Newmont Announces Net Income from Continuing Operations of $1.9 Billion or $3.80 per Share in 2012

Annual Revenue of $9.9 Billion and Increased Quarterly Dividend to $0.425 per share

DENVER, Feb. 21, 2013 /CNW/ - Newmont Mining Corporation (NYSE: NEM) ("Newmont" or the "Company") reported net income from continuing operations of $1.9 billion or $3.80 per basic share ($3.78 per share on a fully diluted basis) in 2012, compared with $0.5 billion, or $1.02 per share in 2011. Adjusted net income[1] was $1.9 billion or $3.71 per share in 2012, compared with $2.2 billion, or $4.31 per share a year ago.

Financial Highlights

2012 Financial Results:

  • Annual revenue of $9.9 billion;
  • Record regular dividends paid to shareholders of $695 million, or $1.40 per share, representing a payout ratio of 38% of adjusted net income;
  • Gold operating margin of $985 per ounce;
  • Operating cash flow of $2.4 billion;
  • Attributable gold and copper production of 5.0 million ounces and 143 million pounds, respectively;
  • Gold and copper consolidated costs applicable to sales ("CAS")[2] of $677 per ounce and $2.34 per pound, respectively;
  • All-in sustaining cost[3] of $1,149 per ounce; and
  • Average realized gold and copper price of $1,662 per ounce and $3.43 per pound, respectively.

Q4 2012 Financial Results:

  • Approved Q1 2013 dividend payable of $0.425 per share;
  • Attributable gold and copper production of 1.3 million ounces and 35 million pounds, respectively;
  • Gold and copper CAS of $720 per ounce and $2.61 per pound, respectively;
  • All-in sustaining cost of $1,192 per ounce; and
  • Average realized gold and copper price of $1,700 per ounce and $3.22 per pound, respectively.

"We were pleased to return the highest dividends in the gold industry on a per share basis in 2012," said Gary Goldberg, President and Chief Operating Officer. "We will maintain this competitive advantage by focusing on reducing our total cost of production and progressing only the most promising opportunities in our portfolio. These include our Akyem project in Ghana, which will begin production later this year, and advancing the Phase 6 stripping campaign to deliver the next tranche of production from Batu Hijau," added Goldberg.

Management Update

As previously announced, Gary Goldberg will become President and Chief Executive Officer (CEO) and join Newmont's Board of Directors on 1 March 2013. He succeeds Richard O'Brien who will step down as CEO and retire from the Board at that time. Russell Ball, Executive Vice President and Chief Financial Officer (CFO), has also decided to step down and will leave Newmont later this year. He plans to continue in his current capacity to ensure a smooth transition as the company seeks its new CFO.

Other management changes include appointing new leaders and building a team whose skills and experience align with Mr. Goldberg's immediate priorities for Newmont – to take a more disciplined approach to capital allocation and cost control and to restore industry leading social and environmental practices.

These new leaders include: Dr. Elaine Dorward-King, a noted sustainable development expert with 25 years of experience in the mining sector who joins Newmont on 18 March 2013 as Executive Vice President, Sustainability & External Relations; Scott Lawson, Senior Vice President Technical Services, with 27 years of experience in international operations management and technical innovation for the mining sector; and Susan Keefe, Vice President, Strategic Relations, with 25 years of experience in communications and reputation management for the mining sector.

Complementing these new appointments are existing leaders Randy Engel, Executive Vice President, Strategic Development; Bill MacGowan, Executive Vice President, Human Resources and Communications; and Stephen Gottesfeld, Executive Vice President, General Counsel and Corporate Secretary.

"I am excited about working with Newmont leaders to raise our game and deliver greater value to shareholders. I also want to take this opportunity to express our thanks to Richard and Russell for their many contributions to Newmont over their years of service," said Gary Goldberg, President and Chief Operating Officer.

2012 Operating Results and 2013 Outlook

In 2012, the Company reported attributable gold and copper production of 5.0 million ounces and 143 million pounds, respectively, at CAS of $677 per ounce, and $2.34 per pound, respectively, on a co-product basis. Attributable 2012 gold production decreased 4% from 2011 levels due to lower production from Asia Pacific as a result of continued Phase 6 waste mining at Batu Hijau, lower grade and ore availability at Tanami, and mine sequencing at Waihi; and lower production from Africa due to lower mill throughput and grade; partially offset by higher production from South America due to higher mill grade and recovery partially offset by lower leach placement; and higher production from North America due to higher throughput at Mill 6, Juniper Mill, and Twin Creeks Autoclave and the startup of the Emigrant mine.

CAS per gold ounce increased 15% in 2012 compared to 2011 due to lower production from Batu Hijau, Tanami, and Waihi, higher royalty and waste mining costs, partially offset by lower co-product allocation of costs to gold.

Attributable copper pounds produced decreased 27% due to continued Phase 6 waste mining at Batu Hijau, partially offset by higher throughput at Boddington.

CAS per copper pound increased 86% due to lower production from Batu Hijau, higher waste mining at Batu Hijau, higher mill maintenance costs at Boddington, and higher co-product allocation of costs to copper.

2013 attributable gold production is expected to be approximately 4.8 million to 5.1 million ounces, with attributable copper production of 150 to 170 million pounds. The outlook reflects a continuation of lower expected production at Batu Hijau as it continues to process lower grade stockpiled ore during Phase 6 stripping and lower production at Yanacocha, partially offset by new production at Akyem expected in late 2013. CAS for gold is expected to be between $675 and $750 per ounce due to lower production at Batu Hijau and Yanacocha combined with higher expected costs for energy, labor and contracted services. All-in sustaining cost (sum of CAS, copper by-product credits, G&A, exploration expense, advanced projects and R&D, other expense, and sustaining capital) is expected to be between $1,100 and $1,200 per ounce. CAS for copper is expected to be between $2.25 and $2.50 per pound due to lower production at Batu Hijau.

2012 Regional Operating Results and 2013 Outlook

North America

Nevada - Attributable gold production was 478,000 and 1.7 million ounces in the fourth quarter and 2012, respectively. CAS was $580 and $638 per ounce, for the fourth quarter and 2012, respectively.

Fourth quarter attributable gold production decreased 8% from the prior year quarter due to lower tons and grades from Leeville. CAS per ounce increased 12% from the prior year quarter due to lower volumes.

2012 attributable gold ounces produced increased slightly due to higher throughput at Mill 6, Juniper Mill, and the Twin Creeks Autoclave as well as new production from Emigrant, partially offset by lower grade at Phoenix and lower throughput and grade at Midas. CAS per ounce increased 6% due to higher commodity and contractor costs and higher royalties.

La Herradura - Attributable gold production was 48,000 and 212,000 ounces in the fourth quarter and 2012, respectively. CAS was $759 and $621 per ounce in the fourth quarter and 2012, respectively.

Fourth quarter attributable gold production decreased 14% from the prior year quarter due to the timing of leach recoveries, a refinery adjustment, and lower grade ore. CAS per ounce increased 25% from the prior year quarter due to higher waste tons mined and lower by-product credits.

2012 attributable gold production remained essentially unchanged due to new production at Noche Buena; offset by lower leach recoveries. CAS per ounce increased 18% due to higher waste tons mined, higher commodity prices and lower by-product credits.

2013 attributable gold production in North America is expected to be approximately 2.0 to 2.1 million ounces at CAS of approximately $600 to $650 per ounce.

South America

Yanacocha - Attributable gold production was 121,000 and 691,000 ounces in the fourth quarter and 2012, respectively. CAS was $617 and $505 per ounce in the fourth quarter and 2012, respectively.

Fourth quarter attributable gold production decreased 30% from the prior year quarter due to lower mill grade and lower leach placement earlier in the year. Costs applicable to sales per ounce increased 21% from the prior year quarter due to the lower production.

2012 attributable gold ounces produced increased 4% due to higher mill grade and recovery, partially offset by lower leach placement at Yanacocha, Carachugo and La Quinua. Leach tons placed decreased 23% from 43 million tons to 33 million tons. CAS per ounce decreased 10% due to higher production and lower mining costs.

La Zanja - Attributable gold production was 13,000 and 53,000 ounces in the fourth quarter and 2012, respectively. 2012 attributable gold ounces produced decreased 17% from the prior year due to a full year of production from our non-consolidated interest in La Zanja.

2013 attributable gold production in South America is expected to be approximately 550,000-600,000 ounces attributable to Newmont due to a reduction in the mining rate in 2013 and 2014 to maintain a more stable operations workforce and lower grade. CAS is expected to be approximately $600 to $650 per ounce, primarily due to lower production.

Asia Pacific

Boddington - Attributable gold production was 216,000 and 724,000 ounces in the fourth quarter and 2012, respectively. Attributable copper production was 19 million pounds and 67 million pounds in the fourth quarter and 2012, respectively. CAS was $856 and $877 per ounce and $2.23 and $2.29 per pound in the fourth quarter and 2012, respectively.

Fourth quarter attributable gold and copper production increased 7% and decreased 10%, respectively, from the prior year quarter due to higher gold grade and with lower copper recovery. CAS increased 14% per ounce and 21% per pound, respectively, due to a higher strip ratio, higher mill maintenance costs, and the impact of the Australian carbon tax, which took effect in July 2012.

2012 attributable gold and copper production decreased 1% and increased 3%, respectively, essentially in line with 2011. CAS increased 29% per ounce and 13% per pound, respectively, due to a higher strip ratio, higher mill maintenance costs, and the impact of the carbon tax in Australia.

2013 attributable gold and copper production at Boddington is expected to be approximately 700,000-750,000 ounces and 70-80 million pounds, respectively, at CAS of approximately $850 to $950 per ounce and $2.45 to $2.65 per pound, respectively on a co-product basis. 2013 production is expected to be in-line with 2012 levels, while higher operating costs are expected to result from higher mining and labor costs, as well as higher costs for contracted services and supplies.

Batu Hijau - Attributable gold production was 7,000 and 33,000 ounces in the fourth quarter and 2012, respectively. Attributable copper production was 16 million and 76 million pounds in the fourth quarter and 2012, respectively. CAS was $1,292 and $1,071 per ounce and $2.77 and $2.36 per pound on a co-product basis in the fourth quarter and 2012, respectively.

Fourth quarter attributable gold and copper production decreased 56% and 33%, respectively, from the prior year quarter due to lower grade and recovery as a result of processing lower grade stockpiled material. CAS increased 71% per ounce and 85% per pound, respectively, due to lower production, offset by lower royalties.

2012 attributable gold and copper production decreased 78% and 42%, respectively, due to lower grade and recovery as a result of processing primarily lower grade stockpiled material. Waste tons mined increased 26% as Phase 6 waste removal continued as planned. The Company expects to process primarily stockpiled ore until Phase 6 ore becomes the primary mill feed in 2014. CAS increased 125% per ounce and 113% per pound, respectively due to lower production, partially offset by lower royalties.

2013 attributable gold production for Batu Hijau is expected to be approximately 20,000 to 30,000 ounces, at CAS of between $900 and $1,000 per ounce, while attributable copper production is expected to be approximately 75 to 90 million pounds, at CAS of between $2.20 and $2.40 per pound. As previously disclosed[4], Newmont expects to continue processing stockpiled ore until Phase 6 ore becomes the primary mill feed commencing in 2014.

Other Australia/New Zealand - Attributable gold production was 245,000 and 955,000 ounces in the fourth quarter and 2012, respectively. CAS was $961 and $879 per ounce in the fourth quarter and 2012, respectively.

Fourth quarter attributable gold production increased 7% from the prior year quarter due to higher throughput at Jundee, higher grade at Waihi and higher throughput and grade at Tanami. CAS per ounce increased 19% from the prior year quarter due to higher mining and mill maintenance costs at KCGM and the impact of the carbon tax in Australia.

2012 attributable gold production decreased 8% due to lower throughput at Tanami and Waihi, and lower throughput, grade, and recovery at KCGM. CAS per ounce increased 32% due to lower production and higher mining costs.

2013 attributable gold production for Other Australia/New Zealand is expected to be approximately 925,000 to 975,000 ounces, primarily due to slightly higher production at Tanami and Waihi. CAS for Other Australia/New Zealand is expected to increase to approximately $950 to $1,050 per ounce in 2013, primarily driven by higher labor costs.

Beginning in 2013, our Asia Pacific region will be split into two regions, Australia/New Zealand, and Indonesia. The Australia/New Zealand region will include Boddington and Other Australia/New Zealand while the Indonesia region will include Batu Hijau. Gold production for Australia/New Zealand is expected to be approximately 1.6 to 1.7 million ounces attributable to Newmont in 2013 at CAS per ounce of $900 to $1,000.

Africa

Ahafo - Attributable gold production was 123,000 and 561,000 ounces during the fourth quarter and 2012, respectively. CAS was $694 and $596 per ounce for the fourth quarter and 2012, respectively.

Fourth quarter attributable gold production increased 40% from the prior year quarter due to drawdown on in-process inventory compared to build up of prior year quarter, higher grade and recovery. CAS per ounce increased 33% from the prior year quarter due to lower in-process inventory buildup and higher drawdown of finished goods inventory at higher average cost as well as higher power and labor cost.

2012 attributable gold production decreased 1% due to lower throughput and grade, largely offset by higher drawdown of in-circuit inventory. CAS per ounce increased 26% due to higher labor, commodity, and royalty costs.

2013 attributable gold production for the Africa operations is expected to increase to approximately 625,000 to 675,000 ounces due to the new production from Akyem in late 2013 at CAS of approximately $525 to $575 per ounce.

Capital Update

Consolidated capital expenditures were $3.2 billion in 2012, up from $3.0 billion in 2011. Attributable capital expenditures were $2.5 billion in 2012, up from $2.3 billion in 2011. Approximately $1.0 billion was spent on major projects in 2012, such as Akyem in Ghana, and equipment, engineering of reservoirs, and demobilization of workforce at Conga, with the balance largely attributed to sustaining capital. The Company currently expects to invest approximately $2.1 to $2.3 billion in attributable capital expenditures in 2013. Approximately 40% of this is allocated to development capital, including at the Akyem project (~$250 million), Ahafo Mill Expansion (~$150 million) the Conga project (~$150 million), and other expansion projects in Nevada (~$260 million) and at La Herradura (~$40 million), with the remaining 60% expected to be spent on sustaining capital.

Newmont's investment priorities include completing construction of Akyem in 2013, finishing the Phase 6 stripping campaign at Batu Hijau during 2013 and 2014, and identifying the best paths forward for Conga in Peru and Tanami in Australia. The Company expects consolidated capital expenditures to decrease from 2012 to 2013 by approximately 15-20%, excluding capitalized interest, as declining capital commitments for Conga, Akyem, and Tanami are partially offset by increasing development capital for the Ahafo Mill Expansion in Ghana as well as the Phoenix Copper Leach in Nevada. Additional capital investment is also possible at the Merian project in Suriname in 2013 pending the outcome of further dialogue with the government and additional project evaluation.

Advanced Projects Update

Consolidated advanced projects, research and development expenditures were $348 million in 2012, down from $373 million in 2011. The Company currently plans to spend approximately $350 to $400 million in advanced projects in 2013 on a consolidated basis, or $300 to $350 on an attributable basis, focused primarily on Long Canyon in Nevada, Elang in Indonesia, and the Subika expansion in Africa.

2013 Outlook[5],[6]


Attributable Production

(Kozs, Mlbs)

Consolidated CAS

($/oz, $/lb) b

Consolidated Capital

Expenditures ($M) c

Attributable Capital

Expenditures ($M) c

Region

Nevada a

1,700 - 1,800

$600 - $650

$600 - $650

$600 - $650

La Herradura

225 - 275

$650 - $700

$125 - $175

$125 - $175

North America

1,950 - 2,050

$600 - $650

$750 - $800

$750 - $800

Yanacocha

475 - 525

$600 - $650

$225 - $275

$100 - $150

La Zanja

40 - 50

-

-

-

Conga

-

-

$250 - $300

$125 - $175

South America

550 - 600

$600 - $650

$550 - $600

$250 - $300

Boddington

700 - 750

$850 - $950

$125 - $175

$125 - $175

Other Australia/NZ

925 - 975

$950 - $1,050

$225 - $275

$225 - $275

Australia/New Zealand

1,625 - 1,725

$900 - $1,000

$375 - $425

$375 - $425

Batu Hijau, Indonesiad

20 - 30

$900 - $1,000

$75 - $125

$25 - $75

Ahafo

525 - 575

$550 - $600

$375 - $425

$375 - $425

Akyem

50 - 100

$450 - $500

$225 - $275

$225 - $275

Africa

625 - 675

$525 - $575

$650 - $700

$650 - $700

Corporate/Other

-

-

$20 - $30

$20 - $30

Total Gold

4,800 - 5,100

$675 - $750

$2,400 - $2,600

$2,100 - $2,300

Boddington

70 - 80

$2.45 - $2.65

-

-

Batu Hijau

75 - 90

$2.20 - $2.40

-

-

Total Copper

150 - 170

$2.25 - $2.50



aNevada CAS includes by-product credits from an estimated 30-40 million pounds of copper production at Phoenix, net of treatment and refining charges.

b 2013 Attributable CAS Outlook is $700 - $750 per ounce.

cExcludes capitalized interest of approximately $142 million, consolidated and attributable.

d Assumes Batu Hijau economic interest of 44.56% for 2013, subject to final divestiture obligations.

2013 Expense Outlook

Description

Consolidated Expenses ($M)

Attributable Expenses ($M)




General & Administrative

$200 - $250

$200 - $250

DD&A

$1,050 - $1,100

$850 - $900

Exploration Expense

$250 - $300

$225 - $275

Advanced Projects & R&D

$350 - $400

$300 - $350

Other Expense

$200 - $250

$150 - $200

Sustaining Capital

$1,400 - $1,500

$1,200 - $1,300

Interest Expense

$200 - $250

$175 - $225

Tax Rate

30% - 32%

30% - 32%

All-in sustaining cost ($/ounce)a,b,c

$1,100 - $1,200

$1,100 - $1,200

Key Assumptions



Gold Price ($/ounce)

$1,500

$1,500

Copper Price ($/pound)

$3.50

$3.50

Oil Price ($/barrel)

$90

$90

AUD Exchange Rate

$1.00

$1.00






a All-in sustaining cost is a non-GAAP metric defined by the Company as the sum of costs applicable to sales, copper by-product credits, G&A, exploration expense, advanced projects and R&D, other expense, and sustaining capital.

bAll-in sustaining cost per ounce is calculated by dividing all-in sustaining cost by the midpoint of estimated sales, less non-consolidated interests in La Zanja and Duketon and development ounces.

cThe Company's methodology for calculating all-in sustaining costs was developed independently, and is subject to change due to a number of factors including the possible adoption of formal industry guidelines from the World Gold Council.




STATEMENTS OF CONSOLIDATED INCOME




Years Ended December 31,




2012


2011


2010




(in millions, except per share)












Sales

$

9,868


$

10,358


$

9,540












Costs and expenses










Costs applicable to sales(1)


4,238



3,890



3,484


Amortization


1,032



1,036



945


Reclamation and remediation


96



120



65


Exploration


356



350



218


Advanced projects, research and development


348



373



216


General and administrative


212



198



178


Write-down of property, plant and mine development


52



2,084



6


Other expense, net


449



265



261





6,783



8,316



5,373

Other income (expense)










Other income, net


278



12



109


Interest expense, net of capitalized interest of $107, $52 and $21, respectively











(249)



(244)



(279)





29



(232)



(170)

Income before income and mining tax and other items


3,114



1,810



3,997

Income and mining tax expense


(869)



(713)



(856)

Equity income (loss) of affiliates


(51)



11



3

Income from continuing operations


2,194



1,108



3,144

Loss from discontinued operations


(76)



(136)



(28)

Net income


2,118



972



3,116

Net income attributable to noncontrolling interests


(309)



(606)



(839)

Net income attributable to Newmont stockholders

$

1,809


$

366


$

2,277












Net income (loss) attributable to Newmont stockholders:










Continuing operations

$

1,885


$

502


$

2,305


Discontinued operations


(76)



(136)



(28)




$

1,809


$

366


$

2,277

Income (loss) per common share










Basic:











Continuing operations

$

3.80


$

1.02


$

4.69



Discontinued operations


(0.15)



(0.28)



(0.06)




$

3.65


$

0.74


$

4.63


Diluted:











Continuing operations

$

3.78


$

1.00


$

4.61



Discontinued operations


(0.15)



(0.27)



(0.06)




$

3.63


$

0.73


$

4.55












Cash dividends declared per common share

$

1.40


$

1.00


$

0.50













(1) Excludes Amortization and Reclamation and remediation.




CONSOLIDATED CASH FLOWS



Three Months Ended December 31,


Twelve Months Ended December 31,



2012


2011




2012



2011





























Operating activities:















Net income


$

697


$

(897)



$

2,118


$

972


Adjustments:















Amortization



281



260




1,032



1,036


Stock based compensation and other non-cash benefits



17



17




72



79


Reclamation and remediation



47



38




96



101


Revaluation of contingent consideration



12



1




12



1


Loss from discontinued operations



(28)



-




76



136


Write-down of property, plant and mine development



58



2,082




52



2,084


Impairment of marketable securities



8



5




47



180


Deferred income taxes



(10)



(565)




15



(671)


Gain on asset sales, net



(95)



(13)




(107)



(81)


Other operating adjustments and write-downs



(107)



(35)




48



65


Net change in operating assets and liabilities



(34)



32




(1,073)



(311)


Net cash provided from continuing operations



846



925




2,388



3,591


Net cash used in discontinued operations



(4)



(3)




(16)



(7)


Net cash provided from operations



842



922




2,372



3,584