Newmont Reports First Quarter Net Income of $68 Million ($0.15 Per Share);
Richard O'Brien Appointed as President
DENVER, April 26 /PRNewswire-FirstCall/ -- Newmont Mining Corporation (NYSE:
NEM) today announced net income for the first quarter of 2007 of $68 million
($0.15 per share), compared with $209 million ($0.47 per share) for the first
quarter of 2006. The Company also reported gold sales of 1.3 million equity
ounces, in-line with expectations, at costs applicable to sales of $421 per
ounce for the first quarter of 2007.
Wayne W. Murdy, Chairman and Chief Executive Officer, said, "While our gold
sales performance was consistent with our plans for the quarter, our financial
results were adversely impacted by higher than anticipated operating costs
resulting from metallurgical and startup challenges at Phoenix in Nevada,
increased waste removal costs during the quarter, and adverse exchange rate
movements impacting our Australian operations.
"As we focus the Company's efforts on operational execution and financial
discipline, I am pleased to announce the appointment of Richard O'Brien as
President and Chief Financial Officer of the Company, effective immediately.
Richard will be responsible for overseeing the operational and financial
performance of the Company while we work together on strategic development and
direction."
Richard O'Brien, President and Chief Financial Officer, said, "Wayne and I
are committed to improving our performance and building value for Newmont's
shareholders and stakeholders.
"As we review our first quarter results, we continue to expect gold sales
between 5.2 and 5.6 million equity ounces and copper sales between 210 and 230
million equity pounds. We also anticipate costs applicable to sales of
approximately $375 to $400 per ounce for the year, provided that our efforts to
address the issues at Phoenix generate planned operational improvements.
We're also pleased to announce the increase of the Company's revolving
credit facility to $2 billion. With a maturity extension to April 2012, this new
credit facility increases our financial flexibility."
FINANCIAL ($ millions, except per share)
Q1 2007 Q1 2006
Revenues $1,256 $1,132
Net income $68 $209
Net income per share $0.15 $0.47
OPERATING
Q1 2007 Q1 2006
Consolidated gold sales (000 ounces) (1) 1,605 1,809
Equity gold sales (000 ounces) (1), (2) 1,342 1,392
Average realized gold price ($/ounce) $653 $556
Costs applicable to sales ($/ounce) $421 $275
Cash operating margin ($/ounce) (3) $232 $281
(1) Includes 14 ounces sold (consolidated and equity) for the quarter ended
March 31, 2006 from Phoenix and Leeville start-up activities which are
not included in Revenue, Costs applicable to sales and Depreciation,
depletion and amortization per ounce calculations prior to commencing
operations on October 1, 2006 and October 14, 2006, respectively.
Revenues and costs during start-up activities are included in Other
income, net.
(2) Includes sales from Holloway and Zarafshan discontinued operations for
the quarter ended March 31, 2006.
(3) Cash operating margin is defined as the Average realized gold price less
Costs applicable to sales per ounce before treatment and refining costs.
Financial Review
First quarter 2007 net income was $68 million ($0.15 per share), compared
with $209 million ($0.47 per share) for the first quarter of 2006. Net income
for the first quarter of 2007 was impacted by the following, which had the net
effect of increasing net income for the quarter by $17 million. Net income for
the first quarter of 2006 was positively impacted by $50 million.
IMPACT OF THE FOLLOWING TRANSACTIONS
(after-tax), $ million
Q1 2007 Q1 2006
Gain on exchange of securities $22 $--
Impairment of marketable securities $(5) $--
Tax estimate revisions, net $-- $48
Discontinued operations $-- $2
The Company generated net cash from continuing operations of $58 million in
the first quarter of 2007, after a $263 million decrease in working capital,
compared to net cash from continuing operations of $233 million in the prior
year quarter.
New accounting rules for tax contingencies resulted in a $107 million
reduction in January 1, 2007 retained earnings.
Regional Highlights and 2007 Overview
NEVADA
Q1 2007 Q1 2006
Consolidated gold sales (000 ounces) (1) 560 535
Equity gold sales (000 ounces) (1) 560 489
Costs applicable to sales ($/ounce) $493 $395
(1) Includes 14 ounces sold (consolidated and equity) for the quarter ended
March 31, 2006 from Phoenix and Leeville start-up activities which are
not included in Revenue, Costs applicable to sales and Depreciation,
depletion and amortization per ounce calculations prior to commencing
operations on October 1, 2006 and October 14, 2006, respectively.
Revenues and costs during start-up activities are included in Other
income, net.
Nevada Operating Performance and Outlook
Equity gold sales in Nevada increased 15% in the first quarter of 2007 from
the year ago quarter. Gold sales increased with the commencement of commercial
production at Phoenix and Leeville in October of 2006. Open pit and underground
ore mined increased to 11 million tons in the first quarter of 2007, up from 9
million in the prior year quarter. Mining at Phoenix and Leeville contributed to
the increase in ore mined. Ore milled increased to 6 million tons from 4 million
tons in the prior year quarter, although milled ore grade decreased 28% with the
processing of lower grade ore from Phoenix. Ore placed on leach pads decreased
by 49% from the prior year quarter due to the completion of mining at Lone Tree
in 2006. Fewer leach ore tons were processed at Carlin, as the ore mined during
the quarter contained a higher proportion of mill material. Stockpile milling at
the Lone Tree processing facilities continued in the first quarter of 2007.
Processing at the Lone Tree mill is expected to continue throughout the
remainder of 2007. Incorporating the first quarter results summarized above, the
Company continues to expect equity gold sales in Nevada of approximately 2.35 to
2.55 million ounces for 2007.
Phoenix optimization remains the primary risk factor influencing Nevada's
gold sales and costs applicable to sales outlook for the year. During the
quarter, Phoenix experienced lower than expected ore grade, tailings line
restrictions, harder than anticipated ore, and lower mill availability. The
Company continues to evaluate solutions to address metallurgical and startup
challenges related to treating oxide and transitional ores at Phoenix.
Nevada's costs applicable to sales per ounce increased 25% from the prior
year quarter from $395 to $493 per ounce. Higher cost production from Phoenix
contributed to the increase in operating costs. Stripping costs also increased
due to accelerated mining at Pete, Gold Quarry and Twin Creeks. Costs for
underground mining contracted services also increased at Leeville and Carlin
East. Labor and input commodity cost escalation continued to impact operating
costs. Depreciation, depletion and amortization increased 53% from the prior
year quarter as a result of increased investment in new equipment and facilities
in 2006.
The Company continues to expect costs applicable to sales of approximately
$375-$400 per ounce, provided that third party and internal initiatives mitigate
the current oxide and transitional ore issues at Phoenix. Unit costs during the
first quarter of 2007 were above the expected range as a result of higher cost
production and lower by-product credits at Phoenix, as well as continued
deployment of higher cost contracted underground and maintenance services.
Contractor expenses are expected to decrease as Newmont employees are deployed
for the remainder of the year. Ongoing challenges at Phoenix could result in
costs applicable to sales per ounce above the expected range for the year.
Potentially higher grades, improving throughput and increased recoveries at
Leeville and Twin Creeks could provide cost reduction opportunities for the
remainder of 2007.
Nevada Capital Projects
Including Nevada's capital expenditures of $158 million during the first
quarter, capital expenditures for the year are expected to remain between $560
and $630 million, with spending primarily related to the construction of the
power plant, mine equipment replacement and sustaining development. Construction
of the 200 megawatt coal-fired power plant was approximately 55% complete at the
end of the first quarter and remains on schedule for completion in 2008.
Anticipated capital costs are expected to be between $620 and $640 million. The
lower cost of self-generated electricity, when compared with projected future
market prices in the region, is expected to reduce Nevada's costs applicable to
sales by approximately $25 per ounce.
YANACOCHA
Q1 2007 Q1 2006
Consolidated gold sales (000 ounces) 455 770
Equity gold sales (000 ounces) 234 395
Costs applicable to sales ($/ounce) $310 $161
Yanacocha Operating Performance and Outlook
Equity gold sales at Yanacocha decreased in the first quarter of 2007 to
234,000 ounces from 395,000 in the prior year quarter. Ore mined and placed on
the leach pads decreased to 17 million tons in the first quarter of 2007 from 31
million tons in the prior year quarter. During the same periods, the amount of
waste material mined increased to 30 million tons from 19 million tons in the
prior year quarter. Leached ore grade decreased by 63% from 0.035 to 0.013
ounces per ton for the first quarter of 2007.
The Company continues to expect equity gold sales of between 775,000 and
825,000 ounces for 2007. Higher than anticipated gold sales during the first
quarter of 2007 resulted from sales of inventory from year end. Yanacocha's gold
sales for the remainder of the year could be adversely impacted by higher waste
removal rates and lower ore grades, while opportunities exist for inventory
reductions and increased recoveries during the remainder of the year at the La
Quinua and Carachugo deposits.
Costs applicable to sales per ounce increased in the first quarter of 2007
to $310 per ounce from $161 per ounce in the year ago quarter, primarily due to
higher waste removal, lower production and labor inflation. Consumption of fuel,
cyanide, chemicals and reagents decreased from the year ago quarter as the
volume of tons mined and placed on leach pads declined. The Company continues to
expect costs applicable to sales of approximately $340-$360 per ounce for the
year. Increased recoveries could result in costs applicable to sales per ounce
towards the lower end of the expected range for the year.
Yanacocha Capital Projects
Including Yanacocha's capital expenditures of $56 million during the first
quarter of 2007, capital spending for the year is expected to be between $310
and $340 million. Construction of the gold mill was approximately 56% complete
at the end of the first quarter of 2007. Progress on the gold mill continues as
expected, with final costs projected between $250 and $270 million, and
commercial production anticipated by mid-2008. Once complete, the gold mill is
expected to enhance the processing efficiency of complex ores, expand future
reserves, improve financial returns and extend the operating life at Yanacocha.
The Company continues to evaluate the Conga project. The timing of the
project remains dependent on completion of optimization studies and further
community engagement.
AUSTRALIA/NEW ZEALAND
Q1 2007 Q1 2006
Consolidated gold sales (000 ounces) 332 333
Equity gold sales (000 ounces) 332 333
Costs applicable to sales ($/ounce) $519 $384
Australia/New Zealand Operating Performance and Outlook
Australia/New Zealand sales were essentially unchanged in the first quarter
of 2007 from the year ago quarter, as lower production was offset by the sale of
inventory. Gold sales at Kalgoorlie remained constant in the first quarter of
2007 compared to 2006. Increased inventory sales at Kalgoorlie offset lower
production from a 12% decrease in mill ore grade caused by lower than
anticipated mining rates due to poor weather conditions and limited shovel
availability. Gold sales at Tanami increased 5% in the first quarter of 2007
from 2006. Sales increased due to a reduction in inventories and 4% higher mill
ore grade. However, mill throughput at Tanami decreased 11% due to unplanned
mill maintenance. Gold sales at Jundee remained constant in the first quarter of
2007 compared to 2006, resulting from increased inventory sales and a 7%
increase in mill ore grade. Mill throughput decreased 20% at Jundee, primarily
due to ball mill maintenance. Additionally, mill recovery at Jundee was 4% lower
from the prior year quarter. Gold sales at Waihi (Martha) decreased 62% in the
first quarter of 2007 from 2006, resulting from planned milling suspension
related to underground mine development at Favona and waste removal at the
Martha open pit. Gold sales at Pajingo increased 50% in the first quarter of
2007 from 2006, due to a 19% increase in tons milled and a 16% increase in mill
ore grade, as mining and ground conditions continue to improve. Incorporating
first quarter results, the Company continues to expect equity gold sales in
Australia/New Zealand of between 1.275 and 1.325 million ounces for 2007.
Costs applicable to sales per ounce increased in the first quarter of 2007
by 35% from the year ago quarter, primarily as a function of higher royalties
due to the higher gold price, higher input costs and adverse movements in the
Australian dollar exchange rate. The strengthening of the Australian dollar
increased costs applicable to sales in Australia/New Zealand by approximately
$26 per ounce from the prior year quarter. Costs applicable to sales per ounce
increased 32% at Kalgoorlie, primarily due to lower gold production and
increased mining and milling costs. At Tanami, unit costs increased 27%,
primarily due to higher ore hauling charges associated with longer hauling
distances, as well as increased royalties due to the higher gold price. Costs
applicable to sales per ounce increased 37% at Jundee, primarily attributable to
increased maintenance and electricity costs, as well as higher drilling and
technical service charges. At Waihi (Martha) in New Zealand, costs applicable to
sales per ounce were higher due to the decrease in gold production and the
planned transition to underground operations. Costs applicable to sales per
ounce at Pajingo decreased 11%, primarily due to increased production from the
year ago quarter.
The Company continues to expect costs applicable to sales of approximately
$445-$470 per ounce, excluding adverse changes in the Australian dollar exchange
rate beyond a full year average rate of 0.75. Unfavorable changes in the
Australian dollar exchange rate could result in operating costs for the region
outside of the expected range for the full year, as a significant portion of
costs in the region are Australian dollar denominated. Costs applicable to sales
in the Australia/New Zealand region are expected to change by approximately $5
to $6 per ounce for every 0.01 move in the Australian dollar exchange rate.
Australia/New Zealand Capital Projects
Including capital expenditures of $98 million during the first quarter,
capital spending for the year is expected to be between $580 and $645 million.
Capital expenditures in Australia are expected to change by roughly $8 million
for every 0.01 move in the Australian dollar exchange rate. Capital investment
in the region is expected to increase for the rest of 2007, primarily focusing
on Boddington. Development of the Boddington project remains on schedule, and is
approximately 33% complete, with start-up expected in late 2008 or early 2009.
Newmont's share of the expected capital cost remains between $0.9 and $1.1
billion. The completion of this project is expected to provide reserve growth
potential with a competitive cost profile in a developed and stable country.
BATU HIJAU
Q1 2007 Q1 2006
Consolidated copper sales (million pounds) 91 81
Equity copper sales (million pounds) 48 43
Costs applicable to sales ($/pound copper) $1.40 $0.81
Average realized copper price (1) $2.74 $2.08
Consolidated gold sales (000 ounces) 84 73
Equity gold sales (000 ounces) 45 39
Costs applicable to sales ($/ounce) $330 $208
(1) Average realized copper price before treatment and refining charges and
after hedge losses.
Batu Hijau Operating Performance and Outlook
Copper and gold sales at Batu Hijau increased by 12% and 15%, respectively,
in the first quarter of 2007 from the prior year quarter. Total tons mined
increased by 6% from the prior year quarter due to the addition of 26 haul
trucks and a loading shovel. The waste-to-ore mined ratio increased to 40.6 in
the first quarter of 2007, up from 0.9 in the prior year quarter. Mill
throughput increased by 11% from the prior year quarter with an increase in
stockpile material feed.
Incorporating first quarter results, the Company continues to expect equity
sales of between 230,000 and 250,000 ounces of gold and between 210 and 230
million pounds of copper in 2007. Higher grade and throughput opportunities
exist for the remainder of 2007.
Total costs applicable to sales increased by $76 million from the year ago
quarter. Costs applicable to sales increased by $58 million from the year ago
quarter due to an increase in waste material mined and the processing of
stockpiled ore from prior years. Costs applicable to sales also increased by $7
million from the prior year quarter due to higher mill throughput and stockpile
re-handling costs. Increasing labor and input commodity prices continue to
impact operating costs, as well as increasing selling expenses and royalties due
to higher average realized prices for both gold and copper.
The Company continues to expect costs applicable to sales of approximately
$225-$240 per ounce of gold and $1.10-$1.20 per pound of copper for the year.
Fewer waste tons are expected to be mined during the remainder of 2007,
resulting in lower mining costs for the year compared with the first quarter.
Additionally, a higher proportion of total operating costs could be allocated to
costs applicable to sales of gold if gold prices and gold sales volumes continue
to increase at a higher rate than copper prices and volumes.
The average realized copper price increased 32% to $2.74 per pound from
$2.08 per pound in the prior year quarter, as the last remaining copper hedge
contracts matured in February 2007. Average realized copper price will continue
to be enhanced by the delivery of all copper hedges for the remainder of the
year.
Batu Hijau Capital Projects
Including Batu Hijau's capital expenditures of $7 million during the first
quarter, the Company continues to expect capital expenditures for the full year
of approximately $140 to $150 million, with spending focused primarily on
sustaining mine development.
AHAFO
Q1 2007 Q1 2006
Consolidated gold sales (000 ounces) 125 --
Equity gold sales (000 ounces) 125 --
Costs applicable to sales ($/ounce) $341 --
Ahafo Operating Performance and Outlook
Ahafo sold 125,000 ounces in the first quarter of 2007. Mill throughput and
gold production were in line with expectations. Ore mill grade of 0.063 ounces
per ton was higher than expected during the first quarter of 2007.
Incorporating first quarter results, the Company continues to expect gold
sales of between 410,000 and 450,000 ounces in 2007. Higher milled ore grades
during the first quarter may provide positive grade reconciliation opportunities
for the remainder of 2007.
Ahafo's costs applicable to sales were $341 per ounce for the first quarter
of 2007, primarily due to lower than anticipated power generation charges during
the first quarter of 2007. Power costs are expected to be higher for the
remainder of 2007. Additionally, higher than expected mill grades and production
helped to reduce unit costs applicable to sales.
The Company continues to expect costs applicable to sales of approximately
$460-$500 per ounce for the year. Lower than anticipated power charges and
higher than expected mill grades could reduce costs applicable to sales to the
lower end of the expected range if sustained throughout the remainder of the
year. Ahafo continues to address power availability issues in Ghana. Generators
are currently being commissioned at Ahafo, allowing the plant to operate while
meeting the government's power shedding requirements.
An additional 80 mega-watt power plant is under construction in Ghana with
completion anticipated during the third quarter. Newmont will have a 25% share
in the power supplied from this plant. The majority of the equipment for this
plant cleared customs in March, with the remaining critical equipment expected
to be delivered by the end of May. As a result of the mining industry's
initiative to install a power plant, the Ghanaian government has agreed to
distribute power proportionately between participating mines and the public. The
Company currently anticipates generating roughly one-third of Ahafo's power
needs from this plant, with the remainder coming from the Ghanaian power grid.
Ghana Capital Projects
Including capital expenditures of $37 million during the first quarter,
capital expenditures for the full year are expected to be between $180 and $200
million. For the rest of 2007, capital projects in Ghana are targeted for power
generation solutions, mine development and mine optimization initiatives, as
well as continued evaluation of the Akyem project.
OTHER OPERATIONS
Q1 2007 Q1 2006
Consolidated gold sales (000 ounces) 49 98
Equity gold sales (000 ounces) 46 94
Costs applicable to sales ($/ounce) $331 $209
Other Operations Performance and Outlook
Combined equity gold sales for the Kori Kollo mine in Bolivia, the La
Herradura mine in Mexico, and the Golden Giant mine in Canada decreased to
46,000 ounces in the first quarter of 2007 from 94,000 ounces in the year ago
quarter. Gold sales decreased due to the completion of mining at Golden Giant,
with remnant sales of 3,000 ounces in the first quarter of 2007, down from
34,000 in the year ago quarter. Gold sales at Kori Kollo decreased 48% in the
first quarter of 2007 from 2006. Ore mined at Kori Kollo decreased to 2 million
tons in the first quarter of 2007 from 3 million tons in the prior year quarter.
The proportion of waste to ore mined at Kori Kollo increased to 1.8 from 0.7 in
the prior year quarter due to a change in pit design. Ore placed on leach pads
at Kori Kollo decreased by 42% due to lower ore volumes mined and higher volumes
of waste moved as compared to the prior year quarter. La Herradura gold sales
increased 10% in the first quarter of 2007 from the prior year quarter,
primarily as a result of a 41% increase in tons placed on the leach pad.
Incorporating first quarter results, the Company expects equity gold sales of
approximately 155,000 to 190,000 ounces in 2007 from its other operations.
Costs applicable to sales per ounce increased from $209 per ounce in the
prior year quarter to $331 per ounce in the first quarter of 2007. Costs
applicable to sales per ounce more than doubled at Kori Kollo in the first
quarter of 2007 primarily due to lower production and higher waste removal costs
from the year ago quarter. Costs applicable to sales per ounce increased 18% at
La Herradura, primarily due to a 46% increase in tons mined and increased
leaching costs. The Company continues to expect costs applicable to sales of
approximately $305-$325 per ounce for the full year on average from Kori Kollo,
La Herradura and Golden Giant.
Capital, Overhead, Taxes, Interest and Other
Capital expenditures for the first quarter of 2007 were $362 million,
primarily for the construction of the power plant and sustaining development in
Nevada ($158 million), construction of the gold mill and leach pad expansions at
Yanacocha ($56 million), construction of the Boddington project and other
sustaining development in Australia ($98 million), as well as sustaining
development and risk mitigation for power shortages in Ghana ($37 million). The
Company continues to expect capital expenditures between $1.8 and $2.0 billion
for 2007. The Company expensed $192 million of depreciation, depletion and
amortization for the first quarter, with 2007 depreciation, depletion and
amortization expected to be between $800 to $865 million.
The Company incurred $37 million of general and administrative expenses
during the first quarter of 2007, with anticipated expenses of between $155 and
$165 million for the year. The 2007 tax rate (assuming $650 per ounce gold) is
expected to be between 29% and 34%. Including $24 million of net interest
expense during the first quarter of 2007, the Company continues to expect net
interest expense of approximately $95 to $105 million for the year. Including
$18 million of advanced projects, research and development expenditures during
the first quarter of 2007, the Company continues to expect full year spending to
be approximately $85 to $100 million.
Exploration Review
Exploration expenditures for the first quarter of 2007 were $40 million,
compared with $33 million in the prior year quarter. Near mine expenditures in
the first quarter were $21 million, consistent with prior year spending of $22
million. Greenfield expenditures in the first quarter of 2007 were $10 million,
compared with $8 million in the first quarter of 2006. For 2007, the Company's
exploration budget anticipates approximately $170 and $175 million of
exploration expenditures during 2007, with roughly 55% focused on near mine
activity, approximately 20% focused on greenfields initiatives, and the
remaining 25% roughly split between follow-up opportunity funds and technical
support.
Exploration spending in North America is primarily targeted on near mine
programs in Nevada at the Carlin Trend, Battle Mountain-Eureka Trend and the
Northern Nevada Rift. Full year expenditures are expected to be approximately
$37 million in the United States, including $9 million of exploration spending
during the first quarter. Exploration drilling for oxide gold targets east of
the Gold Quarry pit demonstrated continuity with intercepts ranging between 50
to 70 meters at 0.5 to 2.0 grams per tonne (164-230 feet at 0.01-0.06 ounces per
ton). Positive drilling results were generated from underground exploration
targets at Turf and Exodus. Drilling at the Full House target near the Carlin
underground mine also intersected step out mineralization in an apparent
extension of the main ore body. Drill results at the Twin Creeks mine and at the
Buffalo Valley Joint Venture identified encouraging oxide gold mineralization.
Exploration spending in South America is primarily targeted on near mine
programs at Yanacocha in Peru, as well as greenfield projects in the Guiana
Shield in South America and the Andes in Peru. Including $10 million of
exploration spending during the first quarter, exploration expenditures for the
full year are expected to be approximately $34 million in the region, or
approximately 20% of the Company's total exploration budget. Drilling at
Yanacocha along the edge of the Maqui Maqui pit intersected sulfide
mineralization with 73 meters at 10.5 grams per tonne (240 feet at 0.29 ounces
per ton) and 0.69% copper. Additional drilling encountered intercepts with
potential oxide and transitional layback opportunities. District exploration and
development are progressing at Yanacocha, Chaquicocha and Conga with results
pending.
Including first quarter expenditures in Australia/New Zealand, exploration
spending for the full year is expected to be approximately $24 million, or
approximately 14% of the Company's total exploration budget. Development
drilling at Boddington is proceeding with up to nine drill rigs targeting
non-reserve material and reserve expansion. Intercepts beneath and adjacent to
the reserve include 116 meters at 0.90 grams per tonne (381 feet at 0.03 ounce
per ton) and 32 meters at 3.69 grams per tonne (105 feet at 0.11 ounce per ton).
Deep drilling for extensions of the Wilson Shoot at the Callie deposit in the
Tanami generated favorable intervals, with visible gold at 2,000 meters (6,562
feet) drill depths. Early stage drill programs at Jundee, Kalgoorlie and Waihi
(Martha) in Australia/New Zealand are in progress.
Including exploration spending during the first quarter in Indonesia and
other Asia districts, exploration spending for the full year is expected to
total approximately 2% of the Company's exploration budget. Exploration programs
in the region are primarily focused on greenfield initiatives in China and
Indonesia.
Exploration spending in Ghana and other African regions totaled
approximately $3 million during the first quarter. Exploration expenditures for
the full year are anticipated to be approximately $18 million, or roughly 10% of
the Company's total exploration budget for the year. Regional exploration
programs throughout 2007 will focus on near mine programs in the Sefwi Belt in
Ghana, as well as other greenfield projects in the Greenstone Belts of West
Africa.
Drilling efforts in Mexico, with the Company's joint venture partner
Penoles, accelerated to the highest level in the history of the district during
the first quarter. Development drilling in the Centauro, Yaqui and Dunas pits
continues to advance as planned. Exploration in the northern district generated
encouraging oxide gold mineralization results with an average grade of just
under 1 gram per tonne (0.03 ounce per ton).
Merchant Banking
For the first quarter of 2007, royalty and dividend income was $31 million
compared to $29 million for the year ago quarter. The Company continues to
expect royalty and dividend income for the year to be between $100 and $110
million. At March 31, 2007, the market value of the marketable equity securities
portfolio was $1.28 billion, a decrease of $100 million from year end 2006.
During the first quarter of 2007, the Company invested a further
$27 million in Gabriel Resources, and closed on an exchange of shares in
Agincourt Resources for shares in Oxiana Limited, realizing a $27 million gain.
The Company also participated in a renewed drilling program and other
pre-feasibility work at the EuroNimba iron ore deposit in Guinea, West Africa.
STATEMENTS OF CONSOLIDATED INCOME
Q1 2007 Q1 2006
(unaudited, in millions
except per share)
Revenues
Sales - gold, net $1,043 $995
Sales - copper, net 213 137
1,256 1,132
Costs and expenses
Costs applicable to sales
(exclusive of depreciation, depletion
and amortization shown separately below)
Gold 676 494
Copper 128 65
Depreciation, depletion and amortization 192 140
Exploration 40 33
Advanced projects, research and development 18 21
General and administrative 37 37
Other expense, net 22 14
1,113 804
Other income (expense)
Other income, net 67 35
Interest expense, net (24) (20)
43 15
Income from continuing operations before
income tax expense, minority interest
and equity income of affiliates 186 343
Income tax expense (62) (37)
Minority interest in income of consolidated
subsidiaries (56) (99)
Income from continuing operations 68 207
Income from discontinued operations -- 2
Net income $68 $209
Income per common share
Basic:
Income from continuing operations $0.15 $0.47
Income from discontinued operations -- --
Net income $0.15 $0.47
Diluted:
Income from continuing operations $0.15 $0.46
Income from discontinued operations $-- $--
Net income $0.15 $0.46
Basic weighted-average common
shares outstanding 451 448
Diluted weighted-average common
shares outstanding 452 451
Cash dividends declared per common share $0.10 $0.10
CONSOLIDATED BALANCE SHEETS
At At
March 31, December 31,
2007 2006
(unaudited, in millions)
ASSETS
Cash and cash equivalents $786 $1,166
Marketable securities and other short-term
investments 130 109
Trade receivables 275 142
Accounts receivable 142 216
Inventories 381 382
Stockpiles and ore on leach pads 353 378
Deferred income tax assets 149 156
Other current assets 79 93
Current assets 2,295 2,642
Property, plant and mine development, net 7,036 6,847
Investments 1,230 1,319
Long-term stockpiles and ore on leach pads 805 812
Deferred income tax assets 638 799
Other long-term assets 185 178
Goodwill 2,986 3,004
Total assets $15,175 $15,601
LIABILITIES
Current portion of long-term debt $164 $159
Accounts payable 291 340
Employee-related benefits 161 182
Derivative instruments 41 174
Income and mining taxes 334 364
Other current liabilities 475 520
Current liabilities 1,466 1,739
Long-term debt 1,726 1,752
Reclamation and remediation liabilities 528 528
Deferred income tax liabilities 569 703
Employee-related benefits 310 309
Other long-term liabilities 226 135
Total liabilities 4,825 5,166
Minority interests in subsidiaries 1,163 1,098
STOCKHOLDERS' EQUITY
Common stock 680 677
Additional paid-in capital 6,726 6,703
Accumulated other comprehensive income 582 673
Retained earnings 1,199 1,284
Total stockholders' equity 9,187 9,337
Total liabilities and
stockholders' equity $15,175 $15,601
STATEMENTS OF CONSOLIDATED CASH FLOW
Q1 2007 Q1 2006
(unaudited, in millions)
Operating activities
Net income $68 $209
Adjustments to reconcile net income to
net cash from continuing operations:
Depreciation, depletion and amortization 192 140
Income from discontinued operations -- (2)
Accretion of accumulated reclamation
obligations 10 7
Deferred income taxes 1 (72)
Minority interest expense 56 99
Gain on asset sales, net (2) (2)
Gain on sale of investments, net (27) --
Hedge gain, net (3) (9)
Other operating adjustments and write-downs 26 37
Net cash provided from continuing operations
before net change in operating assets and
liabilities 321 407
Net change in operating assets and liabilities (263) (174)
Net cash provided from continuing operations 58 233
Net cash provided from discontinued operations -- 2
Net cash from operations 58 235
Investing activities
Additions to property, plant and mine
development (362) (367)
Investments in marketable debt and equity
securities (153) (672)
Proceeds from sale of marketable debt
and equity securities 124 970
Acquisitions -- (187)
Other 1 2
Net cash used in investing activities of
continuing operations (390) (254)
Net cash used in investing activities of
discontinued operations -- (3)
Net cash used in investing activities (390) (257)
Financing activities
Repayment of debt (21) (20)
Dividends paid to common stockholders (45) (45)
Dividends paid to minority interests (1) (45)
Proceeds from stock issuance 9 38
Change in restricted cash and other 8 (8)
Net cash used in financing activities (50) (80)
Effect of exchange rate changes on cash 2 (1)
Net change in cash and cash equivalents (380) (103)
Cash and cash equivalents at
beginning of period 1,166 1,082
Cash and cash equivalents at
end of period $786 $979
OPERATING STATISTICS SUMMARY
Q1 2007 Q1 2006
Gold
Consolidated ounces sold (000):
Nevada (1) 560 535
Yanacocha 455 770
Batu Hijau 84 73
Australia/New Zealand
Tanami 113 108
Kalgoorlie 95 94
Jundee 62 62
Pajingo 48 32
Martha 14 37
332 333
Ahafo 125 --
Other
Kori Kollo 24 44
La Herradura 22 20
Golden Giant 3 34
49 98
1,605 1,809
Equity ounces sold (000):
Nevada (1) 560 489
Yanacocha 234 395
Batu Hijau 45 39
Australia/New Zealand
Tanami 113 108
Kalgoorlie 95 94
Jundee 62 62
Pajingo 48 32
Martha 14 37
332 333
Ahafo 125 --
Other
Kori Kollo 21 40
La Herradura 22 20
Golden Giant 3 34
46 94
1,342 1,350
Discontinued Operations
Zarafshan -- 29
Holloway -- 13
1,342 1,392
Copper
Batu Hijau (pounds sold in millions):
Consolidated 91 81
Equity 48 43
(1) Includes 14 ounces sold (consolidated and equity) for the quarter ended
March 31, 2006 from Phoenix and Leeville start-up activities which are
not included in Revenue, Costs applicable to sales and Depreciation,
depletion and amortization per ounces calculations prior to commencing
operations on October 1, 2006 and October 14, 2006, respectively.
Revenues and costs during start-up activities are included in Other
income, net.
OPERATING STATISTICS - NEVADA
Q1 2007 Q1 2006
Tons mined (000 dry short tons):
Open pit
Ore 10,574 8,751
Waste 48,194 39,303
Total 58,768 48,054
Underground 484 368
Tons milled/processed (000 dry short tons):
Mill 6,237 3,596
Leach 3,355 6,603
Average ore grade (oz/ton):
Mill 0.101 0.141
Leach 0.033 0.024
Average mill recovery rate 81.7% 81.9%
Gold ounces produced (thousands):
Mill 486 448
Leach 76 77
Incremental start-up -- 14
Consolidated 562 539
Equity 562 492
Gold ounces sold (thousands):
Consolidated (1) 560 535
Equity (1) 560 489
Gold production costs (millions):
Costs applicable to sales $276 $206
Depreciation, depletion and amortization $55 $36
Gold production costs (per ounce sold):
Direct mining and production costs $512 $388
By-product credits (29) (11)
Royalties and production taxes 8 15
Reclamation/accretion expense 2 3
Costs applicable to sales $493 $395
Depreciation, depletion, and amortization $98 $68
(1) Includes 14 ounces sold (consolidated and equity) for the quarter ended
March 31, 2006 from Phoenix and Leeville start-up activities which are
not included in Revenue, Costs applicable to sales and Depreciation,
depletion and amortization per ounce calculations prior to commencing
operations on October 1, 2006 and October 14, 2006, respectively.
Revenues and costs during start-up activities are included in Other
income, net.
OPERATING STATISTICS - YANACOCHA
Q1 2007 Q1 2006
Tons mined (000 dry short tons):
Ore 16,548 31,082
Waste 29,660 19,293
Total 46,208 50,375
Tons processed (000 dry short tons) 16,548 31,090
Average ore grade (oz/ton) 0.013 0.035
Gold ounces produced (thousands):
Consolidated 418 800
Equity 215 411
Gold ounces sold (thousands):
Consolidated 455 770
Equity 234 395
Gold production costs (millions):
Costs applicable to sales $141 $124
Depreciation, depletion and amortization $42 $43
Gold production costs (per ounce sold):
Direct mining and production costs $313 $161
By-product credits (26) (11)
Royalties and production taxes 18 8
Reclamation/accretion expense 5 3
Costs applicable to sales $310 $161
Depreciation, depletion, and amortization $93 $56
OPERATING STATISTICS - BATU HIJAU
Q1 2007 Q1 2006
Tons mined (000 dry short tons):
Ore 1,532 31,191
Waste 62,183 28,998
Total 63,715 60,189
Tons milled (000 dry short tons) 11,980 10,829
Average ore grade:
Gold (oz/ton) 0.009 0.010
Copper 0.50% 0.51%
Average mill recovery rate:
Gold 80.0% 76.2%
Copper 80.6% 85.4%
Gold ounces produced (thousands):
Consolidated 88 83
Equity 46 44
Gold ounces sold (thousands):
Consolidated 84 73
Equity 45 39
Copper pounds produced (millions):
Consolidated 96 94
Equity 51 50
Copper pounds sold (millions):
Consolidated 91 81
Equity 48 43
Gold production costs (millions):
Costs applicable to sales $28 $15
Depreciation, depletion and amortization $6 $4
Gold production costs (per ounce sold):
Direct mining and production costs $323 $203
By-product credits (9) (7)
Royalties and production taxes 13 10
Reclamation/accretion expense 3 2
Costs applicable to sales $330 $208
Depreciation, depletion, and amortization $74 $51
Copper production costs (millions):
Costs applicable to sales $128 $65
Depreciation, depletion and amortization $28 $16
Copper production costs (per pound sold):
Direct mining and production costs $1.41 $0.81
By-product credits (0.04) (0.03)
Royalties and production taxes 0.02 0.02
Reclamation/accretion expense 0.01 0.01
Costs applicable to sales $1.40 $0.81
Depreciation, depletion, and amortization $0.31 $0.19
OPERATING STATISTICS - AHAFO
Q1 2007 Q1 2006
Tons mined (000 dry short tons):
Ore 2,545 --
Waste 8,238 --
Total 10,783 --
Tons milled (000 dry short tons): 2,182 --
Average ore grade (oz/ton) 0.063 --
Average mill recovery rate 92.8% --
Gold ounces produced (thousands):
Consolidated 128 --
Equity 128 --
Gold ounces sold (thousands):
Consolidated 125 --
Equity 125 --
Gold production costs (millions):
Costs applicable to sales $43 $--
Depreciation, depletion and amortization $10 $--
Gold production costs (per ounce sold):
Direct mining and production costs $321 $--
By-product credits (1) --
Royalties and production taxes 20 --
Reclamation/accretion expense 1 --
Costs applicable to sales $341 $--
Depreciation, depletion, and amortization $78 $--
OPERATING STATISTICS - PAJINGO AND JUNDEE
Q1 2007 Q1 2006
PAJINGO
Tons mined (000 dry short tons) 147 114
Tons milled (000 dry short tons) 137 115
Average ore grade (oz/ton) 0.315 0.272
Average mill recovery rate 96.5% 96.9%
Gold ounces produced (thousands):
Consolidated 45 32
Equity 45 32
Gold ounces sold (thousands):
Consolidated 48 32
Equity 48 32
Gold production costs (millions):
Costs applicable to sales $19 $14
Depreciation, depletion and amortization $9 $5
Gold production costs (per ounce sold):
Direct mining and production costs $380 $433
By-product credits (12) (12)
Royalties and production taxes 19 15
Reclamation/accretion expense 3 3
Costs applicable to sales $390 $439
Depreciation, depletion, and amortization $178 $149
JUNDEE
Tons mined (000 dry short tons):
Ore 185 158
Waste 1,099 902
Total 1,284 1,060
Tons mined (000 dry short tons) 266 273
Tons milled (000 dry short tons) 448 557
Average ore grade (oz/ton) 0.130 0.121
Average mill recovery rate 88.1% 91.8%
Gold ounces produced (thousands):
Consolidated 54 63
Equity 54 63
Gold ounces sold (thousands):
Consolidated 62 62
Equity 62 62
Gold production costs (millions):
Costs applicable to sales $36 $26
Depreciation, depletion and amortization $6 $5
Gold production costs (per ounce sold):
Direct mining and production costs $564 $404
By-product credits (2) (1)
Royalties and production taxes 14 16
Reclamation/accretion expense 8 6
Costs applicable to sales $584 $425
Depreciation, depletion, and amortization $96 $79
OPERATING STATISTICS - TANAMI AND KALGOORLIE
Q1 2007 Q1 2006
TANAMI
Tons mined (000 dry short tons) 503 523
Tons milled (000 dry short tons) 713 792
Average ore grade (oz/ton) 0.147 0.142
Average mill recovery rate 95.8% 95.6%
Gold ounces produced (thousands):
Consolidated 102 108
Equity 102 108
Gold ounces sold (thousands):
Consolidated 113 108
Equity 113 108
Gold production costs (millions):
Costs applicable to sales $50 $38
Depreciation, depletion and amortization $9 $7
Gold production costs (per ounce sold):
Direct mining and production costs $379 $299
By-product credits (1) (1)
Royalties and production taxes 60 45
Reclamation/accretion expense 2 3
Costs applicable to sales $440 $346
Depreciation, depletion, and amortization $82 $63
KALGOORLIE
Tons mined (000 dry short tons):
Open pit
Ore 1,204 1,817
Waste 8,448 9,445
Total 9,652 11,262
Underground 53 53
Tons milled (000 dry short tons) 1,600 1,698
Average ore grade (oz/ton) 0.055 0.062
Average mill recovery rate 84.3% 82.6%
Gold ounces produced (thousands):
Consolidated 85 92
Equity 85 92
Gold ounces sold (thousands):
Consolidated 95 94
Equity 95 94
Gold production costs (millions):
Costs applicable to sales $58 $44
Depreciation, depletion and amortization $8 $6
Gold production costs (per ounce sold):
Direct mining and production costs $592 $448
By-product credits (3) (2)
Royalties and production taxes 15 14
Reclamation/accretion expense 10 5
Costs applicable to sales $614 $465
Depreciation, depletion, and amortization $88 $70
OPERATING STATISTICS - WAIHI (MARTHA) AND GOLDEN GIANT
Q1 2007 Q1 2006
WAIHI (MARTHA) Tons mined (000 dry short tons):
Open pit
Ore -- 574
Waste 1,255 75
Total 1,255 649
Underground 56 19
Tons milled (000 dry short tons) 17 302
Average ore grade (oz/ton) 0.294 0.119
Average mill recovery rate 89.9% 94.4%
Gold ounces produced (thousands):
Consolidated 4 38
Equity 4 38
Gold ounces sold (thousands):
Consolidated 14 37
Equity 14 37
Gold production costs (millions):
Costs applicable to sales $9 $6
Depreciation, depletion and amortization $3 $3
Gold production costs (per ounce sold):
Direct mining and production costs $671 $244
By-product credits (30) (74)
Royalties and production taxes 7 --
Reclamation/accretion expense 15 6
Costs applicable to sales $663 $176
Depreciation, depletion, and amortization $242 $86
GOLDEN GIANT
Tons mined (000 dry short tons) -- 13
Tons milled (000 dry short tons) -- 17
Average ore grade (oz/ton) -- 0.627
Average mill recovery rate -- 96.9%
Gold ounces produced (thousands):
Consolidated 3 34
Equity 3 34
Gold ounces sold (thousands):
Consolidated 3 34
Equity 3 34
Gold production costs (millions):
Costs applicable to sales $1 $8
Depreciation, depletion and amortization $-- $1
Gold production costs (per ounce sold):
Direct mining and production costs $197 $218
By-product credits (4) (1)
Royalties and production taxes -- --
Reclamation/accretion expense 67 6
Costs applicable to sales $260 $223
Depreciation, depletion, and amortization $-- $17
OPERATING STATISTICS - KORI KOLLO AND LA HERRADURA
Q1 2007 Q1 2006
KORI KOLLO
Tons mined (000 dry short tons):
Ore 1,938 3,360
Waste 3,550 2,346
Total 5,488 5,706
Tons processed (000 dry short tons) 1,938 3,360
Average ore grade (oz/ton) 0.020 0.023
Gold ounces produced (thousands):
Consolidated 25 44
Equity 22 39
Gold ounces sold (thousands):
Consolidated 24 44
Equity 21 40
Gold production costs (millions):
Costs applicable to sales $8 $7
Depreciation, depletion and amortization $3 $2
Gold production costs (per ounce sold):
Direct mining and production costs $355 $141
By-product credits (22) (9)
Royalties and production taxes -- 30
Reclamation/accretion expense 14 7
Costs applicable to sales $347 $169
Depreciation, depletion, and amortization $106 $49
LA HERRADURA Tons mined (000 dry short tons):
Ore 1,317 937
Waste 4,145 2,793
Total 5,462 3,730
Tons processed (000 dry short tons) 1,317 937
Average ore grade (oz/ton) 0.023 0.024
Gold ounces produced (thousands):
Consolidated 15 20
Equity 15 20
Gold ounces sold (thousands):
Consolidated 22 20
Equity 22 20
Gold production costs (millions):
Costs applicable to sales $7 $6
Depreciation, depletion and amortization $2 $2
Gold production costs (per ounce sold):
Direct mining and production costs $351 $275
By-product credits (28) (3)
Royalties and production taxes -- --
Reclamation/accretion expense 1 2
Costs applicable to sales $324 $274
Depreciation, depletion, and amortization $110 $98
GOLD DERIVATIVE POSITION (March 31, 2007)
MATURITY SUMMARY (1),(2) (000 Ounces)
Price Capped
Sales
Contracts
Year Ozs Price (3)
2008 1,000 $384
2009 600 $381
2011 250 $392
Total/Average 1,850 $384
(1) For more detailed descriptions, definitions and explanations, refer to
the Company's Annual Report on form 10-K for the year ended December 31,
2006, filed on February 26, 2007.
(2) Prices quoted are gross contract prices, which represent the gross cash
flow per ounce of each contract. Not included in these prices are the
additional cash outflows associated with borrowing gold over the life of
the contract where the contracts are floating in nature. The rate at
which gold is borrowed is determined over the life of the contract based
on the prevailing market gold lease rate for the time period that the
borrowing is fixed. The borrowing can be fixed for varying periods over
the life of the contract.
(3) The price capped sales contracts had a negative mark-to-market of $589
million at March 31, 2007.
The Company's first quarter earnings conference call and web cast
presentation will be held on April 26, 2007 beginning at 4:00 p.m. Eastern Time
(2:00 p.m. Mountain Time). To participate:
Dial-In Number: 210.234.0003
Leader: Randy Engel
Password: Newmont
The conference call will also be simultaneously carried on our web site at
www.newmont.com under Investor Information/Presentations and will be archived
there for a limited time.
Cautionary Statement:
This news 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 that are intended to be covered by
the safe harbor created by such sections. Such forward-looking statements
include, without limitation, (i) estimates of future gold and copper production
and sales; (ii) estimates of future costs applicable to sales; (iii) estimates
of future capital expenditures, royalty and dividend income, tax rates and
expenses; (iv) estimates regarding timing of future development, construction,
production or closure activities; (v) estimates of potential cost savings from
the Nevada power plant; and (vi) statements regarding future exploration results
and the replacement of reserves. 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,
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 such 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 2006 Annual Report on Form 10-K, filed February 26,
2007, which is on file 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," 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.
APPENDIX A - NET CHANGE IN OPERATING ASSETS AND LIABILITIES
Net cash used in operating activities attributable to the net change in
operating assets and liabilities is composed of the following:
Three Months Ended
March 31,
2007 2006
Decrease (increase) in operating assets:
Trade and accounts receivable $2 $(44)
Inventories, stockpiles and ore on leach pads 9 (123)
Other assets -- (11)
Increase (decrease) in operating liabilities:
Accounts payable and other accrued liabilities (262) 16
Reclamation liabilities (12) (12)
$(263) $(174)
SOURCE Newmont Mining Corporation
-0- 04/26/2007
/CONTACT: Randy Engel, +1-303-837-6033, randy.engel@newmont.com, or
Stephen Gottesfeld, +1-303-837-5737, stephen.gottesfeld@newmont.com, both of
Newmont Mining Corporation/
/Web site: http://www.newmont.com / (NEM)