Newmont Announces Third Quarter 2013 Results

Newmont Mining Corp. (NYSE: NEM) (“Newmont” or the “Company”) today reported attributable net income from continuing operations of $429 million, or $0.86 per share, up 7% from $400 million, or $0.81 per share in the third quarter of 2012. Third quarter results benefited from the sale of the Company’s investment in Canadian Oil Sands Ltd. for approximately $587 million, resulting in a pretax gain of $280 million. Adjusted net income² was $227 million, or $0.46 per share, compared with $426 million, or $0.86 per share, for the prior year quarter. Results for the third quarter of 2013 were favorably impacted by higher production from Nevada and Other Australia/New Zealand operations. Improved production and stable operating costs relative to the prior year quarter were offset by declines of 20% and 13%, respectively, in gold and copper prices.

Third Quarter Highlights³

• Consolidated spending¹ down $700 million year to date, or 13% compared to the first nine months of 2012;
• All-in sustaining costs⁴ (“AISC”) of $993 per ounce, down 16% from the prior year quarter;
• Gold and copper costs applicable to sales⁵ (“CAS”) of $649 per ounce and $2.63 per pound, down 6% and up 11%, respectively, from the prior year quarter;
• Attributable gold and copper production of 1.284 million ounces and 34 million pounds, up 4% and down 3%, respectively, from the prior year quarter; attributable gold and copper sales of 1.261 million ounces and 35 million pounds, up 4% and down 5%, respectively, from the prior year quarter;
• Revenue of $2.0 billion, a decrease of 20% from the prior year quarter;
• Cash flow from continuing operations of $443 million, a decrease of 23% from the prior year quarter;
• Average realized gold and copper prices of $1,322 per ounce and $3.10 per pound, down 20% and 13%, respectively, from the prior year quarter;
• Sold investment in Canadian Oil Sands Ltd. for $587 million resulting in a pretax gain of $280 million; and
• Fourth quarter gold price-linked dividend of $0.20 per share⁶ based upon the average London P.M. Gold fix of $1,326 per ounce for the third quarter.

“Our efforts to improve costs and efficiencies are gaining momentum, and we have reduced consolidated spending by $700 million year to date,” said Gary Goldberg, President and Chief Executive Officer. “Strong third quarter production was driven by our Australia / New Zealand operations. Our Nevada operations are also overcoming first half challenges. We remain focused on delivering value over volume at our existing operations as well as profitable growth at our new ones – a great example is Akyem in Ghana where we recently achieved commercial production.”

As previously announced, Newmont has maintained its 2013 attributable gold production outlook of 4.8 to 5.1 million ounces and has revised its attributable copper production outlook to 135 to 145 million pounds. Newmont now expects to be at the low end of its previously announced 2013 outlook for gold CAS of $750 and $825 per ounce inclusive of stockpile write-downs. The Company continues to expect copper CAS of $4.05 and $4.40 per pound, respectively, inclusive of stockpile write-downs. Exclusive of stockpile write-downs, the Company continues to expect gold and copper CAS between $675 and $750 per ounce and $2.25 and $2.50 per pound, respectively.

2013 consolidated capital expenditure outlook has been reduced by $200 million to $2.0 to $2.2 billion or to $1.7 to $1.9 billion on an attributable basis. Consolidated sustaining capital outlook has been reduced by $100 million to $1.2 to $1.3 billion, or to $1.0 to $1.1 billion on an attributable basis.

As previously announced, Newmont’s Board of Directors approved a fourth quarter dividend in accordance with the Company’s gold price-linked dividend policy of $0.20 per share based upon the average London P.M. Fix of $1,326 per ounce for the third quarter.

Operations

North America

North America AISC for the third quarter were $772 per ounce, down 24% over the prior year quarter. AISC were favorably impacted by a 16% reduction in gold CAS per ounce, attributable to lower royalties, higher by-product credits, and higher production, and a 38% reduction of sustaining capital expenditures per ounce.

Nevada – Attributable gold production in Nevada was 468,000 ounces at CAS of $527 per ounce during the third quarter. Gold production increased 2% from the prior year quarter due to higher leach production from Emigrant and Carlin North Area as well as higher grade and throughput at Juniper Mill and Phoenix, partially offset by lower grade and recovery at Mill 5 and lower throughput and recovery at Mill 6 and the Twin Creeks Autoclave. CAS per ounce decreased 20% from the prior year quarter due to higher ounces produced, higher by-product credits, and lower royalties. AISC at Nevada were $722 per ounce, down 29% over the prior year quarter.

The Company is maintaining its 2013 attributable gold production outlook of between 1.7 and 1.8 million ounces at CAS of $600 to $650 per ounce.

La Herradura – Attributable gold production at La Herradura in Mexico was 52,000 ounces at CAS of $765 per ounce during the third quarter. Gold production increased 2% from the prior year quarter due to higher production from Noche Buena and Centauro, essentially offset by lower production from Soledad and Dipolos. CAS per ounce increased 26% from the prior year quarter due to higher waste mining. AISC at La Herradura were $1,173 per ounce, up 15% over the prior year quarter due to an increase in gold CAS per ounce.

The Company now expects to be at the low end of its previously guided 2013 attributable gold production range of between 200,000 and 250,000 ounces and at the high end of its previously guided CAS range of $650 and $700 per ounce inclusive and exclusive of stockpile write-downs.

South America

South America AISC for the third quarter were $1,077 per ounce, or flat over the prior year quarter. AISC were positively impacted by a 63% reduction in sustaining capital expenditures per ounce, partially offset by a 14% increase in gold CAS per ounce.

Yanacocha – Attributable gold production at Yanacocha in Peru was 132,000 ounces at CAS of $591 per ounce during the third quarter. Gold production decreased 28% from the prior year quarter due to lower leach production as a result of placing lower grade leach ore from Tapado Oeste partially offset by higher mill grade from Tapado Oeste. CAS per ounce increased 14% from the prior year quarter due to higher mining costs related to the commencement of production at Cerro Negro and El Tapado Oeste in the fourth quarter 2012 and leach pad write-downs at La Quinua, Yanacocha, and Maqui Maqui. AISC were $996 per ounce, down 2% over the prior year quarter due to lower sustaining capital expenditures per ounce, partially offset by higher gold CAS per ounce.

The Company is maintaining its 2013 attributable gold production outlook of between 475,000 and 525,000 ounces at CAS of $650 to $700 per ounce inclusive of stockpile write-downs and $600 to $650 per ounce exclusive of stockpile write-downs.

La Zanja – Attributable gold production during the third quarter at La Zanja in Peru was approximately 17,000 ounces. The Company continues to expect attributable gold production of 40,000 to 50,000 ounces.

Australia/New Zealand

Australia/New Zealand AISC for the third quarter were $1,068 per ounce, down 14% over the prior year quarter. AISC were positively impacted by an 18% reduction in gold CAS per ounce and 44% reduction in sustaining capital expenditures per ounce at Other Australia/New Zealand operations, partially offset by higher gold CAS per ounce at Boddington.

Boddington – Attributable gold and copper production during the third quarter at Boddington in Australia was 178,000 ounces and 15 million pounds, respectively, at CAS of $1,031 per ounce and $2.23 per pound, respectively. Gold production increased 7% over the prior year quarter due to higher throughput and recovery partially offset by lower ore grade milled. Copper production decreased 6% due to lower mill grade. Gold CAS increased 11% per ounce due to inventory write-downs partially offset by higher production. Copper CAS was marginally lower than the prior year. AISC at Boddington were $1,197 per ounce, up 12% over the prior year quarter.

The Company is maintaining its 2013 attributable gold production outlook of between 700,000 and 750,000 ounces at CAS of $1,050 to $1,150 per ounce including stockpile write-downs and $850 to $950 per ounce excluding stockpile write-downs. The Company now expects attributable copper production of between 60 and 70 million pounds. Copper production outlook has been revised due to lower than expected mill throughput. The Company continues to expect copper CAS of $2.75 to $2.95 per pound including stockpile write-downs and $2.45 to $2.65 per pound excluding stockpile write-downs.

Other Australia/New Zealand – Attributable gold production⁷ during the third quarter was 289,000 ounces at CAS of $756 per ounce. Gold production increased 26% from the prior year quarter due to higher mill throughput and ore grade from underground sources at Tanami, higher throughput at Waihi, and higher grade and throughput at Kalgoorlie partially offset by lower grade at Jundee. CAS per ounce decreased 19% from the prior year quarter. This was due to higher gold production from Tanami, Waihi and Kalgoorlie partially offset by lower production and higher operating costs at Jundee. AISC were $996 per ounce, down 28% over the prior year quarter due to increased mining productivity and efficiency improvements.

The Company is maintaining its 2013 attributable gold production outlook of between 925,000 and 975,000 ounces at CAS of $1,000 to $1,100 per ounce including stockpile write-downs and $950 to $1,050 per ounce excluding stockpile write-downs.

Indonesia

Indonesia AISC for the third quarter were $1,071 per ounce, down 36% over the prior year quarter due to a 24% reduction in gold CAS per ounce.

Batu Hijau – Attributable gold and copper production during the third quarter at Batu Hijau in Indonesia was 4,000 ounces and 19 million pounds, respectively, at CAS of $846 per ounce and $2.74 per pound, respectively. Gold production decreased 44% due to processing lower grade ore, lower recovery, and lower mill throughput. Copper production was in line due to higher copper mill recovery. Total tons mined increased by 12% as Phase 6 waste removal continues as planned. Gold CAS decreased 24% per ounce due to lower costs allocated to gold on a co-product basis, lower operating costs and royalties, partially offset by lower production. Copper CAS increased 15% per pound due to higher costs allocated to copper on a co-product basis.

The Company is maintaining its 2013 attributable gold production outlook of between 20,000 and 30,000 at CAS of $2,100 to $2,300 per ounce including stockpile write-downs and $900 to $1,000 per ounce excluding stockpile write-downs. The Company now expects attributable copper production of between 70 to 75 million pounds. Copper production outlook has been revised due to lower than expected mill throughput and grades. The Company continues to expect copper CAS of $4.70 to $5.10 per pound including stockpile write-downs and $2.20 to $2.40 per pound excluding stockpile write-downs.

Africa

Africa AISC for the third quarter were $836 per ounce, down 22% over the prior year quarter. AISC were favorably impacted by a 9% reduction in gold CAS and 22% reduction in sustaining capital expenditures per ounce.

Ahafo – Attributable gold production during the third quarter was 144,000 ounces at CAS of $513 per ounce. Gold production increased 10% from the prior year quarter due to higher mill recovery partially offset by lower grade. CAS per ounce decreased 9% from the prior year quarter due to higher ounces produced partially offset by higher mining and milling costs. AISC at Ahafo were $801 per ounce, down 19% over the prior year quarter.

The Company is maintaining its 2013 attributable gold production outlook of between 525,000 and 575,000 ounces at CAS of $550 to $600 per ounce.

Akyem – The Akyem project achieved commercial production in October. The Company is maintaining its 2013 attributable gold production outlook of between 50,000 and 100,000 ounces at CAS of $450 to $500 per ounce.

Capital Update

2013 consolidated capital expenditures outlook was reduced by another $200 million during the third quarter in addition to the $200 million reduction earlier this year. The Company now expects consolidated capital expenditures of between $2.0 to $2.2 billion ($1.7 to $1.9 billion attributable to Newmont). For the first nine months of 2013, capital expenditures in North America were primarily related to the construction of the Phoenix Copper Leach project, the development of the Turf Vent Shaft project, surface and underground mine development and infrastructure improvements in Nevada, as well as mill expansion capital in Mexico. Capital expenditures in South America were primarily related to the Conga and Merian projects, surface mine development, leach pad and other infrastructure improvements and equipment purchases. The majority of capital expenditures in Australia and New Zealand were for underground mine development, tailings facility construction, mining equipment purchases and infrastructure improvements. Capital expenditures in Batu Hijau were primarily for equipment and equipment component purchases. Capital expenditures in Africa were related to Akyem development, the Subika expansion project and the Ahafo Mill expansion project, as well as equipment purchases and surface mine development at Ahafo.

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⁽¹⁾ Excludes Amortization and Reclamation and remediation.

Supplemental Information

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.

Reconciliation of Adjusted Net Income to GAAP Net Income

Management uses the non-GAAP financial measure Adjusted net income to evaluate the Company’s operating performance, and for planning and forecasting future business operations. The Company believes the use of Adjusted net income allows investors and analysts to compare the 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:

Net income (loss) attributable to Newmont stockholders for the three and nine months ended September 30, 2013 was impacted by stockpile and leach pad write-downs of $35 and $310, respectively, net of tax and minority interest, which is not reflected in the table above.

CAS per Ounce/Pound

Costs applicable to sales per ounce/pound are non-GAAP financial measures. These measures are calculated by dividing the costs applicable to sales of gold and copper by gold ounces or copper pounds sold, respectively. These measures are calculated on a consistent basis for the periods presented on both a consolidated and attributable to Newmont basis. Attributable costs applicable to sales are based on our economic interest in production from our mines. For operations where we hold less than a 100% economic share in the production, we exclude the share of gold or copper production attributable to the noncontrolling interest. We include attributable costs applicable to sales per ounce/pound to provide management, investors and analysts with information with which to compare our performance to other gold producers. Costs applicable to sales per ounce/pound statistics are intended to provide additional information only and do not have any standardized meaning prescribed by GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Other companies may calculate these measures differently.

Net attributable costs applicable to sales per ounce measures the benefit of copper produced in conjunction with gold, as a credit against the cost of producing gold. A number of other gold producers present their costs net of the contribution from copper and other non-gold sales. We believe that including a measure on this basis provides management, investors and analysts with information with which to compare our performance to other gold producers, and to better assess the overall performance of our business. In addition, this measure provides information to enable investors and analysts to understand the importance of non-gold revenues to our cost structure.

The following tables reconcile these non-GAAP measures to the most directly comparable GAAP measures.

All-In Sustaining Costs

Newmont has worked to develop a metric that expands on GAAP measures such as cost of goods sold and non-GAAP measures to provide visibility into the economics of our gold mining operations related to expenditures, operating performance and the ability to generate cash flow from operations.

Current GAAP-measures used in the gold industry, such as cost of goods sold, do not capture all of the expenditures incurred to discover, develop, and sustain gold production. Therefore, we believe that all-in sustaining costs and attributable all-in sustaining costs are non-GAAP measures that provide additional information to management, investors, and analysts that aid in the understanding of the economics of our operations and performance compared to other gold producers and in the investor’s visibility by better defining the total costs associated with producing gold.

All-in sustaining cost (“AISC”) amounts are intended to provide additional information only and do not have any standardized meaning prescribed by GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Other companies may calculate these measures differently as a result of differences in the underlying accounting principles, policies applied and in accounting frameworks such as in International Financial Reporting Standards (“IFRS”), or by reflecting the benefit from selling non-gold metals as a reduction to AISC. Differences may also arise related to definitional differences of sustaining versus development capital activities based upon each company’s internal policies.

The following disclosure provides information regarding the adjustments made in determining the All-in sustaining costs measure:

Cost Applicable to Sales - Includes all direct and indirect costs related to current gold production incurred to execute the current mine plan. It is accounted for on an accrual basis and excludes Amortization and Reclamation and remediation, which is consistent with our presentation of Costs Applicable to Sales (“CAS”) on the Statement of Consolidated Income. In determining All-in sustaining costs, only the CAS associated with producing and selling an ounce of gold is included in the measure. Therefore, the amount of gold CAS included in AISC is derived from the CAS presented in the Company’s Statement of Consolidated Income less the amount of CAS attributable to the production of copper at our Boddington and Batu Hijau mines. The copper CAS at those mine sites is disclosed in Note 3 – Segments that accompanies the Consolidated Financial Statements in the Company’s Form 10-Q in the quarter ended September 30, 2013, which is expected to be filed on October 31, 2013. The allocation of CAS between gold and copper at the Boddington and Batu Hijau mines is based upon the relative percentage of copper and gold sold during the period.

Remediation Costs - Includes accretion expense related to asset retirement obligations (“ARO”) and the amortization of the related Asset Retirement Cost (“ARC”) for the Company’s operating properties recorded as an ARC asset. Accretion related to ARO and the amortization of the ARC assets for reclamation and remediation do not reflect annual cash outflows but are calculated in accordance with GAAP. The accretion and amortization reflect the periodic costs of reclamation and remediation associated with current gold production and are therefore included in the measure. The allocation of these costs to gold and copper is determined using the same allocation used in the allocation of CAS between gold and copper at the Boddington and Batu Hijau mines.

Advanced Projects and Exploration - Includes incurred expenses related to projects that are designed to increase or enhance current gold production and gold exploration. We note that as current resources are depleted, exploration and advance projects are necessary for us to replace the depleting reserves or enhance the recovery and processing of the current reserves. As this relates to sustaining our gold production, and is considered a continuing cost of a mining company, these costs are included in the AISC measure. These costs are derived from the Advanced projects, research and development and Exploration amounts presented in the Company’s Statement of Consolidated Income less the amount attributable to the production of copper at our Boddington and Batu Hijau mines. The allocation of these costs to gold and copper is determined using the same allocation used in the allocation of CAS between gold and copper at the Boddington and Batu Hijau mines.

General and Administrative - Includes cost related to administrative tasks not directly related to current gold production, but rather related to support our corporate structure and fulfilling our obligations to operate as a public company. Including these expenses in the AISC metric provides visibility of the impact that general and administrative activities have on current operations and profitability on a per ounce basis.

Other Expense, net - Includes costs related to regional administration and community development to support current gold production. We exclude certain exceptional or unusual expenses from Other expense, net, such as restructuring, as these are not indicative to sustaining our current gold operations. Furthermore, this adjustment to Other expense, net is also consistent with the nature of the adjustments made to Net income (loss) as disclosed in the Company’s non-GAAP financial measure Adjusted net income (loss). The allocation of these costs to gold and copper is determined using the same allocation used in the allocation of CAS between gold and copper at the Boddington and Batu Hijau mines.

Sustaining Capital - We determined sustaining capital as those capital expenditures that are necessary to maintain current gold production and execute the current mine plan. Capital expenditures to develop new operations, or related to projects at existing operations where these projects will enhance gold production or reserves, are considered development. We determined the breakout of sustaining and development capital costs based on a systematic review of our project portfolio in light of the nature of each project. Sustaining capital costs are relevant to the AISC metric as these are needed to maintain the Company’s current gold operations and provide improved transparency related to our ability to finance these expenditures from current operations. The allocation of these costs to gold and copper is determined using the same allocation used in the allocation of CAS between gold and copper at the Boddington and Batu Hijau mines.