Form 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 March 31, 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 (§ 232.405 of this chapter) 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 498,529,240 shares of common stock outstanding on April 16, 2014.

 

 

 


Table of Contents

TABLE OF CONTENTS

 

         Page  
  PART I   

ITEM 1.

  FINANCIAL STATEMENTS      1   
  Condensed Consolidated Statements of Income      1   
  Condensed Consolidated Statements of Comprehensive Income      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 FINANCIAL CONDITION AND RESULTS OF OPERATIONS      41   
  Overview      41   
  Selected Financial and Operating Results      43   
  Consolidated Financial Results      44   
  Results of Consolidated Operations      49   
  Liquidity and Capital Resources      54   
  Environmental      57   
  Accounting Developments      57   
  Non-GAAP Financial Measures      58   
  Safe Harbor Statement      64   

ITEM 3.

  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      65   

ITEM 4.

  CONTROLS AND PROCEDURES      67   
  PART II   

ITEM 1.

  LEGAL PROCEEDINGS      68   

ITEM 1A.

  RISK FACTORS      68   

ITEM 2.

  ISSUER PURCHASES OF EQUITY SECURITIES      68   

ITEM 3.

  DEFAULTS UPON SENIOR SECURITIES      68   

ITEM 4.

  MINE SAFETY DISCLOSURES      68   

ITEM 5.

  OTHER INFORMATION      69   

ITEM 6.

  EXHIBITS      69   

SIGNATURES

     70   

EXHIBIT INDEX

     71   


Table of Contents

PART I—FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

NEWMONT MINING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in millions except per share)

 

     Three Months Ended
March 31,
 
     2014     2013  

Sales (Note 4)

   $ 1,764     $ 2,188  

Costs and expenses

    

Costs applicable to sales (1) (Note 4)

     1,083       1,057  

Amortization (Note 4)

     298       267  

Reclamation and remediation (Note 5)

     20       18  

Exploration

     34       59  

Advanced projects, research and development

     42       52  

General and administrative

     45       56  

Other expense, net (Note 6)

     52       100  
  

 

 

   

 

 

 
     1,574       1,609  
  

 

 

   

 

 

 

Other income (expense)

    

Other income, net (Note 7)

     46       26  

Interest expense, net

     (93     (65
  

 

 

   

 

 

 
     (47     (39
  

 

 

   

 

 

 

Income before income and mining tax and other items

     143       540  

Income and mining tax expense (Note 8)

     (78     (180

Equity income (loss) of affiliates

     —         (4
  

 

 

   

 

 

 

Income from continuing operations

     65       356  

Income (loss) from discontinued operations (Note 9)

     (17     —    
  

 

 

   

 

 

 

Net income

     48       356  

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

     52       (42
  

 

 

   

 

 

 

Net income attributable to Newmont stockholders

   $ 100     $ 314  
  

 

 

   

 

 

 

Net income (loss) attributable to Newmont stockholders:

    

Continuing operations

   $ 117     $ 314  

Discontinued operations

     (17     —    
  

 

 

   

 

 

 
   $ 100     $ 314  
  

 

 

   

 

 

 

Income (loss) per common share (Note 11)

    

Basic:

    

Continuing operations

   $ 0.23     $ 0.63  

Discontinued operations

     (0.03     —    
  

 

 

   

 

 

 
   $ 0.20     $ 0.63  
  

 

 

   

 

 

 

Diluted:

    

Continuing operations

   $ 0.23     $ 0.63  

Discontinued operations

     (0.03     —    
  

 

 

   

 

 

 
   $ 0.20     $ 0.63  
  

 

 

   

 

 

 

Cash dividends declared per common share

   $ 0.150     $ 0.425  

  

 

(1)  Excludes 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

STATEMENTS OF CONDENSED CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(unaudited, in millions)

 

     Three Months Ended March 31,  
     2014     2013  
     (in millions)  

Net income

   $ 48     $ 356  

Other comprehensive income (loss):

    

Unrealized gain(loss) on marketable securities, net of $(1) and $38 tax benefit (expense), respectively

     (31     (52

Foreign currency translation adjustments

     (5     (12

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

     2       5  

Change in fair value of cash flow hedge instruments, net of $4 and $15 tax benefit (expense), respectively

    

Net change from periodic revaluations

     9       21  

Net amount reclassified to income

     —         (24
  

 

 

   

 

 

 

Net unrecognized (loss) gain on derivatives

     9       (3
  

 

 

   

 

 

 

Other comprehensive income (loss)

     (25     (62
  

 

 

   

 

 

 

Comprehensive income

   $ 23     $ 294  
  

 

 

   

 

 

 

Comprehensive income attributable to:

    

Newmont stockholders

   $ 77     $ 253  

Noncontrolling interests

     (54     41  
  

 

 

   

 

 

 
   $ 23     $ 294  
  

 

 

   

 

 

 

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 CASH FLOWS

(unaudited, in millions)

 

     Three Months Ended
March 31,
 
     2014     2013  

Operating activities:

    

Net income

   $ 48     $ 356  

Adjustments:

    

Amortization

     298       267  

Stock based compensation and other non-cash benefits

     13       19  

Reclamation and remediation

     20       18  

Loss (income) from discontinued operations

     17       —    

Impairment of marketable securities

     1       4  

Deferred income taxes

     35       (11

Gain on asset and investment sales, net

     (50     (1

Other operating adjustments and write-downs

     151       74  

Net change in operating assets and liabilities (Note 24)

     (350     (287
  

 

 

   

 

 

 

Net cash provided from continuing operations

     183       439  

Net cash used in discontinued operations

     (3     (6
  

 

 

   

 

 

 

Net cash provided from operations

     180       433  
  

 

 

   

 

 

 

Investing activities:

    

Additions to property, plant and mine development

     (235     (510

Acquisitions, net

     (28     (8

Sale of marketable securities

     25       1  

Purchases of marketable securities

     (1     (1

Proceeds from sale of other assets

     70       25  

Other

     (9     (14
  

 

 

   

 

 

 

Net cash used in investing activities

     (178     (507
  

 

 

   

 

 

 

Financing activities:

    

Proceeds from debt, net

     3       80  

Proceeds from stock issuance, net

     —         1  

Sale of noncontrolling interests

     —         32  

Acquisition of noncontrolling interests

     (2     (6

Dividends paid to common stockholders

     (77     (211

Other

     (4     (1
  

 

 

   

 

 

 

Net cash provided from (used in) financing activities

     (80     (105
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (2     (4
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     (80     (183

Cash and cash equivalents at beginning of period

     1,555       1,561  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,475     $ 1,378  
  

 

 

   

 

 

 

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 March 31,     At December 31,  
     2014     2013  
ASSETS     

Cash and cash equivalents

   $ 1,475     $ 1,555  

Trade receivables

     206       230  

Accounts receivable

     319       252  

Investments (Note 16)

     83       78  

Inventories (Note 17)

     814       717  

Stockpiles and ore on leach pads (Note 18)

     760       805  

Deferred income tax assets

     239       246  

Other current assets (Note 19)

     1,351        1,006  
  

 

 

   

 

 

 

Current assets

     5,247        4,889  

Property, plant and mine development, net

     14,138       14,277  

Investments (Note 16)

     393       439  

Stockpiles and ore on leach pads (Note 18)

     2,723       2,680  

Deferred income tax assets

     1,416       1,473  

Other long-term assets (Note 19)

     881       849  
  

 

 

   

 

 

 

Total assets

   $ 24,798     $ 24,607  
  

 

 

   

 

 

 
LIABILITIES     

Debt (Note 20)

   $ 615     $ 595  

Accounts payable

     463       478  

Employee-related benefits

     247       341  

Income and mining taxes

     27       13  

Other current liabilities (Note 21)

     1,532        1,313  
  

 

 

   

 

 

 

Current liabilities

     2,884        2,740  

Debt (Note 20)

     6,146       6,145  

Reclamation and remediation liabilities (Note 5)

     1,519       1,513  

Deferred income tax liabilities

     696       635  

Employee-related benefits

     333       323  

Other long-term liabilities (Note 21)

     339       342  
  

 

 

   

 

 

 

Total liabilities

     11,917        11,698  
  

 

 

   

 

 

 

Commitments and contingencies (Note 26)

    
EQUITY     

Common stock

     798       789  

Additional paid-in capital

     8,458       8,441  

Accumulated other comprehensive income (loss)

     (205     (182

Retained earnings

     968       945  
  

 

 

   

 

 

 

Newmont stockholders’ equity

     10,019       9,993  

Noncontrolling interests

     2,862       2,916  
  

 

 

   

 

 

 

Total equity

     12,881       12,909  
  

 

 

   

 

 

 

Total liabilities and equity

   $ 24,798     $ 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 February 20, 2014 on Form 10-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. Reclassifications are related to a change in our reportable segments (see Notes 2 and 4), and include a change from by-product accounting for our Phoenix segment to co-product accounting.

In March 2014, we completed a review of our deferred tax and stockpile balances that resulted in the identification of certain errors in these accounts. These errors were not material to our consolidated financial condition, results of operations or cash flows as presented in our previously filed annual and quarterly financial statements; however, the adjustment to correct the cumulative effect of these errors would have been material if recorded in the first quarter of 2014. Accordingly, we revised our financial statements to correct these errors at and for the year ended December 31, 2013. The cumulative decrease to retained earnings was $148 at January 1, 2014. See Note 2 Revision of Financial Statements.

NOTE 2 REVISION OF FINANCIAL STATEMENTS

In March 2014, we determined our deferred tax assets related to certain foreign subsidiaries and Yanacocha stockpiles were overstated by $143 and $20 ($14 net of tax) at December 31, 2013, respectively. The stockpiles revision increased Costs applicable to sales by $2 ($1 net of tax) for the three months ended March 31, 2013. We have assessed the materiality of these misstatements in accordance with the Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) No. 99 and concluded that these errors are not material to our previously issued consolidated financial statements. Accordingly, by reference to SAB No. 108, our previously issued consolidated financial statements have been revised as follows:

 

     Three Months Ended March 31, 2013  

Condensed Consolidated Statement of

Income

   As Previously
Reported
     Co-product
Reclassification(1)
     Revision     As Revised  

Sales

   $ 2,177      $ 11      $ —       $ 2,188  

Costs applicable to sales

     1,044        11        2       1,057  

Net income (loss)

     357        —          (1     356  

Net income (loss) attributable to Newmont stockholders

     315        —          (1     314  

Income (loss) per common share

          

Basic

   $ 0.63      $ —        $ —       $ 0.63  

Diluted

   $ 0.63      $ —        $ —       $ 0.63  

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

     Three Months Ended March 31, 2013  

Condensed Consolidated Statement of Cash Flows

   As Previously
Reported
    Revision     As Revised  

Net income

   $ 357     $ (1   $ 356  

Net changes in operating assets and liabilities

     (288     1       (287

Net cash provided from continuing operations

     439       —         439  

 

     At December 31, 2013  

Condensed Consolidated Balance Sheet

   As Previously
Reported
     Revision     As
Revised
 

Stockpiles and ore on leach pads(2)

   $ 3,506      $ (21   $ 3,485  

Deferred income tax assets(3)

     1,860        (141     1,719  

Other long-term assets

     844        5       849  

Total Assets

     24,764        (157     24,607  

Employee-related benefits

     325        (2     323  

Total liabilities

     11,700        (2     11,698  

Retained earnings

     1,093        (148     945  

Newmont stockholders’ equity

     10,141        (148     9,993  

Noncontrolling interests

     2,923        (7     2,916  

Total equity

     13,064        (155     12,909  

Total liabilities and equity

     24,764        (157     24,607  

 

(1)  Refer to Note 1 for information on the segment reclassifications.
(2)  Includes current and noncurrent stockpiles and ore on leach pads.
(3)  Includes current and noncurrent deferred tax assets.

NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Adopted Accounting Pronouncements

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.

 

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NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

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.

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.

NOTE 4 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 and is as follows:

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

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

Three Months Ended March 31, 2014

                

Carlin

   $ 293      $ 192      $ 35      $ 4      $ 61     $ 42  

Phoenix

                

Gold

     70        34        5          

Copper

     32        26        3          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     102        60        8        1        29       7  

Twin Creeks

     132        55        11        1        111       32  

La Herradura

     31        16        8        4        3       6  

Other North America

     —          —          —          6        (9     5  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

North America

     558        323        62        16        195       92  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Yanacocha

     265        221        101        7        (87     14  

Other South America

     —          —          —          8        (8     7  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

South America

     265        221        101        15        (95     21  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Boddington:

                

Gold

     220        142        25          

Copper

     39        40        6          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     259        182        31        —          37       20  

Tanami

     105        55        17        1        28       20  

Jundee

     82        42        17        1        21       7  

Waihi

     33        19        5        —          7       3  

Kalgoorlie

     118        77        6        1        33       1  

Other Australia/New Zealand

     —          —          4        1        (12 )     1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Australia/New Zealand

     597        375        80        4        114       52  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Batu Hijau:

                

Gold

     8        8        2          

Copper

     42        57        13          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     50        65        15        1        (51     15  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Indonesia

     50        65        15        1        (51     15  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Ahafo

     141        61        16        9        44       22  

Akyem

     153        38        21        —          88       1  

Other Africa

     —          —          —          2        (3     —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Africa

     294        99        37        11        129       23  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Corporate and Other

     —          —          3        29        (149     6  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Consolidated

   $ 1,764      $ 1,083      $ 298      $ 76      $ 143     $ 209  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)  Includes a decrease in accrued capital expenditures of $26; consolidated capital expenditures on a cash basis were $235.

 

8


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

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

Three Months Ended March 31, 2013

                

Carlin

   $ 351      $ 179      $ 32      $ 11      $ 128     $ 46  

Phoenix

                

Gold

     53        41        7          

Copper

     11        11        2          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     64        52        9        4        (4     31  

Twin Creeks

     166        52        18        3        92       25  

La Herradura

     90        40        6        6        37       19  

Other North America

     —          —          —          8        (9     4  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

North America

     671        323        65        32        244       125  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Yanacocha

     455        160        70        13        193       48  

Other South America

     —          —          —          3        (2     86  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

South America

     455        160        70        16        191       134  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Boddington:

                

Gold

     329        174        42          

Copper

     65        48        10          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     394        222        52        —          115       25  

Tanami

     98        75        16        2        4       23  

Jundee

     124        54        16        4        50       13  

Waihi

     50        28        8        1        12       3  

Kalgoorlie

     120        75        5        1        39       1  

Other Australia/New Zealand

     —          —          2        4        (12     1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Australia/New Zealand

     786        454        99        12        208       66  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Batu Hijau:

                

Gold

     11        7        2          

Copper

     70        47        9          
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     81        54        11        6        (4     23  

Other Indonesia

     —          —          —          —          3       —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Indonesia

     81        54        11        6        (1     23  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Ahafo

     195        66        17        13        103       60  

Akyem

     —          —          —          3        (5     66  

Other Africa

     —          —          —          2        (9     —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Africa

     195        66        17        18        89       126  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Corporate and Other

     —          —          5        27        (191     23  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Consolidated

   $ 2,188      $ 1,057      $ 267      $ 111      $ 540     $ 497  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(1)  Includes a decrease in accrued capital expenditures of $13; consolidated capital expenditures on a cash basis were $510.

 

9


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

NOTE 5 RECLAMATION AND REMEDIATION

The Company’s Reclamation and remediation expense consisted of:

 

     Three Months Ended March 31,  
     2014      2013  

Accretion—operating

   $ 18      $ 15  

Accretion—non-operating

     2        3  
  

 

 

    

 

 

 
   $ 20      $ 18  
  

 

 

    

 

 

 

At March 31, 2014 and December 31, 2013, $1,441 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 March 31, 2014 and December 31, 2013, $174 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:

 

     Three Months Ended March 31,  
     2014     2013  

Balance at beginning of period

   $ 1,611     $ 1,539  

Additions, changes in estimates and other

     (8     (3

Liabilities settled

     (8     (9

Accretion expense

     20       18  
  

 

 

   

 

 

 

Balance at end of period

   $ 1,615     $ 1,545  
  

 

 

   

 

 

 

The current portion of Reclamation and remediation liabilities of $96 and $98 at March 31, 2014 and December 31, 2013, respectively, are included in Other current liabilities (see Note 21).

NOTE 6 OTHER EXPENSE, NET

 

     Three Months Ended March 31,  
     2014      2013  

Regional administration

   $ 15      $ 18  

Community development

     11        13  

Restructuring and other

     7        9  

Western Australia power plant

     6        4  

World Gold Council dues

     1        1  

Transaction/Acquisition costs

     —          45  

Other

     12        10  
  

 

 

    

 

 

 
   $ 52      $ 100  
  

 

 

    

 

 

 

 

10


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

NOTE 7 OTHER INCOME, NET

 

     Three Months Ended March 31,  
     2014     2013  

Gain on Midas sale

   $ 47     $ —    

Refinery income, net

     4       3  

Gain on sale of investments, net

     4       —    

Development projects, net

     2       1  

Interest

     1       4  

Canadian Oil Sands dividends

     —         10  

Derivative ineffectiveness, net

     —         3  

Impairment of marketable securities

     (1     (4

Foreign currency exchange, net

     (14     (3

Other

     3       12  
  

 

 

   

 

 

 
   $ 46     $ 26  
  

 

 

   

 

 

 

NOTE 8 INCOME AND MINING TAXES

During the first quarter of 2014, the Company recorded estimated income and mining tax expense of $78 resulting in an effective tax rate of 55%. Estimated income and mining tax expense during the first quarter of 2013 was $180 for an effective tax rate of 33%.

The Company’s income and mining tax expense differed from the statutory rate of 35% for the following reasons:

 

     Three Months Ended March 31,  
     2014     2013  

Income before income and mining tax and other items

     $ 143       $ 540  
    

 

 

     

 

 

 

Tax on income at 35% statutory rate

     35   $ 50       35   $ 189  

Reconciling items:

        

Percentage depletion

     (8     (11     (7     (41

Change in valuation allowance on deferred tax assets

     9       13       1       6  

Disallowed loss on sale of Midas

     9       13      

Mining and other taxes

     6       8       3       18  

Effect of foreign earnings, net of credits

     2       2      

Other

     2       3       1       8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income and mining tax expense

     55   $ 78       33   $ 180  
  

 

 

   

 

 

   

 

 

   

 

 

 

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 March 31, 2014, the Company’s total unrecognized tax benefit was $321 for uncertain income tax positions taken or expected to be taken on income tax returns. Of this, $78 represents the amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate.

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

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 first quarter of 2014, the Company recorded a charge of $17, net of tax benefits of $8, related to an increase in gold price, an increase in expected future production and a decrease in discount rates at quarter end.

Net operating cash used in discontinued operations of $3 and $6 in the first quarter 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 March 31,  
     2014     2013  

Minera Yanacocha

   $ (29   $ 57  

Batu Hijau

     (23     (3

TMAC

     (1     (12

Other

     1       —    
  

 

 

   

 

 

 
   $ (52   $ 42  
  

 

 

   

 

 

 

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%).

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 has a 70.4% economic ownership interest in TMAC, with remaining interests held by various outside investors.

 

12


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

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 March 31,  
     2014     2013  

Net income attributable to Newmont stockholders

   $ 100     $ 314  

Weighted average common shares (millions):

    

Basic

     498       497  

Effect of employee stock-based awards

     1       1  
  

 

 

   

 

 

 

Diluted

     499       498  
  

 

 

   

 

 

 

Net income attributable to Newmont stockholders per common share

    

Basic:

    

Continuing operations

   $ 0.23     $ 0.63  

Discontinued operations

     (0.03     —    
  

 

 

   

 

 

 
   $ 0.20     $ 0.63  
  

 

 

   

 

 

 

Diluted:

    

Continuing operations

   $ 0.23     $ 0.63  

Discontinued operations

     (0.03     —    
  

 

 

   

 

 

 
   $ 0.20     $ 0.63  
  

 

 

   

 

 

 

Options to purchase 3 and 4 million shares of common stock at average exercise prices of $48 and $49 were outstanding at March 31, 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.

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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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

NOTE 12 EMPLOYEE PENSION AND OTHER BENEFIT PLANS

 

     Three Months Ended March 31,  
     2014     2013  

Pension benefit costs, net

    

Service cost

   $ 6     $ 9  

Interest cost

     10       10  

Expected return on plan assets

     (13     (12

Amortization, net

     3       8  
  

 

 

   

 

 

 
   $ 6     $ 15  
  

 

 

   

 

 

 
     Three Months Ended March 31,  
     2014     2013  

Other benefit costs, net

    

Service cost

   $ 1     $ 1  

Interest cost

     2       1  
  

 

 

   

 

 

 
   $ 3     $ 2  
  

 

 

   

 

 

 

NOTE 13 STOCK BASED COMPENSATION

 

     Three Months Ended March 31,  
     2014      2013  

Stock options

   $ 1      $ 3  

Restricted stock units

     7        9  

Performance leveraged stock units

     3        2  

Stock performance units

     3        —    
  

 

 

    

 

 

 
   $ 14      $ 14  
  

 

 

    

 

 

 

 

14


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(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 March 31, 2014  
     Total      Level 1      Level 2      Level 3  

Assets:

           

Cash equivalents

   $ 816      $ 816      $ —        $ —    

Marketable equity securities:

           

Extractive industries

     296        296        —          —    

Other

     15        15        —          —    

Marketable debt securities:

           

Asset backed commercial paper

     23        —          —          23  

Auction rate securities

     5        —          —          5  

Trade receivable from provisional copper and gold concentrate sales, net

     183        183        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 1,338      $ 1,310      $ —        $ 28  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Derivative instruments, net:

           

Foreign exchange forward contracts

   $ 53      $ —        $ 53      $ —    

Boddington contingent consideration

     10        —          —          10  

Holt property royalty

     156        —          —          156  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 219      $ —        $ 53      $ 166  
  

 

 

    

 

 

    

 

 

    

 

 

 

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 March 31, 2014:

 

Description

  At March 31,
2014
    Valuation technique  

Unobservable input

  Range/Weighted
average
 

Auction Rate Securities

  $ 5     Discounted cash flow   Weighted average recoverability rate     58

Asset Backed Commercial Paper

    23     Discounted cash flow   Recoverability rate     90

Boddington Contingent Consideration

    10     Monte Carlo   Discount rate     5
      Long Term Gold price   $ 1,300  
      Long Term Copper price   $ 3.00  

Holt property royalty

    156     Monte Carlo   Weighted average discount rate     5
      Long Term Gold price   $ 1,300  

 

15


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(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 March 31, 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

     —          —         —         —          (3     (3

Revaluation

     —          (2     (2     —          25       25  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Balance at end of period

   $ 5      $ 23     $ 28     $ 10      $ 156     $ 166  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

At March 31, 2014, assets and liabilities classified within Level 3 of the fair value hierarchy represent 2% and 76%, 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 March 31, 2014:

 

     Expected Maturity Date  
           Total/  
     2014     2015     2016     2017     2018     Average  

A$ Operating Fixed Forward Contracts:

            

A$ notional (millions)

     234       270       158       105       6       773  

Average rate ($/A$)

     1.00       0.98       0.95       0.93       0.92       0.97  

Expected hedge ratio

     20     18     11     7     4     —    

NZ$ Operating Fixed Forward Contracts:

            

NZ$ notional (millions)

     46       39       2       —         —         87  

Average rate ($/NZ$)

     0.80       0.79       0.78       —         —         0.79  

Expected hedge ratio

     57     32     9     —         —      

 

16


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(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 March 31, 2014:

 

     Expected Maturity Date  
                       Total/  
     2014     2015     2016     2017     Average  

Diesel Fixed Forward Contracts:

          

Diesel gallons (millions)

     17       16       8       1       42  

Average rate ($/gallon)

     2.86       2.77       2.68       2.61       2.79  

Expected Nevada hedge ratio

     58     42     21     3  

Derivative Instrument Fair Values

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

 

     Fair Value  
     At March 31, 2014  
     Other
Current
Assets
     Other Long-
Term Assets
     Other
Current
Liabilities
     Other Long-
Term
Liabilities
 

Foreign currency exchange contracts:

           

A$ operating fixed forwards

   $ —        $ —        $ 24      $ 34  

NZ$ operating fixed forwards

     3        2        —          —    

Diesel fixed forwards

     1        —          1        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total derivative instruments (Notes 19 and 21)

   $ 4      $ 2      $ 25      $ 34  
  

 

 

    

 

 

    

 

 

    

 

 

 
     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  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

17


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(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      Diesel Forward      Forward Starting  
     Exchange Contracts      Contracts      Swaps  
     2014      2013      2014     2013      2014     2013  

For the three months ended March 31,

               

Cash flow hedging relationships:

               

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

   $ 34      $ 18      $ (2   $ 3      $ —       $ —    

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

     5        38        —         1        (5     (3

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

     —          —          —         3        —         —    

 

(1)  The gain (loss) for the effective portion of the foreign exchange and diesel cash flow hedges reclassified from Accumulated other comprehensive income (loss) is included in Costs applicable to sales. The realized loss for the effective portion of the forward starting swaps reclassified from Accumulated other comprehensive income (loss) is included in Interest Expense.
(2)  The ineffective portion recognized for cash flow hedges is included in Other Income, net.

The amount to be reclassified from Accumulated other comprehensive income, net of tax to income for derivative instruments during the next 12 months is a loss of approximately $5.

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 $3.19 per pound during the first quarter of 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. During the first quarter of 2014, changes in copper prices resulted in a provisional pricing mark-to-market loss of $17 ($0.37 per pound). At March 31, 2014, Newmont had copper sales of 63 million pounds priced at an average of $3.02 per pound, subject to final pricing over the next several months.

The average London P.M. fix for gold was $1,293 per ounce during the first quarter of 2014, compared to the Company’s recorded average provisional price of $1,292 per ounce before mark-to-market adjustments and treatment and refining charges. During the first quarter of 2014, changes in gold prices resulted in a provisional pricing mark-to-market gain of $4 ($4 per ounce). At March 31, 2014, Newmont had gold sales of 130,000 ounces priced at an average of $1,295 per ounce, subject to final pricing over the next several months.

 

18


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

NOTE 16 INVESTMENTS

 

     At March 31, 2014  
     Cost/Equity      Unrealized     Fair/Equity  
     Basis      Gain      Loss     Basis  

Current:

          

Marketable Equity Securities:

          

Gabriel Resources Ltd.

   $ 36      $ 6      $ —       $ 42  

Other

     28        15        (2     41  
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 64      $ 21      $ (2   $ 83  
  

 

 

    

 

 

    

 

 

   

 

 

 

Long-term:

          

Marketable Debt Securities:

          

Asset backed commercial paper

   $ 22      $ 1      $ —       $ 23  

Auction rate securities

     8        —          (3     5  
  

 

 

    

 

 

    

 

 

   

 

 

 
     30        1        (3     28  
  

 

 

    

 

 

    

 

 

   

 

 

 

Marketable Equity Securities:

          

Regis Resources Ltd.

     165        39        —         204  

Other

     20        5        (1     24  
  

 

 

    

 

 

    

 

 

   

 

 

 
     185        44        (1     228  
  

 

 

    

 

 

    

 

 

   

 

 

 

Other investments, at cost

     20        —          —         20  

Investment in Affiliates:

          

Euronimba Ltd.

     3        —          —         3  

Minera La Zanja S.R.L.

     98        —          —         98  

Novo Resources Corp.

     16        —          —         16  
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 352      $ 45      $ (4   $ 393  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

19


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

(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.

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 March 31, 2014

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

Marketable equity securities

   $ 3      $ 2      $ —        $ —        $ 3      $ 2  

Auction rate securities

     —          —          5        3        5        3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 3      $ 2      $ 5      $ 3      $ 8      $ 5  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     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  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

20


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

While the fair value of the Company’s investment in auction rate securities is below its cost, the Company views this decline as temporary. The Company has the ability and intends to hold its investment in auction rate securities until maturity or such time that the market recovers and therefore considers this loss temporary.

NOTE 17 INVENTORIES

 

     At March 31,      At December 31,  
     2014      2013  

In-process

   $ 120      $ 97  

Concentrate

     184        108  

Precious metals

     20        26  

Materials, supplies and other

     490        486  
  

 

 

    

 

 

 
   $ 814      $ 717  
  

 

 

    

 

 

 

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

NOTE 18 STOCKPILES AND ORE ON LEACH PADS

 

     At March 31,      At December 31,  
     2014      2013  

Current:

     

Stockpiles

   $ 513      $ 580  

Ore on leach pads

     247        225  
  

 

 

    

 

 

 
   $ 760      $ 805  
  

 

 

    

 

 

 

Long-term:

     

Stockpiles

   $ 2,511      $ 2,434  

Ore on leach pads

     212        246  
  

 

 

    

 

 

 
   $ 2,723      $ 2,680  
  

 

 

    

 

 

 

 

21


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

     At March 31,      At December 31,  
     2014      2013  

Stockpiles and ore on leach pads:

     

Carlin

   $ 433      $ 439  

Phoenix

     113        109  

Twin Creeks

     319        327  

La Herradura

     66        57  

Yanacocha

     405        504  

Boddington

     314        304  

Tanami

     10        12  

Jundee

     8        7  

Waihi

     1        2  

Kalgoorlie

     112        107  

Batu Hijau

     1,328        1,290  

Ahafo

     315        292  

Akyem

     59        35  
  

 

 

    

 

 

 
   $ 3,483      $ 3,485  
  

 

 

    

 

 

 

The Company recorded write-downs of $110 and $35, classified as components of Costs applicable to sales and Amortization, respectively, for the first quarter of 2014 to reduce the carrying value of stockpiles and ore on leach pads to net realizable value. Of the write-downs in 2014, $24 are related to Carlin, $2 to Twin Creeks, $54 to Yanacocha, $30 to Boddington and $35 to Batu Hijau.

NOTE 19 OTHER ASSETS

 

     At March 31,      At December 31,  
     2014      2013  

Other current assets:

     

Refinery metal inventory and receivable

   $ 947      $ 679  

Prepaid assets

     265        157  

Other refinery metal receivables

     105        130  

Derivative instruments

     4        4  

Other

     30        36  
  

 

 

    

 

 

 
   $ 1,351      $ 1,006  
  

 

 

    

 

 

 

Other long-term assets:

     

Income tax receivable

   $ 254      $ 229  

Goodwill

     132        132  

Intangible assets

     117        98  

Prepaid royalties

     103        103  

Restricted cash

     99        95  

Debt issuance costs

     65        62  

Prepaid maintenance costs

     34        31  

Derivative instruments

     2        1  

Other

     75        98  
  

 

 

    

 

 

 
   $ 881      $ 849  
  

 

 

    

 

 

 

 

22


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

NOTE 20 DEBT

Scheduled minimum debt repayments are $623 for the remainder of 2014, $161 in 2015, $221 in 2016, $771 in 2017, $1 in 2018 and $5,105 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. Proceeds from the term loan are expected to be used to retire the $575 of maturing convertible debt in July 2014. There are no borrowings outstanding under the facility at March 31, 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 March 31, 2014.

NOTE 21 OTHER LIABILITIES

 

     At March 31,      At December 31,  
     2014      2013  

Other current liabilities:

     

Refinery metal payable

   $ 947      $ 679  

Accrued operating costs

     156        157  

Reclamation and remediation liabilities

     96        98  

Interest

     82        74  

Deferred income tax

     74        74  

Accrued capital expenditures

     46        72  

Royalties

     32        58  

Derivative instruments

     25        36  

Holt property royalty

     14        15  

Taxes other than income and mining

     11        6  

Other

     49        44  
  

 

 

    

 

 

 
   $ 1,532      $ 1,313  
  

 

 

    

 

 

 

Other long-term liabilities:

     

Holt property royalty

   $ 142      $ 119  

Income and mining taxes

     71        70  

Power supply agreements

     40        39  

Derivative instruments

     34        60  

Boddington contingent consideration

     10        10  

Other

     42        44  
  

 

 

    

 

 

 
   $ 339      $ 342  
  

 

 

    

 

 

 

 

23


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

NOTE 22 CHANGES IN EQUITY

 

     Three Months Ended
March 31,
 
     2014     2013  

Common stock:

    

At beginning of period

   $ 789     $ 787  

Redemption of Exchangeable Shares

     8       —    

Stock based awards

     1       1  
  

 

 

   

 

 

 

At end of period

     798       788  
  

 

 

   

 

 

 

Additional paid-in capital:

    

At beginning of period

     8,441       8,330  

Redemption of Exchangeable Shares

     (8     —    

Stock based awards

     25       29  

Sale of noncontrolling interests

     —         48  
  

 

 

   

 

 

 

At end of period

     8,458       8,407  
  

 

 

   

 

 

 

Accumulated other comprehensive income (loss):

    

At beginning of period

     (182     490  

Other comprehensive income (loss)

     (23     (61
  

 

 

   

 

 

 

At end of period

     (205     429  
  

 

 

   

 

 

 

Retained earnings:

    

At beginning of period

     945       4,166  

Net income (loss) attributable to Newmont stockholders

     100       314  

Dividends Paid

     (77     (211
  

 

 

   

 

 

 

At end of period

     968       4,269  
  

 

 

   

 

 

 

Noncontrolling interests:

    

At beginning of period

     2,916       3,175  

Net income (loss) attributable to noncontrolling interests

     (52     42  

Sale of noncontrolling interests, net

     —         15  

Other comprehensive income

     (2     (1
  

 

 

   

 

 

 

At end of period

     2,862       3,231  
  

 

 

   

 

 

 

Total equity

   $ 12,881     $ 17,124  
  

 

 

   

 

 

 

 

24


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

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

 

     Unrealized gain
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

     (29     (3     —         9       (23

Reclassifications from accumulated other comprehensive income (loss)

     (2     —         2       —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net current-period other comprehensive income (loss)

     (31     (3     2       9       (23
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

March 31, 2014

   $ (66   $ 142     $ (122   $ (159   $ (205
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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 Income (Loss)
     Three Months
Ended March 31,
2014
    Three Months
Ended March 31,
2013
     

Marketable securities adjustments:

      

Sale of marketable securities

   $ (4   $ —       Other income, net

Impairment of marketable securities

     1       4     Other income, net
  

 

 

   

 

 

   

Total before tax

     (3     4    

Tax benefit (expense)

     1       (1  
  

 

 

   

 

 

   

Net of tax

   $ (2   $ 3    
  

 

 

   

 

 

   

Pension liability adjustments:

      

Amortization, net

   $ 3     $ 8      (1)
  

 

 

   

 

 

   

Total before tax

     3       8    

Tax (expense) benefit

     (1     (3  
  

 

 

   

 

 

   

Net of tax

   $ 2     $ 5    
  

 

 

   

 

 

   

Hedge instruments adjustments:

      

Operating cash flow hedges

   $ (5   $ (39   Costs applicable to sales

Forward starting swap hedges

     5       3     Interest expense, net
  

 

 

   

 

 

   

Total before tax

     —         (36  

Tax benefit (expense)

     —         12    
  

 

 

   

 

 

   

Net of tax

   $ —       $ (24  
  

 

 

   

 

 

   

Total reclassifications for the period, net of tax

   $ —       $ (16  
  

 

 

   

 

 

   

 

(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 2 in the Newmont Annual Report on Form 10-K for the year ended December 31, 2013 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) (Continued)

(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:

 

     Three Months Ended March 31,  
     2014     2013  

Decrease (increase) in operating assets:

    

Trade and accounts receivable

   $ (16   $ 115  

Inventories, stockpiles and ore on leach pads

     (182     (228

EGR refinery assets

     (256     308  

Other assets

     (50     (21

Increase (decrease) in operating liabilities:

    

Accounts payable and other accrued liabilities

     (94     (144

EGR refinery liabilities

     256        (308

Reclamation liabilities

     (8     (9
  

 

 

   

 

 

 
   $ (350   $ (287
  

 

 

   

 

 

 

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.

In April 2013, the Company merged one of its subsidiaries into Newmont USA. As a result of the merger, the prior periods presented have been revised to reflect this change as if the transaction had occurred at the beginning of the earliest period presented in accordance with the accounting guidance for business combinations between entities under common control. Additionally, the changes related to the revisions as described in Note 2 have also been included herein.

 

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Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

     Three Months Ended March 31, 2014  
                       Newmont  
     Newmont                 Mining  
     Mining     Newmont     Other           Corporation  

Condensed Consolidating Statement of Income

   Corporation     USA     Subsidiaries     Eliminations     Consolidated  

Sales

   $ —       $ 500     $ 1,264     $ —       $ 1,764  

Costs and expenses

          

Costs applicable to sales (1)

     —         298       785       —         1,083  

Amortization

     1       54       243       —         298  

Reclamation and remediation

     —         2       18       —         20  

Exploration

     —         4       30       —         34  

Advanced projects, research and development

     —         11       31       —         42  

General and administrative

     —         19       26       —         45  

Other expense, net

     —         6       46       —         52  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     1       394       1,179       —         1,574  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense)

          

Other income, net

     (1     60       (13     —         46  

Interest income—intercompany

     30       —         2       (32     —    

Interest expense—intercompany

     (2     —         (30     32       —    

Interest expense, net

     (82     (1     (10     —         (93
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (55     59       (51     —         (47
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income and mining tax and other items

     (56     165       34       —         143  

Income and mining tax expense

     29       (38     (69     —         (78

Equity income (loss) of affiliates

     127       (151     (17     41       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     100       (24     (52     41       65  

Income (loss) from discontinued operations

     —         —         (17     —         (17
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     100       (24     (69     41       48  

Net income attributable to noncontrolling interests

     —         —         66       (14     52  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Newmont stockholders

   $ 100     $ (24   $ (3   $ 27     $ 100  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 77     $ (22   $ (84   $ 52     $ 23  

Comprehensive income attributable to noncontrolling interests

     —         —         65       (11     54  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to Newmont stockholders

   $ 77     $ (22   $ (19   $ 41     $ 77  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Excludes Amortization and Reclamation and remediation.

 

27


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

     Three Months Ended March 31, 2013  
                             Newmont  
     Newmont                       Mining  
     Mining     Newmont     Other           Corporation  

Condensed Consolidating Statement of Income

   Corporation     USA     Subsidiaries     Eliminations     Consolidated  

Sales

   $ —       $ 543     $ 1,645     $ —       $ 2,188  

Costs and expenses

          

Costs applicable to sales (1)

     —         261       796       —         1,057  

Amortization

     —         48       219       —         267  

Reclamation and remediation

     —         2       16       —         18  

Exploration

     —         11       48       —         59  

Advanced projects, research and development

     —         13       39       —         52  

General and administrative

     —         30       26       —         56  

Other expense, net

     —         15       85       —         100  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     —         380       1,229       —         1,609  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense)

          

Other income, net

     —         3       23       —         26  

Interest income—intercompany

     48       7       5       (60     —    

Interest expense—intercompany

     (3     —         (57     60       —    

Interest expense, net

     (65     (2     2       —         (65
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (20     8       (27     —         (39
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income and mining tax and other items

     (20     171       389       —         540  

Income and mining tax expense

     7       (50     (137     —         (180

Equity income (loss) of affiliates

     327       114       43       (488     (4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     314       235       295       (488     356  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     314       235       295       (488     356  

Net income attributable to noncontrolling interests

     —         —         (66     24       (42
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Newmont stockholders

   $ 314     $ 235     $ 229     $ (464   $ 314  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 253     $ 239     $ 188     $ (386   $ 294  

Comprehensive income attributable to noncontrolling interests

     —         —         (66     25       (41
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to Newmont stockholders

   $ 253     $ 239     $ 122     $ (361   $ 253  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Excludes Amortization and Reclamation and remediation.

 

28


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

     Three Months Ended March 31, 2014  
                             Newmont  
     Newmont                       Mining  
     Mining     Newmont     Other           Corporation  

Condensed Consolidating Statement of Cash Flows

   Corporation     USA     Subsidiaries     Eliminations     Consolidated  

Operating activities:

          

Net income (loss)

   $ 100     $ (24   $ (69   $ 41     $ 48  

Adjustments

     (120     265       385       (45     485  

Net change in operating assets and liabilities

     (29     (45     (276     —         (350
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided from (used in) continuing operations

     (49     196       40       (4     183  

Net cash used in discontinued operations

     —         —         (3     —         (3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided from (used in) operations

     (49     196       37       (4     180  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Investing activities:

          

Additions to property, plant and mine development

     —         (84     (151     —         (235

Acquisitions, net

     —         —         (28     —         (28

Sale of marketable securities

     25       —         —         —         25  

Purchases of marketable securities

     —         —         (1     —         (1

Proceeds from sale of other assets

     —         —         70       —         70  

Other

     —         3       (12     —         (9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     25       (81     (122     —         (178
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financing activities:

          

Proceeds from debt, net

     (7     —         10       —         3  

Net intercompany borrowings (repayments)

     108       (219     111       —         —    

Acquisition of noncontrolling interests

     —         —         (2     —         (2

Dividends paid to common stockholders

     (77     —         (4     4       (77

Other

     —         —         (4     —         (4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided from (used in) financing activities

     24       (219     111       4       (80
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash

     —         —         (2     —         (2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net change in cash and cash equivalents

     —         (104     24       —         (80

Cash and cash equivalents at beginning of period

     —         428       1,127       —         1,555  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ —       $ 324     $ 1,151     $ —       $ 1,475  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

29


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

     Three Months Ended March 31, 2013  
                             Newmont  
     Newmont                       Mining  
     Mining     Newmont     Other           Corporation  

Condensed Consolidating Statement of Cash Flows

   Corporation     USA     Subsidiaries     Eliminations     Consolidated  

Operating activities:

          

Net income (loss)

   $ 314     $ 235     $ 295     $ (488   $ 356  

Adjustments

     (308     (33     225       486       370  

Net change in operating assets and liabilities

     4       (186     (105     —         (287
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided from (used in) continuing operations

     10       16       415       (2     439  

Net cash used in discontinued operations

     —         —         (6     —         (6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided from (used in) operations

     10       16       409       (2     433  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Investing activities:

          

Additions to property, plant and mine development

     —         (105     (405     —         (510

Acquisitions, net

     —         —         (8     —         (8

Sale of marketable securities

     —         —         1       —         1  

Purchases of marketable securities

     —         —         (1     —         (1

Proceeds from sale of other assets

     —         —         25       —         25  

Other

     —         —         (14     —         (14
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     —         (105     (402     —         (507
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financing activities:

          

Proceeds from debt, net

     —         —         80       —         80  

Net intercompany borrowings (repayments)

     200       (143     (57     —         —    

Proceeds from stock issuance, net

     1       —         —         —         1  

Sale of noncontrolling interests

     —         —         32       —         32  

Acquisition of noncontrolling interests

     —         —         (6     —         (6

Dividends paid to common stockholders

     (211     —         (2     2       (211

Other

     —         —         (1     —         (1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided from (used in) financing activities

     (10     (143     46       2       (105
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash

     —         —         (4     —         (4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net change in cash and cash equivalents

     —         (232     49       —         (183

Cash and cash equivalents at beginning of period

     —         342       1,219       —         1,561  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ —       $ 110     $ 1,268     $ —       $ 1,378  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

30


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

     At March 31, 2014  
                                Newmont  
     Newmont                          Mining  
     Mining      Newmont      Other            Corporation  

Condensed Consolidating Balance Sheet

   Corporation      USA      Subsidiaries      Eliminations     Consolidated  

Assets

             

Cash and cash equivalents

   $ —        $ 324      $ 1,151      $ —       $ 1,475  

Trade receivables

     —          28        178        —         206  

Accounts receivable

     —          23        296        —         319  

Intercompany receivable

     1,925        6,131        4,618        (12,674     —    

Investments

     —          1        82        —         83  

Inventories

     —          161        653        —         814  

Stockpiles and ore on leach pads

     —          393        367        —         760  

Deferred income tax assets

     3        140        96        —         239  

Other current assets

     —          71        1,280         —         1,351   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Current assets

     1,928        7,272        8,721         (12,674     5,247   

Property, plant and mine development, net

     31        3,028        11,122        (43     14,138  

Investments

     —          12        381        —         393  

Investments in subsidiaries

     14,187        4,354        2,855        (21,396     —    

Stockpiles and ore on leach pads

     —          468        2,255        —         2,723  

Deferred income tax assets

     711        301        926        (522     1,416  

Long-term intercompany receivable

     3,176        62        377        (3,615     —    

Other long-term assets

     50        231        600        —         881  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ 20,083      $ 15,728      $ 27,237       $ (38,250   $ 24,798  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Liabilities

             

Debt

   $ 567      $ 1      $ 47      $ —       $ 615  

Accounts payable

     —          59        404        —         463  

Intercompany payable

     3,636        4,519        4,519        (12,674     —    

Employee-related benefits

     —          113        134        —         247  

Income and mining taxes

     —          1        26        —         27  

Other current liabilities

     81        126        1,325         —         1,532   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Current liabilities

     4,284        4,819        6,455         (12,674     2,884   

Debt

     5,562        7        577        —         6,146  

Reclamation and remediation liabilities

     —          178        1,341        —         1,519  

Deferred income tax liabilities

     —          25        1,193        (522     696  

Employee-related benefits

     5        171        157        —         333  

Long-term intercompany payable

     213        —          3,445        (3,658     —    

Other long-term liabilities

     —          20        319        —         339  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     10,064        5,220        13,487         (16,854     11,917   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Equity

             

Newmont stockholders’ equity

     10,019        10,508        9,183        (19,691     10,019  

Noncontrolling interests

     —          —          4,567        (1,705     2,862  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total equity

     10,019        10,508        13,750        (21,396     12,881  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities and equity

   $ 20,083      $ 15,728      $ 27,237      $ (38,250   $ 24,798  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

31


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

     At December 31, 2013  
                                Newmont  
     Newmont                          Mining  
     Mining      Newmont      Other            Corporation  

Condensed Consolidating Balance Sheet

   Corporation      USA      Subsidiaries      Eliminations     Consolidated  

Assets

             

Cash and cash equivalents

   $ —        $ 428      $ 1,127      $ —       $ 1,555  

Trade receivables

     —          21        209        —         230  

Accounts receivable

     —          23        229        —         252  

Intercompany receivable

     1,400        6,089        5,672        (13,161     —    

Investments

     22        1        55        —         78  

Inventories

     —          146        571        —         717  

Stockpiles and ore on leach pads

     —          358        447        —         805  

Deferred income tax assets

     3        157        86        —         246  

Other current assets

     —          73        933        —         1,006  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Current assets

     1,425        7,296        9,329        (13,161     4,889  

Property, plant and mine development, net

     32        3,026        11,263        (44     14,277  

Investments

     —          7        432        —         439  

Investments in subsidiaries

     13,982        5,299        2,839        (22,120     —    

Stockpiles and ore on leach pads

     —          512        2,168        —         2,680  

Deferred income tax assets

     694        320        985        (526     1,473  

Long-term intercompany receivable

     3,204        62        367        (3,633     —    

Other long-term assets

     46        228        575        —         849  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ 19,383      $ 16,750      $ 27,958      $ (39,484   $ 24,607  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Liabilities

             

Debt

   $ 561      $ 1      $ 33      $ —       $ 595  

Accounts payable

     —          80        398        —         478  

Intercompany payable

     3,092        5,404        4,665        (13,161     —    

Employee-related benefits

     —          175        166        —         341  

Income and mining taxes

     —          —          13        —         13  

Other current liabilities

     71        161        1,081        —         1,313  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Current liabilities

     3,724        5,821        6,356        (13,161     2,740  

Debt

     5,556        7        582        —         6,145  

Reclamation and remediation liabilities

     —          176        1,337        —         1,513  

Deferred income tax liabilities

     —          23        1,138        (526     635  

Employee-related benefits

     5        169        149        —         323  

Long-term intercompany payable

     196        —          3,481        (3,677     —    

Other long-term liabilities

     —          20        322        —         342  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     9,481        6,216        13,365        (17,364     11,698  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Equity

             

Newmont stockholders’ equity

     9,902        10,534        9,984        (20,427     9,993  

Noncontrolling interests

     —          —          4,609        (1,693     2,916  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total equity

     9,902        10,534        14,593        (22,120     12,909  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities and equity

   $ 19,383      $ 16,750      $ 27,958      $ (39,484   $ 24,607  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

32


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

    Three Months Ended March 31, 2013  
    Newmont Mining Corporation     Newmont USA     Other Subsidiaries     Eliminations  

Condensed Consolidating
Statement of Income

  As Previously
Presented
    Change     As Currently
Presented
    As Previously
Presented
    Change     As Currently
Presented
    As Previously
Presented
    Change     As Currently
Presented
    As Previously
Presented
    Change     As Currently
Presented
 

Sales

  $ —       $ —       $ —       $ 488     $ 55     $ 543     $ 1,689     $ (44   $ 1,645     $ —       $ —       $ —    

Costs and expenses

                       

Costs applicable to sales

    —         —         —         220       41       261       824       (28     796       —         —         —    

Amortization

    —         —         —         40       8       48       227       (8     219       —         —         —    

Reclamation and remediation

    —         —         —         2       —         2       16       —         16       —         —         —    

Exploration

    —         —         —         8       3       11       51       (3     48       —         —         —    

Advanced projects, research and development

    —         —         —         12       1       13       40       (1     39       —         —         —    

General and administrative

    —         —         —         30       —         30       26       —         26       —         —         —    

Other expense, net

    —         —         —         16       (1     15       84       1       85       —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    —         —         —         328       52       380       1,268       (39     1,229       —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense)

                       

Other income, net

    —         —         —         4       (1     3       22       1       23       —         —         —    

Interest income—intercompany

    48       —         48       7       —         7       (2     7       5       (53     (7     (60

Interest expense—intercompany

    (3     —         (3     —         —         —         (50     (7     (57     53       7       60  

Interest expense, net

    (65     —         (65     (2     —         (2     2       —         2       —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    (20     —         (20     9       (1     8       (28     1       (27     —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

    (20     —         (20     169       2       171       393       (4     389       —         —         —    

Income and mining tax benfit (expense)

    7       —         7       (50     —         (50     (138     1       (137     —         —         —    

Equity income (loss) of affiliates

    328       (1     327       115       (1     114       43       —         43       (490     2       (488
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

    315       (1     314       234       1       235       298       (3     295       (490     2       (488
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

    315       (1     314       234       1       235       298       (3     295       (490     2       (488

Net income attributable to noncontrolling interests

    —         —         —         —         —         —         (67     1       (66     25       (1     24  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Newmont stockholders

  $ 315     $ (1   $ 314     $ 234     $ 1     $ 235     $ 231     $ (2   $ 229     $ (465   $ 1     $ (464
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

  $ 254     $ (1   $ 253     $ 238     $ 1     $ 239     $ 190     $ (2   $ 188     $ (387   $ 1     $ (386

Comprehensive income attributable to noncontrolling interests

    —         —         —         —         —         —         (66     —         (66     25       —         25  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to Newmont stockholders

  $ 254     $ (1   $ 253     $ 238     $ 1     $ 239     $ 124     $ (2   $ 122     $ (362   $ 1     $ (361
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

33


Table of Contents

NEWMONT MINING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

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

 

    As of the Three Months Ended March 31, 2013  
    Newmont Mining Company     Newmont USA     Other Subsidiaries     Eliminations  

Condensed Consolidating Statement of

Cash Flows

  As Previously
Presented
    Change     As Revised     As Previously
Presented
    Change     As Revised     As Previously
Presented
    Change     As Revised     As Previously
Presented
    Change     As Revised  

Operating activities:

                       

Net income (loss)

  $ 315     $ (1   $ 314     $ 234     $ 1     $ 235     $ 298     $ (3   $ 295     $ (490   $ 2     $ (488

Adjustments

    (310