | Expenditures (2) | ||||||||||||||||||||||
|
Year Ended December 31, 2007
|
||||||||||||||||||||||||||||
|
Nevada
|
$ | 1,616 | $ | 1,021 | $ | 220 | $ | 42 | $ | 290 | $ | 3,104 | $ | 585 | ||||||||||||||
|
La Herradura
|
60 | 29 | 7 | 6 | 18 | 60 | 10 | |||||||||||||||||||||
|
Hope Bay
|
— | — | — | — | — | 1,566 | — | |||||||||||||||||||||
|
Other North America
|
8 | 2 | — | 19 | (15 | ) | 208 | — | ||||||||||||||||||||
|
North America
|
1,684 | 1,052 | 227 | 67 | 293 | 4,938 | 595 | |||||||||||||||||||||
|
Yanacocha
|
1,093 | 490 | 160 | 28 | 343 | 1,908 | 250 | |||||||||||||||||||||
|
Other South America
|
— | — | — | 27 | (25 | ) | 17 | — | ||||||||||||||||||||
|
South America
|
1,093 | 490 | 160 | 55 | 318 | 1,925 | 250 | |||||||||||||||||||||
|
Boddington
|
— | — | — | 7 | (4 | ) | 915 | 516 | ||||||||||||||||||||
|
Other Australia/New Zealand
|
809 | 552 | 109 | 22 | 98 | 827 | 127 | |||||||||||||||||||||
|
Batu Hijau:
|
||||||||||||||||||||||||||||
|
Gold
|
351 | 114 | 25 | |||||||||||||||||||||||||
|
Copper
|
1,221 | 450 | 96 | |||||||||||||||||||||||||
|
Total Batu Hijau
|
1,572 | 564 | 121 | 1 | 828 | 2,471 | 80 | |||||||||||||||||||||
|
Other Asia Pacific
|
— | — | 3 | 11 | (29 | ) | 149 | 5 | ||||||||||||||||||||
|
Asia Pacific
|
2,381 | 1,116 | 233 | 41 | 893 | 4,362 | 728 | |||||||||||||||||||||
|
Africa
|
306 | 168 | 43 | 36 | 53 | 1,088 | 127 | |||||||||||||||||||||
|
Corporate and
Other
(1)
|
1 | — | 22 | 40 | (1,946 | ) | 3,161 | 12 | ||||||||||||||||||||
|
Consolidated
|
$ | 5,465 | $ | 2,826 | $ | 685 | $ | 239 | $ | (389 | ) | $ | 15,474 | $ | 1,712 | |||||||||||||
| (1) | Corporate and Other includes $111 of Assets held for sale (Note 10). | |
| (2) | Accrual basis includes an increase in accrued capital of $43. Consolidated capital expenditures on a cash basis are $1,669. |
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Write-down of goodwill:
|
||||||||||||
|
Corporate and other
|
$ | — | $ | — | $ | 1,122 | ||||||
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Write-down of property, plant and mine development:
|
||||||||||||
|
Nevada
|
$ | 1 | $ | 4 | $ | — | ||||||
|
Yanacocha
|
1 | — | — | |||||||||
|
Other Australia/New Zealand
|
1 | 2 | 2 | |||||||||
|
Batu Hijau
|
4 | 10 | 8 | |||||||||
|
Corporate and other
|
— | 121 | — | |||||||||
| $ | 7 | $ | 137 | $ | 10 | |||||||
155
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Goodwill:
|
||||||||
|
Other Australia/New Zealand
|
$ | 188 | $ | 188 | ||||
Revenues from export and domestic sales were as follows:
| Years Ended December 31, | ||||||||||||
| 2009 | 2008 | 2007 | ||||||||||
|
Europe
|
$ | 5,573 | $ | 4,756 | $ | 3,776 | ||||||
|
Japan
|
833 | 464 | 562 | |||||||||
|
Indonesia
|
440 | 307 | 512 | |||||||||
|
Korea
|
465 | 231 | 248 | |||||||||
|
Australia
|
222 | 170 | 165 | |||||||||
|
India
|
30 | 32 | 101 | |||||||||
|
Other
|
142 | 164 | 101 | |||||||||
| $ | 7,705 | $ | 6,124 | $ | 5,465 | |||||||
As gold can be sold through numerous gold market traders
worldwide, the Company is not economically dependent on a
limited number of customers for the sale of its product. In
2009, 2008 and 2007, sales to Bank of Nova Scotia were $2,658
(35%), $1,618 (30%) and $876 (20%), respectively, of total gold
sales. Additionally in 2008, the Company had sales to BNP
Paribas that totaled $1,239 (23%) of total gold sales.
Long-lived assets, excluding deferred tax assets, investments
and restricted cash, in the United States and other countries
are as follows:
| At December 31, | ||||||||
| 2009 | 2008 | |||||||
|
Australia
|
$ | 4,683 | $ | 2,371 | ||||
|
United States
|
3,059 | 3,028 | ||||||
|
Indonesia
|
2,067 | 1,980 | ||||||
|
Canada
|
1,869 | 1,671 | ||||||
|
Peru
|
1,443 | 1,461 | ||||||
|
Ghana
|
1,093 | 1,051 | ||||||
|
Other
|
70 | 137 | ||||||
| $ | 14,284 | $ | 11,699 | |||||
156
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 32 | CONSOLIDATING FINANCIAL STATEMENTS |
The following Consolidating Financial Statements are presented
to satisfy disclosure requirements of
Rule 3-10(e)
of
Regulation S-X
resulting from the inclusion of Newmont USA Limited
(“Newmont USA”), a wholly-owned subsidiary of Newmont,
as a co-registrant with Newmont on a shelf registration
statement on
Form S-3
filed under the Securities Act of 1933 under which securities of
Newmont (including debt securities which may be guaranteed by
Newmont USA) may be issued from time to time (the “Shelf
Registration Statement”). To the extent Newmont issues debt
securities under the Shelf Registration Statement, it is
expected that Newmont USA will provide a guarantee of that debt.
In accordance with
Rule 3-10(e)
of
Regulation S-X,
Newmont USA, as the subsidiary guarantor, is 100% owned by
Newmont, the guarantee will be full and unconditional, and it is
not expected that any other subsidiary of Newmont will guarantee
any security issued under the Shelf Registration Statement.
There are no significant restrictions on the ability of Newmont
USA to obtain funds from its subsidiaries by dividend or loan.
| For the Year Ended December 31, 2009 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Condensed Consolidating
|
Mining
|
Newmont
|
Other
|
Corporation
|
||||||||||||||||
|
Statement of Income
|
Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Revenues
|
||||||||||||||||||||
|
Sales — gold, net
|
$ | — | $ | 4,619 | $ | 1,767 | $ | — | $ | 6,386 | ||||||||||
|
Sales — copper, net
|
— | 1,292 | 27 | — | 1,319 | |||||||||||||||
| — | 5,911 | 1,794 | — | 7,705 | ||||||||||||||||
|
Costs and expenses
|
||||||||||||||||||||
|
Costs applicable to sales —
gold
(1)
|
— | 1,847 | 902 | (23 | ) | 2,726 | ||||||||||||||
|
Costs applicable to sales —
copper
(1)
|
— | 307 | 16 | — | 323 | |||||||||||||||
|
Amortization
|
— | 565 | 242 | (1 | ) | 806 | ||||||||||||||
|
Accretion
|
— | 26 | 8 | — | 34 | |||||||||||||||
|
Exploration
|
— | 101 | 86 | — | 187 | |||||||||||||||
|
Advanced projects, research and development
|
— | 66 | 71 | (2 | ) | 135 | ||||||||||||||
|
General and administrative
|
— | 129 | 4 | 26 | 159 | |||||||||||||||
|
Write-down of property, plant and mine development
|
— | 6 | 1 | — | 7 | |||||||||||||||
|
Other expense, net
|
9 | 175 | 199 | — | 383 | |||||||||||||||
| 9 | 3,222 | 1,529 | — | 4,760 | ||||||||||||||||
|
Other income (expense)
|
||||||||||||||||||||
|
Other income (expense), net
|
(11 | ) | 27 | 72 | — | 88 | ||||||||||||||
|
Interest income — intercompany
|
90 | 7 | 5 | (102 | ) | — | ||||||||||||||
|
Interest expense — intercompany
|
(9 | ) | — | (93 | ) | 102 | — | |||||||||||||
|
Interest expense, net
|
(65 | ) | (47 | ) | (8 | ) | — | (120 | ) | |||||||||||
| 5 | (13 | ) | (24 | ) | — | (32 | ) | |||||||||||||
|
Income (loss) from continuing operations before income tax and
other items
|
(4 | ) | 2,676 | 241 | — | 2,913 | ||||||||||||||
|
Income tax benefit (expense)
|
1 | (755 | ) | (34 | ) | — | (788 | ) | ||||||||||||
|
Equity income (loss) of affiliates
|
1,316 | 5 | 185 | (1,522 | ) | (16 | ) | |||||||||||||
|
Income (loss) from continuing operations
|
1,313 | 1,926 | 392 | (1,522 | ) | 2,109 | ||||||||||||||
|
Income (loss) from discontinued operations
|
(16 | ) | (16 | ) | — | 16 | (16 | ) | ||||||||||||
|
Net income (loss)
|
1,297 | 1,910 | 392 | (1,506 | ) | 2,093 | ||||||||||||||
|
Net income (loss) attributable to noncontrolling interests
|
— | (795 | ) | (77 | ) | 76 | (796 | ) | ||||||||||||
|
Net income (loss) attributable to Newmont stockholders
|
$ | 1,297 | $ | 1,115 | $ | 315 | $ | (1,430 | ) | $ | 1,297 | |||||||||
| (1) | Exclusive of Amortization and Accretion. |
157
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| For the Year Ended December 31, 2008 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Condensed Consolidating
|
Mining
|
Newmont
|
Other
|
Corporation
|
||||||||||||||||
|
Statement of Income
|
Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Revenues
|
||||||||||||||||||||
|
Sales — gold, net
|
$ | — | $ | 3,886 | $ | 1,486 | $ | — | $ | 5,372 | ||||||||||
|
Sales — copper, net
|
— | 752 | — | — | 752 | |||||||||||||||
| — | 4,638 | 1,486 | — | 6,124 | ||||||||||||||||
|
Costs and expenses
|
||||||||||||||||||||
|
Costs applicable to sales —
gold
(1)
|
— | 1,823 | 879 | (21 | ) | 2,681 | ||||||||||||||
|
Costs applicable to sales —
copper
(1)
|
— | 399 | — | — | 399 | |||||||||||||||
|
Amortization
|
— | 549 | 190 | (1 | ) | 738 | ||||||||||||||
|
Accretion
|
— | 24 | 7 | — | 31 | |||||||||||||||
|
Exploration
|
— | 131 | 82 | — | 213 | |||||||||||||||
|
Advanced projects, research and development
|
— | 63 | 107 | (4 | ) | 166 | ||||||||||||||
|
General and administrative
|
— | 113 | 6 | 25 | 144 | |||||||||||||||
|
Write-down of property, plant and mine development
|
— | 15 | 122 | — | 137 | |||||||||||||||
|
Other expense, net
|
1 | 237 | 112 | 1 | 351 | |||||||||||||||
| 1 | 3,354 | 1,505 | — | 4,860 | ||||||||||||||||
|
Other income (expense)
|
||||||||||||||||||||
|
Other income (expense), net
|
(40 | ) | 112 | 51 | — | 123 | ||||||||||||||
|
Interest income — intercompany
|
278 | 24 | — | (302 | ) | — | ||||||||||||||
|
Interest expense — intercompany
|
(8 | ) | — | (294 | ) | 302 | — | |||||||||||||
|
Interest expense, net
|
(74 | ) | (56 | ) | (5 | ) | — | (135 | ) | |||||||||||
| 156 | 80 | (248 | ) | — | (12 | ) | ||||||||||||||
|
Income (loss) from continuing operations before income tax and
other items
|
155 | 1,364 | (267 | ) | — | 1,252 | ||||||||||||||
|
Income tax benefit (expense)
|
(55 | ) | (103 | ) | 58 | — | (100 | ) | ||||||||||||
|
Equity income (loss) of affiliates
|
718 | 4 | 102 | (829 | ) | (5 | ) | |||||||||||||
|
Income (loss) from continuing operations
|
818 | 1,265 | (107 | ) | (829 | ) | 1,147 | |||||||||||||
|
Income (loss) from discontinued operations
|
13 | (6 | ) | 3 | 3 | 13 | ||||||||||||||
|
Net income (loss)
|
831 | 1,259 | (104 | ) | (826 | ) | 1,160 | |||||||||||||
|
Net income (loss) attributable to noncontrolling interests
|
— | (347 | ) | 10 | 8 | (329 | ) | |||||||||||||
|
Net income (loss) attributable to Newmont stockholders
|
$ | 831 | $ | 912 | $ | (94 | ) | $ | (818 | ) | $ | 831 | ||||||||
| (1) | Exclusive of Amortization and Accretion. |
158
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| For the Year Ended December 31, 2007 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Condensed Consolidating
|
Mining
|
Newmont
|
Other
|
Corporation
|
||||||||||||||||
|
Statement of Income
|
Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Revenues
|
||||||||||||||||||||
|
Sales — gold, net
|
$ | — | $ | 3,120 | $ | 1,124 | $ | — | $ | 4,244 | ||||||||||
|
Sales — copper, net
|
— | 1,221 | — | — | 1,221 | |||||||||||||||
| — | 4,341 | 1,124 | — | 5,465 | ||||||||||||||||
|
Costs and expenses
|
||||||||||||||||||||
|
Costs applicable to sales —
gold
(1)
|
— | 1,655 | 739 | (18 | ) | 2,376 | ||||||||||||||
|
Costs applicable to sales —
copper
(2)
|
— | 450 | — | — | 450 | |||||||||||||||
|
Loss on settlement of price-capped forward sales
|
— | 531 | — | — | 531 | |||||||||||||||
|
Midas redevelopment
|
— | 11 | — | — | 11 | |||||||||||||||
|
Amortization
|
— | 531 | 155 | (1 | ) | 685 | ||||||||||||||
|
Accretion
|
— | 20 | 7 | — | 27 | |||||||||||||||
|
Exploration
|
— | 113 | 64 | — | 177 | |||||||||||||||
|
Advanced projects, research and development
|
— | 34 | 30 | (2 | ) | 62 | ||||||||||||||
|
General and administrative
|
— | 117 | 4 | 21 | 142 | |||||||||||||||
|
Write-down of goodwill
|
— | — | 1,122 | — | 1,122 | |||||||||||||||
|
Write-down of property, plant and mine development
|
— | 8 | 2 | — | 10 | |||||||||||||||
|
Other expense, net
|
— | 200 | 43 | — | 243 | |||||||||||||||
| — | 3,670 | 2,166 | — | 5,836 | ||||||||||||||||
|
Other income (expense)
|
||||||||||||||||||||
|
Other income (expense), net
|
35 | 98 | (33 | ) | — | 100 | ||||||||||||||
|
Interest income — intercompany
|
210 | 52 | — | (262 | ) | — | ||||||||||||||
|
Interest expense — intercompany
|
(7 | ) | — | (255 | ) | 262 | — | |||||||||||||
|
Interest expense, net
|
(63 | ) | (43 | ) | (12 | ) | — | (118 | ) | |||||||||||
| 175 | 107 | (300 | ) | — | (18 | ) | ||||||||||||||
|
Income (loss) from continuing operations before income tax and
other items
|
175 | 778 | (1,342 | ) | — | (389 | ) | |||||||||||||
|
Income tax benefit (expense)
|
(51 | ) | 43 | (182 | ) | — | (190 | ) | ||||||||||||
|
Equity income (loss) of affiliates
|
(1,114 | ) | 4 | (236 | ) | 1,345 | (1 | ) | ||||||||||||
|
Income (loss) from continuing operations
|
(990 | ) | 825 | (1,760 | ) | 1,345 | (580 | ) | ||||||||||||
|
Income (loss) from discontinued operations
|
(905 | ) | (106 | ) | (760 | ) | 866 | (905 | ) | |||||||||||
|
Net income (loss)
|
(1,895 | ) | 719 | (2,520 | ) | 2,211 | (1,485 | ) | ||||||||||||
|
Net income (loss) attributable to noncontrolling interests
|
— | (451 | ) | 321 | (280 | ) | (410 | ) | ||||||||||||
|
Net income (loss) attributable to Newmont stockholders
|
$ | (1,895 | ) | $ | 268 | $ | (2,199 | ) | $ | 1,931 | $ | (1,895 | ) | |||||||
| (1) | Exclusive of Loss on settlement of price-capped forward sales contracts, Midas redevelopment, Amortization and Accretion. | |
| (2) | Exclusive of Amortization and Accretion. |
159
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| For the Year Ended December 31, 2009 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Condensed Consolidating
|
Mining
|
Newmont
|
Other
|
Corporation
|
||||||||||||||||
|
Statement of Cash Flows
|
Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Operating activities:
|
||||||||||||||||||||
|
Net income (loss)
|
$ | 1,297 | $ | 1,910 | $ | 392 | $ | (1,506 | ) | $ | 2,093 | |||||||||
|
Adjustments
|
75 | 683 | (1,216 | ) | 1,506 | 1,048 | ||||||||||||||
|
Net change in operating assets and liabilities
|
135 | (400 | ) | 38 | — | (227 | ) | |||||||||||||
|
Net cash provided from (used in) continuing operations
|
1,507 | 2,193 | (786 | ) | — | 2,914 | ||||||||||||||
|
Net cash provided from discontinued operations
|
— | 33 | — | — | 33 | |||||||||||||||
|
Net cash provided from (used in) operations
|
1,507 | 2,226 | (786 | ) | — | 2,947 | ||||||||||||||
|
Investing activities:
|
||||||||||||||||||||
|
Additions to property, plant and mine development
|
— | (470 | ) | (1,299 | ) | — | (1,769 | ) | ||||||||||||
|
Acquisitions, net
|
(8 | ) | (11 | ) | (988 | ) | — | (1,007 | ) | |||||||||||
|
Sales of marketable securities
|
— | — | 17 | — | 17 | |||||||||||||||
|
Purchases of marketable securities
|
— | — | (5 | ) | — | (5 | ) | |||||||||||||
|
Other
|
— | 15 | (32 | ) | — | (17 | ) | |||||||||||||
|
Net cash provided from (used in) investing activities
|
(8 | ) | (466 | ) | (2,307 | ) | — | (2,781 | ) | |||||||||||
|
Financing activities:
|
||||||||||||||||||||
|
Net external borrowings (repayments)
|
1,722 | (154 | ) | — | — | 1,568 | ||||||||||||||
|
Net intercompany borrowings (repayments)
|
(4,298 | ) | 953 | 3,345 | — | — | ||||||||||||||
|
Proceeds from stock issuance
|
1,278 | — | — | — | 1,278 | |||||||||||||||
|
Sale of subsidiary shares to noncontrolling interests
|
— | 638 | — | — | 638 | |||||||||||||||
|
Acquisition of subsidiary shares from noncontrolling interests
|
— | — | (287 | ) | — | (287 | ) | |||||||||||||
|
Dividends paid to noncontrolling interests in subsidiaries
|
— | (391 | ) | (3 | ) | — | (394 | ) | ||||||||||||
|
Dividends paid to common stockholders
|
(196 | ) | — | — | — | (196 | ) | |||||||||||||
|
Change in restricted cash and other
|
2 | (48 | ) | 11 | — | (35 | ) | |||||||||||||
|
Net cash provided from (used in) financing activities of
continuing operations
|
(1,492 | ) | 998 | 3,066 | — | 2,572 | ||||||||||||||
|
Net cash used in financing activities of discontinued operations
|
— | (2 | ) | — | — | (2 | ) | |||||||||||||
|
Net cash provided from (used in) financing activities
|
(1,492 | ) | 996 | 3,066 | — | 2,570 | ||||||||||||||
|
Effect of exchange rate changes on cash
|
1 | 1 | 42 | — | 44 | |||||||||||||||
|
Net change in cash and cash equivalents
|
8 | 2,757 | 15 | — | 2,780 | |||||||||||||||
|
Cash and cash equivalents at beginning of period
|
— | 310 | 125 | — | 435 | |||||||||||||||
|
Cash and cash equivalents at end of period
|
$ | 8 | $ | 3,067 | $ | 140 | $ | — | $ | 3,215 | ||||||||||
160
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| For the Year Ended December 31, 2008 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Condensed Consolidating
|
Mining
|
Newmont
|
Other
|
Corporation
|
||||||||||||||||
|
Statement of Cash Flows
|
Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Operating activities:
|
||||||||||||||||||||
|
Net income (loss)
|
$ | 831 | $ | 1,259 | $ | (104 | ) | $ | (826 | ) | $ | 1,160 | ||||||||
|
Adjustments
|
49 | 419 | (430 | ) | 826 | 864 | ||||||||||||||
|
Net change in operating assets and liabilities
|
17 | (575 | ) | (69 | ) | — | (627 | ) | ||||||||||||
|
Net cash provided from (used in) continuing operations
|
897 | 1,103 | (603 | ) | — | 1,397 | ||||||||||||||
|
Net cash provided from (used in) discontinued operations
|
— | (123 | ) | 19 | — | (104 | ) | |||||||||||||
|
Net cash provided from (used in) operations
|
897 | 980 | (584 | ) | — | 1,293 | ||||||||||||||
|
Investing activities:
|
||||||||||||||||||||
|
Additions to property, plant and mine development
|
— | (707 | ) | (1,163 | ) | — | (1,870 | ) | ||||||||||||
|
Sales of marketable securities
|
— | — | 50 | — | 50 | |||||||||||||||
|
Purchases of marketable securities
|
— | — | (17 | ) | — | (17 | ) | |||||||||||||
|
Acquisitions, net
|
— | (7 | ) | (318 | ) | — | (325 | ) | ||||||||||||
|
Other
|
— | 17 | (1 | ) | — | 16 | ||||||||||||||
|
Net cash used in investing activities of continuing operations
|
— | (697 | ) | (1,449 | ) | — | (2,146 | ) | ||||||||||||
|
Net cash provided from (used in) investing activities of
discontinued operations
|
— | (15 | ) | 4 | — | (11 | ) | |||||||||||||
|
Net cash used in investing activities
|
— | (712 | ) | (1,445 | ) | — | (2,157 | ) | ||||||||||||
|
Financing activities:
|
||||||||||||||||||||
|
Net external borrowings (repayments)
|
757 | (116 | ) | (46 | ) | — | 595 | |||||||||||||
|
Net intercompany borrowings (repayments)
|
(1,518 | ) | (287 | ) | 1,805 | — | — | |||||||||||||
|
Dividends paid to noncontrolling interests in subsidiaries
|
— | (385 | ) | (4 | ) | — | (389 | ) | ||||||||||||
|
Dividends paid to common stockholders
|
(182 | ) | — | — | — | (182 | ) | |||||||||||||
|
Proceeds from stock issuance
|
29 | — | — | — | 29 | |||||||||||||||
|
Change in restricted cash and other
|
17 | 48 | 9 | — | 74 | |||||||||||||||
|
Net cash provided from (used in) financing activities of
continuing operations
|
(897 | ) | (740 | ) | 1,764 | — | 127 | |||||||||||||
|
Net cash used in financing activities of discontinued operations
|
— | (4 | ) | — | — | (4 | ) | |||||||||||||
|
Net cash provided from (used in) financing activities
|
(897 | ) | (744 | ) | 1,764 | — | 123 | |||||||||||||
|
Effect of exchange rate changes on cash
|
— | (3 | ) | (51 | ) | — | (54 | ) | ||||||||||||
|
Net change in cash and cash equivalents
|
— | (479 | ) | (316 | ) | — | (795 | ) | ||||||||||||
|
Cash and cash equivalents at beginning of period
|
— | 789 | 441 | — | 1,230 | |||||||||||||||
|
Cash and cash equivalents at end of period
|
$ | — | $ | 310 | $ | 125 | $ | — | $ | 435 | ||||||||||
161
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| For the Year Ended December 31, 2007 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Condensed Consolidating
|
Mining
|
Newmont
|
Other
|
Corporation
|
||||||||||||||||
|
Statement of Cash Flows
|
Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Operating activities:
|
||||||||||||||||||||
|
Net income (loss)
|
$ | (1,895 | ) | $ | 719 | $ | (2,520 | ) | $ | 2,211 | $ | (1,485 | ) | |||||||
|
Adjustments
|
880 | 664 | 3,409 | (2,211 | ) | 2,742 | ||||||||||||||
|
Net change in operating assets and liabilities
|
66 | (523 | ) | (272 | ) | — | (729 | ) | ||||||||||||
|
Net cash provided from (used in) continuing operations
|
(949 | ) | 860 | 617 | — | 528 | ||||||||||||||
|
Net cash provided from discontinued operations
|
— | 26 | 111 | — | 137 | |||||||||||||||
|
Net cash provided from (used in) operations
|
(949 | ) | 886 | 728 | — | 665 | ||||||||||||||
|
Investing activities:
|
||||||||||||||||||||
|
Additions to property, plant and mine development
|
— | (937 | ) | (732 | ) | — | (1,669 | ) | ||||||||||||
|
Sales of marketable securities
|
— | 224 | — | — | 224 | |||||||||||||||
|
Purchases of marketable securities
|
— | (222 | ) | (36 | ) | — | (258 | ) | ||||||||||||
|
Acquisitions, net
|
— | — | (953 | ) | — | (953 | ) | |||||||||||||
|
Repayment of noncontrolling partner carried interest
|
— | 161 | — | — | 161 | |||||||||||||||
|
Other
|
— | 16 | 7 | — | 23 | |||||||||||||||
|
Net cash used in investing activities of continuing operations
|
— | (758 | ) | (1,714 | ) | — | (2,472 | ) | ||||||||||||
|
Net cash provided from investing activities of discontinued
operations
|
1 | 127 | 1,231 | — | 1,359 | |||||||||||||||
|
Net cash provided from (used in) investing activities
|
1 | (631 | ) | (483 | ) | — | (1,113 | ) | ||||||||||||
|
Financing activities:
|
||||||||||||||||||||
|
Net borrowings (repayments)
|
1,125 | (155 | ) | (5 | ) | — | 965 | |||||||||||||
|
Net intercompany borrowings (repayments)
|
71 | (91 | ) | 20 | — | — | ||||||||||||||
|
Dividends paid to noncontrolling interests in subsidiaries
|
— | (270 | ) | — | — | (270 | ) | |||||||||||||
|
Dividends paid to common stockholders
|
(181 | ) | — | — | — | (181 | ) | |||||||||||||
|
Proceeds from stock issuance
|
51 | — | — | — | 51 | |||||||||||||||
|
Purchase of Company share call options
|
(366 | ) | — | — | — | (366 | ) | |||||||||||||
|
Issuance of Company share warrants
|
248 | — | — | — | 248 | |||||||||||||||
|
Change in restricted cash and other
|
— | 6 | 5 | — | 11 | |||||||||||||||
|
Net cash provided from (used in) financing activities
|
948 | (510 | ) | 20 | — | 458 | ||||||||||||||
|
Net cash provided from financing activities of discontinued
operations
|
— | 7 | — | — | 7 | |||||||||||||||
|
Net cash provided from (used in) financing activities
|
948 | (503 | ) | 20 | — | 465 | ||||||||||||||
|
Effect of exchange rate changes on cash
|
— | — | 50 | — | 50 | |||||||||||||||
|
Net change in cash and cash equivalents
|
— | (248 | ) | 315 | — | 67 | ||||||||||||||
|
Cash and cash equivalents at beginning of period
|
— | 1,037 | 126 | — | 1,163 | |||||||||||||||
|
Cash and cash equivalents at end of period
|
$ | — | $ | 789 | $ | 441 | $ | — | $ | 1,230 | ||||||||||
162
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| At December 31, 2009 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Mining
|
Newmont
|
Other
|
Corporation
|
|||||||||||||||||
|
Condensed Consolidating Balance Sheets
|
Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Assets
|
||||||||||||||||||||
|
Cash and cash equivalents
|
$ | 8 | $ | 3,067 | $ | 140 | $ | — | $ | 3,215 | ||||||||||
|
Trade receivables
|
— | 417 | 21 | — | 438 | |||||||||||||||
|
Accounts receivable
|
2,338 | 673 | 363 | (3,272 | ) | 102 | ||||||||||||||
|
Investments
|
— | 4 | 52 | — | 56 | |||||||||||||||
|
Inventories
|
— | 307 | 186 | — | 493 | |||||||||||||||
|
Stockpiles and ore on leach pads
|
— | 331 | 72 | — | 403 | |||||||||||||||
|
Deferred income tax assets
|
— | 157 | 58 | — | 215 | |||||||||||||||
|
Other current assets
|
— | 78 | 822 | — | 900 | |||||||||||||||
|
Current assets
|
2,346 | 5,034 | 1,714 | (3,272 | ) | 5,822 | ||||||||||||||
|
Property, plant and mine development, net
|
— | 5,195 | 7,193 | (18 | ) | 12,370 | ||||||||||||||
|
Investments
|
— | 26 | 1,160 | — | 1,186 | |||||||||||||||
|
Investments in subsidiaries
|
9,842 | 31 | 1,089 | (10,962 | ) | — | ||||||||||||||
|
Long-term stockpiles and ore on leach pads
|
— | 1,323 | 179 | — | 1,502 | |||||||||||||||
|
Deferred income tax assets
|
— | 844 | 93 | — | 937 | |||||||||||||||
|
Other long-term assets
|
2,551 | 357 | 419 | (2,845 | ) | 482 | ||||||||||||||
|
Total assets
|
$ | 14,739 | $ | 12,810 | $ | 11,847 | $ | (17,097 | ) | $ | 22,299 | |||||||||
|
Liabilities
|
||||||||||||||||||||
|
Current portion of debt
|
$ | — | $ | 147 | $ | 10 | $ | — | $ | 157 | ||||||||||
|
Accounts payable
|
46 | 1,201 | 2,413 | (3,264 | ) | 396 | ||||||||||||||
|
Employee-related benefits
|
— | 202 | 48 | — | 250 | |||||||||||||||
|
Income and mining taxes
|
— | 192 | 8 | — | 200 | |||||||||||||||
|
Other current liabilities
|
58 | 281 | 2,949 | (1,971 | ) | 1,317 | ||||||||||||||
|
Current liabilities
|
104 | 2,023 | 5,428 | (5,235 | ) | 2,320 | ||||||||||||||
|
Debt
|
3,928 | 659 | 65 | — | 4,652 | |||||||||||||||
|
Reclamation and remediation liabilities
|
— | 565 | 240 | — | 805 | |||||||||||||||
|
Deferred income tax liabilities
|
31 | 494 | 816 | — | 1,341 | |||||||||||||||
|
Employee-related benefits
|
4 | 324 | 53 | — | 381 | |||||||||||||||
|
Other long-term liabilities
|
338 | 62 | 2,637 | (2,863 | ) | 174 | ||||||||||||||
|
Liabilities of operations held for sale
|
— | 13 | — | — | 13 | |||||||||||||||
|
Total liabilities
|
4,405 | 4,140 | 9,239 | (8,098 | ) | 9,686 | ||||||||||||||
|
Equity
|
||||||||||||||||||||
|
Preferred stock
|
— | — | 61 | (61 | ) | — | ||||||||||||||
|
Common stock
|
770 | — | — | — | 770 | |||||||||||||||
|
Additional paid-in capital
|
7,789 | 2,709 | 3,874 | (6,214 | ) | 8,158 | ||||||||||||||
|
Accumulated other comprehensive income (loss)
|
626 | (125 | ) | 738 | (613 | ) | 626 | |||||||||||||
|
Retained earnings (deficit)
|
1,149 | 3,801 | (2,080 | ) | (1,721 | ) | 1,149 | |||||||||||||
|
Total Newmont stockholders’ equity
|
10,334 | 6,385 | 2,593 | (8,609 | ) | 10,703 | ||||||||||||||
|
Noncontrolling interests
|
— | 2,285 | 15 | (390 | ) | 1,910 | ||||||||||||||
|
Total equity
|
10,334 | 8,670 | 2,608 | (8,999 | ) | 12,613 | ||||||||||||||
|
Total liabilities and equity
|
$ | 14,739 | $ | 12,810 | $ | 11,847 | $ | (17,097 | ) | $ | 22,299 | |||||||||
163
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| At December 31, 2008 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Mining
|
Newmont
|
Other
|
Corporation
|
|||||||||||||||||
|
Condensed Consolidating Balance Sheets
|
Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Assets
|
||||||||||||||||||||
|
Cash and cash equivalents
|
$ | — | $ | 310 | $ | 125 | $ | — | $ | 435 | ||||||||||
|
Trade receivables
|
— | 97 | 7 | — | 104 | |||||||||||||||
|
Accounts receivable
|
1,941 | 904 | 370 | (3,001 | ) | 214 | ||||||||||||||
|
Investments
|
— | 1 | 11 | — | 12 | |||||||||||||||
|
Inventories
|
— | 395 | 112 | — | 507 | |||||||||||||||
|
Stockpiles and ore on leach pads
|
— | 242 | 48 | — | 290 | |||||||||||||||
|
Deferred income tax assets
|
— | 236 | 48 | — | 284 | |||||||||||||||
|
Other current assets
|
1 | 220 | 234 | — | 455 | |||||||||||||||
|
Current assets
|
1,942 | 2,405 | 955 | (3,001 | ) | 2,301 | ||||||||||||||
|
Property, plant and mine development, net
|
— | 5,325 | 4,822 | (19 | ) | 10,128 | ||||||||||||||
|
Investments
|
— | 11 | 644 | — | 655 | |||||||||||||||
|
Investments in subsidiaries
|
6,247 | 25 | 828 | (7,100 | ) | — | ||||||||||||||
|
Long-term stockpiles and ore on leach pads
|
— | 1,031 | 105 | — | 1,136 | |||||||||||||||
|
Deferred income tax assets
|
(45 | ) | 873 | 211 | — | 1,039 | ||||||||||||||
|
Other long-term assets
|
1,977 | 320 | 341 | (2,243 | ) | 395 | ||||||||||||||
|
Assets of operations held for sale
|
— | 73 | — | — | 73 | |||||||||||||||
|
Total assets
|
$ | 10,121 | $ | 10,063 | $ | 7,906 | $ | (12,363 | ) | $ | 15,727 | |||||||||
|
Liabilities
|
||||||||||||||||||||
|
Current portion of debt
|
$ | — | $ | 156 | $ | 9 | $ | — | $ | 165 | ||||||||||
|
Accounts payable
|
524 | 586 | 2,292 | (2,991 | ) | 411 | ||||||||||||||
|
Employee-related benefits
|
— | 139 | 31 | — | 170 | |||||||||||||||
|
Income and mining taxes
|
21 | 39 | 1 | — | 61 | |||||||||||||||
|
Other current liabilities
|
15 | 303 | 461 | (9 | ) | 770 | ||||||||||||||
|
Current liabilities
|
560 | 1,223 | 2,794 | (3,000 | ) | 1,577 | ||||||||||||||
|
Debt
|
2,203 | 802 | 67 | — | 3,072 | |||||||||||||||
|
Reclamation and remediation liabilities
|
1 | 502 | 196 | — | 699 | |||||||||||||||
|
Deferred income tax liabilities
|
— | 364 | 687 | — | 1,051 | |||||||||||||||
|
Employee-related benefits
|
3 | 341 | 35 | — | 379 | |||||||||||||||
|
Other long-term liabilities
|
283 | 182 | 2,049 | (2,262 | ) | 252 | ||||||||||||||
|
Liabilities of operations held for sale
|
— | 36 | — | — | 36 | |||||||||||||||
|
Total liabilities
|
3,050 | 3,450 | 5,828 | (5,262 | ) | 7,066 | ||||||||||||||
|
Equity
|
||||||||||||||||||||
|
Preferred stock
|
— | — | 61 | (61 | ) | — | ||||||||||||||
|
Common stock
|
709 | — | — | — | 709 | |||||||||||||||
|
Additional paid-in capital
|
6,611 | 2,647 | 4,334 | (6,761 | ) | 6,831 | ||||||||||||||
|
Accumulated other comprehensive income (loss)
|
(253 | ) | (173 | ) | (138 | ) | 311 | (253 | ) | |||||||||||
|
Retained earnings (deficit)
|
4 | 2,707 | (2,381 | ) | (326 | ) | 4 | |||||||||||||
|
Newmont stockholders’ equity
|
7,071 | 5,181 | 1,876 | (6,837 | ) | 7,291 | ||||||||||||||
|
Noncontrolling interests
|
— | 1,432 | 202 | (264 | ) | 1,370 | ||||||||||||||
|
Total equity
|
7,071 | 6,613 | 2,078 | (7,101 | ) | 8,661 | ||||||||||||||
|
Total liabilities and equity
|
$ | 10,121 | $ | 10,063 | $ | 7,906 | $ | (12,363 | ) | $ | 15,727 | |||||||||
164
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 33 | COMMITMENTS AND CONTINGENCIES |
General
The Company follows ASC guidance in determining its accruals and
disclosures with respect to loss contingencies. Accordingly,
estimated losses from loss contingencies are accrued by a charge
to income when information available prior to issuance of the
financial statements indicates that it is probable (greater than
a 75% probability) that a liability could be incurred and the
amount of the loss can be reasonably estimated. Legal expenses
associated with the contingency are expensed as incurred. If a
loss contingency is not probable or reasonably estimable,
disclosure of the loss contingency is made in the financial
statements when it is at least reasonably possible that a
material loss could be incurred.
Operating
Segments
The Company’s operating segments are identified in
Note 31. Except as noted in this paragraph, all of the
Company’s commitments and contingencies specifically
described in this Note 33 relate to the Corporate and Other
reportable segment. The Nevada Operations matters under Newmont
USA Limited relate to the North America reportable segment. The
PT Newmont Minahasa Raya matters relate to the Asia Pacific
reportable segment. The Yanacocha matters relate to the South
America reportable segment. The Newmont Yandal Operations Pty
Limited matter relates to the Asia Pacific reportable segment.
The PTNNT matters relate to the Asia Pacific reportable segment.
Environmental
Matters
The Company’s mining and exploration activities are subject
to various laws and regulations governing the protection of the
environment. These laws and regulations are continually changing
and are generally becoming more restrictive. The Company
conducts its operations so as to protect the public health and
environment and believes its operations are in compliance with
applicable laws and regulations in all material respects. The
Company has made, and expects to make in the future,
expenditures to comply with such laws and regulations, but
cannot predict the full amount of such future expenditures.
Estimated future reclamation costs are based principally on
legal and regulatory requirements. At December 31, 2009 and
2008, $698 and $594, respectively, were accrued for reclamation
costs relating to mineral properties in accordance with asset
retirement obligation accounting guidance. The current portions
of $36 and $43 at December 31, 2009 and 2008, respectively,
are included in
Other current liabilities
.
In addition, the Company is involved in several matters
concerning environmental obligations associated with former
mining activities. Generally, these matters concern developing
and implementing remediation plans at the various sites
involved. The Company believes that the related environmental
obligations associated with these sites are similar in nature
with respect to the development of remediation plans, their risk
profile and the compliance required to meet general
environmental standards. Based upon the Company’s best
estimate of its liability for these matters, $161 and $163 were
accrued for such obligations at December 31, 2009 and 2008,
respectively. These amounts are included in
Other current
liabilities
and
Reclamation and remediation
liabilities
. Depending upon the ultimate resolution of these
matters, the Company believes that it is reasonably possible
that the liability for these matters could be as much as 148%
greater or 3% lower than the amount accrued at December 31,
2009. The amounts accrued for these matters are reviewed
periodically based upon facts and circumstances available at the
time. Changes in estimates are recorded in
Other expense, net
in the period estimates are revised.
Details about certain of the more significant matters involved
are discussed below.
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CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Dawn Mining
Company LLC (“Dawn”) — 51% Newmont
Owned
Midnite Mine Site.
Dawn previously leased an
open pit uranium mine, currently inactive, on the Spokane Indian
Reservation in the State of Washington. The mine site is subject
to regulation by agencies of the U.S. Department of
Interior (the Bureau of Indian Affairs and the Bureau of Land
Management), as well as the United States Environmental
Protection Agency (“EPA”).
In 1991, Dawn’s mining lease at the mine was terminated. As
a result, Dawn was required to file a formal mine closure and
reclamation plan. The Department of Interior commenced an
analysis of Dawn’s proposed plan and alternate closure and
reclamation plans for the mine. Work on this analysis has been
suspended indefinitely. In mid-2000, the mine was included on
the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act
(“CERCLA”). In March 2003, the EPA notified Dawn and
Newmont that it had thus far expended $12 on the Remedial
Investigation/Feasibility Study (“RI/FS”) under
CERCLA. In October 2005, the EPA issued the RI/FS on this
property in which it indicated a preferred remedy that it
estimated to cost approximately $150. Newmont and Dawn filed
comments on the RI/FS with the EPA in January 2006. On
October 3, 2006, the EPA issued a final Record of Decision
in which it formally selected the preferred remedy identified in
the RI/FS.
On January 28, 2005, the EPA filed a lawsuit against Dawn
and Newmont under CERCLA in the U.S. District Court for the
Eastern District of Washington. The EPA has asserted that Dawn
and Newmont are liable for reclamation or remediation work and
costs at the mine. Dawn does not have sufficient funds to pay
for the reclamation plan it proposed or for any alternate plan,
or for any additional remediation work or costs at the mine.
On July 14, 2008, after a bench trial, the Court held
Newmont liable under CERCLA as an “operator” of the
Midnite Mine. The Court previously ruled on summary judgment
that both the U.S. Government and Dawn were liable under
CERCLA. On October 17, 2008 the Court issued its written
decision in the bench trial. The Court found Dawn and Newmont
jointly and severally liable under CERCLA for past and future
response costs, and ruled that each of Dawn and Newmont are
responsible to pay one-third of such costs. The Court also found
the U.S. Government liable on Dawn’s and
Newmont’s contribution claim, and ruled that the
U.S. Government is responsible to pay one-third of all past
and future response costs. In November 2008, all parties
appealed the Court’s ruling. Also in November 2008, the EPA
issued an Administrative Order pursuant to Section 106 of
CERCLA ordering Dawn and Newmont to conduct water treatment,
testing and other preliminary remedial actions. Newmont has
initiated those preliminary remedial actions. However, the issue
of whether the EPA’s current preferred remedy is consistent
with the National Contingency Plan has not yet come before the
Court.
Newmont intends to continue to vigorously defend this matter and
cannot reasonably predict the outcome of this lawsuit or the
likelihood of any other action against Dawn or Newmont arising
from this matter.
Dawn Mill Site.
Dawn also owns a uranium mill
site facility, located on private land near Ford, Washington,
which is subject to state and federal regulation. In late 1999,
Dawn sought and later received approval from the State of
Washington for a revised closure plan that expedites the
reclamation process at the site. The currently approved plan for
the site is guaranteed by Newmont.
Newmont Canada
Limited (“Newmont Canada”) — 100% Newmont
Owned
On November 11, 2008, St.
Andrew
Goldfields Ltd. (“St. Andrew”) filed an Application in
the Superior Court of Justice in Ontario, Canada, seeking a
declaration to clarify St. Andrew’s royalty
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CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
obligations regarding certain mineral rights and property
formerly owned by Newmont Canada and now owned by St. Andrew.
Newmont Canada purchased the property, called the Holt-McDermott
property (“Holt Property”), from Barrick Gold
Corporation (“Barrick”) in October 2004. At that time,
Newmont Canada entered into a royalty agreement with Barrick
(the “Barrick Royalty”), allowing Barrick to retain a
royalty on the Holt Property. In August 2006, Newmont Canada
sold all of its interests in the Holt Property to Holloway
Mining Company (“Holloway”) in exchange for common
stock issued by Holloway. In September 2006, Newmont Canada
entered into a purchase and sale agreement with St. Andrew (the
“2006 Agreement”), under which St. Andrew acquired all
the common stock of Holloway. In 2008, Barrick sold its Barrick
Royalty to Royal Gold, Inc. (“Royal Gold”).
In the court proceedings, St.
Andrew alleged
that in the 2006 Agreement it only agreed to assume royalty
obligations equal to 0.013% of net smelter returns from
operations on the Holt Property. Such an interpretation of the
2006 Agreement would make Newmont responsible for any royalties
exceeding that amount payable to Royal Gold pursuant to the
Barrick Royalty. On July 23, 2009, the Court issued a
decision finding in favor of St. Andrews’ interpretation.
On August 21, 2009, Newmont Canada appealed the decision.
Newmont Canada intends to continue to vigorously defend this
matter but cannot reasonably predict the outcome.
Newmont Capital
Limited (“Newmont Capital”) — 100% Newmont
Owned
In February 1999, the EPA placed the Lava Cap mine site in
Nevada County, California on the National Priorities List under
CERCLA. The EPA then initiated a RI/FS under CERCLA to determine
environmental conditions and remediation options at the site.
Newmont Capital owned the property for approximately three years
from 1984 to 1986 but never mined or conducted exploration at
the site. The EPA asserted that Newmont Capital was responsible
for clean up costs incurred at the site. In February 2009, the
U.S. District Court for the Northern District of California
approved the related consent decree and the settlement with
respect to all aspects of this matter, except for future
potential Natural Resource Damage claims, was completed.
Newmont USA
Limited — 100% Newmont Owned
Pinal Creek.
Newmont was a defendant in a
lawsuit brought on November 5, 1991 in U.S. District
Court in Arizona by the Pinal Creek Group, alleging that Newmont
and others are responsible for some portion of costs incurred to
address groundwater contamination emanating from copper mining
operations located in the area of Globe and Miami, Arizona. Two
former subsidiaries of Newmont, Pinto Valley Copper Corporation
and Magma Copper Company (now known as BHP Copper Inc.) owned
some of the mines in the area between 1983 and 1987. In February
2010, Newmont settled all claims and liabilities in this matter
and such settlement is subject to court approval, which is
expected in March 2010.
Gray Eagle Mine Site.
By letter dated
September 3, 2002, the EPA notified Newmont that the EPA
had expended $3 in response costs to address environmental
conditions associated with a historic tailings pile located at
the Grey Eagle Mine site near Happy Camp, California, and
requested that Newmont pay those costs. The EPA has identified
four potentially responsible parties, including Newmont. Newmont
does not believe it has any liability for environmental
conditions at the Grey Eagle Mine site, and intends to
vigorously defend any formal claims by the EPA. Newmont cannot
reasonably predict the likelihood or outcome of any future
action against it arising from this matter.
Ross-Adams Mine Site.
By letter dated
June 5, 2007, the U.S. Forest Service notified Newmont
that it had expended approximately $0.3 in response costs to
address environmental conditions at the
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CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Ross-Adams mine in Prince of Wales, Alaska, and requested
Newmont USA Limited pay those costs and perform an Engineering
Evaluation/Cost Analysis (“EE/CA”) to assess what
future response activities might need to be completed at the
site. Newmont does not believe it has any liability for
environmental conditions at the site, and intends to vigorously
defend any formal claims by the EPA. Newmont has agreed to
perform the EE/CA. Newmont cannot reasonably predict the
likelihood or outcome of any future action against it arising
from this matter.
PT Newmont
Minahasa Raya (“PTNMR”) — 80% Newmont
Owned
On March 22, 2007, an Indonesian non-governmental
organization named Wahana Lingkungan Hidup Indonesia
(“WALHI”) filed a civil suit against PTNMR the Newmont
subsidiary that operated the Minahasa mine in Indonesia, and
Indonesia’s Ministry of Energy and Mineral Resources and
Ministry for the Environment, alleging pollution from the
disposal of mine tailings into Buyat Bay, and seeking a court
order requiring PTNMR to fund a
25-year
monitoring program in relation to Buyat Bay. In December 2007,
the court ruled in PTNMR’s favor and found that
WALHI’s allegations of pollution in Buyat Bay were without
merit. In March 2008, WALHI appealed this decision to the
Indonesian Supreme Court.
Independent sampling and testing of Buyat Bay water and fish, as
well as area residents, conducted by the World Health
Organization and the Australian Commonwealth Scientific and
Industrial Research Organization, confirm that PTNMR has not
polluted the Buyat Bay environment, and, therefore, has not
adversely affected the fish in Buyat Bay or the health of nearby
residents. The Company remains steadfast that it has not caused
pollution or health problems.
Newmont Ghana
Gold Limited (“NGGL”) — 100% Newmont
Owned
On October 8, 2009, an overflow of processing solution
occurred at the Ahafo Mines in Ghana operated by Newmont’s
subsidiary, NGGL. A panel of the Minister of Environment,
Science & Technology of the Government of Ghana (the
“Panel”) was appointed to evaluate the overflow
incident. In January 2010, NGGL received notification of the
findings of the Panel, which recognized that there was no
regulatory framework by which to assess compensation or
penalties relating to such incidents. However, the Panel
recommended that compensation of seven million Ghana Cedis
(approximately $5) be paid by NGGL to the Ghanaian Government to
be used for community compensation and for other uses by the
Government. In January 2010, NGGL has committed to pay the
compensation and is working with the Ghana Government to execute
the payment. NGGL has also confirmed that it is implementing
appropriate corrective measures related to the incident.
Other Legal
Matters
Minera Yanacocha
S.R.L. (“Yanacocha”) — 51.35% Newmont
Owned
Choropampa.
In June 2000, a transport
contractor of Yanacocha spilled approximately 151 kilograms of
elemental mercury near the town of Choropampa, Peru, which is
located 53 miles (85 kilometers) southwest of the Yanacocha
mine. Elemental mercury is not used in Yanacocha’s
operations but is a by-product of gold mining and was sold to a
Lima firm for use in medical instruments and industrial
applications. A comprehensive health and environmental
remediation program was undertaken by Yanacocha in response to
the incident. In August 2000, Yanacocha paid under protest a
fine of 1,740,000 Peruvian soles (approximately $0.5) to the
Peruvian government. Yanacocha has entered into settlement
agreements with a number of individuals impacted by the
incident. As compensation for the disruption and inconvenience
caused by the incident, Yanacocha entered into agreements with
and provided a variety of public works in the three communities
168
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CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
impacted by this incident. Yanacocha cannot predict the
likelihood of additional expenditures related to this matter.
Additional lawsuits relating to the Choropampa incident were
filed against Yanacocha in the local courts of Cajamarca, Peru,
in May 2002 by over 900 Peruvian citizens. A significant number
of the plaintiffs in these lawsuits entered into settlement
agreements with Yanacocha prior to filing such claims. In April
2008, the Peruvian Supreme Court upheld the validity of these
settlement agreements, which should result in the dismissal of
all claims brought by previously settled plaintiffs. Yanacocha
has also entered into settlement agreements with approximately
350 additional plaintiffs. The claims asserted by approximately
200 plaintiffs remain. Neither Newmont nor Yanacocha can
reasonably estimate the ultimate loss relating to such claims.
Newmont Yandal
Operations Pty Ltd (“NYOL”) — 100% Newmont
Owned
On September 3, 2003, J. Aron &
Co.
commenced proceedings in the Supreme Court of
New South Wales (Australia) against NYOL, its subsidiaries and
the administrator in relation to the completed voluntary
administration of the NYOL group. J. Aron & Co., a
NYOL creditor, initially sought injunctive relief that was
denied by the court on September 8, 2003. On
October 30, 2003, J. Aron & Co. filed a statement
of claim alleging various deficiencies in the implementation of
the voluntary administration process and seeking damages and
other relief against NYOL and other parties. Newmont entered
into settlement discussions with the claimants J.
Aron & Co, and the fund administrators. In December
2009 Newmont and the claimants reached a settlement agreement,
which was approved by the court.
PT Newmont Nusa
Tenggara (“PTNNT”) — 35.44% Newmont
Owned
Under the Batu Hijau Contract of Work, beginning in 2006 and
continuing through 2010, a portion of PTNNT’s shares must
be offered for sale, first, to the Indonesian government or,
second, to Indonesian nationals, equal to the difference between
the following percentages and the percentage of shares already
owned by the Indonesian government or Indonesian nationals (if
such number is positive): 23% by March 31, 2006; 30% by
March 31, 2007; 37% by March 31, 2008; 44% by
March 31, 2009; and 51% by March 31, 2010. As PT
Pukuafu Indah (“PTPI”), an Indonesian national, has
owned a 20% interest in PTNNT, in 2006 a 3% interest was
required to be offered for sale and in each of 2007 through 2010
an additional 7% interest must be offered (for an aggregate 31%
interest). The price at which such interest must be offered for
sale to the Indonesian parties is the highest of the
then-current replacement cost, the price at which shares would
be accepted for listing on the Indonesian Stock Exchange, or the
fair market value of such interest as a going concern, as agreed
with the Indonesian government.
PTPI has owned and continues to own a 20% interest in PTNNT, and
therefore the Newmont-Sumitomo partnership was required to offer
a 3% interest in PTNNT for sale in 2006 and an additional 7%
interest in each of 2007 through 2010. In accordance with the
Contract of Work, an offer to sell a 3% interest was made to the
Indonesian government in 2006 and an offer for an additional 7%
interest was made in each of 2007 and 2008. A further 7%
interest in the shares of PTNNT was offered for sale in March
2009. While the central government declined to participate in
the 2006 and 2007 offers, local governments in the area in which
the Batu Hijau mine is located expressed interest in acquiring
shares, as did various Indonesian nationals. In January 2008,
the Newmont-Sumitomo partnership agreed to sell, under a carried
interest arrangement, 2% of PTNNT’s shares to Kabupaten
Sumbawa, one of the local governments, subject to satisfaction
of closing conditions. The Indonesian government subsequently
stated that it would not approve the transfer of shares under
this agreement. On February 11, 2008, PTNNT received
notification from the Department of Energy and Mineral
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CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Resources (“DEMR”) alleging that PTNNT is in breach of
its divestiture requirements under the Contract of Work, and
threatening to issue a notice to terminate the Contract of Work
if PTNNT did not agree to divest the 2006 and 2007 shares,
in accordance with the direction of the DEMR, by
February 22, 2008, which date was extended to March 3,
2008. A second Notice of Default was received relating to the
alleged failure to divest the 2008 shares as well. On
March 3, 2008, the Indonesian government filed for
international arbitration as provided under the Contract of
Work, as did PTNNT. In the arbitration proceeding, PTNNT sought
a declaration that the Indonesian government is not entitled to
terminate the Contract of Work and additional declarations
pertaining to the procedures for divesting the shares. For its
part, the Indonesian government sought declarations that PTNNT
is in default of its divestiture obligations, that the
government may terminate the Contract of Work and recover
damages for breach of the Contract of Work, and that PTNNT must
cause shares subject to divestiture to be sold to certain local
governments.
Subsequent to an additional 7% interest in PTNNT being offered
by NTP for sale on March 28, 2008 (as required under the
Contract of Work), the Director General of Mineral, Coal and
Geothermal Resources at DEMR claimed that PTNNT breached its
obligations under the Contract of Work by allowing shares to be
offered for sale that are pledged to the Senior Lenders as
security for the repayment of the senior debt. In the letter,
the Director General claimed that NTP would be in default under
the Contract of Work if the shares of PTNNT offered for sale in
March 2008, together with the shares offered in 2006 and 2007,
were not in the possession of “Indonesian government
and/or
government owned entities,” free of any such senior pledge,
by July 13, 2008. Consequently, on July 10, 2008,
PTNNT filed a notice to commence an additional international
arbitration proceeding, as provided for under the Contract of
Work, to resolve the claim that PTNNT breached its obligations
under the Contract of Work by allowing shares to be offered that
are subject to pledge obligations to the Senior Lenders. This
issue was incorporated into and resolved as part of the initial
arbitration proceeding.
An international arbitration panel was appointed to resolve
these claims and a hearing was held in Jakarta in December 2008.
On March 31, 2009, the arbitration panel issued its Final
Award and decision on the matter. In its decision, the
arbitration panel determined that PTNNT’s foreign
shareholders had not complied with the divestiture procedure
required by the Contract of Work in 2006 and 2007, but the panel
ruled that the Indonesian government is not entitled to
immediately terminate the Contract of Work and the panel
rejected the Indonesian government’s claim for damages. The
Arbitration Panel granted PTNNT 180 days from the date of
notification of the Final Award to transfer the 2006 3% interest
and the 2007 7% interest in PTNNT to the local governments or
their respective nominees. The Arbitration Panel also applied a
180-day
cure
period to the 2008 7% interest, ruling that PTNNT must (within
such
180-day
period) offer the 2008 7% interest to the Indonesian government
or its nominee, and transfer such shares if, after agreement on
the transfer price, the Indonesian government invokes its right
of first refusal under the Contract of Work. The panel ruled
that shares offered to the Indonesian government pursuant to the
Contract of Work must be offered free of any pledge or
obligation to re-pledge the shares to the Senior Lenders.
Finally, the Panel directed PTNNT to pay to the Indonesian
government an allocated portion of certain legal fees and costs
of the arbitration. PTNNT submitted payment of $2 for legal fees
and costs. The Company also entered a formal agreement with the
Senior Lenders under which the Senior Lenders released the
pledge on the aggregated 31% of shares in PTNNT that are subject
to divestiture requirements in exchange for the Company and
Sumitomo agreeing to provide joint and several guarantees, thus
allowing the Company to transfer these shares free of any pledge
or obligation to re-pledge the shares to the lenders. The
Company subsequently replaced this joint and several guarantee
in October with letters of credit supporting 56.25% of the
obligations under the PTNNT project financing facility. On
July 14, 2009, the Company reached agreement with the
Indonesian government on the
170
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
price of the 2008 7% interest and the 2009 7% interest. PTNNT
has reoffered the 2008 7% interest and the 2009 7% interest to
the Indonesian government at this newly agreed price. In
November and December 2009, sale agreements were concluded
pursuant to which the 2006, 2007 and 2008 shares were
transferred to PTMDB and 2009 shares were committed to be
transferred to PTMDB. Although the Indonesian Government has
acknowledged that PTNNT is no longer in breach of the Contract
of Work, future disputes may arise as to the further divestiture
of the shares. It is uncertain who will acquire any future
divestiture shares, and the nature of our relations with the new
owners of the
2006-2009 shares
and any future divestiture shares remain uncertain.
As part of the negotiation of the sale agreements with PTMDB,
the parties executed an operating agreement under which each
recognizes the right of NTP to operate Batu Hijau and binds the
parties to adhere to NTP’s standards for safety,
environmental stewardship and community responsibility. The
operating agreement becomes effective upon the completion of the
sale of the 2009 shares and continues for so long as the
Company owns more shares of PTNNT than PTMDB. If the operating
agreement terminates, then the Company may lose effective
economic control over the operations of Batu Hijau and will be
at risk for operations conducted in a manner that either
detracts from value or results in safety, environmental or
social standards below those adhered to by NTP. Although any
dispute under the Contract of Work is subject to international
arbitration, there can be no assurance that we would prevail in
any such dispute and any termination of the Contract of Work
could result in substantial diminution in the value of our
interests in PTNNT.
Other
Commitments and Contingencies
Tax contingencies are provided for in accordance with ASC income
tax guidance (see Note 8).
In a 1993 asset exchange, a wholly-owned subsidiary transferred
a coal lease under which the subsidiary had collected advance
royalty payments totaling $484. From 1994 to 2018, remaining
advance payments under the lease to the transferee total $390.
In the event of title failure as stated in the lease, this
subsidiary has a primary obligation to refund previously
collected payments and has a secondary obligation to refund any
of the $390 collected by the transferee, if the transferee fails
to meet its refund obligation. The subsidiary has title
insurance on the leased coal deposits of $240 covering the
secondary obligation. The Company and the subsidiary regard the
circumstances entitling the lessee to a refund as remote.
The Company has minimum royalty obligations on one of its
producing mines in Nevada for the life of the mine. Amounts paid
as a minimum royalty (where production royalties are less than
the minimum obligation) in any year are recoverable in future
years when the minimum royalty obligation is exceeded. Although
the minimum royalty requirement may not be met in a particular
year, the Company expects that over the mine life, gold
production will be sufficient to meet the minimum royalty
requirements. Minimum royalty payments payable are $23 per year
in 2010 through 2014 and $116 thereafter.
As part of its ongoing business and operations, the Company and
its affiliates are required to provide surety bonds, bank
letters of credit and bank guarantees as financial support for
various purposes, including environmental reclamation,
exploration permitting, workers compensation programs and other
general corporate purposes. At December 31 2009 and 2008, there
were $1,073 and $778, respectively, of outstanding letters of
credit, surety bonds and bank guarantees. The surety bonds,
letters of credit and bank guarantees reflect fair value as a
condition of their underlying purpose and are subject to fees
competitively determined in the market place. The obligations
associated with these instruments are generally related to
performance requirements that the Company addresses through its
ongoing operations. As the specific requirements are met, the
beneficiary of the associated instrument cancels
and/or
returns the instrument to the issuing entity.
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Certain of these instruments are associated with operating sites
with long-lived assets and will remain outstanding until
closure. Generally, bonding requirements associated with
environmental regulation are becoming more restrictive. In
addition, the surety markets for certain types of environmental
bonding used by the Company have become increasingly
constrained. The Company, however, believes it is in compliance
with all applicable bonding obligations and will be able to
satisfy future bonding requirements, through existing or
alternative means, as they arise.
Newmont is from time to time involved in various legal
proceedings related to its business. Except in the
above-described proceedings, management does not believe that
adverse decisions in any pending or threatened proceeding or
that amounts that may be required to be paid by reason thereof
will have a material adverse effect on the Company’s
financial condition or results of operations.
| NOTE 34 | UNAUDITED SUPPLEMENTARY DATA |
Quarterly
Data
The following is a summary of selected quarterly financial
information (unaudited):
| 2009 | ||||||||||||||||
| Three Months Ended | ||||||||||||||||
| March 31 | June 30 | September 30 | December 31 | |||||||||||||
|
Revenues
|
$ | 1,536 | $ | 1,602 | $ | 2,049 | $ | 2,518 | ||||||||
|
Gross
profit
(1)
|
$ | 597 | $ | 722 | $ | 1,077 | $ | 1,420 | ||||||||
|
Income from continuing
operations
(2)
|
$ | 189 | $ | 171 | $ | 388 | $ | 560 | ||||||||
|
Income (loss) from discontinued
operations
(2)
|
— | (9 | ) | — | (2 | ) | ||||||||||
|
Net
income
(2)
|
$ | 189 | $ | 162 | $ | 388 | $ | 558 | ||||||||
|
Income from continuing operations, per common share, basic
|
$ | 0.40 | $ | 0.35 | $ | 0.79 | $ | 1.14 | ||||||||
|
Income from discontinued operations, per common share, basic
|
— | (0.02 | ) | — | — | |||||||||||
|
Net income per common share, basic
|
$ | 0.40 | $ | 0.33 | $ | 0.79 | $ | 1.14 | ||||||||
|
Income from continuing operations, per common share, diluted
|
$ | 0.40 | $ | 0.35 | $ | 0.79 | $ | 1.13 | ||||||||
|
Income from discontinued operations, per common share, diluted
|
— | (0.02 | ) | — | — | |||||||||||
|
Net income per common share, diluted
|
$ | 0.40 | $ | 0.33 | $ | 0.79 | $ | 1.13 | ||||||||
|
Basic weighted-average shares outstanding
|
472 | 490 | 490 | 491 | ||||||||||||
|
Diluted weighted-average shares outstanding
|
473 | 491 | 491 | 493 | ||||||||||||
|
Dividends declared per common share
|
$ | 0.10 | $ | 0.10 | $ | 0.10 | $ | 0.10 | ||||||||
|
Closing price of common stock
|
$ | 44.76 | $ | 40.87 | $ | 44.02 | $ | 47.31 | ||||||||
172
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 2008 | ||||||||||||||||
| Three Months Ended | ||||||||||||||||
| March 31 | June 30 | September 30 | December 31 | |||||||||||||
|
Revenues
|
$ | 1,925 | $ | 1,502 | $ | 1,372 | $ | 1,325 | ||||||||
|
Gross
profit
(1)
|
$ | 955 | $ | 564 | $ | 396 | $ | 360 | ||||||||
|
Income from continuing
operations
(2)
|
$ | 356 | $ | 270 | $ | 182 | $ | 8 | ||||||||
|
Income (loss) from discontinued
operations
(2)
|
8 | 1 | 9 | (3 | ) | |||||||||||
|
Net
income
(2)
|
$ | 364 | $ | 271 | $ | 191 | $ | 5 | ||||||||
|
Income from continuing operations, per common share, basic
|
$ | 0.78 | $ | 0.60 | $ | 0.40 | $ | 0.02 | ||||||||
|
Income from discontinued operations, per common share, basic
|
0.02 | — | 0.02 | (0.01 | ) | |||||||||||
|
Net income per common share, basic
|
$ | 0.80 | $ | 0.60 | $ | 0.42 | $ | 0.01 | ||||||||
|
Income from continuing operations, per common share, diluted
|
$ | 0.78 | $ | 0.60 | $ | 0.40 | $ | 0.02 | ||||||||
|
Income from discontinued operations, per common share, diluted
|
0.02 | — | 0.02 | (0.01 | ) | |||||||||||
|
Net income per common share, diluted
|
$ | 0.80 | $ | 0.60 | $ | 0.42 | $ | 0.01 | ||||||||
|
Basic weighted-average shares outstanding
|
453 | 454 | 454 | 454 | ||||||||||||
|
Diluted weighted-average shares outstanding
|
457 | 456 | 455 | 455 | ||||||||||||
|
Dividends declared per common share
|
$ | 0.10 | $ | 0.10 | $ | 0.10 | $ | 0.10 | ||||||||
|
Closing price of common stock
|
$ | 45.30 | $ | 52.16 | $ | 38.76 | $ | 40.70 | ||||||||
| (1) | Revenues less Costs applicable to sales, Amortization and Accretion . | |
| (2) | Attributable to Newmont stockholders. |
Significant after-tax adjustments were as follows:
Fourth quarter 2009:
(i) a $15 ($0.03 per
share, basic) loss related to Boddington contingent
consideration and (ii) a $14 ($0.03 per share, basic) gain
on asset sales;
Third quarter 2009:
none;
Second quarter 2009:
(i) a $42 ($0.08 per
share, basic) loss related to Boddington acquisition costs;
First quarter 2009:
(i) a $9 ($0.02 per
share, basic) loss related to workforce reduction costs;
(ii) a $5 ($0.01 per share, basic) loss related to
Boddington acquisition costs and (iii) a $5 ($0.01 per
share, basic) loss on the impairment of marketable equity
securities and other assets;
Fourth quarter 2008:
(i) a $111 ($0.24
per share, basic) loss on the impairment of marketable equity
securities and other assets and (ii) a $18 ($0.04 per
share, basic) loss on reclamation obligations at non-operating
properties;
Third quarter 2008:
(i) a $27 ($0.06 per
share, basic) loss on the impairment of marketable equity
securities and other assets; (ii) a $19 ($0.04 per share,
basic) gain on the sale of exploration property; (iii) a $9
($0.02 per share, basic) loss on reclamation obligations at
non-operating properties;
173
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Second quarter 2008:
(i) a $41 ($0.09 per
share, basic) loss on reclamation obligations at non-operating
properties; (ii) a $34 ($0.08 per share, basic) loss on the
impairment of marketable equity securities and (iii) a $5
($0.01 per share, basic) loss related to the Western Australia
gas interruption;
First quarter 2008:
(i) a $22 ($0.04 per
share, basic) loss on the impairment of marketable equity
securities.
| NOTE 35 | SUBSEQUENT EVENTS |
On February 23, 2010, PTNNT repaid the $220 remaining
balance under the PTNNT project financing facility. As a result,
the Company is no longer required to maintain letters of credit
to secure 56.25% of the PTNNT project financing facility and
PTNNT’s assets are no longer pledged as collateral.
174
Table of Contents
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
| ITEM 9A. | CONTROLS AND PROCEDURES |
During the fiscal period covered by this report, the
Company’s management, with the participation of the Chief
Executive Officer and Chief Financial Officer of the Company,
carried out an evaluation of the effectiveness of the design and
operation of the Company’s disclosure controls and
procedures (as defined in
Rules 13a-15(e)
and
15d-15(e)
of
the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)). Based on such evaluation, the
Company’s Chief Executive Officer and Chief Financial
Officer have concluded that, as of the end of the period covered
by this report, the Company’s disclosure controls and
procedures are effective to ensure that information required to
be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and
reported within the required time periods and are designed to
ensure that information required to be disclosed in its reports
is accumulated and communicated to the Company’s
management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.
There has been no change in the Company’s internal control
over financial reporting during the most recent fiscal quarter
that has materially affected, or that is reasonably likely to
materially affect, the Company’s internal control over
financial reporting.
Management’s report on internal control over financial
reporting and the attestation report on management’s
assessment are included in Item 8 of this annual report on
Form 10-K.
PART III
| ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
Information concerning Newmont’s directors, Audit
Committee, Compliance with Section 16(a) of the Exchange
Act and Code of Ethics is contained in Newmont’s definitive
Proxy Statement, filed pursuant to Regulation 14A
promulgated under the Securities Exchange Act of 1934 for the
2010 Annual Meeting of Stockholders and is incorporated herein
by reference. Information concerning Newmont’s executive
officers is set forth under Item 4A of this report.
| ITEM 11. | EXECUTIVE COMPENSATION |
Information concerning this item is contained in Newmont’s
definitive Proxy Statement, filed pursuant to
Regulation 14A promulgated under the Securities Exchange
Act of 1934 for the 2010 Annual Meeting of Stockholders and is
incorporated herein by reference.
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Information concerning this item is contained in Newmont’s
definitive Proxy Statement, filed pursuant to
Regulation 14A promulgated under the Securities Exchange
Act of 1934 for the 2010 Annual Meeting of Stockholders and
incorporated herein by reference.
175
Table of Contents
Equity
Compensation Plan Information
The following table sets forth at December 31, 2009
information regarding Newmont’s Common Stock that may be
issued under Newmont’s equity compensation plans:
|
Number of Securities
|
||||||||||||
|
Remaining Available for
|
||||||||||||
|
Number of
|
Future Issuance Under
|
|||||||||||
|
Securities to be
|
Weighted-Average
|
Equity Compensation
|
||||||||||
|
Issued Upon Exercise of
|
Exercise Price of
|
Plans (Excluding
|
||||||||||
|
Outstanding Options,
|
Outstanding Options,
|
Securities Reflected in
|
||||||||||
|
Warrants and Rights
|
Warrants and Rights
|
Column (a))
|
||||||||||
|
Plan Category
|
(a) | (b) (1) | (c) | |||||||||
|
Equity compensation plans approved by security
holders
(2)
|
6,698,931 | $ | 43.26 | 12,078,606 (3 | ) | |||||||
|
Equity compensation plans not approved by security holders
|
218,951 (4 | ) | $ | 26.28 | — | |||||||
|
TOTAL
|
6,917,882 | $ | 38.02 | 12,078,606 | ||||||||
| (1) | The weighted average exercise price does not take into account the shares issuable upon vesting of director stock units and restricted stock units. | |
| (2) | Newmont’s 2005 Stock Incentive Plan was approved by the stockholders on April 27, 2005. A maximum of 20,000,000 shares of Newmont’s Common Stock were authorized to be issued under this plan. Out of this maximum number of shares, no more than 10,000,000 shares may be awarded as restricted stock and other stock based awards and no more than 1,000,000 shares may be awarded as non-employee director stock awards. In addition, no more than 1,000,000 shares may be awarded without agreements providing for vesting in full in three years or more, subject to certain exceptions such as shares subject to performance-based conditions. | |
| (3) | Securities remaining available for future issuance under the 2005 Stock Incentive Plan. No additional grants or awards will be made under any of the Company’s other plans. | |
| (4) | Shares of common stock issuable upon exercise of outstanding options granted under the 1999 Employees Stock Plan. Options have a term of 10 years and vest in periods ranging from two to four years. |
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
Information concerning this item is contained in Newmont’s
definitive Proxy Statement, filed pursuant to
Regulation 14A promulgated under the Securities Exchange
Act of 1934 for the 2010 Annual Meeting of Stockholders and
incorporated herein by reference.
| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Information concerning this item is contained in Newmont’s
definitive Proxy Statement, filed pursuant to
Regulation 14A promulgated under the Securities Exchange
Act of 1934 for the 2010 Annual Meeting of Stockholders and
incorporated herein by reference.
176
Table of Contents
PART IV
| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
The following documents are filed as a part of this report:
| (a) | Financial Statements |
The Consolidated Financial Statements, together with the report
thereon of PricewaterhouseCoopers LLP dated February 25,
2010, are included as part of Item 8, Financial Statements
and Supplementary Data, commencing on page 85 above.
| Page | ||||
| 86 | ||||
| 87 | ||||
| 88 | ||||
| 89 | ||||
| 90 | ||||
| 91 | ||||
| 92 | ||||
| (b) | Exhibits |
Reference is made to the Exhibit Index beginning on
page E-1
hereof.
177
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this Annual Report on
Form 10-K
to be signed on its behalf by the undersigned, thereunto duly
authorized.
NEWMONT MINING CORPORATION
| By: |
/s/
Jeffrey
K. Reeser
|
Jeffrey K. Reeser
Vice President and
Secretary
February 25, 2010
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated on
February 25, 2010.
|
Signature
|
Title
|
|||
|
*
|
President, Chief Executive Officer and Director
(Principal Executive Officer) |
|||
|
*
|
Executive Vice President and Chief Financial Officer (Principal
Financial Officer)
|
|||
|
*
|
Vice President and Chief Accounting Officer
(Principal Accounting Officer) |
|||
| Glen A. Barton* |
Director
|
|||
| Vincent A. Calarco* |
Director
|
|||
| Joseph A. Carrabba* |
Director
|
|||
| Noreen Doyle* |
Director
|
|||
| Veronica M. Hagen* |
Director
|
|||
| Michael S. Hamson* |
Director
|
|||
| Robert J. Miller* |
Director
|
|||
| John B. Prescott* |
Director
|
|||
| Donald C. Roth* |
Director
|
|||
| James V. Taranik* |
Director
|
|||
| Simon R. Thompson* |
Director
|
|||
| *By: |
/s/
Jeffrey
K. Resser
Attorney-in-Fact |
|||
S-1
Table of Contents
EXHIBIT INDEX
|
Exhibit
|
||||
|
Number
|
Description
|
|||
|
1.1
|
— | Underwriting Agreement relating to the sale of the Shares, dated January 28, 2009 between Newmont, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. as representatives of the several underwriters named therein. Incorporated by reference to Exhibit 1.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on February 3, 2009. | ||
|
1.2
|
— | Underwriting Agreement relating to the sale of the 2012 Notes, dated January 28, 2009 between Newmont, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. as representatives of the several underwriters named therein. Incorporated by reference to Exhibit 1.2 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on February 3, 2009. | ||
|
1.3
|
— | Underwriting Agreement dated September 15, 2009, among Registrant, Newmont USA Limited and Deutsche Bank Securities Inc., and UBS Securities LLC, as representatives of the several Underwriters named therein. Incorporated by reference to Exhibit 1.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on September 18, 2009. | ||
|
2.1
|
— | Agreement dated October 8, 2007, among Registrant, Newmont Mining B.C. Limited and Miramar Mining Corporation. Incorporated by reference to Exhibit 2.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on October 10, 2007 and Exhibit 7.3 to Registrant’s Schedule 13D filed with the Securities and Exchange Commission on October 9, 2007. | ||
|
2.2
|
— | Acquisition Agreement, dated November 30, 2007, between Registrant and Franco-Nevada Corporation. Incorporated by reference to Exhibit 99.1 to Registrant’s Form 8-K/A filed with the Securities and Exchange Commission on December 26, 2007. | ||
|
3.1
|
— | Certificate of Incorporation of Registrant, restated as of October 28, 2009. Incorporated by reference to Exhibit 3.1 to Registrant’s Form 10-Q for the period September 30, 2009, and filed with the Securities and Exchange Commission on October 29, 2009. | ||
|
3.2
|
— | Certificate of Designations of Special Voting Stock. Incorporated herein by reference to Exhibit 3.3 to the Registrant’s Registration Statement on Form 8-A relating to the registration of its common stock, filed with the Securities and Exchange Commission on February 15, 2002. | ||
|
3.3
|
— | Certificate of Elimination of $3.25 Convertible Preferred Stock of Registrant. Incorporated by reference to Exhibit 3.1 to Registrant’s Form 10-Q for the period June 30, 2009, and filed with the Securities and Exchange Commission on July 23, 2009. | ||
|
3.4
|
— | By-laws of the Registrant as amended and restated effective October 28, 2009. Incorporated by reference to Exhibit 3.5 to Registrant’s Form 10-Q for the period September 30, 2009, and filed with the Securities and Exchange Commission on October 29, 2009. | ||
|
4.1
|
— | Indenture, dated as of March 22, 2005, among Newmont Mining Corporation, Newmont USA Limited and Citibank, N.A. Incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 22, 2005. | ||
|
4.2
|
— | Form of 5.875% Note due 2035 issued pursuant to Indenture, dated as of March 22, 2005, among Registrant, Newmont USA Limited and Citibank, N.A. Incorporated by reference to Exhibit 4.2 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 22, 2005. | ||
|
4.3
|
— | Indenture, dated as of July 17, 2007, among Registrant, Newmont USA Limited and The Bank of New York Trust Company, N.A. relating to 1.250% Convertible Senior Notes due 2014. Incorporated by reference to Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. |
E-1
Table of Contents
|
Exhibit
|
||||
|
Number
|
Description
|
|||
|
4.4
|
— | Indenture, dated as of July 17, 2007, among Registrant, Newmont USA Limited and The Bank of New York Trust Company, N.A relating to 1.625% Convertible Senior Notes due 2017. Incorporated by reference to Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
4.5
|
— | Indenture, dated as of February 3, 2009, by and among Registrant, Newmont USA Limited and The Bank of New York Mellon Trust Company, N.A., as trustee (including form of 3.00% Convertible Senior Note due 2012).Incorporated by reference to Exhibit 4.1 of Registrant’s Form 8-K filed with the Securities and Exchange Commission on February 3, 2009. | ||
|
4.6
|
— | Indenture, dated September 18, 2009, among Registrant, Newmont USA Limited and The Bank of New York Mellon Trust Company, N.A., as trustee. Incorporated by reference to Exhibit 4.1 to Registrant’s Form 10-Q for the period September 30, 2009, and filed with the Securities and Exchange Commission on October 29, 2009. | ||
|
4.7
|
— | First Supplemental Indenture, dated September 18, 2009, among Registrant, Newmont USA Limited and The Bank of New York Mellon Trust Company, N.A., as trustee (including form of 5.125% Senior Note due 2019, form of 6.250% Senior Note due 2039, and forms of Guaranty for the 2019 Notes and 2039 Notes) . Incorporated by reference to Exhibit 4.2 to Registrant’s Form 10-Q for the period September 30, 2009, and filed with the Securities and Exchange Commission on October 29, 2009. | ||
|
4.8
|
— | Pass Through Trust Agreement dated as of July 15, 1994, between Newmont Gold Company (now known as “Newmont USA Limited”) and The First National Bank of Chicago relating to the Pass Through Certificates, Series 1994-A1. (The front cover of this Exhibit indicates the material differences between such Exhibit and the substantially similar (except for price-related information) Pass-Through Agreement between Newmont Gold Company (now known as “Newmont USA Limited”) and The First National Bank of Chicago relating to the Pass-Through Certificates, Series 1994-A2.) Incorporated by reference to Exhibit 4.1 to Newmont Gold Company’s Quarterly Report on Form 10-Q for the period September 30, 1994. | ||
|
4.9
|
— | Lease dated as of September 30, 1994, between Newmont Gold Company (now known as “Newmont USA Limited”) and Shawmut Bank Connecticut, National Association relating to Trust No. 1 and a 75% undivided interest in Newmont Gold Company’s refractory gold ore treatment facility. (The front cover of this Exhibit indicates the material differences between such Exhibit and the substantially similar (except for price-related information) entered into on the same date relating to the remaining 25% undivided interest in the facility.) Incorporated by reference to Exhibit 4.2 to Newmont Gold Company’s Quarterly Report on Form 10-Q for the period September 30, 1994. | ||
|
4.10
|
— | Trust Indenture and Security Agreement dated as of July 15, 1994, between Shawmut Bank Connecticut, National Association and The First National Bank of Chicago relating to Trust No. 1 and a 75% undivided interest in Newmont Gold Company’s (now known as “Newmont USA Limited”) refractory gold ore treatment facility. (The front cover of this Exhibit indicates the material differences between such Exhibit and the substantially similar (except for price-related information) entered into on the same date relating to the remaining 25% undivided interest in the facility.) Incorporated by reference to Exhibit 4.3 to Newmont Gold Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1994. | ||
|
4.11
|
— | See footnote (1) . | ||
|
10.1
|
— | Savings Equalization Plan, amended and restated, of Newmont USA Limited, a wholly owned subsidiary of the Registrant, effective December 31, 2008 Incorporated by reference to Exhibit 10.1 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008. |
E-2
Table of Contents
|
Exhibit
|
||||
|
Number
|
Description
|
|||
|
10.2
|
— | Pension Equalization Plan, amended and restated, of Newmont USA Limited, a wholly owned subsidiary of the Registrant, effective December 31, 2008 Incorporated by reference to Exhibit 10.1 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008. | ||
|
10.3
|
— | 1996 Employees Stock Plan amended and restated effective as of March 17, 1999. Incorporated by reference to Exhibit 10(d) to Newmont Mining Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998. | ||
|
10.4
|
— | 1999 Employees Stock Plan. Incorporated by reference to Exhibit 10(e) to Newmont Mining Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998. | ||
|
10.5
|
— | 2005 Stock Incentive Plan, amended and restated effective October 26, 2005. Incorporated by reference to Exhibit 10.1 of Registrant’s Form 8-K filed with the Securities and Exchange Commission on October 31, 2005. | ||
|
10.6
|
— | Form of Award Agreement used for Executive Officers to grant stock options pursuant to Registrant’s 1996 Employees Stock Plan. Incorporated herein by reference to Exhibit 99.2 of Registrant’s Form 8-K filed with the Securities and Exchange Commission on December 13, 2004. | ||
|
10.7
|
— | Form of Award Agreement used for Executive Officers to grant stock options pursuant to Registrant’s 1999 Employees Stock Plan. Incorporated herein by reference to Exhibit 10.1 of Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 2, 2005. | ||
|
10.8
|
— | Form of Award Agreement used for Executive Officers to grant restricted stock pursuant to Registrant’s 1999 Employees Stock Plan. Incorporated herein by reference to Exhibit 10.1 of Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 2, 2005. | ||
|
10.9
|
— | Form of Award Agreement used for Executive Officers to grant restricted stock units pursuant to Registrant’s 1999 Employees Stock Plan. Incorporated herein by reference to Exhibit 10.2 of Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 2, 2005. | ||
|
10.10
|
— | Form of Award Agreement used for Executive Officers to grant stock options pursuant to Registrant’s 2005 Stock Incentive Plan. Incorporated herein by reference to Exhibit 10.2 of Registrant’s Form 8-K filed with the Securities and Exchange Commission on October 26, 2005. | ||
|
10.11
|
— | Form of Award Agreement used for Executive Officers to grant restricted stock pursuant to Registrant’s 2005 Stock Incentive Plan. Incorporated herein by reference to Exhibit 10.3 of Registrant’s Form 8-K filed with the Securities and Exchange Commission on October 26, 2005. | ||
|
10.12
|
— | Form of Award Agreement used for Executive Officers to grant restricted stock units pursuant to the Registrant’s 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 to Registrant’s Form 10-Q for the period March 31, 2009, and filed with the Securities and Exchange Commission on April 30, 2009. | ||
|
10.13
|
— | Award Agreement for Richard O’Brien dated April 30, 2007 to grant restricted stock pursuant to Registrant’s 2005 Stock Incentive Plan. Incorporated herein by reference to Exhibit 10.2 to Registrant’s Form 10-Q for the period March 31, 2007, filed with the Securities and Exchange Commission on April 27, 2007. | ||
|
10.14
|
— | Award Agreement for Richard O’Brien dated October 31, 2008 to grant restricted stock pursuant to Registrant’s 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008. | ||
|
10.15
|
— | Award Agreement for Richard O’Brien dated October 31, 2008 to grant stock options pursuant to Registrant’s 2005 Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008. |
E-3
Table of Contents
|
Exhibit
|
||||
|
Number
|
Description
|
|||
|
10.16
|
— | Form of Award Agreement used for non-employee directors to grant director stock units pursuant to the 2005 Stock Incentive Plan. Incorporated herein by reference to Exhibit 10.1 of Registrant’s Form 8-K filed with the Securities and Exchange Commission on June 17, 2005. | ||
|
10.17
|
— | Annual Incentive Compensation Program of Registrant, as amended and restated effective January 1, 2009. Incorporated by reference to Exhibit 10.1 to Registrant’s Form 10-Q for the period June 30, 2009, and filed with the Securities and Exchange Commission on July 23, 2009. | ||
|
10.18
|
— | Employee Performance Incentive Compensation Program of Registrant, effective and restated January 1, 2009. Incorporated by reference to Exhibit 10.2 to Registrant’s Form 10-Q for the period June 30, 2009, and filed with the Securities and Exchange Commission on July 23, 2009. | ||
|
10.19
|
— | Senior Executive Compensation Program effective January 1, 2010, filed herewith. | ||
|
10.20
|
— | Amended and Restated Officers’ Death Benefit Plan effective January 1, 2004 of Newmont USA Limited, a wholly owned subsidiary of Registrant. Incorporated herein by reference to Exhibit 10.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on December 22, 2004. | ||
|
10.21
|
— | Executive Change of Control Plan, amended and restated effective December 31, 2008, of Newmont USA Limited, a wholly owned subsidiary of Registrant. Incorporated by reference to Exhibit 10.1 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008. | ||
|
10.22
|
— | Newmont Mining Corporation 2000 Non-Employee Directors Stock Plan, as Amended and Restated as of May 17, 2000. Incorporated by reference to Exhibit 10 to Newmont Mining Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000. | ||
|
10.23
|
— | Credit Agreement dated as of July 30, 2004, as amended and restated as of July 28, 2005, as amended and restated April 24, 2007, among Newmont Mining Corporation, Newmont USA Limited, JP Morgan Chase Bank, N.A., Australia and New Zealand Banking Group Limited, Banco Bilbao Vizcaya SA, Bank of Montreal Chicago Branch, The Bank of New York, The Bank of Nova Scotia, The Bank of Tokyo-Mitsubishi, Ltd., BNP Paribas, Calyon New York Branch, CIBC Inc., Citicorp USA Inc., Commonwealth Bank of Australia New York Branch, Deutsche Bank AG New York Branch, HSBC Bank USA, National Association, Mizuho Corporate Bank, Ltd., Royal Bank of Canada, The Royal Bank of Scotland, plc, Societe Generale, Sumitomo Mitsui Banking Corporation, UBS Loan Finance LLC, US Bank N.A. Incorporated by reference as Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the period March 31, 2007, filed with the Securities and Exchange Commission on April 27, 2007. | ||
|
10.24
|
— | Retention and Transition Agreement effective July 22, 2009, between Newmont USA Limited and Brant Hinze. Incorporated by reference to Exhibit 10.4 to Registrant’s Form 10-Q for the period June 30, 2009, and filed with the Securities and Exchange Commission on July 23, 2009. | ||
|
10.25
|
— | Purchase Agreement, dated as of July 11, 2007, by and among Newmont Mining Corporation, Newmont USA Limited and J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as Representatives of the several Initial Purchasers listed in Schedule I thereto. Incorporated by reference as Exhibit 10.1 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.26
|
— | Confirmation of Convertible Note Hedge, dated as of July 11, 2007, between Newmont Mining Corporation and JPMorgan Chase Bank, National Association, London Branch (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.2 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. |
E-4
Table of Contents
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Exhibit
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||||
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Number
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Description
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|||
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10.27
|
— | Confirmation of Convertible Note Hedge, dated as of July 11, 2007, between Newmont Mining Corporation and JPMorgan Chase Bank, National Association, London Branch (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.3 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.28
|
— | Confirmation of Convertible Note Hedge, dated as of July 11, 2007, between Newmont Mining Corporation and Citibank, N.A. (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.4 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. 2007. | ||
|
10.29
|
— | Confirmation of Convertible Note Hedge, dated as of July 11, 2007, between Newmont Mining Corporation and Citibank, N.A. (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.5 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.30
|
— | Confirmation of Convertible Note Hedge, dated as of July 11, 2007, between Newmont Mining Corporation and UBS AG, London Branch (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.6 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.31
|
— | Confirmation of Convertible Note Hedge, dated as of July 11, 2007, between Newmont Mining Corporation and UBS AG, London Branch (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.7 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.32
|
— | Confirmation of Convertible Note Hedge, dated as of July 11, 2007, between Newmont Mining Corporation and Deutsche Bank AG, London Branch (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.8 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.33
|
— | Confirmation of Convertible Note Hedge, dated as of July 11, 2007, between Newmont Mining Corporation and Deutsche Bank AG, London Branch (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.9 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.34
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 11, 2007, between Newmont Mining Corporation and JPMorgan Chase Bank, National Association, London Branch (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.10 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.35
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 11, 2007, between Newmont Mining Corporation and JPMorgan Chase Bank, National Association, London Branch (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.11 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.36
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 11, 2007, between Newmont Mining Corporation and Citibank, N.A. (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.12 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.37
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 11, 2007, between Newmont Mining Corporation and Citibank, N.A. (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.13 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.38
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 11, 2007, between Newmont Mining Corporation and UBS AG, London Branch (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.14 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. |
E-5
Table of Contents
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Exhibit
|
||||
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Number
|
Description
|
|||
|
10.39
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 11, 2007, between Newmont Mining Corporation and UBS AG, London Branch (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.15 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.40
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 11, 2007, between Newmont Mining Corporation and Deutsche Bank AG, London Branch (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.16 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.41
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 11, 2007, between Newmont Mining Corporation and Deutsche Bank AG, London Branch (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.17 to Registrant’s on Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.42
|
— | Confirmation of Convertible Note Hedge, dated as of July 13, 2007, between Newmont Mining Corporation and JPMorgan Chase Bank, National Association, London Branch (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.18 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.43
|
— | Confirmation of Convertible Note Hedge, dated as of July 13, 2007, between Newmont Mining Corporation and JPMorgan Chase Bank, National Association, London Branch (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.19 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.44
|
— | Confirmation of Convertible Note Hedge, dated as of July 13, 2007, between Newmont Mining Corporation and Citibank, N.A. (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.20 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.45
|
— | Confirmation of Convertible Note Hedge, dated as of July 13, 2007, between Newmont Mining Corporation and Citibank, N.A. (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.21 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.46
|
— | Confirmation of Convertible Note Hedge, dated as of July 13, 2007, between Newmont Mining Corporation and UBS AG, London Branch (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.22 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.47
|
— | Confirmation of Convertible Note Hedge, dated as of July 13, 2007, between Newmont Mining Corporation and UBS AG, London Branch (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.23 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.48
|
— | Confirmation of Convertible Note Hedge, dated as of July 13, 2007, between Newmont Mining Corporation and Deutsche Bank AG, London Branch (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.24 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.49
|
— | Confirmation of Convertible Note Hedge, dated as of July 13, 2007, between Newmont Mining Corporation and Deutsche Bank AG, London Branch (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.25 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.50
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 13, 2007, between Newmont Mining Corporation and JPMorgan Chase Bank, National Association, London Branch (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.26 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. |
E-6
Table of Contents
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Exhibit
|
||||
|
Number
|
Description
|
|||
|
10.51
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 13, 2007, between Newmont Mining Corporation and JPMorgan Chase Bank, National Association, London Branch (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.27 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.52
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 13, 2007, between Newmont Mining Corporation and Citibank, N.A. (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.28 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.53
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 13, 2007, between Newmont Mining Corporation and Citibank, N.A. (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.29 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.54
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 13, 2007, between Newmont Mining Corporation and UBS AG, London Branch (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.30 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.55
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 13, 2007, between Newmont Mining Corporation and UBS AG, London Branch (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.31 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.56
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 13, 2007, between Newmont Mining Corporation and Deutsche Bank AG, London Branch (with respect to 2014 Notes). Incorporated by reference as Exhibit 10.32 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.57
|
— | Confirmation of Convertible Note Warrant Transaction, dated as of July 13, 2007, between Newmont Mining Corporation and Deutsche Bank AG, London Branch (with respect to 2017 Notes). Incorporated by reference as Exhibit 10.33 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.58
|
— | Office Space and Office Services Agreement between Newmont (USA) Limited and Wayne W. Murdy effective January 1, 2008. Incorporated by reference as Exhibit 10.37 to Registrant’s Form 10-Q for the period June 30, 2007, filed with the Securities and Exchange Commission on August 2, 2007. | ||
|
10.59
|
— | Sale and Purchase Agreement, dated as of January 27, 2009 with AngloGold Ashanti Australia Limited. Incorporated by reference as Exhibit 10.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on January 28, 2009. | ||
|
10.60
|
— | Contract of Work dated December 2, 1986, between the Government of the Republic of Indonesia and PT Newmont Nusa Tenggara. Incorporated by reference as Exhibit 10.1 to Registrant’s Form 10-Q filed with the Securities and Exchange Commission on July 24, 2008. | ||
|
12.1
|
— | Statement re Computation of Ratio of Earnings to Fixed Charges, filed herewith. | ||
|
21
|
— | Subsidiaries of Newmont Mining Corporation, filed herewith. | ||
|
23.1
|
— | Consent of PricewaterhouseCoopers LLP, filed herewith. | ||
|
24
|
— | Power of Attorney, filed herewith. | ||
|
31.1
|
— | Certification Pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by the Principal Executive Officer, filed herewith. | ||
|
31.2
|
— | Certification Pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by the Principal Financial Officer, filed herewith. |
E-7
Table of Contents
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Exhibit
|
||||
|
Number
|
Description
|
|||
|
32.1
|
— | Statement Required by 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Principal Executive Officer, furnished herewith. | ||
|
32.2
|
— | Statement Required by 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Chief Financial Officer, furnished herewith. | ||
|
100
(2)
|
— | The following materials from the Annual Report on Form 10-K of Newmont Mining Corporation for the year ended December 31, 2009, filed on February 24, 2010, formatted in XBRL (eXtensible Business Reporting Language): (i) Statements of Consolidated Income (Loss), (ii) Statements of Consolidated Cash Flows, (iii) Consolidated Balance Sheets, (iv) Statements of Consolidated Changes in Equity, (v) Statements of Consolidated Comprehensive Income (Loss), (vi) document and entity information, and (vii) related notes to these financial statements tagged as blocks of text. In accordance with Rule 402 of Regulation S-T, the information in this Exhibit 100 shall not be deemed “filed” for the purposes of section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by the specific reference in such filing. |
| (1) | In reliance upon Item 601(b)(4)(iii) of Regulation S-K, various instruments defining the rights of holders of long-term debt of the Newmont Mining Corporation are not being filed herewith because the total of securities authorized under each such instrument does not exceed 10% of the total assets of Newmont Mining Corporation. Newmont Mining Corporation hereby agrees to furnish a copy of any such instrument to the Commission upon request. | |
| (2) | In accordance with Rule 402 of Regulation S-T, the information in this Exhibit 100 shall not be deemed “filed” for the purposes of section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by the specific reference in such filing. |
E-8
TABLE OF CONTENTS
Part IprintItem 1. Business (dollars in Millions Except Per Share, Per Ounce and Per Pound Amounts)printItem 1A. Risk Factors (dollars in Millions Except Per Share, Per Ounce and Per Pound Amounts)printItem 2. Properties (dollars in Millions Except Per Share, Per Ounce and Per Pound Amounts)printItem 3. Legal ProceedingsprintItem 4. Submission Of Matters To A Vote Of Security HoldersprintItem 4A. Executive Officers Of The RegistrantprintPart IIprintItem 5. Market For Registrant S Common Equity, Related Stockholder Matters and Issuer Purchase Of Equity SecuritiesprintItem 6. Selected Financial Data (dollars in Millions, Except Per Share)printItem 8. Financial Statements and Supplementary DataprintNote 1 The CompanyprintNote 2 Summary Of Significant Accounting PoliciesprintNote 3 Price-capped Forward Sales ContractsprintNote 4 Midas RedevelopmentprintNote 5 Advanced Projects, Research and DevelopmentprintNote 6 Other Expense, NetprintNote 7 Other Income, NetprintNote 8 Income TaxesprintNote 9 Equity Income (loss) Of AffiliatesprintNote 10 Discontinued Operations and Assets and Liabilities Held For SaleprintNote 11 Net Income Attributable To Noncontrolling InterestsprintNote 12 Newmont Equity and Income (loss) Per ShareprintNote 13 AcquisitionsprintNote 14 Fair Value AccountingprintNote 15 Derivative InstrumentsprintNote 16 InvestmentsprintNote 17 InventoriesprintNote 18 Stockpiles and Ore on Leach PadsprintNote 19 Other AssetsprintNote 20 Property, Plant and Mine DevelopmentprintNote 21 DebtprintNote 22 Employee-related BenefitsprintNote 23 Stock Based CompensationprintNote 24 Other LiabilitiesprintNote 25 Reclamation and Remediation Liabilities (asset Retirement Obligations)printNote 26 Accumulated Other Comprehensive Income (loss)printNote 27 Related Party TransactionsprintNote 28 Net Change in Operating Assets and LiabilitiesprintNote 29 Supplemental Cash Flow InformationprintNote 30 Operating Lease CommitmentsprintNote 31 Segment and Related InformationprintNote 32 Consolidating Financial StatementsprintNote 33 Commitments and ContingenciesprintNote 34 Unaudited Supplementary DataprintNote 35 Subsequent EventsprintItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureprintItem 9A. Controls and ProceduresprintPart IIIprintItem 10. Directors and Executive Officers Of The RegistrantprintItem 11. Executive CompensationprintItem 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder MattersprintItem 13. Certain Relationships and Related TransactionsprintItem 14. Principal Accountant Fees and ServicesprintPart IVprintItem 15. Exhibits and Financial Statement Schedulesprint