Newmont Announces Record Operating Cash Flow of $3.6 Billion and Record Annual Revenue of $10.4 Billion in 2011 DENVER, Feb. 23, 2012 /PRNewswire/ -- Newmont Mining Corporation (NYSE: NEM) ("Newmont" or the "Company") reported income from continuing operations of $0.5 billion or $1.02 per share, compared with $2.3 billion, or $4.69 per share in 2010. Adjusted net income (1) was a record $2.2 billion, or $4.39 per share in 2011, compared with $1.9 billion, or $3.85 per share a year ago. Income from continuing operations was impacted by $1.6 billion, or $3.24 per share, from the non-cash write-down of the Company's Hope Bay project in Canada. This write-down had no impact on reported operating cash flows, cash balances or proven and probable reserves of the Company. 2011 Financial Highlights: Record operating cash flow of $3.6 billion, up 13% from 2010; Record regular dividends paid to shareholders of $494 million, up 100% from 2010, representing a payout ratio of 23% of adjusted net income; Gold operating margin of $971 per ounce, up 32% from 2010; Record revenue of $10.4 billion, up 9% from 2010; Attributable gold (2) and copper production of 5.2 million ounces and 206 million pounds, down 4% and 37%, respectively, from 2010; Gold and copper costs applicable to sales ("CAS") (3) of $591 per ounce and $1.26 per pound, up 22% and 58%, respectively; and Record average realized gold and copper price of $1,562 per ounce and $3.54 per pound, up 28% and 3%, respectively, from 2010. Q4 2011 Financial Highlights: Approved Q1 2012 dividend payable of $0.35 per share; Attributable gold and copper production of 1.3 million ounces and 47 million pounds, respectively; Gold and copper CAS of $602 per ounce and $1.58 per pound, respectively; and Average realized gold and copper price of $1,670 per ounce and $3.41 per pound, respectively. "We are pleased to announce a 32% increase in our operating margin for 2011, compared to a 28% increase in our average realized gold price for the year," commented Richard O'Brien, President and CEO. Our increasing margins provide us with the financial strength to continue to focus on returning capital to our shareholders. During 2011, we paid out an industry leading $494 million in dividends, representing 23% of adjusted net income from continuing operations," added Mr. O'Brien. Operating Results and Outlook In 2011, the Company reported attributable gold and copper production of 5.2 million ounces and 206 million pounds, respectively, at costs applicable to sales of $591 per ounce, and $1.26 per pound, respectively, on a co-product basis. Attributable 2011 gold production decreased 4% from 2010 levels due to lower production in the South America and Asia Pacific regions. Costs applicable to sales per ounce increased 22% over the prior year due to lower production, higher royalty and waste mining, higher co-product allocation of costs to gold and a stronger Australian dollar, partially offset by lower silver and copper by-product credits. Costs applicable to sales per pound increased 58% over the prior year due to lower production, higher waste mining at Batu Hijau and higher mill maintenance costs at Boddington, partially offset by lower co-product allocation of costs to copper. 2012 attributable gold production is expected to be approximately 5.0 million to 5.2 million ounces, with attributable copper production of 150 to 170 million pounds. The outlook reflects lower expected production at Batu Hijau in Indonesia, where the Company is currently engaged in Phase 6 stripping and plans to process lower grade stockpiles until late 2013, partially offset by higher production expected at Nevada and at Ahafo in Ghana. Costs applicable to sales for gold are expected to be between $625 and $675 per ounce due to lower expected production at Batu Hijau, combined with higher expected costs for labor, energy, royalties, and contracted services, particularly in the Asia Pacific region. Costs applicable to sales for copper are expected to be between $1.80 and $2.20 per pound of copper due to lower production at Batu Hijau. Regional Operations Nevada - Attributable gold production was 523,000 ounces in the fourth quarter and 1.7 million ounces in 2011. Costs applicable to sales were $519 and $603 per ounce, for the fourth quarter and 2011, respectively. Fourth quarter attributable gold production increased from the prior year quarter due to the resumption of mining at Gold Quarry, higher grade and recovery at Mill 5 and higher throughput at Juniper mill. Costs applicable to sales per ounce decreased from the prior year quarter due to slightly lower operating costs. 2011 attributable gold production increased slightly from the prior year due to the commencement of underground mining at Exodus and Pete Bajo, higher Gold Quarry production after resolution of previous geotechnical issues, and higher underground production at Leeville, partially offset by lower production from the Chukar underground mine. Total surface ore tons mined were 75% higher primarily due to completing remediation of a slope failure at Gold Quarry. Ore placed on leach pads increased 84% to 8.3 million tons due to higher leach ore tons mined from Lantern as well as re-leaching of ore at Lone Tree. Costs applicable to sales per ounce increased 7% due to higher surface mining and milling costs and higher royalties, partially offset by higher silver and copper by-product credits. La Herradura - Attributable gold production was 56,000 ounces in the fourth quarter and 212,000 ounces in 2011. Costs applicable to sales were $609 and $527 per ounce in the fourth quarter and 2011, respectively. Fourth quarter attributable gold production increased from the prior year quarter due to higher leach placement. Costs applicable to sales per ounce increased from the prior year quarter due to higher employee profit sharing costs, partially offset by higher production and silver by-product credits. 2011 attributable gold production increased 22% from the prior year due to higher leach placement and additional mining equipment at Herradura and Soledad-Dipolos. Costs applicable to sales per ounce increased 25% due to higher waste mining costs and higher employee profit sharing costs, partially offset by higher production and silver by-product credits. 2012 attributable gold production in North America is expected to be approximately 1.9 to 2.0 million ounces at costs applicable to sales of approximately $570 to $630 per ounce. This is in-line with prior year levels as the Company expects to complete repairs on the ventilation shaft at Leeville in Nevada and production from the Noche Buena deposit at La Herradura is expected to commence in the first half of the year. South America Yanacocha - Attributable gold production was 172,000 ounces in the fourth quarter and 664,000 ounces in 2011. Costs applicable to sales were $511 and $560 per ounce in the fourth quarter and 2011, respectively. Fourth quarter attributable gold production was slightly higher than the prior year quarter. Costs applicable to sales per ounce decreased from the prior year quarter due lower operating costs and higher silver by-product credits. 2011 attributable gold production decreased 12% from the prior year due to mine sequencing resulting in lower leach placement at La Quinua, Yanacocha and Carachugo, partially offset by higher mill grade and recovery. Leach tons placed decreased 27% from 59 million tons to 43 million tons. Costs applicable to sales per ounce increased 30% from the prior year due to lower production, higher milling costs and lower silver by-product credits. La Zanja - Attributable gold production was 15,000 ounces in the fourth quarter and 64,000 ounces in 2011. 2012 attributable gold production in South America is expected to be approximately 700,000-750,000 ounces, primarily due to lower leach production at Yanacocha. Costs applicable to sales are expected to stabilize to approximately $480 to $530 per ounce, primarily due to mine sequencing and higher mill grade. Asia Pacific Boddington - Attributable gold production was 205,000 ounces in the fourth quarter and 741,000 ounces in 2011. Attributable copper production was 22 million pounds in the fourth quarter and 69 million pounds in 2011. Costs applicable to sales were $749 ($599 on net basis (4)) and $682 ($548 on a net basis (4)) per ounce and $1.84 and $2.03 per pound in the fourth quarter and 2011, respectively. Fourth quarter 2011 gold production was in-line with the prior year quarter, while copper production increased 47% due to higher throughput and grade. Costs applicable to sales per ounce increased 20% in the fourth quarter over the prior year due to higher mining and milling costs, and higher royalty costs. Costs applicable to sales per pound decreased 11% mainly due to higher production. 2011 attributable gold and copper production increased 2% and 19%, respectively, from the prior year due to higher mill throughput and higher copper grade, partially offset by lower recoveries and lower gold grade. Costs applicable to sales increased 16% per ounce and 9% per pound, respectively, due to higher mining and mill maintenance costs, higher royalty costs and a stronger Australian dollar, net of hedging gains, partially offset by higher production and higher silver by-product credits. 2012 attributable gold and copper production at Boddington is expected to be approximately 750,000-800,000 ounces and 70-80 million pounds, respectively, at costs applicable to sales of approximately $800 to $850 per ounce and $2.00 to $2.25 per pound on a co-product basis. 2012 production is expected to be in-line with 2011 levels, while higher operating costs are expected to result from higher mining and labor costs, the implementation of a carbon tax in Australia, as well as higher costs for contracted services and supplies. Batu Hijau - Attributable gold production was 16,000 ounces in the fourth quarter and 154,000 ounces in 2011. Attributable copper production was 25 million pounds in the fourth quarter and 137 million pounds in 2011. Costs applicable to sales were $754 and $476 per ounce and $1.50 and $1.11 per pound on a co-product basis in the fourth quarter and 2011, respectively. Fourth quarter attributable gold and copper production decreased from the prior year quarter due to lower mill throughput, grade and recovery as a result of processing more stockpiled ore. Costs applicable to sales per ounce and per pound increased from the prior year quarter due to higher labor costs as well as substantially lower grade and recovery as a result of processing more stockpiled material. 2011 attributable copper and gold production decreased 48% and 57%, respectively, from the prior year due to lower throughput, grade and recovery as a result of processing more stockpiled material, compared to high grade Phase 5 ore in 2010 and mill down time from motor replacements during the second and third quarters of 2011. Waste tons mined increased 135% as Phase 6 waste removal continues as planned. The Company expects to process primarily stockpiled ore until Phase 6 ore becomes the primary mill feed in late 2013. Costs applicable to sales increased 61% per pound and 101% per ounce due to lower production, higher waste mining and higher labor costs. 2012 attributable gold production for Batu Hijau is expected to be approximately 45,000 to 55,000 ounces, at costs applicable to sales of between $800 and $850 per ounce, while attributable copper production is expected to be approximately 80 to 90 million pounds, at costs applicable to sales of between $1.80 and $2.20 per pound. As previously disclosed (5), Newmont continues to expect processing stockpiled ore until Phase 6 ore becomes the primary mill feed commencing in late 2013. Other Australia/New Zealand - Attributable gold production was 224,000 ounces in the fourth quarter and 1.0 million ounces in 2011. Costs applicable to sales were $807 and $664 per ounce in the fourth quarter and 2011, respectively. Fourth quarter attributable gold production decreased from the prior year quarter due to lower throughput at Jundee and Tanami, and a lower ore grade at Waihi, partially offset by higher ore grade at Jundee and Kalgoorlie. Costs applicable to sales per ounce increased from the prior year quarter due to lower production and higher mining costs at Tanami and Waihi. 2011 attributable gold production decreased 4% from the prior year due to lower throughput at Tanami and lower grade at Waihi. Costs applicable to sales per ounce increased 22% due to lower production, higher mining and milling costs and a stronger Australian dollar, net of hedging gains. 2012 attributable gold production for other Australia/New Zealand is expected to be approximately 980,000 to 1.1 million ounces, primarily due to slightly lower production at KCGM and Jundee. Costs applicable to sales for other Australia/New Zealand are expected to increase to approximately $810 to $860 per ounce in 2012, primarily driven by a stronger forecasted Australian dollar, net of hedging gains, higher labor costs, and the implementation of a carbon tax in Australia. Africa Ahafo - Attributable gold production was 88,000 and 566,000 ounces during the fourth quarter and 2011, respectively. Costs applicable to sales were $520 and $474 per ounce for the fourth quarter and 2011, respectively. Fourth quarter attributable production decreased from the prior year quarter due to lower mill grade and an increase in in-process inventory in December. Costs applicable to sales per ounce increased from the prior year quarter due to higher mining and milling costs. 2011 attributable gold production increased 4% from the prior year due to higher throughput and recovery. Ore tons mined increased 28% from a full year of production at Amoma. Costs applicable to sales per ounce increased 5% due to higher labor, commodity and royalty costs, partially offset by higher production. 2012 attributable gold production for the Africa operations is expected to increase to approximately 570,000 to 600,000 ounces due to higher ore grade. Costs applicable to sales of approximately $500 to $550 per ounce are expected for 2012, primarily as a result of higher mining and milling costs. Capital Update Consolidated capital expenditures were $2.8 billion in 2011, up from $1.4 billion in 2010. Attributable capital expenditures were $2.3 billion in 2011, up from $1.2 billion in 2010. Approximately $1.3 billion was spent on major projects in 2011, such as Conga in Peru, Akyem in Ghana, Tanami shaft in Australia, with the balance largely attributed to sustaining capital. The Company currently plans to spend approximately $3.0 to $3.3 billion in attributable capital expenditures in 2012, or $4.0 to $4.3 billion on a consolidated basis. Approximately 60% of expected attributable 2012 capital expenditures are allocated to growth project initiatives, including further development of Akyem, the Tanami Shaft, and potentially Conga, with the remaining 40% expected to be spent on sustaining and maintenance capital. Advanced Projects Update Consolidated advanced projects, research and development expenditures were $373 million in 2011, up from $216 million in 2010. In 2011, the Company increased spending to accelerate internal growth opportunities across our portfolio, including Long Canyon, Vista Vein and the Phoenix copper leach in Nevada, the Conga and Chaquicocha projects in Peru, the Merian gold project in Suriname, the Elang project in Indonesia, and Subika expansion at Ahafo in Ghana. The Company currently plans to spend approximately $475 to $525 million in advanced projects in 2012 on a consolidated basis, or $430 to $480 on an attributable basis, focused primarily on Merian, Midas, Long Canyon, Vista Vein, Elang and the Ahafo mill expansion. 2012 Outlook (6) (7) Attributable Production Consolidated CAS Consolidated Capital Attributable Capital Kozs, Mlbs Expenditures ($M) La Herradura Yanacocha La Zanja Conga (a) Boddington Other Australia/NZ Batu Hijau (e) Ahafo Akyem Corporate/Other Total Gold Total Copper a The future development of the Conga project remains subject to risks and uncertainties as disclosed in the Company's cautionary statement. Development of the Conga project has been temporarily suspended as disclosed on November 30, 2011. Should the Company be unable to continue with the current development plan at Conga, Newmont may reprioritize and reallocate capital to development alternatives in Nevada, Australia, Ghana, and Indonesia. b 2012 Attributable CAS Outlook is $640 - $690 per ounce. c 2012 Net Attributable CAS Outlook (inclusive of by-product credits) is $600 - $650 per ounce. d Includes capitalized interest of approximately $140 million. e Assumes Batu Hijau economic interest of 44.5625% for 2012, subject to final divestiture obligations. Key Assumptions Consolidated Expenses Attributable Expenses General & Administrative Advanced Projects & R&D Tax Rate Gold Price ($/ounce) Copper Price ($/pound) Oil Price ($/barrel) AUD Exchange Rate Non-GAAP measure. See page 12 for reconciliation. Attributable gold production was 5.185 million ounces in 2011, while attributable gold sales were 5.025 million. Attributable gold CAS was $597 per ounce for 2011. Net attributable gold CAS (inclusive of by-product credits) was $509 per ounce for 2011. See by-product reconciliation on page 13. Please see Newmont's Form 10-K filed on February 24, 2011. Outlook referenced in the table above and elsewhere in this release is based upon management's good faith estimates as of February 23, 2012 and are considered "forward-looking statements." References to outlook guidance are based on current mine plans, assumptions noted above and current geotechnical, metallurgical, hydrological and other physical conditions, which are subject to risk and uncertainty as discussed in the "Cautionary Statement" on page 14. 2012 Annual CAS, inclusive of hedge gains and losses, are expected to change by approximately $11 per ounce for every $10 change in the oil price and by approximately $4 per ounce for every $0.10 change in the Australian dollar exchange rate. in millions, except per share Costs applicable to sales (1) Reclamation and remediation Advanced projects, research and development Write-down of property, plant and mine development Income before income and mining tax and other items Income and mining tax expense Equity income (loss) of affiliates Net income attributable to Newmont stockholders Net income (loss) attributable to Newmont stockholders: Income (loss) per common share Basic: Diluted: Excludes Amortization and Reclamation and remediation. Stock based compensation and other non-cash benefits Revaluation of contingent consideration Impairment of marketable securities Gain on asset sales, net Other operating adjustments and write-downs Net cash provided from continuing operations Net cash used in discontinued operations Net cash provided from operations Acquisitions, net Purchases of marketable securities Proceeds from sale of other assets Proceeds from debt, net Proceeds from stock issuance, net Sale of noncontrolling interests Dividends paid to common stockholders At December 31, Stockpiles and ore on leach pads Property, plant and mine development, net Employee-related benefits Reclamation and remediation liabilities Deferred income tax liabilities Common stock - $1.60 par value Newmont stockholders' equity Consolidated ounces produced (thousands): Batu Hijau Other Australia/New Zealand Copper Consolidated pounds produced (millions): Attributable ounces produced (thousands): Other South America Equity Interests Other Asia Pacific Equity Interests Attributable pounds produced (millions): Costs Applicable to Sales ($/ounce) (1) Attributable to Newmont Costs Applicable to Sales ($/pound) (1) (1) Excludes Amortization and Reclamation and remediation. Consolidated Capital Expenditures ($ million) Hope Bay Conga Other Asia Pacific Total - Accrual Basis Change in Capital Accrual Total - Cash Basis Attributable to Newmont (Accrual Basis) Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by Generally Accepted Accounting Principles ("GAAP"). These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Reconciliation of Adjusted Net Income to GAAP Net Income Management uses the non-GAAP financial measure Adjusted net income to evaluate the Company's operating performance, and for planning and forecasting future business operations. The Company believes the use of Adjusted net income allows investors and analysts to compare the results of the continuing operations of the Company and its direct and indirect subsidiaries relating to the production and sale of minerals to similar operating results of other mining companies, by excluding exceptional or unusual items, income or loss from discontinued operations and the permanent impairment of assets, including marketable securities and goodwill. Management's determination of the components of Adjusted net income are evaluated periodically and based, in part, on a review of non-GAAP financial measures used by mining industry analysts. Net income attributable to Newmont stockholders is reconciled to Adjusted net income as follows: in millions except per share, after-tax Impairment of Hope Bay assets Other impairments/asset sales Fronteer acquisition costs Boddington contingent consideration PTNNT community contribution Income tax planning, net Costs Applicable to Sales per Ounce/Pound Costs applicable to sales per ounce/pound are non-GAAP financial measures. These measures are calculated by dividing the costs applicable to sales of gold and copper by gold ounces or copper pounds sold, respectively. These measures are calculated on a consistent basis for the periods presented on both a consolidated and attributable to Newmont basis. Attributable costs applicable to sales are based on our economic interest in production from our mines. For operations where we hold less than a 100% economic share in the production, we exclude the share of gold or copper production attributable to the non-controlling interest. We include attributable costs applicable to sales per ounce/pound to provide management, investors and analysts with information with which to compare our performance to other gold producers. Costs applicable to sales per ounce/pound statistics are intended to provide additional information only and do not have any standardized meaning prescribed by GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The measures are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Other companies may calculate these measures differently. Net attributable costs applicable to sales per ounce measures the benefit of copper produced in conjunction with gold, as a credit against the cost of producing gold. A number of other gold producers present their costs net of the contribution from copper and other non-gold sales. We believe that including a measure of this basis provides management, investors and analysts with information with which to compare our performance to other gold producers, and to better assess the overall performance of our business. In addition, this measure provides information to enable investors and analysts to understand the importance of non-gold revenues to our cost structure. Costs applicable to sales per ounce/pound Costs applicable to sales: Noncontrolling interests (1) Gold/Copper sold (000 ounces/million lbs): Costs applicable to sales per ounce/pound: Net attributable costs applicable to sales per ounce Attributable costs applicable to sales: Copper revenue: Net attributable costs applicable to sales Attributable gold ounces sold (thousands) (1) Relates to partners' interests in Batu Hijau and Yanacocha. Reconciliation of Co-Product Costs Applicable to Sales to By-Product Costs Applicable to Sales Sales and Costs applicable to sales for Boddington are presented in the Condensed Consolidated Financial Statements for both gold and copper due to the significant portion of copper production (approximately 15-20% of revenue based on the latest life-of-mine plan and metal price assumptions). The co-product method allocates costs applicable to sales to each metal based on specifically identifiable costs where applicable and on a relative proportion of sales values for other costs. Management also assesses the performance of the Boddington mine on a by-product basis due to the majority of sales being derived from gold and to determine contingent consideration payments to AngloGold. The by-product method deducts copper sales from costs applicable to sales as shown in the following table: Co-product costs applicable to sales - gold Less copper margin: Sales - copper Costs applicable to sales - copper Copper margin By-product costs applicable to sales - gold Costs applicable to sales - gold (per ounce) Co-product By-product Gold ounces sold (thousands) Newmont Mining Corporation (NYSE: NEM) announced it will report Fourth Quarter and Year-End 2011 results after the market closes on Thursday, February 23, 2012. A conference call will be held on Friday, February 24, 2012 at 10:00 a.m. Mountain Time); it will also be carried on the Company's website. Dial-In Number Intl Dial-In Number Leader John Seaberg Passcode Newmont Replay Number Intl Replay Number Replay Passcode Webcast Details Cautionary Statement This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended which are intended to be covered by the safe harbor created by such sections and other applicable laws. Such forward-looking statements may include, without limitation: (i) estimates and expectations regarding the Company's strategy and plans; (ii) estimates of future mineral production and sales; (iii) estimates of future operating costs, costs applicable to sales and other costs; (iv) estimates of future capital expenditures and consolidated advanced projects, research and development expenditures; and (v) the Company's exploration pipeline and expectations regarding the development, growth and exploration potential of the Company's projects, including project start dates, ramp up, life, pipeline timelines (including commencement of mining, drilling and stage gate advancement and expansion opportunities) and expected project returns; (vi) potential ounces or tons of reserves, non-reserve mineralization and potential resources; (vii) dividend payments and increases; (viii) future liquidity, cash and balance sheet expectations; and (ix) other financial outlook for the Company's operations and projects. Estimates or expectations of future events or results are based upon certain assumptions, which may prove to be incorrect. Such assumptions, include, but are not limited to: (i) there being no significant change to current geotechnical, metallurgical, hydrological and other physical conditions; (ii) permitting, development, operations and expansion of the Company's projects being consistent with current expectations and mine plans; (iii) political, social and legal developments in any jurisdiction in which the Company operates being consistent with its current expectations; (iv) certain exchange rate assumptions for the Australian dollar to the U.S. dollar, as well as other exchange rates being approximately consistent with current levels; (v) certain price assumptions for gold, copper and oil; (vi) prices for key supplies being approximately consistent with current levels and such supplies otherwise being available on bases consistent with the Company's current expectations; and (vii) the accuracy of our current mineral reserve and mineral resource estimates and exploration information. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the "forward-looking statements." Such risks include, but are not limited to: (i) gold and other metals price volatility; (ii) currency fluctuations; (iii) increased capital and operating costs and scarcity of competition for required labor and supplies; (iv) variances in ore grade or recovery rates from those assumed in mining plans; (v) political and operational risks; (vi) community relations, conflict resolution and outcome of projects or oppositions; and (vii) governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company's 2011 Annual Report on Form 10-K, filed on February 24, 2012, with the Securities and Exchange Commission, as well as the Company's other SEC filings. The Company does not undertake any obligation to release publicly revisions to any "forward-looking statement," including, without limitation, outlook, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued "forward-looking statement" constitutes a reaffirmation of that statement. Continued reliance on "forward-looking statements" is at investors' own risk.