NEWMONT CORP /DE/
10-Ks and 10-Qs
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Table of Contents
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-K
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, 2010 | ||
|
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
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 whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). 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, 2010, the aggregate market value of the
registrant’s voting and non-voting common equity held by
non-affiliates of the registrant was $30,366,217,467 based on
the closing sale price as reported on the New York Stock
Exchange. There were 486,564,649 shares of common stock
outstanding (and 6,703,999 exchangeable shares exchangeable into
Newmont Mining Corporation common stock on a
one-for-one
basis) on February 18, 2011.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of Registrant’s definitive Proxy Statement
submitted to the Registrant’s stockholders in connection
with our 2011 Annual Stockholders Meeting to be held on
April 19, 2011, are incorporated by reference into
Part III of this report.
Table of Contents
TABLE OF
CONTENTS
i
Table of Contents
ii
Table of Contents
| ITEM 1. | BUSINESS (dollars in millions except per share, per ounce and per pound amounts) |
Introduction
Newmont Mining Corporation is primarily a gold producer with
significant assets or operations in the United States,
Australia, Peru, Indonesia, Ghana, Canada, New Zealand and
Mexico. At December 31, 2010, Newmont had proven and
probable gold reserves of 93.5 million ounces and an
aggregate land position of approximately 27,500 square
miles (71,100 square kilometers). Newmont is also engaged
in the production of copper, principally through its Batu Hijau
operation in Indonesia and Boddington operation in Australia.
Newmont Mining Corporation’s original predecessor
corporation was incorporated in 1921 under the laws of Delaware.
Newmont’s corporate headquarters are in Greenwood Village,
Colorado, USA. In this report, “Newmont,” the
“Company,” “our” and “we” refer to
Newmont Mining Corporation
and/or
our
affiliates and subsidiaries. References to “A$” refer
to Australian currency, “C$” to Canadian currency,
“NZ$” to New Zealand currency, “IDR” to
Indonesian currency and “$” to United States currency.
Newmont’s
Sales
and long-lived assets are
geographically distributed as follows:
| Sales | Long-Lived Assets | |||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
|
Indonesia
|
26 | % | 24 | % | 17 | % | 14 | % | 14 | % | 17 | % | ||||||||||||
|
Australia/New Zealand
|
24 | % | 16 | % | 17 | % | 33 | % | 33 | % | 20 | % | ||||||||||||
|
United States
|
22 | % | 25 | % | 32 | % | 20 | % | 21 | % | 26 | % | ||||||||||||
|
Peru
|
19 | % | 26 | % | 26 | % | 11 | % | 10 | % | 13 | % | ||||||||||||
|
Ghana
|
7 | % | 7 | % | 7 | % | 8 | % | 8 | % | 9 | % | ||||||||||||
|
Mexico
|
2 | % | 2 | % | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||
|
Canada
|
— | % | — | % | — | % | 13 | % | 13 | % | 14 | % | ||||||||||||
On February 3, 2011, Newmont and Fronteer Gold Inc.
(“Fronteer”) announced that they entered into an
agreement under which Newmont will acquire all of the
outstanding common shares of Fronteer by way of a Plan of
Arrangement (“Arrangement”). Under the Arrangement,
shareholders of Fronteer will receive C$14.00 in cash and one
common share in Pilot Gold Inc., a Canadian corporation, which
will retain certain exploration assets of Fronteer, for each
common share of Fronteer. The Arrangement will be subject to
approval by at least 66% of the votes cast at a special meeting
of Fronteer’s shareholders, expected to be held in April
2011, and the subsequent approval of the Ontario Superior Court
of Justice. The agreement also contains certain termination
rights for both Newmont and Fronteer including a break fee of
C$85 payable by Fronteer, if the transaction is not completed in
certain specified circumstances. The transaction is expected to
close in the second quarter of 2011 for approximately C$2,300.
Fronteer owns, among other assets, the exploration stage Long
Canyon project, which is located approximately one hundred miles
from the Company’s existing infrastructure in Nevada and
provides the potential for significant development and operating
synergies.
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 in the United States, 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 Boddington in Australia,
Batu Hijau in Indonesia and other smaller operations in
Australia and New Zealand. Our Africa segment consists primarily
of Ahafo and Akyem in Ghana. See Item 1A, Risk Factors,
below and Note 3 to the Consolidated
1
Table of Contents
Financial Statements for information relating to our operating
segments, domestic and export sales, and lack of dependence on a
limited number of customers.
Products
References in this report to attributable gold ounces or
attributable copper pounds mean that portion of gold or copper
produced, sold or included in proven and probable reserves based
on our ownership
and/or
economic interest, unless otherwise noted.
Gold
General.
We had consolidated gold production
of 6.5 million ounces (5.4 million ounces attributable
to Newmont) in 2010, 6.5 million ounces (5.2 million
ounces) in 2009 and 6.2 million ounces (5.2 million
ounces) in 2008. Of our 2010 consolidated gold production,
approximately 30% came from North America, 23% from South
America, 39% from Asia Pacific and 8% from Africa.
For 2010, 2009 and 2008, 81%, 83% and 88%, respectively, of our
Sales
were attributable to gold. Most of our
Sales
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 2008 through 2010, on
average, current mine production has accounted for approximately
61% of the annual gold supply.
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 | |||||||||
|
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
|
$ | 1,421 | $ | 1,058 | $ | 1,225 | ||||||
|
2011 (through February 18, 2011)
|
$ | 1,389 | $ | 1,319 | $ | 1,357 | ||||||
Source: Kitco, Reuters and the London Bullion Market Association
2
Table of Contents
On February 18, 2011, the afternoon fixing gold price on
the London Bullion Market was $1,384 per ounce and the spot
market gold price on the New York Commodity Exchange was
$1,388 per ounce.
We generally sell our gold at the prevailing market price during
the month in which the gold is delivered to the customer. We
recognize revenue from a sale when the price is determinable,
the gold has been delivered, the title has been transferred and
collection of the sales price is reasonably assured.
Copper
General.
We had consolidated copper production
of 600 million pounds (327 million pounds attributable
to Newmont) in 2010, 504 million pounds (227 million
pounds) in 2009 and 285 million pounds (128 million
pounds) in 2008. Copper production is in the form of saleable
concentrate that is sold to smelters for further treatment and
refining. For 2010, 2009 and 2008, 19%, 17% and 12%,
respectively, of our
Sales
were attributable to copper.
Copper Uses.
Refined copper is incorporated
into wire and cable products for use in the construction,
electric utility, communications and transportation industries.
Copper is also used in industrial equipment and machinery,
consumer products and a variety of other electrical and
electronic applications and is also used to make brass. Copper
substitutes include aluminum, plastics, stainless steel and
fiber optics. Refined, or cathode, copper is also an
internationally traded commodity.
Copper Supply.
A combination of current mine
production and recycled scrap material make up the annual copper
supply.
Copper Price.
The copper price is quoted on
the London Metal Exchange in terms of dollars per metric ton of
high grade copper. The following table presents the dollar per
pound equivalent of the annual high, low and average daily
prices of high grade copper on the London Metal Exchange over
the past ten years ($/pound):
| Year | High | Low | Average | |||||||||
|
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
|
$ | 4.38 | $ | 2.75 | $ | 3.43 | ||||||
|
2011 (through February 18, 2011)
|
$ | 4.62 | $ | 4.20 | $ | 4.41 | ||||||
Source: London Metal Exchange
On February 18, 2011, the high grade copper closing price
on the London Metal Exchange was $4.48 per pound.
We generally sell our copper based on the monthly average market
price for the third month following the month in which the
delivery to the customer takes place. We recognize revenue from
a sale when the price is determinable, the concentrate has been
loaded on a vessel, the title has been transferred and
collection of the sales price is reasonably assured. For revenue
recognition, we use a provisional price based on the average
prevailing market price during the two week period prior to
3
Table of Contents
completion of vessel loading. The copper concentrate is marked
to market through earnings until final settlement.
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 successive stages of flotation, resulting in a
concentrate containing approximately 26% to 31% 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.
Hedging
Activities
Our strategy is to provide shareholders with leverage to changes
in gold and copper prices by selling our gold and copper at
current market prices and consequently, we do not hedge our gold
and copper sales. We continue to manage certain 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 17 to the Consolidated Financial Statements.
Gold and Copper
Reserves
At December 31, 2010 we had 93.5 million ounces of
proven and probable gold reserves attributable to Newmont. We
added 8.2 million ounces to proven and probable reserves,
and depleted
4
Table of Contents
6.5 million ounces during 2010. We also added
0.3 million ounces to proven and probable reserves through
acquisitions and divested 0.3 million ounces. 2010 reserves
were calculated at a gold price assumption of $950, A$1,100 or
NZ$1,350 per ounce, respectively. A reconciliation of the
changes in proven and probable gold reserves during the past
three years follows:
| 2010 | 2009 | 2008 | ||||||||||
| (millions of ounces) | ||||||||||||
|
Opening balance
|
91.8 | 85.0 | 86.5 | |||||||||
|
Depletion
|
(6.5 | ) | (6.8 | ) | (6.7 | ) | ||||||
|
Additions
(1)
|
8.2 | 6.4 | 5.2 | |||||||||
|
Acquisitions
(2)
|
0.3 | 8.2 | — | |||||||||
|
Other
divestments
(3)
|
(0.3 | ) | (1.0 | ) | — | |||||||
|
Closing balance
|
93.5 | 91.8 | 85.0 | |||||||||
A reconciliation of the changes in proven and probable gold
reserves for 2010 by region is as follows:
|
North
|
South
|
Asia
|
||||||||||||||
| America | America | Pacific | Africa | |||||||||||||
| (millions of ounces) | ||||||||||||||||
|
Opening balance
|
30.3 | 11.8 | 32.9 | 16.8 | ||||||||||||
|
Depletion
|
(2.3 | ) | (1.0 | ) | (2.5 | ) | (0.7 | ) | ||||||||
|
Additions
|
5.5 | 0.6 | 1.0 | 1.1 | ||||||||||||
|
Acquisitions
(2)
|
— | — | 0.3 | — | ||||||||||||
|
Other
divestments
(3)
|
— | — | (0.3 | ) | — | |||||||||||
|
Closing balance
|
33.5 | 11.4 | 31.4 | 17.2 | ||||||||||||
| (1) | The impact of the change in gold price assumption on reserve additions was approximately 1.7 million, 1.7 million and 1.9 million ounces in 2010, 2009 and 2008, respectively. The gold price assumption was $950 per ounce in 2010, $800 per ounce in 2009, $725 per ounce in 2008 and $575 per ounce in 2007. | |
| (2) | In 2010, we recognized our attributable interest in Regis Resources Ltd and their reserves in the Duketon belt of Western Australia for an attributable reserve of 0.3 million ounces. In 2009, reserves were increased by 6.7 million ounces through the acquisition of the remaining 33.33% interest in Boddington. At December 31, 2009, our economic interest in Batu Hijau increased to 52.44% as a result of transactions with a noncontrolling partner, increasing reserves by 1.5 million ounces. | |
| (3) | In April 2010, our direct ownership interest in Batu Hijau decreased from 35.44% to 31.5% (economic interest decreased from 52.44% to 48.50%) as a result of the divestiture required under the Contract of Work. In November and December 2009, our direct ownership interest 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, 2010 we had 9,420 million pounds of
proven and probable copper reserves. We added 1,000 million
pounds to proven and probable reserves, depleted
370 million pounds and divested 330 million pounds
during 2010. 2010 reserves were calculated at a copper price of
$2.50 or
5
Table of Contents
A$2.95 per pound. A reconciliation of the changes in proven and
probable copper reserves during the past three years is as
follows:
| 2010 | 2009 | 2008 | ||||||||||
| (millions of pounds) | ||||||||||||
|
Opening balance
|
9,120 | 7,780 | 7,550 | |||||||||
|
Depletion
|
(370 | ) | (310 | ) | (210 | ) | ||||||
|
Additions
(1)
|
1,000 | 400 | 440 | |||||||||
|
Acquisitions
(2)
|
— | 2,040 | — | |||||||||
|
Other
divestments
(3)
|
(330 | ) | (790 | ) | — | |||||||
|
Closing balance
|
9,420 | 9,120 | 7,780 | |||||||||
A reconciliation of changes in proven and probable copper
reserves for 2010 by region is as follows:
|
North
|
South
|
Asia
|
||||||||||
| America | America | Pacific | ||||||||||
| (millions of pounds) | ||||||||||||
|
Opening balance
|
900 | 1,660 | 6,560 | |||||||||
|
Depletion
|
(20 | ) | — | (350 | ) | |||||||
|
Additions
|
760 | — | 240 | |||||||||
|
Acquisitions
|
— | — | — | |||||||||
|
Other
divestments
(3)
|
— | — | (330 | ) | ||||||||
|
Closing balance
|
1,640 | 1,660 | 6,120 | |||||||||
| (1) | The impact of the change in copper price assumption on reserve additions was 150 million, 290 million and 300 million pounds in 2010, 2009 and 2008, respectively. The copper price assumption was $2.50 per pound in 2010, $2.00 per pound in 2009, $2.00 per pound in 2008 and $1.75 per pound in 2007. | |
| (2) | In 2009, reserves were increased by 640 million pounds through the acquisition of the remaining 33.33% interest in Boddington. At December 31, 2009, our economic interest in Batu Hijau increased to 52.44% as a result of transactions with a noncontrolling partner, increasing reserves by 1,400 million pounds. | |
| (3) | In April 2010, our direct ownership interest in Batu Hijau decreased from 35.44% to 31.5% (economic interest decreased from 52.44% to 48.50%) as a result of the divestiture required under the Contract of Work. In November and December 2009, our direct ownership interest 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. Our
Exploration
expense was $218, $187 and $213 in 2010, 2009
and 2008, respectively.
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
6
Table of Contents
government. These countries include, among others, Australia,
Canada, Ghana, Indonesia, Mexico, New Zealand, Peru and
Suriname. The concessions and contracts are subject to the
political risks associated with foreign operations. See
Item 1A, Risk Factors, 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, below.
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. At
December 31, 2010, $904 was accrued for reclamation costs
relating to current or recently producing properties.
We are 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. Based upon
our best estimate of our liability for these matters, $144 was
accrued at December 31, 2010 for such obligations
associated with properties previously owned or operated by us or
our subsidiaries. The amounts accrued for these matters are
reviewed periodically based upon facts and circumstances
available at the time.
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 4 and 31 to the
Consolidated Financial Statements, below.
In addition to legal and regulatory compliance, we have
developed complimentary 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 reducing 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 (“DJSI”),
remaining a member of the DJSI for four consecutive years, and
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receiving International Cyanide Management Code certification at
100% of registered Newmont sites as of the end of 2009.
Employees and
Contractors
Approximately 15,500 people were employed by Newmont at
December 31, 2010. In addition, approximately
18,800 people were working as contractors in support of
Newmont’s operations.
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 may include, without limitation:
| • | Estimates regarding future earnings; | |
| • | Estimates of future mineral production and sales, for specific operations and attributable to Newmont; | |
| • | 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. |
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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 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 Relations 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. Certain other information, including 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 position 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 prices of gold and copper,
which fluctuate on a daily basis and 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; | |
| • | expectations of the future rate of inflation; | |
| • | interest rates; |
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| • | 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 gold or copper. We have recorded asset
write-downs in the past and may experience additional
write-downs as a result of lower 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 prevailing gold or copper prices; | |
| • | 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. Even if significant
mineralization is discovered, it will likely take many years
from the initial phases of exploration until commencement of
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 or copper 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.
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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 position.
Estimates of
proven and probable reserves and non reserve mineralization are
uncertain and the volume and grade of ore actually recovered may
vary from our estimates.
The reserves stated in this report represent the amount of gold
and copper that we estimated, at December 31, 2010 and
2009, could be economically and legally extracted or produced at
the time of the reserve determination. Estimates of proven and
probable reserves are subject to considerable uncertainty. Such
estimates are, to a large extent, based on the prices of gold
and copper 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
phases of exploration until commencement of production, during
which time, the economic feasibility of production 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 position 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 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 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 operations and
economic returns anticipated from new 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. Such projects could experience
unexpected problems and delays during development, construction
and mine
start-up.
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Our decision to develop a project is typically based on the
results of feasibility studies, 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:
| • | changes in tonnage, grades and metallurgical characteristics of ore to be mined and processed; | |
| • | higher input commodity and labor costs; | |
| • | the quality of the data on which engineering assumptions were made; | |
| • | adverse geotechnical conditions; | |
| • | availability of adequate labor force and supply and cost of water and power; | |
| • | 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; | |
| • | 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
position.
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, milling equipment and conveyor systems; | |
| • | underground fires or floods; | |
| • | unexpected geological formations or conditions (whether in mineral or gaseous form); | |
| • | 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 lightning, cyclonic or tropical storms, floods or other inclement weather conditions. |
The occurrence of one or more of these events in connection with
our exploration activities and development and production of
mining operations may result in the death of, or personal injury
to, our employees, other personnel or third parties, 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 reputation, business, prospects, results of
operations and financial position.
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Shortages of
critical parts, equipment and skilled labor may adversely affect
our operations and development projects.
The mining 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, impacted the efficiency of our operations, and resulted
in cost increases and delays in construction of projects;
thereby impacting operating costs, capital expenditures and
production and construction schedules.
Mining
companies are increasingly required to consider and provide
benefits to the communities and countries in which they operate,
and are subject to extensive environmental, health and safety
laws and regulations.
As a result of public concern about the real or perceived
detrimental effects of economic globalization and global climate
impacts, businesses generally and large multinational
corporations in natural resources industries, such as Newmont,
in particular, face increasing public scrutiny of their
activities. These businesses are under pressure to demonstrate
that, as they seek to generate satisfactory returns on
investment to shareholders, other stakeholders, including
employees, governments, communities surrounding operations and
the countries in which they operate, benefit and will continue
to benefit from their commercial activities. Such pressures tend
to be particularly focused on companies whose activities are
perceived to have a high impact on their social and physical
environment. The potential consequences of these pressures
include reputational damage, legal suits and social investment
obligations.
In addition, our ability to successfully obtain key permits and
approvals to explore for, develop and operate mines and to
successfully operate 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 creation of social and
economic benefits in the surrounding communities. Our ability to
obtain permits and approvals and to successfully operate in
particular communities may be adversely impacted by real or
perceived detrimental events associated with our activities or
those of other mining companies affecting the environment, human
health and safety of communities in which we operate. Delays in
obtaining or failure to obtain government permits and approvals
may adversely affect our operations, including our ability to
explore or develop properties, commence production or continue
operations. Key permits and approvals may be revoked or
suspended or may be varied in a manner that adversely affects
our operations, including our ability to explore or develop
properties, commence production or continue operations.
Our exploration, development, mining and processing operations
are subject to extensive laws and regulations governing worker
health and safety and the protection of the environment, which
generally apply to air and water quality, protection of
protected species, hazardous waste management and reclamation.
We have made, and expect to make in the future, significant
expenditures to comply with such laws and regulations.
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.
Future changes in applicable laws, regulations and permits or
changes in their enforcement or regulatory interpretation could
substantially increase costs to achieve compliance, lead to the
revocation of existing or future exploration or mining rights or
otherwise have an adverse impact on our results of operations
and financial position. For instance, the operation of our mines
in the United States is subject to regulation by the Federal
Mine Safety and Health Administration (“MSHA”) under
the Federal Mine Safety and Health Act of 1977 (the “Mine
Act”). MSHA inspects our mines on a regular basis and
issues various citations and orders when it believes a violation
has occurred under the Mine Act. If such inspections result in
an alleged violation, we may be subject to fines, penalties or
sanctions and our mining operations could be subject to
temporary or extended closures, which could have an adverse
effect on our results of operations and financial position.
Following passage of The Mine Improvement and New Emergency
Response Act of 2006, MSHA significantly increased the
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numbers of citations and orders charged against mining
operations. The dollar penalties assessed for citations issued
has also increased in recent years.
In addition, the United States Environmental Protection Agency
(“EPA”) is currently seeking to regulate as hazardous
waste under the Resource Conservation and Recovery Act
(“RCRA”) secondary streams derived from core
beneficiation operations, such as our roasting operations, in
Nevada. Historically, such streams have been considered exempt
from RCRA and have been regulated by the Nevada Division of
Environmental Protection. The regulation of these streams as
hazardous waste under RCRA could subject us to civil and
criminal penalties for past practices and require us to incur
substantial future costs to modify our waste water collection
systems and retrofit our tailings storage facilities at our
Nevada mining operations, which could have an adverse effect on
our results of operations and financial position.
Increased global attention or regulation on water quality
discharge, such as recently enacted water quality legislation
applicable to our operations in Peru, and on restricting or
prohibiting the use of cyanide and other hazardous substances in
processing activities could similarly have an adverse impact on
our results of operations and financial position due to
increased compliance and input costs.
We have implemented a management system 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
position, 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.
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. For example, 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.
Any underestimated or unanticipated rehabilitation costs could
materially affect our financial position, results of operations
and cash flows. Environmental liabilities are accrued when they
become known, are 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 attributable to Newmont stockholders in
the related period. In addition, regulators are increasingly
requesting security in the form of cash collateral, credit,
trust arrangements or guarantees to secure the performance of
environmental obligations, which could have an adverse effect on
our financial position. For a more detailed discussion of
potential environmental liabilities, see the discussion in
Environmental Matters, Note 31 to the Consolidated
Financial Statements.
The laws and regulations governing mine closure and remediation
in a particular jurisdiction are subject to review at any time
and may be amended to impose additional requirements and
conditions which may cause our provisions for environmental
liabilities to be underestimated and could materially affect our
financial position or results of operations.
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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.
Energy is a significant input to our mining operations, with our
principal energy sources being electricity, purchased petroleum
products, natural gas and coal.
A number of governments or governmental bodies have introduced
or are contemplating regulatory changes in response to the
potential impacts of climate change that are viewed as the
result of emissions from the combustion of carbon-based fuels.
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 emissions targets for 2020. Prior to the
January 31, 2010 deadline, the United States, Australia,
New Zealand, 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 United States to address the concerns
raised by such endangerment finding. Additionally, the
Australian Government may introduce legislation authorizing a
national emissions trading scheme and mandatory renewable energy
targets.
Legislation and increased regulation regarding climate change
could impose increased 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. Until the timing, scope and extent of any
future regulation becomes known, we cannot predict the effect on
our financial condition, financial position, results of
operations and ability to compete.
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
are subject to risks of doing business.
Exploration, development, production and mine closure activities
are subject to political, economic and other risks of doing
business, 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, including retroactive increases and claims and requests to renegotiate terms of existing royalties and taxes, by governmental entities, including such increases, claims and/or requests by the governments of Ghana, Indonesia, Australia, Peru, the United States and the State of Nevada; | |
| • | increases in training and other costs and challenges relating to requirements by governmental entities to employ the nationals of the country in which a particular operation is located; | |
| • | delays in obtaining or renewing, or the inability to obtain, maintain or renew, necessary governmental permits and approvals; |
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| • | claims for increased mineral royalties or ownership interests by local or indigenous communities; | |
| • | 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; | |
| • | increases in costs relating to, or restrictions or prohibitions on, the use of ports for concentrate storage and shipping, particularly in relation to our Boddington and Batu Hijau operations where use of alternative ports is not currently economically feasible; | |
| • | 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 criminal activities such as trespass, illegal mining, theft and vandalism; | |
| • | risk of loss due to disease and other potential endemic health issues; | |
| • | disadvantages relating to submission to the jurisdiction of foreign courts or arbitration panels or enforcement or appeals of judgments at foreign courts or arbitration panels against a sovereign nation within its own territory; 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. |
Consequently, our exploration, development and production
activities 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.
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.
Presidential and parliamentary elections took place in July
2009, 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, and our
assets and operations in particular, and may have a preference
for national mining companies to own Indonesia’s mineral
assets.
Violence committed by radical elements in Indonesia and other
countries, and the presence or increase 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.
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Our Batu Hijau
operation in Indonesia may be adversely affected by a delay in
receiving certain permit renewals.
Over the years, we are required to apply for renewals of certain
key permits related to Batu Hijau. PTNNT, the entity operating
Batu Hijau, employs a submarine tailings disposal
(“STD”) system. The STD system is operated pursuant to
a permit from the government of Indonesia that is up for renewal
in May 2011, and is a key requirement to continue normal
operations at Batu Hijau. A delay or failure to receive a STD
permit renewal could adversely impact Batu Hijau operations and
may adversely impact our future operating and financial results.
Our ownership
interest in Batu Hijau has been reduced in accordance with the
Contract of Work issued by the Indonesian Government and future
reductions in our interest in PTNNT may result in our loss of
control over the Batu Hijau operations.
We operate Batu Hijau and currently have a 31.5% direct
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%. 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 certain voting rights and obligations to the
Company. On June 25, 2010, PTPI completed the sale of
approximately a 2.2% interest in PTNNT to PT Indonesia Masbaga
Investama (“PTIMI”) and the Company entered into a
transaction with PTIMI, whereby we agreed to advance certain
funds to PTIMI in exchange for a pledge of PTIMI’s 2.2%
share of PTNNT dividends, net of withholding tax, and the
assignment of certain voting rights and obligations to the
Company. Based on the above transactions, the Company recognized
an additional 17% effective economic interest in PTNNT. Combined
with the Company’s 56.25% ownership in NTP, Newmont has a
48.5% effective economic interest in PTNNT and continues to
consolidate Batu Hijau in its Consolidated Financial Statements.
Under the Contract of Work executed in 1986 between the
Indonesian government and PTNNT, 51% of PTNNT’s shares must
be offered for sale, first, to the Indonesian government or,
second, to Indonesian nationals by March 31, 2010. Pursuant
to this divestiture provision, the ownership interest in the
Batu Hijau mine’s production, assets and 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. Loss of control over PTNNT operations
may result in our deconsolidation of PTNNT for accounting
purposes, which would reduce our reported consolidated sales,
total assets and operating cash flows. See Note 31 to the
Consolidated Financial Statements for more information about the
PTNNT share divestiture.
Furthermore, as part of the negotiation of the share
divestitures with PT Multi Daerah Bersaing (“PTMDB”),
the consortium of Indonesian regional and local governments and
an unrelated Indonesian company that purchased such shares, 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 remains in effect for so long as NTP owns
more shares of PTNNT than PTMDB. If the operating agreement
terminates, we will likely lose effective control over the
operations of Batu Hijau and will be at risk for operations
conducted in a manner that could potentially reduce the value of
PTNNT or results in safety, environmental or social standards
below those adhered to by NTP.
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The Contract
of Work has been and may continue to be the subject of dispute
or legal review and is subject to termination by the Indonesian
government if we do not comply with our obligations, which would
result in loss of all or much of the value of Batu
Hijau.
The divestiture provisions of the Contract of Work have been the
subject of dispute. In 2008, the Department of Energy and
Mineral Resources of the Indonesian government (the
“DEMR”) alleged that PTNNT was in breach of its
divestiture requirements under the Contract of Work and
threatened to terminate the Contract of Work if PTNNT did not
agree to divest shares in accordance with the direction of the
DEMR. The matter was resolved by an international arbitration
panel in March 2009. The arbitration decision led to NTP
divesting 24% of PTNNT’s shares to PTMDB, the party
nominated by the DEMR. NTP is in the concluding stages of
working with the DEMR to divest the final 7% interest in PTNNT
required to be divested under the Contract of Work. Following
NTP’s divestiture of 24% of PTNNT’s shares to PTMDB,
PTPI filed lawsuits in the South Jakarta District Court
contending that it owns, or has rights to own, the shares in
PTNNT that were divested by NTP to fulfill the requirements of
the Contract of Work and the March 2009 arbitration award. In
November 2010, the South Jakarta District Court issued a ruling
with respect to one of the lawsuits, finding that PTPI has an
entitlement to receive the full 31% interest in PTNNT required
to be divested under the Contract of Work and awarding PTPI
monetary damages of approximately $27. NTP has appealed the
South Jakarta District Court ruling, a ruling which we believe
contradicts both the Contract of Work and the March 2009
arbitration. Although we are confident that the appellate courts
will reverse the South Jakarta District Court ruling, there can
be no assurance that NTP will prevail in this litigation.
Although the Indonesian government has acknowledged that PTNNT
is currently in compliance with the Contract of Work, future
disputes may arise under the Contract of Work. 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. See Note 31 to the Consolidated
Financial Statements for more information about the disputes
involving the Contract of Work.
In January 2009, the Indonesian Government passed a new mining
law. While the law preserves the right PTNNT to operate our Batu
Hijau operations pursuant to the Contract of Work, no assurances
can be provided that the Indonesian government will not seek to
renegotiate certain provisions of the Contract of Work to
conform to certain provisions of the new mining law, which could
include requests for, among other things, higher royalty rates.
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, some of which blocked the road between the Yanacocha
mine complex and the City of Cajamarca in Peru. 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 2008, 2009, 2010 and thus far in 2011, 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 results of
operations and financial position.
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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 the older age of certain of our
mines and 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 and hydrological impacts. 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 and at our operations in Nevada and
Peru. In January 2010, our affiliate, PTNNT, experienced a
geotechnical failure 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 and hydrological conditions, such as 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, wall instability, and seismic activity, which may
result in slippage of material.
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 position.
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 $79 for each ounce of gold
produced from operations in Australia before taking into account
the impact of currency hedging. From December 31, 2009 to
December 31, 2010, the Australian dollar appreciated by
approximately $0.12 per U.S. dollar, or approximately 13%.
We hedge up to 90% of our future forecasted Australian dollar
denominated operating expenditures to reduce the variability of
our Australian dollar exposure. At December 31, 2010 we
have hedged 72%, 45%, 22%, 17% and 8% of our forecasted
Australian denominated operating costs in 2011, 2012, 2013, 2014
and 2015, respectively. Our Australian dollar derivative
programs will limit the benefit to the Company of future
decreases, if any, in the U.S. 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
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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 of our outstanding
debt and pay dividends could be significantly constrained.
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, 2010 Standard & Poor’s
Rating Services rated Newmont Mining Corporation BBB+, with a
stable outlook, and Moody’s Investors Service rated Newmont
Mining Corporation Baa1 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 position.
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 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; | |
| • | 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 addressing any pre-existing liabilities or claims involving 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, results of operations and financial position.
Our operations
may be adversely affected by energy shortages.
Our mining operations and development projects require
significant amounts of energy. Our principal energy sources are
electricity, purchased petroleum products, natural gas and coal.
Some of our operations are in remote locations requiring long
distance transmission of power, and in some locations we compete
with other companies for access to third party power generators
or electrical supply networks. A disruption in the transmission
of energy, inadequate energy transmission infrastructure or the
termination of any of our energy supply contracts could
interrupt our energy supply and adversely affect our operations.
We have periodically experienced power shortages in Ghana
resulting primarily from drought, increasing demands for
electricity and insufficient hydroelectric or other generating
capacity which
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caused curtailment of production at our Ahafo operations. As a
result of the mining industry’s agreement 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. The need to use 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 position.
Continuation
of our mining production is dependent on the availability of
sufficient water supplies to support our mining
operations.
Our mining operations require significant quantities of water
for mining, ore processing and related support facilities. Our
operations in North and South America and Australia are in areas
where water is scarce and competition among users for continuing
access to water is significant. Continuous production at our
mines is dependent on our ability to maintain our water rights
and claims and defeat claims adverse to our current water uses
in legal proceedings. Although each of our operations currently
has sufficient water rights and claims to cover its operational
demands, we cannot predict the potential outcome of pending or
future legal proceedings relating to our water rights, claims
and uses. The loss of some or all water rights for any of our
mines, in whole or in part, or shortages of water to which we
have rights could require us to curtail or shut down mining
production and could prevent us from pursuing expansion
opportunities. Laws and regulations may be introduced in some
jurisdictions in which we operate which could limit our access
to sufficient water resources in our operations, thus adversely
affecting our operations.
The 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.
Production at our mines is dependent upon the efforts of our
employees and, consequently, our maintenance of good
relationships 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, 2010 union represented
employees constituted approximately 48% of our worldwide work
force. There can be no assurance that any future disputes will
be resolved without disruptions to operations.
We rely on contractors to conduct a significant portion of
our operations and construction projects.
A significant portion of our operations and construction
projects are currently conducted in whole or in part by
contractors. As a result, our operations are subject to a number
of risks, some of which are outside our control, including:
| • | negotiating agreements with contractors on acceptable terms; | |
| • | the inability to replace a contractor and its operating equipment in the event that either party terminates the agreement; | |
| • | reduced control over those aspects of operations which are the responsibility of the contractor; |
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| • | failure of a contractor to perform under its agreement; | |
| • | interruption of operations or increased costs in the event that a contractor ceases its business due to insolvency or other unforeseen events; | |
| • | failure of a contractor to comply with applicable legal and regulatory requirements, to the extent it is responsible for such compliance; and | |
| • | problems of a contractor with managing its workforce, labor unrest or other employment issues. |
In addition, we may incur liability to third parties as a result
of the actions of our contractors. The occurrence of one or more
of these risks could adversely affect our results of operations
and financial position.
We are subject
to litigation and may be subject to additional litigation in the
future.
We are currently, or may in the future become, subject to
litigation, arbitration or other legal proceedings with other
parties. If decided adversely to Newmont, these legal
proceedings, or others that could be brought against us in the
future, could have a material adverse effect on our financial
position or prospects. For a more detailed discussion of pending
litigation, see Note 31 to the Consolidated Financial
Statements.
In the event of a dispute arising at our foreign operations, we
may be subject to the exclusive jurisdiction of foreign courts
or arbitral panels, or may not be successful in subjecting
foreign persons to the jurisdiction of courts or arbitral panels
in the United States. Our inability to enforce our rights and
the enforcement of rights on a prejudicial basis by foreign
courts or arbitral panels could have an adverse effect on our
results of operations and financial position.
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
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, and our ability to use
these properties is dependent on agreements with traditional
owners 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 natural resource companies may harm our
business.
We compete with other natural resource companies to attract and
retain key executives, skilled labor, contractors and other
employees. We also compete with other natural resource companies
for specialized equipment, components and supplies, such as
drill rigs, necessary for exploration and development, as well
as for rights to mine properties containing gold, copper 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, 2010 the
Company’s current and long-term deferred tax assets were
$177 and $1,437, 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,
market conditions caused the value of the investments in our
pension plans to decrease significantly. As a result, we
contributed $161 and $55 to the pension plans in 2010 and 2009,
respectively. If future plan investment returns are not
sufficient, 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 8 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 and development 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 production from Nevada was approximately 1.7 million
ounces for 2010 with ore mined from eight open pit and six
underground mines. At December 31, 2010, we reported
31.2 million ounces of gold reserves in Nevada, with 81% of
those ounces in open pit mines and 19% 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 79% of
Nevada’s gold production in 2010, compared with 77% in
2009, and 72% in 2008. With respect to remaining reserves, we
estimate that approximately 85% are refractory ores and 15% 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.
In Nevada, mining taxes are assessed on up to 5% of net proceeds
of a mine. Net proceeds are calculated as the excess of gross
yield over direct costs. Gross yield is determined as the value
received when minerals are sold, exchanged for anything of value
or removed from the state. Direct costs generally include the
costs to develop, extract, produce, transport, refine and market
minerals.
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 production of 38,000 ounces in 2010, 39,000 ounces in 2009
and 45,000 ounces in 2008 were attributable to Newmont, based on
our 25% ownership interest.
We have an ore sale agreement with Yukon-Nevada Gold Corporation
(“Yukon-Nevada”) to process the Company’s ore. We
recognized attributable gold sales, net of treatment charges, of
15,000 ounces in 2010, 700 ounces in 2009 and 8,000 ounces in
2008, pursuant to this agreement. During 2008, Yukon-Nevada
discontinued operations; however, during the second half of
2009, they resumed operations on a limited basis.
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 produced 174,000
attributable ounces of gold in 2010 and at December 31,
2010 we reported 2.3 million ounces of gold reserves.
Hope Bay, Canada.
We own 100% of the Hope Bay
project, a large undeveloped gold project in the Nunavut
Territory of Canada. Hope Bay is an 80 kilometer district in the
Canadian arctic and is one of the last known undeveloped
greenstone belts in the world. The exploration success over the
last few
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years continues to confirm the district’s significant
long-term potential. In 2010, we commenced an underground
decline at the Doris North deposit and expect the Doris phase 1
project to provide access for test stoping and development
drilling, progressing to a construction decision by the end of
2011.
South
America
The properties of Minera Yanacocha S.R.L. (“MYSRL”)
include the mining operations at Yanacocha and the Conga
project. We hold a 51.35% interest in MYSRL with the remaining
interests held by Compañia de Minas Buenaventura, S.A.A.
(“Buenaventura”) (43.65%) and the International
Finance Corporation (5%).
MYSRL has mining rights with respect to a large land position
consisting of concessions granted by the Peruvian government to
MYSRL and a related entity. These mining concessions provide for
both the right to explore and exploit. However, MYSRL must first
obtain the respective exploration and exploitation permits,
which are generally granted in due course. MYSRL 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. MYSRL, 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 five years.
Yanacocha, Peru.
Yanacocha is 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 and 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 production for 2010 was 1.5 million
ounces (750,000 attributable ounces) and at December 31,
2010 we reported 5.0 million ounces of gold reserves.
Conga, Peru.
The Conga project is located
within close proximity of existing operations at Yanacocha.
Feasibility studies on our preferred development option were
completed in late 2009 and we continue to progress into the
development stage with an emphasis on project engineering and
obtaining all required permits. In 2010, we selected and
mobilized the project engineering procurement and construction
contractor. In October 2010, the project’s Environmental
Impact Assessment was approved by the Peruvian authorities. A
construction decision is expected in the first half of 2011. If
all permits are secured, the commencement of production is
expected in late 2014 or early 2015. At December 31, 2010
we reported 6.1 million ounces of gold reserves and
1,660 million pounds of copper reserves at Conga.
La Zanja, Peru.
Newmont holds a 46.94%
interest in La Zanja, a gold project near the city of
Cajamarca, Peru. The remaining interests are held by
Buenaventura. The mine commenced operations in September 2010
and is operated by Buenaventura. The site will consist of two
small open pits and one oxide leach pad. La Zanja produced
21,000 attributable gold ounces in 2010 and at December 31,
2010 we reported 0.3 million ounces of gold reserves.
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.
25
Table of Contents
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 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.
Native title claims are not expected to 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 and taxes are paid to
state and territorial governments, typically based on a
percentage of gross revenues or earnings. Indigenous communities
have negotiated royalty payments as a condition to granting
access to areas where they have native title or other property
rights.
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 in September 2009 and commenced commercial
production in November 2009. Boddington produced 728,000 ounces
of gold and 58 million pounds of copper in 2010 and at
December 31, 2010 we reported 20.3 million ounces of
gold reserves and 2,360 million pounds of copper reserves.
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 2010,
the Kalgoorlie operations produced 754,000 ounces of gold
(377,000 attributable ounces) and at December 31, 2010 we
reported 3.8 million ounces of gold reserves.
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 2010, with mill feed supplemented from
oxide stockpiles for blending purposes. Jundee produced 335,000
ounces of gold in 2010 and at December 31, 2010 we reported
0.8 million ounces of gold reserves.
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 2010, the Tanami
operations produced 250,000 ounces of gold and at
December 31, 2010 we reported 2.0 million ounces of
gold reserves.
26
Table of Contents
Waihi.
Waihi (100% owned) is located within
the town of Waihi, approximately 68 miles (110 kilometers)
southeast of Auckland, New Zealand and currently consists of the
Favona underground deposit and the Martha open pit. The Waihi
operation produced 108,000 ounces of gold in 2010 and at
December 31, 2010 we reported 0.5 million ounces of
gold reserves.
Duketon.
We have a 16.22% interest in Regis
Resources Ltd. (“Regis”), a mineral company with
significant gold and nickel exploration properties in Eastern
Goldfields of Western Australia. Regis owns 100% of the Duketon
gold project, which is located approximately 200 miles
northeast of Kalgoorlie. Duketon commenced production in the
third quarter of 2010 and produced 5,000 attributable ounces of
gold in 2010. At December 31, 2010, we reported
0.3 million ounces of gold reserves.
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 late 1999. In 2010, Batu Hijau produced
542 million pounds of copper (269 million attributable
pounds) and 737,000 ounces of gold (364,000 attributable
ounces). At December 31, 2010 we reported
3,760 million pounds of copper reserves and
3.7 million ounces of gold reserves at Batu Hijau.
We own 31.50% 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
56% of PT Newmont Nusa Tenggara (“PTNNT”), the
Indonesian subsidiary that owns Batu Hijau. Newmont entered into
transactions with P.T. Pukuafu Indah (“PTPI”) and
PT Indonesia Masbaga Investama (“PTIMI”), unrelated
noncontrolling partners of PTNNT, whereby we agreed to advance
certain funds in exchange for a pledge of the shares as
security, an assignment of the noncontrolling partners’
combined 20% share of PTNNT dividends, net of withholding tax,
and certain voting rights and obligations to the Company. As a
result, PTPI and PTIMI were determined to be Variable Interest
Entities (“VIEs”) as they have minimal attributable
capital and certain voting rights and obligations to their 20%
interest in PTNNT reside with Newmont. As a result, our
effective economic interest in PTNNT increased by 17% to 48.50%
at December 31, 2010. The remaining 24% interest in PTNNT
is owned by PT Multi Daerah Bersaing (“PTMDB”). 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 51% of PTNNT’s shares must have
been offered for sale, first, to the Indonesian government or,
second, to Indonesian nationals by March 31, 2010. Pursuant
to this provision, the ownership interest in the Batu Hijau
mine’s proven and probable 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. Furthermore, as part of the
negotiation of the sale agreements with PTMDB, the parties
executed an operating agreement under which each party
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 remains in effect 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 could potentially reduce the value of
PTNNT or result in safety, environmental or social standards
below those adhered to by NTP. Such loss of control may cause us
to deconsolidate PTNNT for accounting purposes, which would
reduce
27
Table of Contents
our reported consolidated sales, cost applicable to sales,
amortization, total assets and operating cash flow attributable
to PTNNT. See Note 31 to the Consolidated Financial
Statements.
Africa
Ahafo, Ghana.
Ahafo (100% owned) is located in
the Brong-Ahafo Region of Ghana, approximately 180 miles
(290 kilometers) northwest of Accra. We currently operate four
open pits at Ahafo with reserves contained in 11 pits.
Commercial production in the fourth pit, Amoma, began in October
2010. The process plant consists of a conventional mill and
carbon-in-leach
circuit. Ahafo produced 545,000 ounces of gold in 2010 and at
December 31, 2010 we reported 10.0 million ounces of
gold reserves.
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 $14 in
Income and mining
tax expense
to date under the levy.
Akyem, Ghana.
Akyem (100% owned) is located
approximately 80 miles (125 kilometers) northwest of Accra.
In January 2010, we received the mining lease for Akyem. We
continue to progress into the development stage with an emphasis
on project engineering and obtaining all required land access
and permits. In 2010, we selected and mobilized the project
engineering procurement and construction contractor and we are
advancing the project towards a construction decision in the
first half of 2011. If all permits are secured, we expect this
project to commence production in late 2013 or early 2014. At
December 31, 2010, we reported 7.2 million ounces of
gold reserves.
28
Table of Contents
Operating
Statistics
The following tables detail operating statistics related to gold
production, sales and production costs per ounce:
| North America | South America | |||||||||||||||||||||||
| Year Ended December 31, | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||
|
Tons mined (000 dry short tons):
|
||||||||||||||||||||||||
|
Open pit
|
233,359 | 239,102 | 222,222 | 199,467 | 197,559 | 211,525 | ||||||||||||||||||
|
Underground
|
2,452 | 2,740 | 2,500 | — | — | — | ||||||||||||||||||
|
Tons processed (000 dry short tons):
|
||||||||||||||||||||||||
|
Mill
|
23,497 | 24,702 | 24,755 | 6,832 | 6,242 | 4,196 | ||||||||||||||||||
|
Leach
|
17,240 | 19,697 | 26,210 | 58,691 | 136,293 | 97,823 | ||||||||||||||||||
|
Average ore grade (oz/ton):
|
||||||||||||||||||||||||
|
Mill
|
0.085 | 0.085 | 0.093 | 0.081 | 0.118 | 0.082 | ||||||||||||||||||
|
Leach
|
0.019 | 0.022 | 0.025 | 0.019 | 0.018 | 0.018 | ||||||||||||||||||
|
Average mill recovery rate
|
78.9 | % | 81.8 | % | 81.8 | % | 82.5 | % | 86.4 | % | 88.2 | % | ||||||||||||
|
Ounces produced (000):
|
||||||||||||||||||||||||
|
Mill
|
1,540 | 1,700 | 1,878 | 421 | 630 | 304 | ||||||||||||||||||
|
Leach
|
366 | 398 | 476 | 1,038 | 1,428 | 1,505 | ||||||||||||||||||
|
Development
(1)
|
3 | 1 | 1 | 3 | — | — | ||||||||||||||||||
|
Consolidated
|
1,909 | 2,099 | 2,355 | 1,462 | 2,058 | 1,809 | ||||||||||||||||||
|
Attributable to Newmont
|
1,909 | 2,099 | 2,355 | 771 | 1,057 | 929 | ||||||||||||||||||
|
Consolidated ounces sold (000)
|
1,898 | 2,117 | 2,319 | 1,463 | 2,068 | 1,842 | ||||||||||||||||||
|
Production costs per ounce sold:
|
||||||||||||||||||||||||
|
Direct mining and production costs
|
$ | 601 | $ | 535 | $ | 461 | $ | 444 | $ | 318 | $ | 354 | ||||||||||||
|
By-product credits
|
(72 | ) | (55 | ) | (38 | ) | (50 | ) | (31 | ) | (27 | ) | ||||||||||||
|
Royalties and production taxes
|
15 | 15 | 16 | 32 | 18 | 16 | ||||||||||||||||||
|
Other
|
7 | 6 | 6 | 5 | 5 | 3 | ||||||||||||||||||
|
Costs applicable to sales
|
551 | 501 | 445 | 431 | 310 | 346 | ||||||||||||||||||
|
Amortization
|
153 | 128 | 110 | 111 | 81 | 92 | ||||||||||||||||||
|
Reclamation and remediation
|
4 | 3 | 3 | 10 | 6 | 5 | ||||||||||||||||||
|
Total production costs
|
$ | 708 | $ | 632 | $ | 558 | $ | 552 | $ | 397 | $ | 443 | ||||||||||||
29
Table of Contents
| Asia Pacific | Africa | |||||||||||||||||||||||
| Year Ended December 31, | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||
|
Tons mined (000 dry short tons):
|
||||||||||||||||||||||||
|
Open pit
|
238,725 | 204,814 | 244,220 | 51,054 | 51,971 | 50,567 | ||||||||||||||||||
|
Underground
|
3,564 | 3,778 | 3,896 | — | — | — | ||||||||||||||||||
|
Tons milled (000 dry short tons)
|
89,293 | 58,853 | 50,074 | 8,372 | 8,335 | 8,262 | ||||||||||||||||||
|
Average ore grade (oz/ton)
|
0.033 | 0.034 | 0.033 | 0.077 | 0.074 | 0.075 | ||||||||||||||||||
|
Average mill recovery rate
|
86.3 | % | 88.3 | % | 88.0 | % | 86.1 | % | 87.2 | % | 89.7 | % | ||||||||||||
|
Ounces produced (000):
|
||||||||||||||||||||||||
|
Mill
|
2,535 | 1,776 | 1,464 | 529 | 532 | 506 | ||||||||||||||||||
|
Development
(1)
|
— | 56 | — | 16 | — | 19 | ||||||||||||||||||
|
Consolidated
|
2,535 | 1,832 | 1,464 | 545 | 532 | 525 | ||||||||||||||||||
|
Attributable to Newmont
|
2,167 | 1,517 | 1,316 | 545 | 532 | 525 | ||||||||||||||||||
|
Consolidated ounces sold (000)
|
2,407 | 1,803 | 1,486 | 528 | 546 | 503 | ||||||||||||||||||
|
Production costs per ounce sold:
|
||||||||||||||||||||||||
|
Direct mining and production costs
|
$ | 457 | $ | 395 | $ | 502 | $ | 411 | $ | 414 | $ | 380 | ||||||||||||
|
By-product credits
|
(14 | ) | (10 | ) | (9 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||||||
|
Royalties and production taxes
|
28 | 24 | 20 | 38 | 29 | 27 | ||||||||||||||||||
|
Other
|
3 | 1 | 2 | 2 | 2 | 2 | ||||||||||||||||||
|
Costs applicable to sales
|
474 | 410 | 515 | 450 | 444 | 408 | ||||||||||||||||||
|
Amortization
|
109 | 100 | 99 | 150 | 125 | 126 | ||||||||||||||||||
|
Reclamation and remediation
|
5 | 4 | 5 | 4 | 4 | 3 | ||||||||||||||||||
|
Total production costs
|
$ | 588 | $ | 514 | $ | 619 | $ | 604 | $ | 573 | $ | 537 | ||||||||||||
| Total Gold | ||||||||||||
| Year Ended December 31, | 2010 | 2009 | 2008 | |||||||||
|
Ounces produced (000):
|
||||||||||||
|
Mill
|
5,025 | 4,638 | 4,152 | |||||||||
|
Leach
|
1,404 | 1,826 | 1,981 | |||||||||
|
Development
(1)
|
22 | 57 | 20 | |||||||||
|
Consolidated
|
6,451 | 6,521 | 6,153 | |||||||||
|
Attributable to
Newmont
(2)
|
5,392 | 5,237 | 5,201 | |||||||||
|
Consolidated ounces sold (000)
|
6,296 | 6,534 | 6,150 | |||||||||
|
Production costs per ounce sold:
|
||||||||||||
|
Direct mining and production costs
|
$ | 493 | $ | 418 | $ | 432 | ||||||
|
By-product credits
|
(39 | ) | (30 | ) | (25 | ) | ||||||
|
Royalties and production taxes
|
26 | 20 | 18 | |||||||||
|
Other
|
5 | 3 | 4 | |||||||||
|
Costs applicable to sales
|
485 | 411 | 429 | |||||||||
|
Amortization
|
126 | 105 | 103 | |||||||||
|
Reclamation and remediation
|
6 | 4 | 4 | |||||||||
|
Total production costs
|
$ | 617 | $ | 520 | $ | 536 | ||||||
| (1) | Ounces from the removal and production of de minimis saleable materials during development. Sales from development are recorded in Other income , net of incremental mining and processing costs. | |
| (2) | Includes 32 and 76 thousand ounces from discontinued operations at Kori Kollo, Bolivia in 2009 and 2008, respectively. |
30
Table of Contents
The following table details operating statistics related to
copper production, sales and production costs per pound.
| Asia Pacific | ||||||||||||
| Year Ended December 31, | 2010 | 2009 | 2008 | |||||||||
|
Tons milled (000 dry short tons)
|
77,155 | 47,087 | 37,818 | |||||||||
|
Average grade
|
0.46 | % | 0.60 | % | 0.47 | % | ||||||
|
Average recovery rate
|
85.1 | % | 89.2 | % | 80.6 | % | ||||||
|
Consolidated pounds produced (millions)
|
600 | 504 | 285 | |||||||||
|
Attributable to Newmont
|
327 | 227 | 128 | |||||||||
|
Consolidated pounds sold (millions)
|
539 | 507 | 290 | |||||||||
|
Production costs per pound sold:
|
||||||||||||
|
Costs applicable to sales
|
$ | 0.80 | $ | 0.64 | $ | 1.38 | ||||||
|
Amortization
|
0.21 | 0.16 | 0.28 | |||||||||
|
Reclamation and remediation
|
0.01 | 0.01 | 0.02 | |||||||||
|
Total production costs
|
$ | 1.02 | $ | 0.81 | $ | 1.68 | ||||||
Proven and
Probable Reserves
We had proven and probable gold reserves of 93.5 million
ounces at December 31, 2010, calculated at a gold price
assumption of $950, A$1,100 or NZ$1,350 per ounce, respectively.
Our 2010 reserves would decline by approximately 5%
(4.9 million ounces), if calculated at a $900 per ounce
gold price. An increase in the gold price to $1,000 per ounce
would increase reserves by approximately 3% (3.1 million
ounces), all other assumptions remaining constant. For 2009,
reserves were calculated at a gold price assumption of $800,
A$1,000 or NZ$1,200 per ounce, respectively.
At December 31, 2010, our proven and probable gold reserves
in North America were 33.5 million ounces. Outside of North
America, year-end proven and probable gold reserves were
60.0 million ounces, including 31.4 million ounces in
Asia Pacific, 17.2 million ounces in Africa and
11.4 million ounces in South America.
Our proven and probable copper reserves at December 31,
2010 were 9,420 million pounds. For 2010, reserves were
calculated at a copper price assumption of $2.50 or A$2.95 per
pound, increased from $2.00 or A$2.40 per pound, used in 2009.
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 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 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 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
31
Table of Contents
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 will recalculate reserves at
December 31, 2011, taking into account metal prices,
changes, if any, in future production and capital costs,
divestments and depletion as well as any acquisitions and
additions during 2011.
The following tables detail gold proven and probable reserves
reflecting only those reserves attributable to Newmont’s
ownership or economic interest at December 31, 2010 and
2009:
| December 31, 2010 (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 | % | 36,600 | 0.064 | 2,340 | 226,900 | 0.040 | 8,980 | 263,500 | 0.043 | 11,320 | 75 | % | |||||||||||||||||||||||||||||||
|
Carlin Underground, Nevada
|
100 | % | 5,800 | 0.272 | 1,570 | 8,800 | 0.330 | 2,910 | 14,600 | 0.307 | 4,480 | 88 | % | |||||||||||||||||||||||||||||||
|
Midas,
Nevada
(5)
|
100 | % | 200 | 0.394 | 100 | 300 | 0.264 | 90 | 500 | 0.319 | 190 | 95 | % | |||||||||||||||||||||||||||||||
|
Phoenix,
Nevada
(6)(7)
|
100 | % | — | — | 329,800 | 0.018 | 6,090 | 329,800 | 0.018 | 6,090 | 73 | % | ||||||||||||||||||||||||||||||||
|
Twin Creeks, Nevada
|
100 | % | 11,400 | 0.097 | 1,110 | 46,400 | 0.071 | 3,280 | 57,800 | 0.076 | 4,390 | 79 | % | |||||||||||||||||||||||||||||||
|
Turquoise Ridge,
Nevada
(8)
|
25 | % | 1,400 | 0.458 | 640 | 1,700 | 0.456 | 770 | 3,100 | 0.457 | 1,410 | 92 | % | |||||||||||||||||||||||||||||||
|
Nevada
In-Process
(9)
|
100 | % | 28,500 | 0.022 | 610 | — | — | 28,500 | 0.022 | 610 | 62 | % | ||||||||||||||||||||||||||||||||
|
Nevada
Stockpiles
(10)
|
100 | % | 33,900 | 0.077 | 2,630 | 2,800 | 0.028 | 80 | 36,700 | 0.074 | 2,710 | 78 | % | |||||||||||||||||||||||||||||||
|
Total
Nevada
(11)
|
117,800 | 0.076 | 9,000 | 616,700 | 0.036 | 22,200 | 734,500 | 0.042 | 31,200 | 78 | % | |||||||||||||||||||||||||||||||||
|
La Herradura,
Mexico
(12)
|
44 | % | 44,600 | 0.023 | 1,010 | 61,100 | 0.021 | 1,280 | 105,700 | 0.022 | 2,290 | 66 | % | |||||||||||||||||||||||||||||||
| 162,400 | 0.062 | 10,010 | 677,800 | 0.035 | 23,480 | 840,200 | 0.040 | 33,490 | 77 | % | ||||||||||||||||||||||||||||||||||
|
South America
|
||||||||||||||||||||||||||||||||||||||||||||
|
Conga,
Peru
(6)(13)
|
51.35 | % | — | — | 317,200 | 0.019 | 6,080 | 317,200 | 0.019 | 6,080 | 79 | % | ||||||||||||||||||||||||||||||||
|
Yanacocha, Peru Open
Pits
(14)
|
51.35 | % | 23,500 | 0.028 | 650 | 118,800 | 0.032 | 3,790 | 142,300 | 0.031 | 4,440 | 70 | % | |||||||||||||||||||||||||||||||
|
Yanacocha, Peru
In-Process
(9)(14)
|
51.35 | % | 21,300 | 0.025 | 540 | — | — | — | 21,300 | 0.025 | 540 | 74 | % | |||||||||||||||||||||||||||||||
|
Total Yanacocha, Peru
|
51.35 | % | 44,800 | 0.027 | 1,190 | 118,800 | 0.032 | 3,790 | 163,600 | 0.030 | 4,980 | 71 | % | |||||||||||||||||||||||||||||||
|
La Zanja,
Peru
(15)
|
46.94 | % | 10,100 | 0.018 | 180 | 10,500 | 0.016 | 160 | 20,600 | 0.017 | 340 | 66 | % | |||||||||||||||||||||||||||||||
| 54,900 | 0.025 | 1,370 | 446,500 | 0.022 | 10,030 | 501,400 | 0.023 | 11,400 | 75 | % | ||||||||||||||||||||||||||||||||||
|
Asia Pacific
|
||||||||||||||||||||||||||||||||||||||||||||
|
Batu Hijau Open
Pit
(6)(16)
|
48.50 | % | 168,800 | 0.014 | 2,420 | 124,600 | 0.006 | 700 | 293,400 | 0.011 | 3,120 | 78 | % | |||||||||||||||||||||||||||||||
|
Batu Hijau
Stockpiles
(6)(10)(16)
|
48.50 | % | — | — | 170,700 | 0.004 | 610 | 170,700 | 0.004 | 610 | 69 | % | ||||||||||||||||||||||||||||||||
|
Total Batu Hijau, Indonesia
|
48.50 | % | 168,800 | 0.014 | 2,420 | 295,300 | 0.004 | 1,310 | 464,100 | 0.008 | 3,730 | 76 | % | |||||||||||||||||||||||||||||||
|
Boddington, Western
Australia
(6)
|
100 | % | 181,900 | 0.021 | 3,760 | 885,900 | 0.019 | 16,540 | 1,067,800 | 0.019 | 20,300 | 82 | % | |||||||||||||||||||||||||||||||
|
Duketon, Western
Australia
(17)
|
16.22 | % | 1,800 | 0.056 | 100 | 4,500 | 0.055 | 250 | 6,300 | 0.055 | 350 | 94 | % | |||||||||||||||||||||||||||||||
|
Jundee, Western
Australia
(18)
|
100 | % | 3,100 | 0.051 | 160 | 1,600 | 0.373 | 600 | 4,700 | 0.160 | 760 | 91 | % | |||||||||||||||||||||||||||||||
|
Kalgoorlie Open Pit and Underground
|
50 | % | 15,000 | 0.061 | 910 | 40,700 | 0.059 | 2,390 | 55,700 | 0.059 | 3,300 | 85 | % | |||||||||||||||||||||||||||||||
|
Kalgoorlie
Stockpiles
(10)
|
50 | % | 15,100 | 0.031 | 470 | — | — | 15,100 | 0.031 | 470 | 78 | % | ||||||||||||||||||||||||||||||||
|
Total Kalgoorlie, Western
Australia
(19)
|
50 | % | 30,100 | 0.046 | 1,380 | 40,700 | 0.059 | 2,390 | 70,800 | 0.053 | 3,770 | 84 | % | |||||||||||||||||||||||||||||||
|
Tanami, Northern
Territories
(20)
|
100 | % | 6,400 | 0.151 | 970 | 7,900 | 0.134 | 1,070 | 14,300 | 0.142 | 2,040 | 95 | % | |||||||||||||||||||||||||||||||
|
Waihi, New
Zealand
(21)
|
100 | % | — | — | — | 4,200 | 0.110 | 460 | 4,200 | 0.110 | 460 | 89 | % | |||||||||||||||||||||||||||||||
| 392,100 | 0.022 | 8,790 | 1,240,100 | 0.018 | 22,620 | 1,632,200 | 0.019 | 31,410 | 83 | % | ||||||||||||||||||||||||||||||||||
|
Africa
|
||||||||||||||||||||||||||||||||||||||||||||
|
Ahafo Open
Pits
(22)
|
100 | % | — | — | 148,300 | 0.064 | 9,540 | 148,300 | 0.064 | 9,540 | 87 | % | ||||||||||||||||||||||||||||||||
|
Ahafo
Stockpiles
(10)
|
100 | % | 14,100 | 0.033 | 460 | — | — | 14,100 | 0.033 | 460 | 86 | % | ||||||||||||||||||||||||||||||||
|
Total Ahafo, Ghana
|
100 | % | 14,100 | 0.033 | 460 | 148,300 | 0.064 | 9,540 | 162,400 | 0.062 | 10,000 | 87 | % | |||||||||||||||||||||||||||||||
|
Akyem,
Ghana
(23)
|
100 | % | — | — | 137,900 | 0.052 | 7,200 | 137,900 | 0.052 | 7,200 | 88 | % | ||||||||||||||||||||||||||||||||
| 14,100 | 0.033 | 460 | 286,200 | 0.059 | 16,740 | 300,300 | 0.057 | 17,200 | 88 | % | ||||||||||||||||||||||||||||||||||
|
Total Gold
|
623,500 | 0.033 | 20,630 | 2,650,600 | 0.027 | 72,870 | 3,274,100 | 0.029 | 93,500 | 81 | % | |||||||||||||||||||||||||||||||||
32
Table of Contents
| 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
|
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
|
100 | % | 400 | 0.480 | 200 | 300 | 0.347 | 100 | 700 | 0.425 | 300 | 95 | % | |||||||||||||||||||||||||||||||
|
Phoenix, Nevada
|
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
(8)
|
25 | % | 1,100 | 0.480 | 550 | 1,500 | 0.527 | 810 | 2,600 | 0.507 | 1,360 | 92 | % | |||||||||||||||||||||||||||||||
|
Nevada
In-Process
(9)
|
100 | % | 33,800 | 0.021 | 730 | — | — | 33,800 | 0.021 | 730 | 65 | % | ||||||||||||||||||||||||||||||||
|
Nevada
Stockpiles
(10)
|
100 | % | 27,000 | 0.079 | 2,140 | 2,500 | 0.028 | 70 | 29,500 | 0.075 | 2,210 | 79 | % | |||||||||||||||||||||||||||||||
|
Total Nevada
|
100,600 | 0.075 | 7,560 | 570,200 | 0.037 | 20,950 | 670,800 | 0.042 | 28,510 | 77 | % | |||||||||||||||||||||||||||||||||
|
La Herradura, Mexico
|
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
|
51.35 | % | — | — | 317,200 | 0.019 | 6,080 | 317,200 | 0.019 | 6,080 | 79 | % | ||||||||||||||||||||||||||||||||
|
Yanacocha, Peru Open Pits
|
51.35 | % | 7,800 | 0.035 | 270 | 123,700 | 0.036 | 4,480 | 131,500 | 0.036 | 4,750 | 69 | % | |||||||||||||||||||||||||||||||
|
Yanacocha, Peru
In-Process
(9)
|
51.35 | % | 26,400 | 0.025 | 660 | — | — | 26,400 | 0.025 | 660 | 74 | % | ||||||||||||||||||||||||||||||||
|
Total Yanacocha, Peru
|
51.35 | % | 34,200 | 0.027 | 930 | 123,700 | 0.036 | 4,480 | 157,900 | 0.034 | 5,410 | 69 | % | |||||||||||||||||||||||||||||||
|
La Zanja, Peru
|
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
|
52.44 | % | 201,100 | 0.015 | 2,970 | 167,700 | 0.005 | 810 | 368,800 | 0.010 | 3,780 | 76 | % | |||||||||||||||||||||||||||||||
|
Batu Hijau
Stockpiles
(10)
|
52.44 | % | — | — | 193,800 | 0.004 | 720 | 193,800 | 0.004 | 720 | 70 | % | ||||||||||||||||||||||||||||||||
|
Total Batu Hijau, Indonesia
|
52.44 | % | 201,100 | 0.015 | 2,970 | 361,500 | 0.004 | 1,530 | 562,600 | 0.008 | 4,500 | 75 | % | |||||||||||||||||||||||||||||||
|
Boddington, Western Australia
|
100 | % | 184,600 | 0.025 | 4,640 | 781,800 | 0.021 | 16,320 | 966,400 | 0.022 | 20,960 | 82 | % | |||||||||||||||||||||||||||||||
|
Jundee, Western Australia
|
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
(10)
|
50 | % | 14,300 | 0.031 | 440 | — | — | 14,300 | 0.031 | 440 | 78 | % | ||||||||||||||||||||||||||||||||
|
Total Kalgoorlie, Western Australia
|
50 | % | 35,500 | 0.049 | 1,720 | 39,600 | 0.062 | 2,470 | 75,100 | 0.056 | 4,190 | 84 | % | |||||||||||||||||||||||||||||||
|
Tanami, Northern Territories
|
100 | % | 5,200 | 0.160 | 830 | 7,900 | 0.102 | 810 | 13,100 | 0.125 | 1,640 | 96 | % | |||||||||||||||||||||||||||||||
|
Waihi, New Zealand
|
100 | % | — | — | 4,000 | 0.101 | 410 | 4,000 | 0.101 | 410 | 90 | % | ||||||||||||||||||||||||||||||||
| 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
|
100 | % | — | — | 128,700 | 0.068 | 8,810 | 128,700 | 0.068 | 8,810 | 87 | % | ||||||||||||||||||||||||||||||||
|
Ahafo
Stockpiles
(10)
|
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
|
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 | % | |||||||||||||||||||||||||||||||||
| (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 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 |
33
Table of Contents
| 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. | ||
| Proven and probable reserves include gold or copper attributable to Newmont’s ownership or economic interest. | ||
| Proven and probable 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. | ||
| 2010 reserves were calculated at a gold price of $950, A$1,100 or NZ$1,350 per ounce unless otherwise noted. | ||
| 2009 reserves were calculated at a gold price of $800, A$1,000 or NZ$1,200 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 2.8 million ounces of silver with a metallurgical recovery of 88%. | |
| (6) | Gold cut-off grade varies with level of copper credits. | |
| (7) | Also contains reserves of 86.3 million ounces of silver with a metallurgical recovery of 36%. | |
| (8) | Reserve estimates provided by Barrick, the operator of the Turquoise Ridge joint venture. | |
| (9) | 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. | |
| (10) | 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. | |
| (11) | Cut-off grades utilized in Nevada 2010 reserves were as follows: oxide leach material not less than 0.006 ounce per ton; oxide mill material not less than 0.026 ounce per ton; flotation material not less than 0.011 ounce per ton; and refractory mill material not less than 0.042 ounce per ton. | |
| (12) | Cut-off grade utilized in 2010 reserves not less than 0.009 ounce per ton. Includes undeveloped attributable reserves at the Noche Buena deposit of 0.3 million ounces. |
34
Table of Contents
| (13) | Deposit is currently undeveloped. Reserves estimates will be recalculated in 2011 upon completion of Feasibility Study Update. | |
| (14) | Reserves include the currently undeveloped deposit at La Quinua Sur, which contains attributable reserves of 0.8 million ounces. Cut-off grades utilized in 2010 reserves were as follows: oxide leach material not less than 0.003 ounce per ton; and oxide mill material not less than 0.014 ounce per ton. Also contains attributable reserves of 16.5 million ounces of silver with a metallurgical recovery of 21%. | |
| (15) | Reserve estimates provided by Buenaventura, the operator of the La Zanja project. Cut-off grade utilized in 2010 reserves not less than 0.004 ounce per ton. | |
| (16) | Percentage reflects Newmont’s economic interest at December 31, 2010. In April 2010 our economic interest decreased from 52.44% to 48.50% as a result of the divestiture required under the Contract of Work. Also contains attributable reserves of 12.9 million ounces of silver with a metallurgical recovery of 78%. | |
| (17) | Reserve estimates provided by Regis Resources Ltd., in which Newmont holds a 16.22% interest. Gold cut-off grades utilized in 2010 reserves not less than 0.015 ounce per ton. | |
| (18) | Cut-off grade utilized in 2010 reserves not less than 0.020 ounce per ton. | |
| (19) | Cut-off grade utilized in 2010 reserves not less than 0.026 ounce per ton. | |
| (20) | Cut-off grade utilized in 2010 reserves not less than 0.045 ounce per ton. | |
| (21) | Cut-off grade utilized in 2010 reserves not less than 0.015 ounce per ton. | |
| (22) | Includes undeveloped reserves at seven pits in the Ahafo trend totaling 3.2 million ounces. Cut-off grade utilized in 2010 reserves not less than 0.014 ounce per ton. | |
| (23) | Deposit is undeveloped. Cut-off grade utilized in 2010 reserves not less than 0.020 ounce per ton. |
The following tables detail copper proven and probable reserves
reflecting only those reserves attributable to Newmont’s
ownership or economic interest at December 31, 2010 and
2009:
| December 31, 2010 (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 Mill,
Nevada
(4)
|
100 | % | — | — | 332,600 | 0.15 | % | 1,030 | 332,600 | 0.15 | % | 1,030 | 61 | % | ||||||||||||||||||||||||||||||
|
Phoenix Copper Leach,
Nevada
(5)
|
100 | % | — | — | 132,900 | 0.23 | % | 610 | 132,900 | 0.23 | % | 610 | 53 | % | ||||||||||||||||||||||||||||||
| — | — | 465,500 | 0.18 | % | 1,640 | 465,500 | 0.18 | % | 1,640 | 58 | % | |||||||||||||||||||||||||||||||||
|
South America
|
||||||||||||||||||||||||||||||||||||||||||||
|
Conga,
Peru
(6)
|
51.35 | % | — | — | 317,200 | 0.26 | % | 1,660 | 317,200 | 0.26 | % | 1,660 | 85 | % | ||||||||||||||||||||||||||||||
|
Asia Pacific
|
||||||||||||||||||||||||||||||||||||||||||||
|
Batu Hijau Open
Pit
(7)
|
48.50 | % | 168,800 | 0.50 | % | 1,700 | 124,600 | 0.34 | % | 860 | 293,400 | 0.44 | % | 2,560 | 80 | % | ||||||||||||||||||||||||||||
|
Batu Hijau
Stockpiles
(7)(8)
|
48.50 | % | — | — | 170,700 | 0.35 | % | 1,200 | 170,700 | 0.35 | % | 1,200 | 66 | % | ||||||||||||||||||||||||||||||
|
Total Batu Hijau, Indonesia
|
48.50 | % | 168,800 | 0.50 | % | 1,700 | 295,300 | 0.35 | % | 2,060 | 464,100 | 0.40 | % | 3,760 | 76 | % | ||||||||||||||||||||||||||||
|
Boddington, Western
Australia
(9)
|
100 | % | 181,900 | 0.10 | % | 380 | 885,900 | 0.11 | % | 1,980 | 1,067,800 | 0.11 | % | 2,360 | 84 | % | ||||||||||||||||||||||||||||
| 350,700 | 0.30 | % | 2,080 | 1,181,200 | 0.17 | % | 4,040 | 1,531,900 | 0.20 | % | 6,120 | 79 | % | |||||||||||||||||||||||||||||||
|
Total Copper
|
350,700 | 0.30 | % | 2,080 | 1,963,900 | 0.19 | % | 7,340 | 2,314,600 | 0.20 | % | 9,420 | 76 | % | ||||||||||||||||||||||||||||||
35
Table of Contents
| 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
|
100 | % | — | — | 287,500 | 0.16 | % | 900 | 287,500 | 0.16 | % | 900 | 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
|
52.44 | % | 201,100 | 0.51 | % | 2,070 | 167,700 | 0.32 | % | 1,060 | 368,800 | 0.42 | % | 3,130 | 77 | % | ||||||||||||||||||||||||||||
|
Batu Hijau
Stockpiles
(8)
|
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
|
100 | % | 184,600 | 0.11 | % | 400 | 781,800 | 0.10 | % | 1,640 | 966,400 | 0.11 | % | 2,040 | 84 | % | ||||||||||||||||||||||||||||
| 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 | % | ||||||||||||||||||||||||||||||
| (1) | See footnote (1) to the Gold Proven and Probable Reserves tables above. Copper reserves for 2010 were calculated at a copper price of $2.50 or A$2.95 per pound. 2009 copper reserves 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 Reserves tables above. Tonnages are rounded to nearest 100,000. | |
| (3) | See footnote (3) to the Gold Proven and Probable Reserves tables above. Pounds are rounded to the nearest 10 million. | |
| (4) | Copper cut-off grade varies with level of gold credits. | |
| (5) | Copper cut-off grade varies with level of leach solubility. | |
| (6) | Deposit is undeveloped. Copper cut-off grade varies with level of gold credits. Reserve estimates will be recalculated in 2011 upon completion of Feasibility Study Update. | |
| (7) | Percentage reflects Newmont’s economic interest at December 31, 2010. In April 2010 our economic interest decreased from 52.44% to 48.50% as a result of the divestiture required under the Contract of Work. Copper cut-off grade varies with level of gold credits. | |
| (8) | 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. | |
| (9) | Copper cut-off grade varies with level of gold credits. |
The following table reconciles year-end 2010 and 2009 gold and
copper proven and probable reserves:
| Gold Ounces | Copper Pounds | |||||||
| (in millions) | (in millions) | |||||||
|
December 31, 2009
|
91.8 | 9,120 | ||||||
|
Depletion
(1)
|
(6.5 | ) | (370 | ) | ||||
|
Revisions and additions,
net
(2)
|
8.2 | 1,000 | ||||||
|
Acquisitions
|
0.3 | — | ||||||
|
Other divestments
|
(0.3 | ) | (330 | ) | ||||
|
December 31, 2010
|
93.5 | 9,420 | ||||||
| (1) | Reserves mined and processed in 2010. | |
| (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 31 to the
Consolidated Financial Statements.
| ITEM 4A. | EXECUTIVE OFFICERS OF THE REGISTRANT |
Newmont’s executive officers at February 18, 2011 were:
| Name | Age | Office | ||||
|
Richard T. O’Brien
|
56 | President and Chief Executive Officer | ||||
|
Russell Ball
|
42 | Executive Vice President and Chief Financial Officer | ||||
|
Randy Engel
|
44 | Executive Vice President, Strategic Development | ||||
|
Brian A. Hill
|
51 | Executive Vice President, Operations | ||||
|
Guy Lansdown
|
50 | Executive Vice President, Discovery and Development | ||||
|
William N. MacGowan
|
53 | Executive Vice President, Human Resources | ||||
|
Jeffrey R.
Huspeni
(1)
|
55 | Senior Vice President, African Operations | ||||
|
Thomas Kerr
|
50 | Senior Vice President, North American Operations | ||||
|
Carlos Santa Cruz
|
55 | Senior Vice President, South American Operations | ||||
|
Tim
Netscher
(2)
|
60 | Senior Vice President, Asia Pacific Operations | ||||
|
David Gutierrez
|
56 | Vice President, Planning and Tax | ||||
|
Roger Johnson
|
53 | Vice President and Chief Accounting Officer | ||||
|
Thomas P. Mahoney
|
55 | Vice President and Treasurer | ||||
| (1) | Effective April 1, 2011, Mr. Huspeni will replace Mr. Netscher as Senior Vice President, Asia Pacific Operations, and David Schummer who, as of the date of this Annual Report, serves as Group Executive Operations, North America, will replace Mr. Huspeni as Senior Vice President, African Operations. For this reason, Mr. Schummer’s biographical information is also included below. | |
| (2) | Effective March 31, 2011, Mr. Netscher will retire from such position. |
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. 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.
37
Table of Contents
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 for
Group Five in South Africa.
Mr. MacGowan
was elected Executive Vice President,
Human Resources, in February 2010, when he joined Newmont.
Mr. MacGowan previously served as Executive Vice President
and Chief Human Resources Officer, People and Places from 2006
to 2010; Senior Vice President, Human Resources, 2004 to 2006;
Vice President, Human Resources, Global Centers of Expertise,
2002 to 2004; Vice President, Human Resources, Engineering and
Operations, 2001 to 2002; Vice President, Human Resources,
Enterprise Services, 1999 to 2001 and; Director, Human
Resources, Enterprise Services, 1998 to 1999 for Sun
Microsystems.
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.
Effective April 1, 2011, Mr. Schummer, age 39,
will replace Mr. Huspeni as Senior Vice President, African
Operations. He has served as Group Executive Operations, North
America and Group Executive Business Excellence since 2010,
General Manager Operations Yanacocha, Peru from 2007 to 2010,
Mine Manager and Mine Superintendent at Yanacocha, Peru from
2003 to 2006. Previously, he served as Mine Superintendent and
General Foreman in Sumbawa, Indonesia for the Batu Hijau Project
from 1999 to 2003.
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. 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
| 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”.
On November 9, 2009, Newmont announced its intention to
seek removal from the official list of the Australian Stock
Exchange (“ASX”) and to suspend trading of the CHESS
Depositary Interests (“CDIs”). The announcement was
due to a low level of CDIs quoted on the ASX with low levels of
trading when compared to other exchanges where it may trade.
Further, investors seeking to purchase shares in Newmont could
do so on the NYSE. The CDIs were suspended from trading on the
ASX on February 10, 2010 and removed from the official list
of the ASX on February 17, 2010.
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:
| 2010 | 2009 | |||||||||||||||
| High | Low | High | Low | |||||||||||||
|
First quarter
|
$ | 51.94 | $ | 42.86 | $ | 46.90 | $ | 35.03 | ||||||||
|
Second quarter
|
$ | 61.74 | $ | 51.53 | $ | 48.87 | $ | 38.14 | ||||||||
|
Third quarter
|
$ | 64.94 | $ | 55.40 | $ | 47.12 | $ | 37.89 | ||||||||
|
Fourth quarter
|
$ | 64.72 | $ | 58.09 | $ | 55.83 | $ | 41.50 | ||||||||
On February 18, 2011, there were 486,564,649 shares of
Newmont’s common stock outstanding, which were held by
approximately 12,995 stockholders of record. A dividend of $0.15
per share of common stock outstanding was declared in the third
and fourth quarters of 2010, while a dividend of $0.10 per share
of common stock outstanding was declared in the first and second
quarters of 2010, for a total of $0.50 during 2010. A dividend
of $0.10 per share of common stock outstanding was declared in
each quarter of 2009, for a total of $0.40 during 2009.
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 18, 2011, there were outstanding 6,703,999
Exchangeable Shares, which were held by 39 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,
2010 to December 31, 2010.
39
Table of Contents
| ITEM 6. | SELECTED FINANCIAL DATA (dollars in millions, except per share) |
| Years Ended December 31, | ||||||||||||||||||||
| 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
|
Sales
|
$ | 9,540 | $ | 7,705 | $ | 6,124 | $ | 5,465 | $ | 4,805 | ||||||||||
|
Income (loss) from continuing operations
|
$ | 3,144 | $ | 2,109 | $ | 1,147 | $ | (580 | ) | $ | 900 | |||||||||
|
Net income (loss)
|
$ | 3,116 | $ | 2,093 | $ | 1,160 | $ | (1,485 | ) | $ | 1,154 | |||||||||
|
Net income (loss) attributable to Newmont
stockholders
(1)
|
$ | 2,277 | $ | 1,297 | $ | 831 | $ | (1,895 | ) | $ | 791 | |||||||||
|
Income (loss) per common share attributable to Newmont
stockholders:
|
||||||||||||||||||||
|
Basic:
|
||||||||||||||||||||
|
Continuing operations
|
$ | 4.69 | $ | 2.68 | $ | 1.80 | $ | (2.18 | ) | $ | 1.20 | |||||||||
|
Discontinued operations
|
(0.06 | ) | (0.02 | ) | 0.03 | (2.01 | ) | 0.56 | ||||||||||||
| $ | 4.63 | $ | 2.66 | $ | 1.83 | $ | (4.19 | ) | $ | 1.76 | ||||||||||
|
Diluted:
|
||||||||||||||||||||
|
Continuing operations
|
$ | 4.61 | $ | 2.68 | $ | 1.80 | $ | (2.18 | ) | $ | 1.19 | |||||||||
|
Discontinued operations
|
(0.06 | ) | (0.02 | ) | 0.03 | (2.01 | ) | 0.56 | ||||||||||||
| $ | 4.55 | $ | 2.66 | $ | 1.83 | $ | (4.19 | ) | $ | 1.75 | ||||||||||
|
Dividends declared per common share
|
$ | 0.50 | $ | 0.40 | $ | 0.40 | $ | 0.40 | $ | 0.40 | ||||||||||
| At December 31, | ||||||||||||||||||||
| 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
|
Total assets
|
$ | 25,663 | $ | 22,299 | $ | 15,727 | $ | 15,474 | $ | 15,601 | ||||||||||
|
Debt, including current portion
|
$ | 4,441 | $ | 4,809 | $ | 3,237 | $ | 2,597 | $ | 1,911 | ||||||||||
|
Newmont stockholders’ equity
|
$ | 13,345 | $ | 10,703 | $ | 7,291 | $ | 7,759 | $ | 9,337 | ||||||||||
| (1) | Net income (loss) attributable to Newmont stockholders includes income (loss) from discontinued operations of $(28), $(11), $15, $907 and $251 net of tax in 2010, 2009, 2008, 2007 and 2006, respectively. |
40
Table of Contents
| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollars in millions, except per share, per ounce and per pound amounts) |
The following discussion provides information that management
believes is relevant to an assessment and understanding of the
consolidated financial condition and results of operations of
Newmont Mining Corporation and its subsidiaries (collectively,
“Newmont,” the “Company,” “our”
and “we”). We use certain non-GAAP financial
performance measures in our MD&A. For a detailed
description of each of the non-GAAP measures used in this
MD&A, please see the discussion under
“Non-GAAP Financial Performance Measures”
beginning on page 72. References to “A$” 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 consolidated financial condition and
results of operations at and for the three years ended
December 31, 2010, 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 2011; | |
| • | “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 generally accepted accounting principle (“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 the
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
and/or
operations in the United States, Australia, Peru, Indonesia,
Ghana, Canada, New Zealand and Mexico.
Our vision is to be the most valued and respected mining company
through industry leading performance. In 2010, we have
successfully executed on the key benchmarks that we set out at
the beginning of the year.
41
Table of Contents
Delivered
strong operating performance.
| • | Consolidated gold production of approximately 6.5 million ounces (5.4 million ounces attributable to Newmont) at Costs applicable to sales of $485 per ounce; | |
| • | Consolidated copper production of approximately 600 million pounds (327 million pounds attributable to Newmont) at Costs applicable to sales of $0.80 per pound; | |
| • | Record Sales of $9,540, an increase of 24% over 2009; | |
| • | Gold operating margin (average realized price less consolidated Costs applicable to sales ) of $737 per ounce in 2010, an increase of 30% over 2009 compared to an increase of 25% in the average realized gold price for the same period; | |
| • | Record Net income attributable to Newmont stockholders of $4.63 per share, basic; | |
| • | Record Cash flow from continuing operations of $3,180, an increase of 9% over 2009; and | |
| • | Net increase of 1.7 million ounces of gold reserves to 93.5 million ounces at December 31, 2010. |
Advanced the
development of our project pipeline.
| • | Akyem, Ghana — In January 2010 we received the mining lease from the Ghanaian government. We continue to progress into the development stage with an emphasis on project engineering and obtaining all required land access and permits. In 2010, we selected and mobilized the project engineering procurement and construction contractor, and we are advancing the project towards a construction decision in the first half of 2011. If all permits are secured on the currently articulated schedule, we expect this project to commence production in late 2013 or early 2014. At December 31, 2010, we reported 7.2 million ounces of gold reserves at Akyem; | |
| • | Conga, Peru — Feasibility studies on our preferred option were completed in late 2009 and we continue to progress into the development stage with an emphasis on project engineering and obtaining all required permits. In 2010, we selected and mobilized the project engineering procurement and construction contractor. In October 2010, the project’s Environmental Impact Assessment was approved by the Peruvian authorities. A construction decision is expected in the first half of 2011. If all permits are secured, production is expected to commence in late 2014 or early 2015. At December 31, 2010 we reported 6.1 million attributable ounces of gold reserves and 1,660 million attributable pounds of copper reserves at Conga; and | |
| • | Hope Bay, Nunavut, Canada — Hope Bay is an 80 kilometer district in the Canadian arctic and is one of the last known undeveloped greenstone belts in the world. The exploration success over the last few years continues to confirm the district’s significant long-term potential. In 2010, we commenced an underground decline at the Doris North deposit and expect the Doris phase 1 project to provide access for test stoping and development drilling in 2011 progressing to a construction decision by the end of 2011. |
Implemented
Business Excellence initiatives to further drive continuous
improvement and business efficiencies throughout our
organization.
| • | Continuing to improve our safety performance; | |
| • | Applying trained resources to identify and realize cost reductions, value creation and operational efficiencies; | |
| • | Maintaining our industry-leading environmental, social and community relations commitments; | |
| • | Remaining a leading member of the Dow Jones Sustainability World Index; and | |
| • | Investing in people and innovation. |
42
Table of Contents
Summary of
Consolidated Financial and Operating Performance
The table below highlights key financial and operating results:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Sales
|
$ | 9,540 | $ | 7,705 | $ | 6,124 | ||||||
|
Income from continuing operations
|
$ | 3,144 | $ | 2,109 | $ | 1,147 | ||||||
|
Net income
|
$ | 3,116 | $ | 2,093 | $ | 1,160 | ||||||
|
Net income attributable to Newmont stockholders
|
$ | 2,277 | $ | 1,297 | $ | 831 | ||||||
|
Per common share, basic
|
||||||||||||
|
Income from continuing operations attributable to Newmont
stockholders
|
$ | 4.69 | $ | 2.68 | $ | 1.80 | ||||||
|
Net income attributable to Newmont stockholders
|
$ | 4.63 | $ | 2.66 | $ | 1.83 | ||||||
|
Adjusted net
income
(1)
|
$ | 1,893 | $ | 1,359 | $ | 792 | ||||||
|
Adjusted net income per
share
(1)
|
$ | 3.85 | $ | 2.79 | $ | 1.74 | ||||||
|
Gold ounces produced (thousands)
|
||||||||||||
|
Consolidated
|
6,451 | 6,521 | 6,153 | |||||||||
|
Attributable to
Newmont
(2)
|
5,392 | 5,237 | 5,201 | |||||||||
|
Copper pounds produced (millions)
|
||||||||||||
|
Consolidated
|
600 | 504 | 285 | |||||||||
|
Attributable to Newmont
|
327 | 227 | 128 | |||||||||
|
Gold ounces sold (thousands)
|
||||||||||||
|
Consolidated
|
6,296 | 6,534 | 6,150 | |||||||||
|
Attributable to Newmont
|
5,274 | 5,217 | 5,089 | |||||||||
|
Copper pounds sold (millions)
|
||||||||||||
|
Consolidated
|
539 | 507 | 290 | |||||||||
|
Attributable to Newmont
|
292 | 226 | 130 | |||||||||
|
Average price realized,
net
(3)
|
||||||||||||
|
Gold (per ounce)
|
$ | 1,222 | $ | 977 | $ | 874 | ||||||
|
Copper (per pound)
|
$ | 3.43 | $ | 2.60 | $ | 2.59 | ||||||
|
Costs applicable to
sales
(4)
|
||||||||||||
|
Gold (per ounce)
|
$ | 485 | $ | 411 | $ | 429 | ||||||
|
Copper (per pound)
|
$ | 0.80 | $ | 0.64 | $ | 1.38 | ||||||
| (1) | See “Non-GAAP Financial Measures” on page 72. | |
| (2) | Includes production from discontinued operations of 32 and 76 ounces in 2009 and 2008, respectively. | |
| (3) | After treatment and refining charges. | |
| (4) | Consolidated Costs applicable to sales excludes Amortization and Reclamation and remediation . |
Consolidated
Financial Performance
Sales increased 24% in 2010 compared to 2009 due to higher
average realized gold and copper prices and higher consolidated
copper pounds sold, partially offset by fewer consolidated gold
ounces sold. The average realized gold price increased 25% to
$1,222 per ounce in 2010 from $977 per ounce in 2009. The
average realized copper price, including $120 favorable mark to
market adjustments on provisionally priced copper sales and net
of treatment and refining charges, increased 32% to $3.43 per
pound in 2010 compared to $2.60 per pound in 2009. Copper pounds
sold increased in 2010 compared to 2009 due to higher production
at Batu Hijau and a full year of
ramp-up
43
Table of Contents
production at Boddington. Gold ounces sold decreased in 2010
compared to 2009 due to higher concentrates held in inventory at
December 31, 2010 and lower production in North and South
America, partially offset by higher production in Asia Pacific,
primarily Boddington.
Costs applicable to sales
increased
16% in 2010 compared to 2009 due to a full year of Boddington
production and higher waste mining and milling costs, partially
offset by lower gold sales volumes, higher by-product credits
and a
build-up
of
inventories and stockpiles. In addition, the effective income
and mining tax rate was lower in 2010 due to $440 in benefits
resulting from income tax planning for certain
non-U.S. subsidiaries.
Liquidity
Our financial position was as follows:
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
|
Debt (including current portion)
|
$ | 4,441 | $ | 4,809 | ||||
|
Newmont stockholders’ equity
|
$ | 13,345 | $ | 10,703 | ||||
|
Cash and cash equivalents
|
$ | 4,056 | $ | 3,215 | ||||
|
Investments (including current portion)
|
$ | 1,681 | $ | 1,242 | ||||
During 2010, our debt and liquidity positions were affected by
the following:
| • | Net cash provided from continuing operations of $3,180; | |
| • | Capital expenditures of $1,402; | |
| • | Income and mining taxes paid of $1,185; | |
| • | Proceeds from the sale of Batu Hijau shares to noncontrolling interests of $229; | |
| • | Debt pre-payment of $368; | |
| • | Pension and other benefit contributions of $163; | |
| • | Acquisition of additional 17% Batu Hijau economic interest from noncontrolling interests for $110; | |
| • | Dividends paid to common shareholders of $246; and | |
| • | Dividends paid to noncontrolling interests of $462. |
Looking
Forward
We will continue to focus on operational and project excellence
in 2011 to deliver on our plans and continue the advancement of
our project pipeline, resulting in the following expectations
for 2011:
| • | Attributable gold production of approximately 5.1 to 5.3 million ounces, primarily due to lower production at Batu Hijau as it moves into Phase 6 stripping, partially offset by higher production at Nevada and Ahafo; | |
| • | Costs applicable to sales per consolidated gold ounce sold of $560 to $590 due to lower production at Batu Hijau combined with higher costs for energy, labor and contracted services; | |
| • | Attributable copper production of approximately 190 to 220 million pounds at Costs applicable to sales per consolidated copper pound sold of approximately $1.25 to $1.50; | |
| • | We expect to close the Fronteer acquisition for approximately C$2,300 in the second quarter; | |
| • | Consolidated capital expenditures of approximately $2,700 to $3,000 in 2011, with approximately 40% to be spent on major project initiatives, including further development of the Akyem project in Ghana, the Conga project in Peru, the Hope Bay project in Canada and the Nevada project portfolio. The remaining 60% is expected to be spent on several expansion and |
44
Table of Contents
| optimization projects, routine replacements, new project development and other mine life extension efforts; |
| • | Exploration expense of approximately $335 to $345; and | |
| • | Advanced projects, research and development expense of approximately $405 to $415. |
Certain key factors will affect our future financial and
operating results. These include, but are not limited to, the
following:
| • | Our 2011 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, the Conga project in Peru and the Long Canyon project in Nevada to be acquired from Fronteer 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.
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 and their
components. 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
45
Table of Contents
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 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,
2010 and 2009, our stockpiles had a total carrying value of
$1,786 and $1,387, respectively.
The following is a summary of our ore stockpiles:
| At December 31, | At December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| ($ in millions) | ($ per ounce) | |||||||||||||||
|
Gold
|
||||||||||||||||
|
Nevada
|
$ | 324 | $ | 269 | $ | 175 | $ | 150 | ||||||||
|
Yanacocha
|
69 | 32 | 167 | 167 | ||||||||||||
|
Boddington
|
192 | 46 | 348 | 189 | ||||||||||||
|
Other Australia/New Zealand
|
145 | 121 | 308 | 282 | ||||||||||||
|
Batu Hijau
|
142 | 133 | 172 | 140 | ||||||||||||
|
Ahafo
|
121 | 72 | 307 | 252 | ||||||||||||
|
Total/Weighted Average
|
$ | 993 | $ | 673 | $ | 220 | $ | 173 | ||||||||
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Table of Contents
| At December 31, | At December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| ($ in millions) | ($ per pound) | |||||||||||||||
|
Copper
|
||||||||||||||||
|
Boddington
|
$ | 56 | $ | 13 | $ | 0.95 | $ | 0.51 | ||||||||
|
Batu Hijau
|
737 | 701 | 0.47 | 0.38 | ||||||||||||
|
Total/Weighted Average
|
$ | 793 | $ | 714 | $ | 0.49 | $ | 0.38 | ||||||||
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, 2010 included production cost and capitalized
expenditure assumptions unique to each operation, a long-term
gold price of $1,100 per ounce, a long-term copper price of
$3.00 per pound and U.S. to Australian dollar exchange rate
of $0.90 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
2008, we recorded a write-down of stockpiles to NRV of $2.
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.
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, 2010 apart from production cost and
capitalized expenditure assumptions unique to each operation
included a long-term gold price of $1,100 per ounce. If
short-term and long-term metals prices
47
Table of Contents
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. At December 31, 2010 and 2009, our leach pads had a
total carrying value of $588 and $518, respectively.
The following is a summary of our ore on leach pads:
| At December 31, | At December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| ($ in millions) | ($ per ounce) | |||||||||||||||
|
Gold
|
||||||||||||||||
|
Nevada
|
$ | 155 | $ | 176 | $ | 431 | $ | 362 | ||||||||
|
La Herradura
|
6 | 5 | 526 | 450 | ||||||||||||
|
Yanacocha
|
427 | 337 | 558 | 357 | ||||||||||||
|
Total/Weighted Average
|
$ | 588 | $ | 518 | $ | 517 | $ | 360 | ||||||||
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. 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 future
cash flows for each mine site reporting unit at
December 31, 2010 apart from production cost and
capitalized expenditure assumptions unique to each operation,
included a long-term gold price of $1,100 per ounce, a long-term
copper price of $3.00 per pound and U.S. to Australian
dollar exchange rate of $0.90 per A$1.00. During 2008, we
recorded an impairment of $120 to reduce the carrying value of
property, plant and mine development as part of
Write-down 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.
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.
48
Table of Contents
Derivative
Instruments
With the exception of the Call Spread Transactions (as described
in Note 14 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, 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 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
and will be
recognized in the statements of consolidated income 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
would be reclassified to the statements
of consolidated income immediately.
Reclamation
and Remediation 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. Reclamation
obligations are based on when the spending for an existing
environmental disturbance will occur. We review, on at least an
annual basis, the reclamation obligation at each mine site in
accordance with guidance for accounting for asset retirement
obligations.
Reclamation obligations 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.
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 to 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.
49
Table of Contents
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. 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 and mining tax expense
.
Consolidated
Financial Results
Gold
Sales
increased $1,306 in 2010 compared to 2009 due
to a $245 per ounce increase in the average realized price after
treatment and refining charges, partially offset by 238,000
fewer ounces sold. Gold
Sales
increased $1,014 in 2009
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. 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, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Consolidated gold sales:
|
||||||||||||
|
Gross before provisional pricing
|
$ | 7,706 | $ | 6,397 | $ | 5,387 | ||||||
|
Provisional pricing
mark-to-market
|
41 | 15 | (2 | ) | ||||||||
|
Gross after provisional pricing
|
7,747 | 6,412 | 5,385 | |||||||||
|
Less: Treatment and refining charges
|
(55 | ) | (26 | ) | (13 | ) | ||||||
|
Net
|
$ | 7,692 | $ | 6,386 | $ | 5,372 | ||||||
|
Consolidated gold ounces sold (thousands)
|
6,296 | 6,534 | 6,150 | |||||||||
|
Average realized gold price (per ounce):
|
||||||||||||
|
Gross before provisional pricing
|
$ | 1,224 | $ | 979 | 876 | |||||||
|
Provisional pricing
mark-to-market
|
7 | 2 | — | |||||||||
|
Gross after provisional pricing
|
1,231 | 981 | 876 | |||||||||
|
Less: Treatment and refining charges
|
(9 | ) | (4 | ) | (2 | ) | ||||||
|
Net
|
$ | 1,222 | $ | 977 | 874 | |||||||
The change in consolidated gold sales is due to:
|
2010 vs.
|
2009 vs.
|
|||||||
| 2009 | 2008 | |||||||
|
Increase (decrease) in consolidated ounces sold
|
$ | (234 | ) | $ | 337 | |||
|
Increase in average realized gold price
|
1,569 | 690 | ||||||
|
Increase in treatment and refining charges
|
(29 | ) | (13 | ) | ||||
| $ | 1,306 | $ | 1,014 | |||||
Copper
Sales
increased $529 in 2010 compared to 2009 due
to an $0.83 per pound increase in the average realized price
after treatment and refining charges and 32 million
additional pounds sold.
50
Table of Contents
Copper
Sales
increased $567 in 2009 compared to 2008 due
to 217 million additional pounds sold. For a complete
discussion regarding variations in copper volumes, see
Results of Consolidated Operations
below.
The following analysis reflects the changes in consolidated
copper sales:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Consolidated copper sales:
|
||||||||||||
|
Gross before provisional pricing
|
$ | 1,842 | $ | 1,283 | $ | 878 | ||||||
|
Provisional pricing
mark-to-market
gain
|
120 | 173 | (47 | ) | ||||||||
|
Gross after provisional pricing
|
1,962 | 1,456 | 831 | |||||||||
|
Less: Treatment and refining charges
|
(114 | ) | (137 | ) | (79 | ) | ||||||
|
Net
|
$ | 1,848 | $ | 1,319 | $ | 752 | ||||||
|
Consolidated copper pounds sold (millions)
|
539 | 507 | 290 | |||||||||
|
Average realized copper price (per pound):
|
||||||||||||
|
Gross before provisional pricing
|
$ | 3.42 | $ | 2.53 | $ | 3.03 | ||||||
|
Provisional pricing
mark-to-market
gain
|
0.22 | 0.33 | (0.16 | ) | ||||||||
|
Gross after provisional pricing
|
3.64 | 2.86 | 2.87 | |||||||||
|
Less: Treatment and refining charges
|
(0.21 | ) | (0.26 | ) | (0.28 | ) | ||||||
|
Net
|
$ | 3.43 | $ | 2.60 | $ | 2.59 | ||||||
The change in consolidated copper sales is due to:
|
2010 vs.
|
2009 vs.
|
|||||||
| 2009 | 2008 | |||||||
|
Increase in consolidated pounds sold
|
$ | 88 | $ | 623 | ||||
|
Increase in average realized copper price
|
418 | 2 | ||||||
|
Decrease (increase) in treatment and refining charges
|
23 | (58 | ) | |||||
| $ | 529 | $ | 567 | |||||
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Table of Contents
The following is a summary of consolidated gold and copper
sales, net:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Gold
|
||||||||||||
|
North America:
|
||||||||||||
|
Nevada
|
$ | 2,111 | $ | 1,943 | $ | 1,929 | ||||||
|
La Herradura
|
217 | 113 | 83 | |||||||||
| 2,328 | 2,056 | 2,012 | ||||||||||
|
South America:
|
||||||||||||
|
Yanacocha
|
1,778 | 2,013 | 1,613 | |||||||||
|
Asia Pacific:
|
||||||||||||
|
Boddington
|
834 | 101 | — | |||||||||
|
Batu Hijau
|
776 | 550 | 261 | |||||||||
|
Kalgoorlie
|
463 | 329 | 264 | |||||||||
|
Jundee
|
416 | 413 | 342 | |||||||||
|
Tanami
|
311 | 280 | 321 | |||||||||
|
Waihi
|
131 | 116 | 123 | |||||||||
| 2,931 | 1,789 | 1,311 | ||||||||||
|
Africa:
|
||||||||||||
|
Ahafo
|
655 | 528 | 435 | |||||||||
|
Corporate and other
|
— | — | 1 | |||||||||
| 7,692 | 6,386 | 5,372 | ||||||||||
|
Copper
|
||||||||||||
|
Asia Pacific:
|
||||||||||||
|
Batu Hijau
|
1,686 | 1,292 | 752 | |||||||||
|
Boddington
|
162 | 27 | — | |||||||||
| 1,848 | 1,319 | 752 | ||||||||||
| $ | 9,540 | $ | 7,705 | $ | 6,124 | |||||||
Costs applicable to sales
for gold increased in 2010
compared to 2009 due to a full year of Boddington production and
higher mining and milling costs, partially offset by lower sales
volumes, higher by-product credits and a
build-up
of
inventories and stockpiles. The increase in 2009 compared to
2008 was due to higher sales volumes and higher royalty and
workers participation costs, partially offset by higher
by-product sales and lower diesel costs.
Costs applicable to
sales
for copper increased in 2010 from 2009 due to higher
production and waste mining costs at Batu Hijau and a full year
of Boddington production. The decrease in 2009 from 2008 was due
to lower diesel and mining costs, partially offset by higher
labor costs and the
start-up
of
Boddington production. For a complete discussion regarding
variations in operations, see
Results of Consolidated
Operations
below.
Amortization
expense increased in 2010 from 2009 due to a
full year of Boddington production, additional equipment
purchases and higher capitalized mine development.
Amortization
expense 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
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
52
Table of Contents
complete discussion, see
Results of Consolidated
Operations
, below. We expect
Amortization
expense to
be approximately $1,025 to $1,035 in 2011.
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, | |||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
|
Gold
|
||||||||||||||||||||||||
|
North America:
|
||||||||||||||||||||||||
|
Nevada
|
$ | 974 | $ | 1,019 | $ | 993 | $ | 271 | $ | 261 | $ | 246 | ||||||||||||
|
La Herradura
|
73 | 42 | 38 | 19 | 11 | 8 | ||||||||||||||||||
| 1,047 | 1,061 | 1,031 | 290 | 272 | 254 | |||||||||||||||||||
|
South America:
|
||||||||||||||||||||||||
|
Yanacocha
|
630 | 642 | 637 | 162 | 168 | 170 | ||||||||||||||||||
|
Asia Pacific:
|
||||||||||||||||||||||||
|
Boddington
|
400 | 45 | — | 113 | 15 | — | ||||||||||||||||||
|
Batu Hijau
|
155 | 118 | 124 | 42 | 30 | 25 | ||||||||||||||||||
|
Kalgoorlie
|
211 | 210 | 231 | 15 | 15 | 16 | ||||||||||||||||||
|
Jundee
|
132 | 136 | 149 | 33 | 49 | 34 | ||||||||||||||||||
|
Tanami
|
173 | 174 | 207 | 43 | 47 | 39 | ||||||||||||||||||
|
Waihi
|
69 | 57 | 55 | 17 | 25 | 33 | ||||||||||||||||||
| 1,140 | 740 | 766 | 263 | 181 | 147 | |||||||||||||||||||
|
Africa:
|
||||||||||||||||||||||||
|
Ahafo
|
237 | 242 | 205 | 78 | 68 | 63 | ||||||||||||||||||
| 3,054 | 2,685 | 2,639 | 793 | 689 | 634 | |||||||||||||||||||
|
Copper
|
||||||||||||||||||||||||
|
Asia Pacific:
|
||||||||||||||||||||||||
|
Batu Hijau
|
337 | 307 | 399 | 90 | 78 | 80 | ||||||||||||||||||
|
Boddington
|
93 | 16 | — | 25 | 4 | — | ||||||||||||||||||
| 430 | 323 | 399 | 115 | 82 | 80 | |||||||||||||||||||
|
Other
|
||||||||||||||||||||||||
|
Hope Bay
|
— | — | — | 13 | 12 | 1 | ||||||||||||||||||
|
Asia Pacific
|
— | — | — | 2 | 3 | 3 | ||||||||||||||||||
|
Corporate and other
|
— | — | — | 22 | 20 | 20 | ||||||||||||||||||
| — | — | — | 37 | 35 | 24 | |||||||||||||||||||
| $ | 3,484 | $ | 3,008 | $ | 3,038 | $ | 945 | $ | 806 | $ | 738 | |||||||||||||
Exploration
expense increased to $218 in 2010 from $187
in 2009 due to additional near mine expenditures in all regions,
with the largest increase in Nevada at Leeville/Turf and Midas.
Exploration
expense decreased in 2009 from $213 in 2008
due to a reduced drilling program related to our focus on net
cash flow generation and a more selective and strategic
exploration program. We expect
Exploration
expense to be
approximately $335 to $345 in 2011.
During 2010, we added 8.2 million ounces to proven and
probable reserves, with 6.5 million ounces of depletion.
Reserve additions of 8.2 million ounces were primarily due
to conversion of mineralized material at Leeville
(1.8 million ounces), Ahafo (1.5 million ounces), Twin
Creeks (1.4 million ounces), Phoenix (0.8 million
ounces), La Herradura (0.7 million ounces) and Tanami
53
Table of Contents
(0.7 million ounces) with most of the remaining additions
coming from open pit and underground sources in the United
States, Australia and South America (1.8 million ounces).
Gold reserves were revised down by 0.5 million ounces at
Akyem in Ghana, primarily due to new mining assumptions and
higher cutoff grades. The estimated impact of the change in gold
price assumption on these reserve additions was an increase of
1.7 million ounces.
During 2009, we added 6.4 million ounces to proven and
probable reserves, with 6.8 million ounces of depletion.
Reserve additions of 6.4 million ounces were primarily due
to conversion of mineralized material at Gold Quarry
(2.9 million ounces), Boddington (1.3 million ounces),
Tanami (0.5 million ounces) and Ahafo (0.5 million
ounces) with most of the remaining additions coming from open
pit and underground sources in Australia and South America
(0.6 million ounces). Gold reserves were revised down by
0.3 million 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 ounces.
During 2008, we added 5.2 million ounces to proven and
probable reserves, with 6.7 million ounces of depletion.
Reserve additions from exploration of 4.4 million ounces
were primarily due to conversion of mineralized material at
Boddington (1.6 million ounces, 66.67% ownership), with
most of the remaining additions coming from several open pit and
underground sites in Nevada (totaling 1.2 million ounces)
and from underground sites in Australia (0.7 million
ounces). Gold reserves were revised down by 1.1 million
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 ounces.
Advanced projects, research and development
expense
includes development project management costs, feasibility
studies and certain drilling costs.
Advanced projects,
research and development
expense increased 60% in 2010
compared to 2009 due to additional spending at Hope Bay and
increased spending to accelerate internal growth opportunities
across our portfolio. Significant projects include the Hope Bay
gold project in Nunavut, Canada, the Subika underground and
Akyem gold projects in Ghana and the Conga copper and gold
project in Peru. We expect
Advanced projects, research and
development
expense to be approximately $405 to $415 in
2011, with a focus on the major projects above.
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Major projects:
|
||||||||||||
|
Hope Bay
|
$ | 74 | $ | 25 | $ | 39 | ||||||
|
Subika underground
|
11 | 2 | — | |||||||||
|
Conga
|
8 | 4 | 4 | |||||||||
|
Akyem
|
5 | 8 | 7 | |||||||||
|
Boddington
|
— | 25 | 3 | |||||||||
|
Other projects:
|
||||||||||||
|
Technical and project services
|
49 | 24 | 23 | |||||||||
|
Corporate
|
29 | 14 | 15 | |||||||||
|
Other
|
40 | 33 | 75 | |||||||||
| $ | 216 | $ | 135 | $ | 166 | |||||||
General and administrative
expense increased to $178 in
2010 compared to $159 in 2009 due to higher benefit and
compensation costs.
General and administrative
expense
increased in 2009 compared to $144 in 2008 due to higher
benefits, mainly pension and other post retirement costs.
General and administrative
expense as a percentage of
Sales
was 1.9% in 2010, compared to 2.1% and 2.4% in 2009
and 2008, respectively. We expect
General and administrative
expense to be approximately $190 to $200 in 2011.
54
Table of Contents
Write-down of property, plant and mine development
totaled $6, $7 and $137 for 2010, 2009 and 2008,
respectively. The 2010 write-down primarily related to asset
disposals in North America and Asia Pacific. The 2009 write-down
primarily related to asset disposals 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.
Other expense, net
was $261, $358 and $240 for 2010, 2009
and 2008, respectively. The decrease in 2010 over 2009 is due to
costs related to acquiring the remaining interest in Boddington,
higher charges related to the Western Australian power plant,
and a workforce reduction that impacted 3% of our global
workforce in 2009, partially offset by higher community
development costs at
Batu Hijau
in 2010. The
increase in 2009 over 2008 is due to costs related to acquiring
the remaining interest in Boddington in 2009, the workforce
reduction that impacted 3% of our global workforce and an
increase in expenses for the Western Australian power plant,
partially offset by the recovery of provision for doubtful
accounts expensed in 2008.
Other income, net
was $109, $88 and $123 for 2010, 2009
and 2008, respectively. The increase in 2010 over 2009 is
primarily related to an increase in Canadian Oil Sands Trust
distributions due to higher oil prices in 2010 and sales of
non-core assets, partially offset by foreign currency exchange
losses. The decrease in 2009 over 2008 is primarily related to a
decrease in Canadian Oil Sands Trust distributions due to lower
oil prices in 2009 and higher gains on sale of investments and
exploration properties in 2008, partially offset by the
other-than-temporary
investment impairment in 2008.
Interest expense, net
was $279, $120 and $135 for 2010,
2009 and 2008, respectively. Capitalized interest totaled $21,
$111 and $47 in each year, respectively.
Interest expense,
net
increased in 2010 compared to 2009 due to the reduction
in capitalized interest as Boddington achieved commercial
production in November 2009 and interest related to the 2019 and
2039 senior notes issued during September 2009, partially offset
by lack of interest due to the prepayment in 2010 of the PTNNT
project financing and Yanacocha senior notes and credit
facility.
Interest expense, net
decreased in 2009 from
2008 due to higher capitalized interest related to the higher
construction investments at Boddington, partially offset by
additional interest on the senior notes issued in September 2009
and convertible senior notes issued in February 2009. We expect
Interest expense, net
to be approximately $235 to $245 in
2011.
Income and mining tax expense
was $856, $829 and $142 in
2010, 2009 and 2008, respectively. The effective tax rates were
21%, 28% and 11% in 2010, 2009 and 2008, respectively. The lower
effective tax rate in 2010 and 2008 is primarily due to tax
benefits recognized as a result of “check the box”
elections made with respect to certain of our
non-U.S. subsidiaries.
As a result of the elections, the subsidiaries are treated as
flow-through entities for U.S. federal income tax purposes.
The restructurings in 2010 resulted in the recording of a
deferred tax asset, calculated as the difference between fair
market valuations of the subsidiaries compared to the underlying
financial statement basis in the assets. The restructuring in
2008 resulted in a significant loss that allowed us to recover
income taxes paid in prior years. Without the restructuring, the
effective tax rate for 2010 and 2008 would have been 32% and
24%, respectively. Although the 2010 tax benefit from the
restructuring was much larger than the amount in 2008 ($440 as
opposed to $159), the impact to the overall effective tax rate
was diluted due to the large pretax book income for that year.
The factors that most significantly impacted our effective tax
rates for the three periods are percentage depletion, changes in
estimates of reserves for income tax uncertainties and the
impact of certain specific transactions. Many of these factors
are sensitive to the average realized price of gold and other
metals. For a complete discussion, see Note 10 to the
Consolidated Financial Statements.
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
55
Table of Contents
effective tax rate is expected to be volatile in future periods.
The effective tax rate is expected to be between 28% and 32% in
2011.
Net income attributable to noncontrolling interests
was
as follows:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Batu Hijau
|
$ | 549 | $ | 445 | $ | 98 | ||||||
|
Yanacocha
|
292 | 354 | 232 | |||||||||
|
Other
|
(2 | ) | (3 | ) | (1 | ) | ||||||
| $ | 839 | $ | 796 | $ | 329 | |||||||
Net income attributable to noncontrolling interests
increased in 2010 from 2009 as a result of higher earnings
at Batu Hijau and the required March 2010 divestiture of Batu
Hijau, partially offset by lower earnings at Yanacocha and the
additional 17% economic interest in Batu Hijau as a result of
advancing funds to certain noncontrolling partners in exchange
for their share of Batu Hijau’s dividends, net of
withholding tax (for a complete discussion see Results of
Consolidated Operations below). The 2009 increase over 2008
resulted from increased earnings at Batu Hijau and
Yanacocha and divestiture of a portion of Batu Hijau in
accordance with the provisions of the Contract of Work. See
Note 13 to the Consolidated Financial Statements for a
discussion of the changes in our Batu Hijau ownership.
Equity income (loss) of affiliates
was as follows:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
AGR Matthey Joint Venture
|
$ | 3 | $ | 5 | $ | (2 | ) | |||||
|
Regis Resources Ltd.
|
— | — | (3 | ) | ||||||||
|
Minera La Zanja S.R.L.
|
10 | (4 | ) | — | ||||||||
|
Euronimba Ltd.
|
(10 | ) | (17 | ) | — | |||||||
| $ | 3 | $ | (16 | ) | $ | (5 | ) | |||||
The AGR Matthey Joint Venture (“AGR”) was dissolved in
2010. Our interest in Regis Resources Ltd. (“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. In 2009, we began accounting for our
investments in Minera La Zanja S.R.L. (46.94%) and
Euronimba Ltd. (43.5%) on the equity method.
Income (loss) from discontinued operations
was as follows:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Sales
|
$ | — | $ | 32 | $ | 75 | ||||||
|
Income (loss) from operations:
|
||||||||||||
|
Kori Kollo
|
$ | — | $ | 1 | $ | (9 | ) | |||||
|
Other
|
— | — | 6 | |||||||||
| — | 1 | (3 | ) | |||||||||
|
Non-operating gain (loss)
|
(40 | ) | (44 | ) | 1 | |||||||
|
Pre-tax income (loss)
|
(40 | ) | (43 | ) | (2 | ) | ||||||
|
Income tax benefit
|
12 | 27 | 15 | |||||||||
|
Income (loss) from discontinued operations
|
$ | (28 | ) | $ | (16 | ) | $ | 13 | ||||
56
Table of Contents
Discontinued operations include Kori Kollo sold in July 2009 and
various other operations sold to third parties.
In December 2010, we recognized a $28 charge, net of tax
benefits, for legal claims related to historic operations
previously sold to third parties.
In July 2009, we sold our interest in Kori Kollo in Bolivia. As
part of the transaction, a reclamation trust fund was
established with the proceeds to be made available exclusively
for closure and reclamation cost funding when operations
eventually cease. We recognized a $16 charge in 2009, net of tax
benefits, related to the sale.
Other comprehensive income,
net of tax was $484 in 2010
and included non-cash adjustments for a $269 net gain in
value of marketable securities, a $98 net gain on the
translation of subsidiaries with
non-U.S. dollar
functional currencies, a $13 net loss related to pension
and other post-retirement benefit adjustments and a
$130 net gain on derivatives designated as cash flow
hedges.
Other comprehensive income,
net of tax was $882
in 2009 and included non-cash adjustments for a $418 net
gain in value of marketable securities, a $264 net 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 loss,
net of tax was $1,212
in 2008 and included a $573 net loss in value of marketable
securities, a $387 net 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
$122 net loss on derivatives designated as cash flow hedges.
Results of
Consolidated Operations
| Gold or Copper Produced | Costs Applicable to Sales (1) | Amortization | ||||||||||||||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||
| (ounces in thousands) | ($ per ounce) | ($ per ounce) | ||||||||||||||||||||||||||||||||||
|
Gold
|
||||||||||||||||||||||||||||||||||||
|
North America
|
1,909 | 2,099 | 2,355 | $ | 551 | $ | 501 | $ | 445 | $ | 153 | $ | 128 | $ | 110 | |||||||||||||||||||||
|
South
America
(2)
|
1,462 | 2,058 | 1,809 | 431 | 310 | 346 | 111 | 81 | 92 | |||||||||||||||||||||||||||
|
Asia
Pacific
(2)
|
2,535 | 1,832 | 1,464 | 474 | 410 | 515 | 109 | 100 | 99 | |||||||||||||||||||||||||||
|
Africa
|
545 | 532 | 525 | 450 | 444 | 408 | 150 | 125 | 126 | |||||||||||||||||||||||||||
|
Total/Weighted-Average
|
6,451 | 6,521 | 6,153 | $ | 485 | $ | 411 | $ | 429 | $ | 126 | $ | 105 | $ | 103 | |||||||||||||||||||||
|
Attributable to
Newmont
(3)
|
5,392 | 5,237 | 5,201 | |||||||||||||||||||||||||||||||||
| (pounds in millions) | ($ per pound) | ($ per pound) | ||||||||||||||||||||||||||||||||||
|
Copper
|
||||||||||||||||||||||||||||||||||||
|
Asia
Pacific
(2)
|
600 | 504 | 285 | $ | 0.80 | $ | 0.64 | $ | 1.38 | $ | 0.21 | $ | 0.16 | $ | 0.28 | |||||||||||||||||||||
|
Attributable to Newmont
|
327 | 227 | 128 | |||||||||||||||||||||||||||||||||
| (1) | Consolidated Costs applicable to sales excludes Amortization and Reclamation and remediation. | |
| (2) | Consolidated gold ounces includes noncontrolling interests’ share for Yanacocha and Batu Hijau. Consolidated copper pounds includes noncontrolling interests’ share for Batu Hijau. | |
| (3) | Includes 32 and 76 thousand ounces from discontinued operations at Kori Kollo, Bolivia in 2009 and 2008, respectively. |
57
Table of Contents
2010 compared
to 2009
Consolidated gold ounces produced decreased slightly due to:
| • | lower production from South America due to mine sequencing resulting in increased waste mining, lower leach placement and lower mill ore grade; and | |
| • | lower production from North America due to completion of mining at Deep Post in 2009 and geotechnical issues at Gold Quarry; mostly offset by | |
| • | higher production from Asia Pacific due to a full year of Boddington production and higher ore grade and throughput at Batu Hijau; and | |
| • | higher production from Africa due to higher ore grade. |
Consolidated copper pounds produced increased 19% due to higher
ore grade and throughput at Batu Hijau and a full year of
Boddington production.
Costs applicable to sales
per consolidated gold ounce
sold increased 18% due to lower production from South America, a
full year of higher cost production at Boddington and higher
diesel, royalty and waste mining costs, partially offset by
higher by-product credits.
Costs applicable to sales
per
consolidated copper pound sold increased 25% due to higher waste
mining at Batu Hijau and a full year of higher cost production
at Boddington, partially offset by higher production at Batu
Hijau.
2009 compared
to 2008
Consolidated gold ounces produced increased 6% due to:
| • | higher production from Asia Pacific primarily as a result of higher ore grade and throughput at Batu Hijau and the start-up of Boddington; and | |
| • | higher production from South America as a result of higher grade and throughput at the Yanacocha mill; partially offset by | |
| • | lower production from North America due to lower grade and lower leach placement in Nevada. |
Consolidated copper pounds produced increased 77% due to higher
ore grades and throughput at Batu Hijau and the
start-up
of
Boddington.
Costs applicable to sales
per consolidated gold ounce
sold decreased 4% due to higher production, lower diesel costs
and higher by-product credits partially offset by higher
royalties and workers’ participation costs.
Costs
applicable to sales
per consolidated copper pound sold
decreased 54% 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.
We expect 2011 gold production of approximately 5.1 to
5.3 million ounces attributable to Newmont, primarily due
to lower production at Batu Hijau as it moves into Phase 6
stripping, partially offset by higher production at Nevada and
Ahafo. Consolidated
Costs applicable to sales
per ounce
for 2011 are expected to be approximately $560 to $590 due to
lower production at Batu Hijau combined with higher costs for
energy, labor and contracted services. We expect 2011 copper
production attributable to Newmont of approximately 190 to
220 million pounds at consolidated
Costs applicable to
sales
per pound of approximately $1.25 to $1.50 due to lower
production at Batu Hijau.
58
Table of Contents
North America
Operations
| Gold Ounces Produced | Costs Applicable to Sales (1) | Amortization | ||||||||||||||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||
| (in thousands) | ($ per ounce) | ($ per ounce) | ||||||||||||||||||||||||||||||||||
|
Nevada
|
1,735 | 1,986 | 2,260 | $ | 565 | $ | 509 | $ | 447 | $ | 157 | $ | 130 | $ | 111 | |||||||||||||||||||||
|
La Herradura
(2)
|
174 | 113 | 95 | 420 | 372 | 397 | 110 | 95 | 86 | |||||||||||||||||||||||||||
|
Total/Weighted-Average
|
1,909 | 2,099 | 2,355 | $ | 551 | $ | 501 | $ | 445 | $ | 153 | $ | 128 | $ | 110 | |||||||||||||||||||||
|
Attributable to Newmont
|
1,909 | 2,099 | 2,355 | |||||||||||||||||||||||||||||||||
| (1) | Consolidated Costs applicable to sales excludes Amortization and Reclamation and remediation . | |
| (2) | Our proportionately consolidated 44%. |
2010 compared
to 2009
Nevada, USA.
Gold ounces produced decreased
13% due to the completion of underground mining at Deep Post in
2009, lower Gold Quarry ore mined as a result of a geotechnical
issue which occurred in December 2009 and lower leach tons
placed at Twin Creeks and Carlin, partially offset by increased
underground mining at Leeville. Total ore tons mined were 26%
lower primarily due to the Gold Quarry slope failure and the
completion of mining at North Lantern in April 2010. Ore placed
on leach pads decreased 62% to 4.5 million tons.
Costs
applicable to sales
per ounce increased 11% due to lower
production, partially offset by higher by-product credits.
Amortization
per ounce increased 21% due to lower
production and higher underground development costs.
La Herradura, Mexico.
Gold ounces
produced increased 54% due to the commencement of commercial
production at the Soledad and Dipolos pits in January 2010.
Costs applicable to sales
per ounce increased 13% due to
higher waste tons mined.
Amortization
per ounce increased
16% due to new equipment purchases.
2009 compared
to 2008
Nevada, USA.
Gold ounces produced decreased
12% due to lower mill ore grades from Leeville as well as the
completion of mining at Deep Post and mine sequencing changes at
Gold Quarry resulting in lower leach placement. Ore placed on
leach pads decreased 40% to 11.9 million tons, 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 14% 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 production, higher underground development costs
and a full year of power plant operations.
La Herradura, Mexico.
Gold ounces
produced increased 19% due to higher leach placement.
Costs
applicable to sales
per ounce decreased 6% due to higher
production and lower fuel costs.
Amortization
per ounce
increased 10% due to new equipment purchases.
Gold production for North America in 2011 is expected to be
approximately 2.0 to 2.1 million ounces at
Costs
applicable to sales
per ounce of approximately $560 to $600.
Production from Nevada operations have been impacted by the
December 2009 geotechnical event at Gold Quarry, limiting access
to ore originally scheduled to be mined in 2010 and 2011. During
2010, we mined through the impacted area and expect to
reestablish access to ore in the first half of 2011.
59
Table of Contents
South America
Operations
| Gold Ounces Produced | Costs Applicable to Sales (1) | Amortization | ||||||||||||||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||
| (in thousands) | ($ per ounce) | ($ per ounce) | ||||||||||||||||||||||||||||||||||
|
Yanacocha (51.35%
owned)
(2)
|
1,462 | 2,058 | 1,809 | $ | 431 | $ | 310 | $ | 346 | $ | 111 | $ | 81 | $ | 92 | |||||||||||||||||||||
|
Attributable to
Newmont
(3)
|
771 | 1,057 | 929 | |||||||||||||||||||||||||||||||||
| (1) | Consolidated Costs applicable to sales excludes Amortization and Reclamation and remediation . | |
| (2) | Consolidated gold ounces produced includes noncontrolling interests’ share. | |
| (3) | Includes 21 thousand ounces in 2010 from our 46.94% non-consolidated interest in La Zanja. |
2010 compared
to 2009
Yanacocha, Peru.
Gold ounces produced
decreased 29% due to mine sequencing resulting in increased
waste mining, lower leach placement, transitional ore
stockpiling at La Quinua and lower grade and recovery
resulting in lower mill production. Leach tons placed decreased
from 136 million tons to 59 million tons.
Costs
applicable to sales
per ounce increased 39% due to higher
waste material mined, lower production, higher labor, diesel and
maintenance costs, and higher workers’ participation and
royalty costs as a result of higher gold prices, partially
offset by higher by-product credits.
Amortization
per
ounce increased 37% due to lower production.
2009 compared
to 2008
Yanacocha, Peru.
Gold ounces produced
increased 14% as higher ore grade and recovery resulted in
higher mill production, partially offset by lower leach
production due to longer recovery times. Ore placed on the leach
pads increased to 136 million tons from 98 million
tons at a consistent grade of 0.018 ounces per ton.
Costs
applicable to sales
per ounce decreased 10% due to lower
waste material mined, 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.
Gold production for South America in 2011 is expected to be
approximately 715,000 to 775,000 ounces attributable to Newmont,
due to lower leach production at Yanacocha.
Costs applicable
to sales
per ounce are expected to increase in 2011 to
approximately $500 to $550, primarily due to lower gold
production and higher contracted services and supplies.
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Table of Contents
Asia Pacific
Operations
| Gold Ounces Produced | Costs Applicable to Sales (1) | Amortization | ||||||||||||||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||
| (in thousands) | ($ per ounce) | ($ per ounce) | ||||||||||||||||||||||||||||||||||
|
Gold
|
||||||||||||||||||||||||||||||||||||
|
Boddington
|
728 | 122 | — | $ | 590 | $ | 468 | $ | — | $ | 166 | $ | 160 | $ | — | |||||||||||||||||||||
|
Batu
Hijau
(2)(3)
|
737 | 560 | 269 | 237 | 214 | 414 | 63 | 55 | 85 | |||||||||||||||||||||||||||
|
Other
|
||||||||||||||||||||||||||||||||||||
|
Kalgoorlie
(4)
|
377 | 337 | 306 | 558 | 624 | 760 | 41 | 43 | 52 | |||||||||||||||||||||||||||
|
Jundee
|
335 | 411 | 378 | 393 | 331 | 395 | 99 | 120 | 91 | |||||||||||||||||||||||||||
|
Tanami
|
250 | 289 | 367 | 689 | 599 | 567 | 170 | 160 | 108 | |||||||||||||||||||||||||||
|
Waihi
|
108 | 113 | 144 | 647 | 481 | 390 | 156 | 215 | 234 | |||||||||||||||||||||||||||
| 1,070 | 1,150 | 1,195 | 546 | 499 | 541 | 101 | 117 | 103 | ||||||||||||||||||||||||||||
|
Total/Weighted-Average
|
2,535 | 1,832 | 1,464 | $ | 474 | $ | 410 | $ | 515 | $ | 109 | $ | 100 | $ | 99 | |||||||||||||||||||||
|
Attributable to
Newmont
(5)
|
2,167 | 1,517 | 1,316 | |||||||||||||||||||||||||||||||||
| Copper Pounds Produced | Costs Applicable to Sales (1) | Amortization | ||||||||||||||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||
| (in millions) | ($ per pound) | ($ per pound) | ||||||||||||||||||||||||||||||||||
|
Copper
|
||||||||||||||||||||||||||||||||||||
|
Boddington
|
58 | 10 | — | $ | 1.86 | $ | 1.77 | $ | — | $ | 0.51 | $ | 0.46 | $ | — | |||||||||||||||||||||
|
Batu
Hijau
(2)(3)
|
542 | 494 | 285 | 0.69 | 0.62 | 1.38 | 0.19 | 0.16 | 0.28 | |||||||||||||||||||||||||||
|
Total/Weighted-Average
|
600 | 504 | 285 | $ | 0.80 | $ | 0.64 | $ | 1.38 | $ | 0.21 | $ | 0.16 | $ | 0.28 | |||||||||||||||||||||
|
Attributable to Newmont
|
327 | 227 | 128 | |||||||||||||||||||||||||||||||||
| (1) | Consolidated Costs applicable to sales excludes Amortization and Reclamation and remediation . | |
| (2) | Consolidated gold ounces and copper pounds produced includes noncontrolling interests’ share. | |
| (3) | Our weighted-average economic interest based on copper production was 49.55%, 43.89% and 45.00% in 2010, 2009 and 2008, respectively. See Note 13 to the Consolidated Financial Statements for a discussion of the changes in our ownership of Batu Hijau. | |
| (4) | Our proportionately consolidated 50%. | |
| (5) | Includes 5 thousand ounces in 2010 from our non-consolidated interest in Duketon. |
Boddington, Australia.
Boddington produced
728,000 ounces of gold and 58 million pounds of copper at
Costs applicable to sales
of $590 per ounce ($487 on a
by-product basis; see “Non-GAAP Financial
Measures” on page 72) and $1.86 per pound on a
co-product basis. As Boddington continued to
ramp-up
in
2010, production was below original expectations due to lower
than anticipated gold grade and mill throughput.
Costs
applicable to sales
were higher than expected due to higher
mining and mill maintenance costs.
Amortization
per ounce
was higher than expected due to lower production.
2010 compared
to 2009
Batu Hijau, Indonesia.
Copper and gold
production increased 10% and 32%, respectively, due to higher
grade and mill throughput as a result of mining at the bottom of
Phase 5 and processing softer ore, partially offset by lower
recovery. Unseasonably dry weather permitted additional mining
in the bottom of Phase 5 during the fourth quarter. Beginning in
2011, we expect to process primarily stockpiled ore until Phase
6 ore becomes the primary mill feed commencing in late 2013.
Costs applicable to sales
increased 11% per pound and per
ounce due to higher waste mining and milling
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Table of Contents
costs, including higher labor and diesel costs.
Amortization
increased 19% per pound and 15% per ounce due to higher
equipment additions, partially offset by higher production.
Other Australia/New Zealand.
Gold production
decreased 7% due to lower mill grade at Jundee and Waihi and
lower mill grade and throughput at Tanami, partially offset by
higher grade, throughput and recovery at Kalgoorlie.
Costs
applicable to sales
per ounce increased 9% due to lower
production and a weaker U.S. dollar. Changes in Australia
and New Zealand exchange rates increased
Costs applicable to
sales
per ounce by $33.
Amortization
per ounce
decreased 14% due to lower mine development costs at Waihi and
Jundee, partially offset by lower production.
2009 compared
to 2008
Batu Hijau, Indonesia.
Consolidated copper
pounds and gold ounces produced increased 73% and 108%,
respectively, due to higher mill throughput, grade and recovery
due to processing higher grade Phase 5 ore compared to ore
sourced primarily from lower grade and harder ore stockpiles in
2008.
Costs applicable to sales
decreased 55% per pound
and 48% per ounce due to higher production.
Costs applicable
to sales
per ounce also decreased due to a higher co-product
allocation of costs to copper due to a higher realized copper
price.
Amortization
decreased 43% per pound and 35% per
ounce due to higher production.
Other Australia/New Zealand.
Gold ounces
produced decreased 4% due to lower throughput as a result of
unplanned mill maintenance and lower grade at Tanami and a
temporary suspension of milling operations due to an electrical
fire at Waihi, partially offset by higher throughput and grade
at Jundee and higher throughput, grade and recovery at
Kalgoorlie.
Costs applicable to sales
per ounce decreased
8% due to lower diesel prices, partially offset by lower
production, a stronger Australian dollar and higher royalties.
Amortization
per ounce increased 14% due to lower
production, a higher mix of underground production at Jundee and
a shortened mine life adjustment at Tanami.
Gold production for Asia Pacific is expected to decrease in 2011
to approximately 1.9 to 2.0 million ounces attributable to
Newmont at higher consolidated
Costs applicable to sales
per ounce of approximately $600 to $675 in 2011, primarily
due to lower production at Batu Hijau. We expect copper
production for the Asia Pacific region of approximately 190 to
220 million pounds attributable to Newmont at consolidated
Costs applicable to sales
per pound of approximately
$1.25 to $1.50 in 2011.
Africa
Operations
| Gold Ounces Produced | Costs Applicable to Sales (1) | Amortization | ||||||||||||||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||
| (in thousands) | ($ per ounce) | ($ per ounce) | ||||||||||||||||||||||||||||||||||
|
Ahafo
|
545 | 532 | 525 | $ | 450 | $ | 444 | $ | 408 | $ | 150 | $ | 125 | $ | 126 | |||||||||||||||||||||
|
Attributable to Newmont
|
545 | 532 | 525 | |||||||||||||||||||||||||||||||||
| (1) | Consolidated Costs applicable to sales excludes Amortization and Reclamation and remediation . |
2010 compared
to 2009
Ahafo, Ghana.
Gold ounces produced increased
due to higher grade ore mined at Apensu in 2010 and the
commencement of production at Amoma in October 2010.
Costs
applicable to sales
per ounce increased slightly due to
higher labor, power, diesel and royalty costs, partially offset
by higher production.
Amortization
per ounce increased
20% due to higher capitalized mine development and equipment
additions.
2009 compared
to 2008
Ahafo, Ghana.
Gold ounces produced increased
due to higher throughput, partially offset by lower mill
recovery.
Costs applicable to sales
per ounce increased
9% due to higher labor, contracted
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Table of Contents
services, maintenance and power costs, partially offset by lower
diesel prices.
Amortization
per ounce decreased slightly
as higher production was offset by equipment additions.
Gold production for the Africa operations is expected to be
approximately 550,000 to 590,000 ounces in 2011 due to mining
higher ore grade.
Costs applicable to sales
per ounce of
approximately $485 to $535 are expected for 2011, primarily as a
result of higher energy prices and higher labor and royalty
costs.
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 36%,
24% and 27% of our
Costs applicable to sales
were paid in
currencies other than the U.S. dollar in 2010, 2009 and
2008, 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 local currency exchange rates in relation to the
U.S. dollar at our foreign mining operations increased
Costs applicable to sales
per ounce $10, net of hedging,
in 2010 compared to 2009, and decreased
Costs applicable to
sales
per ounce $6, net of hedging, in 2009 from 2008,
primarily due to movements in the Australian dollar.
We hedge a portion of our forecasted Australian dollar
denominated operating expenditures. At December 31, 2010,
we have hedged 72%, 45% and 22% of our forecasted Australian
denominated operating costs in 2011, 2012 and 2013,
respectively, at an average rate of 0.82, 0.84 and 0.84,
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.
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Table of Contents
Liquidity and
Capital Resources
Cash Provided
from Operations
Net cash provided from continuing operations
was $3,180,
$2,914 and $1,397 for 2010, 2009 and 2008, respectively, and was
impacted by the following key factors:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Consolidated gold ounces sold (in thousands)
|
6,296 | 6,534 | 6,150 | |||||||||
|
Average price received per ounce of gold,
net
(1)
|
$ | 1,222 | $ | 977 | $ | 874 | ||||||
|
Costs applicable to sales per ounce of gold
sold
(2)
|
$ | 485 | $ | 411 | $ | 429 | ||||||
|
Consolidated copper pounds sold (in millions)
|
539 | 507 | 290 | |||||||||
|
Average price received per pound of copper,
net
(1)
|
$ | 3.43 | $ | 2.60 | $ | 2.59 | ||||||
|
Costs applicable to sales per pound of copper
sold
(2)
|
$ | 0.80 | $ | 0.64 | $ | 1.38 | ||||||
| (1) | After treatment and refining charges. | |
| (2) | Excludes Amortization and Reclamation and remediation . |
Net cash provided from continuing operations
was a record
$3,180 in 2010, an increase of $266 from 2009 due to higher
realized gold and copper prices of $1,569 and $418,
respectively, and increased consolidated copper sales volume of
$88; partially offset by decreased gold sales volume of $234, as
discussed above in
Consolidated Financial Results.
The
increase was also partially offset by higher costs applicable to
sales of $476, primarily from a full year of Boddington
operations, higher interest expense of $159, higher current
income and mining tax expense of $408, and an additional $527
investment in working capital (trade receivables, inventories,
stockpiles and ore on leach pads). Cash flow provided from
operations during 2009 was $2,914, an increase of $1,517 from
2008 due to higher realized gold prices of $690 and increased
gold and copper sales volume of $337 and $623, respectively, as
discussed above in
Consolidated Financial Results
and a
$400 lower investment in working capital. The increase was
partially offset by lower distributions from the Canadian Oil
Sands Trust of $84 and higher current income and mining tax
expense of $370.
We are currently planning to contribute $18 to our retirement
benefit programs in 2011. For additional discussion see
Note 8 to the Consolidated Financial Statements.
Investing
Activities
Net cash used in investing activities of continuing
operations
was $1,419 in 2010 compared to $2,781 and $2,146
in 2009 and 2008, respectively, for the reasons explained below.
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Table of Contents
Additions to property, plant and mine development
were
$1,402, $1,769 and $1,870 for continuing operations in 2010,
2009 and 2008, respectively, as follows:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
North America:
|
||||||||||||
|
Nevada
|
$ | 298 | $ | 205 | $ | 299 | ||||||
|
Hope Bay
|
115 | 5 | 82 | |||||||||
|
La Herradura
|
41 | 54 | 27 | |||||||||
| 454 | 264 | 408 | ||||||||||
|
South America:
|
||||||||||||
|
Yanacocha
|
167 | 119 | 202 | |||||||||
|
Conga
|
134 | 27 | 34 | |||||||||
| 301 | 146 | 236 | ||||||||||
|
Asia Pacific:
|
||||||||||||
|
Boddington
|
146 | 1,093 | 815 | |||||||||
|
Jundee
|
44 | 29 | 36 | |||||||||
|
Tanami
|
94 | 74 | 52 | |||||||||
|
Kalgoorlie
|
25 | 11 | 14 | |||||||||
|
Waihi
|
13 | 8 | 28 | |||||||||
|
Batu Hijau
|
67 | 44 | 83 | |||||||||
|
Other
|
17 | 3 | 2 | |||||||||
| 406 | 1,262 | 1,030 | ||||||||||
|
Africa:
|
||||||||||||
|
Ahafo
|
109 | 75 | 109 | |||||||||
|
Akyem
|
70 | 10 | 2 | |||||||||
| 179 | 85 | 111 | ||||||||||
|
Corporate and Other
|
34 | 16 | 20 | |||||||||
|
Accrual basis
|
1,374 | 1,773 | 1,805 | |||||||||
|
Decrease (increase) in accrued capital expenditures
|
28 | (4 | ) | 65 | ||||||||
|
Cash basis
|
$ | 1,402 | $ | 1,769 | $ | 1,870 | ||||||
Capital expenditures in North America during 2010 included $41
for La Herradura primarily for equipment purchases, leach
pad expansion and surface development, $43 for Leeville/Turf
development, $95 for surface and underground development, $37
for process facilities improvements and upgrades, $26 for
reserve conversion and other capital drilling and $22 for mine
equipment in Nevada. Hope Bay expenditures included $115
primarily for equipment and other infrastructure. South America
capital expenditures included $134 primarily for engineering,
capitalized labor costs and land acquisitions for the Conga
project and $53 for leach pad expansions, $31 for surface
equipment and $20 for surface improvements at Yanacocha. Capital
expenditures in Asia Pacific included $109 for surface and
underground equipment, $83 for surface improvements and
underground mine development, $88 for tailings facilities and
$55 for process facilities. Capital expenditures in Africa
included $26 for Amoma construction, $38 for the Subika
expansion project, $21 for tailings dams and $70 primarily for
land acquisitions and surface development for the Akyem project.
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
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Table of Contents
included $5 for project infrastructure. South America capital
expenditures included $27 for the Conga project and $37 for
leach pad expansions and $32 for surface improvements at
Yanacocha. Capital 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 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.
During 2010, 2009 and 2008, $57, $29 and $18, respectively, of
drilling and related costs were capitalized and included in mine
development costs. These capitalized costs included $26 at North
America, $23 at Asia Pacific and $8 at Africa in 2010, $24 at
North America and $5 at Asia Pacific in 2009; and $10 at Asia
Pacific and $8 at North America in 2008.
During 2010, 2009 and 2008, $36, $26 and $27, respectively, of
pre-stripping costs were capitalized and included in mine
development costs. Pre-stripping costs included the Lantern 3
pit in Nevada and El Tapado Oeste at Yanacocha in 2010, the
North Lantern pit in Nevada in 2009 and the Bobstar and North
Lantern pits in Nevada and the Awonsu and Amoma pits at Ahafo in
2008.
We anticipate capital expenditures of approximately $2,700 to
$3,000 in 2011, with approximately 60% of the 2011 capital
budget allocated to several expansion and optimization projects,
routine replacements, new project development and other mine
life extension efforts and the remaining 40% allocated to
project development, including the development of the Akyem
project in Ghana, the Conga project in Peru, Hope Bay in Canada,
and the Nevada project portfolio.
Acquisitions, net.
In 2009, we paid $982 to
acquire the remaining 33.33% interest in Boddington.
Consideration also included quarterly contingent payments capped
at a combined $100, equal to 50% of the average realized
operating margin (
Sales
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. During 2010, we paid $4 in
contingent payments in accordance with the Boddington
acquisition agreement. Additionally, we paid $11 for a mining
property near the La Herradura, Mexico operation in 2009.
During the first quarter of 2008, we paid $318 to complete the
acquisition of the Hope Bay project. 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%.
Purchases and sales of marketable
securities.
During 2010, we purchased marketable
securities of $28 and we received $3 for the sale of marketable
securities. During 2009, we purchased marketable securities of
Regis Resources for $5 and we received $17 for the sale of Regis
Resources shares and other marketable securities. During 2008,
we purchased marketable securities of Gabriel Resources Ltd. for
$11 and other marketable securities for $6 and we received $50
for the sale of marketable securities.
Proceeds from sale of other assets.
During
2010, we received $13 from the sale of our 40% interest in AGR
and $5 and $4 for the sale of exploration properties in Armenia
and Guyana, respectively. We also received $34 from the sale of
other assets including non-core assets held at
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Tanami. During 2009 and 2008, proceeds included $14 and $32,
respectively, for the sale of other mining projects.
Financing
Activities
Net cash provided from (used in) financing activities of
continuing operations
was $(915) in 2010, compared to $2,572
and $127 in 2009 and 2008, respectively, for the reasons
explained below.
Proceeds from debt, net.
During 2009, we
received proceeds from debt of $4,299, including $1,756 under
our revolving credit facility, $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 and $64 from other credit facilities. During 2008, we
received proceeds from debt of $5,078, including $4,987 under
our revolving credit facility, $75 at Ahafo from an
International Finance Corporation loan and $18 from shareholder
loans.
At December 31, 2010 $153 of the $2,000 revolving credit
facility is currently used to secure the issuance of letters of
credit, primarily supporting reclamation obligations (see
“Off-Balance Sheet Arrangements”
below).
Repayment of debt.
During 2010, we repaid $430
of debt, including pre-payment of the $220 remaining under the
PTNNT project financing facility and $96 and $52 under
Yanacocha’s senior notes and credit facility, respectively,
and scheduled debt repayments of $24 related to the
sale-leaseback of the refractory ore treatment plant (classified
as a capital lease) and $38 on other credit facilities and
capital leases. During 2009, we repaid $2,731 of debt, including
$2,513 under our revolving credit facility, $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) and $36 on other credit facilities and capital leases.
During 2008, we repaid $4,483 of debt, including $4,230 under
our revolving credit facility and scheduled debt repayments of
$119 on maturity of the Australia notes, $87 related to Batu
Hijau project financing, $22 related to the sale-leaseback of
the refractory ore treatment plant (classified as a capital
lease) and $25 on other credit facilities and capital leases.
Scheduled minimum debt repayments are $259 in 2011, $559 in
2012, $42 in 2013, $533 in 2014, $18 in 2015 and $3,030
thereafter. We expect to be able to fund maturities of debt from
Net cash provided by operating activities
, short-term
investments, existing cash balances and available credit
facilities.
At December 31, 2010 and 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 $60, $1,278 and $29 during 2010, 2009 and 2008,
respectively, from the issuance of common stock. In February
2009, we completed a public offering of 34,500,000 shares
of common stock at $37 per share for net proceeds of $1,236.
Sale of subsidiary shares to noncontrolling
interests.
In March 2010, November 2009 and
December 2009, Nusa Tenggara Partnership (“NTP”)
completed the sale of 7%, 10% and 7% of shares in PTNNT to a
third party buyer, respectively. These transactions reduced our
direct ownership interest in PTNNT to 31.5%. Cash proceeds from
the 2010 and 2009 sales were $229 and $638, respectively, with
our 56.25% share being $129 and $359, respectively, and the
remaining balances paid to our NTP partner.
Acquisition of subsidiary shares from noncontrolling
interests.
On June 25, 2010,
P.T. Pukuafu Indah (“PTPI”), an unrelated
noncontrolling partner of PTNNT, completed the sale of
approximately a 2.2% interest in PTNNT to PT Indonesia Masbaga
Investama (“PTIMI”). To enable the transaction to
proceed, we released our rights to the dividends payable on this
2.2% interest and released our security interest in the
associated shares. We further agreed to advance certain funds to
PTIMI to enable it to purchase the interest in exchange for an
assignment by PTIMI to us of the dividends
67
Table of Contents
payable on the 2.2% interest (net of withholding tax), a pledge
of the shares as security for the loan and certain voting rights
and obligations. The funds that we advanced to PTIMI and which
it paid to PTPI for the shares were used by PTPI to reduce its
outstanding loan balance with us. Upon completion of this
transaction, PTPI requested and was allowed to make additional
draw-downs under our agreement with PTPI. Our economic interest
in PTPI’s and PTIMI’s combined 20% interest in PTNNT
remains at 17% and has not changed as a result of these
transactions.
On December 22, 2009, we entered into a transaction with
PTPI 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, certain voting
rights and obligations and a commitment from PTPI to support the
application of our standards to the operation of the Batu Hijau
mine. As a result, our effective economic interest in PTNNT
increased by 17%. In connection with the above transaction, we
advanced additional funds to PTPI during 2010.
Dividends paid to noncontrolling interests.
We
paid dividends of $462, $394 and $389 to noncontrolling
interests during 2010, 2009 and 2008, respectively. The
dividends paid in 2010 and 2009 included $100 and $279,
respectively, for our NTP partner’s share of the interest
sold in Batu Hijau during those years.
Dividends paid to common stockholders.
We paid
annual dividends of $0.50 per common share during 2010 and
$0.40 per common share during 2009 and 2008. Additionally,
Newmont Mining Corporation of Canada Limited, a subsidiary of
the Company, paid annual dividends of C$0.52, C$0.46 and C$0.43
during 2010, 2009 and 2008, respectively. On February 23,
2011, we declared a regular quarterly dividend of $0.15 per
share, payable March 30, 2011 to holders of record at the
close of business on March 15, 2011. Total dividends paid
to common stockholders were $246, $196 and $182 in 2010, 2009
and 2008, respectively.
Discontinued
Operations
Net operating cash provided from (used in) discontinued
operations
was $(13) in 2010, compared to $33 and $(104) in
2009 and 2008, respectively, as follows:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Kori Kollo
|
$ | (13 | ) | $ | 33 | $ | 7 | |||||
|
Income taxes and other
|
— | — | (111 | ) | ||||||||
| $ | (13 | ) | $ | 33 | $ | (104 | ) | |||||
During 2008, we made tax payments of $153 related to the
December 2007 royalty portfolio sale.
Net cash used in investing activities of discontinued
operations
was $11 in 2008 and 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 proceeds of $5 from the sale of other former
mining assets.
Net cash used in financing activities of discontinued
operations
was $2 and $4 in 2009 and 2008, respectively, for
repayment of debt 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
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Table of Contents
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, 2010 and 2009, the facility fees were 0.07% of
the commitment. There was $153 and $452 outstanding under the
letter of credit
sub-facility
at December 31, 2010 and 2009, respectively. At
December 31, 2010, $nil was borrowed under the facility.
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 and mining 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.
At December 31, 2010 and 2009, we were in compliance with
all debt covenants and provisions related to potential defaults.
Shelf
Registration Statement
In September 2009, 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.
Contractual
Obligations
Our contractual obligations at December 31, 2010 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)
|
$ | 5,288 | $ | 418 | $ | 1,510 | $ | 340 | $ | 3,020 | ||||||||||
|
Capital lease
obligations
(1)
|
194 | 41 | 144 | 9 | — | |||||||||||||||
|
Reclamation and remediation
obligations
(2)
|
1,654 | 61 | 185 | 118 | 1,290 | |||||||||||||||
|
Employee-related
benefits
(3)
|
601 | 89 | 116 | 90 | 306 | |||||||||||||||
|
Uncertain income tax liabilities and
interest
(4)
|
36 | — | — | — | 36 | |||||||||||||||
|
Operating leases
|
113 | 26 | 49 | 16 | 22 | |||||||||||||||
|
Minimum royalty payments
|
389 | 28 | 83 | 55 | 223 | |||||||||||||||
|
Purchase
obligations
(5)
|
958 | 197 | 245 | 110 | 406 | |||||||||||||||
|
Other
(6)
|
387 | 85 | 282 | 12 | 8 | |||||||||||||||
| $ | 9,620 | $ | 945 | $ | 2,614 | $ | 750 | $ | 5,311 | |||||||||||
69
Table of Contents
| (1) | Amounts represent principal ($4,441) and estimated interest payments ($1,041) 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 reclamation and remediation obligations are reflected here. For more information regarding reclamation and remediation liabilities, see Note 4 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 2015 cannot be reasonably estimated given variable market conditions and actuarial assumptions and are not included. | |
| (4) | We are unable to reasonably estimate the timing of our uncertain income tax liabilities and interest payments beyond 2011 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 $83 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 17 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 $1,191 of
outstanding letters of credit, surety bonds and bank guarantees
(see Note 31 to the Consolidated Financial Statements).
We also have sales agreements to sell copper and gold
concentrates at market prices as follows (in thousands of tons):
| 2011 | 2012 | 2013 | 2014 | 2015 | Thereafter | |||||||||||||||||||
|
Batu Hijau
|
420 | 440 | 430 | 518 | — | — | ||||||||||||||||||
|
Boddington
|
226 | 254 | 243 | 254 | 231 | 672 | ||||||||||||||||||
|
Nevada
|
61 | 75 | — | — | — | — | ||||||||||||||||||
| 707 | 769 | 673 | 772 | 231 | 672 | |||||||||||||||||||
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 significant future capital expenditures (see
Investing Activities, above), funding of exploration and
advanced projects, debt repayments and dividends to both common
shareholders and noncontrolling interests will impact
Net
cash used in investing activities
and
Net cash used in
financing activities
and exceed
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 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
70
Table of Contents
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 23 to the Consolidated Financial
Statements.
On February 3, 2011, we announced an agreement with
Fronteer Gold, Inc. (“Fronteer”) to acquire all of the
outstanding common shares of Fronteer. Fronteer shareholders
will receive C$14.00 in cash and one common share of Pilot Gold
Inc., a Canadian Corporation, which will retain certain
exploration assets of Fronteer, for each common share of
Fronteer. The transaction is expected to close in the second
quarter of 2011 for approximately C$2,300.
Cash flows are expected to be impacted by variations in the
realized prices 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
dollar. 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 2011 as a
result of planned contributions of $18 for our post-retirement
benefit programs.
Based on expected attributable production of between 5.1 and
5.3 million ounces of gold and between 190 and
220 million pounds of copper in 2011, we do not anticipate
reasonably expected variations in our production profile alone
to influence our ability to pay our debt and other obligations
in 2011.
Environmental
Our mining and exploration activities are subject to various
federal and state laws and regulations governing the protection
of the environment. 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.
At December 31, 2010 and 2009, $904 and $698, respectively,
were accrued for reclamation costs relating to currently or
recently producing mineral properties, of which $46 is
classified as a current liability. For more information on the
Company’s reclamation and remediation liabilities, see
Note 4 to the Consolidated Financial Statements.
In addition, we are involved in several matters concerning
environmental obligations associated with former mining
activities. Based upon our best estimate of our liability for
these matters, $144 and $161 were accrued for such obligations
at December 31, 2010 and 2009, respectively. We spent $23,
$20 and $39 in 2010, 2009 and 2008, respectively, for
environmental obligations related to former, primarily historic,
mining activities, and have classified $18 as a current
liability. Expenditures for 2010 related primarily to the Con
mine in Canada which was acquired as part of the Miramar
acquisition, the Mt. Leyshon property in Australia, which is a
legacy Normandy site, the Dawn mill site and Resurrection, a
mine site in Leadville, Colorado. Expenditures for 2009 related
primarily to Grass Valley in California, the Mt. Leyshon
property, the Dawn mill site in Washington State and the Con
mine. Expenditures for 2008 related primarily to Resurrection as
well as the Mt. Leyshon property. For more information on the
Company’s obligations associated with former mining
activities, see Note 31 to the Consolidated Financial
Statements.
71
Table of Contents
Included in capital expenditures were $118, $131 and $231 in
2010, 2009 and 2008, respectively, to comply with environmental
regulations. Ongoing costs to comply with environmental
regulations have not been a significant component of
Costs
applicable to sales
.
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 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 a review of non-GAAP financial measures used by mining
industry analysts.
Net income attributable to Newmont
stockholders
is reconciled to Adjusted net income as follows:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Net income attributable to Newmont stockholders
|
$ | 2,277 | $ | 1,297 | $ | 831 | ||||||
|
Income tax planning and other, net
|
(391 | ) | — | (159 | ) | |||||||
|
Net gain on asset sales
|
(39 | ) | (16 | ) | (47 | ) | ||||||
|
PTNNT community contribution
|
13 | — | — | |||||||||
|
Impairment of assets
|
4 | 8 | 182 | |||||||||
|
Boddington contingent consideration
|
1 | 15 | — | |||||||||
|
Boddington acquisition costs
|
— | 44 | — | |||||||||
|
Discontinued operations loss (income)
|
28 | 11 | (15 | ) | ||||||||
|
Adjusted net income
|
$ | 1,893 | $ | 1,359 | $ | 792 | ||||||
|
Adjusted net income per share, basic
|
$ | 3.85 | $ | 2.79 | $ | 1.74 | ||||||
|
Adjusted net income per share, diluted
|
$ | 3.79 | $ | 2.79 | $ | 1.74 | ||||||
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
72
Table of Contents
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 for the
acquisition of 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:
| Years Ended December 31, | ||||||||
| 2010 | 2009 | |||||||
|
Co-product costs applicable to sales — gold
|
$ | 400 | $ | 45 | ||||
|
Less copper margin:
|
||||||||
|
Sales — copper
|
162 | 27 | ||||||
|
Costs applicable to sales — copper
|
(93 | ) | (16 | ) | ||||
| 69 | 11 | |||||||
|
By-product costs applicable to sales — gold
|
$ | 331 | $ | 34 | ||||
|
Costs applicable to sales — gold ($ per ounce)
|
||||||||
|
Co-product
|
$ | 590 | $ | 468 | ||||
|
By-product
|
$ | 487 | $ | 352 | ||||
|
Gold ounces sold (in thousands)
|
679 | 95 | ||||||
| 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
73
Table of Contents
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 gold and copper prices by selling our production at spot
market prices. Consequently, we do not hedge our gold and copper
sales. We have and will continue to manage certain 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 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 potential risk to our financial condition 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 further mitigate market liquidity risk by
spreading out the maturity of our derivatives over time.
Cash Flow
Hedges
We utilize foreign currency contracts to reduce the variability
of the US dollar amount of forecasted foreign currency
expenditures caused by changes in exchange rates. We hedge a
portion of our A$ and NZ$ denominated operating expenditures
which results in a blended rate realized each period. The
hedging instruments are fixed forward contracts with expiration
dates ranging up to five years from the date of issue. The
principal hedging objective is reduction in the volatility of
realized
period-on-period
$/A$ and $/NZ$ rates, respectively. We use diesel contracts to
reduce the variability 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
. Gains and losses from hedge
ineffectiveness are recognized in current earnings.
74
Table of Contents
Foreign
Currency Exchange Risk
We had the following foreign currency derivative contracts
outstanding at December 31, 2010 and 2009:
| Expected Maturity Date | Fair Value, Net | |||||||||||||||||||||||||||||||
|
Total
|
At December 31, | |||||||||||||||||||||||||||||||
| 2011 | 2012 | 2013 | 2014 | 2015 | Average | 2010 | 2009 | |||||||||||||||||||||||||
|
A$ Fixed Forward Contracts:
|
||||||||||||||||||||||||||||||||
|
A$ notional (millions)
|
1,026 | 631 | 314 | 221 | 99 | 2,291 | $ | 295 | $ | 130 | ||||||||||||||||||||||
|
Average rate ($/A$)
|
0.82 | 0.84 | 0.84 | 0.83 | 0.80 | 0.83 | ||||||||||||||||||||||||||
|
Expected hedge ratio
|
72 | % | 45 | % | 22 | % | 17 | % | 8 | % | 34 | % | ||||||||||||||||||||
|
NZ$ Fixed Forward Contracts:
|
||||||||||||||||||||||||||||||||
|
NZ$ notional (millions)
|
67 | 23 | — | — | — | 90 | $ | 6 | $ | 6 | ||||||||||||||||||||||
|
Average rate ($/NZ$)
|
0.69 | 0.69 | — | — | — | 0.69 | ||||||||||||||||||||||||||
|
Expected hedge ratio
|
57 | % | 22 | % | — | % | — | % | — | % | 40 | % | ||||||||||||||||||||
We had a net asset of $1 related to a historical IDR fixed
forward hedge program at December 31, 2009.
Diesel Price
Risk
We had the following diesel derivative contracts outstanding at
December 31, 2010 and 2009:
| Expected Maturity Date | Fair Value, Net | |||||||||||||||||||
|
Total
|
At December 31, | |||||||||||||||||||
| 2011 | 2012 | Average | 2010 | 2009 | ||||||||||||||||
|
Diesel Fixed Forward Contracts:
|
||||||||||||||||||||
|
Diesel gallons (millions)
|
21 | 7 | 28 | $ | 8 | $ | 6 | |||||||||||||
|
Average rate ($/gallon)
|
2.28 | 2.44 | 2.32 | |||||||||||||||||
|
Expected Nevada hedge ratio
|
50 | % | 18 | % | 34 | % | ||||||||||||||
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, 2010, we had $222 fixed to floating swap
contracts designated as a hedge against our
8
5
/
8
% debentures
due 2011. The interest rate swap contracts assist in managing
our mix of fixed and floating rate debt. Under the hedge
contract terms, we receive fixed-rate interest 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 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. The fair
value of the interest rate swaps was $3 and $7 at
December 31, 2010 and December 31, 2009, respectively.
75
Table of Contents
Provisional
Copper and Gold Sales
Our provisional copper and gold sales 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 gold and copper concentrates at
the prevailing indices’ prices 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.
The average LME copper price was $3.43 per pound during 2010,
compared with our recorded average provisional price of $3.42
before
mark-to-market
gains and treatment and refining charges. During 2010,
increasing copper prices resulted in a provisional pricing
mark-to-market
gain of $120 ($0.22 per pound). At December 31, 2010, we
had copper sales of 111 million pounds priced at an average
of $4.40 per pound, subject to final pricing over the next
several months. Each $0.10 change in the price for provisionally
priced sales would have an approximate $4 effect on our
Net
income attributable to Newmont stockholders
.
The average London P.M. fix for gold was $1,225 per ounce during
2010, compared with our recorded average provisional price of
$1,224 per ounce before
mark-to-market
gains and treatment and refining charges. During 2010,
increasing gold prices resulted in a provisional pricing
mark-to-market
gain of $41 ($7 per ounce). At December 31, 2010, we had
gold sales of 105,000 ounces priced at an average of $1,411 per
ounce, subject to final pricing over the next several months.
Each $10 change in the price for provisionally priced gold sales
would have an approximate $1 effect on our
Net income
attributable to Newmont stockholders
.
Fixed and
Variable Rate Debt
We have both fixed and variable rate debt. 99% and 93% of our
debt portfolio was fixed rate debt at December 31, 2010 and
2009, respectively. The carrying value of fixed rate debt
increased primarily due to note discount amortization. Variable
rate debt as a percentage of total debt decreased primarily due
to the full repayment of the PTNNT project financing facility of
$219, Yanacocha credit facility of $62, and Yanacocha senior
notes of $100. We may manage our fixed and variable rate debt
blend by entering into interest rate swap agreements (see
Interest Rate Risk above). Our fixed rate debt exposure at
December 31, 2010 and 2009 is summarized as follows:
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
|
Carrying value of fixed rate debt
|
$ | 4,209 | $ | 4,146 | ||||
|
Fair value of fixed rate
debt
(1)
|
$ | 5,016 | $ | 4,470 | ||||
|
Pro forma fair value sensitivity of fixed rate debt of a
+/−10 basis point interest rate
change
(2)
|
$ | +/−38 | $ | +/−38 | ||||
| (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 and certain capital leases. The PTNNT and Yanacocha project financing facilities were also excluded in 2009, prior to their full repayment in 2010. 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. |
76
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, 2010. 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, 2010, 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, 2010 has
been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report
which appears herein.
77
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, comprehensive
income (loss), changes in equity and cash flows present fairly,
in all material respects, the financial position of Newmont
Mining Corporation and its subsidiaries at December 31,
2010 and 2009, and the results of their operations and their
cash flows for each of the three years in the period ended
December 31, 2010 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, 2010, 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.
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 23, 2011
78
Table of Contents
NEWMONT MINING
CORPORATION
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
| (in millions, except per share) | ||||||||||||
|
Sales (Note 3)
|
$ | 9,540 | $ | 7,705 | $ | 6,124 | ||||||
|
Costs and expenses
|
||||||||||||
|
Costs applicable to
sales
(1)
(Note 3)
|
3,484 | 3,008 | 3,038 | |||||||||
|
Amortization (Note 3)
|
945 | 806 | 738 | |||||||||
|
Reclamation and remediation (Note 4)
|
65 | 59 | 142 | |||||||||
|
Exploration
|
218 | 187 | 213 | |||||||||
|
Advanced projects, research and development (Note 5)
|
216 | 135 | 166 | |||||||||
|
General and administrative
|
178 | 159 | 144 | |||||||||
|
Write-down of property, plant and mine development (Note 3)
|
6 | 7 | 137 | |||||||||
|
Other expense, net (Note 6)
|
261 | 358 | 240 | |||||||||
| 5,373 | 4,719 | 4,818 | ||||||||||
|
Other income (expense)
|
||||||||||||
|
Other income, net (Note 7)
|
109 | 88 | 123 | |||||||||
|
Interest expense, net of capitalized interest of $21, $111 and
$47, respectively
|
(279 | ) | (120 | ) | (135 | ) | ||||||
| (170 | ) | (32 | ) | (12 | ) | |||||||
|
Income before income and mining tax and other items
|
3,997 | 2,954 | 1,294 | |||||||||
|
Income and mining tax expense (Note 10)
|
(856 | ) | (829 | ) | (142 | ) | ||||||
|
Equity income (loss) of affiliates (Note 11)
|
3 | (16 | ) | (5 | ) | |||||||
|
Income from continuing operations
|
3,144 | 2,109 | 1,147 | |||||||||
|
Income (loss) from discontinued operations (Note 12)
|
(28 | ) | (16 | ) | 13 | |||||||
|
Net income
|
3,116 | 2,093 | 1,160 | |||||||||
|
Net income attributable to noncontrolling interests
(Note 13)
|
(839 | ) | (796 | ) | (329 | ) | ||||||
|
Net income attributable to Newmont stockholders
|
$ | 2,277 | $ | 1,297 | $ | 831 | ||||||
|
Net income attributable to Newmont stockholders:
|
||||||||||||
|
Continuing operations
|
$ | 2,305 | $ | 1,308 | $ | 816 | ||||||
|
Discontinued operations
|
(28 | ) | (11 | ) | 15 | |||||||
| $ | 2,277 | $ | 1,297 | $ | 831 | |||||||
|
Income per common share (Note 14)
|
||||||||||||
|
Basic:
|
||||||||||||
|
Continuing operations
|
$ | 4.69 | $ | 2.68 | $ | 1.80 | ||||||
|
Discontinued operations
|
(0.06 | ) | (0.02 | ) | 0.03 | |||||||
| $ | 4.63 | $ | 2.66 | $ | 1.83 | |||||||
|
Diluted:
|
||||||||||||
|
Continuing operations
|
$ | 4.61 | $ | 2.68 | $ | 1.80 | ||||||
|
Discontinued operations
|
(0.06 | ) | (0.02 | ) | 0.03 | |||||||
| $ | 4.55 | $ | 2.66 | $ | 1.83 | |||||||
|
Cash dividends declared per common share
|
$ | 0.50 | $ | 0.40 | $ | 0.40 | ||||||
| (1) | Excludes Amortization and Reclamation and remediation . |
The accompanying notes are an integral part of these
consolidated financial statements.
79
Table of Contents
NEWMONT MINING
CORPORATION
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
| (in millions) | ||||||||||||
|
Operating activities:
|
||||||||||||
|
Net income
|
$ | 3,116 | $ | 2,093 | $ | 1,160 | ||||||
|
Adjustments:
|
||||||||||||
|
Amortization
|
945 | 806 | 738 | |||||||||
|
Stock based compensation and other benefits
|
70 | 57 | 50 | |||||||||
|
Reclamation and remediation
|
65 | 59 | 142 | |||||||||
|
Revaluation of contingent consideration
|
2 | 23 | — | |||||||||
|
Loss (income) from discontinued operations
|
28 | 16 | (13 | ) | ||||||||
|
Write-down of property, plant and mine development
|
6 | 7 | 137 | |||||||||
|
Impairment of marketable securities
|
1 | 6 | 114 | |||||||||
|
Deferred income taxes
|
(380 | ) | 1 | (315 | ) | |||||||
|
Gain on asset sales, net
|
(64 | ) | (24 | ) | (72 | ) | ||||||
|
Other operating adjustments and write-downs
|
145 | 97 | 83 | |||||||||
|
Net change in operating assets and liabilities (Note 27)
|
(754 | ) | (227 | ) | (627 | ) | ||||||
|
Net cash provided from continuing operations
|
3,180 | 2,914 | 1,397 | |||||||||
|
Net cash provided from (used in) discontinued operations
(Note 12)
|
(13 | ) | 33 | (104 | ) | |||||||
|
Net cash provided from operations
|
3,167 | 2,947 | 1,293 | |||||||||
|
Investing activities:
|
||||||||||||
|
Additions to property, plant and mine development
|
(1,402 | ) | (1,769 | ) | (1,870 | ) | ||||||
|
Acquisitions, net
|
(4 | ) | (1,007 | ) | (325 | ) | ||||||
|
Proceeds from sale of marketable securities
|
3 | 17 | 50 | |||||||||
|
Purchases of marketable securities
|
(28 | ) | (5 | ) | (17 | ) | ||||||
|
Proceeds from sale of other assets
|
56 | 18 | 52 | |||||||||
|
Other
|
(44 | ) | (35 | ) | (36 | ) | ||||||
|
Net cash used in investing activities of continuing operations
|
(1,419 | ) | (2,781 | ) | (2,146 | ) | ||||||
|
Net cash used in investing activities of discontinued operations
(Note 12)
|
— | — | (11 | ) | ||||||||
|
Net cash used in investing activities
|
(1,419 | ) | (2,781 | ) | (2,157 | ) | ||||||
|
Financing activities:
|
||||||||||||
|
Proceeds from debt, net
|
— | 4,299 | 5,078 | |||||||||
|
Repayment of debt
|
(430 | ) | (2,731 | ) | (4,483 | ) | ||||||
|
Proceeds from stock issuance, net
|
60 | 1,278 | 29 | |||||||||
|
Sale of subsidiary shares to noncontrolling interests
|
229 | 638 | — | |||||||||
|
Acquisition of subsidiary shares from noncontrolling interests
|
(110 | ) | (287 | ) | — | |||||||
|
Dividends paid to noncontrolling interests
|
(462 | ) | (394 | ) | (389 | ) | ||||||
|
Dividends paid to common stockholders
|
(246 | ) | (196 | ) | (182 | ) | ||||||
|
Change in restricted cash and other
|
44 | (35 | ) | 74 | ||||||||
|
Net cash provided from (used in) financing activities of
continuing operations
|
(915 | ) | 2,572 | 127 | ||||||||
|
Net cash used in financing activities of discontinued operations
(Note 12)
|
— | (2 | ) | (4 | ) | |||||||
|
Net cash provided from (used in) financing activities
|
(915 | ) | 2,570 | 123 | ||||||||
|
Effect of exchange rate changes on cash
|
8 | 44 | (54 | ) | ||||||||
|
Net change in cash and cash equivalents
|
841 | 2,780 | (795 | ) | ||||||||
|
Cash and cash equivalents at beginning of period
|
3,215 | 435 | 1,230 | |||||||||
|
Cash and cash equivalents at end of period
|
$ | 4,056 | $ | 3,215 | $ | 435 | ||||||
The accompanying notes are an integral part of these
consolidated financial statements.
80
Table of Contents
NEWMONT MINING
CORPORATION
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
| (in millions) | ||||||||
|
ASSETS
|
||||||||
|
Cash and cash equivalents
|
$ | 4,056 | $ | 3,215 | ||||
|
Trade receivables
|
582 | 438 | ||||||
|
Accounts receivable
|
88 | 102 | ||||||
|
Investments (Note 18)
|
113 | 56 | ||||||
|
Inventories (Note 19)
|
658 | 493 | ||||||
|
Stockpiles and ore on leach pads (Note 20)
|
617 | 403 | ||||||
|
Deferred income tax assets (Note 10)
|
177 | 215 | ||||||
|
Other current assets (Note 21)
|
962 | 900 | ||||||
|
Current assets
|
7,253 | 5,822 | ||||||
|
Property, plant and mine development, net (Note 22)
|
12,907 | 12,370 | ||||||
|
Investments (Note 18)
|
1,568 | 1,186 | ||||||
|
Stockpiles and ore on leach pads (Note 20)
|
1,757 | 1,502 | ||||||
|
Deferred income tax assets (Note 10)
|
1,437 | 937 | ||||||
|
Other long-term assets (Note 21)
|
741 | 482 | ||||||
|
Total assets
|
$ | 25,663 | $ | 22,299 | ||||
| LIABILITIES | ||||||||
|
Debt (Note 23)
|
$ | 259 | $ | 157 | ||||
|
Accounts payable
|
427 | 396 | ||||||
|
Employee-related benefits (Note 8)
|
288 | 250 | ||||||
|
Income and mining taxes (Note 10)
|
355 | 200 | ||||||
|
Other current liabilities (Note 24)
|
1,418 | 1,317 | ||||||
|
Current liabilities
|
2,747 | 2,320 | ||||||
|
Debt (Note 23)
|
4,182 | 4,652 | ||||||
|
Reclamation and remediation liabilities (Note 4)
|
984 | 805 | ||||||
|
Deferred income tax liabilities (Note 10)
|
1,488 | 1,341 | ||||||
|
Employee-related benefits (Note 8)
|
325 | 381 | ||||||
|
Other long-term liabilities (Note 24)
|
221 | 187 | ||||||
|
Total liabilities
|
9,947 | 9,686 | ||||||
|
Commitments and contingencies (Note 31)
|
||||||||
|
EQUITY
|
||||||||
|
Common stock — $1.60 par value;
|
||||||||
|
Authorized — 750 million shares
|
||||||||
|
Issued and outstanding —
|
||||||||
|
Common: 487 million and 482 million shares issued,
less 271,000 and 270,000 treasury shares, respectively
|
778 | 770 | ||||||
|
Exchangeable: 56 million shares issued, less
50 million and 47 million redeemed shares, respectively
|
||||||||
|
Additional paid-in capital
|
8,279 | 8,158 | ||||||
|
Accumulated other comprehensive income (Note 25)
|
1,108 | 626 | ||||||
|
Retained earnings
|
3,180 | 1,149 | ||||||
|
Newmont stockholders’ equity
|
13,345 | 10,703 | ||||||
|
Noncontrolling interests
|
2,371 | 1,910 | ||||||
|
Total equity
|
15,716 | 12,613 | ||||||
|
Total liabilities and equity
|
$ | 25,663 | $ | 22,299 | ||||
The accompanying notes are an integral part of these
consolidated financial statements.
81
Table of Contents
NEWMONT MINING
CORPORATION
|
Accumulated
|
||||||||||||||||||||||||||||
|
Additional
|
Other
|
Retained
|
||||||||||||||||||||||||||
| Common Stock |
Paid-In
|
Comprehensive
|
Earnings
|
Noncontrolling
|
Total
|
|||||||||||||||||||||||
| Shares | Amount | Capital | Income (Loss) | (Deficit) | Interests | Equity | ||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||
|
Balance at December 31, 2007
|
453 | $ | 696 | $ | 6,916 | $ | 957 | $ | (810 | ) | $ | 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 awards 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 | $ | (253 | ) | $ | 4 | $ | 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 offering
|
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 awards 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 | $ | 626 | $ | 1,149 | $ | 1,910 | $ | 12,613 | |||||||||||||||
|
Net income
|
— | — | — | — | 2,277 | 839 | 3,116 | |||||||||||||||||||||
|
Other comprehensive income
|
— | — | — | 482 | — | 2 | 484 | |||||||||||||||||||||
|
Dividends paid
|
— | — | — | — | (246 | ) | (476 | ) | (722 | ) | ||||||||||||||||||
|
Sale of subsidiary shares to noncontrolling interests
|
— | — | 16 | — | — | 183 | 199 | |||||||||||||||||||||
|
Acquisition of subsidiary shares from noncontrolling interests
|
— | — | — | — | — | (87 | ) | (87 | ) | |||||||||||||||||||
|
Stock based awards and related share issuances
|
2 | 4 | 109 | — | — | — | 113 | |||||||||||||||||||||
|
Shares issued in exchange for exchangeable shares
|
— | 4 | (4 | ) | — | — | — | — | ||||||||||||||||||||
|
Balance at December 31, 2010
|
493 | $ | 778 | $ | 8,279 | $ | 1,108 | $ | 3,180 | $ | 2,371 | $ | 15,716 | |||||||||||||||
The accompanying notes are an integral part of these
consolidated financial statements.
82
Table of Contents
NEWMONT MINING
CORPORATION
STATEMENTS
OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
| (in millions) | ||||||||||||
|
Net income
|
$ | 3,116 | $ | 2,093 | $ | 1,160 | ||||||
|
Other comprehensive income (loss):
|
||||||||||||
|
Unrealized gain (loss) on marketable securities, net of $(60),
$(82)
|
269 | 418 | (573 | ) | ||||||||
|
and $105 tax benefit (expense), respectively
|
||||||||||||
|
Foreign currency translation adjustments
|
98 | 264 | (387 | ) | ||||||||
|
Change in pension and other post-retirement benefits, net of $7
$(7) and $69 tax benefit (expense), respectively
|
||||||||||||
|
Net change from periodic revaluations
|
(23 | ) | 4 | (139 | ) | |||||||
|
Net amount reclassified to income
|
10 | 10 | 9 | |||||||||
|
Net unrecognized gain (loss) on pension and other
post-retirement benefits
|
(13 | ) | 14 | (130 | ) | |||||||
|
Change in fair value of cash flow hedge instruments, net of
$(59), $(82) and $53 tax benefit (expense), respectively
|
||||||||||||
|
Net change from periodic revaluations
|
202 | 183 | (127 | ) | ||||||||
|
Net amount reclassified to income
|
(72 | ) | 3 | 5 | ||||||||
|
Net unrecognized gain (loss) on derivatives
|
130 | 186 | (122 | ) | ||||||||
|
Other comprehensive income (loss)
|
484 | 882 | (1,212 | ) | ||||||||
|
Comprehensive income (loss)
|
$ | 3,600 | $ | 2,975 | $ | (52 | ) | |||||
|
Comprehensive income (loss) attributable to:
|
||||||||||||
|
Newmont stockholders
|
$ | 2,759 | $ | 2,176 | $ | (379 | ) | |||||
|
Noncontrolling interests
|
841 | 799 | 327 | |||||||||
| $ | 3,600 | $ | 2,975 | $ | (52 | ) | ||||||
The accompanying notes are an integral part of these
consolidated financial statements.
83
Table of Contents
NEWMONT MINING
CORPORATION
(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 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.
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 |
Use of
Estimates
The Company’s Consolidated Financial Statements have been
prepared in accordance with United States generally accepted
accounting principles (“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.
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
FASB Accounting Standards Codification
(“ASC”) guidance for identification and reporting
of 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 56% interest in PT Newmont Nusa Tenggara
(“PTNNT” or “Batu Hijau”), as a VIE due to
certain capital structures and contractual relationships.
Newmont also identified PT Pukuafu Indah
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STATEMENTS — (Continued)
(“PTPI”) and PT Indonesia Masbaga Investama
(“PTIMI”), unrelated noncontrolling partners of PTNNT,
as VIEs. Newmont entered into transactions with PTPI and PTIMI,
whereby the Company agreed to advance certain funds in exchange
for a pledge of the noncontrolling partners’ combined 20%
share of PTNNT dividends, net of withholding tax. The agreements
also provide Newmont with certain voting rights and obligations
related to the noncontrolling partners’ combined 20% share
of PTNNT and commitments from PTPI and PTIMI to support the
application of Newmont’s standards to the operation of the
Batu Hijau mine. The Company has determined itself to be the
primary beneficiary of these entities and controls the
operations of Batu Hijau, and therefore consolidates PTNNT in
the Company’s 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 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 18.
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.
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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 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.
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CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
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 are
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.
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, production, and
sale 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
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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 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
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
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STATEMENTS — (Continued)
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 costs and capital 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
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 state and 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
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STATEMENTS — (Continued)
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. 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 and mining tax expense
.
Reclamation
and Remediation Costs
Reclamation 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 reclamation
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 reclamation
obligation at each mine site in accordance with ASC guidance for
accounting reclamation 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
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 and 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
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other comprehensive income
. Amounts deferred in
Accumulated other comprehensive income
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
at the settlement date is deferred and
reclassified to earnings, 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 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 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
until the hedged item affects
earnings.
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.
Net Income per
Common Share
Basic and diluted income per share are presented for
Net
income attributable to Newmont stockholders
and for
Income from continuing operations attributable to Newmont
stockholders
. Basic income 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 14 and 23). 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
In addition to
Net income, 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
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STATEMENTS — (Continued)
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 2010 presentation. The Company reclassified certain
income based state and provincial taxes from
Costs applicable
to sales
to
Income and mining tax expense
, and
reclassified reclamation accretion and estimate revisions for
non-operating sites from
Other expense, net
to
Reclamation and remediation.
Recently
Adopted 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
qualitative analysis identifies the 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. Adoption of the updated
guidance, effective for the Company’s fiscal year beginning
January 1, 2010, had no impact on the Company’s
consolidated financial position, results of operations or cash
flows.
Fair Value
Accounting
In January 2010, ASC guidance for fair value measurements and
disclosure was updated to require additional disclosures related
to transfers in and out of level 1 and 2 fair value
measurements. The guidance was amended to clarify the level of
disaggregation required for assets and liabilities and the
disclosures required for inputs and valuation techniques used to
measure the fair value of assets and liabilities that fall in
either level 2 or level 3. The updated guidance was
effective for the Company’s fiscal year beginning
January 1, 2010. The adoption had no impact on the
Company’s consolidated financial position, results of
operations or cash flows. Refer to Note 16 for further
details regarding the Company’s assets and liabilities
measured at fair value.
Recently
Issued Accounting Pronouncements
Business
Combinations
In December 2010, the ASC guidance for business combinations was
updated to clarify existing guidance which requires a public
entity to disclose pro forma revenue and earnings of the
combined entity as though the business combination(s) that
occurred during the current year had occurred as of the
beginning of the comparable prior annual period only. The update
also expands the supplemental pro forma disclosures required to
include a description of the nature and amount of material,
nonrecurring pro forma adjustments directly attributable to the
business combination included in the reported pro forma revenue
and earnings. The updated guidance 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.
Fair Value
Accounting
In January 2010, the ASC guidance for fair value measurements
and disclosure was updated to require enhanced detail in the
level 3 reconciliation. The updated guidance is effective
for the
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STATEMENTS — (Continued)
Company’s fiscal year beginning January 1, 2011. The
Company expects minimal impact from adopting this guidance.
| NOTE 3 | SEGMENT INFORMATION |
The Company 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
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. The
Company’s major operations include Nevada, Yanacocha,
Boddington, Batu Hijau, Other Australia/New Zealand 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 and mining taxes
(except for equity investments). Intercompany revenue and
expense amounts have been eliminated within each segment in
order to report on the
93
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
basis that management uses internally for evaluating segment
performance. The financial information relating to the
Company’s segments is as follows:
|
Costs
|
Advanced
|
|||||||||||||||||||||||||||
|
Applicable to
|
Projects and
|
Pre-Tax
|
Total
|
Capital
|
||||||||||||||||||||||||
| Sales | Sales | Amortization | Exploration | Income | Assets | Expenditures (1) | ||||||||||||||||||||||
|
Year Ended December 31, 2010
|
||||||||||||||||||||||||||||
|
Nevada
|
$ | 2,111 | $ | 974 | $ | 271 | $ | 85 | $ | 738 | $ | 3,387 | $ | 298 | ||||||||||||||
|
La Herradura
|
217 | 73 | 19 | 6 | 118 | 216 | 41 | |||||||||||||||||||||
|
Hope Bay
|
— | — | 13 | 98 | (111 | ) | 2,152 | 115 | ||||||||||||||||||||
|
Other North America
|
— | — | 1 | 1 | (1 | ) | 112 | — | ||||||||||||||||||||
|
North America
|
2,328 | 1,047 | 304 | 190 | 744 | 5,867 | 454 | |||||||||||||||||||||
|
Yanacocha
|
1,778 | 630 | 162 | 24 | 893 | 2,682 | 167 | |||||||||||||||||||||
|
Other South America
|
— | — | 1 | 38 | (34 | ) | 292 | 134 | ||||||||||||||||||||
|
South America
|
1,778 | 630 | 163 | 62 | 859 | 2,974 | 301 | |||||||||||||||||||||
|
Boddington:
|
||||||||||||||||||||||||||||
|
Gold
|
834 | 400 | 113 | |||||||||||||||||||||||||
|
Copper
|
162 | 93 | 25 | |||||||||||||||||||||||||
|
Total Boddington
|
996 | 493 | 138 | 6 | 304 | 4,323 | 146 | |||||||||||||||||||||
|
Batu Hijau:
|
||||||||||||||||||||||||||||
|
Gold
|
776 | 155 | 42 | |||||||||||||||||||||||||
|
Copper
|
1,686 | 337 | 90 | |||||||||||||||||||||||||
|
Total Batu Hijau
|
2,462 | 492 | 132 | 3 | 1,736 | 3,398 | 67 | |||||||||||||||||||||
|
Other Australia/New Zealand
|
1,321 | 585 | 108 | 31 | 575 | 1,025 | 176 | |||||||||||||||||||||
|
Other Asia Pacific
|
— | — | 2 | 19 | (14 | ) | 535 | 17 | ||||||||||||||||||||
|
Asia Pacific
|
4,779 | 1,570 | 380 | 59 | 2,601 | 9,281 | 406 | |||||||||||||||||||||
|
Ahafo
|
655 | 237 | 78 | 24 | 298 | 1,055 | 109 | |||||||||||||||||||||
|
Other Africa
|
— | — | — | 9 | (10 | ) | 291 | 70 | ||||||||||||||||||||
|
Africa
|
655 | 237 | 78 | 33 | 288 | 1,346 | 179 | |||||||||||||||||||||
|
Corporate and Other
|
— | — | 20 | 90 | (495 | ) | 6,195 | 34 | ||||||||||||||||||||
|
Consolidated
|
$ | 9,540 | $ | 3,484 | $ | 945 | $ | 434 | $ | 3,997 | $ | 25,663 | $ | 1,374 | ||||||||||||||
| (1) | Accrual basis includes a decrease in accrued capital expenditures of $28; consolidated capital expenditures on a cash basis were $1,402. |
94
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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 | Expenditures (1) | ||||||||||||||||||||||
|
Year Ended December 31, 2009
|
||||||||||||||||||||||||||||
|
Nevada
|
$ | 1,943 | $ | 1,019 | $ | 261 | $ | 54 | $ | 583 | $ | 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 | 1,061 | 284 | 125 | 556 | 5,290 | 264 | |||||||||||||||||||||
|
Yanacocha
|
2,013 | 642 | 168 | 23 | 1,089 | 2,472 | 119 | |||||||||||||||||||||
|
Other South America
|
— | — | — | 23 | 1 | 32 | 27 | |||||||||||||||||||||
|
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 | ||||||||||||||||||||
|
Batu Hijau:
|
||||||||||||||||||||||||||||
|
Gold
|
550 | 118 | 30 | |||||||||||||||||||||||||
|
Copper
|
1,292 | 307 | 78 | |||||||||||||||||||||||||
|
Total Batu Hijau
|
1,842 | 425 | 108 | — | 1,242 | 3,129 | 44 | |||||||||||||||||||||
|
Other Australia/New Zealand
|
1,138 | 577 | 136 | 21 | 374 | 870 | 122 | |||||||||||||||||||||
|
Other Asia Pacific
|
— | — | 3 | 12 | (50 | ) | 256 | 3 | ||||||||||||||||||||
|
Asia Pacific
|
3,108 | 1,063 | 266 | 65 | 1,507 | 8,230 | 1,262 | |||||||||||||||||||||
|
Ahafo
|
528 | 242 | 68 | 13 | 178 | 985 | 75 | |||||||||||||||||||||
|
Other Africa
|
— | — | — | 10 | (7 | ) | 202 | 10 | ||||||||||||||||||||
|
Africa
|
528 | 242 | 68 | 23 | 171 | 1,187 | 85 | |||||||||||||||||||||
|
Corporate and Other
|
— | — | 20 | 63 | (370 | ) | 5,088 | 16 | ||||||||||||||||||||
|
Consolidated
|
$ | 7,705 | $ | 3,008 | $ | 806 | $ | 322 | $ | 2,954 | $ | 22,299 | $ | 1,773 | ||||||||||||||
| (1) | Accrual basis includes an increase in accrued capital expenditures of $4; consolidated capital expenditures on a cash basis were $1,769. |
95
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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 | $ | 993 | $ | 246 | $ | 50 | $ | 591 | $ | 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 | 1,031 | 255 | 144 | 401 | 4,978 | 408 | |||||||||||||||||||||
|
Yanacocha
|
1,613 | 637 | 170 | 28 | 694 | 1,902 | 202 | |||||||||||||||||||||
|
Other South America
|
— | — | — | 38 | (8 | ) | 30 | 34 | ||||||||||||||||||||
|
South America
|
1,613 | 637 | 170 | 66 | 686 | 1,932 | 236 | |||||||||||||||||||||
|
Boddington
|
— | — | — | 10 | (13 | ) | 1,735 | 815 | ||||||||||||||||||||
|
Batu Hijau:
|
||||||||||||||||||||||||||||
|
Gold
|
261 | 124 | 25 | |||||||||||||||||||||||||
|
Copper
|
752 | 399 | 80 | |||||||||||||||||||||||||
|
Total Batu Hijau
|
1,013 | 523 | 105 | 2 | 301 | 2,371 | 83 | |||||||||||||||||||||
|
Other Australia/New Zealand
|
1,050 | 642 | 122 | 24 | 268 | 819 | 130 | |||||||||||||||||||||
|
Other Asia Pacific
|
— | — | 3 | 16 | (101 | ) | 87 | 2 | ||||||||||||||||||||
|
Asia Pacific
|
2,063 | 1,165 | 230 | 52 | 455 | 5,012 | 1,030 | |||||||||||||||||||||
|
Ahafo
|
435 | 205 | 63 | 18 | 145 | 984 | 109 | |||||||||||||||||||||
|
Other Africa
|
— | — | — | 31 | (31 | ) | 197 | 2 | ||||||||||||||||||||
|
Africa
|
435 | 205 | 63 | 49 | 114 | 1,181 | 111 | |||||||||||||||||||||
|
Corporate and Other
|
1 | — | 20 | 68 | (362 | ) | 2,624 | 20 | ||||||||||||||||||||
|
Consolidated
|
$ | 6,124 | $ | 3,038 | $ | 738 | $ | 379 | $ | 1,294 | $ | 15,727 | $ | 1,805 | ||||||||||||||
| (1) | Corporate and Other includes $73 of Assets held for sale. | |
| (2) | Accrual basis includes a decrease in accrued capital expenditures of $65; consolidated capital expenditures on a cash basis were $1,870. |
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Write-down of property, plant and mine development:
|
||||||||||||
|
Nevada
|
$ | 4 | $ | 1 | $ | 4 | ||||||
|
Yanacocha
|
— | 1 | — | |||||||||
|
Batu Hijau
|
1 | 4 | 10 | |||||||||
|
Other Australia/New Zealand
|
1 | 1 | 2 | |||||||||
|
Corporate and other
|
— | — | 121 | |||||||||
| $ | 6 | $ | 7 | $ | 137 | |||||||
96
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
|
Stockpiles and ore on leach pads:
|
||||||||
|
Nevada
|
$ | 479 | $ | 445 | ||||
|
La Herradura
|
6 | 5 | ||||||
|
Yanacocha
|
496 | 369 | ||||||
|
Boddington
|
248 | 59 | ||||||
|
Batu Hijau
|
879 | 834 | ||||||
|
Other Australia/New Zealand
|
145 | 121 | ||||||
|
Ahafo
|
121 | 72 | ||||||
| $ | 2,374 | $ | 1,905 | |||||
Revenues from export and domestic sales were as follows:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Europe
|
$ | 6,209 | $ | 5,573 | $ | 4,756 | ||||||
|
Japan
|
1,544 | 833 | 464 | |||||||||
|
Korea
|
760 | 465 | 231 | |||||||||
|
Indonesia
|
372 | 440 | 307 | |||||||||
|
Mexico
|
217 | 113 | 83 | |||||||||
|
Australia
|
110 | 222 | 170 | |||||||||
|
India
|
— | 30 | 32 | |||||||||
|
Other
|
328 | 29 | 81 | |||||||||
| $ | 9,540 | $ | 7,705 | $ | 6,124 | |||||||
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
2010, 2009 and 2008, sales to Bank of Nova Scotia were $2,435
(32%), $2,658 (42%) and $1,618 (30%), 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, were as follows:
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
|
Australia
|
$ | 5,055 | $ | 4,683 | ||||
|
United States
|
3,031 | 3,059 | ||||||
|
Canada
|
2,088 | 1,869 | ||||||
|
Indonesia
|
2,109 | 2,067 | ||||||
|
Peru
|
1,772 | 1,443 | ||||||
|
Ghana
|
1,231 | 1,093 | ||||||
|
Other
|
94 | 70 | ||||||
| $ | 15,380 | $ | 14,284 | |||||
97
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 4 | RECLAMATION AND REMEDIATION |
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, 2010 and 2009, $904 and $698, respectively,
were accrued for reclamation obligations relating to 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, 2010 and 2009,
$144 and $161, respectively, were accrued for such obligations.
These amounts are also included in
Reclamation and
remediation liabilities
.
Included in
Other long-term assets
at December 31,
2010 and 2009 is $12 and $11, respectively, of restricted cash
that is legally restricted for purposes of settling asset
retirement obligations related to the Con mine in Yellowknife,
NWT, Canada. Included in
Investments
at December 31,
2010 and 2009 are $10 and $10 of long-term marketable debt
securities, respectively, and $6 and $5 long-term marketable
equity securities, respectively, which are legally pledged for
purposes of settling asset retirement obligations related to the
San Jose Reservoir in Yanacocha.
The following is a reconciliation of reclamation and remediation
liabilities:
|
Balance January 1, 2009
|
$ | 757 | ||
|
Additions, changes in estimates and other
|
105 | |||
|
Liabilities settled
|
(49 | ) | ||
|
Accretion expense
|
46 | |||
|
Balance December 31, 2009
|
859 | |||
|
Additions, changes in estimates and other
|
188 | |||
|
Liabilities settled
|
(51 | ) | ||
|
Accretion expense
|
52 | |||
|
Balance December 31, 2010
|
$ | 1,048 | ||
The current portion of
Reclamation and remediation
liabilities
of $64 and $54 at December 31, 2010 and
2009, respectively, are included in
Other current liabilities
(see Note 24).
The Company’s reclamation and remediation expenses
consisted of:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Reclamation
|
$ | 13 | $ | 13 | $ | 101 | ||||||
|
Accretion — operating
|
44 | 34 | 31 | |||||||||
|
Accretion — non-operating
|
8 | 12 | 10 | |||||||||
| $ | 65 | $ | 59 | $ | 142 | |||||||
Additions to the reclamation liability in 2010 of $188 include
$186 for currently or recently producing properties due mainly
to increased water treatment costs as a result of mine plan
changes
98
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
for Yanacocha, increased demolition costs for Boddington, an
increase in the tailings area at Kalgoorlie, increased backfill
at Phoenix, increased activity at Hope Bay and $2 for historic
mining operations primarily related to additional water
management costs.
Additions to the reclamation liability in 2009 of $105 include
$90 for currently or recently producing properties due mainly to
increased disturbance area at Batu Hijau, post-mine backfilling
of underground operations and an increase in the tailings area
at Kalgoorlie, 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 historic
mining operations for additional water management costs,
property acquisitions and other related activities.
| NOTE 5 | ADVANCED PROJECTS, RESEARCH AND DEVELOPMENT |
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Major projects:
|
||||||||||||
|
Hope Bay
|
$ | 74 | $ | 25 | $ | 39 | ||||||
|
Subika underground
|
11 | 2 | — | |||||||||
|
Conga
|
8 | 4 | 4 | |||||||||
|
Akyem
|
5 | 8 | 7 | |||||||||
|
Boddington
|
— | 25 | 3 | |||||||||
|
Other projects:
|
||||||||||||
|
Technical and project services
|
49 | 24 | 23 | |||||||||
|
Corporate
|
29 | 14 | 15 | |||||||||
|
Other
|
40 | 33 | 75 | |||||||||
| $ | 216 | $ | 135 | $ | 166 | |||||||
| NOTE 6 | OTHER EXPENSE, NET |
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Community development
|
$ | 111 | $ | 84 | $ | 87 | ||||||
|
Regional administration
|
64 | 55 | 48 | |||||||||
|
Western Australia power plant
|
15 | 37 | 18 | |||||||||
|
World Gold Council dues
|
13 | 11 | 10 | |||||||||
|
Batu Hijau divestiture
|
4 | 12 | 15 | |||||||||
|
Revaluation of contingent consideration
|
2 | 23 | — | |||||||||
|
Boddington acquisition costs
|
— | 67 | — | |||||||||
|
Other
|
52 | 69 | 62 | |||||||||
| $ | 261 | $ | 358 | $ | 240 | |||||||
99
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 7 | OTHER INCOME, NET |
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Canadian Oil Sands Trust distributions
|
$ | 55 | $ | 26 | $ | 110 | ||||||
|
Gain on asset sales, net
|
48 | 16 | 42 | |||||||||
|
Income from developing projects, net
|
18 | 4 | 12 | |||||||||
|
Gain on sale of investments, net
|
16 | 8 | 30 | |||||||||
|
European Gold Refinery income
|
14 | 14 | 4 | |||||||||
|
Interest income
|
11 | 16 | 29 | |||||||||
|
Impairment of marketable securities
|
(1 | ) | (6 | ) | (114 | ) | ||||||
|
Foreign currency exchange losses, net
|
(64 | ) | (1 | ) | (12 | ) | ||||||
|
Other
|
12 | 11 | 22 | |||||||||
| $ | 109 | $ | 88 | $ | 123 | |||||||
| NOTE 8 | EMPLOYEE RELATED BENEFITS |
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
|
Current:
|
||||||||
|
Accrued payroll and withholding taxes
|
$ | 189 | $ | 152 | ||||
|
Peruvian workers’ participation
|
49 | 59 | ||||||
|
Employee pension benefits
|
6 | 4 | ||||||
|
Other post-retirement plans
|
3 | 4 | ||||||
|
Accrued severance
|
2 | 3 | ||||||
|
Other employee-related payables
|
39 | 28 | ||||||
| $ | 288 | $ | 250 | |||||
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
|
Long-term:
|
||||||||
|
Employee pension benefits
|
$ | 127 | $ | 204 | ||||
|
Other post-retirement benefit plans
|
92 | 91 | ||||||
|
Accrued severance
|
73 | 57 | ||||||
|
Peruvian workers’ participation
|
18 | 17 | ||||||
|
Other employee-related payables
|
15 | 12 | ||||||
| $ | 325 | $ | 381 | |||||
Pension and
Other Benefit Plans
The Company provides defined benefit pension plans to eligible
employees. Benefits are generally based on years of service and
the employee’s average annual compensation. Various
international pension plans are based on local laws and
requirements. 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.
100
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company sponsors retiree health care plans that provide
prescription drug benefits to eligible retirees that our
plans’ actuaries have determined are actuarially equivalent
to Medicare Part D. The effect of the federal subsidies
received decreased post-retirement projected accumulated benefit
obligation (“ABO”) by $7 in 2009. In 2010, Congress
passed certain measures of healthcare reform which changed the
tax-free status of Medicare Part D subsidies and eliminated
the impact on the post-retirement ABO.
The following tables provide a reconciliation of changes in the
plans’ benefit obligations and assets’ fair values for
2010 and 2009:
| Pension Benefits | Other Benefits | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Change in Benefit Obligation:
|
||||||||||||||||
|
Benefit obligation at beginning of year
|
$ | 580 | $ | 518 | $ | 95 | $ | 89 | ||||||||
|
Service cost
|
21 | 18 | 2 | 2 | ||||||||||||
|
Interest cost
|
36 | 32 | 6 | 5 | ||||||||||||
|
Actuarial (gain) loss
|
68 | 29 | (6 | ) | 1 | |||||||||||
|
Amendments
|
2 | — | — | — | ||||||||||||
|
Foreign currency exchange loss
|
2 | 5 | — | 1 | ||||||||||||
|
Settlement payments
|
(1 | ) | (1 | ) | — | — | ||||||||||
|
Benefits paid
|
(27 | ) | (21 | ) | (2 | ) | (3 | ) | ||||||||
|
Projected benefit obligation at end of year
|
$ | 681 | $ | 580 | N/A | N/A | ||||||||||
|
Accumulated Benefit Obligation
|
$ | 543 | $ | 465 | $ | 95 | $ | 95 | ||||||||
|
Change in Fair Value of Assets:
|
||||||||||||||||
|
Fair value of assets at beginning of year
|
$ | 372 | $ | 278 | $ | — | $ | — | ||||||||
|
Actual return on plan assets
|
53 | 61 | — | — | ||||||||||||
|
Employer contributions
|
161 | 55 | 2 | 3 | ||||||||||||
|
Foreign currency exchange loss
|
1 | — | — | — | ||||||||||||
|
Settlement payments
|
(1 | ) | (1 | ) | — | — | ||||||||||
|
Benefits paid
|
(27 | ) | (21 | ) | (2 | ) | (3 | ) | ||||||||
|
Fair value of assets at end of year
|
$ | 559 | $ | 372 | $ | — | $ | — | ||||||||
|
Unfunded status, net
|
$ | 122 | $ | 208 | $ | 95 | $ | 95 | ||||||||
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. The Company is currently planning to
contribute at least $18 to its retirement benefit programs in
2011.
101
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table provides the net amounts recognized in the
Consolidated Balance Sheets at December 31:
| Pension Benefits | Other Benefits | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Accrued employee benefit liability
|
$ | 122 | $ | 208 | $ | 95 | $ | 95 | ||||||||
|
Accumulated other comprehensive income (loss):
|
||||||||||||||||
|
Net actuarial gain (loss)
|
$ | (263 | ) | $ | (240 | ) | $ | 12 | $ | 8 | ||||||
|
Prior service credit (cost)
|
(8 | ) | (7 | ) | 5 | 5 | ||||||||||
| (271 | ) | (247 | ) | 17 | 13 | |||||||||||
|
Less: Income taxes
|
95 | 86 | (6 | ) | (4 | ) | ||||||||||
| $ | (176 | ) | $ | (161 | ) | $ | 11 | $ | 9 | |||||||
The following table provides components of the net periodic
pension and other benefits costs for the years ended December 31:
| Pension Benefit Costs | Other Benefit Costs | |||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
|
Service cost
|
$ | 21 | $ | 18 | $ | 15 | $ | 2 | $ | 2 | $ | 2 | ||||||||||||
|
Interest cost
|
36 | 32 | 29 | 6 | 5 | 5 | ||||||||||||||||||
|
Expected return on plan assets
|
(32 | ) | (29 | ) | (28 | ) | — | — | — | |||||||||||||||
|
Amortization, net
|
17 | 16 | 4 | (1 | ) | (1 | ) | (3 | ) | |||||||||||||||
|
Settlements
|
— | — | 13 | — | — | — | ||||||||||||||||||
| $ | 42 | $ | 37 | $ | 33 | $ | 7 | $ | 6 | $ | 4 | |||||||||||||
The following table provides the components recognized in
Other comprehensive income (loss)
for the years ended
December 31:
| Pension Benefits | Other Benefits | |||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
|
Net gain (loss)
|
$ | (41 | ) | $ | 7 | $ | (196 | ) | $ | 5 | $ | (1 | ) | $ | (17 | ) | ||||||||
|
Amortization, net
|
17 | 16 | 17 | (1 | ) | (1 | ) | (3 | ) | |||||||||||||||
|
Total recognized in Other comprehensive income (loss)
|
$ | (24 | ) | $ | 23 | $ | (179 | ) | $ | 4 | $ | (2 | ) | $ | (20 | ) | ||||||||
|
Total recognized in net periodic benefit cost and Other
comprehensive income (loss)
|
$ | (66 | ) | $ | (14 | ) | $ | (212 | ) | $ | (3 | ) | $ | (7 | ) | $ | (24 | ) | ||||||
The expected recognition of amounts in
Accumulated other
comprehensive income (loss
) is $22 and $1 for net actuarial
loss and prior service cost for pension benefits in 2011,
respectively, and $nil and $1 for net actuarial gain and prior
service credit for other benefits in 2011, respectively.
102
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Significant assumptions were as follows:
| Pension Benefits | Other Benefits | |||||||||||||||
| At December 31, | At December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Weighted-average assumptions used in measuring the
Company’s benefit obligation:
|
||||||||||||||||
|
Discount rate
|
5.75 | % | 6.10 | % | 5.75 | % | 6.10 | % | ||||||||
|
Rate of compensation increase
|
5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | ||||||||
| Pension Benefits | Other Benefits | |||||||||||||||||||||||
| Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
| 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
|
Weighted-average assumptions used in measuring the net periodic
pension benefit cost:
|
||||||||||||||||||||||||
|
Discount long-term rate
|
6.10 | % | 6.05 | % | 6.80 | % | 6.10 | % | 6.05 | % | 6.80 | % | ||||||||||||
|
Expected return on plan assets
|
8.00 | % | 8.00 | % | 8.00 | % | N/A | N/A | N/A | |||||||||||||||
|
Rate of compensation increase
|
5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | ||||||||||||
Yield curves matching our benefit obligations were derived using
a model based on high quality corporate bond data from Bloomberg
in 2010. The model develops a discount rate by selecting a
portfolio of high quality corporate bonds whose projected cash
flows match the projected benefit payments of the plan. In 2009,
the Company used yield curves modeled from cash flow analysis
under the Citigroup Above Median Pension Discount Curve. The
resulting curves were used to identify a discount rate for the
Company of 5.75% and 6.10% in 2010 and 2009, 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 based
on an analysis of the actual plan asset returns over multiple
time horizons and comparable other U.S. corporations. The
average actual return on plan assets during the 22 years
ended December 31, 2010 approximated 9%.
The pension plans employ several independent investment firms
which invest the assets of the plans in certain approved funds
that correspond to specific asset classes with associated target
allocations. 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 plans
and that of the individual investment firms is measured against
recognized market indices. The performance of the pension funds
are monitored by an investment committee comprised of members of
the Company’s management, which is advised by an
independent investment consultant. 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 2010
and the actual asset allocation at December 31, 2010.
|
Actual at
|
||||||||
|
December 31,
|
||||||||
| Asset Allocation | Target | 2010 | ||||||
|
U.S. equity investments
|
40 | % | 40 | % | ||||
|
International equity investments
|
25 | % | 25 | % | ||||
|
Fixed income investments
|
30 | % | 35 | % | ||||
|
Cash
|
5 | % | — | % | ||||
103
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table sets forth the Company’s pension plan
assets measured at fair value by level within the fair value
hierarchy. 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, 2010 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
|
Plan Assets:
|
||||||||||||||||
|
Cash and cash equivalents
|
$ | 2 | $ | — | $ | — | $ | 2 | ||||||||
|
Commingled funds
|
— | 557 | — | 557 | ||||||||||||
| $ | 2 | $ | 557 | $ | — | $ | 559 | |||||||||
| Fair Value at December 31, 2009 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
|
Plan Assets:
|
||||||||||||||||
|
Cash and cash equivalents
|
$ | 21 | $ | — | $ | — | $ | 21 | ||||||||
|
Commingled funds
|
— | 351 | — | 351 | ||||||||||||
| $ | 21 | $ | 351 | $ | — | $ | 372 | |||||||||
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, 2010, the underlying assets of the commingled
funds consist of U.S. equity investments (40%),
international equity investments (25%) and fixed income
investments (35%).
The assumed health care cost trend rate to measure the expected
cost of benefits was 8.00% for 2011, 7.25% for 2012, 6.50% for
2013, 5.75% for 2014, and 5.00% 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-Point
|
One-Percentage-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
|
$ | 15 | $ | (12 | ) | |||
Cash
Flows
Benefit payments to be paid to pension participants are expected
to be as follows: $36 in 2011, $25 in 2012, $28 in 2013, $32 in
2014, $38 in 2015, and $232 in total over the five years from
2016
104
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
through 2020. Benefit payments made to other benefit plan
participants are expected to be as follows: $4 in 2011, $4 in
2012, $4 in 2013, $5 in 2014, $5 in 2015, and $31 in total over
the five years from 2015 through 2020.
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 union 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 hourly 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 2010, $15 in 2009 and $14 in 2008.
| NOTE 9 | 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,
restricted stock units and performance leveraged stock units. At
December 31, 2010, 10,516,994 shares were available
for future stock incentive plan awards.
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:
| 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
|
Weighted-average risk-free interest rate
|
2.5 | % | 2.0 | % | 3.1 | % | 4.6 | % | 4.9 | % | ||||||||||
|
Dividend yield
|
0.7 | % | 1.0 | % | 1.0 | % | 1.0 | % | 0.7 | % | ||||||||||
|
Expected life in years
|
5 | 5 | 5 | 5 | 5 | |||||||||||||||
|
Volatility
|
38 | % | 36 | % | 30 | % | 32 | % | 34 | % | ||||||||||
105
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table summarizes annual activity for all stock
options for each of the three years ended December 31:
| 2010 | 2009 | 2008 | ||||||||||||||||||||||
|
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
|
6,142,073 | $ | 42.65 | 6,463,004 | $ | 42.17 | 6,234,814 | $ | 41.09 | |||||||||||||||
|
Granted
|
918,343 | $ | 55.68 | 1,157,825 | $ | 39.99 | 1,416,963 | $ | 40.77 | |||||||||||||||
|
Exercised
|
(1,494,686 | ) | $ | 40.38 | (1,204,836 | ) | $ | 36.24 | (931,741 | ) | $ | 30.88 | ||||||||||||
|
Forfeited and expired
|
(151,525 | ) | $ | 51.02 | (273,920 | ) | $ | 50.20 | (257,032 | ) | $ | 49.17 | ||||||||||||
|
Outstanding at end of year
|
5,414,205 | $ | 45.36 | 6,142,073 | $ | 42.65 | 6,463,004 | $ | 42.17 | |||||||||||||||
|
Options exercisable at year-end
|
3,211,115 | $ | 45.50 | 3,880,866 | $ | 44.39 | 4,464,475 | $ | 42.01 | |||||||||||||||
|
Weighted-average fair value of options granted during the year
|
$ | 20.01 | $ | 12.88 | $ | 11.96 | ||||||||||||||||||
The following table summarizes information about stock options
outstanding and exercisable at December 31, 2010:
| Options Outstanding | ||||||||||||||||||||
|
Weighted-
|
Options Exercisable | |||||||||||||||||||
|
Average
|
Weighted-
|
Weighted-
|
||||||||||||||||||
|
Remaining
|
Average
|
Average
|
||||||||||||||||||
|
Number
|
Contractual
|
Exercise
|
Number
|
Exercise
|
||||||||||||||||
| Range of Exercise Prices | Outstanding | Life (in years) | Price | Exercisable | Price | |||||||||||||||
|
$20 to $30
|
480,573 | 5.6 | $ | 26.74 | 180,573 | $ | 26.47 | |||||||||||||
|
$30 to $40
|
1,197,686 | 7.6 | $ | 39.60 | 480,164 | $ | 39.08 | |||||||||||||
|
$40 to $50
|
2,175,950 | 5.5 | $ | 44.62 | 1,884,578 | $ | 44.65 | |||||||||||||
|
$50+
|
1,559,996 | 7.6 | $ | 56.54 | 665,800 | $ | 57.71 | |||||||||||||
| 5,414,205 | 6.6 | $ | 45.36 | 3,211,115 | $ | 45.50 | ||||||||||||||
At December 31, 2010 there was $21 of unrecognized
compensation cost related to 2,203,090 unvested stock options.
This cost is expected to be recognized over a weighted-average
period of approximately 2 years. The total intrinsic value
of options exercised in 2010, 2009 and 2008 was $29, $16 and
$15, respectively. At December 31, 2010, the aggregate
intrinsic value of outstanding stock options was $87 and the
aggregate intrinsic value of exercisable options was $51 at
December 31, 2010.
The following stock options vested in each of the three years
ended December 31:
| 2010 | 2009 | 2008 | ||||||||||
|
Stock options vested
|
922,463 | 795,566 | 835,982 | |||||||||
|
Weighted-average exercise price
|
$ | 42.16 | $ | 46.86 | $ | 47.21 | ||||||
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
106
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
other restrictions. Upon vesting, the employee is entitled to
receive one share of the Company’s common stock for each
restricted stock unit. In 2010, 2009 and 2008 the Company
granted 483,408, 450,195 and 16,360 restricted stock units,
respectively, at a weighted-average fair market value of $52,
$42 and $39, respectively, per underlying share of the
Company’s common stock. At December 31, 2010, 454,256,
255,230 and 3,765 shares remain unvested for the 2010, 2009
and 2008 grants, respectively.
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
2010 and 2009, the Company granted 64,646 and 40,078 common
shares, respectively, and 129,302 and 80,172 restricted stock
units, respectively, included in the restricted stock unit
grants above at a fair market value of $50 and $43 per
underlying share of the Company’s common stock,
respectively, under the financial performance stock bonus plan.
Beginning in 2010, the Company grants performance leveraged
stock units (“PSUs”) to eligible executives. In 2010,
the Company granted 204,732 PSUs at a weighted-average fair
market value of $69. The actual number of PSUs earned will be
determined at the end of a three year performance period (except
two partial awards that will be based on a one and two year
performance period, respectively), based upon certain measures
of shareholder return.
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 2008, 218,697 shares of restricted
stock, were granted at a weighted-average fair market value of
$39 per underlying share of the Company’s common stock. At
December 31, 2010, 126,391 shares remained unvested
for the 2008 restricted stock awards. In 2008, the Company
granted 394,095 shares of deferred stock, at a
weighted-average fair market value of $44 per underlying share
of the Company’s common stock. At December 31, 2010,
106,168 shares remained unvested for the 2008 deferred
stock awards.
The total intrinsic value of other stock based compensation
awards that vested in 2010, 2009 and 2008 was $28, $19 and $14,
respectively. At December 31, 2010, there was $25 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 years.
The Company recognized stock based compensation as follows:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Stock options
|
$ | 16 | $ | 14 | $ | 16 | ||||||
|
Restricted stock units
|
16 | 6 | — | |||||||||
|
Performance leveraged stock units
|
7 | — | — | |||||||||
|
Common stock
|
3 | 3 | — | |||||||||
|
Restricted stock
|
2 | 4 | 6 | |||||||||
|
Deferred stock
|
8 | 13 | 12 | |||||||||
| $ | 52 | $ | 40 | $ | 34 | |||||||
107
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 10 | INCOME AND MINING TAXES |
The Company’s
Income and mining tax expense
consisted of:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Current:
|
||||||||||||
|
United States
|
$ | (214 | ) | $ | (46 | ) | $ | (104 | ) | |||
|
Foreign
|
(1,022 | ) | (782 | ) | (353 | ) | ||||||
| (1,236 | ) | (828 | ) | (457 | ) | |||||||
|
Deferred:
|
||||||||||||
|
United States
|
518 | 42 | 246 | |||||||||
|
Foreign
|
(138 | ) | (43 | ) | 69 | |||||||
| 380 | (1 | ) | 315 | |||||||||
| $ | (856 | ) | $ | (829 | ) | $ | (142 | ) | ||||
The Company’s
Income before income and mining tax and
other items
consisted of:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
United States
|
$ | 737 | $ | 291 | $ | 563 | ||||||
|
Foreign
|
3,260 | 2,663 | 731 | |||||||||
| $ | 3,997 | $ | 2,954 | $ | 1,294 | |||||||
The Company’s income and mining 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, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Income before income and mining tax and other items
|
$ | 3,997 | $ | 2,954 | $ | 1,294 | ||||||
|
United States statutory corporate income tax rate
|
35 | % | 35 | % | 35 | % | ||||||
|
Income tax expense computed at United States statutory corporate
income tax rate statutory corporate income tax rate
|
(1,399 | ) | (1,034 | ) | (453 | ) | ||||||
|
Reconciling items:
|
||||||||||||
|
Tax benefit generated on change in form of a non-
|
440 | — | 159 | |||||||||
|
U.S. subsidiary
|
||||||||||||
|
Percentage depletion
|
151 | 127 | 130 | |||||||||
|
Resolution of prior years’ uncertain income tax matters
|
11 | 38 | 69 | |||||||||
|
Change in valuation allowance on deferred tax assets
|
18 | 32 | (31 | ) | ||||||||
|
Mining taxes (net of federal benefit)
|
(33 | ) | (27 | ) | (27 | ) | ||||||
|
Other
|
(44 | ) | 35 | 11 | ||||||||
|
Income and mining tax expense
|
$ | (856 | ) | $ | (829 | ) | $ | (142 | ) | |||
108
Table of Contents
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, | ||||||||
| 2010 | 2009 | |||||||
|
Deferred income tax assets:
|
||||||||
|
Exploration costs
|
$ | 75 | $ | 72 | ||||
|
Depreciation
|
6 | 21 | ||||||
|
Net operating losses and tax credits
|
799 | 980 | ||||||
|
Retiree benefit and vacation accrual costs
|
98 | 124 | ||||||
|
Remediation and reclamation costs
|
158 | 132 | ||||||
|
Investment in partnerships
|
563 | 57 | ||||||
|
Other
|
103 | 64 | ||||||
| 1,802 | 1,450 | |||||||
|
Valuation allowances
|
(435 | ) | (437 | ) | ||||
| 1,367 | 1,013 | |||||||
|
Deferred income tax liabilities:
|
||||||||
|
Net undistributed earnings of subsidiaries
|
(237 | ) | (218 | ) | ||||
|
Unrealized gain on investments
|
(176 | ) | (137 | ) | ||||
|
Depletable and amortizable costs associated with mineral rights
|
(857 | ) | (826 | ) | ||||
|
Derivative instruments
|
(25 | ) | (37 | ) | ||||
|
Other
|
— | (1 | ) | |||||
| (1,295 | ) | (1,219 | ) | |||||
|
Net deferred income tax assets (liabilities)
|
$ | 72 | $ | (206 | ) | |||
Net deferred income tax assets and liabilities consist of:
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
|
Current deferred income tax assets
|
$ | 177 | $ | 215 | ||||
|
Long-term deferred income tax assets
|
1,437 | 937 | ||||||
|
Current deferred income tax liabilities
|
(54 | ) | (17 | ) | ||||
|
Long-term deferred income tax liabilities
|
(1,488 | ) | (1,341 | ) | ||||
| $ | 72 | $ | (206 | ) | ||||
Factors that
Significantly Impact Effective Tax Rate
In 2010, the Company converted certain
non-U.S. entities
to U.S. entities for U.S. income tax purposes. The
lower effective tax rate in 2010 and 2008 is primarily due to
tax benefits recognized as a result of “check the box”
elections made with respect to certain of the Company’s
non-US subsidiaries. As a result of the elections, the
subsidiaries are treated as flow-through entities for
U.S. federal income tax purposes. The restructurings in
2010 resulted in the recording of a deferred tax asset,
calculated as the difference between fair market valuations of
the subsidiaries compared to the underlying financial statement
basis in the assets. The restructuring in 2008 resulted in a
significant loss that allowed the Company to recover income
taxes paid in prior years.
109
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Percentage depletion allowances (tax deductions for depletion
that may exceed the tax basis in mineral reserves) are available
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 the
Company’s consolidated United States income tax return. The
deductions are highly sensitive to the price of gold and other
minerals produced by the Company.
Tax expense decreased due to the reduction in income taxes 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.
The reduction in valuation allowances in 2010 and 2009 are a
result of the increase in value of certain marketable
securities, 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. 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 2010 primarily is attributable to
non-U.S. subsidiaries
tax loss carryforwards.
In the fourth quarter of 2010, the Company reclassified certain
income based state and provincial taxes from
Costs applicable
to sales
to
Income and mining tax expense
. Tax
expense increased due to the inclusion of such taxes as
Income and mining tax expense
. The reclassification
resulted in $33, $27 and $27 (net of federal benefit) increases
to income and mining taxes for 2010, 2009 and 2008, respectively.
Other
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 $7 and $117
at December 31, 2010 and 2009, respectively. The decrease
shown above is due to the change in the Company’s assertion
regarding unremitted earnings that resulted from the conversion
of
non-U.S. entities
to U.S. entities in 2010. As such, deferred taxes are now
being provided for the foreign operations included in the
restructuring.
Company’s
Unrecognized Tax Benefits
At December 31, 2010, 2009 and 2008, the Company had $116,
$130 and $181 of total gross unrecognized tax benefits,
respectively. A reconciliation of the beginning and ending
amount of gross unrecognized tax benefits is as follows:
| 2010 | 2009 | 2008 | ||||||||||
|
Total amount of gross unrecognized tax benefits at beginning of
year
|
$ | 130 | $ | 181 | $ | 230 | ||||||
|
Additions for tax positions of prior years
|
3 | (21 | ) | 29 | ||||||||
|
Additions for tax positions of current year
|
— | 3 | 50 | |||||||||
|
Reductions due to settlements with taxing authorities
|
(9 | ) | (27 | ) | (57 | ) | ||||||
|
Reductions due to lapse of statute of limitations
|
(8 | ) | (6 | ) | (71 | ) | ||||||
|
Total amount of gross unrecognized tax benefits at end of year
|
$ | 116 | $ | 130 | $ | 181 | ||||||
110
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
At December 31, 2010, 2009 and 2008, $45, $63 and $116,
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 has adjusted the
unrecognized tax benefits accordingly.
In 2010, PTNNT, the Company’s partially owned subsidiary in
Indonesia, received a final tax assessment from the Indonesian
Tax Office. Although required to pay $132 (of which, $119
related to corporate income tax matters) of tax and penalties
upon receipt of the tax assessment, PTNNT intends to vigorously
defend its positions through all processes available to it.
PTNNT believes it is more likely than not that it will prevail
based on prior experience and therefore recorded a corresponding
receivable in the third quarter.
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 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 $1 to $3 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 and mining tax expense. At December 31, 2010 and
2009, the total amount of accrued income-tax-related interest
and penalties included in the Consolidated Balance Sheets was
$10 and $13, respectively. During 2010, the Company released
through the Statements of Consolidated Income $4 of interest and
penalties. During 2009 and 2008, the Company accrued through the
Statements of Consolidated Income an additional $9 and $31 of
interest and penalties.
111
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Tax Loss
Carryforwards, Foreign Tax Credits, and AMT
Credits
At December 31, 2010 and 2009, the Company had
(i) $1,220 and $1,213 of net operating loss carry forwards,
respectively; and (ii) $168 and $279 of tax credit carry
forwards, respectively. At December 31, 2010 and 2009, $857
and $1,020, 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 loss carryforwards expire at various
dates through 2030. Valuation allowances have been recorded on
net operating loss carryforwards where the Company believes
based on the available evidence, it is more likely than not that
the net operating losses will not be realized.
Tax credit carry forwards for 2010 and 2009 of $53 and $158
consist of foreign tax credits available in the United States;
substantially all such credits not utilized will expire at the
end of 2018. Other credit carry forwards at the end of 2010 and
2009 in the amounts of $115 and $121, 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.
Differences in tax rates and other foreign income tax law
variations make the ability to fully utilize all 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 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 foreign earnings included in the
annual United States consolidated income tax return.
| NOTE 11 | EQUITY INCOME (LOSS) OF AFFILIATES |
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
AGR Matthey Joint Venture
|
$ | 3 | $ | 5 | $ | (2 | ) | |||||
|
Regis Resources Ltd.
|
— | — | (3 | ) | ||||||||
|
Minera La Zanja S.R.L.
|
10 | (4 | ) | — | ||||||||
|
Euronimba Ltd.
|
(10 | ) | (17 | ) | — | |||||||
| $ | 3 | $ | (16 | ) | $ | (5 | ) | |||||
AGR Matthey
Joint Venture
The AGR Matthey Joint Venture (“AGR”), a gold
refinery, in which Newmont held a 40% interest, was dissolved on
March 30, 2010. Newmont received consideration of $14 from
the dissolution and recorded a gain of $6 during 2010. Newmont
received dividends of $7 and $2 during 2010 and 2009,
respectively, from its interests in AGR. See also Note 26
for details of Newmont’s transactions with AGR.
Regis
Resources Ltd.
Prior to December 2009, Newmont held a 23.15% interest in Regis
Resources Ltd. (“Regis Resources”). 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 and the Company
discontinued equity accounting.
112
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Minera
La Zanja S.R.L.
Newmont holds a 46.94% interest in Minera La Zanja, S.R.L.
(“La Zanja”), a gold project near the city of
Cajamarca, Peru. The remaining interests are held by
Compañia de Minas Buenaventura, S.A.A.
(“Buenaventura”). The mine commenced operations in
September 2010 and is operated by Buenaventura.
Euronimba
Ltd.
Newmont holds a 43.50% interest in Euronimba Ltd.
(“Euronimba”), with the remaining interests held by
BHP Billiton (43.50%) and Areva (13%). Euronimba owns 95% of the
Nimba iron ore project located in the Republic of Guinea which
is in the early stages of development.
| NOTE 12 | DISCONTINUED OPERATIONS |
Discontinued operations include Kori Kollo sold in July 2009 and
various other operations sold to third parties.
In December 2010, the Company recognized a $28 charge, net of
tax benefits, for legal claims related to historic operations
previously sold to third parties.
In July 2009, the Company sold its interest in Kori Kollo 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 recognized a $16 charge
in 2009, net of tax benefits, related to the sale.
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 income statement
results from the historical presentation to
Income (loss)
from discontinued operations
in the Statements of
Consolidated Income for all periods presented. The Statements of
Consolidated Cash Flows have been reclassified for discontinued
operations for all periods presented.
The following table details selected financial information
included in the
Income (loss) from discontinued operations
in the Statements of Consolidated Income:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Sales
|
$ | — | $ | 32 | $ | 75 | ||||||
|
Income (loss) from operations:
|
||||||||||||
|
Kori Kollo
|
$ | — | $ | 1 | $ | (9 | ) | |||||
|
Other
|
— | — | 6 | |||||||||
| — | 1 | (3 | ) | |||||||||
|
Non-operating gain (loss)
|
(40 | ) | (44 | ) | 1 | |||||||
|
Pre-tax income (loss)
|
(40 | ) | (43 | ) | (2 | ) | ||||||
|
Income tax benefit
|
12 | 27 | 15 | |||||||||
|
Income (loss) from discontinued operations
|
$ | (28 | ) | $ | (16 | ) | $ | 13 | ||||
113
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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, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Net cash provided from (used in) discontinued operations:
|
||||||||||||
|
Income (loss) from discontinued operations
|
$ | (28 | ) | $ | (16 | ) | $ | 13 | ||||
|
Amortization
|
— | 3 | 9 | |||||||||
|
Deferred income taxes
|
(12 | ) | (28 | ) | 4 | |||||||
|
Impairment of assets held for sale
|
— | 44 | — | |||||||||
|
Other operating adjustments and write-downs
|
— | 7 | 19 | |||||||||
|
Increase (decrease) in net operating liabilities
|
27 | 23 | (149 | ) | ||||||||
| $ | (13 | ) | $ | 33 | $ | (104 | ) | |||||
|
Net cash used in investing activities of discontinued operations:
|
||||||||||||
|
Proceeds from asset sales, net
|
$ | — | $ | — | $ | (6 | ) | |||||
|
Additions to property, plant and mine development
|
— | — | (5 | ) | ||||||||
| $ | — | $ | — | $ | (11 | ) | ||||||
|
Net cash used in financing activities of discontinued operations:
|
||||||||||||
|
Repayment of debt
|
$ | — | $ | (2 | ) | $ | (4 | ) | ||||
| $ | — | $ | (2 | ) | $ | (4 | ) | |||||
| NOTE 13 | NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS |
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Batu Hijau
|
$ | 549 | $ | 445 | $ | 98 | ||||||
|
Yanacocha
|
292 | 354 | 232 | |||||||||
|
Other
|
(2 | ) | (3 | ) | (1 | ) | ||||||
| $ | 839 | $ | 796 | $ | 329 | |||||||
In June 2010, PTPI completed the sale of an approximate 2.2%
interest in PTNNT to PTIMI. To enable the transaction to
proceed, the Company released its rights to the dividends
payable on this 2.2% interest and released the security interest
in the associated shares. The Company further agreed, however,
to advance certain funds to PTIMI to enable it to purchase the
interest in exchange for an assignment by PTIMI to the Company
of the dividends payable on the 2.2% interest (net of
withholding tax), a pledge of the shares as security on the
advance, and certain voting rights and obligations. The funds
that the Company advanced to PTIMI and which it paid to PTPI for
the shares were used by PTPI to reduce its outstanding balance
with the Company. Upon completion of this transaction, PTPI
requested and was allowed to borrow additional funds under the
Company’s agreement with PTPI. The Company’s economic
interest in PTPI’s and PTIMI’s combined 20% interest
in PTNNT remains at 17% and has not changed as a result of these
transactions.
In March 2010, the Company (through NTP) completed the sale and
transfer of shares for a 7% 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 56% from 63%. In 2009, the Company (through NTP)
completed the sale and
114
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
transfer of shares for a 17% interest in PTNNT to PTMDB in
compliance with divestiture obligations under the Contract of
Work, reducing NTP’s ownership interest to 63% from 80%.
The 2010 and 2009 share transfers resulted in gains of
approximately $16 (after tax of $33) and $63 (after tax of
$115), respectively, that were recorded as
Additional paid-in
capital
. For information on the Batu Hijau Contract of Work
and divestiture requirements, see the discussion in Note 31
to the Consolidated Financial Statements.
In December 2009, the Company entered into a transaction with
PTPI, 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 certain voting rights and obligations, and a commitment
from PTPI to support the application of Newmont’s standards
to the operation of the Batu Hijau mine. Based on the
transaction with PTPI, the Company recognized an additional 17%
effective economic interest in PTNNT.
At December 31, 2010, Newmont had a 48.50% effective
economic interest in PTNNT. Based on ASC guidance for variable
interest entities, Newmont continues to consolidate PTNNT in its
Consolidated Financial Statements.
Newmont has a 51.35% ownership interest in Yanacocha, with the
remaining interests held by Compañia de Minas Buenaventura,
S.A.A. (43.65%) and the International Finance Corporation (5%).
| NOTE 14 | NEWMONT EQUITY AND INCOME 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.
Treasury
Stock
Treasury stock is acquired by the Company when certain
restricted stock awards vest or are forfeited (see Note 9).
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 to holders of Newmont common stock. At
December 31, 2010 and 2009, the value of these no-par
shares was included in
Additional paid-in capital
and
outstanding shares.
Net Income per
Common Share
Basic income 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
115
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
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, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Net income attributable to Newmont stockholders:
|
||||||||||||
|
Continuing operations
|
$ | 2,305 | $ | 1,308 | $ | 816 | ||||||
|
Discontinued operations
|
(28 | ) | (11 | ) | 15 | |||||||
| $ | 2,277 | $ | 1,297 | $ | 831 | |||||||
|
Weighted average common shares (millions):
|
||||||||||||
|
Basic
|
492 | 487 | 454 | |||||||||
|
Effect of employee stock based awards
|
2 | — | 1 | |||||||||
|
Effect of convertible notes
|
6 | — | — | |||||||||
|
Diluted
|
500 | 487 | 455 | |||||||||
|
Net income attributable to Newmont stockholders per
|
||||||||||||
|
common share
|
||||||||||||
|
Basic:
|
||||||||||||
|
Continuing operations
|
$ | 4.69 | $ | 2.68 | $ | 1.80 | ||||||
|
Discontinued operations
|
(0.06 | ) | (0.02 | ) | 0.03 | |||||||
| $ | 4.63 | $ | 2.66 | $ | 1.83 | |||||||
|
Diluted:
|
||||||||||||
|
Continuing operations
|
$ | 4.61 | $ | 2.68 | $ | 1.80 | ||||||
|
Discontinued operations
|
(0.06 | ) | (0.02 | ) | 0.03 | |||||||
| $ | 4.55 | $ | 2.66 | $ | 1.83 | |||||||
Options to purchase 2 million, 4 million and
4 million shares of common stock at average exercise prices
of $57, $47 and $48 were outstanding at December 31, 2010,
2009 and 2008, respectively, but were not included in the
computation of diluted weighted average number of common shares
because their effect would have been anti-dilutive.
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. The notes issued in 2009 and 2007 are
convertible, at the holder’s option, equivalent to a
conversion price of $46.18 per share of common stock
(11,206,150 shares of common stock) and $46.13 per share of
common stock (24,929,547 shares of common stock),
respectively. 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 ASC guidance. The average price of the
Company’s common stock for the year ended December 31,
2010 exceeded the conversion price of $46.18 and $46.13 for the
notes issued in 2009 and 2007, respectively, and therefore,
6 million additional shares were included in the
computation of diluted weighted average common shares for the
year ended December 31, 2010.
116
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
In connection with the 2007 convertible senior notes offering,
the Company entered into convertible note hedge transactions and
warrant transactions (“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 $46.13 was effectively increased to
$60.17. Should the warrant transactions become dilutive to the
Company’s earnings per share (i.e. Newmont’s share
price exceeds $60.17) the underlying shares will be included in
the computation of diluted income per common share.
The
Net income attributable to Newmont stockholders
and
transfers from noncontrolling interests was:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Net income attributable to Newmont stockholders
|
$ | 2,277 | $ | 1,297 | $ | 831 | ||||||
|
Transfers from the noncontrolling interests:
|
||||||||||||
|
Increase in Additional paid-in capital from sale of PTNNT
shares, net of tax of $33 and $115, respectively
|
16 | 63 | — | |||||||||
|
Net income attributable to Newmont stockholders and transfers
from noncontrolling interests
|
$ | 2,293 | $ | 1,360 | $ | 831 | ||||||
| NOTE 15 | ACQUISITIONS |
On June 25, 2009 the Company completed the acquisition of
the remaining 33.33% interest in Boddington from AngloGold
Ashanti Australia Limited (“AngloGold”). Consideration
for the acquisition consisted of $982 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 beginning in the second quarter of 2010 on one-third
of gold sales from Boddington. At the acquisition date, the
Company estimated the fair value of the contingent consideration
at $62. In connection with the acquisition, the Company incurred
$67 of transaction costs in 2009 of which $15 of these costs
were paid at December 31, 2010.
At December 31, 2010 and December 31, 2009, the fair
value of the contingent consideration was valued to
approximately $83 and $85, respectively. Changes to the
estimated fair value resulting from periodic revaluations are
recorded to
Other expense, net
. During 2010, the Company
paid $4 in cash to AngloGold related to the contingent
consideration. The range of remaining undiscounted amounts the
Company could pay is between $0 and $96.
117
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Boddington purchase price allocation based on the estimated
fair values of assets acquired and liabilities assumed was as
follows:
|
Assets:
|
||||
|
Cash
|
$ | 1 | ||
|
Property, plant and mine development, net
|
1,073 | |||
|
Inventories and stockpiles
|
7 | |||
|
Other assets
|
11 | |||
| $ | 1,092 | |||
|
Liabilities:
|
||||
|
Accrued liabilities
|
$ | 33 | ||
|
Reclamation liabilities
|
15 | |||
| 48 | ||||
|
Net assets acquired
|
$ | 1,044 | ||
During 2008, the Company paid $318 million to complete the
2007 acquisition of Miramar Mining Corporation and the Hope Bay
project.
| NOTE 16 | 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 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). |
118
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
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, 2010 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
|
Assets:
|
||||||||||||||||
|
Cash equivalents
|
$ | 2,316 | $ | 2,316 | $ | — | $ | — | ||||||||
|
Marketable equity securities:
|
||||||||||||||||
|
Extractive industries
|
1,573 | 1,573 | — | — | ||||||||||||
|
Other
|
6 | 6 | — | — | ||||||||||||
|
Marketable debt securities:
|
||||||||||||||||
|
Asset backed commercial paper
|
19 | — | — | 19 | ||||||||||||
|
Corporate
|
10 | 10 | — | — | ||||||||||||
|
Auction rate securities
|
5 | — | — | 5 | ||||||||||||
|
Trade receivable from provisional copper and gold concentrate
sales, net
|
412 | 412 | — | — | ||||||||||||
|
Derivative instruments, net:
|
||||||||||||||||
|
Foreign exchange forward contracts
|
301 | — | 301 | — | ||||||||||||
|
Diesel forward contracts
|
8 | — | 8 | — | ||||||||||||
|
Interest rate swap contracts
|
3 | — | 3 | — | ||||||||||||
| $ | 4,653 | $ | 4,317 | $ | 312 | $ | 24 | |||||||||
|
Liabilities:
|
||||||||||||||||
|
8
5
/
8
% debentures
($222 hedged portion)
|
$ | 228 | $ | — | $ | 228 | $ | — | ||||||||
|
Boddington contingent consideration
|
83 | — | — | 83 | ||||||||||||
| $ | 311 | $ | — | $ | 228 | $ | 83 | |||||||||
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
securities are segregated based on industry. 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 marketable debt securities include
investments in auction rate securities and asset backed
commercial paper. The Company reviews the fair value for auction
rate securities and asset backed commercial paper on at least a
quarterly basis. 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 using probabilistic cash flow assumptions. In
January 2009, the investments in the Company’s asset backed
commercial paper were restructured by court order. The
restructuring allowed an interest distribution to be made to
investors. The Company estimated the fair value of the asset
backed
119
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
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 and asset
backed commercial paper are classified within Level 3 of
the fair value hierarchy. 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 net trade receivable from provisional copper
and gold concentrate sales, subject to final pricing, is valued
using quoted market prices based on forward curves 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. 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 a
portion of the interest rate risk exposure of its
8
5
/
8
% debentures
due May 2011. The hedged portion of the Company’s
8
5
/
8
% debentures
are 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
% debentures
is classified within Level 2 of the fair value hierarchy.
The Company recorded a contingent consideration liability
related to the 2009 acquisition of the final 33.33% interest in
Boddington. 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. See
Note 15.
The table below sets forth a summary of changes in the fair
value of the Company’s Level 3 financial assets and
liabilities for the years ended December 31, 2010:
|
Boddington
|
||||||||||||||||||||
|
Auction Rate
|
Asset Backed
|
Total
|
Contingent
|
Total
|
||||||||||||||||
| Securities | Commercial Paper | Assets | Consideration | Liabilities | ||||||||||||||||
|
Balance at beginning of period
|
$ | 5 | $ | 18 | $ | 23 | $ | 85 | $ | 85 | ||||||||||
|
Unrealized gain
|
— | 1 | 1 | — | — | |||||||||||||||
|
Revaluation
|
— | — | — | 2 | 2 | |||||||||||||||
|
Settlements
|
— | — | — | (4 | ) | (4 | ) | |||||||||||||
|
Balance at end of period
|
$ | 5 | $ | 19 | $ | 24 | $ | 83 | $ | 83 | ||||||||||
The revaluation on the Boddington contingent consideration
liability of $2 was recorded in
Other expense, net
.
Unrealized gains of $1 for 2010 were included in
Accumulated
other comprehensive income
as a result of changes in C$
exchange rates from December 31, 2009. At December 31,
2010, the assets and liabilities classified within Level 3
of the fair value hierarchy represent 1% and 27% of the total
assets and liabilities measured at fair value.
| NOTE 17 | DERIVATIVE INSTRUMENTS |
The Company’s strategy is to provide shareholders with
leverage to changes in gold and copper prices by selling its
production at spot market prices. Consequently, the Company does
not hedge its
120
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
gold and copper sales. Newmont continues to manage certain risks
associated with commodity input costs, interest rates and
foreign currencies using the derivative market. All of the cash
flow and fair value derivative instruments described below were
transacted for risk management purposes and qualify as hedging
instruments. The maximum period over which hedged transactions
are expected to occur is five years.
Cash Flow
Hedges
The foreign currency and diesel contracts are 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
and are reclassified to income
during the period in which the hedged transaction affects
earnings. Gains and losses from hedge ineffectiveness are
recognized in current earnings.
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 a portion of the Company’s A$ and NZ$
denominated operating expenditures which results in a blended
rate realized each period. The hedging instruments are fixed
forward contracts with expiration dates ranging up to five years
from the date of issue. The principal hedging objective is
reduction in the volatility of realized
period-on-period
$/A$ and $/NZ$ rates, respectively.
Newmont had the following foreign currency derivative contracts
outstanding at December 31, 2010:
| Expected Maturity Date | ||||||||||||||||||||||||
|
Total/
|
||||||||||||||||||||||||
| 2011 | 2012 | 2013 | 2014 | 2015 | Average | |||||||||||||||||||
|
A$ Fixed Forward Contracts:
|
||||||||||||||||||||||||
|
A$ notional (millions)
|
1,026 | 631 | 314 | 221 | 99 | 2,291 | ||||||||||||||||||
|
Average rate ($/A$)
|
0.82 | 0.84 | 0.84 | 0.83 | 0.80 | 0.83 | ||||||||||||||||||
|
Expected hedge ratio
|
72 | % | 45 | % | 22 | % | 17 | % | 8 | % | 34 | % | ||||||||||||
|
NZ$ Fixed Forward Contracts:
|
||||||||||||||||||||||||
|
NZ$ notional (millions)
|
67 | 23 | — | — | — | 90 | ||||||||||||||||||
|
Average rate ($/NZ$)
|
0.69 | 0.69 | — | — | — | 0.69 | ||||||||||||||||||
|
Expected hedge ratio
|
57 | % | 22 | % | — | % | — | % | — | % | 40 | % | ||||||||||||
Diesel Fixed
Forward Contracts
Newmont hedges a portion 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.
121
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Newmont had the following diesel derivative contracts
outstanding at December 31, 2010:
| Expected Maturity Date | ||||||||||||
|
Total/
|
||||||||||||
| 2011 | 2012 | Average | ||||||||||
|
Diesel Fixed Forward Contracts:
|
||||||||||||
|
Diesel gallons (millions)
|
21 | 7 | 28 | |||||||||
|
Average rate ($/gallon)
|
2.28 | 2.44 | 2.32 | |||||||||
|
Expected Nevada hedge ratio
|
50 | % | 18 | % | 34 | % | ||||||
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.
Fair Value
Hedges
Interest Rate
Swap Contracts
At December 31, 2010, Newmont had $222 fixed to floating
swap contracts designated as a hedge against its
8
5
/
8
% debentures
due 2011. The interest rate swap contracts assist in managing
the Company’s mix of fixed and floating rate debt. Under
the hedge contract terms, Newmont receives fixed-rate interest
payments at 8.63% and pays floating-rate interest amounts based
on periodic London Interbank Offered Rate (“LIBOR”)
settings plus a spread, ranging from 2.60% to 7.63%. The
interest rate swap contracts were designated as fair value
hedges and changes in fair value have been recorded in income in
each period, consistent with recording changes to the
mark-to-market
value of the underlying hedged liability in income.
Derivative
Instrument Fair Values
Newmont had the following derivative instruments designated as
hedges at December 31, 2010 and December 31, 2009:
| Fair Values of Derivative Instruments | ||||||||||||||||
| At December 31, 2010 | ||||||||||||||||
|
Other Current
|
Other Long-Term
|
Other Current
|
Other Long-Term
|
|||||||||||||
| Assets | Assets | Liabilities | Liabilities | |||||||||||||
|
Foreign currency exchange contracts:
|
||||||||||||||||
|
A$ fixed forward contracts
|
$ | 181 | $ | 114 | $ | — | $ | — | ||||||||
|
NZ$ fixed forward contracts
|
5 | 1 | — | — | ||||||||||||
|
Diesel fixed forward contracts
|
7 | 1 | — | — | ||||||||||||
|
Interest rate swap contracts
|
3 | — | — | — | ||||||||||||
|
Total derivative instruments (Note 21)
|
$ | 196 | $ | 116 | $ | — | $ | — | ||||||||
122
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| Fair Values of Derivative Instruments | ||||||||||||||||
| At December 31, 2009 | ||||||||||||||||
|
Other Current
|
Other Long-Term
|
Other Current
|
Other Long-Term
|
|||||||||||||
| Assets | Assets | Liabilities | Liabilities | |||||||||||||
|
Foreign currency exchange contracts:
|
||||||||||||||||
|
A$ fixed forward contracts
|
$ | 78 | $ | 53 | $ | — | $ | 1 | ||||||||
|
NZ$ fixed forward contracts
|
5 | 1 | — | — | ||||||||||||
|
IDR fixed forward contracts
|
1 | — | — | — | ||||||||||||
|
Diesel fixed forward contracts
|
5 | 1 | — | — | ||||||||||||
|
Interest rate swap contracts
|
3 | 4 | — | — | ||||||||||||
|
Total derivative instruments (Note 21)
|
$ | 92 | $ | 59 | $ | — | $ | 1 | ||||||||
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 | |||||||||||||||||||||||
| For the Years Ended December 31, | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||
|
Cash flow hedging relationships:
|
||||||||||||||||||||||||
|
Gain (loss) recognized in other comprehensive income (effective
portion)
|
$ | 287 | $ | 245 | $ | (166 | ) | $ | 6 | $ | 7 | $ | (18 | ) | ||||||||||
|
Gain (loss) reclassified from Accumulated other comprehensive
income into income (effective
portion)
(1)
|
$ | 92 | $ | (6 | ) | $ | (17 | ) | $ | 4 | $ | (11 | ) | $ | (4 | ) | ||||||||
| Treasury Rate Lock Contracts | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Cash flow hedging relationships:
|
||||||||||||
|
Gain (loss) recognized in other comprehensive income (effective
portion)
(2)
|
$ | — | $ | 11 | $ | — | ||||||
| (1) | The gain (loss) for the effective portion of foreign currency exchange and diesel cash flow hedges reclassified from Accumulated other comprehensive income is included in Costs applicable to sales . | |
| (2) | The gain for the effective portion of treasury rate lock cash flow hedges reclassified from Accumulated other comprehensive income is recorded in Interest expense, net . |
The amount to be reclassified from
Accumulated other
comprehensive income
, net of tax to income during the next
12 months is a gain of approximately $135.
| Interest Rate Swap Contracts | 8 5 / 8 % Debentures (Hedged Portion) | |||||||||||||||||||||||
| For the Years Ended December 31, | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||
|
Fair value hedging relationships:
|
||||||||||||||||||||||||
|
Gain (loss) recognized in income (effective
portion)
(1)
|
$ | 6 | $ | 4 | $ | 2 | $ | — | $ | (1 | ) | $ | (2 | ) | ||||||||||
|
Gain (loss) recognized in income (ineffective portion)
(2)
|
$ | (4 | ) | $ | (3 | ) | $ | 4 | $ | 2 | $ | (3 | ) | $ | 6 | |||||||||
| (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. |
123
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Provisional
Copper and Gold Sales
The Company’s provisional copper and gold sales 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 gold and copper concentrates at
the prevailing indices’ prices 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.
The average LME copper price was $3.43 per pound during 2010,
compared with the Company’s recorded average provisional
price of $3.42 before
mark-to-market
gains and treatment and refining charges. During 2010,
increasing copper prices resulted in a provisional pricing
mark-to-market
gain of $120 ($0.22 per pound). At December 31, 2010,
Newmont had copper sales of 111 million pounds priced at an
average of $4.40 per pound, subject to final pricing over the
next several months.
The average London P.M. fix for gold was $1,225 per ounce during
2010, compared with the Company’s recorded average
provisional price of $1,224 per ounce before
mark-to-market
gains and treatment and refining charges. During 2010,
increasing gold prices resulted in a provisional pricing
mark-to-market
gain of $41 ($7 per ounce). At December 31, 2010, Newmont
had gold sales of 105,000 ounces priced at an average of $1,411
per ounce, subject to final pricing over the next several months.
| NOTE 18 | INVESTMENTS |
| At December 31, 2010 | ||||||||||||||||
|
Cost/Equity
|
Unrealized |
Fair/Equity
|
||||||||||||||
| Basis | Gain | Loss | Basis | |||||||||||||
|
Current:
|
||||||||||||||||
|
Marketable Equity Securities:
|
||||||||||||||||
|
New Gold Inc.
|
5 | 54 | — | 59 | ||||||||||||
|
Other
|
19 | 35 | — | 54 | ||||||||||||
| $ | 24 | $ | 89 | $ | — | $ | 113 | |||||||||
|
Long-term:
|
||||||||||||||||
|
Marketable Debt Securities:
|
||||||||||||||||
|
Asset backed commercial paper
|
$ | 25 | $ | — | $ | (6 | ) | $ | 19 | |||||||
|
Auction rate securities
|
7 | — | (2 | ) | 5 | |||||||||||
|
Corporate
|
7 | 3 | — | 10 | ||||||||||||
| 39 | 3 | (8 | ) | 34 | ||||||||||||
|
Marketable Equity Securities:
|
||||||||||||||||
|
Canadian Oil Sands Trust
|
308 | 508 | — | 816 | ||||||||||||
|
Gabriel Resources Ltd.
|
78 | 325 | — | 403 | ||||||||||||
|
Regis Resources Ltd.
|
23 | 148 | — | 171 | ||||||||||||
|
Other
|
39 | 37 | — | 76 | ||||||||||||
| 448 | 1,018 | — | 1,466 | |||||||||||||
|
Other investments, at cost
|
11 | — | — | 11 | ||||||||||||
|
Investment in Affiliates:
|
||||||||||||||||
|
La Zanja
|
57 | — | — | 57 | ||||||||||||
| $ | 555 | $ | 1,021 | $ | (8 | ) | $ | 1,568 | ||||||||
124
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| At December 31, 2009 | ||||||||||||||||
|
Cost/Equity
|
Unrealized |
Fair/Equity
|
||||||||||||||
| Basis | Gain | Loss | Basis | |||||||||||||
|
Current:
|
||||||||||||||||
|
Marketable Equity Securities:
|
||||||||||||||||
|
Regis Resources Ltd.
|
$ | 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 | ||||||||||||
|
Other
|
15 | 18 | — | 33 | ||||||||||||
| 381 | 738 | — | 1,119 | |||||||||||||
|
Other investments, at cost
|
6 | — | — | 6 | ||||||||||||
|
Investment in Affiliates:
|
||||||||||||||||
|
AGR Matthey Joint Venture
|
20 | — | — | 20 | ||||||||||||
|
La Zanja
|
8 | — | — | 8 | ||||||||||||
| $ | 454 | $ | 740 | $ | (8 | ) | $ | 1,186 | ||||||||
Included in
Investments
at December 31, 2010 and
2009 are $10 and $10 of long-term marketable debt securities,
respectively, and $6 and $5 long-term marketable equity
securities, respectively, which are legally pledged for purposes
of settling asset retirement obligations related to the
San Jose Reservoir in Yanacocha.
On December 21, 2010 Newmont exercised 6 million
warrants of New Gold Inc. and received 6 million New Gold
Inc. shares for consideration of $5.
In March 2010, Regis Resources issued A$10 interest free
convertible notes to Newmont which were repayable by
December 31, 2012 and 5 million options. On
September 30, 2010, Newmont accepted the offer to terminate
its equity participation right on all Regis Resources tenements
in return for 9 million Regis Resources shares upon
conversion of the interest free convertible notes. This
conversion resulted in a gain of approximately $5. On
October 26, 2010, Newmont exercised the options and
received 5 million Regis Resources shares for consideration
of $4.
During 2010, the Company purchased $15 and exercised warrants
for $4 of other marketable equity securities. During 2009, the
Company purchased $5 of Regis Resources shares.
AGR, in which the Company held a 40% equity interest, was
dissolved on March 30, 2010. The Company received
consideration of $14 from the dissolution and recorded a gain of
$6 in 2010.
125
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
During 2010 and 2009, the Company recognized impairments for
other-than-temporary
declines in value of $1 and $6, respectively, 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, 2010 | Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | ||||||||||||||||||
|
Asset backed commercial paper
|
$ | — | $ | — | $ | 19 | $ | 6 | $ | 19 | $ | 6 | ||||||||||||
|
Auction rate securities
|
— | — | 5 | 2 | 5 | 2 | ||||||||||||||||||
| $ | — | $ | — | $ | 24 | $ | 8 | $ | 24 | $ | 8 | |||||||||||||
| 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 | |||||||||||||
The unrealized loss of $8 at December 31, 2010 and 2009
relate to the Company’s investments in asset backed
commercial paper and auction rate securities as listed in the
tables above. While the fair values of these investments are
below their respective cost, the Company views these declines as
temporary. 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.
| NOTE 19 | INVENTORIES |
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
|
In-process
|
$ | 142 | $ | 80 | ||||
|
Concentrate
|
111 | 10 | ||||||
|
Precious metals
|
4 | 9 | ||||||
|
Materials, supplies and other
|
401 | 394 | ||||||
| $ | 658 | $ | 493 | |||||
126
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 20 | STOCKPILES AND ORE ON LEACH PADS |
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
|
Current:
|
||||||||
|
Stockpiles
|
$ | 389 | $ | 206 | ||||
|
Ore on leach pads
|
228 | 197 | ||||||
| $ | 617 | $ | 403 | |||||
|
Long-term:
|
||||||||
|
Stockpiles
|
$ | 1,397 | $ | 1,181 | ||||
|
Ore on leach pads
|
360 | 321 | ||||||
| $ | 1,757 | $ | 1,502 | |||||
| NOTE 21 | OTHER ASSETS |
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
|
Other current assets:
|
||||||||
|
Refinery metal inventory and receivable
|
$ | 617 | $ | 671 | ||||
|
Derivative instruments
|
196 | 92 | ||||||
|
Other prepaid assets
|
65 | 70 | ||||||
|
Other
|
84 | 67 | ||||||
| $ | 962 | $ | 900 | |||||
|
Other long-term assets:
|
||||||||
|
Goodwill
|
$ | 188 | $ | 188 | ||||
|
Income tax receivable
|
119 | — | ||||||
|
Derivative instruments
|
116 | 59 | ||||||
|
Intangible assets
|
91 | 29 | ||||||
|
Debt issuance costs
|
39 | 50 | ||||||
|
Restricted cash
|
25 | 70 | ||||||
|
Other receivables
|
19 | 16 | ||||||
|
Other
|
144 | 70 | ||||||
| $ | 741 | $ | 482 | |||||
127
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 22 | PROPERTY, PLANT AND MINE DEVELOPMENT |
|
Depreciable
|
At December 31, 2010 | At December 31, 2009 | ||||||||||||||||||||||||||
|
Life
|
Accumulated
|
Net Book
|
Accumulated
|
Net Book
|
||||||||||||||||||||||||
| (in years) | Cost | Amortization | Value | Cost | Amortization | Value | ||||||||||||||||||||||
|
Land
|
— | $ | 118 | $ | — | $ | 118 | $ | 111 | $ | — | $ | 111 | |||||||||||||||
|
Facilities and equipment
|
1 - 27 | 12,424 | (5,460 | ) | 6,964 | 12,099 | (4,816 | ) | 7,283 | |||||||||||||||||||
|
Mine development
|
1 - 27 | 3,217 | (1,445 | ) | 1,772 | 2,696 | (1,181 | ) | 1,515 | |||||||||||||||||||
|
Mineral interests
|
1 - 27 | 3,463 | (667 | ) | 2,796 | 3,380 | (608 | ) | 2,772 | |||||||||||||||||||
|
Asset retirement cost
|
1 - 27 | 638 | (238 | ) | 400 | 462 | (210 | ) | 252 | |||||||||||||||||||
|
Construction-in-progress
|
— | 857 | — | 857 | 437 | — | 437 | |||||||||||||||||||||
| $ | 20,717 | $ | (7,810 | ) | $ | 12,907 | $ | 19,185 | $ | (6,815 | ) | $ | 12,370 | |||||||||||||||
|
Leased assets included above in facilities and equipment
|
2 - 25 | $ | 421 | $ | (289 | ) | $ | 132 | $ | 421 | $ | (275 | ) | $ | 146 | |||||||||||||
| At December 31, 2010 | At December 31, 2009 | |||||||||||||||||||||||||||
|
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 | $ | 1,235 | $ | (660 | ) | $ | 575 | $ | 1,207 | $ | (601 | ) | $ | 606 | |||||||||||||
|
Development stage
|
— | 149 | — | 149 | 155 | — | 155 | |||||||||||||||||||||
|
Exploration stage
|
1 - 27 | 2,079 | (7 | ) | 2,072 | 2,018 | (7 | ) | 2,011 | |||||||||||||||||||
| $ | 3,463 | $ | (667 | ) | $ | 2,796 | $ | 3,380 | $ | (608 | ) | $ | 2,772 | |||||||||||||||
Construction-in-progress
at December 31, 2010 of $857 included $266 at South America
related to Conga and infrastructure at Yanacocha, including a
water treatment plant, $252 at North America related to tailings
dam expansion and processing facility improvements in Nevada and
other infrastructure at Hope Bay and Nevada, $222 at Asia
Pacific related to tailings dam expansion at Boddington and
other infrastructure at Boddington, Tanami and Batu Hijau and
$84 at Africa related to the Akyem project and infrastructure at
Ahafo.
Construction-in-progress
at December 31, 2009 of $437 included $168 at Africa
related to the Akyem project, the development of Amoma and other
infrastructure at Ahafo, $103 at Asia Pacific related to
Boddington and infrastructure at Tanami, $85 at South America
related to project infrastructure, a water treatment plant and a
tailings pipeline and $65 at North America related to tailings
dam expansion at Twin Creeks and an underground truck shop and
equipment purchases at Carlin.
Write-down of property, plant and mine development totaled $6,
$7 and $137 for 2010, 2009 and 2008, respectively. The 2010
write-down primarily related to the disposal of assets in North
America and Asia Pacific. The 2009 write-down primarily related
to the disposal of assets in Asia Pacific and South America. The
2008 write-down primarily related to the impairment of mineral
interests at the Fort a la Corne JV in North America and
the disposal of assets in North America and Asia Pacific.
128
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 23 | DEBT |
| At December 31, 2010 | At December 31, 2009 | |||||||||||||||
| Current | Non-Current | Current | Non-Current | |||||||||||||
|
Sale-leaseback of refractory ore treatment plant
|
$ | 30 | $ | 134 | $ | 24 | $ | 164 | ||||||||
|
8
5
/
8
% debentures,
net of discount (due 2011)
|
217 | — | — | 218 | ||||||||||||
|
2012 convertible senior notes, net of discount
|
— | 488 | — | 463 | ||||||||||||
|
2014 convertible senior notes, net of discount
|
— | 489 | — | 468 | ||||||||||||
|
2017 convertible senior notes, net of discount
|
— | 434 | — | 417 | ||||||||||||
|
2019 senior notes, net of discount
|
— | 896 | — | 896 | ||||||||||||
|
2035 senior notes, net of discount
|
— | 598 | — | 597 | ||||||||||||
|
2039 senior notes, net of discount
|
— | 1,087 | — | 1,087 | ||||||||||||
|
PTNNT project financing facility
|
— | — | 87 | 133 | ||||||||||||
|
Yanacocha credit facility and senior notes
|
— | — | 22 | 140 | ||||||||||||
|
Ahafo project facility
|
10 | 55 | 10 | 65 | ||||||||||||
|
Other capital leases
|
2 | 1 | 14 | 4 | ||||||||||||
| $ | 259 | $ | 4,182 | $ | 157 | $ | 4,652 | |||||||||
Scheduled minimum debt repayments are $259 in 2011, $559 in
2012, $42 in 2013, $533 in 2014, $18 in 2015 and $3,030
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 $190
and $226 at December 31, 2010 and 2009, respectively.
Future minimum lease payments are $39 in 2011, $70 in 2012, $36
in 2013, $36 in 2014 and $9 in 2015. 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 17). Using prevailing
interest rates on similar instruments, the estimated fair value
of these senior notes was $228 and $242 at December 31,
2010, and 2009, 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.
129
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
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.
There was $153 and $452 outstanding under the letter of credit
sub-facility
at December 31, 2010 and 2009, respectively. At
December 31, 2010 and 2009, we had no borrowings
outstanding under the facility.
2012
Convertible Senior Notes
In February 2009, the Company issued $518 of uncollateralized
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 $46.18 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 is dilutive to the Company’s
earnings per share (Newmont’s share price exceeds $46.18)
the shares are 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 $668 and $580 at December 31, 2010 and
2009, respectively. 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 uncollateralized
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 $46.13 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 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 $46.13
was effectively increased to $60.17. When the conversion premium
and call spread transactions is dilutive to the Company’s
earnings per share (Newmont’s share price exceeds $46.13
and $60.17, respectively) the underlying shares are 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 the 2014 and 2017
senior notes was $697 and $627, respectively, at
December 31, 2010 and $584 and $517, respectively, at
December 31, 2009. The foregoing fair value estimates were
prepared with the
130
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
assistance of an independent third party and may or may not
reflect the actual trading value of this debt.
The Company’s Consolidated Balance Sheets report the
following related to the convertible senior notes:
| At December 31, 2010 | At December 31, 2009 | |||||||||||||||||||||||
| Convertible Senior Notes Due | Convertible Senior Notes Due | |||||||||||||||||||||||
| 2012 | 2014 | 2017 | 2012 | 2014 | 2017 | |||||||||||||||||||
|
Additional paid-in capital
|
$ | 46 | $ | 97 | $ | 123 | $ | 46 | $ | 97 | $ | 123 | ||||||||||||
|
Principal amount
|
$ | 518 | $ | 575 | $ | 575 | $ | 518 | $ | 575 | $ | 575 | ||||||||||||
|
Unamortized debt discount
|
(30 | ) | (86 | ) | (141 | ) | (55 | ) | (107 | ) | (158 | ) | ||||||||||||
|
Net carrying amount
|
$ | 488 | $ | 489 | $ | 434 | $ | 463 | $ | 468 | $ | 417 | ||||||||||||
For the years ended December 31, 2010 and 2009, the Company
recorded $32 and $30 of interest expense for the contractual
interest coupon and $63 and $56 of amortization of the debt
discount, respectively, related to the convertible senior notes.
The remaining unamortized debt discount is amortized over the
remaining two, four and seven year periods of the 2012, 2014 and
2017 convertible senior notes, respectively. At
December 31, 2010, the if-converted value of the 2012,
2014, and 2017 convertible senior notes exceeded the related
principle amounts by $117, $130, and $130, respectively.
2019 and 2039
Senior Notes
In September 2009, the Company completed a two part public
offering of $900 and $1,100 uncollateralized 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 $984 and $1,189,
respectively, at December 31, 2010 and $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.
2035 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 $624 and $566
at December 31, 2010 and 2009, 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 had a project financing facility with a syndicate of
banks. The scheduled repayments of this debt were semi-annual
installments of $43 through November 2010 and $22 from May 2011
through November 2013. On February 23, 2010, PTNNT repaid
the $220 remaining balance under the PTNNT project financing
facility.
131
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Yanacocha Credit
Facility and Senior Notes
During 2006, Yanacocha entered into an uncollateralized $100
bank financing with a syndicate of Peruvian commercial banks and
issued $100 of senior notes into the Peruvian capital markets.
The credit facility and senior notes principal and interest were
fully repaid in November 2010.
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 and mining 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.
At December 31, 2010 and 2009, the Company and its related
entities were in compliance with all debt covenants and
provisions related to potential defaults.
132
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 24 | OTHER LIABILITIES |
| At December 31, | ||||||||
| 2010 | 2009 | |||||||
|
Other current liabilities:
|
||||||||
|
Refinery metal payable
|
$ | 617 | $ | 671 | ||||
|
Accrued operating costs
|
217 | 131 | ||||||
|
Taxes other than income and mining
|
135 | 73 | ||||||
|
Royalties
|
90 | 58 | ||||||
|
Accrued capital expenditures
|
83 | 115 | ||||||
|
Interest
|
66 | 72 | ||||||
|
Reclamation and remediation liabilities
|
64 | 54 | ||||||
|
Deferred income tax
|
54 | 17 | ||||||
|
Boddington contingent consideration
|
32 | 16 | ||||||
|
Other
|
60 | 110 | ||||||
| $ | 1,418 | $ | 1,317 | |||||
|
Other long-term liabilities:
|
||||||||
|
Boddington contingent consideration
|
$ | 51 | $ | 69 | ||||
|
Power supply agreements
|
45 | — | ||||||
|
Income and mining taxes
|
36 | 38 | ||||||
|
Other
|
89 | 80 | ||||||
| $ | 221 | $ | 187 | |||||
| NOTE 25 | ACCUMULATED OTHER COMPREHENSIVE INCOME |
| At December 31, 2010 | ||||||||
| 2010 | 2009 | |||||||
|
Unrealized gain on marketable securities, net of $200 and $138
tax expense, respectively
|
$ | 902 | $ | 635 | ||||
|
Foreign currency translation adjustments
|
155 | 57 | ||||||
|
Pension liability adjustments, net of $95 and $86 tax benefit,
respectively
|
(176 | ) | (161 | ) | ||||
|
Other post-retirement benefit adjustments, net of $6 and $4 tax
expense, respectively
|
11 | 9 | ||||||
|
Changes in fair value of cash flow hedge instruments, net of tax
expense and noncontrolling interests of $97 and $38, respectively
|
216 | 86 | ||||||
| $ | 1,108 | $ | 626 | |||||
133
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 26 | RELATED PARTY TRANSACTIONS |
Newmont had transactions with AGR, as follows:
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Gold and silver sales
|
$ | 3 | $ | 10 | $ | 10 | ||||||
|
Refining fees paid
|
$ | — | $ | 3 | $ | 3 | ||||||
See Note 11 for a discussion of Newmont’s investment
in AGR.
| NOTE 27 | 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, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Decrease (increase) in operating assets:
|
||||||||||||
|
Trade and accounts receivable
|
$ | (153 | ) | $ | 42 | $ | 81 | |||||
|
Inventories, stockpiles and ore on leach pads
|
(501 | ) | (378 | ) | (343 | ) | ||||||
|
EGR refinery assets
|
116 | (508 | ) | 38 | ||||||||
|
Other assets
|
(87 | ) | (19 | ) | (208 | ) | ||||||
|
Increase (decrease) in operating liabilities:
|
||||||||||||
|
Accounts payable and other accrued liabilities
|
38 | 177 | (54 | ) | ||||||||
|
EGR refinery liabilities
|
(116 | ) | 508 | (38 | ) | |||||||
|
Reclamation liabilities
|
(51 | ) | (49 | ) | (103 | ) | ||||||
| $ | (754 | ) | $ | (227 | ) | $ | (627 | ) | ||||
| NOTE 28 | SUPPLEMENTAL CASH FLOW INFORMATION |
| Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
|
Income and mining taxes, net of refunds
|
$ | 1,185 | $ | 431 | $ | 816 | ||||||
|
Pension plan and other benefit contributions
|
$ | 163 | $ | 58 | $ | 76 | ||||||
|
Interest, net of amounts capitalized
|
$ | 228 | $ | 117 | $ | 96 | ||||||
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.
| NOTE 29 | 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 $26 in
2011, $23 in 2012, $18 in 2013, $8 in 2014, $8 in 2015 and $30
thereafter, totaling $113. Rent expense for 2010, 2009 and 2008
was $46, $48 and $36, respectively.
134
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 30 | CONDENSED 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.
| Years Ended December 31, 2010 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Condensed Consolidating
|
Mining
|
Newmont
|
Other
|
Corporation
|
||||||||||||||||
| Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Sales
|
$ | — | $ | 6,568 | $ | 2,972 | $ | — | $ | 9,540 | ||||||||||
|
Costs and expenses
|
||||||||||||||||||||
|
Costs applicable to
sales
(1)
|
— | 2,171 | 1,341 | (28 | ) | 3,484 | ||||||||||||||
|
Amortization
|
— | 601 | 345 | (1 | ) | 945 | ||||||||||||||
|
Reclamation and remediation
|
— | 48 | 17 | — | 65 | |||||||||||||||
|
Exploration
|
— | 131 | 87 | — | 218 | |||||||||||||||
|
Advanced projects, research and development
|
— | 110 | 107 | (1 | ) | 216 | ||||||||||||||
|
General and administrative
|
— | 144 | 4 | 30 | 178 | |||||||||||||||
|
Write-down of property, plant and mine development
|
— | 5 | 1 | — | 6 | |||||||||||||||
|
Other expense, net
|
— | 183 | 78 | — | 261 | |||||||||||||||
| — | 3,393 | 1,980 | — | 5,373 | ||||||||||||||||
|
Other income (expense)
|
||||||||||||||||||||
|
Other income, net
|
(4 | ) | 29 | 84 | — | 109 | ||||||||||||||
|
Interest income — intercompany
|
161 | 7 | 5 | (173 | ) | — | ||||||||||||||
|
Interest expense — intercompany
|
(11 | ) | — | (162 | ) | 173 | — | |||||||||||||
|
Interest expense, net
|
(246 | ) | (27 | ) | (6 | ) | — | (279 | ) | |||||||||||
| (100 | ) | 9 | (79 | ) | — | (170 | ) | |||||||||||||
|
Income before income and mining tax and other items
|
(100 | ) | 3,184 | 913 | — | 3,997 | ||||||||||||||
|
Income and mining tax expense
|
479 | (1,114 | ) | (221 | ) | — | (856 | ) | ||||||||||||
|
Equity income (loss) of affiliates
|
1,926 | 2 | 281 | (2,206 | ) | 3 | ||||||||||||||
|
Income from continuing operations
|
2,305 | 2,072 | 973 | (2,206 | ) | 3,144 | ||||||||||||||
|
Income (loss) from discontinued operations
|
(28 | ) | 2 | (30 | ) | 28 | (28 | ) | ||||||||||||
|
Net income
|
2,277 | 2,074 | 943 | (2,178 | ) | 3,116 | ||||||||||||||
|
Net income attributable to noncontrolling interests
|
— | (1,026 | ) | 34 | 153 | (839 | ) | |||||||||||||
|
Net income attributable to Newmont stockholders
|
$ | 2,277 | $ | 1,048 | $ | 977 | $ | (2,025 | ) | $ | 2,277 | |||||||||
| (1) | Excludes Amortization and Reclamation and remediation . |
135
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| Years Ended December 31, 2009 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Condensed Consolidating
|
Mining
|
Newmont
|
Other
|
Corporation
|
||||||||||||||||
| Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Sales
|
$ | — | $ | 5,911 | $ | 1,794 | $ | — | $ | 7,705 | ||||||||||
|
Costs and expenses
|
||||||||||||||||||||
|
Costs applicable to
sales
(1)
|
— | 2,128 | 903 | (23 | ) | 3,008 | ||||||||||||||
|
Amortization
|
— | 565 | 242 | (1 | ) | 806 | ||||||||||||||
|
Reclamation and remediation
|
— | 41 | 18 | — | 59 | |||||||||||||||
|
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 | 160 | 189 | — | 358 | |||||||||||||||
| 9 | 3,196 | 1,514 | — | 4,719 | ||||||||||||||||
|
Other income (expense)
|
||||||||||||||||||||
|
Other income, 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 before income and mining tax and other items
|
(4 | ) | 2,702 | 256 | — | 2,954 | ||||||||||||||
|
Income and mining tax expense
|
1 | (781 | ) | (49 | ) | — | (829 | ) | ||||||||||||
|
Equity income (loss) of affiliates
|
1,316 | 5 | 185 | (1,522 | ) | (16 | ) | |||||||||||||
|
Income from continuing operations
|
1,313 | 1,926 | 392 | (1,522 | ) | 2,109 | ||||||||||||||
|
Income (loss) from discontinued operations
|
(16 | ) | (16 | ) | — | 16 | (16 | ) | ||||||||||||
|
Net income
|
1,297 | 1,910 | 392 | (1,506 | ) | 2,093 | ||||||||||||||
|
Net income attributable to noncontrolling interests
|
— | (795 | ) | (77 | ) | 76 | (796 | ) | ||||||||||||
|
Net income attributable to Newmont stockholders
|
$ | 1,297 | $ | 1,115 | $ | 315 | $ | (1,430 | ) | $ | 1,297 | |||||||||
| (1) | Excludes Amortization and Reclamation and remediation . |
136
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| Years Ended December 31, 2008 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Condensed Consolidating
|
Mining
|
Newmont
|
Other
|
Corporation
|
||||||||||||||||
| Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Sales
|
$ | — | $ | 4,638 | $ | 1,486 | $ | — | $ | 6,124 | ||||||||||
|
Costs and expenses
|
||||||||||||||||||||
|
Costs applicable to
sales
(1)
|
— | 2,193 | 866 | (21 | ) | 3,038 | ||||||||||||||
|
Amortization
|
— | 549 | 190 | (1 | ) | 738 | ||||||||||||||
|
Reclamation and remediation
|
— | 85 | 57 | — | 142 | |||||||||||||||
|
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 | 176 | 62 | 1 | 240 | |||||||||||||||
| 1 | 3,325 | 1,492 | — | 4,818 | ||||||||||||||||
|
Other income (expense)
|
||||||||||||||||||||
|
Other income, 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 before income and mining tax and other items
|
155 | 1,393 | (254 | ) | — | 1,294 | ||||||||||||||
|
Income and mining tax expense
|
(55 | ) | (132 | ) | 45 | — | (142 | ) | ||||||||||||
|
Equity income (loss) of affiliates
|
718 | 4 | 102 | (829 | ) | (5 | ) | |||||||||||||
|
Income from continuing operations
|
818 | 1,265 | (107 | ) | (829 | ) | 1,147 | |||||||||||||
|
Income (loss) from discontinued operations
|
13 | (6 | ) | 3 | 3 | 13 | ||||||||||||||
|
Net income
|
831 | 1,259 | (104 | ) | (826 | ) | 1,160 | |||||||||||||
|
Net income attributable to noncontrolling interests
|
— | (347 | ) | 10 | 8 | (329 | ) | |||||||||||||
|
Net income attributable to Newmont stockholders
|
$ | 831 | $ | 912 | $ | (94 | ) | $ | (818 | ) | $ | 831 | ||||||||
| (1) | Excludes Amortization and Reclamation and remediation . |
137
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| For the Year Ended December 31, 2010 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Condensed Consolidating
|
Mining
|
Newmont
|
Other
|
Corporation
|
||||||||||||||||
| Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Operating activities:
|
||||||||||||||||||||
|
Net income
|
$ | 2,277 | $ | 2,074 | $ | 943 | $ | (2,178 | ) | $ | 3,116 | |||||||||
|
Adjustments
|
(600 | ) | 865 | (1,625 | ) | 2,178 | 818 | |||||||||||||
|
Net change in operating assets and liabilities
|
(57 | ) | (512 | ) | (185 | ) | — | (754 | ) | |||||||||||
|
Net cash provided from (used in) continuing operations
|
1,620 | 2,427 | (867 | ) | — | 3,180 | ||||||||||||||
|
Net cash used in discontinued operations
|
— | (13 | ) | — | — | (13 | ) | |||||||||||||
|
Net cash provided from (used in) operations
|
1,620 | 2,414 | (867 | ) | — | 3,167 | ||||||||||||||
|
Investing activities:
|
||||||||||||||||||||
|
Additions to property, plant and mine development
|
— | (721 | ) | (681 | ) | — | (1,402 | ) | ||||||||||||
|
Acquisitions, net
|
— | — | (4 | ) | — | (4 | ) | |||||||||||||
|
Proceeds from sale of marketable securities
|
— | — | 3 | — | 3 | |||||||||||||||
|
Purchases of marketable securities
|
— | (5 | ) | (23 | ) | — | (28 | ) | ||||||||||||
|
Proceeds from sale of other assets
|
— | 16 | 40 | — | 56 | |||||||||||||||
|
Other
|
— | — | (44 | ) | — | (44 | ) | |||||||||||||
|
Net cash used in investing activities
|
— | (710 | ) | (709 | ) | — | (1,419 | ) | ||||||||||||
|
Financing activities:
|
||||||||||||||||||||
|
Net repayments
|
— | (420 | ) | (10 | ) | — | (430 | ) | ||||||||||||
|
Net intercompany borrowings (repayments)
|
(1,442 | ) | (152 | ) | 1,730 | (136 | ) | — | ||||||||||||
|
Proceeds from stock issuance
|
60 | — | — | — | 60 | |||||||||||||||
|
Sale of subsidiary shares to noncontrolling interests
|
— | 229 | — | — | 229 | |||||||||||||||
|
Acquisition of subsidiary shares from noncontrolling interests
|
— | — | (110 | ) | — | (110 | ) | |||||||||||||
|
Dividends paid to noncontrolling interests
|
— | (598 | ) | — | 136 | (462 | ) | |||||||||||||
|
Dividends paid to common stockholders
|
(246 | ) | — | — | — | (246 | ) | |||||||||||||
|
Change in restricted cash and other
|
— | 46 | (2 | ) | — | 44 | ||||||||||||||
|
Net cash provided from (used in) financing activities
|
(1,628 | ) | (895 | ) | 1,608 | — | (915 | ) | ||||||||||||
|
Effect of exchange rate changes on cash
|
— | 1 | 7 | — | 8 | |||||||||||||||
|
Net change in cash and cash equivalents
|
(8 | ) | 810 | 39 | — | 841 | ||||||||||||||
|
Cash and cash equivalents at beginning of period
|
8 | 3,067 | 140 | — | 3,215 | |||||||||||||||
|
Cash and cash equivalents at end of period
|
$ | — | $ | 3,877 | $ | 179 | $ | — | $ | 4,056 | ||||||||||
138
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 | ) | |||||||||||
|
Proceeds from sale of marketable securities
|
— | — | 17 | — | 17 | |||||||||||||||
|
Purchases of marketable securities
|
— | — | (5 | ) | — | (5 | ) | |||||||||||||
|
Proceeds from sale of other assets
|
— | 15 | 3 | — | 18 | |||||||||||||||
|
Other
|
— | — | (35 | ) | — | (35 | ) | |||||||||||||
|
Net cash used in investing activities
|
(8 | ) | (466 | ) | (2,307 | ) | — | (2,781 | ) | |||||||||||
|
Financing activities:
|
||||||||||||||||||||
|
Net 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
|
— | (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 | ||||||||||
139
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 | ) | ||||||||||||
|
Acquisitions, net
|
— | (7 | ) | (318 | ) | — | (325 | ) | ||||||||||||
|
Proceeds from sale of marketable securities
|
— | — | 50 | — | 50 | |||||||||||||||
|
Purchases of marketable securities
|
— | — | (17 | ) | — | (17 | ) | |||||||||||||
|
Proceeds from sale of other assets
|
— | 17 | 35 | — | 52 | |||||||||||||||
|
Other
|
— | — | (36 | ) | — | (36 | ) | |||||||||||||
|
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 borrowings (repayments)
|
757 | (116 | ) | (46 | ) | — | 595 | |||||||||||||
|
Net intercompany borrowings (repayments)
|
(1,518 | ) | (287 | ) | 1,805 | — | — | |||||||||||||
|
Proceeds from stock issuance
|
29 | — | — | — | 29 | |||||||||||||||
|
Dividends paid to noncontrolling interests
|
— | (385 | ) | (4 | ) | — | (389 | ) | ||||||||||||
|
Dividends paid to common stockholders
|
(182 | ) | — | — | — | (182 | ) | |||||||||||||
|
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 | ||||||||||
140
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| At December 31, 2010 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Mining
|
Newmont
|
Other
|
Corporation
|
|||||||||||||||||
| Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||||
|
Assets
|
||||||||||||||||||||
|
Cash and cash equivalents
|
$ | — | $ | 3,877 | $ | 179 | $ | — | $ | 4,056 | ||||||||||
|
Trade receivables
|
— | 501 | 81 | — | 582 | |||||||||||||||
|
Accounts receivable
|
2,222 | 802 | 265 | (3,201 | ) | 88 | ||||||||||||||
|
Investments
|
— | 72 | 41 | — | 113 | |||||||||||||||
|
Inventories
|
— | 388 | 270 | — | 658 | |||||||||||||||
|
Stockpiles and ore on leach pads
|
— | 513 | 104 | — | 617 | |||||||||||||||
|
Deferred income tax assets
|
— | 170 | 7 | — | 177 | |||||||||||||||
|
Other current assets
|
— | 77 | 885 | — | 962 | |||||||||||||||
|
Current assets
|
2,222 | 6,400 | 1,832 | (3,201 | ) | 7,253 | ||||||||||||||
|
Property, plant and mine development, net
|
— | 5,364 | 7,562 | (19 | ) | 12,907 | ||||||||||||||
|
Investments
|
— | 25 | 1,543 | — | 1,568 | |||||||||||||||
|
Investments in subsidiaries
|
12,295 | 35 | 1,909 | (14,239 | ) | — | ||||||||||||||
|
Stockpiles and ore on leach pads
|
— | 1,347 | 410 | — | 1,757 | |||||||||||||||
|
Deferred income tax assets
|
638 | 690 | 109 | — | 1,437 | |||||||||||||||
|
Other long-term assets
|
2,675 | 496 | 584 | (3,014 | ) | 741 | ||||||||||||||
|
Total assets
|
$ | 17,830 | $ | 14,357 | $ | 13,949 | $ | (20,473 | ) | $ | 25,663 | |||||||||
|
Liabilities
|
||||||||||||||||||||
|
Debt
|
$ | — | $ | 249 | $ | 10 | $ | — | $ | 259 | ||||||||||
|
Accounts payable
|
355 | 1,269 | 1,996 | (3,193 | ) | 427 | ||||||||||||||
|
Employee-related benefits
|
— | 222 | 66 | — | 288 | |||||||||||||||
|
Income and mining taxes
|
19 | 261 | 75 | — | 355 | |||||||||||||||
|
Other current liabilities
|
56 | 373 | 2,959 | (1,970 | ) | 1,418 | ||||||||||||||
|
Current liabilities
|
430 | 2,374 | 5,106 | (5,163 | ) | 2,747 | ||||||||||||||
|
Debt
|
3,991 | 135 | 56 | — | 4,182 | |||||||||||||||
|
Reclamation and remediation liabilities
|
— | 676 | 308 | — | 984 | |||||||||||||||
|
Deferred income tax liabilities
|
— | 513 | 975 | — | 1,488 | |||||||||||||||
|
Employee-related benefits
|
5 | 244 | 76 | — | 325 | |||||||||||||||
|
Other long-term liabilities
|
375 | 56 | 2,824 | (3,034 | ) | 221 | ||||||||||||||
|
Total liabilities
|
4,801 | 3,998 | 9,345 | (8,197 | ) | 9,947 | ||||||||||||||
|
Equity
|
||||||||||||||||||||
|
Preferred stock
|
— | — | 61 | (61 | ) | — | ||||||||||||||
|
Common stock
|
778 | — | — | — | 778 | |||||||||||||||
|
Additional paid-in capital
|
7,963 | 2,722 | 3,894 | (6,300 | ) | 8,279 | ||||||||||||||
|
Accumulated other comprehensive income
|
1,108 | (75 | ) | 1,180 | (1,105 | ) | 1,108 | |||||||||||||
|
Retained earnings
|
3,180 | 4,850 | (1,109 | ) | (3,741 | ) | 3,180 | |||||||||||||
|
Newmont stockholders’ equity
|
13,029 | 7,497 | 4,026 | (11,207 | ) | 13,345 | ||||||||||||||
|
Noncontrolling interests
|
— | 2,862 | 578 | (1,069 | ) | 2,371 | ||||||||||||||
|
Total equity
|
13,029 | 10,359 | 4,604 | (12,276 | ) | 15,716 | ||||||||||||||
|
Total liabilities and equity
|
$ | 17,830 | $ | 14,357 | $ | 13,949 | $ | (20,473 | ) | $ | 25,663 | |||||||||
141
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| At December 31, 2009 | ||||||||||||||||||||
|
Newmont
|
||||||||||||||||||||
|
Newmont
|
Mining
|
|||||||||||||||||||
|
Mining
|
Newmont
|
Other
|
Corporation
|
|||||||||||||||||
| Condensed Consolidating Balance Sheet | 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 | ) | — | ||||||||||||||
|
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
|
||||||||||||||||||||
|
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 | 75 | 2,637 | (2,863 | ) | 187 | ||||||||||||||
|
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
|
626 | (125 | ) | 738 | (613 | ) | 626 | |||||||||||||
|
Retained earnings
|
1,149 | 3,801 | (2,080 | ) | (1,721 | ) | 1,149 | |||||||||||||
|
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 | |||||||||
142
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| NOTE 31 | 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 3. Except as noted in this paragraph, all of the
Company’s commitments and contingencies specifically
described in this Note 31 relate to the Corporate and Other
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 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, 2010 and
2009, $904 and $698, respectively, were accrued for reclamation
costs relating to currently producing mineral properties in
accordance with asset retirement obligation guidance. The
current portions of $46 and $36 at December 31, 2010 and
2009, 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, $144 and $161 were
accrued for such obligations at December 31, 2010 and 2009,
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 164%
greater or 4% lower than the amount accrued at December 31,
2010. The amounts accrued for these matters are reviewed
periodically based upon facts and circumstances available at the
time. Changes in estimates are recorded in
Reclamation and
remediation
in the period estimates are revised.
Details about certain of the more significant matters involved
are discussed below.
143
Table of Contents
NEWMONT MINING
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.
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
Corporation (“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 obligations
regarding certain mineral rights and property formerly owned by
Newmont Canada and now owned by St. Andrew.
144
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
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, which is
a royalty determined by multiplying 0.00013 by the quarterly
average gold price. On July 23, 2009, the Superior Court
issued a decision finding in favor of St. Andrews’
interpretation. On August 21, 2009, Newmont Canada appealed
the decision. If the Court of Appeals upholds the lower court
ruling, Newmont will be liable for the sliding scale royalty,
which would equal a 13% royalty at a quarterly average gold
price of $1,000, minus a 0.013% of net smelter returns. There is
no cap on the royalty at issue and it increases or decreases
with the gold price, based upon the multiplication of 0.00013 by
the quarterly average gold price. Newmont Canada intends to
continue to vigorously defend this matter but cannot reasonably
predict the outcome.
Newmont USA
Limited — 100% Newmont Owned
Grey 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 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 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 High Court. On January 27, 2010, the Indonesian
High Court upheld the December 2007 ruling in favor of PTNMR. On
May 17, 2010, WALHI filed an appeal of the January 27,
2010 Indonesian High Court
145
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
ruling seeking review from the Indonesian Supreme Court. The
appeal by WALHI is being reviewed by 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.
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
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 the Company expects to 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
the Company nor Yanacocha can reasonably estimate the ultimate
loss relating to such claims.
PT Newmont Nusa
Tenggara (“PTNNT”) — 31.5% Newmont Direct
Ownership
Under the Batu Hijau Contract of Work, beginning in 2006 and
continuing through 2010, a portion of PTNNT’s shares were
required to 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 at all
relevant times, in 2006, a 3% interest was required to be
offered for sale and, in each of 2007 through 2010, an
additional 7% interest was required to be offered (for an
aggregate 31% interest). The price at which such interests were
to 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.
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, and the offer for the final 7% interest was made
in March 2010. 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
146
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
nationals. After disagreement with the government over whether
the government’s first right to purchase had expired and
receipt of Notices of Default from the government claiming
breach and threatening termination of the Contract of Work, 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 was 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
was 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.
An international arbitration panel (the “Panel”) was
appointed to resolve these claims and other claims that had
arisen in relation to divestment and a hearing was held in
Jakarta in December 2008. On March 31, 2009, the Panel
issued its final award and decision on the matter. In its
decision, the 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 was not entitled to
immediately terminate the Contract of Work and rejected the
Indonesian government’s claim for damages. The Panel
granted PTNNT 180 days from the date of notification of the
final award to effect transfer of the 2006 3% interest and the
2007 7% interest in PTNNT to the local governments or their
respective nominees. The Panel also applied a
180-day
cure
period to the 2008 7% interest, requiring that PTNNT effect the
offer of the 2008 7% interest to the Indonesian government or
its nominee within such
180-day
period, and ensure the transfer of such shares if, after
agreement on the transfer price, the Indonesian government
invoked its right of first refusal under the Contract of Work.
On July 14, 2009, the Company reached agreement with the
Indonesian government on the price of the 2008 7% interest and
the 2009 7% interest. PTNNT effected the reoffer of 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 PT Multi Daerah Bersaing
(“PTMDB”), the nominee of the local governments, and
the 2009 shares were transferred to PTMDB in February 2010,
resulting in PTMDB owning a 24% interest in PTNNT.
On December 17, 2010, the Ministry of Energy &
Mineral Resources, acting on behalf of the Indonesian
government, accepted the offer to acquire the final 7% interest
in PTNNT. The government entity that will purchase the shares
has not yet been designated, but the purchase and sale of this
final 7% stake offered to complete the divestiture process is
anticipated to close in the first half of 2011. Further disputes
may arise in regard to the divestiture of the 2010 shares.
As part of the negotiation of the sale agreements with PTMDB,
the parties executed an operating agreement (the “Operating
Agreement”) under which each recognizes the rights of the
Company and Sumitomo to apply their operating standards to the
management of PTNNT’s operations, including standards for
safety, environmental stewardship and community responsibility.
The Operating Agreement became effective upon the completion of
the sale of the 2009 shares in February 2010 and will
continue for so long as the Company and Sumitomo own more shares
of PTNNT than PTMDB. If the Operating Agreement terminates, then
the Company may lose control over the applicable operating
standards for 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 the Company and Sumitomo.
In the event of any future disputes under the Contract of Work
or Operating Agreement, there can be no assurance that the
Company would prevail in any such dispute and any termination of
such contracts could result in substantial diminution in the
value of the Company’s interests in PTNNT.
147
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NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Additionally, in February 2010, PTNNT was notified by the tax
authorities of the Indonesian government, that PTNNT may be
obligated to pay value added taxes on certain goods imported
after the year 2000. PTNNT believes that pursuant to the terms
of its Contract of Work, it is only required to pay value added
taxes on these types of goods imported after February 28,
2010. The Company and PTNNT are working cooperatively with the
applicable government authorities to resolve this matter.
Effective as of January 1, 2011, the local government in
the region where the Batu Hijau mine is located purported to
commence the enforcement of regulations that purport to require
PTNNT to pay additional taxes based on revenue and the value of
PTNNT’s contracts. In addition, the regulations purport to
require PTNNT to obtain certain export-related documents from
the regional government for purposes of shipping copper
concentrate. PTNNT is required to and has obtained all export
related-documents in compliance with the laws and regulations of
the central government. PTNNT believes that the new regional
regulations are not enforceable as they expressly contradict
higher level Indonesian laws that set out the permissible
taxes that can be imposed by a regional government and all
effective export requirements. PTNNT’s position is
supported by Indonesia’s Ministry of Energy &
Mineral Resources, Ministry of Trade, and the provincial
government. To date, PTNNT has not been forced to comply with
these new contradictory regional regulations. On
February 4, 2011, PTNNT filed legal proceedings seeking to
have the regulations declared null and void because they
conflict with the laws of Indonesia. Further disputes with the
local government could arise in relation to these regulations.
PTNNT intends to vigorously defend its position in this dispute.
PT Pukuafu Indah
Litigation
In October 2009, PTPI filed a lawsuit in the Central Jakarta
District Court against PTNNT and the Indonesian government
seeking to cancel the March 2009 arbitration award pertaining to
the manner in which divestiture of shares in PTNNT should
proceed (refer to the discussion of PTNNT above for the
arbitration results). On October 11, 2010, the District
Court ruled in favor of PTNNT and the Indonesian government
finding, among other things, that PTPI lacks standing to contest
the validity of the arbitration award. PTPI has filed a notice
of appeal of the court’s ruling.
Subsequent to its initial claim, PTPI filed numerous additional
lawsuits, two of which have been withdrawn, against Newmont
Indonesia Limited (“NIL”) and Nusa Tenggara Mining
Corporation (“NTMC”), a subsidiary of Sumitomo, in the
South Jakarta District Court. Fundamentally, the cases all
relate to PTPI’s contention that it owns, or has rights to
own, the shares in PTNNT that NIL and NTMC have or will divest
to fulfill the requirements of the PTNNT Contract of Work and
the March 2009 arbitration award. PTPI also makes various other
allegations, including alleged rights in or to the
Company’s or Sumitomo’s non-divestiture shares in
PTNNT, and PTPI asserts claims for significant damages allegedly
arising from NIL’s and NTMC’s unlawful acts in
transferring the divestiture shares to a third party. On
November 30, 2010, the South Jakarta District Court
rendered a decision in favor of PTPI in one of the cases which
included an order that NIL/NTMC transfer 31% of PTNNT shares to
PTPI and pay PTPI $26 in damages and certain monetary penalties.
The order is not final and binding until the appeal process is
completed. NIL and NTMC appealed the decision. In January 2010,
PTPI also filed a lawsuit against PTNNT’s President
Director, Mr. Martiono Hadianto, alleging wrongful acts
associated with the arbitration, including failure to properly
share certain information. The South Jakarta District Court
issued a decision partially in favor of PTPI against the PTNNT
President Director, requiring the production of arbitration
documents. The PTNNT President Director has appealed the
decision which is non binding until the appeal process is
completed. Despite the rulings, Newmont, Sumitomo and
PTNNT’s management believe that all of PTPI’s claims
in these cases are without merit and constitute a material
breach of a written release agreement executed by PTPI in 2009,
in which it and its shareholders committed to cease prosecution
of all then-pending lawsuits and
148
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
not to initiate new proceedings, in conjunction with
Newmont’s provision of financing to PTPI in late 2009.
In August 2010, NIL and NVL USA Limited (“NVL”)
commenced an arbitration against PTPI in the Singapore
International Arbitration Centre, as provided in relevant
agreements, seeking declarations that PTPI has violated the
release agreement by failing to dismiss its Indonesian lawsuits,
that PTPI is in breach of the November 2009 loan facility and
related agreements, and that NIL and NVL are entitled to damages
arising from PTPI’s and its shareholders’ conduct.
On October 1, 2010, NIL and NVL requested, based upon the
release agreement, that the arbitral tribunal issue an interim
order requiring PTPI and its shareholders to discontinue the
various Indonesian court proceedings and refrain from bringing
additional lawsuits. On October 15, 2010, the tribunal
issued an order granting NIL and NVL’s request. The order
of the tribunal restrains PTPI and its agents from
“proceeding with or continuing with or assisting or
participating in the prosecution of the Indonesian [s]uits”
and from commencing additional proceedings relating to the same
subject matter as the Indonesian lawsuits. NIL and NVL are in
the process of enforcing the interim award in Indonesian courts
but it is not known the extent to which the Indonesian courts
will enforce the order or whether PTPI and its shareholders
will, in any event, abide by the order.
The Company intends to continue vigorously defending the PTPI
lawsuits and pursuing its claims against PTPI in arbitration.
Other Commitments
and Contingencies
Tax contingencies are provided for in accordance with ASC income
tax guidance (see Note 10).
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 $28 in 2011
through 2015 and $251 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, 2010 and
December 31, 2009, there were $1,191 and $1,073,
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.
149
Table of Contents
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. However,
the Company, 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 32 | UNAUDITED SUPPLEMENTARY DATA |
Quarterly
Data
The following is a summary of selected quarterly financial
information (unaudited):
| 2010 | ||||||||||||||||
| Three Months Ended | ||||||||||||||||
| March 31 | June 30 | September 30 | December 31 | |||||||||||||
|
Sales
|
$ | 2,242 | $ | 2,153 | $ | 2,597 | $ | 2,548 | ||||||||
|
Gross
profit
(1)
|
$ | 1,135 | $ | 1,062 | $ | 1,447 | $ | 1,402 | ||||||||
|
Income from continuing
operations
(2)
|
$ | 546 | $ | 382 | $ | 537 | $ | 840 | ||||||||
|
Income (loss) from discontinued
operations
(2)
|
— | — | — | (28 | ) | |||||||||||
|
Net
income
(2)
|
$ | 546 | $ | 382 | $ | 537 | $ | 812 | ||||||||
|
Income per common share
|
||||||||||||||||
|
Basic:
|
||||||||||||||||
|
Continuing operations
|
$ | 1.11 | $ | 0.78 | $ | 1.09 | $ | 1.71 | ||||||||
|
Discontinued operations
|
— | — | — | (0.06 | ) | |||||||||||
| $ | 1.11 | $ | 0.78 | $ | 1.09 | $ | 1.65 | |||||||||
|
Diluted:
|
||||||||||||||||
|
Continuing operations
|
$ | 1.11 | $ | 0.77 | $ | 1.07 | $ | 1.67 | ||||||||
|
Discontinued operations
|
— | — | — | (0.06 | ) | |||||||||||
| $ | 1.11 | $ | 0.77 | $ | 1.07 | $ | 1.61 | |||||||||
|
Weighted average common shares (millions)
|
||||||||||||||||
|
Basic
|
491 | 492 | 493 | 493 | ||||||||||||
|
Diluted
|
493 | 499 | 502 | 504 | ||||||||||||
|
Cash dividends declared per common share
|
$ | 0.10 | $ | 0.10 | $ | 0.15 | $ | 0.15 | ||||||||
|
Closing price of common stock
|
$ | 50.93 | $ | 61.74 | $ | 62.81 | $ | 61.43 | ||||||||
150
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| 2009 | ||||||||||||||||
| Three Months Ended | ||||||||||||||||
| March 31 | June 30 | September 30 | December 31 | |||||||||||||
|
Sales
|
$ | 1,536 | $ | 1,602 | $ | 2,049 | $ | 2,518 | ||||||||
|
Gross
profit
(1)
|
$ | 606 | $ | 726 | $ | 1,083 | $ | 1,417 | ||||||||
|
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 per common share
|
||||||||||||||||
|
Basic:
|
||||||||||||||||
|
Continuing operations
|
$ | 0.40 | $ | 0.35 | $ | 0.79 | $ | 1.14 | ||||||||
|
Discontinued operations
|
— | (0.02 | ) | — | — | |||||||||||
| $ | 0.40 | $ | 0.33 | $ | 0.79 | $ | 1.14 | |||||||||
|
Diluted:
|
||||||||||||||||
|
Continuing operations
|
$ | 0.40 | $ | 0.35 | $ | 0.79 | $ | 1.13 | ||||||||
|
Discontinued operations
|
— | (0.02 | ) | — | — | |||||||||||
| $ | 0.40 | $ | 0.33 | $ | 0.79 | $ | 1.13 | |||||||||
|
Weighted average common shares (millions)
|
||||||||||||||||
|
Basic
|
472 | 490 | 490 | 491 | ||||||||||||
|
Diluted
|
473 | 491 | 491 | 493 | ||||||||||||
|
Cash 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 | ||||||||
| (1) | Sales less Costs applicable to sales, Amortization and Reclamation and remediation . | |
| (2) | Attributable to Newmont stockholders. |
Significant after-tax items were as follows:
Fourth quarter 2010:
(i) a $264 ($0.54
per share, basic) income tax benefit from internal restructuring;
Third quarter 2010:
none;
Second quarter 2010:
(i) a $7 ($0.01 per
share, basic) net gain on asset sales;
First quarter 2010:
(i) a $127 ($0.26 per
share, basic) income tax benefit from internal restructuring;
(ii) a $25 ($0.05 per share, basic) net gain on asset sales
and (iii) a $13 ($0.03 per share, basic) PTNNT community
contribution;
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;
151
Table of Contents
NEWMONT MINING
CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
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.
| NOTE 33 | SUBSEQUENT EVENTS |
On February 3, 2011, Newmont and Fronteer Gold Inc.
(“Fronteer”) announced that they had entered into an
agreement under which Newmont will acquire all of the
outstanding common shares of Fronteer by way of a Plan of
Arrangement (“Arrangement”). Fronteer owns, among
other assets, the exploration stage Long Canyon project, which
is located approximately one hundred miles from the
Company’s existing infrastructure in Nevada and provides
the potential for significant development and operating
synergies. Under the Arrangement, shareholders of Fronteer will
receive C$14.00 in cash and one common share in Pilot Gold,
which will retain certain exploration assets of Fronteer, for
each common share of Fronteer. The transaction is expected to
close in the second quarter of 2011 for approximately C$2,300.
Provided for in the Arrangement is a break fee of C$85 if the
transaction is not completed in certain specified circumstances.
152
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.
| ITEM 9B. | OTHER INFORMATION |
Mine Safety
Disclosure
At Newmont, safety is a core value and we strive for superior
performance. Our health and safety management system, which
includes detailed standards and procedures for safe production,
addresses topics such as employee training, risk management,
workplace inspection, emergency response, accident investigation
and program auditing. In addition to strong leadership and
involvement from all levels of the organization, these programs
and procedures form the cornerstone of safety at Newmont,
ensuring that employees are provided a superior safe and healthy
environment and are intended as a means to reduce workplace
accidents, incidents and losses, comply with all mining-related
regulations and provide support for both regulators and the
industry to improve mine safety.
In addition, we have an established “Rapid Response”
process to mitigate and prevent the escalation of adverse
consequences in the event that existing risk management controls
fail, particularly in the event of an incident that may have the
potential to seriously impact the safety of employees, the
community or the environment. This process provides appropriate
support to an affected site to complement their technical
response to an incident, minimizes the impact by considering the
environmental, strategic, legal, financial and public image
aspects of the incident, ensures communications are being
carried out in accordance with legal and ethical requirements
and identifies actions that need to be taken on a broader scale
than can be predicted by those involved in overcoming the
immediate hazards.
The operation of our U.S. based mines is subject to
regulation by the Federal Mine Safety and Health Administration
(“MSHA”) under the Federal Mine Safety and Health Act
of 1977 (the “Mine Act”). MSHA inspects our mines on a
regular basis and issues various citations and orders when it
believes a violation has occurred under the Mine Act. Following
passage of The Mine Improvement and New Emergency Response Act
of 2006, MSHA significantly increased the numbers of citations
153
Table of Contents
and orders charged against mining operations. The dollar
penalties assessed for citations issued has also increased in
recent years.
Newmont is required to report certain mine safety violations in
this Annual Report on
Form 10-K
pursuant to Section 1503(a) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act and that required information
is included in exhibit 99.1 and is incorporated by
reference into this Annual Report.
| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
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
2011 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 2011 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 2011 Annual Meeting of Stockholders and
incorporated herein by reference.
Equity
Compensation Plan Information
The following table sets forth at December 31, 2010
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,
|
Oustanding 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)
|
6,164,816 | 45.47 | 10,516,994 (3 | ) | ||||||||
|
Equity compensation plans not approved by security holders
|
30,488 (4 | ) | 24.57 | — | ||||||||
|
TOTAL
|
6,195,304 | 45.35 | 10,516,994 | |||||||||
| (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 |
154
Table of Contents
| 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, AND DIRECTOR INDEPENDENCE |
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 2011 Annual Meeting of Stockholders and
incorporated herein by reference.
| ITEM 14. | PRINCIPAL ACCOUNTING 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 2011 Annual Meeting of Stockholders and
incorporated herein by reference.
155
Table of Contents
| ITEM 15. | EXHIBITS, 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 23,
2011, are included as part of Item 8, Financial Statements
and Supplementary Data, commencing on page 68 above.
| Page | ||||
| 78 | ||||
| 79 | ||||
| 80 | ||||
| 81 | ||||
| 82 | ||||
| 83 | ||||
| 84 | ||||
| (b) | Exhibits |
Reference is made to the Exhibit Index beginning on
page E-1
hereof.
156
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 24, 2011
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 24, 2011.
| 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
|
|||
| John B. Prescott* |
Director
|
|||
| Donald C. Roth* |
Director
|
|||
| Simon R. Thompson* |
Director
|
|||
| *By: |
/s/
Jeffrey
K. Reeser
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
|
— | By-laws of the Registrant as amended and restated effective December 8, 2010. Incorporated by reference to Exhibit 3.1 to Registrant’s Form 8-K filed with the Securities and Exchange Commission on December 10, 2010. | ||
|
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. | ||
|
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. |
E-1
Table of Contents
|
Exhibit
|
||||
| Number | Description | |||
|
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. | ||
|
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 10.2 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. |
E-2
Table of Contents
|
Exhibit
|
||||
| Number | Description | |||
|
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 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. | ||
|
10.9
|
— | 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. | ||
|
10.10
|
— | 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 10.13 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008. | ||
|
10.11
|
— | 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 10.14 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008. | ||
|
10.12
|
— | 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. | ||
|
10.13
|
— | Annual Incentive Compensation Program of Registrant, as amended and restated effective January 1, 2010. Incorporated by reference to Exhibit 10.3 to Registrant’s Form 10-Q for the period June 30, 2010, and filed with the Securities and Exchange Commission on July 28, 2010. | ||
|
10.14
|
— | Employee Performance Incentive Compensation Program of Registrant, effective and restated January 1, 2010. Incorporated by reference to Exhibit 10.4 to Registrant’s Form 10-Q for the period June 30, 2010, and filed with the Securities and Exchange Commission on July 28, 2010. | ||
|
10.15
|
— | Senior Executive Compensation Program effective January 1, 2010. Incorporated herein by reference to Exhibit 10.19 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009. | ||
|
10.16
|
— | 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. | ||
|
10.17
|
— | 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 10.20 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008. |
E-3
Table of Contents
|
Exhibit
|
||||
| Number | Description | |||
|
10.18
|
— | 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. | ||
|
10.19
|
— | Letter Agreement dated May 3, 2010 between Registrant and Robert J. Miller. Incorporated herein by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010. | ||
|
10.20
|
— | Transition Agreement dated May 5, 2010 between Newmont International Services Limited and Alan Blank. Incorporation by reference to Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010. | ||
|
10.21
|
— | 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. | ||
|
10.22
|
— | 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. | ||
|
10.23
|
— | 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. | ||
|
10.24
|
— | 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. | ||
|
10.25
|
— | 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. | ||
|
10.26
|
— | 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. | ||
|
10.27
|
— | 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. | ||
|
10.28
|
— | 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. |
E-4
Table of Contents
|
Exhibit
|
||||
| Number | Description | |||
|
10.29
|
— | 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. | ||
|
10.30
|
— | 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. | ||
|
10.31
|
— | 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. | ||
|
10.32
|
— | 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. | ||
|
10.33
|
— | 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. | ||
|
10.34
|
— | 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. | ||
|
10.35
|
— | 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. | ||
|
10.36
|
— | 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. | ||
|
10.37
|
— | 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. | ||
|
10.38
|
— | 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. | ||
|
10.39
|
— | 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. |
E-5
Table of Contents
|
Exhibit
|
||||
| Number | Description | |||
|
10.40
|
— | 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. | ||
|
10.41
|
— | 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. | ||
|
10.42
|
— | 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. | ||
|
10.43
|
— | 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. | ||
|
10.44
|
— | 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. | ||
|
10.45
|
— | 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. | ||
|
10.46
|
— | 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. | ||
|
10.47
|
— | 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. | ||
|
10.48
|
— | 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. | ||
|
10.49
|
— | 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. | ||
|
10.50
|
— | 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. | ||
|
10.51
|
— | 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. |
E-6
Table of Contents
|
Exhibit
|
||||
| Number | Description | |||
|
10.52
|
— | 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. | ||
|
10.53
|
— | 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. | ||
|
10.54
|
— | 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. | ||
|
10.55
|
— | 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. | ||
|
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. | ||
|
99.1
|
— | Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, filed herewith. | ||
|
101
|
— | The following materials are furnished herewith: (i) XBRL Instance, (ii) XBRL Taxonomy Extension Schema, (iii) XBRL Taxonomy Extension Calculation, (iv) XBRL Taxonomy Extension Labels, (v) XBRL Taxonomy Extension Presentation, and (vi) XBRL Taxonomy Extension Definition. In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Exchange Act of 1934, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as 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. |
E-7
TABLE OF CONTENTS
Part IItem 1. Business (dollars in Millions Except Per Share, Per Ounce and Per Pound Amounts)Item 1A. Risk Factors (dollars in Millions Except Per Share, Per Ounce and Per Pound Amounts)Item 2. Properties (dollars in Millions Except Per Share, Per Ounce and Per Pound Amounts)Item 3. Legal ProceedingsItem 4A. Executive Officers Of The RegistrantPart IIItem 5. Market For Registrant S Common Equity, Related Stockholder Matters and Issuer Purchase Of Equity SecuritiesItem 6. Selected Financial Data (dollars in Millions, Except Per Share)Item 8. Financial Statements and Supplementary DataNote 1 The CompanyNote 2 Summary Of Significant Accounting PoliciesNote 3 Segment InformationNote 4 Reclamation and RemediationNote 5 Advanced Projects, Research and DevelopmentNote 6 Other Expense, NetNote 7 Other Income, NetNote 8 Employee Related BenefitsNote 9 Stock Based CompensationNote 10 Income and Mining TaxesNote 11 Equity Income (loss) Of AffiliatesNote 12 Discontinued OperationsNote 13 Net Income Attributable To Noncontrolling InterestsNote 14 Newmont Equity and Income Per ShareNote 15 AcquisitionsNote 16 Fair Value AccountingNote 17 Derivative InstrumentsNote 18 InvestmentsNote 19 InventoriesNote 20 Stockpiles and Ore on Leach PadsNote 21 Other AssetsNote 22 Property, Plant and Mine DevelopmentNote 23 DebtNote 24 Other LiabilitiesNote 25 Accumulated Other Comprehensive IncomeNote 26 Related Party TransactionsNote 27 Net Change in Operating Assets and LiabilitiesNote 28 Supplemental Cash Flow InformationNote 29 Operating Lease CommitmentsNote 30 Condensed Consolidating Financial StatementsNote 31 Commitments and ContingenciesNote 32 Unaudited Supplementary DataNote 33 Subsequent EventsItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPart IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accounting Fees and ServicesPart IVItem 15. Exhibits, Financial Statement Schedules