Newmont Announces First Quarter 2013 Results

DENVER, April 29, 2013 /PRNewswire/ -- Newmont Mining Corporation (NYSE: NEM) ("Newmont" or the "Company") today reported attributable net income from continuing operations of $315 million, or $0.63 per basic share, down 44% from $561 million, or $1.13 per basic share in the first quarter of 2012. As previously reported, results for the first quarter of 2013 compared to the first quarter of 2012 were influenced by lower grade and recovery at Carlin and lower grade at Twin Creeks in Nevada, and shipping delays resulting in lower concentrate sales.  Adjusted net income² was $354 million, or $0.71 per basic share, compared with $578 million, or $1.17 per basic share, for the prior year quarter.

Quarterly Highlights³

• Attributable gold and copper production of 1.165 million ounces and 38 million pounds, down 11% and up 9%, respectively, from the prior year quarter; attributable gold and copper sales of 1.142 million ounces and 31 million pounds, down 11% and 16%, respectively, from the prior year quarter;
• Attributable all-in sustaining costs¹ down 7% or $92 million vs. prior year quarter;
• Gold and copper costs applicable to sales ("CAS") of $758 per ounce and $2.19 per pound, up 22% and up 11%, respectively, from the prior year quarter;
• Consolidated spending¹ down $217 million, or 13% vs. prior year quarter;
• Lowering 2013 capital expenditure guidance by $100 million;
• Maintaining attributable gold and copper production and CAS guidance for the year; and
• Second quarter dividend payable of $0.35 per share in accordance with the Company's gold-price-linked dividend policy and consistent with the prior year quarter.

"We made progress on our plans to build long-term shareholder value through disciplined capital allocation and cost and efficiency improvements," said Gary Goldberg, President and Chief Executive Officer.  "We cut planned 2013 capital expenditure guidance by $100 million and reduced our consolidated spending by $217 million compared to the first quarter of 2012. This drove our all-in sustaining cost per ounce to the lower end of guidance despite some production challenges. We continue to build on this and the $130 million savings we realized last year by streamlining operating and overhead costs and investing in more profitable production to improve shareholder returns. We expect first production at Akyem in Ghana later this year, and the ramp up Phase 6 ore mining at Batu Hijau in Indonesia late next year, to enhance free cash flow in 2014 and 2015," added Goldberg.

The Company continues to expect full year 2013 attributable gold and copper production of 4.8 – 5.1 million ounces and 150 – 170 million pounds, respectively.  Planned production is expected to increase in the second half of the year primarily as a result of greater mill throughput in Nevada and the ramp up of first production at Akyem in Ghana.

Newmont is lowering its 2013 attributable and consolidated capital expenditure outlook by $100 million to $2.0 to $2.2 billion, and to $2.3 to $2.5 billion, respectively.  

As previously announced, Newmont's Board of Directors approved a second quarter gold price-linked dividend in accordance with the Company's gold price-linked dividend policy of $0.35 per share⁴ based upon the average London P.M. Gold Fix for the first quarter. 

Operations

North America

Nevada – Attributable gold production in Nevada was 381,000 ounces at CAS of $774 per ounce during the first quarter. Gold production decreased 12% from the prior year quarter due to lower grade and recovery at Mill 5 and Mill 6 and lower grade at the Twin Creeks autoclave, partially offset by new production at Emigrant and higher throughput at Phoenix. CAS per ounce increased 25% due to lower ounces sold and lower capitalized mine development activities in 2013 compared to 2012.

The Company continues to expect 2013 attributable gold production of between 1.7 million and 1.8 million ounces at CAS of between $600 and $650 per ounce and is lowering its 2013 capital expenditure outlook range by $50 million to between $550 to $600 million, consolidated and attributable. The Board also recently approved full funding of $398 million for the Turf/Leevile vent shaft scheduled for completion in 2015.

La Herradura – Attributable gold production at La Herradura in Mexico was 55,000 ounces at CAS of $717 per ounce during the first quarter.  Gold production increased 2% from the prior year quarter due to higher leach placement and grade. CAS per ounce increased 23% due to mining additional waste tons compared to 2012.

The Company continues to expect 2013 attributable gold production of between 225,000 and 275,000 ounces at CAS of between $650 and $700 per ounce.

South America

Yanacocha – Attributable gold production at Yanacocha in Peru was 147,000 ounces at CAS of $568 per ounce during the first quarter. Gold production decreased 22% from the prior year quarter due to lower mill grade and lower leach ore placement from Chaquicocha. CAS per ounce increased 24% due to lower production and lower silver by-product credits.

The Company continues to expect 2013 attributable gold production of between 475,000 and 525,000 ounces at CAS of between $600 and $650 per ounce.

La Zanja – Attributable gold production during the first quarter at La Zanja in Peru was approximately 15,000 ounces. 

The Company continues to expect 2013 attributable gold production of between 40,000 and 50,000 ounces.

Australia/New Zealand

Boddington – Attributable gold and copper production during the first quarter at Boddington in Australia was 177,000 ounces and 18 million pounds, respectively, at CAS of $873 per ounce and $2.35 per pound, respectively.  Gold and copper production increased 9% and 29%, respectively, from the prior year quarter due to higher mill grade. CAS increased 12% per ounce and increased 21% per pound from the prior year quarter due to a higher strip ratio, higher mill maintenance costs, and the impact of the carbon tax which took effect in July 2012. Copper costs applicable to sales were also affected by the higher co-product cost allocated to copper compared to the prior year quarter.

The Company continues to expect 2013 attributable gold production of between 700,000 and 750,000 ounces at CAS of between $850 and $950 per ounce and attributable copper production of between 70 and 80 million pounds at CAS of between $2.45 and $2.65 per pound.

Other Australia/New Zealand – Attributable gold production⁵ during the first quarter was 258,000 ounces at CAS of $962 per ounce. Gold production decreased 4% from the prior year quarter due to lower mill grade at Jundee, Kalgoorlie, and Tanami coupled with lower throughput at Tanami and partly offset by higher throughput at Waihi. CAS per ounce increased 27% primarily due to lower production, higher operating costs, and the impact of the carbon tax.

The Company continues to expect 2013 attributable gold production of between 925,000 and 975,000 ounces at CAS of between $950 and $1,050 per ounce and is lowering its 2013 capital expenditure outlook range by $25 million to between $200 to $250 million, consolidated and attributable.

Indonesia

Batu Hijau – Attributable gold and copper production during the first quarter at Batu Hijau in Indonesia was 7,000 ounces and 20 million pounds, respectively, at CAS of $993 per ounce and $2.05 per pound, respectively. Gold and copper production decreased 36% and 5%, respectively, due to lower grade and recovery as a result of processing lower grade stockpiled material as Phase 6 stripping continues. CAS increased 9% per ounce and 3% per pound, respectively, due to lower production partially offset by lower mill maintenance costs.

The Company continues to expect 2013 attributable gold production of between 20,000 and 30,000 ounces at CAS of between $900 and $1,000 per ounce and attributable copper production of between 75 and 90 million pounds at CAS of between $2.20 and $2.40 per pound.

Africa

Ahafo – Attributable gold production during the first quarter at Ahafo in Ghana was 125,000 ounces at CAS of $555 per ounce. Gold production decreased 29% from the prior year quarter due to an increase of in-process inventory and lower milled grade, partly offset by higher recovery. CAS per ounce decreased 2% from the prior year quarter due to lower mining and milling costs compared to the prior year quarter. 

The Company continues to expect 2013 attributable gold production at Ahafo of between 525,000 and 575,000 ounces at CAS of between $550 and $600 per ounce.

The Company is lowering its 2013 capital expenditure outlook range for Africa by $25 million to between $625 to $675 million, consolidated and attributable.

All-in Sustaining Costs Update

Consolidated spending is down $217 million, or 13% vs. prior year quarter. Consolidated all-in sustaining costs were $1,086 per ounce during the first quarter, or $1,115 per ounce on an attributable basis, due to lower gold and copper production, partially offset by lower advanced projects, exploration and sustaining capital spending. The Company continues to expect all-in sustaining costs of between $1,100 to $1,200 per ounce on both a consolidated and attributable basis for 2013.   

The following table reconciles this non-GAAP measure to the most directly comparable GAAP measure:

Capital Update

Capital expenditures in North America during the first quarter of 2013 were primarily related to the construction of the Phoenix Copper Leach project, the development of the Turf/Leeville vent shaft, surface and underground mine development in both Nevada and Mexico and infrastructure improvements in Nevada. Capital expenditures in South America were primarily related to the Conga and Merian projects, surface mine development 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 and infrastructure improvements. Capital expenditures in Africa were primarily related to Akyem development and the Subika expansion project, equipment purchases and surface mine development at Ahafo.

We remain focused on the progression of our next generation of mining projects. Approximately 40% of our 2013 capital expenditures will be allocated as development capital, including the Akyem project, the Phoenix Copper Leach project, the Ahafo Mill Expansion, the Conga project and other expansion projects in Nevada and at La Herradura, with the remaining 60% expected to be spent on sustaining capital. Additional capital investment is also possible at the Merian project in Suriname in 2013 pending the outcome of further dialogue with the government and project economic evaluation. We continue to manage our wider project portfolio to maintain flexibility to address the development risks associated with our projects including permitting, local community and government support, engineering and procurement availability, technical issues, escalating costs and other associated risks that could adversely impact the timing and costs of certain opportunities.

2013 Outlook^6,7 

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 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 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. 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:

CAS per Ounce/Pound
CAS per ounce/pound are non-GAAP financial measures. These measures are calculated by dividing the CAS 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 CAS is 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 non-controlling interest. We include attributable CAS per ounce/pound to provide management, investors and analysts with information with which to compare our performance to other gold producers. CAS 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 CAS 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 of 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.

Conference Call Information
A conference call will be held on Tuesday, April 30, 2013 at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time); it will also be carried on the Company's website.

Conference Call Details

Webcast Details

The First Quarter 2013 results and related financial and statistical information will be available after the market close on Monday, April 29, 2013 on the "Investor Relations" section of the Company's web site, www.newmont.com. Additionally, the conference call will be archived for a limited time on the Company's website.

Cautionary Statement Regarding Forward Looking Statements, Including 2013 Outlook:

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 production and sales; (ii) estimates of future costs applicable to sales; (iii) estimates of future consolidated and attributable capital expenditures, CAS, and all-in sustaining cost; 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, community relations, conflict resolution and outcome of projects or oppositions and governmental regulation and judicial outcomes.  For a more detailed discussion of such risks and other factors, see the Company's 2012 Annual Report on Form 10-K, filed on February 22, 2013, 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.

¹ Non-GAAP measure.  See page 4 for reconciliation to costs applicable to sales which was $1,044 and $1,017 for the three months ended March 31 2013 and 2012, respectively.

² Non-GAAP measure.  See page 13 for reconciliation to net income attributable to stockholders which was $315 and $490 for the three months ended March 31, 2013 and 2012, respectively.

³Amounts reported are on a Consolidated basis, unless otherwise noted.

⁴ Payable on June 27, 2013 to shareholders of record as of June 12, 2013.

⁵ Includes 14,000 and 4,000 attributable ounces in the first quarter 2013 and 2012, respectively, from our interest in Duketon.

⁶ Outlook referenced in the table above and elsewhere in this release is based upon management's good faith estimates as of April 29, 2013 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 15 and in the section entitled "Risk Factors" in the Company's form 10-K.

⁷ 2013 Annual CAS, inclusive of hedge gains and losses, are expected to change by approximately $13 per ounce for every $10 change in the oil price and by approximately $6 per ounce for every $0.10 change in the Australian dollar exchange rate. 

SOURCE Newmont Mining Corporation

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