Newmont Reports 76% Increase in Net Income to a Record $2.3 Billion and Record $3.2 Billion of Operating Cash Flow in 2010

DENVER, Feb. 24, 2011 /PRNewswire/ -- Newmont Mining Corporation (NYSE: NEM) ("Newmont" or the "Company") today announced that net income increased 76% to $2.3 billion ($4.63 per share) in 2010, compared to $1.3 billion ($2.66 per share) in the prior year.  Operating cash flow was a record $3.2 billion for 2010, compared to $2.9 billion in 2009.  Adjusted net income(1) rose 39% to a record $1.9 billion ($3.85 per share) from $1.4 billion ($2.79 per share) in 2009, while the Company's gold operating margin(2) increased by 30% to $737 per ounce in 2010, from $566 per ounce in 2009.

2010 Highlights:

• Attributable gold and copper production of 5.4 million ounces and 327 million pounds, respectively, with gold production slightly higher and copper production approximately 44% higher than in 2009;
• Record revenue of $9.5 billion, an increase of 24% from 2009;
• Average realized gold and copper price of $1,222 per ounce and $3.43 per pound, respectively;
• Gold operating margin increase(3) of 30%, compared with an average realized gold price increase of 25%;
• Consolidated costs applicable to sales for gold and copper of $485 per ounce and $0.80 per pound, respectively; and
• Cash and cash equivalents of more than $4 billion on December 31, 2010.

Q4 2010 Highlights:

• Attributable gold and copper production of 1.4 million ounces and 74 million pounds, respectively;
• Average realized gold and copper price of $1,366 per ounce and $4.52 per pound, respectively; and
• Costs applicable to sales for gold and copper of $512 per ounce and $0.95 per pound, respectively.

"I am pleased to report that we generated record operating cash flow for the second year in a row, with our gold operating margin growing by 30% to $737 per ounce on an average realized gold price of $1,222 in 2010," stated Richard O'Brien, President and CEO.  "As a whole, our operations performed according to our plans, producing 5.4 million attributable ounces of gold in 2010. We continue to advance our Conga Project in Peru, which contains over 6 million attributable ounces of gold and 1.6 billion attributable pounds of copper reserves. Similarly, we continued to advance with our Akyem Project in Ghana, which contains over 7 million attributable ounces of gold reserves. Advancing these two world-class mining projects, as well as continuing our drilling programs at Hope Bay in Canada, remain some of our top priorities in 2011."

Portfolio Wide Operating Results and Outlook

In 2010, the Company reported attributable gold and copper production of 5.4 million ounces and 327 million pounds, respectively, at costs applicable to sales of $485 per ounce, and $0.80 per pound, respectively, on a co-product basis.  Attributable 2010 gold production increased over 2009 levels due to the first full year of production at Boddington and a full year of mining higher grade ore from the bottom of the pit at Batu Hijau.  Costs applicable to sales per gold ounce sold increased 18% over the prior year due to lower production from South America, a full year of higher cost production at Boddington and higher diesel, royalty and waste mining costs, partially offset by higher by-product credits. Costs applicable to sales per copper pound sold increased 25% over the prior year due to higher waste mining at Batu Hijau and a full year of higher cost production at Boddington, partially offset by higher production from Batu Hijau.

2011 attributable gold production is expected to be approximately 5.1 million to 5.3 million ounces, with attributable copper production of 190 to 220 million pounds.  The volume outlook reflects lower expected production at Batu Hijau as it moves into Phase 6 stripping, partially offset by higher production expected at Nevada and Ahafo.  Costs applicable to sales are expected to be between $560 and $590 per ounce due to lower expected production at Batu Hijau, combined with higher expected costs for energy, labor, and contracted services.  Costs applicable to sales are expected to be between $1.25 and $1.50 per pound of copper due to lower production at Batu Hijau.

Regional Operations

North America

Nevada  Attributable gold production was 429,000 ounces in the fourth quarter and 1.7 million ounces in 2010.  Costs applicable to sales were $520 and $565 per ounce for the fourth quarter and 2010, respectively.

Fourth quarter production decreased from the prior year quarter due to lower leach placement at Twin Creeks and Carlin, lower Gold Quarry ore mined as a result of the slope failure in late 2009 and lower mill ore grade due to the completion of mining at Deep Post in December 2009.  Costs applicable to sales per ounce increased from the prior year quarter due to lower production, partially offset by higher by-product credits.  

2010 attributable gold ounces decreased 13% due to the completion of underground mining at Deep Post in 2009, lower Gold Quarry ore mined as a result of a slope failure which occurred in December 2009 and lower leach tons placed at Twin Creeks and Carlin, partially offset by increased underground mining at Leeville. Total ore tons mined were 26% lower, primarily due to the Gold Quarry slope failure and the completion of mining at North Lantern in April 2010. Ore placed on leach pads decreased 62% to 4.5 million tons. Costs applicable to sales per ounce increased 11% due to lower production, partially offset by higher by-product credits.

La Herradura  Attributable gold production was 49,000 ounces in the fourth quarter and 174,000 ounces in 2010.  Costs applicable to sales were $434 and $420 per ounce in the fourth quarter and 2010, respectively.  

Fourth quarter production increased from the prior year quarter due to higher leach placement.  Costs applicable to sales per ounce increased from the prior year quarter due to higher waste mining costs.  

2010 attributable gold ounces produced increased 54% in 2010 from the prior year due to the commencement of commercial production at the Soledad and Dipolos pits in January 2010. Costs applicable to sales per ounce increased 13% due to higher waste tons mined.

2011 attributable gold production in North America is expected to be approximately 2.0 to 2.1 million ounces at costs applicable to sales of approximately $560 to $600 per ounce. Production from Nevada has been impacted by the December 2009 slope failure at Gold Quarry, limiting access to ore originally scheduled to be mined in 2010 and 2011. During 2010, the Company mined through the impacted area and expects to reestablish access to ore in the first half of 2011.

South America

Yanacocha  Attributable gold production was 170,000 ounces in the fourth quarter and 750,000 ounces in 2010.  Costs applicable to sales were $559 and $431 per gold ounce in the fourth quarter and 2010, respectively.

Fourth quarter production decreased from the prior year quarter due to lower leach placement, transitional ore stockpiling at La Quinua and lower mill grade.  Costs applicable to sales per ounce increased from the prior year quarter due to higher waste material mined and higher royalties and lower by-product credits.  

2010 attributable gold production decreased 29% from the prior year due to mine sequencing resulting in increased waste mining, lower leach placement, transitional ore stockpiling at La Quinua and lower grade and recovery resulting in lower mill production. Leach tons placed decreased from 136 million tons in 2009, which was a record amount, to 59 million tons in 2010. Costs applicable to sales per ounce increased 39% from the prior year due to higher waste material mined, lower production, higher labor, diesel and maintenance costs, and higher workers' participation and royalty costs as a result of higher gold prices, partially offset by higher by-product credits.

La Zanja  Attributable gold production was 16,000 ounces in the fourth quarter and 21,000 ounces in 2010.  La Zanja achieved commercial production in the third quarter 2010.  

2011 attributable gold production in South America is expected to be approximately 715,000-775,000 ounces, primarily due to lower leach production at Yanacocha. Costs applicable to sales are expected to increase in 2011 to approximately $500 to $550 per ounce, primarily due to lower gold production and higher contracted services and supplies.

Asia Pacific

Boddington  Attributable gold production was 206,000 ounces in the fourth quarter and 728,000 ounces in 2010.  Attributable copper production was 15 million pounds in the fourth quarter and 58 million pounds in 2010.  Costs applicable to sales were $624 ($512 on a by-product basis(4)) and $590 ($487 on a by-product basis(4)) per gold ounce and $2.06 and $1.86 per pound of copper, in the fourth quarter and 2010, respectively.  

Fourth quarter 2010 production increased from the prior year quarter due to the commencement of commercial production in November 2009.  

2010 production at Boddington was in line with revised guidance.  Costs applicable to sales were higher than expected due to lower production and higher mining and mill maintenance costs.

2011 attributable gold production at Boddington is expected to be approximately 750,000-800,000 ounces at costs applicable to sales of approximately $580 to $620 per ounce on a co-product basis. Lower than expected gold production at Boddington is primarily attributable to lower gold ore grade and lower expected mill throughput, while higher operating costs are expected to result from lower than expected production volumes, higher mining costs, as well as higher contracted services and supplies. We continue to review our ore grade and processing models to identify opportunities to optimize and improve our future production and operating costs at Boddington.

Batu Hijau  Attributable gold production was 88,000 ounces in the fourth quarter and 364,000 ounces in 2010. Attributable copper production was 59 million pounds in the fourth quarter and 269 million pounds in 2010.  Costs applicable to sales were $243 and $237 per gold ounce and $0.81 and $0.69 per pound of copper on a co-product basis in the fourth quarter and 2010, respectively.

Fourth quarter copper production decreased from the prior year quarter due to lower mill throughput.  Gold production increased from the prior year quarter due to unseasonably dry weather and continued mining in the bottom of Phase 5, resulting in higher gold grades which offset the lower mill throughput.  Costs applicable to sales per ounce and per pound increased from the prior year quarter due to higher waste mining and milling costs, including higher labor costs.  

2010 attributable copper and gold production increased 10% and 32%, respectively, in 2010 over the prior year due to higher grade and mill throughput as a result of mining at the bottom of Phase 5 and processing softer ore, partially offset by lower recovery. Unseasonably dry weather permitted additional mining in the bottom of Phase 5 during the fourth quarter. Beginning in 2011, we expect to process stockpiled ore until Phase 6 ore becomes the primary mill feed commencing in late 2013. Costs applicable to sales increased 11% per pound and per ounce due to higher waste mining, labor and diesel costs.

2011 attributable gold production for Batu Hijau is expected to be approximately 110,000-140,000 ounces, at costs applicable to sales of between $400 and $440 per ounce, while attributable copper production is expected to be approximately 120 to 140 million pounds, at costs applicable to sales of between $1.10 and $1.30 per pound.  The decrease from 2010 production levels is primarily due to the processing of stockpiles as Phase 6 stripping continues.  

Other Australia/New Zealand  Attributable gold production was 259,000 ounces in the fourth quarter and 1.1 million ounces in 2010. Costs applicable to sales were $554 and $546 per ounce in the fourth quarter and 2010, respectively.

Fourth quarter production decreased from the prior year quarter due to lower mill grade at Jundee and Kalgoorlie, partially offset by higher throughput at Tanami.  Costs applicable to sales per ounce increased from the prior year quarter due to lower production and a stronger Australian dollar.  

2010 attributable gold production decreased 7% due to lower mill grade at Jundee and Waihi and lower mill grade and throughput at Tanami, partially offset by higher grade, throughput and recovery at Kalgoorlie. Costs applicable to sales per ounce increased 9% due to lower production and a stronger Australian dollar.

2011 attributable production for the Asia Pacific region is expected to be approximately 1.9 to 2.0 million ounces, primarily as a result of lower production at Batu Hijau. Costs applicable to sales are expected to increase to approximately $600 to $675 per ounce in 2011, primarily driven by lower Batu Hijau production. We expect attributable copper production for the Asia Pacific region of approximately 190 to 220 million pounds at costs applicable to sales of approximately $1.25 to $1.50 per pound in 2011.

Africa

Attributable gold production was 137,000 and 545,000 ounces, respectively, during the fourth quarter and 2010.  Costs applicable to sales were $433 and $450 per ounce for the fourth quarter and 2010, respectively,.

Fourth quarter production increased from the prior year quarter due to higher mill grade.   Costs applicable to sales per ounce decreased from the prior year quarter due to higher production, partially offset by higher labor, power and royalty costs.

2010 attributable gold production increased due to higher grade ore mined at Apensu in 2010 and the commencement of production at Amoma in October 2010. Costs applicable to sales per ounce increased slightly due to higher labor, power, diesel and royalty costs, partially offset by higher production.

2011 attributable gold production for the Africa operations is expected to be approximately 550,000 to 590,000 ounces due to mining higher ore grade. Costs applicable to sales of approximately $485 to $535 per ounce are expected for 2011, primarily as a result of higher energy prices and higher labor and royalty costs.

Capital Update

Consolidated capital expenditures were $1.4 billion in 2010, down from $1.8 billion in 2009, due to the completion of construction at Boddington.  Approximately $319 million was spent on major projects in 2010, with the balance largely attributed to sustaining capital.  The Company currently plans to spend $2.1 to $2.5 billion in attributable capital expenditures in 2011, or $2.7 to $3.0 billion on a consolidated basis.  Approximately 40% of 2011 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 growth and sustaining capital.

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:

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 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:

To view complete financial disclosure, including regional mine statistics, Results of Consolidated Operations, Liquidity and Capital Resources, Management's Discussion & Analysis, the Form 10-K, and a complete outline of the 2011 Operating and Financial guidance by region, please see www.newmont.com.  

The Company's fourth quarter and 2010 earnings and exploration update conference call and web cast presentation will be held on Thursday, February 24, 2011 beginning at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time). 

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.

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, including, without limitation, Deep Post, Gold Quarry, Twin Creeks, Carlin, North Lantern, La Herradura, Yanacocha, La Zanja, Boddington, Batu Hijau, Jundee, Kalgoorlie, Waihi, Tanami, Apensu, Amoma, Akyem, Conga and Hope Bay.  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 2010 Annual Report on Form 10-K, filed on February 24, 2011, 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.

SOURCE Newmont Mining Corporation