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| NEM > SEC Filings for NEM > Form 10-Q on 30-Apr-2009 | All Recent SEC Filings |
30-Apr-2009
Quarterly Report
The following discussion provides information that management believes is
relevant to an assessment and understanding of the consolidated financial
condition and results of operations of Newmont Mining Corporation and its
subsidiaries (collectively, "Newmont," the "Company," "our" and "we").
References to "A$" refer to Australian currency, "C$" to Canadian currency,
"IDR" to Indonesian currency, "NZ$" to New Zealand currency and "$" to United
States currency.
This item should be read in conjunction with our interim unaudited Consolidated
Financial Statements and the notes thereto included in this quarterly report.
Additionally, the following discussion and analysis should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations and the consolidated financial statements included in
Selected Financial and Operating Results
Three Months Ended
March 31,
2009 2008
Revenues $ 1,522 $ 1,943
Income from continuing operations $ 277 $ 551
Net income $ 277 $ 557
Net income attributable to Newmont stockholders $ 189 $ 365
Per common share, basic
Income from continuing operations attributable to
Newmont stockholders $ 0.40 $ 0.80
Net income attributable to Newmont stockholders $ 0.40 $ 0.81
Consolidated gold ounces sold (thousands) (1) 1,534 1,621
Consolidated copper pounds sold (millions) 95 105
Average price received, net (2)
Gold (per ounce) $ 906 $ 933
Copper (per pound) $ 1.69 $ 4.10
Costs applicable to sales (3)
Gold (per ounce) $ 435 $ 396
Copper (per pound) $ 0.89 $ 1.43
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(1) Includes incremental start-up ounces of 1 in 2008. Incremental start-up includes the removal and production of de minimis saleable materials during development and is recorded as Other income, net of incremental mining and processing costs.
(2) After treatment and refining charges.
(3) Excludes Amortization and Accretion.
Consolidated Financial Results
Net income attributable to Newmont stockholders for the three month period ended
March 31, 2009 was $189, or $0.40 per share. Results for the first three months
of 2009 compared to 2008 were impacted by lower realized gold and copper prices
and lower sales volume.
Sales - gold, net for the first quarter of 2009 decreased $120, or 8%, compared to the first quarter of 2008, primarily due to lower realized prices and decreased sales volumes. For a complete discussion regarding variations in gold volumes, see Results of Consolidated Operations below. The following analysis summarizes the change in consolidated gold sales revenue:
Three Months Ended
March 31,
2009 2008
Consolidated gold sales:
Gross $ 1,393 $ 1,518
Less: Treatment and refining charges (2 ) (7 )
Net $ 1,391 $ 1,511
Consolidated gold ounces sold (thousands):
Gross 1,534 1,621
Less: Incremental start-up sales (1) - (1 )
Net 1,534 1,620
Average realized price (per ounce):
Before treatment and refining charges $ 908 $ 937
After treatment and refining charges $ 906 $ 933
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(1) Incremental start-up sales includes the removal and production of de minimis saleable materials during development and is recorded as Other income, net of incremental mining and processing costs.
The change in consolidated gold sales is due to:
Three Months Ended
March 31,
2009 vs. 2008
Decrease in consolidated ounces sold $ (80 )
Decrease in average realized gold price (45 )
Decrease in treatment and refining charges 5
$ (120 )
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Sales - copper, net for the first quarter of 2009 decreased $271, or 63%, compared to the first quarter of 2008 primarily due to lower realized prices and decreased sales volumes. For a complete discussion regarding variations in copper volumes, see Results of Consolidated Operationsbelow. The following analysis summarizes the change in consolidated copper sales revenue:
Three Months Ended
March 31,
2009 2008
Consolidated copper sales:
Gross before provisional pricing $ 154 $ 382
Provisional pricing mark-to-market gain 29 82
Gross after provisional pricing 183 464
Less: Treatment and refining charges (22 ) (32 )
Net $ 161 $ 432
Consolidated copper pounds sold (millions) 95 105
Average realized price (per pound):
Gross before provisional pricing $ 1.62 $ 3.62
Provisional pricing mark-to-market gain 0.30 0.78
Gross after provisional pricing 1.92 4.40
Less: Treatment and refining charges (0.23 ) (0.30 )
Net $ 1.69 $ 4.10
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The change in consolidated copper sales is due to:
Three Months Ended
March 31,
2009 vs. 2008
Decrease in consolidated pounds sold $ (44 )
Decrease in average realized copper price (237 )
Decrease in treatment and refining charges 10
$ (271 )
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The following is a summary of net gold and copper sales:
Three Months Ended
March 31,
2009 2008
Gold
North America:
Nevada, USA $ 468 $ 491
La Herradura, Mexico 23 24
491 515
South America:
Yanacocha, Peru 427 499
Kori Kollo, Bolivia 16 18
443 517
Asia Pacific:
Jundee, Australia 88 87
Tanami, Australia 77 89
Kalgoorlie, Australia 67 65
Waihi, New Zealand 37 29
Batu Hijau, Indonesia 59 112
328 382
Africa:
Ahafo, Ghana 129 97
$ 1,391 $ 1,511
Copper
Asia Pacific:
Batu Hijau, Indonesia $ 161 $ 432
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Costs applicable to sales increased $27 for gold and decreased $65 for copper
for the first quarter of 2009 compared to the first quarter of 2008, as detailed
in the table below. The increase in Costs applicable to sales - gold is
primarily due to increased underground mining activity, a build in Nevada
inventory in 2008 and lower copper by-product credits at Phoenix, partially
offset by 5% fewer ounces sold, lower diesel costs and favorable U.S. dollar
exchange rates. The decrease in Costs applicable to sales - copper is primarily
due to 10% fewer pounds sold, lower diesel and labor costs and a higher
allocation of costs to gold at Batu Hijau as a result of lower copper prices.
For a complete discussion regarding variations in operations, see Results of
Consolidated Operations below.
Amortization increased for the first quarter of 2009 compared to the first
quarter of 2008, as detailed in the table below, and primarily relates to the
Nevada power plant commissioned in the second quarter of 2008. We expect 2009
Amortization to be approximately $775 to $825 (assuming 100% ownership of the
Boddington project in 2009).
The following is a summary of Costs applicable to sales and Amortization:
Costs Applicable
to Sales Amortization
Three Months Ended Three Months Ended
March 31, March 31,
2009 2008 2009 2008
Gold
North America:
Nevada, USA $ 263 $ 215 $ 61 $ 50
Hope Bay, Canada - - 3 -
La Herradura, Mexico 10 8 2 2
273 223 66 52
South America:
Yanacocha, Peru 152 168 41 44
Kori Kollo, Bolivia 14 8 1 2
166 176 42 46
Asia Pacific:
Jundee, Australia 33 38 9 7
Tanami, Australia 49 50 11 8
Kalgoorlie, Australia 48 54 4 4
Waihi, New Zealand 15 14 9 6
Batu Hijau, Indonesia 27 37 7 8
172 193 40 33
Africa:
Ahafo, Ghana 57 49 18 13
668 641 166 144
Copper
Asia Pacific:
Batu Hijau, Indonesia 85 150 21 31
Other
Asia Pacific - - - 1
Corporate and Other - - 5 6
- - 5 7
$ 753 $ 791 $ 192 $ 182
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Exploration expense increased for the first quarter of 2009 compared to the first quarter of 2008 as a result of timing and additional expenditures at Hope Bay. We expect 2009 Explorationexpense to be approximately $165 to $175. Advanced projects, research and development for the first quarter of 2009 and 2008 is summarized as follows:
Three Months Ended
March 31,
2009 2008
Hope Bay $ 5 $ 5
Technical and project services 5 4
Nevada underground 5 -
Boddington 3 1
Callie Deeps 2 -
Fort a la Corne JV 1 7
Akyem 1 2
Other 9 11
$ 31 $ 30
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We expect Advanced projects, research and development expenses to be
approximately $120 to $150 in 2009.
General and administrative expenses increased by $10 for the first quarter of
2009 compared to the first quarter of 2008 due to higher variable compensation
and benefit costs. We expect 2009 General and administrative expenses to be
approximately $140 to $150.
Other expense, net for the first quarter of 2009 and 2008 is summarized as follows:
Three Months Ended
March 31,
2009 2008
Workforce reduction $ 14 $ -
Regional administration 12 9
Community development 10 14
Boddington acquisition costs 8 -
Peruvian royalty 6 7
Batu Hijau divestiture 5 3
Western Australia power plant 3 5
World Gold Council dues 3 3
Accretion, non-operating 3 2
Pension settlement loss - 11
Reclamation estimate revisions - 2
Other 13 7
$ 77 $ 63
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The 2009 expense includes costs related to a global workforce reduction that
impacted almost 3% of our world wide workforce. Community development and
regional administration expenses relate to our social responsibility, external
and government relations, and regional office costs which are not a direct cost
of mine production.
Other income, net for the first quarter of 2009 and 2008 is summarized as
follows:
Three Months Ended
March 31,
2009 2008
Canadian Oil Sands Trust income $ 4 $ 24
Interest income 3 10
Gain on asset sales, net 1 4
Gain on ineffective portion of derivative instruments, net - 3
Foreign currency exchange losses, net (3 ) (6 )
Write-down of investments (6 ) (22 )
Other 10 2
$ 9 $ 15
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Canadian Oil Sands Trust income decreased $20 in the first quarter of 2009
compared to the first quarter of 2008 due to reduced distributions related to a
significant decrease in oil prices.
Interest expense, net increased by $4 for the first quarter of 2009 compared to
the first quarter of 2008 mainly due to interest on the convertible senior notes
and corporate revolving credit facility. We expect 2009 Interest expense, net to
increase to approximately $150 to $160 due to higher levels of debt related to
the February 2009 public offering of $518 convertible senior notes and the
adoption of FSP APB 14-1 in the first quarter of 2009, which increases non-cash
interest expense.
Income tax expense during the first quarter of 2009 was $105 compared to $232
during the first quarter of 2008. Taxes were lower primarily as a result of
lower income from continuing operations before income tax and a lower effective
tax rate for the first quarter of 2009. The effective tax rate for the first
quarter of 2009 was 27% compared to 29% for the first quarter of 2008. The 2%
decrease from the 2008 first quarter rate primarily relates to the effect of
foreign earnings in subsidiaries where earnings are indefinitely reinvested. The
effective tax rates in the first quarter of 2009 and 2008 are different from the
United States statutory rate of 35% primarily due to (i) U.S. percentage
depletion and (ii) the effect of different income tax rates in countries where
earnings are indefinitely reinvested. For a complete discussion of the factors
that influence our effective tax rate, see Management's Discussion and Analysis
of Results of Operations and Financial Condition in Newmont's Annual Report on
Form 10-K for the year ended December 31, 2008, filed February 19, 2009. We
expect the 2009 full year tax rate to be approximately 27% to 31%, assuming an
average gold price of $875 per ounce.
Net income attributable to Noncontrolling interests decreased $104 in the first
quarter of 2009 compared to the first quarter of 2008, as a result of decreased
earnings at Batu Hijau and Yanacocha.
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