10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

 

Form 10-Q

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2014

or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-31240

 

 

LOGO

NEWMONT MINING CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   84-1611629

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

6363 South Fiddler’s Green Circle

Greenwood Village, Colorado

  80111
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code (303) 863-7414

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12-b2 of the Exchange Act. (Check one):

 

Large accelerated filer   x    Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company.)    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act).    ¨  Yes    x  No

There were 498,758,930 shares of common stock outstanding on July 18, 2014.

 

 

 


Table of Contents

TABLE OF CONTENTS

 

         Page  
PART I   

ITEM 1.

  FINANCIAL STATEMENTS      1   
  Condensed Consolidated Statements of Operations      1   
  Condensed Consolidated Statements of Comprehensive Income (Loss)      2   
  Condensed Consolidated Statements of Cash Flows      3   
  Condensed Consolidated Balance Sheets      4   
  Notes to Condensed Consolidated Financial Statements      5   

ITEM 2.

  MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION      43   
  Overview      43   
  Selected Financial and Operating Results      45   
  Consolidated Financial Results      46   
  Results of Consolidated Operations      52   
  Liquidity and Capital Resources      62   
  Environmental      65   
  Accounting Developments      66   
  Non-GAAP Financial Measures      66   
  Safe Harbor Statement      74   

ITEM 3.

  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      74   

ITEM 4.

  CONTROLS AND PROCEDURES      76   
PART II   

ITEM 1.

  LEGAL PROCEEDINGS      77   

ITEM 1A.

  RISK FACTORS      77   

ITEM 2.

  ISSUER PURCHASES OF EQUITY SECURITIES      77   

ITEM 3.

  DEFAULTS UPON SENIOR SECURITIES      77   

ITEM 4.

  MINE SAFETY DISCLOSURES      77   

ITEM 5.

  OTHER INFORMATION      78   

ITEM 6.

  EXHIBITS      78   

SIGNATURES

     79   

EXHIBIT INDEX

     80   


Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions except per share)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2014     2013     2014     2013  

Sales (Note 3)

   $ 1,765     $ 2,018     $ 3,529     $ 4,206  

Costs and expenses

        

Costs applicable to sales (1) (Note 3)

     1,060       1,682       2,143       2,739  

Depreciation and amortization

     306       415       604       682  

Reclamation and remediation (Note 4)

     21       18       41       36  

Exploration

     41       76       75       135  

Advanced projects, research and development

     42       46       84       98  

General and administrative

     48       54       93       110  

Write-downs (Note 5)

     13       2,261       13       2,262  

Other expense, net (Note 6)

     51       77       103       176  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,582       4,629       3,156       6,238  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense)

        

Other income, net (Note 7)

     3       50       49       76  

Interest expense, net

     (94     (70     (187     (135
  

 

 

   

 

 

   

 

 

   

 

 

 
     (91     (20     (138     (59
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income and mining tax and other items

     92       (2,631     235       (2,091

Income and mining tax benefit (expense) (Note 8)

     53       287       (25     107  

Equity income (loss) of affiliates

     2       (3     2       (7
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     147       (2,347     212       (1,991

Income (loss) from discontinued operations (Note 9)

     (2     74       (19     74  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     145       (2,273     193       (1,917

Net loss (income) attributable to noncontrolling interests (Note 10)

     35       214       87       172  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Newmont stockholders

   $ 180     $ (2,059   $ 280     $ (1,745
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Newmont stockholders:

        

Continuing operations

   $ 182     $ (2,133   $ 299     $ (1,819

Discontinued operations

     (2     74       (19     74  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 180     $ (2,059   $ 280     $ (1,745
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) per common share (Note 11)

        

Basic:

        

Continuing operations

   $ 0.37     $ (4.29   $ 0.60     $ (3.66

Discontinued operations

     (0.01     0.15       (0.04     0.15  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 0.36     $ (4.14   $ 0.56     $ (3.51
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted:

        

Continuing operations

   $ 0.37     $ (4.29   $ 0.60     $ (3.66

Discontinued operations

     (0.01     0.15       (0.04     0.15  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 0.36     $ (4.14   $ 0.56     $ (3.51
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends declared per common share

   $ 0.025     $ 0.35     $ 0.175     $ 0.775  

 

(1)  Excludes Depreciation and amortization and Reclamation and remediation.

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

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Table of Contents

NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in millions)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2014     2013     2014     2013  

Net income (loss)

   $ 145     $ (2,273   $ 193     $ (1,917

Other comprehensive income (loss):

        

Unrealized gain (loss) on marketable securities, net of $0, $(77), $(1) and $(115) tax benefit (expense), respectively

     (55     (227     (86     (279

Foreign currency translation adjustments

     7       (10     2       (22

Change in pension and other post-retirement benefits, net of $1, $3, $2 and $8 tax benefit, respectively

     1       6       3       11  

Change in fair value of cash flow hedge instruments, net of $9, $(130), $13 and $(145) tax benefit (expense), respectively

        

Net change from periodic revaluations

     25       (258     34       (237

Net amount reclassified to income

     (13     (11     (13     (35
  

 

 

   

 

 

   

 

 

   

 

 

 

Net unrecognized gain (loss) on derivatives

     12       (269     21       (272
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss)

     (35     (500     (60     (562
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 110     $ (2,773   $ 133     $ (2,479
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to:

        

Newmont stockholders

   $ 143     $ (2,560   $ 220     $ (2,307

Noncontrolling interests

     (33     (213     (87     (172
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 110     $ (2,773   $ 133     $ (2,479
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

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NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)

 

     Six Months Ended
June 30,
 
     2014     2013  

Operating activities:

    

Net income (loss)

   $ 193     $ (1,917

Adjustments:

    

Depreciation and amortization

     604       682  

Stock based compensation and other non-cash benefits

     27       38  

Reclamation and remediation

     41       36  

Loss (income) from discontinued operations

     19       (74

Write-downs

     13       2,262  

Impairment of marketable securities

     1       11  

Deferred income taxes

     (92     (480

Gain on asset and investment sales, net

     (52     (1

Other operating adjustments and write-downs

     260       632  

Net change in operating assets and liabilities (Note 24)

     (453     (457
  

 

 

   

 

 

 

Net cash provided from continuing operations

     561       732  

Net cash used in discontinued operations

     (6     (11
  

 

 

   

 

 

 

Net cash provided from operations

     555       721  
  

 

 

   

 

 

 

Investing activities:

    

Additions to property, plant and mine development

     (489     (1,120

Acquisitions, net

     (28     (13

Sale of marketable securities

     25       1  

Purchases of marketable securities

     (1     (1

Proceeds from sale of other assets

     76       49  

Other

     (11     (21
  

 

 

   

 

 

 

Net cash used in investing activities

     (428     (1,105
  

 

 

   

 

 

 

Financing activities:

    

Proceeds from debt, net

     18       987  

Repayment of debt

     (5     (534

Proceeds from stock issuance, net

     —         2  

Sale of noncontrolling interests

     68       32  

Acquisition of noncontrolling interests

     (4     (10

Dividends paid to noncontrolling interests

     (4     (2

Dividends paid to common stockholders

     (89     (385

Other

     (11     (3
  

 

 

   

 

 

 

Net cash provided from (used in) financing activities

     (27     87  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (2     (16
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     98       (313

Cash and cash equivalents at beginning of period

     1,555       1,561  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,653     $ 1,248  
  

 

 

   

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

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NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in millions)

 

     At June 30,     At December 31,  
     2014     2013  
ASSETS     

Cash and cash equivalents

   $ 1,653     $ 1,555  

Trade receivables

     147       230  

Accounts receivable

     299       252  

Investments (Note 16)

     84       78  

Inventories (Note 17)

     863       717  

Stockpiles and ore on leach pads (Note 18)

     775       805  

Deferred income tax assets

     287       246  

Other current assets (Note 19)

     1,246       1,006  
  

 

 

   

 

 

 

Current assets

     5,354       4,889  

Property, plant and mine development, net

     14,043       14,277  

Investments (Note 16)

     347       439  

Stockpiles and ore on leach pads (Note 18)

     2,773       2,680  

Deferred income tax assets

     1,611       1,478  

Other long-term assets (Note 19)

     848       844  
  

 

 

   

 

 

 

Total assets

   $ 24,976     $ 24,607  
  

 

 

   

 

 

 
LIABILITIES     

Debt (Note 20)

   $ 112     $ 595  

Accounts payable

     435       478  

Employee-related benefits

     232       341  

Income and mining taxes

     52       13  

Other current liabilities (Note 21)

     1,421       1,313  
  

 

 

   

 

 

 

Current liabilities

     2,252       2,740  

Debt (Note 20)

     6,673       6,145  

Reclamation and remediation liabilities (Note 4)

     1,531       1,513  

Deferred income tax liabilities

     730       635  

Employee-related benefits

     345       323  

Other long-term liabilities (Note 21)

     354       342  
  

 

 

   

 

 

 

Total liabilities

     11,885       11,698  
  

 

 

   

 

 

 

Commitments and contingencies (Note 26)

    
EQUITY     

Common stock

     798       789  

Additional paid-in capital

     8,636       8,538  

Accumulated other comprehensive income (loss)

     (242     (182

Retained earnings

     1,039       848  
  

 

 

   

 

 

 

Newmont stockholders’ equity

     10,231       9,993  

Noncontrolling interests

     2,860       2,916  
  

 

 

   

 

 

 

Total equity

     13,091       12,909  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 24,976     $ 24,607  
  

 

 

   

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

NOTE 1 BASIS OF PRESENTATION

The interim Condensed Consolidated Financial Statements (“interim statements”) of Newmont Mining Corporation and its subsidiaries (collectively, “Newmont” or the “Company”) are unaudited. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. These interim statements should be read in conjunction with Newmont’s Consolidated Financial Statements for the year ended December 31, 2013 filed on June 13, 2014 on Form 8-K. The year-end balance sheet data was derived from the audited financial statements and, in accordance with the instructions to Form 10-Q, certain information and footnote disclosures required by United States generally accepted accounting principles (“GAAP”) have been condensed or omitted. References to “A$” refer to Australian currency, “C$” to Canadian currency and “NZ$” to New Zealand currency.

On February 18, 2014 the Company redeemed all outstanding exchangeable shares (other than those held by Newmont and its affiliates). On the date of the redemption, holders of exchangeable shares received, in exchange for each exchangeable share, one share of common stock of Newmont. At December 31, 2013, the value of the remaining outstanding exchangeable shares was included in Additional paid-in capital and Common shares.

Certain amounts in prior years have been reclassified to conform to the 2014 presentation.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Risks and Uncertainties

As a global mining company, our revenue, profitability and future rate of growth are substantially dependent on prevailing prices for gold, copper and, to a lesser extent, silver. Historically, the commodity markets have been very volatile, and there can be no assurance that commodity prices will not be subject to wide fluctuations in the future. A substantial or extended decline in commodity prices could have a material adverse effect on our financial position, results of operations, cash flows, access to capital and on the quantities of reserves that we can economically produce. The carrying value of our property, plant and mine development assets, inventories, stockpiles and ore on leach pads, and deferred tax assets are particularly sensitive to the outlook for commodity prices. A decline in our long term price outlook from current levels could result in material impairment charges related to these assets.

We are currently subject to an export ban at our Batu Hijau copper mine in Indonesia. In early 2014, the Indonesian government issued new regulations that impose new export conditions, an export duty and a January 2017 ban on the export of copper concentrate, all of which violate the Contract of Work signed by the Government of Indonesia and PT Newmont Nusa Tenggara (“PTNNT”) and the bilateral investment treaty between Indonesia and the Netherlands. While the 2009 mining law preserves the validity of PTNNT’s Contract of Work (the investment agreement entered into by PTNNT and the Indonesian government in 1986, which includes the right to export copper concentrates and a prohibition against new taxes, duties, and levies), the Indonesian government has stated its intention to enforce the new regulations on PTNNT’s operations and has not yet recognized PTNNT’s rights to export copper concentrate and only pay the taxes, duties, and levies specified in the Contract of Work. The Company believes that these new 2014 regulations conflict with the Contract of Work. Although PTNNT is continuing to engage with government officials in Indonesia in an effort to resolve this issue and gain clarity on implementation of the new regulations, the Company can make no assurances that the new regulations will not continue to impact operations or outlook for the Batu Hijau operation for an extended period. In June 2014, the Company invoked the force majeure clause in its Contract of Work due to these export issues and placed the Batu Hijau operations on care and maintenance. In July 2014, the Company filed international arbitration against the Government of Indonesia.

As a result of placing the Batu Hijau copper mine on care and maintenance, we have evaluated, and will continue to evaluate, the need for asset impairments, inventory write-downs, tax valuation allowances and other applicable accounting charges due to the status of the mine. PTNNT will continue to incur various costs during the care and maintenance period.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

Recently Adopted Accounting Pronouncements

Discontinued Operations

In April 2014, ASC guidance was issued related to Discontinued Operations which changed the criteria for determining which disposals can be presented as discontinued operations and modified related disclosure requirements. The updated guidance requires an entity to only classify discontinued operations due to a major strategic shift or a major effect on an entity’s operations in the financial statements. The updated guidance will also require additional disclosures relating to discontinued operations. The Company early adopted this guidance prospectively at the beginning of fiscal year January 1, 2014. Adoption of the new guidance did not have an impact on the consolidated financial position, results of operations or cash flows.

Presentation of an Unrecognized Tax Benefit

In July 2013, ASC guidance was issued related to the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. The updated guidance requires an entity to net its unrecognized tax benefits against the deferred tax assets for all same jurisdiction net operating loss carryforward, a similar tax loss, or tax credit carryforwards. A gross presentation will be required only if such carryforwards are not available or would not be used by the entity to settle any additional income taxes resulting from disallowance of the uncertain tax position. Adoption of the new guidance, effective for the fiscal year beginning January 1, 2014, had no impact on the consolidated financial position, results of operations or cash flows.

Foreign Currency Matters

In March 2013, ASC guidance was issued related to foreign currency matters to clarify the treatment of cumulative translation adjustments when a parent sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. The updated guidance also resolves the diversity in practice for the treatment of business combinations achieved in stages in a foreign entity. Adoption of the new guidance, effective for the fiscal year beginning January 1, 2014, had no impact on the consolidated financial position, results of operations or cash flows.

Recently Issued Accounting Pronouncements

Stock based compensation

In June 2014, ASU guidance was issued to resolve the diversity of practice relating to the accounting for stock based performance awards that the performance target could be achieved after the employee completes the required service period. The update is effective prospectively or retrospectively beginning January 1, 2015. The Company does not expect the updated guidance to have an impact on the consolidated financial position, results of operations or cash flows.

Revenue Recognition

In May 2014, ASU guidance was issued related to revenue from contracts with customers. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods and is to be retrospectively applied. Early adoption is not permitted. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 3 SEGMENT INFORMATION

The Company’s reportable segments are based upon the Company’s management structure that is focused on the geographic region for the Company’s operations. Geographic regions include North America, South America, Australia/New Zealand, Indonesia, Africa and Corporate and Other. Segment results for 2013 have been retrospectively revised to reflect a change in our reportable segments to align with a change in the chief operating decision makers’ evaluation of the organization, effective in the first quarter of 2014. The Nevada operations have been revised to reflect Carlin, Phoenix, and Twin Creeks segments and Other Australia/New Zealand operations have been revised to reflect Tanami, Jundee, Waihi and Kalgoorlie segments. The Conga development project will be reported in the Other South America segment. The Nimba and Merian development projects, historically reported in Other Africa and Other South America, respectively, will be reported in Corporate and Other. The financial information relating to the Company’s segments for all periods presented have been updated to reflect these changes.

On July 1, 2014, the Company completed the sale of its Jundee underground gold mine in Australia to Northern Star Resources Limited for total proceeds of approximately $94. As of June 30, 2014, total assets and total liabilities were $119 and $50, respectively.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

     Sales      Costs
Applicable
to Sales
     Depreciation
and
Amortization
     Advanced
Projects and
Exploration
     Pre-Tax
Income (Loss)
 

Three Months Ended June 30, 2014

              

Carlin

   $ 268      $ 209      $ 43      $ 7      $ 3  

Phoenix:

              

Gold

     72        35        9        

Copper

     39        30        5        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     111        65        14        —          30  

Twin Creeks

     125        49        9        3        62  

La Herradura

     59        26        10        2        20  

Other North America

     —          —          —          6        (7
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

North America

     563        349        76        18        108  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Yanacocha

     240        184        84        9        (53

Other South America

     —          —          —          9        (24
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

South America

     240        184        84        18        (77
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Boddington:

              

Gold

     190        133        24        

Copper

     38        32        6        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     228        165        30        —          27  

Tanami

     119        63        18        4        33  

Jundee

     97        43        17        —          37  

Waihi

     52        19        7        1        24  

Kalgoorlie

     96        65        4        2        22  

Other Australia/New Zealand

     —          —          5        1        (13
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Australia/New Zealand

     592        355        81        8        130  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Batu Hijau:

              

Gold

     10        9        3        

Copper

     59        54        17        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     69        63        20        1        (33

Other Indonesia

     —          —          —          —          (1
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Indonesia

     69        63        20        1        (34
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ahafo

     156        65        17        5        71  

Akyem

     145        44        21        —          74  

Other Africa

     —          —          —          3        (5
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Africa

     301        109        38        8        140  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Corporate and Other

     —          —          7        30        (175
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated

   $ 1,765      $ 1,060      $ 306      $ 83      $ 92  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

8


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

     Sales      Costs
Applicable to
Sales
     Depreciation
and
Amortization
     Advanced
Projects and
Exploration
     Pre-Tax
Income (Loss)
 

Three Months Ended June 30, 2013

              

Carlin

   $ 290      $ 169      $ 27      $ 8      $ 80  

Phoenix:

              

Gold

     80        37        8        

Copper

     25        15        3        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     105        52        11        3        37  

Twin Creeks

     188        80        22        3        80  

La Herradura

     71        42        7        15        8  

Other North America

     —          —          —          13        (17
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

North America

     654        343        67        42        188  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Yanacocha

     420        201        97        10        83  

Other South America

     —          —          —          2        (5
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

South America

     420        201        97        12        78  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Boddington:

              

Gold

     249        252        59        

Copper

     49        62        14        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     298        314        73        —          (2,200

Tanami

     83        64        17        3        (116

Jundee

     105        51        21        3        30  

Waihi

     34        25        8        1        —    

Kalgoorlie

     110        123        8        1        (17

Other Australia/New Zealand

     —          —          3        4        (25
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Australia/New Zealand

     630        577        130        12        (2,328
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Batu Hijau:

              

Gold

     15        63        13        

Copper

     99        413        81        
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     114        476        94        5        (477

Other Indonesia

     —          —          —          —          (1
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Indonesia

     114        476        94        5        (478
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Ahafo

     200        85        20        11        84  

Akyem

     —          —          —          2        (2

Other Africa

     —          —          —          4        (8
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Africa

     200        85        20        17        74  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Corporate and Other

     —          —          7        34        (165
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated

   $ 2,018      $ 1,682      $ 415      $ 122      $ (2,631
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

9


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

     Sales      Costs
Applicable
to Sales
     Depreciation
and
Amortization
     Advanced
Projects and
Exploration
     Pre-Tax
Income (Loss)
    Capital
Expenditures(1)
 

Six Months Ended June 30, 2014

                

Carlin

   $ 561      $ 401      $ 78      $ 11      $ 64     $ 102  

Phoenix:

                

Gold

     142        69        14          

Copper

     71        56        8          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     213        125        22        1        59       16  

Twin Creeks

     257        104        20        4        173       60  

La Herradura

     90        42        18        6        23       14  

Other North America

     —          —          —          12        (16     6  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

North America

     1,121        672        138        34        303       198  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Yanacocha

     505        405        185        16        (140     35  

Other South America

     —          —          —          17        (32     15  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

South America

     505        405        185        33        (172     50  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Boddington:

                

Gold

     410        275        49          

Copper

     77        72        12          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     487        347        61        —          64       46  

Tanami

     224        118        35        5        61       38  

Jundee

     179        85        34        1        58       15  

Waihi

     85        38        12        1        31       5  

Kalgoorlie

     214        142        10        3        55       5  

Other Australia/New Zealand

     —          —          9        2        (25     4  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Australia/New Zealand

     1,189        730        161        12        244       113  

Batu Hijau:

                

Gold

     18        17        5          

Copper

     101        111        30          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     119        128        35        2        (84     31  

Other Indonesia

     —          —          —          —          (1     —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Indonesia

     119        128        35        2        (85     31  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Ahafo

     297        126        33        14        115       60  

Akyem

     298        82        42        —          162       —    

Other Africa

     —          —          —          5        (8     —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Africa

     595        208        75        19        269       60  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Corporate and Other

     —          —          10        59        (324     12  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Consolidated

   $ 3,529      $ 2,143      $ 604      $ 159      $ 235     $ 464  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)  Includes a decrease in accrued capital expenditures of $25; consolidated capital expenditures on a cash basis were $489.

 

10


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

     Sales      Costs
Applicable
to Sales
     Depreciation
and
Amortization
     Advanced
Projects and
Exploration
     Pre-Tax
Income (Loss)
    Capital
Expenditures(1)
 

Six Months Ended June 30, 2013

                

Carlin

   $ 641      $ 348      $ 59      $ 19      $ 208     $ 119  

Phoenix:

                

Gold

     133        78        15          

Copper

     36        26        5          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     169        104        20        7        33       68  

Twin Creeks

     354        132        40        6        172       43  

La Herradura

     161        82        13        21        45       64  

Other North America

     —          —          —          21        (26     13  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

North America

     1,325        666        132        74        432       307  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Yanacocha

     875        361        167        23        276       89  

Other South America

     —          —          —          5        (7     161  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

South America

     875        361        167        28        269       250  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Boddington:

                

Gold

     578        426        101          

Copper

     114        110        24          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     692        536        125        —          (2,085     54  

Tanami

     181        139        33        5        (112     44  

Jundee

     229        105        37        7        80       23  

Waihi

     84        53        16        2        12       8  

Kalgoorlie

     230        198        13        2        22       5  

Other Australia/New Zealand

     —          —          5        8        (37     3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Australia/New Zealand

     1,416        1,031        229        24        (2,120     137  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Batu Hijau:

                

Gold

     26        70        15          

Copper

     169        460        90          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     195        530        105        11        (481     56  

Other Indonesia

     —          —          —          —          2       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Indonesia

     195        530        105        11        (479     56  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Ahafo

     395        151        37        24        187       117  

Akyem

     —          —          —          5        (7     154  

Other Africa

     —          —          —          6        (17     —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Africa

     395        151        37        35        163       271  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Corporate and Other

     —          —          12        61        (356     48  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Consolidated

   $ 4,206      $ 2,739      $ 682      $ 233      $ (2,091   $ 1,069  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)  Includes a decrease in accrued capital expenditures of $51; consolidated capital expenditures on a cash basis were $1,120.

 

11


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 4 RECLAMATION AND REMEDIATION

The Company’s Reclamation and remediation expense consisted of:

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2014      2013      2014      2013  

Accretion—operating

   $ 18      $ 15      $ 36      $ 30  

Accretion—non-operating

     3        3        5        6  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 21      $ 18      $ 41      $ 36  
  

 

 

    

 

 

    

 

 

    

 

 

 

At June 30, 2014 and December 31, 2013, $1,457 and $1,432, respectively, were accrued for reclamation obligations relating to operating properties. In addition, the Company is involved in several matters concerning environmental obligations associated with former, primarily historic, mining activities. Generally, these matters concern developing and implementing remediation plans at the various sites involved. At June 30, 2014 and December 31, 2013, $165 and $179, respectively, were accrued for such obligations. These amounts are also included in Reclamation and remediation liabilities.

The following is a reconciliation of Reclamation and remediation liabilities:

 

     Six Months Ended June 30,  
     2014     2013  

Balance at beginning of period

   $ 1,611     $ 1,539  

Additions, changes in estimates and other

     (7     (3

Liabilities settled

     (23     (24

Accretion expense

     41       36  
  

 

 

   

 

 

 

Balance at end of period

   $ 1,622     $ 1,548  
  

 

 

   

 

 

 

The current portion of Reclamation and remediation liabilities of $91 and $98 at June 30, 2014 and December 31, 2013, respectively, are included in Other current liabilities (see Note 21).

 

12


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 5 WRITE-DOWNS

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2014      2013      2014      2013  

Property, plant and mine development

           

Yanacocha

   $ —        $ —        $ —        $ 1  

Other South America

     13        —          13        —    

Boddington

     —          2,107        —          2,107  

Tanami

     —          66        —          66  

Batu Hijau

     —          1        —          1  
  

 

 

    

 

 

    

 

 

    

 

 

 
     13        2,174        13        2,175  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other long-term assets

           

Boddington

     —          31        —          31  

Tanami

     —          56        —          56  
  

 

 

    

 

 

    

 

 

    

 

 

 
     —          87        —          87  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 13      $ 2,261      $ 13      $ 2,262  
  

 

 

    

 

 

    

 

 

    

 

 

 

Write-downs totaled $13 for the three and six months ended June 30, 2014, and $2,261 and $2,262 for the three and six months ended June 30, 2013, respectively. The 2014 write-downs are primarily related to non-essential equipment in Other South America. The 2013 write-downs were primarily due to a decrease in the Company’s long-term gold and copper price assumptions during the second quarter to $1,400 per ounce and $3.00 per pound, respectively, combined with rising operating costs. These factors represented significant changes in the business, requiring the Company to evaluate for impairment. For purposes of this evaluation, estimates of future cash flows of the individual reporting units were used to determine fair value. The estimated cash flows were derived from life-of-mine plans, developed using long-term pricing reflective of the current price environment and projections for operating costs.

Due to the above conditions in 2013, Goodwill was included in the Company’s impairment analysis. After-tax discounted future cash flows of reporting units with Goodwill were analyzed. Goodwill had a carrying value of $188 at December 31, 2012. As a result of this evaluation, the Company recorded an impairment of $56 at Tanami, resulting in a carrying value of $132 at June 30, 2013.

NOTE 6 OTHER EXPENSE, NET

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2014      2013      2014      2013  

Regional administration

   $ 16      $ 18      $ 31      $ 36  

Community development

     15        17        26        30  

Restructuring and other

     6        21        13        30  

Western Australia power plant

     1        7        7        11  

Transaction/Acquisition costs

     —          —          —          45  

Other

     13        14        26        24  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 51      $ 77      $ 103      $ 176  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

13


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 7 OTHER INCOME, NET

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2014     2013     2014     2013  

Gain on Midas sale

   $ —       $ —       $ 47     $ —    

Refinery Income, net

     5       4       9       7  

Gain on sale of investments, net

     1       —         5       —    

Development projects, net

     —         7       2       8  

Interest

     1       2       2       6  

Canadian Oil Sands dividends

     —         11       —         21  

Derivative ineffectiveness, net

     —         (3     —         —    

Impairment of marketable securities

     —         (7     (1     (11

Foreign currency exchange, net

     (10     40       (24     37  

Other

     6       (4     9       8  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 3     $ 50     $ 49     $ 76  
  

 

 

   

 

 

   

 

 

   

 

 

 

NOTE 8 INCOME AND MINING TAXES

During the second quarter of 2014, the Company recorded an estimated income and mining tax benefit of $53, resulting in an effective tax rate of (58)%. Estimated income and mining tax benefit during the second quarter of 2013 was $287 for an effective tax rate of 12%. During the first half of 2014, the estimated income and mining tax expense was $25, resulting in an effective tax rate of 10%. Estimated income and mining tax benefit during the first half of 2013 was $107 for an effective tax rate of 7%.

The Company’s income and mining tax expense differed from the amounts computed by applying the United States statutory corporate income tax rate for the following reasons:

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2014     2013     2014     2013  

Income (loss) before income and mining tax and other items

     $ 92       $ (2,631     $ 235       $ (2,091
    

 

 

     

 

 

     

 

 

     

 

 

 

Tax at statutory rate

     35   $ 32       35   $ (921     35   $ 82       35   $ (732

Reconciling items:

                

Percentage depletion

     (21 )%      (19     2     (52     (13 )%      (30     4     (93

Change in valuation allowance on deferred tax assets

     (81 )%      (75     (26 )%      723       (27 )%      (62     (33 )%      728  

Mining and other Taxes

     5     5       (1 )%      18       3     8       (1 )%      36  

Disallowed loss on Midas Sale

       —           —         6     13         —    

Effect of foreign earnings, net of credits

     3     3       (1 )%      20       4     9       (1 )%      16  

Other

     1     1       3     (75     2     5       3     (62
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income and mining tax expense (benefit)

     (58 )%    $ (53     12   $ (287     10   $ 25       7   $ (107
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The difference in effective tax rates is due to the following: (i) a 2014 release of valuation allowance on some of the Company’s tax credits related to the settlement of an income tax audit (ii) a larger impact in 2014 from percentage depletion, partially offset by (iii) a 2014 increase in the rate associated with mining taxes.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

A valuation allowance is provided for those deferred tax assets for which it is more likely than not that the related benefits will not be realized. In determining the amount of the valuation allowance, each quarter the Company considers future reversals of existing taxable temporary differences, estimated future taxable income, taxable income in prior carryback year(s), as well as feasible tax planning strategies in each jurisdiction to determine if the deferred tax assets are realizable. If it is determined that the Company will not realize all or a portion of its deferred tax assets, it will place or increase a valuation allowance. Conversely, if determined that it will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced. There are a number of risk factors that could impact the Company’s ability to realize the deferred tax assets. See Note 2, Summary of Significant Accounting Policies, Risks and Uncertainties.

The Company operates in numerous countries around the world and accordingly it is subject to, and pays annual income taxes under, the various income tax regimes in the countries in which it operates. Some of these tax regimes are defined by contractual agreements with the local government, and others are defined by the general corporate income tax laws of the country. The Company has historically filed, and continues to file, all required income tax returns and pay the income taxes reasonably determined to be due. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time the Company is subject to a review of its historic income tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company’s business conducted within the country involved.

At June 30, 2014, the Company’s total unrecognized tax benefit was $396 for uncertain income tax positions taken or expected to be taken on income tax returns. Of this, $33 represents the amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate.

As a result of the statute of limitations that expire in the next 12 months in various jurisdictions, and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease by approximately $5 to $10 in the next 12 months.

NOTE 9 DISCONTINUED OPERATIONS

Discontinued operations include Holloway Mining Company, which owned the Holt-McDermott property (“Holt property”) that was sold to St. Andrew Goldfields Ltd. (“St. Andrew”) in 2006. In 2009, the Superior Court issued a decision finding Newmont Canada Corporation (“Newmont Canada”) liable for a sliding scale royalty on production from the Holt property, which was upheld in 2011 by the Ontario Court of Appeal. During the second quarter of 2014, the Company recorded a charge of $2, net of tax benefits of $1, related to a decrease in discount rates offset by a decrease in gold price. During the first half of 2014, the Company recorded a charge from discontinued operations of $19, net of tax benefit of $9, related to an increase in gold price, an increase in expected future production and a decrease in discount rates. During the second quarter of 2013, the Company recorded a benefit of $74, net of tax expense of $34, related to a decline in the gold spot price and an increase in discount rates. During the first half of 2013, the Company recorded a benefit from discontinued operations of $74, net of tax expense of $34, related to a decline in the gold spot price and an increase in discount rates.

Net operating cash used in discontinued operations of $6 and $11 in the first half of 2014 and 2013 respectively relates to payments on the Holt property royalty.

NOTE 10 NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2014     2013     2014     2013  

Minera Yanacocha

   $ (20   $ 24     $ (49   $ 81  

Batu Hijau

     (10     (238     (33     (241

TMAC

     (6     (2     (7     (14

Other

     1       2       2       2  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ (35   $ (214   $ (87   $ (172
  

 

 

   

 

 

   

 

 

   

 

 

 

Newmont has a 51.35% ownership interest in Minera Yanacocha S.R.L. (“Yanacocha”), with the remaining interests held by Compañia de Minas Buenaventura, S.A.A. (43.65%) and the International Finance Corporation (5%).

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

Newmont has a 48.5% effective economic interest in PT Newmont Nusa Tenggara (“PTNNT”) with remaining interests held by an affiliate of Sumitomo Corporation of Japan and various Indonesian entities. PTNNT operates the Batu Hijau copper and gold mine in Indonesia. Based on ASC guidance for variable interest entities, Newmont consolidates PTNNT in its Condensed Consolidated Financial Statements.

Newmont’s economic ownership interest in TMAC was reduced to 45.2% from 70.4% in April 2014 due to TMAC’s private placement to raise funds. The remaining interests are held by TMAC management and various outside investors.

NOTE 11 INCOME PER COMMON SHARE

Basic income per common share is computed by dividing income available to Newmont common stockholders by the weighted average number of common shares outstanding during the period. Diluted income per common share is computed similarly except that weighted average common shares is increased to reflect all dilutive instruments.

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2014     2013     2014     2013  

Net income (loss) attributable to Newmont stockholders

        

Continuing operations

   $ 182     $ (2,133   $ 299     $ (1,819

Discontinued operations

     (2     74       (19     74  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 180     $ (2,059   $ 280     $ (1,745
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares (millions):

        

Basic

     499       497       498       497  

Effect of employee stock-based awards

     —         —         1       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     499       497       499       497  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) per common share

        

Basic:

        

Continuing operations

   $ 0.37     $ (4.29   $ 0.60     $ (3.66

Discontinued operations

     (0.01     0.15       (0.04     0.15  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 0.36     $ (4.14   $ 0.56     $ (3.51
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted:

        

Continuing operations

   $ 0.37     $ (4.29   $ 0.60     $ (3.66

Discontinued operations

     (0.01     0.15       (0.04     0.15  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 0.36     $ (4.14   $ 0.56     $ (3.51
  

 

 

   

 

 

   

 

 

   

 

 

 

Options to purchase 3 and 4 million shares of common stock at average exercise prices of $48 and $48 were outstanding at June 30, 2014 and 2013, respectively, but were not included in the computation of diluted weighted average common shares because their exercise prices exceeded the average price of the Company’s common stock for the respective periods presented.

Other outstanding options to purchase 1 million shares of common stock were not included in the computation of diluted weighted average common shares in the second quarter and first half of 2013 because their effect would have been anti-dilutive.

Newmont is required to settle the principal amount of its 2014 and 2017 Convertible Senior Notes in cash and may elect to settle the remaining conversion premium (average share price in excess of the conversion price), if any, in cash, shares or a combination thereof. The effect of contingently convertible instruments on diluted earnings per share is calculated under the net share settlement method in accordance with ASC guidance. The conversion price exceeded the Company’s share price for the periods presented, therefore no additional shares were included in the computation of diluted weighted average common shares.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 12 EMPLOYEE PENSION AND OTHER BENEFIT PLANS

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2014     2013     2014     2013  

Pension benefit costs, net

        

Service cost

   $ 7     $ 9     $ 13     $ 18  

Interest cost

     10       10       20       20  

Expected return on plan assets

     (13     (13     (26     (25

Amortization

     4       10       7       18  

Settlements

     3       —         3       —    
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 11     $ 16     $ 17     $ 31  
  

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended June 30,     Six Months Ended June 30,  
     2014     2013     2014     2013  

Other benefit costs, net

        

Service cost

   $ —       $ 1     $ 1     $ 2  

Interest cost

     1       2       3       3  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 1     $ 3     $ 4     $ 5  
  

 

 

   

 

 

   

 

 

   

 

 

 

NOTE 13 STOCK BASED COMPENSATION

 

     Three Months Ended June 30,      Six Months Ended June 30,  
     2014      2013      2014      2013  

Stock options

   $ 1      $ 2      $ 2      $ 5  

Restricted stock units

     8        7        15        16  

Performance leveraged stock units

     2        2        5        4  

Strategic performance units

     2        3        5        3  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 13      $ 14      $ 27      $ 28  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 14 FAIR VALUE ACCOUNTING

The following table sets forth the Company’s assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. As required by accounting guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

     Fair Value at June 30, 2014  
     Total      Level 1      Level 2      Level 3  

Assets:

           

Cash equivalents

   $ 861      $ 861      $ —        $ —    

Marketable equity securities:

           

Extractive industries

     244        244        —          —    

Other

     16        16        —          —    

Marketable debt securities:

           

Asset backed commercial paper

     24        —          —          24  

Auction rate securities

     6        —          —          6  

Trade receivable from provisional copper and gold concentrate sales, net

     111        111        —          —    

Derivative instruments, net:

           

Diesel forward contracts

     4        —          4        —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 1,266      $ 1,232      $ 4      $ 30  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Derivative instruments, net:

           

Foreign exchange forward contracts

   $ 30      $ —        $ 30      $ —    

Boddington contingent consideration

     10        —          —          10  

Holt property royalty

     155        —          —          155  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 195      $ —        $ 30      $ 165  
  

 

 

    

 

 

    

 

 

    

 

 

 

The fair values of the derivative instruments in the table above are presented on a net basis. The gross amounts related to the fair value of the derivatives instruments above are included in the Derivatives Instruments Note (see Note 15). All other Fair Value disclosures in the above table are presented on a gross basis.

The following table sets forth a summary of the quantitative and qualitative information related to the unobservable inputs used in the calculation of the Company’s Level 3 financial assets and liabilities at June 30, 2014:

 

Description

  At June 30, 2014    

Valuation technique

 

Unobservable input

  Range/Weighted
average
 

Auction Rate Securities

  $ 6     Discounted cash flow   Weighted average recoverability rate     80 

Asset Backed Commercial Paper

    24     Discounted cash flow   Recoverability rate     90 

Boddington Contingent Consideration

    10     Monte Carlo   Discount rate    
      Long Term Gold price   $ 1,300  
      Long Term Copper price   $ 3.00  

Holt property royalty

    155     Monte Carlo   Weighted average discount rate    
      Long Term Gold price   $ 1,300  

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

The following table sets forth a summary of changes in the fair value of the Company’s Level 3 financial assets and liabilities at June 30, 2014:

 

     Auction Rate
Securities
     Asset Backed
Commercial
Paper
    Total Assets      Boddington
Contingent
Royalty
     Holt Property
Royalty
    Total
Liabilities
 

Balance at beginning of period

   $ 5      $ 25     $ 30      $ 10      $ 134     $ 144  

Settlements

     —          —         —          —          (6     (6

Revaluation

     1        (1     —          —          27       27  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Balance at end of period

   $ 6      $ 24     $ 30      $ 10      $ 155     $ 165  
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

At June 30, 2014, assets and liabilities classified within Level 3 of the fair value hierarchy represent 2% and 85%, respectively, of total assets and liabilities measured at fair value.

NOTE 15 DERIVATIVE INSTRUMENTS

The Company’s strategy is to provide shareholders with leverage to changes in gold and copper prices by selling its production at spot market prices. Consequently, the Company does not hedge its gold and copper sales. The Company continues to manage certain risks associated with commodity input costs, interest rates and foreign currencies using the derivative market. All of the derivative instruments described below were transacted for risk management purposes and qualify as cash flow hedges.

Cash Flow Hedges

The foreign currency and diesel contracts are designated as cash flow hedges, and as such, the effective portion of unrealized changes in market value have been recorded in Accumulated other comprehensive income (loss) and are reclassified to income during the period in which the hedged transaction affects earnings. Gains and losses from hedge ineffectiveness are recognized in current earnings.

Foreign Currency Contracts

Newmont had the following foreign currency derivative contracts outstanding at June 30, 2014:

 

     Expected Maturity Date  
     2014     2015     2016     2017     2018     Total/
Average
 

A$ Operating Fixed Forward Contracts:

            

A$ notional (millions)

     153       270       158       105       6       692  

Average rate ($/A$)

     0.99       0.98       0.95       0.93       0.92       0.97  

Expected hedge ratio

     19     18     11     7     4  

NZ$ Operating Fixed Forward Contracts:

            

NZ$ notional (millions)

     32       47       7       —         —         86  

Average rate ($/NZ$)

     0.80       0.80       0.81       —         —         0.80  

Expected hedge ratio

     62     38     14     —         —      

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

Diesel Fixed Forward Contracts

Newmont had the following diesel derivative contracts outstanding at June 30, 2014:

 

     Expected Maturity Date  
                       Total/  
     2014     2015     2016     2017     Average  

Diesel Fixed Forward Contracts:

          

Diesel gallons (millions)

     12       18       10       2       42  

Average rate ($/gallon)

     2.85       2.78       2.69       2.67       2.77  

Expected Nevada hedge ratio

     60     46     26     8  

Derivative Instrument Fair Values

Newmont had the following derivative instruments designated as hedges at June 30, 2014 and December 31, 2013:

 

     Fair Value  
     At June 30, 2014  
     Other
Current
Assets
     Other Long-
Term Assets
     Other
Current
Liabilities
     Other Long-
Term
Liabilities
 

Foreign currency exchange contracts:

           

A$ operating fixed forwards

   $ —        $ —        $ 16      $ 19  

NZ$ operating fixed forwards

     4        1        —          —    

Diesel fixed forwards

     2        2        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total derivative instruments (Notes 19 and 21)

   $ 6      $ 3      $ 16      $ 19  
  

 

 

    

 

 

    

 

 

    

 

 

 
     Fair Value  
     At December 31, 2013  
     Other
Current
Assets
     Other Long-
Term Assets
     Other
Current
Liabilities
     Other Long-
Term
Liabilities
 

Foreign currency exchange contracts:

           

A$ operating fixed forwards

   $ —        $ —        $ 36      $ 60  

NZ$ operating fixed forwards

     1        —          —          —    

Diesel fixed forwards

     3        1        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total derivative instruments (Notes 19 and 21)

   $ 4      $ 1      $ 36      $ 60  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

The following tables show the location and amount of gains (losses) reported in the Company’s Consolidated Financial Statements related to the Company’s cash flow hedges.

 

    Foreign Currency
Exchange Contracts
    Diesel Forward
Contracts
    Forward Starting
Swap Contracts
 
    2014     2013     2014     2013     2014     2013  

For the three months ended June 30,

           

Cash flow hedging relationships:

           

Gain (loss) recognized in other comprehensive income (loss) (effective portion)

  $ 18     $ (386   $ 3     $ (6   $ —       $ —    

Gain (loss) reclassified from Accumulated other comprehensive income into income (loss) (effective portion) (1) 

    22       22       1       (4     (4     (6

Gain (loss) reclassified from Accumulated other comprehensive loss into income (ineffective portion)(2) 

    —         —         —         (3     —         —    

For the six months ended June 30,

           

Cash flow hedging relationships:

           

Gain (loss) recognized in other comprehensive income (loss) (effective portion)

  $ 52     $ (368   $ 1     $ (4   $ —       $ —    

Gain (loss) reclassified from Accumulated other comprehensive income into income (loss) (effective portion) (1) 

    27       60       1       —         (9     (9

 

(1) The gain (loss) recognized for the effective portion of cash flow hedges is included in Cost Applicable to Sales, Write-downs and Interest expense, net.
(2)  The ineffective portion recognized for cash flow hedges is included in Other income, net.

Based on fair values at June 30, 2014 the amount to be reclassified from Accumulated other comprehensive income (loss), net of tax to income for derivative instruments during the next 12 months is a gain of approximately $3.

Provisional Copper and Gold Sales

The Company’s provisional copper and gold sales contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from the sale of the gold and copper concentrates at the prevailing indices’ prices at the time of sale. The embedded derivative, which does not qualify for hedge accounting, is marked to market through earnings each period prior to final settlement.

London Metal Exchange (“LME”) copper prices averaged $3.08 per pound during the three months ended June 30, 2014, compared with the Company’s recorded average provisional price of $3.12 per pound before mark-to-market adjustments and treatment and refining charges. LME copper prices averaged $3.14 per pound during the six months ended June 30, 2014, compared with the Company’s recorded average provisional price of $3.13 per pound before mark-to-market adjustments and treatment and refining charges. During the three and six months ended June 30, 2014, changes in copper prices resulted in a provisional pricing mark-to-market gain of $6 ($0.14 per pound) and loss of $11 ($0.13 per pound), respectively. At June 30, 2014, Newmont had copper sales of 48 million pounds priced at an average of $3.15 per pound, subject to final pricing over the next several months.

The average London P.M. fix for gold was $1,288 per ounce during the three months ended June 30, 2014, compared with the Company’s recorded average provisional price of $1,287 per ounce before mark-to-market adjustments and treatment and refining charges. The average London P.M. fix for gold was $1,291 per ounce during the six months ended June 30, 2014, compared to the Company’s recorded average provisional price of $1,290 per ounce before mark-to-market adjustments and treatment and refining charges. During the three months ended June 30, 2014 there was minimal fluctuation in the gold price, resulting in a provisional pricing mark-to-market close to nil. During the six months ended June 30, 2014, changes in gold prices resulted in a gain of $5 ($2 per ounce). At June 30, 2014, Newmont had gold sales of 54,000 ounces priced at an average of $1,311 per ounce, subject to final pricing over the next several months.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 16 INVESTMENTS

 

     At June 30, 2014  
     Cost/Equity      Unrealized     Fair/Equity  
     Basis      Gain      Loss     Basis  

Current:

          

Marketable Equity Securities:

          

Gabriel Resources Ltd.

   $ 37      $ 8      $ —       $ 45  

Other

     29        13        (3     39  
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 66      $ 21      $ (3   $ 84  
  

 

 

    

 

 

    

 

 

   

 

 

 

Long-term:

          

Marketable Debt Securities:

          

Asset backed commercial paper

   $ 23      $ 1      $ —       $ 24  

Auction rate securities

     8        —          (2     6  
  

 

 

    

 

 

    

 

 

   

 

 

 
     31        1        (2     30  
  

 

 

    

 

 

    

 

 

   

 

 

 

Marketable Equity Securities:

          

Regis Resources Ltd.

     165        —          (15     150  

Other

     21        6        (1     26  
  

 

 

    

 

 

    

 

 

   

 

 

 
     186        6        (16     176  
  

 

 

    

 

 

    

 

 

   

 

 

 

Other investments, at cost

     20        —          —         20  

Investment in Affiliates:

          

Euronimba Ltd.

     2        —          —         2  

Minera La Zanja S.R.L.

     104        —          —         104  

Novo Resources Corp.

     15        —          —         15  
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 358      $ 7      $ (18   $ 347  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

     At December 31, 2013  
     Cost/Equity      Unrealized     Fair/Equity  
     Basis      Gain      Loss     Basis  

Current:

          

Marketable Equity Securities:

          

Gabriel Resources Ltd.

   $ 37      $ —        $ —       $ 37  

Paladin Energy Ltd.

     21        1        —         22  

Other

     19        4        (4     19  
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 77      $ 5      $ (4   $ 78  
  

 

 

    

 

 

    

 

 

   

 

 

 

Long-term:

          

Marketable Debt Securities:

          

Asset backed commercial paper

   $ 23      $ 2      $ —       $ 25  

Auction rate securities

     8        —          (3     5  
  

 

 

    

 

 

    

 

 

   

 

 

 
     31        2        (3     30  
  

 

 

    

 

 

    

 

 

   

 

 

 

Marketable Equity Securities:

          

Regis Resources Ltd.

     165        88        —         253  

Other

     30        5        —         35  
  

 

 

    

 

 

    

 

 

   

 

 

 
     195        93        —         288  
  

 

 

    

 

 

    

 

 

   

 

 

 

Other investments, at cost

     13        —          —         13  

Investment in Affiliates:

          

Minera La Zanja S.R.L.

     92        —          —         92  

Novo Resources Corp.

     16        —          —         16  
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 347      $ 95      $ (3   $ 439  
  

 

 

    

 

 

    

 

 

   

 

 

 

In March 2014, the Company sold its investment in Paladin Energy Ltd. for $25, resulting in a pre-tax gain of $4 recorded in Other income, net. In June 2014, the Company completed the sale of its investment in Leyshon Energy Ltd. for $1, resulting in a pre-tax gain of $1 recorded in Other income, net.

The following tables present the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by length of time that the individual securities have been in a continuous unrealized loss position:

 

     Less than 12 Months      12 Months or Greater      Total  

At June 30, 2014

   Fair Value      Unrealized
Losses
     Fair Value      Unrealized
Losses
     Fair Value      Unrealized
Losses
 

Marketable equity securities

   $ 158      $ 19      $ —        $ —        $ 158      $ 19  

Auction rate securities

     —          —          6        2        6        2  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 158      $ 19      $ 6      $ 2      $ 164      $ 21  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     Less than 12 Months      12 Months or Greater      Total  

At December 31, 2013

   Fair Value      Unrealized
Losses
     Fair Value      Unrealized
Losses
     Fair Value      Unrealized
Losses
 

Marketable equity securities

   $ 54      $ 4      $ —        $ —        $ 54      $ 4  

Auction rate securities

     —          —          5        3        5        3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 54      $ 4      $ 5      $ 3      $ 59      $ 7  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

While the fair value of the Company’s investments in marketable equity securities and auction rate securities are below their respective cost, the Company views these declines as temporary. The Company has the ability and intends to hold its auction rate securities until maturity or such time that the market recovers.

NOTE 17 INVENTORIES

 

     At June 30,      At December 31,  
     2014      2013  

In-process

   $ 115      $ 97  

Concentrate

     239        108  

Precious metals

     22        26  

Materials, supplies and other

     487        486  
  

 

 

    

 

 

 
   $ 863      $ 717  
  

 

 

    

 

 

 

The Company recorded write-downs of $1 and $2, classified as components of Costs applicable to sales and Depreciation and amortization, respectively, for the first half of 2014, to reduce the carrying value of Yanacocha’s inventories to net realizable value.

NOTE 18 STOCKPILES AND ORE ON LEACH PADS

 

     At June 30,      At December 31,  
     2014      2013  

Current:

     

Stockpiles

   $ 528      $ 580  

Ore on leach pads

     247        225  
  

 

 

    

 

 

 
   $ 775      $ 805  
  

 

 

    

 

 

 

Long-term:

     

Stockpiles

   $ 2,564      $ 2,434  

Ore on leach pads

     209        246  
  

 

 

    

 

 

 
   $ 2,773      $ 2,680  
  

 

 

    

 

 

 

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

     At June 30,      At December 31,  
     2014      2013  

Stockpiles and ore on leach pads:

     

Carlin

   $ 412      $ 439  

Phoenix

     115        109  

Twin Creeks

     309        327  

La Herradura

     92        57  

Yanacocha

     368        504  

Boddington

     329        304  

Tanami

     8        12  

Jundee

     7        7  

Waihi

     3        2  

Kalgoorlie

     113        107  

Batu Hijau

     1,379        1,290  

Ahafo

     335        292  

Akyem

     78        35  
  

 

 

    

 

 

 
   $ 3,548      $ 3,485  
  

 

 

    

 

 

 

The Company recorded write-downs of $182 and $62, classified as components of Costs applicable to sales and Depreciation and amortization, respectively, for the first half of 2014 to reduce the carrying value of stockpiles and ore on leach pads to net realizable value. Adjustments to net realizable value are a result of current and prior stripping and the associated historical and estimated future processing costs in relation to the Company’s long term price assumptions. Of the write-downs in 2014, $65 are related to Carlin, $5 to Twin Creeks, $87 to Yanacocha, $50 to Boddington and $37 to Batu Hijau.

NOTE 19 OTHER ASSETS

 

     At June 30,      At December 31,  
     2014      2013  

Other current assets:

     

Refinery metal inventory and receivable

   $ 802      $ 679  

Prepaid assets

     305        157  

Other refinery metal receivables

     97        130  

Derivative instruments

     6        4  

Other

     36        36  
  

 

 

    

 

 

 
   $ 1,246      $ 1,006  
  

 

 

    

 

 

 

Other long-term assets:

     

Income tax receivable

   $ 249      $ 229  

Goodwill

     132        132  

Intangible assets

     114        98  

Prepaid royalties

     103        103  

Restricted cash

     99        95  

Debt issuance costs

     62        62  

Prepaid maintenance costs

     40        31  

Derivative instruments

     3        1  

Other

     46        93  
  

 

 

    

 

 

 
   $ 848      $ 844  
  

 

 

    

 

 

 

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 20 DEBT

Scheduled minimum debt repayments are $51 for the remainder of 2014, $168 in 2015, $221 in 2016, $771 in 2017, $1 in 2018 and $5,680 thereafter.

Term Loan and Revolver Extension

On March 31, 2014, the Company entered into a $575 uncollateralized term loan facility with a syndicate of banks. The term loan allows for a single drawing any business day on or prior to July 15, 2014 (the “Funding Date”) and will mature five years after the Funding Date. Borrowings under the facility will bear interest at LIBOR plus a margin ranging from 0.875% to 1.65%. Fees and other debt issuance costs related to the facility will be capitalized and amortized over the term of the debt. There are no borrowings outstanding under the facility at June 30, 2014.

On July 11, 2014, the Company borrowed $575 under the new term loan facility. The loan will mature July 11, 2019. Proceeds were used to retire the $575 convertible debt due on July 15, 2014. As such, the convertible debt has been reclassified to long-term on the balance sheet at June 30, 2014.

On March 31, 2014, the Company’s Corporate Revolving Credit Facility was amended to extend the facility two years to 2019. The available capacity under the Corporate Revolving Credit Facility remains at $3,000. There are no borrowings outstanding under the facility at June 30, 2014.

NOTE 21 OTHER LIABILITIES

 

     At June 30,      At December 31,  
     2014      2013  

Other current liabilities:

     

Refinery metal payable

   $ 802      $ 679  

Deferred income tax

     142        74  

Accrued operating costs

     135        157  

Reclamation and remediation liabilities

     91        98  

Interest

     75        74  

Accrued capital expenditures

     47        72  

Royalties

     32        58  

Derivative instruments

     16        36  

Holt property royalty

     14        15  

Taxes other than income and mining

     11        6  

Other

     56        44  
  

 

 

    

 

 

 
   $ 1,421      $ 1,313  
  

 

 

    

 

 

 

Other long-term liabilities:

     

Holt property royalty

   $ 141      $ 119  

Income and mining taxes

     105        70  

Power supply agreements

     41        39  

Derivative instruments

     19        60  

Boddington contingent consideration

     10        10  

Other

     38        44  
  

 

 

    

 

 

 
   $ 354      $ 342  
  

 

 

    

 

 

 

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 22 CHANGES IN EQUITY

 

     Six Months Ended June 30,  
     2014     2013  

Common stock:

    

At beginning of period

   $ 789     $ 787  

Redemptions of Exchangeable Shares

     8       —    

Stock based awards

     1       2  
  

 

 

   

 

 

 

At end of period

     798       789  
  

 

 

   

 

 

 

Additional paid-in capital:

    

At beginning of period

     8,538       8,428  

Redemption of Exchangeable Shares

     (8     —    

Stock based awards(1)

     74       53  

Sale of noncontrolling interests

     32       48  
  

 

 

   

 

 

 

At end of period

     8,636       8,529  
  

 

 

   

 

 

 

Accumulated other comprehensive income (loss):

    

At beginning of period

     (182     490  

Other comprehensive income (loss)

     (60     (562
  

 

 

   

 

 

 

At end of period

     (242     (72
  

 

 

   

 

 

 

Retained earnings:

    

At beginning of period

     848       3,992  

Net income (loss) attributable to Newmont stockholders

     280       (1,745

Dividends Paid

     (89     (385
  

 

 

   

 

 

 

At end of period

     1,039       1,862  
  

 

 

   

 

 

 

Noncontrolling interests:

    

At beginning of period

     2,916       3,175  

Net income (loss) attributable to noncontrolling interests

     (87     (172

Dividends paid to noncontrolling interests

     (4     (2

Sale of noncontrolling interests, net

     35       10  
  

 

 

   

 

 

 

At end of period

     2,860       3,011  
  

 

 

   

 

 

 

Total equity

   $ 13,091     $ 14,119  
  

 

 

   

 

 

 

 

(1) A 2014 balance sheet adjustment of $21 was recorded during the current quarter to correct the presentation of stock based compensation cost as a component of additional paid-in capital, which was previously included as a current employee-related benefit liability. We concluded that the unadjusted balance of $46 was immaterial to the comparative December 31, 2013 balance sheet.

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 23 RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

 

     Unrealized
(loss) on
marketable
securities, net
    Foreign
currency
translation
adjustments
     Pension
and other
post-
retirement
benefit
adjustments
    Changes in fair
value of cash
flow hedge
instruments
    Total  

December 31, 2013

   $ (35   $ 145      $ (124   $ (168   $ (182

Change in other comprehensive income (loss) before reclassifications

     (83     2        (2     34       (49

Reclassifications from accumulated other comprehensive income (loss)

     (3     —          5       (13     (11
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net current-period other comprehensive income (loss)

     (86     2        3       21       (60
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

June 30, 2014

   $ (121   $ 147      $ (121   $ (147   $ (242
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

Details about Accumulated Other

Comprehensive Income (Loss)

Components

  Amount Reclassified from Accumulated Other Comprehensive
Income (Loss)
   

Affected Line Item in the
Condensed Consolidated
Statement of Operations

    Three Months
Ended June
30, 2014
    Three Months
Ended June
30, 2013
    Six Months
Ended June
30, 2014
    Six Months
Ended June
30, 2013
     

Marketable securities adjustments:

         

Sale of marketable securities

  $ (1   $ —       $ (5   $ —       Other income, net

Impairment of marketable securities

    —         7       1       11     Other income, net
 

 

 

   

 

 

   

 

 

   

 

 

   

Total before tax

    (1     7       (4     11    

Tax benefit (expense)

    —         (2     1       (3  
 

 

 

   

 

 

   

 

 

   

 

 

   

Net of tax

  $ (1   $ 5     $ (3   $ 8    
 

 

 

   

 

 

   

 

 

   

 

 

   

Pension liability adjustments:

         

Amortization, net

  $ 4     $ 10     $ 7     $ 18      (1)
 

 

 

   

 

 

   

 

 

   

 

 

   

Total before tax

    4       10       7       18    

Tax benefit (expense)

    (1     (3     (2     (6  
 

 

 

   

 

 

   

 

 

   

 

 

   

Net of tax

  $ 3     $ 7     $ 5     $ 12    
 

 

 

   

 

 

   

 

 

   

 

 

   

Hedge instruments adjustments:

         

Operating cash flow hedges

  $ (23   $ (43   $ (28   $ (79   Costs applicable to sales

Capital cash flow hedges

    —         1       —         1     Depreciation and amortization

Capital cash flow hedges

    —         18       —         18     Write-downs

Forward starting swap hedges

    4       6       9       9     Interest expense, net

Hedge ineffectiveness

    —         3       —         —       Other income, net
 

 

 

   

 

 

   

 

 

   

 

 

   

Total before tax

    (19     (15     (19     (51  

Tax benefit (expense)

    6       4       6       16    
 

 

 

   

 

 

   

 

 

   

 

 

   

Net of tax

  $ (13   $ (11   $ (13   $ (35  
 

 

 

   

 

 

   

 

 

   

 

 

   

Total reclassifications for the period, net of tax

  $ (11   $ 1     $ (11   $ (15  
 

 

 

   

 

 

   

 

 

   

 

 

   
         

 

(1) This accumulated other comprehensive income (loss) component is included in General and administrative and costs that benefit the inventory/production process. Refer to Note 3 to the Consolidated Financial Statements for the year ended December 31, 2013 filed June 13, 2014 on Form 8-K for information on costs that benefit the inventory/production process.

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

NOTE 24 NET CHANGE IN OPERATING ASSETS AND LIABILITIES

Net cash provided from operations attributable to the net change in operating assets and liabilities is composed of the following:

 

     Six Months Ended June 30,  
     2014     2013  

Decrease (increase) in operating assets:

    

Trade and accounts receivable

   $ 68     $ 187  

Inventories, stockpiles and ore on leach pads

     (359     (399

EGR refinery assets

     (123     623  

Other assets

     (47     8  

Increase (decrease) in operating liabilities:

    

Accounts payable and other accrued liabilities

     (92     (229

EGR refinery liabilities

     123       (623

Reclamation liabilities

     (23     (24
  

 

 

   

 

 

 
   $ (453   $ (457
  

 

 

   

 

 

 

NOTE 25 CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The following Condensed Consolidating Financial Statements are presented to satisfy disclosure requirements of Rule 3-10(e) of Regulation S-X resulting from the inclusion of Newmont USA Limited (“Newmont USA”), a wholly-owned subsidiary of Newmont, as a co-registrant with Newmont on debt securities issued under a shelf registration statement on Form S-3 filed under the Securities Act of 1933 under which securities of Newmont (including debt securities guaranteed by Newmont USA) may be issued (the “Shelf Registration Statement”). In accordance with Rule 3-10(e) of Regulation S-X, Newmont USA, as the subsidiary guarantor, is 100% owned by Newmont, the guarantees are full and unconditional, and no other subsidiary of Newmont guaranteed any security issued under the Shelf Registration Statement. There are no restrictions on the ability of Newmont or Newmont USA to obtain funds from its subsidiaries by dividend or loan.

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

     Three Months Ended June 30, 2014  
                             Newmont  
     Newmont                       Mining  
     Mining     Newmont     Other           Corporation  

Condensed Consolidating Statement of Operation

   Corporation     USA     Subsidiaries     Eliminations     Consolidated  

Sales

   $ —       $ 485     $ 1,280     $ —       $ 1,765  

Costs and expenses

          

Costs applicable to sales (1)

     —         304       756       —         1,060  

Depreciation and amortization

     1       71       234       —         306  

Reclamation and remediation

     —         3       18       —         21  

Exploration

     —         5       36       —         41  

Advanced projects, research and development

     —         10       32       —         42  

General and administrative

     —         27       21       —         48  

Write-downs

     —         —         13       —         13  

Other expense, net

     —         9       42       —         51  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     1       429       1,152       —         1,582  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense)

          

Other income, net

     (3     (2     8       —         3  

Interest income—intercompany

     30       —         3       (33     —    

Interest expense—intercompany

     (3     —         (30     33       —    

Interest expense, net

     (83     (1     (10     —         (94
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (59     (3     (29     —         (91
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income and mining tax and other items

     (60     53       99       —         92  

Income and mining tax benefit (expense)

     11       (8     50       —         53  

Equity income (loss) of affiliates

     229       58       23       (308     2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     180       103       172       (308     147  

Income (loss) from discontinued operations

     —         —         (2     —         (2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     180       103       170       (308     145  

Net loss (income) attributable to noncontrolling interests

     —         —         23       12       35  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Newmont stockholders

   $ 180     $ 103     $ 193     $ (296   $ 180  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 143     $ 112     $ 145     $ (290   $ 110  

Comprehensive loss (income) attributable to noncontrolling interests

     —         —         24       9       33  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to Newmont stockholders

   $ 143     $ 112     $ 169     $ (281   $ 143  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Excludes Depreciation and amortization and Reclamation and remediation.

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

     Three Months Ended June 30, 2013  
                             Newmont  
     Newmont                       Mining  
     Mining     Newmont     Other           Corporation  

Condensed Consolidating Statement of Operation

   Corporation     USA     Subsidiaries     Eliminations     Consolidated  

Sales

   $ —       $ 541     $ 1,477     $ —       $ 2,018  

Costs and expenses

          

Costs applicable to sales (1)

     —         271       1,411       —         1,682  

Depreciation and amortization

     —         48       367       —         415  

Reclamation and remediation

     —         2       16       —         18  

Exploration

     —         17       59       —         76  

Advanced projects, research and development

     —         10       36       —         46  

General and administrative

     —         24       30       —         54  

Write-downs

     —         —         2,261       —         2,261  

Other expense, net

     —         15       62       —         77  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     —         387       4,242       —         4,629  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense)

          

Other income, net

     2       6       42       —         50  

Interest income—intercompany

     34       8       5       (47     —    

Interest expense—intercompany

     (3     —         (44     47       —    

Interest expense, net

     (68     (4     2       —         (70
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (35     10       5       —         (20
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income and mining tax and other items

     (35     164       (2,760     —         (2,631

Income and mining tax benefit (expense)

     12       (71     346       —         287  

Equity income (loss) of affiliates

     (2,036     (505     (172     2,710       (3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (2,059     (412     (2,586     2,710       (2,347

Income (loss) from discontinued operations

     —         —         74       —         74  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (2,059     (412     (2,512     2,710       (2,273

Net loss (income) attributable to noncontrolling interests

     —         —         328       (114     214  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Newmont stockholders

   $ (2,059   $ (412   $ (2,184   $ 2,596     $ (2,059
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ (2,559   $ (424   $ (3,062   $ 3,272     $ (2,773

Comprehensive loss (income) attributable to noncontrolling interests

     —         —         328       (115     213  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to Newmont stockholders

   $ (2,559   $ (424   $ (2,734   $ 3,157     $ (2,560
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Excludes Depreciation and amortization and Reclamation and remediation.

 

31


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

     Six Months Ended June 30, 2014  
                       Newmont  
     Newmont                 Mining  
     Mining     Newmont     Other           Corporation  

Condensed Consolidating Statement of Operation

   Corporation     USA     Subsidiaries     Eliminations     Consolidated  

Sales

   $ —       $ 985     $ 2,544     $ —       $ 3,529  

Costs and expenses

          

Costs applicable to sales (1)

     —         602       1,541       —         2,143  

Depreciation and amortization

     2       125       477       —         604  

Reclamation and remediation

     —         5       36       —         41  

Exploration

     —         9       66       —         75  

Advanced projects, research and development

     —         21       63       —         84  

General and administrative

     —         46       47       —         93  

Write-downs

     —         —         13       —         13  

Other expense, net

     —         15       88       —         103  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2       823       2,331       —         3,156  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense)

          

Other income, net

     (4     58       (5     —         49  

Interest income—intercompany

     60       —         5       (65     —    

Interest expense—intercompany

     (5     —         (60     65       —    

Interest expense, net

     (165     (2     (20     —         (187
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (114     56       (80     —         (138
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income and mining tax and other items

     (116     218       133       —         235  

Income and mining tax benefit (expense)

     40       (46     (19     —         (25

Equity income (loss) of affiliates

     356       (93     6       (267     2  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     280       79       120       (267     212  

Income (loss) from discontinued operations

     —         —         (19     —         (19
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     280       79       101       (267     193  

Net loss (income) attributable to noncontrolling interests

     —         —         89       (2     87  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Newmont stockholders

   $ 280     $ 79     $ 190     $ (269   $ 280  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 220     $ 90     $ 61     $ (238   $ 133  

Comprehensive loss (income) attributable to noncontrolling interests

     —         —         89       (2     87  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to Newmont stockholders

   $ 220     $ 90     $ 150     $ (240   $ 220  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Excludes Depreciation and amortization and Reclamation and remediation.

 

32


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(dollars in millions, except per share, per ounce and per pound amounts)

 

     Six Months Ended June 30, 2013  
                             Newmont  
     Newmont                       Mining  
     Mining     Newmont     Other           Corporation  

Condensed Consolidating Statement of Operation

   Corporation     USA     Subsidiaries     Eliminations     Consolidated  

Sales

   $ —       $ 1,084     $ 3,122     $ —       $ 4,206  

Costs and expenses

          

Costs applicable to sales (1)

     —         532       2,207       —         2,739  

Depreciation and amortization

     —         96       586       —         682  

Reclamation and remediation

     —         4       32       —         36  

Exploration

     —         28       107       —         135  

Advanced projects, research and development

     —         23       75       —         98  

General and administrative

     —         54       56       —         110  

Write-downs

     —         —         2,262       —         2,262  

Other expense, net

     —         30       146       —         176  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     —         767       5,471       —         6,238  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense)

          

Other income, net

     2       9       65       —         76  

Interest income—intercompany

     82       15       10       (107     —    

Interest expense—intercompany

     (6     —         (101     107       —    

Interest expense, net

     (133     (6     4       —         (135
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (55     18       (22     —         (59
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income and mining tax and other items

     (55     335       (2,371     —         (2,091

Income and mining tax benefit (expense)

     19       (121     209       —         107  

Equity income (loss) of affiliates

     (1,709     (391     (129     2,222       (7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     (1,745     (177     (2,291     2,222       (1,991

Income (loss) from discontinued operations

     —         —         74       —         74  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (1,745     (177     (2,217     2,222       (1,917

Net loss (income) attributable to noncontrolling interests

     —         —         262       (90     172  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Newmont stockholders

   $ (1,745   $ (177   $ (1,955   $ 2,132     $ (1,745</