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3 See reconciliation from by-product costs applicable to sales to GAAP costs applicable to sales on page 12.

 

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Gold production for 2010 is now expected to be between 700,000 and 750,000 ounces at costs applicable to sales of between $575 to $595 per ounce.  Copper production for 2010 is now expected to be between 50 to 60 million pounds, at costs applicable to sales of between $1.75 and $1.95 per pound.

 

Batu Hijau – Equity gold and copper production during the third quarter at Batu Hijau in Indonesia was 106,000 ounces and 69 million pounds, respectively, at costs applicable to sales of $211 per ounce and $0.65 per pound, respectively.   Equity gold and copper production increased 14% and 9%, respectively, from the prior year quarter due to higher mill throughput, partially offset by lower recovery.  Costs applicable to sales for gold and copper increased 19% and 30%, respectively, from the prior year quarter due to higher waste mining costs.  Phase 5 mining and Phase 6 waste removal were delayed during the quarter due to abnormally high “dry season” rainfall, which restricted access to the bottom of the pit and resulted in processing a higher proportion of stockpiled ore.

The Company now expects 2010 equity gold and copper production at Batu Hijau of between 310,000 and 340,000 ounces, and between 250 and 265 million pounds, respectively.  The Company expects 2010 gold and copper costs applicable to sales of between $250 and $270 per ounce and $0.65 and $0.75 per pound, respectively.

In the fourth quarter 2010, the company plans to suspend mining at the bottom of Phase 5 and begin processing ore from stockpiles as mining will be primarily for Phase 6 waste removal.  The Company expects Phase 6 ore to become the primary ore feed commencing in 2014.

Other Australia/New Zealand - Equity gold production at our other Australia/New Zealand operations during the third quarter was 284,000 ounces at costs applicable to sales of $552 per ounce.  Gold production decreased slightly from the prior year quarter due to lower mill grade at Jundee and Waihi, partially offset by higher mill grade and recovery at Kalgoorlie and Tanami. Costs applicable to sales increased 5% from the prior year quarter due to lower production and a stronger Australian dollar.

The Company now expects 2010 equity gold production at the Company’s other Australia/New Zealand operations of between 1.09 and 1.11 million ounces at costs applicable to sales of between $550 to $570 per ounce.

Africa

Ahafo – Gold production during the third quarter at Ahafo in Ghana was 156,000 ounces at costs applicable to sales of $422 per ounce.  Gold production increased 8% from the prior year quarter due to higher grade ore, partially offset by lower throughput. Costs applicable to sales per ounce decreased 5% from the prior year quarter due to higher production and increases in ore stockpiles, partially offset by higher diesel and royalty costs.

Third quarter 2010 production included 16,000 incremental start-up ounces from the Amoma pit, resulting in net sales of $13 million included in Other income, net.  Commercial production for the Amoma pit occurred on October 1.  

The Company expects 2010 gold production at Ahafo of between 520,000 and 540,000 ounces at costs applicable to sales of between $430 and $470 per ounce.

 

 

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Capital Update

Consolidated capital expenditures were $344 million during the third quarter, down from $404 million in the third quarter of 2009 as the Boddington capital spend was substantially completed at the end of 2009.  The Company is lowering its 2010 consolidated capital expenditure outlook to $1.3 billion to $1.5 billion, with approximately 30% to be invested in each of the North America and Asia Pacific regions, and the remaining 40% at other locations.  Approximately 40% of 2010 consolidated capital expenditures are expected to be related to major project initiatives, including further development of the Akyem project in Ghana, the Conga project in Peru, Hope Bay in Canada, and the Nevada project portfolio, while the remaining 60% is expected to be for maintenance and sustaining expenditures.

 

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2010 Outlook – Q3 Update4

Our current outlook for 2010 equity production, CAS and consolidated capital expenditures is as follows:

		2010 Outlook - Q3 Update		2010 Outlook - Q3 Update		2010 Outlook - Q3 Update
		Equity Production		CAS		Consolidated Capital
Region		(Kozs, Mlbs)		($/oz, $/lb)		Expenditures ($M)
Nevada		1,710 - 1,750		$590 - $610		$355 – $375
La Herradura		155 - 165		$405 - $420		$55 – $65
Hope Bay						$65 – $75
North America		1,865 - 1,915		$575 - $595		$475 – $515
Yanacocha		760 - 770		$400 - $420		$135 – $155
La Zanja		10 - 20		-		-
Conga		-		-		$155 – $165
South America		770 - 790		$400 - $420		$290 - $320
Boddington – Gold a		700 - 750		$575 - $595		$140 – $155
Other Australia/NZ		1,090 - 1,110		$550 - $570		$200 - $215
Batu Hijau – Gold b		310 - 340		$250 - $270		$100 - $120
Asia Pacific		2,100 - 2,200		$475 - $500		$440 - $490
Ahafo		520 - 540		$430 - $470		$110 – $120
Akyem		-		-		$95 – $105
Africa		520 - 540		$430 - $470		$205 - $235
Corporate/Other						$48 – $52
Total Gold		5,300 - 5,400		$485 - $500		$1,300 - $1,500
Boddington – Copper a		50 - 60		$1.75 - $1.95
Batu Hijau – Copper b		250 - 265		$0.65 - $0.75
Total Copper		300 - 325		$0.85 - $0.95

a Boddington shown on a co-product basis.

b Assumes Batu Hijau economic interest of 48.5% for the remainder of 2010

		2010 Outlook - Q3 Update
Description		($M)
General & Administrative		$180 – $190
Interest Expense		$270 – $290
DD&A		$925 – $950
Exploration Expense		$220 – $245
Advanced Projects & R&D		$230 – $250
Tax Rate		26% – 28%
Assumptions
Gold Price ($/ounce)		$1,100
Copper Price ($/pound)		$3.00
Oil Price ($/barrel)		$80
Australian Dollar Exchange Rate		0.90

 

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4 Outlook referenced in the table above and elsewhere in this release is based upon management’s good faith estimates as of November 2, 2010 and are considered “forward-looking statements.”   References to outlook guidance are based on current mine plans, assumptions noted above and current geotechnical, metallurgical, hydrological and other physical conditions, which are subject to risk and uncertainty as discussed in the “Cautionary Statement” on page 13.

 

 

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Condensed Statements of Consolidated Income (unaudited, in millions)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Sales		$	2,597			$	2,049			$	6,992			$	5,187
Costs and expenses
Costs applicable to sales			903				765				2,636				2,200
Amortization			242				199				697				566
Reclamation and remediation			18				10				44				34
Exploration			67				55				163				147
Advanced projects, research and development			46				27				149				100
General and administrative			45				39				133				118
Other expense, net			50				65				200				250
			1,371				1,160				4,022				3,415
Other income (expense)
Other income, net			5				25				97				43
Interest expense, net			(66	)			(10	)			(210	)			(65	)
			(61	)			15				(113	)			(22	)
Income from continuing operations before income tax
And other items			1,165				904				2,857				1,750
Income tax expense			(348	)			(253	)			(756	)			(494	)
Equity income (loss) of affiliates			(3	)			(6	)			(7	)			(14	)
Income from continuing operations			814				645				2,094				1,242
Income (loss) from discontinued operations			-				-				-				(14	)
Net income			814				645				2,094				1,228
Net income attributable to noncontrolling interests			(277	)			(257	)			(629	)			(489	)
Net income attributable to Newmont stockholders		$	537			$	388			$	1,465			$	739
Net income attributable to Newmont stockholders:
Continuing operations			537				388			$	1,465			$	748
Discontinued operations			-				-				-				(9	)
			537				388			$	1,465			$	739
Income per common share
Basic:
Continuing operations		$	1.09			$	0.79			$	2.98			$	1.54
Discontinued operations			-				-				-				(0.02	)
		$	1.09			$	0.79			$	2.98			$	1.52
Diluted:
Continuing operations		$	1.07			$	0.79			$	2.94			$	1.54
Discontinued operations			-				-				-				(0.02	)
		$	1.07			$	0.79			$	2.94			$	1.52
Cash dividends declared per common share			0.15				0.10			$	0.35			$	0.30

 

 

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Condensed Statements of Consolidated Cash Flow (unaudited, in millions)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2010				2009				2010				2009
Operating activities:
Net income		$	814			$	645			$	2,094			$	1,228
Adjustments:
Amortization			242				199				697				566
Loss from discontinued operations			-				-				-				14
Reclamation and remediation			18				10				44				34
Deferred income taxes			34				20				(52	)			7
Stock based compensation and other benefits			15				14				54				44
Other operating adjustments and write-downs			66				21				84				80
Net change in operating assets and liabilities			(335	)			151				(586	)			(27	)
Net cash provided from continuing operations			854				1,060				2,335				1,946
Net cash provided from (used in) discontinued operations			-				(5	)			(13	)			3
Net cash provided from operations			854				1,055				2,322				1,949
Investing activities:
Additions to property, plant and mine development			(344	)			(404	)			(972	)			(1,314	)
Investments in marketable debt and equity securities			(2	)			-				(9	)			-
Acquisitions, net			(2	)			(6	)			(2	)			(766	)
Proceeds from sale of other assets			1				1				53				3
Other			(50	)			(7	)			(72	)			(11	)
Net cash used in investing activities			(397	)			(416	)			(1,002	)			(2,088	)
Financing activities:
Proceeds from debt, net			-				2,808				-				4,302
Repayment of debt			(11	)			(936	)			(274	)			(2,604	)
Sale of subsidiary shares to noncontrolling interests			-				-				229				-
Acquisition of subsidiary shares from noncontrolling interests			-				-				(109	)			-
Dividends paid to common stockholders			(74	)			(49	)			(172	)			(147	)
Dividends paid to noncontrolling interests			(53	)			(3	)			(360	)			(115	)
Proceeds from stock issuance, net			26				1				56				1,248
Change in restricted cash and other			(2	)			-				46				5
Net cash provided from (used in) financing activities of continuing operations			(114	)			1,821				(584	)			2,689
Net cash used in financing activities of discontinued operations			-				-				-				(2	)
Net cash provided from (used in) financing activities			(114	)			1,821				(584	)			2,687
Effect of exchange rate changes on cash			6				18				-				39
Net change in cash and cash equivalents			349				2,478				736				2,587
Cash and cash equivalents at beginning of period			3,602				544				3,215				435
Cash and cash equivalents at end of period		$	3,951			$	3,022			$	3,951			$	3,022

 

 

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Condensed Consolidated Balance Sheets (unaudited, in millions)

		At September 30,				At December 31,
		2010				2009
ASSETS
Cash and cash equivalents		$	3,951			$	3,215
Trade receivables			489				438
Accounts receivable			93				102
Investments			46				56
Inventories			526				493
Stockpiles and ore on leach pads			538				403
Deferred income tax assets			195				215
Other current assets			1,218				900
Current assets			7,056				5,822
Property, plant and mine development, net			12,532				12,370
Investments			1,278				1,186
Stockpiles and ore on leach pads			1,722				1,502
Deferred income tax assets			1,086				937
Other long-term assets			702				482
Total assets		$	24,376			$	22,299
LIABILITIES
Debt		$	289			$	157
Accounts payable			396				396
Employee-related benefits			227				250
Income and mining taxes			265				200
Other current liabilities			1,621				1,317
Current liabilities			2,798				2,320
Debt			4,289				4,652
Reclamation and remediation liabilities			820				805
Deferred income tax liabilities			1,432				1,341
Employee-related benefits			349				381
Other long-term liabilities			169				174
Liabilities of operations held for sale			-				13
Total liabilities			9,857				9,686
EQUITY
Common stock			778				770
Additional paid-in capital			8,260				8,158
Accumulated other comprehensive income			768				626
Retained earnings			2,442				1,149
Newmont stockholders’ equity			12,248				10,703
Noncontrolling interests			2,271				1,910
Total equity			14,519				12,613
Total liabilities and equity		$	24,376			$	22,299

 

 

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Production Statistics

		Three Months Ended September 30,								Nine Months Ended September 30,
		2010				2009				2010				2009
Gold
Consolidated ounces produced (thousands):
North America
Nevada			453				486				1,306				1,421
La Herradura			42				24				125				79
			495				510				1,431				1,500
South America
Yanacocha			355				543				1,131				1,559
Asia Pacific
Boddington			180				4				522				4
Jundee			87				103				267				304
Tanami			69				64				183				235
Kalgoorlie			102				95				288				241
Waihi			26				30				78				81
Batu Hijau			219				208				554				387
			683				504				1,892				1,252
Africa
Ahafo			156				145				408				409
			1,689				1,702				4,862				4,720
Copper
Consolidated pounds produced (millions):
Asia Pacific
Boddington			14				1				43				1
Batu Hijau			142				141				420				336
			156				142				463				337
Gold
Equity ounces produced (thousands):
North America
Nevada			453				486				1,306				1,421
La Herradura			42				24				125				79
			495				510				1,431				1,500
South America
Yanacocha			182				280				580				801
Other South America Non-consolidated Equity Interests			5				-				5				-
			187				280				585				801
Asia Pacific
Boddington			180				4				522				4
Jundee			87				103				267				304
Tanami			69				64				183				235
Kalgoorlie			102				95				288				241
Waihi			26				30				78				81
Batu Hijau			106				93				276				174
			570				389				1,614				1,039
Africa
Ahafo			156				145				408				409
Discontinued Operations
Kori Kollo			-				2				-				32
			1,408				1,326				4,038				3,781
Copper
Equity pounds produced (millions):
Asia Pacific
Boddington			14				1				43				1
Batu Hijau			69				63				210				151
			83				64				253				152

 

 

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CAS and Capital Expenditures

		Three Months Ended September 30,								Nine Months Ended September 30,
		2010				2009				2010				2009
Gold
Costs Applicable to Sales ($/ounce) (1)
North America
Nevada		$	575			$	541			$	595			$	532
La Herradura			464				352				415				381
			565				532				579				524
South America
Yanacocha			420				294				392				313
Asia Pacific
Boddington			617				-				577				-
Jundee			381				329				388				339
Tanami			707				684				756				613
Kalgoorlie			550				638				543				630
Waihi			726				518				681				457
Batu Hijau			211				178				235				232
			451				380				469				422
Africa
Ahafo			422				446				456				424
Average		$	477			$	404			$	483			$	419
Copper
Costs Applicable to Sales ($/pound) (1)
Asia Pacific
Boddington		$	1.81			$	-			$	1.80			$	-
Batu Hijau			0.65				0.50				0.66				0.63
Average		$	0.73			$	0.50			$	0.76			$	0.63

		Three Months Ended September 30,								Nine Months Ended September 30,
		2010				2009				2010				2009
Consolidated Capital Expenditures ($ million)
North America
Nevada		$	83			$	43			$	200			$	154
Hope Bay			40				1				88				4
La Herradura			11				15				33				34
			134				59				321				192
South America
Yanacocha			41				27				109				78
Conga			43				5				86				16
			84				32				195				94
Asia Pacific
Boddington			25				277				106				961
Jundee			9				7				30				21
Tanami			21				14				59				42
Kalgoorlie			7				4				14				6
Waihi			3				3				8				6
Batu Hijau			15				7				48				30
Other Asia Pacific			8				1				11				2
			88				313				276				1,068
Africa
Ahafo			29				19				80				42
Akyem			27				3				49				4
			56				22				129				46
Corporate and Other			12				4				23				12
Total - Accrual Basis			374				430				944				1,412
Change in Capital Accrual			(30	)			(26	)			28				(98	)
Total - Cash Basis		$	344			$	404			$	972			$	1,314

(1)     Excludes Amortization and Reclamation and remediation.

 

 

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

		Three months ended								Nine months ended
		September 30,								September 30,
($million except per share, after-tax)		2010				2009				2010				2009
GAAP Net income (1)		$	537			$	388			$	1,465			$	739
Income tax benefit from internal restructuring			-				-				(127	)			-
Net gain on asset sales			(3	)			(2	)			(35	)			(2	)
PTNNT community contribution			-				-				13				-
Impairment of assets			-				1				3				6
Boddington acquisition costs			-				-				-				44
Loss from discontinued operations (1)			-				-				-				9
Adjusted net income		$	534			$	387			$	1,319			$	796
Adjusted net income per share		$	1.08			$	0.79			$	2.68			$	1.64

(1) Attributable to Newmont stockholders.

Reconciliation of Co-Product Costs Applicable to Sales to By-Product Costs Applicable to Sales

Sales and Costs applicable to sales for Boddington are presented in the Condensed 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 sales values for other costs. Management also assesses the performance of the Boddington mine on a by-product basis due to the majority of sales being derived from gold and to determine contingent consideration payments to AngloGold. The by-product method deducts copper sales from costs applicable to sales as shown in the following table:

 

 

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		Three months ended								Nine months ended
		September 30, 2010								September 30, 2010
		Boddington				Consolidated				Boddington				Consolidated
($ millions)
Co-product costs applicable to sales - gold		$	91			$	788			$	284			$	2,307
Less copper margin:
Sales - copper			38				581				117				1,373
Costs applicable to sales - copper			(19	)			(115	)			(68	)			(329	)
Copper margin			19				466				49				1,044
By-product costs applicable to sales - gold		$	72			$	322			$	235			$	1,263
Costs applicable to sales - gold (per ounce)
Co-product		$	617			$	477			$	577			$	483
By-product		$	487			$	195			$	478			$	264
Gold ounces sold (thousands)			148				1,651				492				4,778

 

To view complete financial disclosure, including regional mine statistics, Results of Consolidated Operations, Liquidity and Capital Resources, Management’s Discussion & Analysis, the Form 10-Q, and a complete outline of the 2010 Operating and Financial guidance by region, please see www.newmont.com.

The Company’s third quarter and earnings conference call and web cast presentation will be held on Tuesday, November 2, 2010 beginning at 11:30 a.m. Eastern Time (9:30 a.m. Mountain Time).  To participate:

Dial-In Number	888.566.1822
Intl Dial-In Number	312.470.7119
Leader	John Seaberg
Passcode	Newmont
Replay Number	888.293.8913
Intl Replay Number	203.369.3024
Replay Passcode	2010

The conference call also will be simultaneously carried on our web site at www.newmont.com under Investor Relations/Presentations and will be archived there for a limited time.

 

Investor Contacts
John Seaberg	303.837.5743	john.seaberg@newmont.com
Investor Contacts
Karli Anderson	303.837.6049	karli.anderson@newmont.com
Investor Contacts
Monica Brisnehan	303.837.5836	monica.brisnehan@newmont.com
Media Contacts
Omar Jabara	303.837.5114	omar.jabara@newmont.com

 

 

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Cautionary Statement

This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended which are intended to be covered by the safe harbor created by such sections and other applicable laws.  Such forward-looking statements may include, without limitation: (i) estimates of future mineral production and sales; (ii) estimates of future costs applicable to sales; (iii) estimates of future capital expenditures; and (iv) expectations regarding the development, growth and exploration potential of the Company’s projects.  Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect.  Such assumptions, include, but are not limited to: (i) there being no significant change to current geotechnical, metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company’s projects being consistent with current expectations and mine plans; (iii) political developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) certain exchange rate assumptions for the Australian dollar to the U.S. dollar, as well as other the exchange rates being approximately consistent with current levels; (v) certain price assumptions for gold, copper and oil; (vi) prices for key supplies being approximately consistent with current levels; and (vii) the accuracy of our current mineral reserve and mineral resource estimates. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis.  However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the “forward-looking statements”.  Such risks include, but are not limited to, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, political and operational risks in the countries in which we operate, and governmental regulation and judicial outcomes.  For a more detailed discussion of such risks and other factors, see the Company’s 2009 Annual Report on Form 10-K, filed on February 25, 2010, with the Securities and Exchange Commission, as well as the Company’s other SEC filings.  The Company does not undertake any obligation to release publicly revisions to any “forward-looking statement,” including, without limitation, outlook, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.  Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. Continued reliance on “forward-looking statements” is at investors' own risk.

 

 

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