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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, 2011 filed February 24, 2012 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, “NZ$” to New Zealand currency and “$” to United States currency.
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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recently Adopted Accounting Pronouncements
Goodwill Impairment
In September 2011, ASC guidance was issued related to goodwill impairment. Under the updated guidance, an entity will have the option to first assess qualitatively whether it is necessary to perform the two-step goodwill impairment test. If the Company believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The update does not change how the Company performs the two-step impairment test under previous guidance. The Company's January 1, 2012 adoption of the guidance had no impact on the Company's consolidated financial position, results of operations or cash flows.
Fair Value Accounting
In May 2011, ASC guidance was issued related to disclosures around fair value accounting. The updated guidance clarifies different components of fair value accounting including the application of the highest and best use and valuation premise concepts, measuring the fair value of an instrument classified in a reporting entity's shareholders' equity and disclosing quantitative information about the unobservable inputs used in fair value measurements that are categorized in Level 3 of the fair value hierarchy. The Company's January 1, 2012 adoption of the updated guidance had no impact on the Company's consolidated financial position, results of operations or cash flows.
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NOTE 3 SEGMENT INFORMATION
Costs | Advanced | |||||||||||||||
Applicable to | Projects and | Pre-Tax | ||||||||||||||
Sales | Sales | Amortization | Exploration | Income (Loss) | ||||||||||||
Three Months Ended June 30, 2012 | ||||||||||||||||
Nevada | $ | 571 | $ | 258 | $ | 47 | $ | 43 | $ | 217 | ||||||
La Herradura | 93 | 33 | 6 | 11 | 46 | |||||||||||
Other North America | - | - | - | 1 | (54) | |||||||||||
North America | 664 | 291 | 53 | 55 | 209 | |||||||||||
Yanacocha | 614 | 177 | 62 | 18 | 333 | |||||||||||
Conga | - | - | - | 12 | (12) | |||||||||||
Other South America | - | - | - | 19 | (19) | |||||||||||
South America | 614 | 177 | 62 | 49 | 302 | |||||||||||
Boddington: | ||||||||||||||||
Gold | 264 | 157 | 49 | NA | NA | |||||||||||
Copper | 42 | 38 | 12 | NA | NA | |||||||||||
Total | 306 | 195 | 61 | 2 | 37 | |||||||||||
Batu Hijau: | ||||||||||||||||
Gold | 18 | 11 | 3 | NA | NA | |||||||||||
Copper | 88 | 70 | 14 | NA | NA | |||||||||||
Total | 106 | 81 | 17 | 7 | (16) | |||||||||||
Other Australia/New Zealand | 331 | 182 | 33 | 18 | 101 | |||||||||||
Other Asia Pacific | - | - | 2 | 4 | (9) | |||||||||||
Asia Pacific | 743 | 458 | 113 | 31 | 113 | |||||||||||
Ahafo | 208 | 76 | 16 | 11 | 100 | |||||||||||
Akyem | - | - | - | 5 | (5) | |||||||||||
Other Africa | - | - | - | 3 | (2) | |||||||||||
Africa | 208 | 76 | 16 | 19 | 93 | |||||||||||
Corporate and Other | - | - | 4 | 34 | (160) | |||||||||||
Consolidated | $ | 2,229 | $ | 1,002 | $ | 248 | $ | 188 | $ | 557 |
Costs | Advanced | Pre-Tax | ||||||||||||||||||||
Sales | Applicable to Sales | Amortization | Projects and Exploration | Income (Loss) | Total Assets | Capital Expenditures(1) | ||||||||||||||||
Six Months Ended June 30, 2012 | ||||||||||||||||||||||
Nevada | $ | 1,294 | $ | 525 | $ | 100 | $ | 77 | $ | 586 | $ | 7,280 | $ | 370 | ||||||||
La Herradura | 186 | 65 | 11 | 17 | 91 | 353 | 29 | |||||||||||||||
Other North America | - | - | - | 1 | (106) | 199 | - | |||||||||||||||
North America | 1,480 | 590 | 111 | 95 | 571 | 7,832 | 399 | |||||||||||||||
Yanacocha | 1,208 | 338 | 112 | 35 | 682 | 2,775 | 243 | |||||||||||||||
Conga | - | - | - | 39 | (39) | 1,462 | 342 | |||||||||||||||
Other South America | - | - | - | 44 | (44) | 44 | - | |||||||||||||||
South America | 1,208 | 338 | 112 | 118 | 599 | 4,281 | 585 | |||||||||||||||
Boddington: | ||||||||||||||||||||||
Gold | 562 | 294 | 81 | N/A | N/A | N/A | N/A | |||||||||||||||
Copper | 103 | 68 | 18 | N/A | N/A | N/A | N/A | |||||||||||||||
Total | 665 | 362 | 99 | 5 | 180 | 4,640 | 52 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 52 | 30 | 6 | N/A | N/A | N/A | N/A | |||||||||||||||
Copper | 260 | 155 | 30 | N/A | N/A | N/A | N/A | |||||||||||||||
Total | 312 | 185 | 36 | 14 | 32 | 3,651 | 61 | |||||||||||||||
Other Australia/New Zealand | 758 | 372 | 69 | 33 | 280 | 1,348 | 137 | |||||||||||||||
Other Asia Pacific | - | - | 3 | 10 | (4) | 606 | 8 | |||||||||||||||
Asia Pacific | 1,735 | 919 | 207 | 62 | 488 | 10,245 | 258 | |||||||||||||||
Ahafo | 489 | 172 | 40 | 22 | 250 | 1,328 | 108 | |||||||||||||||
Akyem | - | - | - | 9 | (10) | 750 | 189 | |||||||||||||||
Other Africa | - | - | - | 5 | (4) | 9 | - | |||||||||||||||
Africa | 489 | 172 | 40 | 36 | 236 | 2,087 | 297 | |||||||||||||||
Corporate and Other | - | - | 9 | 67 | (301) | 4,215 | 37 | |||||||||||||||
Consolidated | $ | 4,912 | $ | 2,019 | $ | 479 | $ | 378 | $ | 1,593 | $ | 28,660 | $ | 1,576 | ||||||||
(1) | Includes a decrease in accrued capital expenditures of $2; consolidated capital expenditures on a cash basis were $1578. |
Costs | Advanced | |||||||||||||||
Applicable to | Projects and | Pre-Tax | ||||||||||||||
Sales | Sales | Amortization | Exploration | Income (Loss) | ||||||||||||
Three Months Ended June 30, 2011 | ||||||||||||||||
Nevada | $ | 529 | $ | 224 | $ | 56 | $ | 38 | $ | 195 | ||||||
La Herradura | 81 | 27 | 5 | 3 | 44 | |||||||||||
Other North America | - | - | 4 | 53 | (8) | |||||||||||
North America | 610 | 251 | 65 | 94 | 231 | |||||||||||
Yanacocha | 524 | 190 | 66 | 11 | 232 | |||||||||||
Conga | - | - | 1 | 7 | (7) | |||||||||||
Other South America | - | - | - | 7 | (9) | |||||||||||
South America | 524 | 190 | 67 | 25 | 216 | |||||||||||
Boddington: | ||||||||||||||||
Gold | 269 | 117 | 31 | N/A | N/A | |||||||||||
Copper | 54 | 27 | 7 | N/A | N/A | |||||||||||
Total | 323 | 144 | 38 | 2 | 140 | |||||||||||
Batu Hijau: | ||||||||||||||||
Gold | 92 | 30 | 7 | N/A | N/A | |||||||||||
Copper | 242 | 79 | 18 | N/A | N/A | |||||||||||
Total | 334 | 109 | 25 | 1 | 186 | |||||||||||
Other Australia/New Zealand | 375 | 158 | 31 | 10 | 168 | |||||||||||
Other Asia Pacific | - | - | - | 5 | (34) | |||||||||||
Asia Pacific | 1,032 | 411 | 94 | 18 | 460 | |||||||||||
Ahafo | 218 | 65 | 20 | 8 | 119 | |||||||||||
Akyem | - | - | - | 1 | (1) | |||||||||||
Other Africa | - | - | - | 3 | (5) | |||||||||||
Africa | 218 | 65 | 20 | 12 | 113 | |||||||||||
Corporate and Other | - | - | 4 | 26 | (173) | |||||||||||
Consolidated | $ | 2,384 | $ | 917 | $ | 250 | $ | 175 | $ | 847 |
Costs | Advanced | Pre-Tax | ||||||||||||||||||||
Sales | Applicable to Sales | Amortization | Projects and Exploration | Income (Loss) | Total Assets | Capital Expenditures(1) | ||||||||||||||||
Six Months Ended June 30, 2011 | ||||||||||||||||||||||
Nevada | $ | 1,111 | $ | 496 | $ | 128 | $ | 55 | $ | 411 | $ | 6,797 | $ | 228 | ||||||||
La Herradura | 146 | 45 | 9 | 9 | 80 | 260 | 41 | |||||||||||||||
Other North America | - | - | 7 | 97 | (58) | 2,294 | 27 | |||||||||||||||
North America | 1,257 | 541 | 144 | 161 | 433 | 9,351 | 296 | |||||||||||||||
Yanacocha | 886 | 343 | 119 | 17 | 381 | 2,634 | 127 | |||||||||||||||
Conga | - | - | 1 | 10 | (11) | 562 | 251 | |||||||||||||||
Other South America | - | - | - | 14 | (15) | 37 | - | |||||||||||||||
South America | 886 | 343 | 120 | 41 | 355 | 3,233 | 378 | |||||||||||||||
Boddington: | ||||||||||||||||||||||
Gold | 501 | 217 | 59 | N/A | N/A | N/A | N/A | |||||||||||||||
Copper | 107 | 55 | 14 | N/A | N/A | N/A | N/A | |||||||||||||||
Total | 608 | 272 | 73 | 3 | 244 | 4,419 | 75 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 232 | 64 | 14 | N/A | N/A | N/A | N/A | |||||||||||||||
Copper | 611 | 168 | 38 | N/A | N/A | N/A | N/A | |||||||||||||||
Total | 843 | 232 | 52 | 1 | 509 | 3,513 | 88 | |||||||||||||||
Other Australia/New Zealand | 790 | 324 | 66 | 22 | 365 | 1,124 | 134 | |||||||||||||||
Other Asia Pacific | - | - | 1 | 6 | (34) | 625 | 4 | |||||||||||||||
Asia Pacific | 2,241 | 828 | 192 | 32 | 1,084 | 9,681 | 301 | |||||||||||||||
Ahafo | 465 | 145 | 42 | 15 | 255 | 1,037 | 37 | |||||||||||||||
Akyem | - | - | - | 2 | (2) | 351 | 67 | |||||||||||||||
Other Africa | - | - | - | 3 | (6) | 6 | - | |||||||||||||||
Africa | 465 | 145 | 42 | 20 | 247 | 1,394 | 104 | |||||||||||||||
Corporate and Other | - | - | 8 | 51 | (299) | 4,979 | 18 | |||||||||||||||
Consolidated | $ | 4,849 | $ | 1,857 | $ | 506 | $ | 305 | $ | 1,820 | $ | 28,638 | $ | 1,097 | ||||||||
(1) | Includes an increase in accrued capital expenditures of $77; consolidated capital expenditures on a cash basis were $1020. |
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NOTE 4 RECLAMATION AND REMEDIATION
At June 30, 2012 and December 31, 2011, $1,145 and $1,070, respectively, were accrued for reclamation obligations relating to mineral properties. In addition, the Company is involved in several matters concerning environmental obligations associated with former, primarily historic, mining activities. Generally, these matters concern developing and implementing remediation plans at the various sites involved. At June 30, 2012 and December 31, 2011, $191 and $170, respectively, were accrued for such obligations. These amounts are also included in Reclamation and remediation liabilities.
The following is a reconciliation of Reclamation and remediation liabilities:
Six Months Ended June 30, | ||||||||
2012 | 2011 | |||||||
Balance at beginning of period | $ | 1,240 | $ | 1,048 | ||||
Additions, changes in estimates and other | 105 | 32 | ||||||
Liabilities settled | (41) | (15) | ||||||
Accretion expense | 32 | 29 | ||||||
Balance at end of period | $ | 1,336 | $ | 1,094 |
The current portion of Reclamation and remediation liabilities of $66 and $71 at June 30, 2012 and December 31, 2011, respectively, are included in Other current liabilities (see Note 22).
The Company's reclamation and remediation expenses consisted of:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||
Reclamation | $ | - | $ | 28 | $ | - | $ | 28 | ||||||
Accretion - operating | 13 | 13 | 27 | 25 | ||||||||||
Accretion - non-operating | 3 | 2 | 5 | 4 | ||||||||||
$ | 16 | $ | 43 | $ | 32 | $ | 57 | |||||||
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NOTE 5 OTHER EXPENSE, NET
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||
Hope Bay care and maintenance | $ | 52 | $ | - | $ | 102 | $ | - | ||||||
Community development | 20 | 23 | 51 | 40 | ||||||||||
Regional administration | 29 | 21 | 50 | 37 | ||||||||||
Acquisiton costs | 12 | 20 | 12 | 21 | ||||||||||
Western Australia power plant | 4 | 5 | 8 | 9 | ||||||||||
Indonesian value added tax settlement | - | - | - | 21 | ||||||||||
Other | 9 | 18 | 23 | 32 | ||||||||||
$ | 126 | $ | 87 | $ | 246 | $ | 160 |
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NOTE 6 OTHER INCOME, NET
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Income (loss) from developing projects, net | $ | 19 | $ | (4) | $ | 33 | $ | 20 | |||||||
Reduction of allowance for loan receivable | - | - | 21 | - | |||||||||||
Canadian Oil Sands | 11 | 10 | 20 | 16 | |||||||||||
Gain on asset sales, net | - | - | 10 | 3 | |||||||||||
Refinery income, net | 2 | - | 7 | - | |||||||||||
Interest | 2 | 2 | 7 | 6 | |||||||||||
Gain on sale of investments, net | - | 50 | - | 50 | |||||||||||
Foreign currency exchange, net | 12 | (18) | (3) | (29) | |||||||||||
Impairment of marketable securities | (8) | (1) | (32) | (1) | |||||||||||
Other | (2) | 9 | 6 | 14 | |||||||||||
$ | 36 | $ | 48 | $ | 69 | $ | 79 |
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NOTE 7 EMPLOYEE PENSION AND OTHER BENEFIT PLANS
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Pension benefit costs, net | |||||||||||||||
Service cost | $ | 8 | $ | 6 | $ | 15 | $ | 12 | |||||||
Interest cost | 11 | 10 | 21 | 20 | |||||||||||
Expected return on plan assets | (11) | (11) | (22) | (21) | |||||||||||
Amortization | 8 | 7 | 14 | 12 | |||||||||||
$ | 16 | $ | 12 | $ | 28 | $ | 23 | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Other benefit costs, net | |||||||||||||||
Service cost | $ | - | $ | - | $ | 1 | $ | 1 | |||||||
Interest cost | 2 | 1 | 3 | 2 | |||||||||||
$ | 2 | $ | 1 | $ | 4 | $ | 3 |
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NOTE 8 STOCK BASED COMPENSATION
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||
Stock options | $ | 3 | $ | 7 | $ | 7 | $ | 10 | ||||||
Restricted stock units | 6 | 11 | 11 | 21 | ||||||||||
Performance leveraged stock units | 3 | 1 | 6 | 3 | ||||||||||
Strategic stock units | 1 | - | 1 | - | ||||||||||
$ | 13 | $ | 19 | $ | 25 | $ | 34 |
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NOTE 9 INCOME AND MINING TAXES
During the second quarter of 2012, the Company recorded estimated income and mining tax expense of $175 resulting in an effective tax rate of 32%. Estimated income and mining tax expense during the second quarter of 2011 was $187 for an effective tax rate of 22%. During the first half of 2012, estimated income and mining tax expense was $518 resulting in an effective tax rate of 33%. Estimated income and mining tax expense during the first half of 2011 was $492 for an effective tax rate of 27%. The higher effective tax rate in the second quarter and first half of 2012 is a result of the following: (i) valuation allowances recorded on our Canadian deferred tax assets generated in 2012 due to care and maintenance expenditures at Hope Bay, (ii) an increase in mining taxes included in Income and mining tax expense, primarily related to Nevada and Peru, and (iii) a $65 non-recurring tax benefit in the second quarter and first half of 2011, recorded in connection with the conversion of non-U.S. tax-paying entities to entities currently subject to U.S. income tax which resulted in an increase in net deferred tax assets.
The Company operates in numerous countries around the world and accordingly it is subject to, and pays annual income taxes under, the various income tax regimes in the countries in which it operates. Some of these tax regimes are defined by contractual agreements with the local government, and others are defined by the general corporate income tax laws of the country. The Company has historically filed, and continues to file, all required income tax returns and pay the income taxes reasonably determined to be due. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time the Company is subject to a review of its historic income tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company's business conducted within the country involved.
At June 30, 2012, the Company's total unrecognized tax benefit was $245 for uncertain income tax positions taken or expected to be taken on income tax returns. Of this, $28 represents the amount of unrecognized tax benefits that, if recognized, would affect the Company's effective income tax rate.
As a result of the statute of limitations that expire in the next 12 months in various jurisdictions, and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease by approximately $20 to $25 in the next 12 months.
The Company's income and mining tax expense differed from the amounts computed by applying the United States statutory corporate income tax rate for the following reasons:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||
Income before income and mining | ||||||||||||||||||||||||||
tax and other items | $ | 557 | $ | 847 | $ | 1,593 | $ | 1,820 | ||||||||||||||||||
Tax on income at statutory rate | 35 | % | 195 | 35 | % | 296 | 35 | % | 558 | 35 | % | 637 | ||||||||||||||
Reconciling items: | ||||||||||||||||||||||||||
Tax benefit generated on change | ||||||||||||||||||||||||||
in form of a non-U.S. subsidiary | - | (8) | % | (65) | - | (4) | % | (65) | ||||||||||||||||||
Percentage depletion | (6) | % | (34) | (7) | % | (56) | (7) | % | (108) | (6) | % | (111) | ||||||||||||||
Change in valuation allowance on | ||||||||||||||||||||||||||
deferred tax assets | 2 | % | 13 | - | 3 | % | 46 | - | ||||||||||||||||||
Other | 1 | % | 1 | 2 | % | 12 | 2 | % | 22 | 2 | % | 31 | ||||||||||||||
Income and mining tax expense | 32 | % | $ | 175 | 22 | % | $ | 187 | 33 | % | $ | 518 | 27 | % | $ | 492 |
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NOTE 10 DISCONTINUED OPERATIONS
Discontinued operations include Holloway Mining Company, which owned the Holt-McDermott property (“Holt property”) and 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 half of 2012, the Company recorded an additional $71 charge, net of tax benefits of $4, to reflect an increase in future expected production at the Holt property due to new reserve and resource estimates published by St. Andrew and a higher gold price.
Net operating cash used in discontinued operations of $8 in the first half of 2012 relates to payments on the Holt property royalty.
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NOTE 11 NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||
Yanacocha | $ | 97 | $ | 72 | $ | 195 | $ | 126 | ||||||
Batu Hijau | (5) | 64 | 8 | 166 | ||||||||||
Other | - | 1 | 2 | 1 | ||||||||||
$ | 92 | $ | 137 | $ | 205 | $ | 293 |
At June 30, 2012, Newmont had a 48.5% effective economic interest in PT Newmont Nusa Tenggara (“PTNNT”). 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 51.35% ownership interest in Minera Yanacocha S.R.L. (“Yanacocha”), with the remaining interests held by Compañia de Minas Buenaventura, S.A.A. (43.65%) and the International Finance Corporation (5%).
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NOTE 13 CHANGES IN EQUITY
Six Months Ended June 30, | ||||||||||
2012 | 2011 | |||||||||
Common stock: | ||||||||||
At beginning of period | $ | 784 | $ | 778 | ||||||
Stock based awards | 2 | 2 | ||||||||
At end of period | 786 | 780 | ||||||||
Additional paid-in capital: | ||||||||||
At beginning of period | 8,408 | 8,279 | ||||||||
Stock based awards | 55 | 52 | ||||||||
Conversion premium on convertible notes | (172) | 0 | ||||||||
Shares issued in exchange for exchangeable shares | 0 | (1) | ||||||||
At end of period | 8,291 | 8,330 | ||||||||
Accumulated other comprehensive income: | ||||||||||
At beginning of period | 652 | 1,108 | ||||||||
Other comprehensive income | (291) | 202 | ||||||||
At end of period | 361 | 1,310 | ||||||||
Retained earnings: | ||||||||||
At beginning of period | 3,052 | 3,180 | ||||||||
Net income attributable to Newmont stockholders | 769 | 901 | ||||||||
Dividends paid | (347) | (173) | ||||||||
At end of period | 3,474 | 3,908 | ||||||||
Noncontrolling interests: | ||||||||||
At beginning of period | 2,875 | 2,371 | ||||||||
Net income attributable to noncontrolling interests | 205 | 293 | ||||||||
Dividends paid | (3) | (2) | ||||||||
Other comprehensive income | - | 3 | ||||||||
At end of period | 3,077 | 2,665 | ||||||||
Total equity | $ | 15,989 | $ | 16,993 | ||||||
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NOTE 14 ACQUISITIONS
On April 6, 2011, Newmont completed the acquisition of Fronteer Gold, Inc. (“Fronteer”). Under the Arrangement, shareholders of Fronteer received C$14.00 in cash and one-fourth common share in Pilot Gold, which retained certain exploration assets of Fronteer, for each common share of Fronteer. In connection with the acquisition, Newmont incurred transaction costs of $21, which were recorded in Other Expense, net in the first half of 2011.
On June 25, 2009 the Company completed the acquisition of the remaining 33.33% interest in Boddington from AngloGold Ashanti Australia Limited (“AngloGold”), with a transaction that included maximum contingent consideration of $100, based on an operating margin royalty. Since the completion of the acquisition, the Company has accrued the maximum royalty, of which $12 was accrued in the current quarter.
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NOTE 15 FAIR VALUE ACCOUNTING
Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
The following table sets forth the Company's assets and liabilities measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. As required by accounting guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Fair Value at June 30, 2012 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 503 | $ | 503 | $ | - | $ | - | |||||||
Marketable equity securities: | |||||||||||||||
Extractive industries | 1,110 | 1,110 | - | - | |||||||||||
Other | 10 | 10 | - | - | |||||||||||
Marketable debt securities: | |||||||||||||||
Asset backed commercial paper | 19 | - | - | 19 | |||||||||||
Corporate | 98 | - | 98 | - | |||||||||||
Auction rate securities | 5 | - | - | 5 | |||||||||||
Trade receivable from provisional copper | |||||||||||||||
and gold concentrate sales, net | 179 | 179 | - | - | |||||||||||
Derivative instruments, net: | |||||||||||||||
Foreign exchange forward contracts | 223 | - | 223 | - | |||||||||||
$ | 2,147 | $ | 1,802 | $ | 321 | $ | 24 | ||||||||
Liabilities: | |||||||||||||||
Diesel forward contracts | 8 | - | 8 | - | |||||||||||
Boddington contingent consideration | 44 | - | - | 44 | |||||||||||
Holt property royalty | 243 | - | - | 243 | |||||||||||
$ | 295 | $ | - | $ | 8 | $ | 287 |
The Company's cash equivalent instruments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The cash equivalent instruments that are valued based on quoted market prices in active markets are primarily money market securities and U.S. Treasury securities.
The Company's marketable equity securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The securities are segregated based on industry. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.
The Company's corporate marketable debt securities are valued using quoted market prices in non-active markets and as such are classified within Level 2 of the fair value hierarchy.The Company's marketable debt securities include investments in auction rate securities and asset backed commercial paper. The Company reviews the fair value for auction rate securities and asset backed commercial paper on a quarterly basis. The auction rate securities are traded in markets that are not active, trade infrequently and have little price transparency. The Company estimated the fair value of the auction rate securities based on weighted average risk calculations using cash flow assumptions discounted approximately 42%, which reflects an estimated discount for lack of marketability. The Company estimated the fair value of its asset backed commercial paper using a probability of return ranging from 13%-74% for each class of notes, which is reflective of information reviewed regarding the separate classes of securities. As a result of utilizing the unobservable inputs noted above in its fair value estimation of the Company's auction rate securities and asset backed commercial paper, both fair value estimates are classified within Level 3 of the fair value hierarchy.
The Company's net trade receivable from provisional copper and gold concentrate sales, subject to final pricing, is valued using quoted market prices based on forward curves and, as such, is classified within Level 1 of the fair value hierarchy.
The Company's derivative instruments are valued using pricing models and the Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs. The Company's derivatives trade in liquid markets, and as such, model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.
The estimated value of the Boddington contingent royalty was determined using a Monte Carlo valuation model which simulates future gold and copper prices and costs applicable to sales. This contingent royalty is capped at $100, and at June 30, 2012, the Company has accrued the maximum of $100. At June 30, 2012 the Company used the following long-term price assumptions: 1) $1,500 per ounce gold price, 2) $3.50 per pound copper price, 3) $90 per barrel of oil, and 4) a $1.00 A$/US$ exchange rate. The Company used an approximate 4% discount rate in the model. The contingent royalty liability is classified within Level 3 of the fair value hierarchy.
The estimated fair value of the Holt sliding scale royalty was determined using a Monte Carlo valuation model to simulate future gold prices utilizing a long-term gold price assumption of $1,500 per ounce, various gold production scenarios based on publicly available reserve and resource information for the Holt property and an approximate 4% weighted average discount rate. The sliding scale royalty liability is classified within Level 3 of the fair value hierarchy.
The table below sets forth a summary of changes in the fair value of the Company's Level 3 financial assets and liabilities for the six months ended June 30, 2012:
Auction Rate Securities | Asset Backed Commercial Paper | Total Assets | Boddington Contingent Royalty | Holt Property Royalty | Total Liabilities | ||||||||||||||||
Balance at beginning of period | $ | 5 | $ | 19 | $ | 24 | $ | 54 | $ | 176 | $ | 230 | |||||||||
Settlements | - | - | - | (22) | (8) | (30) | |||||||||||||||
Revaluation | - | - | - | 12 | 75 | 87 | |||||||||||||||
Balance at end of period | $ | 5 | $ | 19 | $ | 24 | $ | 44 | $ | 243 | $ | 287 |
At June 30, 2012, assets and liabilities classified within Level 3 of the fair value hierarchy represent 1% and 97%, respectively, of total assets and liabilities measured at fair value.
|
NOTE 16 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 or fair value hedges.
Cash Flow Hedges
The foreign currency, diesel and forward starting swap 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 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 utilizes foreign currency contracts to reduce the variability of the US dollar amount of forecasted foreign currency expenditures caused by changes in exchange rates. Newmont hedges a portion of the Company's A$ and NZ$ denominated operating expenditures which results in a blended rate realized each period. The hedging instruments are fixed forward contracts with expiration dates ranging up to five years from the date of issue. The principal hedging objective is reduction in the volatility of realized period-on-period $/A$ and $/NZ$ rates, respectively.
In June 2011, Newmont began hedging a portion of the Company's A$ denominated capital expenditures related to the construction of the Akyem project in Africa utilizing foreign currency contracts. The hedging instruments are fixed forward contracts with expiration dates ranging up to two years.
In July 2011, Newmont began hedging a portion of the Company's A$ denominated capital expenditures related to the construction of a mine shaft at Tanami in Australia utilizing foreign currency contracts. The hedging instruments are fixed forward contracts with expiration dates ranging up to three years.
Newmont had the following foreign currency derivative contracts outstanding at June 30, 2012:
Expected Maturity Date | ||||||||||||||||||||||||
Total/ | ||||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | Average | ||||||||||||||||||
A$ Operating Fixed Forward Contracts: | ||||||||||||||||||||||||
A$ notional (millions) | 641 | 1,048 | 762 | 471 | 244 | 28 | 3,194 | |||||||||||||||||
Average rate ($/A$) | 0.93 | 0.93 | 0.90 | 0.89 | 0.90 | 0.88 | 0.91 | |||||||||||||||||
Expected hedge ratio | 78 | % | 68 | % | 50 | % | 33 | % | 17 | % | 4 | % | ||||||||||||
A$ Capital Fixed Forward Contracts: | ||||||||||||||||||||||||
A$ notional (millions) | 27 | 51 | 22 | - | - | - | 100 | |||||||||||||||||
Average rate ($/A$) | 1.00 | 0.98 | 0.96 | - | - | - | 0.98 | |||||||||||||||||
Expected hedge ratio | 37 | % | 28 | % | 40 | % | - | - | - | |||||||||||||||
NZ$ Operating Fixed Forward Contracts: | ||||||||||||||||||||||||
NZ$ notional (millions) | 41 | 37 | 4 | - | - | - | 82 | |||||||||||||||||
Average rate ($/NZ$) | 0.78 | 0.78 | 0.78 | - | - | - | 0.78 | |||||||||||||||||
Expected hedge ratio | 60 | % | 29 | % | 8 | % | - | - | - |
Diesel Fixed Forward Contracts
Newmont hedges a portion of its operating cost exposure related to diesel consumed at its Nevada operations to reduce the variability in realized diesel prices. The hedging instruments consist of a series of financially settled fixed forward contracts with expiration dates ranging up to three years from the date of issue.
Newmont had the following diesel derivative contracts outstanding at June 30, 2012:
Expected Maturity Date | ||||||||||||||||||
Total/ | ||||||||||||||||||
2012 | 2013 | 2014 | 2015 | Average | ||||||||||||||
Diesel Fixed Forward Contracts: | ||||||||||||||||||
Diesel gallons (millions) | 16 | 22 | 10 | 1 | 49 | |||||||||||||
Average rate ($/gallon) | 2.91 | 2.92 | 2.88 | 2.85 | 2.91 | |||||||||||||
Expected hedge ratio | 71 | % | 50 | % | 24 | % | 8 | % |
Forward Starting Swap Contracts
During 2011, Newmont entered into forward starting interest rate swap contracts with a total notional value of $2,000. These contracts hedged movements in treasury rates related to a debt issuance that occurred in the first quarter of 2012. On March 8, 2012, Newmont closed its sale of $2,500 senior notes consisting of 3.5% senior notes due 2022 in the principal amount of $1,500 (10-year notes), and 4.875% senior notes due 2042 in the principal amount of $1,000 (30-year notes). As a result, the forward-starting interest rate swaps were settled for $362, of which $349 represented the effective portion of the hedging instrument included in Accumulated other comprehensive income. The net proceeds from the debt issuance were adjusted by the settlement amount of the swap contracts and included as a financing activity in the Condensed Consolidated Statements of Cash Flow.
Fair Value Hedges
Interest Rate Swap Contracts
Newmont had $222 fixed to floating swap contracts designated as a hedge against 8 5/8% debentures which matured in May 2011.
Derivative Instrument Fair Values
Newmont had the following derivative instruments designated as hedges at June 30, 2012 and December 31, 2011:
Fair Value | ||||||||||||||
At June 30, 2012 | ||||||||||||||
Other Current Assets | Other Long-Term Assets | Other Current Liabilities | Other Long-Term Liabilities | |||||||||||
Foreign currency exchange contracts: | ||||||||||||||
A$ operating fixed forwards | $ | 102 | $ | 121 | $ | 2 | $ | 1 | ||||||
A$ capital fixed forwards | 1 | 1 | - | - | ||||||||||
NZ$ operating fixed forwards | 1 | - | - | - | ||||||||||
Diesel fixed forwards | 1 | - | 6 | 3 | ||||||||||
Total derivative instruments (Note ##OthAssetsNote and ##OthLiabNote) | $ | 105 | $ | 122 | $ | 8 | $ | 4 | ||||||
Fair Value | ||||||||||||||
At December 31, 2011 | ||||||||||||||
Other Current Assets | Other Long-Term Assets | Other Current Liabilities | Other Long-Term Liabilities | |||||||||||
Foreign currency exchange contracts: | ||||||||||||||
A$ operating fixed forwards | $ | 121 | 112 | 6 | 4 | |||||||||
A$ capital fixed forwards | - | - | - | 1 | ||||||||||
NZ$ operating fixed forwards | 2 | - | 1 | - | ||||||||||
Diesel fixed forwards | 4 | - | 2 | 1 | ||||||||||
Forward starting interest rate swaps | - | - | 399 | - | ||||||||||
Total derivative instruments (Note ##OthAssetsNote and ##OthLiabNote) | $ | 127 | $ | 112 | $ | 408 | $ | 6 |
The following tables show the location and amount of gains (losses) reported in the Company's Condensed Consolidated Financial Statements related to the Company's cash flow and fair value hedges and the gains (losses) recorded for the hedged item related to the fair value hedges.
Foreign Currency Exchange Contracts | Diesel Forward Contracts | Forward Starting Swap Contracts | |||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | ||||||||||||||
For the three months ended June 30, | |||||||||||||||||||
Cash flow hedging relationships: | |||||||||||||||||||
Gain (loss) recognized in other comprehensive income (effective portion) | $ | 23 | $ | 126 | $ | (16) | $ | (5) | $ | - | $ | - | |||||||
Gain (loss) reclassified from Accumulated other comprehensive income into income (effective portion) (1)? | 38 | 49 | 1 | 5 | (3) | - | |||||||||||||
For the six months ended June 30, | |||||||||||||||||||
Cash flow hedging relationships: | |||||||||||||||||||
Gain (loss) recognized in other comprehensive income (effective portion) | $ | 85 | $ | 193 | $ | (4) | $ | 10 | $ | 36 | $ | - | |||||||
Gain(loss) reclassified from Accumulated other comprehensive income into income (effective portion) (1)? | 85 | 91 | 4 | 9 | (4) | - | |||||||||||||
Gain reclassified from Accumulated other comprehensive income into income (ineffective portion) (2)? | - | - | - | - | 2 | - |
(1) The gain (loss) for the effective portion of the foreign exchange and diesel cash flow hedges reclassified from Accumulated other comprehensive income is included in Costs applicable to sales. The loss for the effective portion of the forward starting swaps reclassified from Accumulated other comprehensive income is included in Interest Expense.
(2) The ineffective portion recognized for cash flow hedges is included in Other Income, net.
Interest Rate | 8 5/8% Debentures | |||||||||||||
Swap Contracts | (Hedged Portion) | |||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||
For the three months ended June 30, | ||||||||||||||
Fair value hedging relationships: | ||||||||||||||
Gain (loss) recognized in income (effective portion) (1)? | $ | - | $ | 1 | $ | - | $ | (1) | ||||||
(Loss) recognized in income (ineffective portion) (2)? | - | (1) | - | - | ||||||||||
For the six months ended June 30, | ||||||||||||||
Fair value hedging relationships: | ||||||||||||||
Gain (loss) recognized in income (effective portion) (1)? | $ | - | $ | 3 | $ | - | $ | (6) | ||||||
(Loss) recognized in income (ineffective portion) (2)? | - | (2) | - | - |
(1) The gain (loss) recognized for the effective portion of fair value hedges and the underlying hedged debt is included in Interest expense, net.
(2) The ineffective portion recognized for fair value hedges and the underlying hedged debt 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 gain of approximately $49.
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 $3.57 per pound during the three months ended June 30, 2012, compared with the Company's recorded average provisional price of $3.52 per pound before mark-to-market adjustments and treatment and refining charges. LME copper prices averaged $3.67 per pound during the six months ended June 30, 2012, compared with the Company's recorded average provisional price of $3.65 per pound before mark-to-market adjustments and treatment and refining charges. During the three and six months ended June 30, 2012, changes in copper prices resulted in a provisional pricing mark-to-market loss of $18 ($0.40 per pound) and gain of $13 ($0.12 per pound), respectively. At June 30, 2012, Newmont had copper sales of 40 million pounds priced at an average of $3.44 per pound, subject to final pricing over the next several months.
The average London P.M. fix for gold was $1,609 per ounce during the three months ended June 30, 2012, compared with the Company's recorded average provisional price of $1,607 per ounce before mark-to-market adjustments and treatment and refining charges. The average London P.M. fix for gold was $1,651 per ounce during the six months ended June 30, 2012, compared to the Company's recorded average provisional price of $1,651 per ounce before mark-to-market adjustments and treatment and refining charges. During the three and six months ended June 30, 2012, changes in gold prices resulted in a provisional pricing mark-to-market loss of $2 ($2 per ounce) and gain of $4 ($1 per ounce), respectively. At June 30, 2012, Newmont had gold sales of 74,000 ounces priced at an average of $1,600 per ounce, subject to final pricing over the next several months.
|
NOTE 17 INVESTMENTS
At June 30, 2012 | ||||||||||||||||
Cost/Equity | Unrealized | Fair/Equity | ||||||||||||||
Basis | Gain | Loss | Basis | |||||||||||||
Current: | ||||||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Paladin Energy Ltd. | $ | 60 | $ | 7 | $ | - | $ | 67 | ||||||||
Other | 14 | 6 | (3) | 17 | ||||||||||||
74 | 13 | (3) | 84 | |||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Corporate | 48 | - | - | 48 | ||||||||||||
$ | 122 | $ | 13 | $ | (3) | $ | 132 | |||||||||
Long-term: | ||||||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Asset backed commercial paper | $ | 25 | $ | - | $ | (6) | $ | 19 | ||||||||
Auction rate securities | 8 | - | (3) | 5 | ||||||||||||
Corporate | 48 | 2 | - | 50 | ||||||||||||
81 | 2 | (9) | 74 | |||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Canadian Oil Sands Ltd. | 303 | 296 | - | 599 | ||||||||||||
Gabriel Resources Ltd. | 76 | 1 | - | 77 | ||||||||||||
Regis Resources Ltd. | 36 | 260 | - | 296 | ||||||||||||
Other | 68 | 8 | (12) | 64 | ||||||||||||
483 | 565 | (12) | 1,036 | |||||||||||||
Other investments, at cost | 12 | - | - | 12 | ||||||||||||
Investment in Affiliates: | ||||||||||||||||
Euronimba Ltd. | 2 | - | - | 2 | ||||||||||||
Minera La Zanja S.R.L. | 61 | - | - | 61 | ||||||||||||
$ | 639 | $ | 567 | $ | (21) | $ | 1,185 | |||||||||
Included in Investments at June 30, 2012 and December 31, 2011 are $7 and $11 of long-term marketable debt securities, respectively, and $10 and $4 of long-term marketable equity securities, respectively, that are legally pledged for purposes of settling asset retirement obligations related to the San Jose Reservoir at Yanacocha.
During the three and six months ended June 30, 2012, the Company recognized impairments for other-than-temporary declines in value of $8 and $32 for marketable equity securities.
During the first half of 2012, the Company made net purchases of corporate marketable debt securities of $91.
The following tables present the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by length of time that the individual securities have been in a continuous unrealized loss position:
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||
At June 30, 2012 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||
Marketable equity securities | $ | 34 | $ | 14 | $ | - | $ | - | $ | 34 | $ | 14 | |||||
Asset backed commercial paper | - | - | 19 | 6 | 19 | 6 | |||||||||||
Auction rate securities | - | - | 5 | 3 | 5 | 3 | |||||||||||
$ | 34 | $ | 14 | $ | 24 | $ | 9 | $ | 58 | $ | 23 | ||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||
At December 31, 2011 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||
Marketable equity securities | $ | 42 | $ | 18 | $ | - | $ | - | $ | 42 | $ | 18 | |||||
Asset backed commercial paper | - | - | 19 | 6 | 19 | 6 | |||||||||||
Auction rate securities | - | - | 5 | 2 | 5 | 2 | |||||||||||
$ | 42 | $ | 18 | $ | 24 | $ | 8 | $ | 66 | $ | 26 |
While the fair values of the Company's investments in asset backed commercial paper and auction rate securities are below their respective cost, the Company views these declines as temporary. The Company intends to hold its investment in auction rate securities and asset backed commercial paper until maturity or such time that the market recovers and therefore considers these losses temporary.
At December 31, 2011 | ||||||||||||||||
Cost/Equity | Unrealized | Fair/Equity | ||||||||||||||
Basis | Gain | Loss | Basis | |||||||||||||
Current: | ||||||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Paladin Energy Ltd. | $ | 60 | $ | 13 | $ | - | $ | 73 | ||||||||
Other | 15 | 7 | (1) | 21 | ||||||||||||
$ | 75 | $ | 20 | $ | (1) | $ | 94 | |||||||||
Long-term: | ||||||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Asset backed commercial paper | $ | 25 | $ | - | $ | (6) | $ | 19 | ||||||||
Auction rate securities | 7 | - | (2) | 5 | ||||||||||||
Corporate | 10 | 1 | - | 11 | ||||||||||||
42 | 1 | (8) | 35 | |||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Canadian Oil Sands Trust | 302 | 401 | - | 703 | ||||||||||||
Gabriel Resources Ltd. | 76 | 236 | - | 312 | ||||||||||||
Regis Resources Ltd. | 36 | 218 | - | 254 | ||||||||||||
Other | 92 | 16 | (17) | 91 | ||||||||||||
506 | 871 | (17) | 1,360 | |||||||||||||
Other investments, at cost | 11 | - | - | 11 | ||||||||||||
Investment in Affiliates: | ||||||||||||||||
Minera La Zanja S.R.L. | 66 | - | - | 66 | ||||||||||||
$ | 625 | $ | 872 | $ | (25) | $ | 1,472 |
|
NOTE 18 INVENTORIES
At June 30, | At December 31, | |||||||
2012 | 2011 | |||||||
In-process | $ | 123 | $ | 159 | ||||
Concentrate | 192 | 116 | ||||||
Precious metals | 36 | 12 | ||||||
Materials, supplies and other | 452 | 427 | ||||||
$ | 803 | $ | 714 |
|
NOTE 19 STOCKPILES AND ORE ON LEACH PADS
At June 30, | At December 31, | |||||||
2012 | 2011 | |||||||
Current: | ||||||||
Stockpiles | $ | 590 | $ | 506 | ||||
Ore on leach pads | 208 | 165 | ||||||
$ | 798 | $ | 671 | |||||
Long-term: | ||||||||
Stockpiles | $ | 2,187 | $ | 1,904 | ||||
Ore on leach pads | 392 | 367 | ||||||
$ | 2,579 | $ | 2,271 |
At June 30, | At December 31, | |||||||
2012 | 2011 | |||||||
Stockpiles and ore on leach pads: | ||||||||
Nevada | $ | 608 | $ | 536 | ||||
La Herradura | 21 | 6 | ||||||
Yanacocha | 591 | 512 | ||||||
Boddington | 456 | 435 | ||||||
Batu Hijau | 1,331 | 1,119 | ||||||
Other Australia/New Zealand | 165 | 161 | ||||||
Ahafo | 205 | 173 | ||||||
$ | 3,377 | $ | 2,942 |
|
NOTE 20 OTHER ASSETS
At June 30, | At December 31, | |||||||
2012 | 2011 | |||||||
Other current assets: | ||||||||
Refinery metal inventory and receivable | $ | 393 | $ | 796 | ||||
Prepaid assets | 176 | 93 | ||||||
Derivative instruments | 105 | 127 | ||||||
Restricted cash | 2 | 20 | ||||||
Note receivable | - | 12 | ||||||
Other | 62 | 85 | ||||||
$ | 738 | $ | 1,133 | |||||
Other long-term assets: | ||||||||
Goodwill | $ | 188 | $ | 188 | ||||
Income tax receivable | 185 | 142 | ||||||
Intangible assets | 142 | 147 | ||||||
Derivative instruments | 122 | 112 | ||||||
Restricted cash | 91 | 48 | ||||||
Debt issuance costs | 79 | 59 | ||||||
Other receivables | 16 | 17 | ||||||
Other | 179 | 144 | ||||||
$ | 1,002 | $ | 857 |
|
NOTE 21 DEBT
At June 30, 2012 | At December 31, 2011 | |||||||||||
Current | Non-Current | Current | Non-Current | |||||||||
Sale-leaseback of refractory ore treatment plant | $ | 30 | $ | - | $ | 165 | $ | - | ||||
Corporate revolving credit facility | - | - | - | 33 | ||||||||
2012 Convertible Senior Notes, net | - | - | 514 | - | ||||||||
2014 Convertible Senior Notes, net | - | 523 | - | 512 | ||||||||
2017 Convertible Senior Notes, net | - | 461 | - | 452 | ||||||||
2019 Senior Notes, net | - | 897 | - | 896 | ||||||||
2022 Senior Notes, net | - | 1,489 | - | - | ||||||||
2035 Senior Notes, net | - | 598 | - | 598 | ||||||||
2039 Senior Notes, net | - | 1,087 | - | 1,087 | ||||||||
2042 Senior Notes, net | - | 992 | - | - | ||||||||
Ahafo project finance facility | 10 | 40 | 10 | 45 | ||||||||
Other capital leases | - | 1 | - | 1 | ||||||||
$ | 40 | $ | 6,088 | $ | 689 | $ | 3,624 | |||||
Scheduled minimum debt repayments are $35 for the remainder of 2012, $10 in 2013, $533 in 2014, $10 in 2015, $10 in 2016 and $5,530 thereafter.
Corporate Revolving Credit Facility
In May 2012, the Company's Corporate Revolving Credit Facility was amended to increase the capacity to $3,000 and extend the facility one year to 2017. The available capacity under the Corporate Revolving Credit Facility prior to the amendment was $2,500.
2012 Convertible Senior Notes
In February 2012, the Company's 2012 Convertible Senior Notes matured, resulting in a principal payment of $517. The Company elected to pay the conversion premium of $172 in cash in lieu of issuing common shares.
2022 and 2042 Senior Notes
In March 2012, the Company completed a two part public offering of $1,500 and $1,000 uncollateralized Senior Notes maturing on March 15, 2022 and March 15, 2042, respectively; net proceeds were $1,479 and $983, respectively. The 2022 Senior Notes pay interest semi-annually at a rate of 3.50% per annum and the 2042 Senior Notes pay semi-annual interest of 4.875% per annum.
Consistent with the Company's other Notes included in the table above, the 2022 and 2042 Senior Notes contain various covenants and default provisions including payment defaults, limitation on liens, limitation on sales and leaseback agreements and merger restrictions.
|
NOTE 22 OTHER LIABILITIES
At June 30, | At December 31, | |||||||
2012 | 2011 | |||||||
Other current liabilities: | ||||||||
Refinery metal payable | $ | 393 | $ | 796 | ||||
Accrued capital expenditures | 237 | 248 | ||||||
Accrued operating costs | 231 | 231 | ||||||
Interest | 79 | 55 | ||||||
Taxes other than income and mining | 78 | 93 | ||||||
Reclamation and remediation liabilities | 66 | 71 | ||||||
Deferred income tax | 54 | 50 | ||||||
Royalties | 38 | 53 | ||||||
Boddington contingent consideration | 28 | 24 | ||||||
Holt property royalty | 17 | 17 | ||||||
Derivative instruments | 8 | 408 | ||||||
Other | 58 | 87 | ||||||
$ | 1,287 | $ | 2,133 | |||||
Other long-term liabilities: | ||||||||
Holt property royalty | $ | 226 | $ | 159 | ||||
Income and mining taxes | 75 | 88 | ||||||
Power supply agreements | 45 | 45 | ||||||
Boddington contingent consideration | 16 | 30 | ||||||
Derivative instruments | 4 | 6 | ||||||
Other | 37 | 36 | ||||||
$ | 403 | $ | 364 | |||||
|
NOTE 23 NET CHANGE IN OPERATING ASSETS AND LIABILITIES
Net cash provided from operations attributable to the net change in operating assets and liabilities is composed of the following:
Six Months Ended June 30, | ||||||||
2012 | 2011 | |||||||
Decrease (increase) in operating assets: | ||||||||
Trade and accounts receivable | $ | (14) | $ | 121 | ||||
Inventories, stockpiles and ore on leach pads | (443) | (230) | ||||||
EGR refinery assets | 406 | (437) | ||||||
Other assets | (43) | (67) | ||||||
Increase (decrease) in operating liabilities: | ||||||||
Accounts payable and other accrued liabilities | (227) | (349) | ||||||
EGR refinery liabilities | (406) | 437 | ||||||
Reclamation liabilities | (41) | (15) | ||||||
$ | (768) | $ | (540) |
|
NOTE 24 SUPPLEMENTAL CASH FLOW INFORMATION
Six Months Ended June 30, | ||||||||
2012 | 2011 | |||||||
Income and mining taxes, net of refunds | $ | 746 | $ | 892 | ||||
Interest, net of amounts capitalized | $ | 105 | $ | 92 |
|
NOTE 25 CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Newmont USA, a 100% owned subsidiary of Newmont Mining Corporation, has fully and unconditionally guaranteed the 2019, 2022, 2035, 2039 and 2042 Senior Notes, the 2014 and 2017 Convertible Senior Notes and the corporate revolving credit facility. The following consolidating financial statements are provided for Newmont USA, as guarantor, and for Newmont Mining Corporation, as issuer, as an alternative to providing separate financial statements for the guarantor. The accounts of Newmont Mining Corporation are presented using the equity method of accounting for investments in subsidiaries.
Three Months Ended June 30, 2012 | ||||||||||||||||
Newmont | ||||||||||||||||
Newmont | Mining | |||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||
Sales | $ | - | $ | 1,383 | $ | 846 | $ | - | $ | 2,229 | ||||||
Costs and expenses | ||||||||||||||||
Costs applicable to sales (1) | - | 550 | 464 | (12) | 1,002 | |||||||||||
Amortization | - | 135 | 113 | - | 248 | |||||||||||
Reclamation and remediation | - | 12 | 4 | - | 16 | |||||||||||
Exploration | - | 71 | 35 | - | 106 | |||||||||||
Advanced projects, research and development | - | 64 | 17 | 1 | 82 | |||||||||||
General and administrative | - | 44 | 2 | 11 | 57 | |||||||||||
Other expense, net | - | 42 | 84 | - | 126 | |||||||||||
- | 918 | 719 | - | 1,637 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income, net | (6) | 12 | 30 | - | 36 | |||||||||||
Interest income - intercompany | 39 | 1 | 6 | (46) | - | |||||||||||
Interest expense - intercompany | (3) | (1) | (42) | 46 | - | |||||||||||
Interest expense, net | (62) | (7) | (2) | - | (71) | |||||||||||
(32) | 5 | (8) | - | (35) | ||||||||||||
Income before income and mining tax and other items | (32) | 470 | 119 | - | 557 | |||||||||||
Income and mining tax expense | 11 | (83) | (103) | - | (175) | |||||||||||
Equity income (loss) of affiliates | 300 | (2) | 50 | (359) | (11) | |||||||||||
Net income | 279 | 385 | 66 | (359) | 371 | |||||||||||
Net income attributable to noncontrolling interests | - | (91) | (31) | 30 | (92) | |||||||||||
Net income attributable to Newmont stockholders | $ | 279 | $ | 294 | $ | 35 | $ | (329) | $ | 279 | ||||||
Comprehensive income | $ | (18) | $ | 357 | $ | (190) | $ | (77) | $ | 72 | ||||||
Comprehensive income attributable to | ||||||||||||||||
noncontrolling interests | - | (91) | (29) | 30 | (90) | |||||||||||
Comprehensive income attributable to Newmont | ||||||||||||||||
stockholders | $ | (18) | $ | 266 | $ | (219) | $ | (47) | $ | (18) |
(1) Excludes Amortization and Reclamation and remediation.
Three Months Ended June 30, 2011 | ||||||||||||||||
Newmont | ||||||||||||||||
Newmont | Mining | |||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||
Sales | $ | - | $ | 1,468 | $ | 916 | $ | - | $ | 2,384 | ||||||
Costs and expenses | ||||||||||||||||
Costs applicable to sales (1) | - | 551 | 375 | (9) | 917 | |||||||||||
Amortization | - | 156 | 94 | - | 250 | |||||||||||
Reclamation and remediation | - | 37 | 6 | - | 43 | |||||||||||
Exploration | - | 47 | 42 | - | 89 | |||||||||||
Advanced projects, research and development | - | 41 | 46 | (1) | 86 | |||||||||||
General and administrative | - | 39 | 1 | 10 | 50 | |||||||||||
Other expense, net | - | 67 | 20 | - | 87 | |||||||||||
- | 938 | 584 | - | 1,522 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income, net | (2) | 41 | 9 | - | 48 | |||||||||||
Interest income - intercompany | 40 | 2 | 2 | (44) | - | |||||||||||
Interest expense - intercompany | (3) | - | (41) | 44 | - | |||||||||||
Interest expense, net | (59) | (3) | (1) | - | (63) | |||||||||||
(24) | 40 | (31) | - | (15) | ||||||||||||
Income before income and mining tax and other items | (24) | 570 | 301 | - | 847 | |||||||||||
Income and mining tax expense | 5 | (111) | (81) | - | (187) | |||||||||||
Equity income (loss) of affiliates | 406 | 2 | 50 | (458) | - | |||||||||||
Income from continuing operations | 387 | 461 | 270 | (458) | 660 | |||||||||||
Loss from discontinued operations | - | 7 | (143) | - | (136) | |||||||||||
Net income (loss) | 387 | 468 | 127 | (458) | 524 | |||||||||||
Net income attributable to noncontrolling interests | - | (173) | 30 | 6 | (137) | |||||||||||
Net income attributable to Newmont stockholders | $ | 387 | $ | 295 | $ | 157 | $ | (452) | $ | 387 | ||||||
Comprehensive income | $ | 308 | $ | 419 | $ | 230 | $ | (511) | $ | 446 | ||||||
Comprehensive income attributable to noncontrolling | ||||||||||||||||
interests | - | (173) | 29 | 6 | (138) | |||||||||||
Comprehensive income attributable to Newmont | ||||||||||||||||
stockholders | $ | 308 | $ | 246 | $ | 259 | $ | (505) | $ | 308 |
(1) Excludes Amortization and Reclamation and remediation.
Six Months Ended June 30, 2012 | ||||||||||||||||
Newmont | ||||||||||||||||
Newmont | Mining | |||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||
Sales | $ | - | $ | 3,000 | $ | 1,912 | $ | - | $ | 4,912 | ||||||
Costs and expenses | ||||||||||||||||
Costs applicable to sales (1) | - | 1,113 | 929 | (23) | 2,019 | |||||||||||
Amortization | - | 265 | 214 | - | 479 | |||||||||||
Reclamation and remediation | - | 23 | 9 | - | 32 | |||||||||||
Exploration | - | 124 | 70 | - | 194 | |||||||||||
Advanced projects, research and development | - | 152 | 31 | 1 | 184 | |||||||||||
General and administrative | - | 86 | 3 | 22 | 111 | |||||||||||
Other expense, net | - | 89 | 157 | - | 246 | |||||||||||
- | 1,852 | 1,413 | - | 3,265 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income, net | (9) | 25 | 53 | - | 69 | |||||||||||
Interest income - intercompany | 79 | 3 | 11 | (93) | - | |||||||||||
Interest expense - intercompany | (8) | (1) | (84) | 93 | - | |||||||||||
Interest expense, net | (108) | (12) | (3) | - | (123) | |||||||||||
(46) | 15 | (23) | - | (54) | ||||||||||||
Income before income and mining tax and other items | (46) | 1,163 | 476 | - | 1,593 | |||||||||||
Income and mining tax expense | 16 | (229) | (305) | - | (518) | |||||||||||
Equity income (loss) of affiliates | 799 | (13) | 117 | (933) | (30) | |||||||||||
Income from continuing operations | 769 | 921 | 288 | (933) | 1,045 | |||||||||||
Loss from discontinued operations | - | 4 | (75) | - | (71) | |||||||||||
Net income | 769 | 925 | 213 | (933) | 974 | |||||||||||
Net income attributable to noncontrolling interests | - | (207) | (63) | 65 | (205) | |||||||||||
Net income attributable to Newmont stockholders | $ | 769 | $ | 718 | $ | 150 | $ | (868) | $ | 769 | ||||||
Comprehensive income | $ | 478 | $ | 898 | $ | (51) | $ | (642) | $ | 683 | ||||||
Comprehensive income attributable to | ||||||||||||||||
noncontrolling interests | - | (207) | (63) | 65 | (205) | |||||||||||
Comprehensive income attributable to Newmont | ||||||||||||||||
stockholders | $ | 478 | $ | 691 | $ | (114) | $ | (577) | $ | 478 |
(1) Excludes Amortization and Reclamation and remediation.
Six Months Ended June 30, 2011 | ||||||||||||||||
Newmont | ||||||||||||||||
Newmont | Mining | |||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||
Sales | $ | - | $ | 2,986 | $ | 1,863 | $ | - | $ | 4,849 | ||||||
Costs and expenses | ||||||||||||||||
Costs applicable to sales (1) | - | 1,117 | 759 | (19) | 1,857 | |||||||||||
Amortization | - | 315 | 191 | - | 506 | |||||||||||
Reclamation and remediation | - | 48 | 9 | - | 57 | |||||||||||
Exploration | - | 81 | 70 | - | 151 | |||||||||||
Advanced projects, research and development | - | 68 | 87 | (1) | 154 | |||||||||||
General and administrative | - | 73 | 2 | 20 | 95 | |||||||||||
Other expense, net | - | 121 | 39 | - | 160 | |||||||||||
- | 1,823 | 1,157 | - | 2,980 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income, net | (8) | 67 | 20 | - | 79 | |||||||||||
Interest income - intercompany | 76 | 4 | 4 | (84) | - | |||||||||||
Interest expense - intercompany | (6) | - | (78) | 84 | - | |||||||||||
Interest expense, net | (113) | (12) | (3) | - | (128) | |||||||||||
(51) | 59 | (57) | - | (49) | ||||||||||||
Income before income and mining tax and other items | (51) | 1,222 | 649 | - | 1,820 | |||||||||||
Income and mining tax expense | 15 | (319) | (188) | - | (492) | |||||||||||
Equity income (loss) of affiliates | 937 | 3 | 139 | (1,077) | 2 | |||||||||||
Income (loss) from continuing operations | 901 | 906 | 600 | (1,077) | 1,330 | |||||||||||
Income (loss) from discontinued operations | - | 7 | (143) | - | (136) | |||||||||||
Net income | 901 | 913 | 457 | (1,077) | 1,194 | |||||||||||
Net income attributable to noncontrolling interests | - | (365) | 10 | 62 | (293) | |||||||||||
Net income attributable to Newmont stockholders | $ | 901 | $ | 548 | $ | 467 | $ | (1,015) | $ | 901 | ||||||
Comprehensive income | $ | 1,103 | $ | 881 | $ | 825 | $ | (1,410) | $ | 1,399 | ||||||
Comprehensive income attributable to noncontrolling | ||||||||||||||||
interests | - | (365) | 7 | 62 | (296) | |||||||||||
Comprehensive income attributable to Newmont | ||||||||||||||||
stockholders | $ | 1,103 | $ | 516 | $ | 832 | $ | (1,348) | $ | 1,103 |
(1) Excludes Amortization and Reclamation and remediation.
Six Months Ended June 30, 2012 | |||||||||||||||||||
Newmont | |||||||||||||||||||
Newmont | Mining | ||||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Operating activities: | |||||||||||||||||||
Net income (loss) | $ | 769 | $ | 925 | $ | 213 | $ | (933) | $ | 974 | |||||||||
Adjustments | 32 | 273 | (480) | 933 | 758 | ||||||||||||||
Net change in operating assets and liabilities | (7) | (514) | (247) | - | (768) | ||||||||||||||
Net cash provided from (used in) continuing operations | 794 | 684 | (514) | - | 964 | ||||||||||||||
Net cash used in discontinued operations | - | - | (8) | - | (8) | ||||||||||||||
Net cash provided from (used in) operations | 794 | 684 | (522) | - | 956 | ||||||||||||||
Investing activities: | |||||||||||||||||||
Additions to property, plant and mine development | - | (1,090) | (488) | - | (1,578) | ||||||||||||||
Sale of marketable securities | - | - | 106 | - | 106 | ||||||||||||||
Purchases of marketable securities | - | (91) | (105) | - | (196) | ||||||||||||||
Acquisitions, net | - | - | (22) | - | (22) | ||||||||||||||
Proceeds from sale of other assets | - | 9 | 4 | - | 13 | ||||||||||||||
Other | - | - | (37) | - | (37) | ||||||||||||||
Net cash used in investing activities | - | (1,172) | (542) | - | (1,714) | ||||||||||||||
Financing activities: | |||||||||||||||||||
Net borrowings (repayments) | 1,543 | (136) | (5) | - | 1,402 | ||||||||||||||
Payment of conversion premium on debt | (172) | - | - | - | (172) | ||||||||||||||
Net intercompany borrowings (repayments) | (1,833) | 692 | 1,141 | - | - | ||||||||||||||
Dividends paid to common stockholders | (347) | - | - | - | (347) | ||||||||||||||
Dividends paid to noncontrolling interests | - | (3) | - | - | (3) | ||||||||||||||
Proceeds from stock issuance, net | 15 | - | - | - | 15 | ||||||||||||||
Other | - | - | (1) | - | (1) | ||||||||||||||
Net cash provided from (used in) financing activities | (794) | 553 | 1,135 | - | 894 | ||||||||||||||
Effect of exchange rate changes on cash | - | (1) | 2 | - | 1 | ||||||||||||||
Net change in cash and cash equivalents | - | 64 | 73 | - | 137 | ||||||||||||||
Cash and cash equivalents at beginning of period | - | 1,526 | 234 | - | 1,760 | ||||||||||||||
Cash and cash equivalents at end of period | $ | - | $ | 1,590 | $ | 307 | $ | - | $ | 1,897 |
Six Months Ended June 30, 2011 | |||||||||||||||||||
Newmont | |||||||||||||||||||
Newmont | Mining | ||||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Operating activities: | |||||||||||||||||||
Net income (loss) | $ | 901 | $ | 913 | $ | 457 | $ | (1,077) | $ | 1,194 | |||||||||
Adjustments | 39 | 362 | (729) | 1,077 | 749 | ||||||||||||||
Net change in operating assets and liabilities | (27) | (509) | (4) | - | (540) | ||||||||||||||
Net cash provided from (used in) continuing operations | 913 | 766 | (276) | - | 1,403 | ||||||||||||||
Net cash used in discontinued operations | - | - | (2) | - | (2) | ||||||||||||||
Net cash provided from (used in) operations | 913 | 766 | (278) | - | 1,401 | ||||||||||||||
Investing activities: | |||||||||||||||||||
Additions to property, plant and mine development | - | (671) | (349) | - | (1,020) | ||||||||||||||
Sale of marketable securities | - | 55 | - | - | 55 | ||||||||||||||
Purchases of marketable securities | - | - | (15) | - | (15) | ||||||||||||||
Acquisitions, net | - | - | (2,291) | - | (2,291) | ||||||||||||||
Proceeds from sale of other assets | - | (56) | 62 | - | 6 | ||||||||||||||
Other | - | - | (15) | - | (15) | ||||||||||||||
Net cash used in investing activities | - | (672) | (2,608) | - | (3,280) | ||||||||||||||
Financing activities: | |||||||||||||||||||
Net borrowings (repayments) | 83 | (276) | (5) | - | (198) | ||||||||||||||
Net intercompany borrowings (repayments) | (831) | (2,018) | 2,849 | - | - | ||||||||||||||
Dividends paid to common stockholders | (173) | - | - | - | (173) | ||||||||||||||
Dividends paid to noncontrolling interests | - | (17) | - | - | (17) | ||||||||||||||
Proceeds from stock issuance, net | 8 | - | - | - | 8 | ||||||||||||||
Other | - | 1 | (1) | - | - | ||||||||||||||
Net cash provided from (used in) financing activities | (913) | (2,310) | 2,843 | - | (380) | ||||||||||||||
Effect of exchange rate changes on cash | - | 1 | 57 | - | 58 | ||||||||||||||
Net change in cash and cash equivalents | - | (2,215) | 14 | - | (2,201) | ||||||||||||||
Cash and cash equivalents at beginning of period | - | 3,877 | 179 | - | 4,056 | ||||||||||||||
Cash and cash equivalents at end of period | $ | - | $ | 1,662 | $ | 193 | $ | - | $ | 1,855 |
At June 30, 2012 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | - | $ | 1,590 | $ | 307 | $ | - | $ | 1,897 | |||||||
Trade receivables | - | 183 | 107 | - | 290 | ||||||||||||
Accounts receivable | 3,854 | 4,642 | 293 | (8,430) | 359 | ||||||||||||
Investments | 67 | 48 | 17 | - | 132 | ||||||||||||
Inventories | - | 400 | 403 | - | 803 | ||||||||||||
Stockpiles and ore on leach pads | - | 669 | 129 | - | 798 | ||||||||||||
Deferred income tax assets | 5 | 250 | - | - | 255 | ||||||||||||
Other current assets | 9 | 147 | 582 | - | 738 | ||||||||||||
Current assets | 3,935 | 7,929 | 1,838 | (8,430) | 5,272 | ||||||||||||
Property, plant and mine development, net | - | 7,675 | 9,293 | (32) | 16,936 | ||||||||||||
Investments | - | 72 | 1,113 | - | 1,185 | ||||||||||||
Investments in subsidiaries | 15,184 | 2 | 2,967 | (18,153) | - | ||||||||||||
Stockpiles and ore on leach pads | - | 1,882 | 697 | - | 2,579 | ||||||||||||
Deferred income tax assets | 800 | 833 | 53 | - | 1,686 | ||||||||||||
Other long-term assets | 3,791 | 752 | 899 | (4,440) | 1,002 | ||||||||||||
Total assets | $ | 23,710 | $ | 19,145 | $ | 16,860 | $ | (31,055) | $ | 28,660 | |||||||
Liabilities | |||||||||||||||||
Debt | $ | - | $ | 30 | $ | 10 | $ | - | $ | 40 | |||||||
Accounts payable | 4,420 | 3,161 | 1,321 | (8,328) | 574 | ||||||||||||
Employee-related benefits | - | 206 | 87 | - | 293 | ||||||||||||
Income and mining taxes | - | 53 | 120 | - | 173 | ||||||||||||
Other current liabilities | 78 | 539 | 2,735 | (2,065) | 1,287 | ||||||||||||
Current liabilities | 4,498 | 3,989 | 4,273 | (10,393) | 2,367 | ||||||||||||
Debt | 6,047 | 1 | 40 | - | 6,088 | ||||||||||||
Reclamation and remediation liabilities | - | 908 | 362 | - | 1,270 | ||||||||||||
Deferred income tax liabilities | - | 601 | 1,455 | - | 2,056 | ||||||||||||
Employee-related benefits | 5 | 370 | 112 | - | 487 | ||||||||||||
Other long-term liabilities | 527 | 51 | 4,297 | (4,472) | 403 | ||||||||||||
Total liabilities | 11,077 | 5,920 | 10,539 | (14,865) | 12,671 | ||||||||||||
Equity | |||||||||||||||||
Preferred stock | - | - | 61 | (61) | - | ||||||||||||
Common stock | 786 | - | 5 | (5) | 786 | ||||||||||||
Additional paid-in capital | 8,012 | 3,050 | 5,698 | (8,469) | 8,291 | ||||||||||||
Accumulated other comprehensive income | 361 | (216) | 905 | (689) | 361 | ||||||||||||
Retained earnings | 3,474 | 6,776 | (1,603) | (5,173) | 3,474 | ||||||||||||
Newmont stockholders’ equity | 12,633 | 9,610 | 5,066 | (14,397) | 12,912 | ||||||||||||
Noncontrolling interests | - | 3,615 | 1,255 | (1,793) | 3,077 | ||||||||||||
Total equity | 12,633 | 13,225 | 6,321 | (16,190) | 15,989 | ||||||||||||
Total liabilities and equity | $ | 23,710 | $ | 19,145 | $ | 16,860 | $ | (31,055) | $ | 28,660 | |||||||
At December 31, 2011 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | - | $ | 1,526 | $ | 234 | $ | - | $ | 1,760 | |||||||
Trade receivables | - | 205 | 95 | - | 300 | ||||||||||||
Accounts receivable | 1,415 | 3,447 | 264 | (4,806) | 320 | ||||||||||||
Investments | 72 | - | 22 | - | 94 | ||||||||||||
Inventories | - | 333 | 381 | - | 714 | ||||||||||||
Stockpiles and ore on leach pads | - | 532 | 139 | - | 671 | ||||||||||||
Deferred income tax assets | 134 | 257 | 5 | - | 396 | ||||||||||||
Other current assets | - | 91 | 1,042 | - | 1,133 | ||||||||||||
Current assets | 1,621 | 6,391 | 2,182 | (4,806) | 5,388 | ||||||||||||
Property, plant and mine development, net | - | 6,917 | 8,990 | (26) | 15,881 | ||||||||||||
Investments | - | 29 | 1,443 | - | 1,472 | ||||||||||||
Investments in subsidiaries | 14,675 | 43 | 2,825 | (17,543) | - | ||||||||||||
Stockpiles and ore on leach pads | - | 1,641 | 630 | - | 2,271 | ||||||||||||
Deferred income tax assets | 708 | 838 | 59 | - | 1,605 | ||||||||||||
Other long-term assets | 3,423 | 641 | 927 | (4,134) | 857 | ||||||||||||
Total assets | $ | 20,427 | $ | 16,500 | $ | 17,056 | $ | (26,509) | $ | 27,474 | |||||||
Liabilities | |||||||||||||||||
Debt | $ | 514 | $ | 165 | $ | 10 | $ | - | $ | 689 | |||||||
Accounts payable | 2,698 | 1,327 | 1,343 | (4,807) | 561 | ||||||||||||
Employee-related benefits | - | 222 | 85 | - | 307 | ||||||||||||
Income and mining taxes | - | 45 | 205 | - | 250 | ||||||||||||
Other current liabilities | 450 | 459 | 3,186 | (1,962) | 2,133 | ||||||||||||
Current liabilities | 3,662 | 2,218 | 4,829 | (6,769) | 3,940 | ||||||||||||
Debt | 3,578 | 1 | 45 | - | 3,624 | ||||||||||||
Reclamation and remediation liabilities | - | 809 | 360 | - | 1,169 | ||||||||||||
Deferred income tax liabilities | - | 732 | 1,415 | - | 2,147 | ||||||||||||
Employee-related benefits | 5 | 355 | 99 | - | 459 | ||||||||||||
Other long-term liabilities | 567 | 61 | 3,895 | (4,159) | 364 | ||||||||||||
Total liabilities | 7,812 | 4,176 | 10,643 | (10,928) | 11,703 | ||||||||||||
Equity | |||||||||||||||||
Preferred stock | - | - | 61 | (61) | - | ||||||||||||
Common stock | 784 | - | - | - | 784 | ||||||||||||
Additional paid-in capital | 8,127 | 3,050 | 5,702 | (8,471) | 8,408 | ||||||||||||
Accumulated other comprehensive income | 652 | (189) | 1,168 | (979) | 652 | ||||||||||||
Retained earnings | 3,052 | 6,055 | (1,744) | (4,311) | 3,052 | ||||||||||||
Newmont stockholders’ equity | 12,615 | 8,916 | 5,187 | (13,822) | 12,896 | ||||||||||||
Noncontrolling interests | - | 3,408 | 1,226 | (1,759) | 2,875 | ||||||||||||
Total equity | 12,615 | 12,324 | 6,413 | (15,581) | 15,771 | ||||||||||||
Total liabilities and equity | $ | 20,427 | $ | 16,500 | $ | 17,056 | $ | (26,509) | $ | 27,474 | |||||||
|
NOTE 26 COMMITMENTS AND CONTINGENCIES
General
The Company follows ASC guidance in accounting for loss contingencies. Accordingly, estimated losses from contingencies are accrued by a charge to income when information available prior to issuance of the financial statements indicates that it is probable that a liability could be incurred and the amount of the loss can be reasonably estimated. Legal expenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosure of the contingency and estimated range of loss, if determinable is made in the financial statements when it is at least reasonably possible that a material loss could be incurred.
Operating Segments
The Company's operating segments are identified in Note 3. Except as noted in this paragraph, all of the Company's commitments and contingencies specifically described in this Note 26 relate to the Corporate and Other reportable segment. The PT Newmont Minahasa Raya and PTNNT matters relate to the Asia Pacific reportable segment. The Yanacocha matters relate to the South America reportable segment.
Environmental Matters
The Company's mining and exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. The Company conducts its operations so as to protect the public health and environment and believes its operations are in compliance with applicable laws and regulations in all material respects. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures.
Estimated future reclamation costs are based principally on legal and regulatory requirements. At June 30, 2012 and December 31, 2011, $1,145 and $1,070, respectively, were accrued for reclamation costs relating to currently or recently producing mineral properties in accordance with asset retirement obligation guidance. The current portions of $45 and $47 at June 30, 2012 and December 31, 2011, respectively, are included in Other current liabilities.
The Company is involved in several matters concerning environmental obligations associated with former mining activities. Generally, these matters concern developing and implementing remediation plans at the various sites involved. The Company believes that the related environmental obligations associated with these sites are similar in nature with respect to the development of remediation plans, their risk profile and the compliance required to meet general environmental standards. Based upon the Company's best estimate of its liability for these matters, $191 and $170 were accrued for such obligations at June 30, 2012 and December 31, 2011, respectively. These amounts are included in Other current liabilities and Reclamation and remediation liabilities. Depending upon the ultimate resolution of these matters, the Company believes that it is reasonably possible that the liability for these matters could be as much as 108% greater or 7% lower than the amount accrued at June 30, 2012. The amounts accrued are reviewed periodically based upon facts and circumstances available at the time. Changes in estimates are recorded in Reclamation and remediation in the period estimates are revised.
Details about certain of the more significant matters involved are discussed below.
Newmont Mining Corporation
Conjecture Mine Site. On April 24, 2012, Federal Resources Corporation served Newmont with a third party complaint seeking contribution for reclamation costs at the Conjecture Mine site in Bonner County, Idaho. The United States Department of Justice on behalf of the EPA (“U.S.”) brought a CERCLA action against Federal Resources Corporation for costs incurred in response to alleged releases or threatened releases of hazardous substances at the Conjecture Mine, Idaho Lakeview and Minnie More Mine sites. The U.S. has expended approximately $5 in total costs for the completion of reclamation at the Conjecture Mine. Federal Resources Corporation alleges that Newmont is the successor-in-interest to Duval Corporation (“Duval”), and that Duval is a former operator of the Conjecture Mine. Newmont denies that it is a successor-in-interest to the liabilities of Duval and further Newmont has not uncovered any evidence to substantiate that Duval operated the Conjecture Mine. Therefore, Newmont intends to vigorously defend this lawsuit. Newmont cannot reasonably predict the likelihood or outcome of this matter.
Empire Mine. On July 19, 2012, the California Department of Parks and Recreation (“Parks”) served Newmont, New Verde Mines LLC, Newmont North America Exploration Limited, Newmont Realty Company and Newmont USA Limited with a complaint for damages and declaratory relief under CERCLA, specifically for costs associated with water treatment at the Empire Mine State Park and for a declaration that Newmont is liable for past and future response costs, as well as indemnification to Parks. In 1975 Parks purchased the Empire Mine site in Grass Valley, California from Newmont to create a historic state park featuring the mining of the Empire Mine. Parks has operated the Empire Mine Site for over 35 years. Newmont intends to vigorously defend this lawsuit. Newmont cannot reasonably predict the outcome of this matter.
Newmont USA Limited - 100% Newmont Owned
Grey Eagle Mine Site. By letter dated September 3, 2002, the EPA notified Newmont that the EPA had expended $3 in response costs to address environmental conditions associated with a historic tailings pile located at the Grey Eagle Mine site near Happy Camp, California, and requested that Newmont pay those costs. The EPA has identified four potentially responsible parties, including Newmont. Newmont does not believe it has any liability for environmental conditions at the Grey Eagle Mine site, and intends to vigorously defend any formal claims by the EPA. Newmont cannot reasonably predict the likelihood or outcome of any future action against it arising from this matter.
Ross-Adams Mine Site. By letter dated June 5, 2007, the U.S. Forest Service notified Newmont that it had expended approximately $0.3 in response costs to address environmental conditions at the Ross-Adams mine in Prince of Wales, Alaska, and requested Newmont USA Limited pay those costs and perform an Engineering Evaluation/Cost Analysis (“EE/CA”) to assess what future response activities might need to be completed at the site. Newmont intends to vigorously defend any formal claims by the EPA. Newmont has agreed to perform the EE/CA. Newmont cannot reasonably predict the likelihood or outcome of any future action against it arising from this matter.
PT Newmont Minahasa Raya (“PTNMR”) - 80% Newmont Owned
On March 22, 2007, an Indonesian non-governmental organization named Wahana Lingkungan Hidup Indonesia (“WALHI”) filed a civil suit against PTNMR, the Newmont subsidiary that operated the Minahasa mine in Indonesia, and Indonesia's Ministry of Energy & Mineral Resources and Ministry of Environment, alleging pollution from the government-approved and permitted disposal of mill tailings into Buyat Bay, and seeking a court order requiring PTNMR to fund a 25-year monitoring program in relation to Buyat Bay. In December 2007, the court ruled in PTNMR's favor and found that WALHI's allegations of pollution in Buyat Bay were without merit. In March 2008, WALHI appealed this decision to the Indonesian High Court. On January 27, 2010, the Indonesian High Court upheld the December 2007 ruling in favor of PTNMR. On May 17, 2010, WALHI filed an appeal of the January 27, 2010 Indonesian High Court ruling seeking review from the Indonesian Supreme Court. Independent sampling and testing of Buyat Bay water and fish, as well as area residents, conducted by the World Health Organization and the Australian Commonwealth Scientific and Industrial Research Organization confirm that PTNMR has not polluted the Buyat Bay environment, and, therefore, has not adversely affected the fish in Buyat Bay or the health of nearby residents. Ongoing monitoring of seawater quality by an Independent Scientific Panel continues to confirm that PTNMR's operations have not adversely affected the environment. The Company remains steadfast that it has not caused pollution or health problems.
Other Legal Matters
Minera Yanacocha S.R.L. (“Yanacocha”) - 51.35% Newmont Owned
Choropampa. In June 2000, a transport contractor of Yanacocha spilled approximately 151 kilograms of elemental mercury near the town of Choropampa, Peru, which is located 53 miles (85 kilometers) southwest of the Yanacocha mine. Elemental mercury is not used in Yanacocha's operations but is a by-product of gold mining and was sold to a Lima firm for use in medical instruments and industrial applications. A comprehensive health and environmental remediation program was undertaken by Yanacocha in response to the incident. In August 2000, Yanacocha paid under protest a fine of 1,740,000 Peruvian soles (approximately $0.5) to the Peruvian government. Yanacocha has entered into settlement agreements with a number of individuals impacted by the incident. As compensation for the disruption and inconvenience caused by the incident, Yanacocha entered into agreements with and provided a variety of public works in the three communities impacted by this incident. Yanacocha cannot predict the likelihood of additional expenditures related to this matter.
Additional lawsuits relating to the Choropampa incident were filed against Yanacocha in the local courts of Cajamarca, Peru, in May 2002 by over 900 Peruvian citizens. A significant number of the plaintiffs in these lawsuits entered into settlement agreements with Yanacocha prior to filing such claims. In April 2008, the Peruvian Supreme Court upheld the validity of these settlement agreements, which the Company expects to result in the dismissal of all claims brought by previously settled plaintiffs. Yanacocha has also entered into settlement agreements with approximately 350 additional plaintiffs. The claims asserted by approximately 200 plaintiffs remain. In 2011, Yanacocha was served with 23 complaints alleging grounds to nullify the settlements entered between Yanacocha and the plaintiffs. Yanacocha has answered the complaints and the court has dismissed several of the matters and the plaintiffs have filed appeals. All appeals have been referred to the Civil Court of Cajamarca, which has confirmed the decision of the lower court judge. The plaintiffs have filed appeals of such orders before the Supreme Court. Yanacocha will continue to vigorously defend its position. Neither the Company nor Yanacocha can reasonably estimate the ultimate loss relating to such claims.
PT Newmont Nusa Tenggara (“PTNNT”) – 31.5% Newmont Owned
Under the Batu Hijau Contract of Work, beginning in 2006 and continuing through 2010, a portion of PTNNT's shares were required to be offered for sale, first, to the Indonesian government or, second, to Indonesian nationals, equal to the difference between the following percentages and the percentage of shares already owned by the Indonesian government or Indonesian nationals (if such number is positive): 23% by March 31, 2006; 30% by March 31, 2007; 37% by March 31, 2008; 44% by March 31, 2009; and 51% by March 31, 2010. As PT Pukuafu Indah (“PTPI”), an Indonesian national, owned a 20% interest in PTNNT at all relevant times, in 2006, a 3% interest was required to be offered for sale and, in each of 2007 through 2010, an additional 7% interest was required to be offered (for an aggregate 31% interest). The price at which such interests were offered for sale to the Indonesian parties was the fair market value of such interest considering PTNNT as a going concern, as agreed with the Indonesian government.
In accordance with the Contract of Work, an offer to sell a 3% interest was made to the Indonesian government in 2006 and an offer for an additional 7% interest was made in each of 2007, 2008, 2009 and 2010. While the central government declined to participate in the 2006 and 2007 offers, local governments in the area in which the Batu Hijau mine is located expressed interest in acquiring shares, as did various Indonesian nationals. After disagreement with the government over whether the government's first right to purchase had expired and receipt of Notices of Default from the government claiming breach and threatening termination of the Contract of Work, on March 3, 2008, the Indonesian government filed for international arbitration as provided under the Contract of Work, as did PTNNT.
An international arbitration panel (the “Panel”) was appointed to resolve these claims and other claims that had arisen in relation to divestment and on March 31, 2009, the Panel issued its final award and decision on the matter. In its decision, the Panel determined that PTNNT's foreign shareholders had not complied with the divestiture procedure required by the Contract of Work in 2006 and 2007, but the Panel ruled that the Indonesian government was not entitled to immediately terminate the Contract of Work and rejected the Indonesian government's claim for damages. In November and December 2009, sale agreements were concluded pursuant to which the 2006, 2007 and 2008 shares were transferred to PT Multi Daerah Bersaing (“PTMDB”), the nominee of the local governments, and the 2009 shares were transferred to PTMDB in February 2010, resulting in PTMDB owning a 24% interest in PTNNT.
On December 17, 2010, the Ministry of Energy & Mineral Resources, acting on behalf of the Indonesian government, accepted the offer to acquire the final 7% interest in PTNNT. Subsequently, the Indonesian government designated Pusat Investasi Pemerintah (“PIP”), an agency of the Ministry of Finance, as the entity that will buy the final stake. On May 6, 2011, PIP and the foreign shareholders entered into a definitive agreement for the sale and purchase of the final 7% divestiture stake. Closing of the transaction is pending receipt of approvals from certain Indonesian government ministries. Subsequent to signing the agreement, a disagreement arose between the Ministry of Finance and the Indonesian parliament in regard to whether parliamentary approval was needed to allow PIP to make the share purchase. In October 2011, press reports stated that Indonesia's Supreme Audit Agency had determined that parliamentary approval is required. The Ministry of Finance continues to dispute the need for parliamentary approval and has filed a case with Indonesia's Constitutional Court to have the issue finally resolved. Further disputes may arise in regard to the divestiture of the 2010 shares.
As part of the negotiation of the sale agreements with PTMDB, the parties executed an operating agreement (the “Operating Agreement”) under which each recognizes the rights of the Company and Sumitomo to apply their operating standards to the management of PTNNT's operations, including standards for safety, environmental stewardship and community responsibility. The Operating Agreement became effective upon the completion of the sale of the 2009 shares in February 2010 and will continue for so long as the Company and Sumitomo own more shares of PTNNT than PTMDB. If the Operating Agreement terminates, then the Company may lose control over the applicable operating standards for Batu Hijau and will be at risk for operations conducted in a manner that either detracts from value or results in safety, environmental or social standards below those adhered to by the Company and Sumitomo.
In the event of any future disputes under the Contract of Work or Operating Agreement, there can be no assurance that the Company would prevail in any such dispute and any termination of such contracts could result in substantial diminution in the value of the Company's interests in PTNNT.
Effective January 1, 2011, the local government in the region where the Batu Hijau mine is located commenced the enforcement of local regulations that purport to require PTNNT to pay additional taxes based on revenue and the value of PTNNT's contracts. In addition, the regulations purport to require PTNNT to obtain certain export-related documents from the regional government for purposes of shipping copper concentrate. PTNNT is required to and has obtained all export related-documents in compliance with the laws and regulations of the central government. PTNNT believes that the new regional regulations are not enforceable as they expressly contradict higher level Indonesian laws that set out the permissible taxes that can be imposed by a regional government and all effective export requirements. PTNNT's position is supported by Indonesia's Ministry of Energy & Mineral Resources, Ministry of Trade, and the provincial government. To date, PTNNT has not been forced to comply with these new contradictory regional regulations. On February 4, 2011, PTNNT filed legal proceedings seeking to have the regulations declared null and void because they conflict with the laws of Indonesia. Subsequently, the Ministry of Home Affairs issued a decree declaring these local regulations to be contrary to Indonesian law and thus unenforceable. Further disputes with the local government could arise in relation to these regulations. PTNNT intends to vigorously defend its position in this dispute.
Additionally, in September 2011, WALHI brought an administrative law claim against Indonesia's Ministry of Environment to challenge the May 2011 renewal of PTNNT's submarine tailings permit. PTNNT and the regional government of KSB (“KSB”) filed separate applications for intervention into the proceedings, both of which were accepted by the Administrative Court. KSB intervened on the side of WALHI, and PTNNT joined on the side of the Ministry of Environment. On April 3, 2012, the Administrative Court ruled in favor of the Ministry of Environment and PTNNT, finding that the Ministry of Environment properly renewed the permit in accordance with Indonesian law and regulations. WALHI has appealed the verdict. PTNNT will continue to defend its submarine tailings permit and is confident that the Ministry of Environment acted properly in renewing PTNNT's permit.
Newmont Mining Corporation claim relating to PTNNT divestiture
Indonesian citizens apparently living in the province of Nusa Tenggara Barat filed a lawsuit against Indonesia's Ministry of Finance and other government officials (as defendants) and against PTNNT and the Company (as co-defendants). Plaintiffs claim that the purchase by the central government of the final 7% divestiture stake in PTNNT violates, or would violate, their human rights. PTNNT's alleged liability appears supposedly to arise from being a party involved in the process of divestiture, and the Company's from being a holding company of PTNNT. The allegations regarding alleged liability are vague and unclear. Plaintiffs seek various relief, including an order requiring the defendants and co-defendants to transfer the final 7% stake to the regional government of Nusa Tenggara Barat and a payment of approximately $247 in damages. The Company considers that there is lack of jurisdiction, and that the claims, including those pertaining to it and PTNNT, are entirely without merit.
PT Pukuafu Indah Litigation
In October 2009, PTPI filed a lawsuit in the Central Jakarta District Court against PTNNT and the Indonesian government seeking to cancel the March 2009 arbitration award pertaining to the manner in which divestiture of shares in PTNNT should proceed (refer to the discussion of PTNNT above for the arbitration results). On October 11, 2010, the District Court ruled in favor of PTNNT and the Indonesian government finding, among other things, that PTPI lacks standing to contest the validity of the arbitration award. PTPI filed an appeal to the High Court, which was rejected by the High Court on January 4, 2012. PTPI has appealed the case to the Indonesian Supreme Court.
Subsequent to its initial claim, PTPI filed numerous additional lawsuits, three of which have been withdrawn, against Newmont Indonesia Limited (“NIL”) and Nusa Tenggara Mining Corporation (“NTMC”), a subsidiary of Sumitomo, in the South Jakarta District Court. Fundamentally, the cases all relate to PTPI's contention that it owns, or has rights to own, the shares in PTNNT that have been or will be divested to fulfill the requirements of the PTNNT Contract of Work and the March 2009 arbitration award. PTPI also makes various other allegations, including alleged rights in or to the Company's or NTMC's non-divestiture shares in PTNNT, and PTPI asserts claims for significant damages allegedly arising from NIL's and NTMC's unlawful acts in transferring the divestiture shares to a third party. On November 30, 2010, the South Jakarta District Court rendered a decision in favor of PTPI in one of the cases that included an order that NIL/NTMC transfer 31% of PTNNT shares to PTPI and pay PTPI $26 in damages and certain monetary penalties. The order is not final and binding until the appeal process is completed. NIL and NTMC appealed the decision. On June 28, 2011, the South Jakarta District Court ruled in favor of NIL and NTMC in one of PTPI's lawsuits contending that PTPI has rights in or to NIL's and NTMC's non-divestiture shares. In the Company's view, this ruling further conflicts with the November 30, 2010 ruling finding that PTPI has rights in the divestiture shares. PTPI has filed a notice of appeal. In March 2012, the District Court dismissed PTPI's final two cases that were pending at the trial court level, and PTPI has to date appealed one of these lawsuits.
In January 2010, PTPI also filed a lawsuit against PTNNT's President Director, Mr. Martiono Hadianto, alleging wrongful acts associated with the arbitration, including failure to properly share certain information. The South Jakarta District Court issued a decision partially in favor of PTPI against the PTNNT President Director, requiring the production of arbitration documents. The PTNNT President Director has appealed the decision, which is nonbinding until the appeal process is completed.
Newmont, Sumitomo and PTNNT's management believe that all of PTPI's claims in these matters are without merit and constitute a material breach of a written release agreement executed by PTPI in 2009, in which it and its shareholders committed to cease prosecution of all then-pending lawsuits and not to initiate new proceedings, in conjunction with Newmont's provision of financing to PTPI in late 2009.
In August 2010, NIL and NVL USA Limited (“NVL”) commenced an arbitration against PTPI in the Singapore International Arbitration Centre, as provided in relevant financing agreements, seeking declarations that PTPI has violated the release agreement by failing to dismiss its Indonesian lawsuits, that PTPI is in breach of the November 2009 loan facility and related agreements, and that NIL and NVL are entitled to damages arising from PTPI's and its shareholders' conduct.
On October 1, 2010, NIL and NVL requested, based upon the release agreement, that the arbitral tribunal issue an interim order requiring PTPI and its shareholders to discontinue the various Indonesian court proceedings and refrain from bringing additional lawsuits. On October 15, 2010, the tribunal issued an order granting NIL and NVL's request. The order of the tribunal restrains PTPI and its agents from “proceeding with or continuing with or assisting or participating in the prosecution of the Indonesian [s]uits” and from commencing additional proceedings relating to the same subject matter as the Indonesian lawsuits. NIL and NVL obtained an enforcement order in Singapore courts but it is not known whether PTPI and its shareholders will abide by the court order. PTPI and its shareholders' proceedings in Singapore court to contest enforcement of the interim award were rejected by the court.
On April 7, 2011, the arbitral tribunal issued a final award, while keeping the proceedings open to allow NIL and NVL to seek further relief as necessary, finding PTPI and its shareholders in breach of various provisions of the financing agreements, including the release agreement. The tribunal, for the second time, ordered PTPI and its agents to restrain from proceeding with the Indonesian lawsuits or filing new lawsuits relating to the same subject matter. In addition, the tribunal ordered PTPI and other shareholder defendants, collectively, to pay more than $11 in damages, costs and expenses. NIL and NVL obtained an enforcement order in Singapore courts but it is not known whether PTPI and its shareholders will comply with the court order. NIL and NVL have also registered the final award in the Central Jakarta District Court to seek enforcement in Indonesia.
The Company intends to continue vigorously defending the PTPI lawsuits and pursuing its claims against PTPI.
NWG Investments Inc. v. Fronteer Gold Inc.
In April 2011, Newmont acquired Fronteer Gold Inc. (“Fronteer”). Fronteer has been named as a defendant in a lawsuit filed in New York State Supreme Court by NWG Investments Inc. (“NWG”).
Fronteer acquired NewWest Gold Corporation (“NewWest Gold”) in September 2007. At the time of that acquisition, NWG owned approximately 86% of NewWest Gold and an individual named Jacob Safra owned or controlled 100% of NWG. Prior to its acquisition of NewWest Gold, Fronteer entered into a June 2007 lock-up agreement with NWG providing that, among other things, NWG would support Fronteer's acquisition of NewWest Gold. At that time, Fronteer owned approximately 42% of Aurora Energy Resources Inc. (“Aurora”), which, among other things, had a uranium exploration project in Labrador, Canada.
NWG contends that, during the negotiations leading up to the lock-up agreement, Fronteer represented to NWG that Aurora would commence uranium mining in Labrador by 2013, that this was a firm date, that Fronteer was not aware of any obstacle to doing so, that Aurora faced no serious environmental issues in Labrador and that Aurora's competitors faced greater delays in commencing uranium mining. NWG further contends that it entered into the lock-up agreement and agreed to support Fronteer's acquisition of NewWest Gold in reliance upon these purported representations. On October 11, 2007, less than three weeks after the Fronteer-NewWest Gold transaction closed, a member of the Nunatsiavut Assembly introduced a motion calling for the adoption of a moratorium on uranium mining in Labrador. On April 8, 2008, the Nunatsiavut Assembly adopted a three-year moratorium on uranium mining in Labrador. NWG contends that Fronteer was aware during the negotiations of the NWG/Fronteer lock-up agreement that the Nunatsiavut Assembly planned on adopting this moratorium and that its adoption would preclude Aurora from commencing uranium mining by 2013, but Fronteer nonetheless fraudulently induced NWG to enter into the lock-up agreement.
NWG has not yet filed or served a complaint upon Fronteer or Newmont. Newmont intends to defend this matter, but cannot reasonably predict the outcome.
Other Commitments and Contingencies
Tax contingencies are provided for in accordance with ASC income tax guidance (see Note 9).
The Company has minimum royalty obligations on one of its producing mines in Nevada for the life of the mine. Amounts paid as a minimum royalty (where production royalties are less than the minimum obligation) in any year are recoverable in future years when the minimum royalty obligation is exceeded. Although the minimum royalty requirement may not be met in a particular year, the Company expects that over the mine life, gold production will be sufficient to meet the minimum royalty requirements. Minimum royalty payments payable are $28 in 2012 through 2016 and $223 thereafter.
As part of its ongoing business and operations, the Company and its affiliates are required to provide surety bonds, bank letters of credit and bank guarantees as financial support for various purposes, including environmental reclamation, exploration permitting, workers compensation programs and other general corporate purposes. At June 30, 2012 and December 31, 2011, there were $1,661 and $1,354, respectively, of outstanding letters of credit, surety bonds and bank guarantees. The surety bonds, letters of credit and bank guarantees reflect fair value as a condition of their underlying purpose and are subject to fees competitively determined in the market place. The obligations associated with these instruments are generally related to performance requirements that the Company addresses through its ongoing operations. As the specific requirements are met, the beneficiary of the associated instrument cancels and/or returns the instrument to the issuing entity. Certain of these instruments are associated with operating sites with long-lived assets and will remain outstanding until closure. Generally, bonding requirements associated with environmental regulation are becoming more restrictive. However, the Company believes it is in compliance with all applicable bonding obligations and will be able to satisfy future bonding requirements through existing or alternative means, as they arise.
Newmont is from time to time involved in various legal proceedings related to its business. Except in the above described proceedings, management does not believe that adverse decisions in any pending or threatened proceeding or that amounts that may be required to be paid by reason thereof will have a material adverse effect on the Company's financial condition or results of operations.
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NOTE ##SuppNote SUPPLEMENTARY DATA
Ratio of Earnings to Fixed Charges
The ratio of earnings to fixed charges for the six months ended June 30, 2012 was 9.7. The ratio of earnings to fixed charges represents income before income and mining tax expense, equity income (loss) of affiliates, loss from discontinued operations and net income attributable to noncontrolling interests, divided by interest expense. Interest expense includes amortization of capitalized interest and the portion of rent expense representative of interest. Interest expense does not include interest on income tax liabilities. The computation of the ratio of earnings to fixed charges can be found in Exhibit 12.1.
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Recently Adopted Accounting Pronouncements
Goodwill Impairment
In September 2011, ASC guidance was issued related to goodwill impairment. Under the updated guidance, an entity will have the option to first assess qualitatively whether it is necessary to perform the two-step goodwill impairment test. If the Company believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The update does not change how the Company performs the two-step impairment test under previous guidance. The Company's January 1, 2012 adoption of the guidance had no impact on the Company's consolidated financial position, results of operations or cash flows.
Fair Value Accounting
In May 2011, ASC guidance was issued related to disclosures around fair value accounting. The updated guidance clarifies different components of fair value accounting including the application of the highest and best use and valuation premise concepts, measuring the fair value of an instrument classified in a reporting entity's shareholders' equity and disclosing quantitative information about the unobservable inputs used in fair value measurements that are categorized in Level 3 of the fair value hierarchy. The Company's January 1, 2012 adoption of the updated guidance had no impact on the Company's consolidated financial position, results of operations or cash flows.
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NOTE 3 SEGMENT INFORMATION
Costs | Advanced | |||||||||||||||
Applicable to | Projects and | Pre-Tax | ||||||||||||||
Sales | Sales | Amortization | Exploration | Income (Loss) | ||||||||||||
Three Months Ended June 30, 2012 | ||||||||||||||||
Nevada | $ | 571 | $ | 258 | $ | 47 | $ | 43 | $ | 217 | ||||||
La Herradura | 93 | 33 | 6 | 11 | 46 | |||||||||||
Other North America | - | - | - | 1 | (54) | |||||||||||
North America | 664 | 291 | 53 | 55 | 209 | |||||||||||
Yanacocha | 614 | 177 | 62 | 18 | 333 | |||||||||||
Conga | - | - | - | 12 | (12) | |||||||||||
Other South America | - | - | - | 19 | (19) | |||||||||||
South America | 614 | 177 | 62 | 49 | 302 | |||||||||||
Boddington: | ||||||||||||||||
Gold | 264 | 157 | 49 | NA | NA | |||||||||||
Copper | 42 | 38 | 12 | NA | NA | |||||||||||
Total | 306 | 195 | 61 | 2 | 37 | |||||||||||
Batu Hijau: | ||||||||||||||||
Gold | 18 | 11 | 3 | NA | NA | |||||||||||
Copper | 88 | 70 | 14 | NA | NA | |||||||||||
Total | 106 | 81 | 17 | 7 | (16) | |||||||||||
Other Australia/New Zealand | 331 | 182 | 33 | 18 | 101 | |||||||||||
Other Asia Pacific | - | - | 2 | 4 | (9) | |||||||||||
Asia Pacific | 743 | 458 | 113 | 31 | 113 | |||||||||||
Ahafo | 208 | 76 | 16 | 11 | 100 | |||||||||||
Akyem | - | - | - | 5 | (5) | |||||||||||
Other Africa | - | - | - | 3 | (2) | |||||||||||
Africa | 208 | 76 | 16 | 19 | 93 | |||||||||||
Corporate and Other | - | - | 4 | 34 | (160) | |||||||||||
Consolidated | $ | 2,229 | $ | 1,002 | $ | 248 | $ | 188 | $ | 557 |
Costs | Advanced | |||||||||||||||
Applicable to | Projects and | Pre-Tax | ||||||||||||||
Sales | Sales | Amortization | Exploration | Income (Loss) | ||||||||||||
Three Months Ended June 30, 2011 | ||||||||||||||||
Nevada | $ | 529 | $ | 224 | $ | 56 | $ | 38 | $ | 195 | ||||||
La Herradura | 81 | 27 | 5 | 3 | 44 | |||||||||||
Other North America | - | - | 4 | 53 | (8) | |||||||||||
North America | 610 | 251 | 65 | 94 | 231 | |||||||||||
Yanacocha | 524 | 190 | 66 | 11 | 232 | |||||||||||
Conga | - | - | 1 | 7 | (7) | |||||||||||
Other South America | - | - | - | 7 | (9) | |||||||||||
South America | 524 | 190 | 67 | 25 | 216 | |||||||||||
Boddington: | ||||||||||||||||
Gold | 269 | 117 | 31 | N/A | N/A | |||||||||||
Copper | 54 | 27 | 7 | N/A | N/A | |||||||||||
Total | 323 | 144 | 38 | 2 | 140 | |||||||||||
Batu Hijau: | ||||||||||||||||
Gold | 92 | 30 | 7 | N/A | N/A | |||||||||||
Copper | 242 | 79 | 18 | N/A | N/A | |||||||||||
Total | 334 | 109 | 25 | 1 | 186 | |||||||||||
Other Australia/New Zealand | 375 | 158 | 31 | 10 | 168 | |||||||||||
Other Asia Pacific | - | - | - | 5 | (34) | |||||||||||
Asia Pacific | 1,032 | 411 | 94 | 18 | 460 | |||||||||||
Ahafo | 218 | 65 | 20 | 8 | 119 | |||||||||||
Akyem | - | - | - | 1 | (1) | |||||||||||
Other Africa | - | - | - | 3 | (5) | |||||||||||
Africa | 218 | 65 | 20 | 12 | 113 | |||||||||||
Corporate and Other | - | - | 4 | 26 | (173) | |||||||||||
Consolidated | $ | 2,384 | $ | 917 | $ | 250 | $ | 175 | $ | 847 |
NOTE 3 SEGMENT INFORMATION
Costs | Advanced | Pre-Tax | ||||||||||||||||||||
Sales | Applicable to Sales | Amortization | Projects and Exploration | Income (Loss) | Total Assets | Capital Expenditures(1) | ||||||||||||||||
Six Months Ended June 30, 2012 | ||||||||||||||||||||||
Nevada | $ | 1,294 | $ | 525 | $ | 100 | $ | 77 | $ | 586 | $ | 7,280 | $ | 370 | ||||||||
La Herradura | 186 | 65 | 11 | 17 | 91 | 353 | 29 | |||||||||||||||
Other North America | - | - | - | 1 | (106) | 199 | - | |||||||||||||||
North America | 1,480 | 590 | 111 | 95 | 571 | 7,832 | 399 | |||||||||||||||
Yanacocha | 1,208 | 338 | 112 | 35 | 682 | 2,775 | 243 | |||||||||||||||
Conga | - | - | - | 39 | (39) | 1,462 | 342 | |||||||||||||||
Other South America | - | - | - | 44 | (44) | 44 | - | |||||||||||||||
South America | 1,208 | 338 | 112 | 118 | 599 | 4,281 | 585 | |||||||||||||||
Boddington: | ||||||||||||||||||||||
Gold | 562 | 294 | 81 | N/A | N/A | N/A | N/A | |||||||||||||||
Copper | 103 | 68 | 18 | N/A | N/A | N/A | N/A | |||||||||||||||
Total | 665 | 362 | 99 | 5 | 180 | 4,640 | 52 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 52 | 30 | 6 | N/A | N/A | N/A | N/A | |||||||||||||||
Copper | 260 | 155 | 30 | N/A | N/A | N/A | N/A | |||||||||||||||
Total | 312 | 185 | 36 | 14 | 32 | 3,651 | 61 | |||||||||||||||
Other Australia/New Zealand | 758 | 372 | 69 | 33 | 280 | 1,348 | 137 | |||||||||||||||
Other Asia Pacific | - | - | 3 | 10 | (4) | 606 | 8 | |||||||||||||||
Asia Pacific | 1,735 | 919 | 207 | 62 | 488 | 10,245 | 258 | |||||||||||||||
Ahafo | 489 | 172 | 40 | 22 | 250 | 1,328 | 108 | |||||||||||||||
Akyem | - | - | - | 9 | (10) | 750 | 189 | |||||||||||||||
Other Africa | - | - | - | 5 | (4) | 9 | - | |||||||||||||||
Africa | 489 | 172 | 40 | 36 | 236 | 2,087 | 297 | |||||||||||||||
Corporate and Other | - | - | 9 | 67 | (301) | 4,215 | 37 | |||||||||||||||
Consolidated | $ | 4,912 | $ | 2,019 | $ | 479 | $ | 378 | $ | 1,593 | $ | 28,660 | $ | 1,576 | ||||||||
(1) | Includes a decrease in accrued capital expenditures of $2; consolidated capital expenditures on a cash basis were $1578. |
Costs | Advanced | Pre-Tax | ||||||||||||||||||||
Sales | Applicable to Sales | Amortization | Projects and Exploration | Income (Loss) | Total Assets | Capital Expenditures(1) | ||||||||||||||||
Six Months Ended June 30, 2011 | ||||||||||||||||||||||
Nevada | $ | 1,111 | $ | 496 | $ | 128 | $ | 55 | $ | 411 | $ | 6,797 | $ | 228 | ||||||||
La Herradura | 146 | 45 | 9 | 9 | 80 | 260 | 41 | |||||||||||||||
Other North America | - | - | 7 | 97 | (58) | 2,294 | 27 | |||||||||||||||
North America | 1,257 | 541 | 144 | 161 | 433 | 9,351 | 296 | |||||||||||||||
Yanacocha | 886 | 343 | 119 | 17 | 381 | 2,634 | 127 | |||||||||||||||
Conga | - | - | 1 | 10 | (11) | 562 | 251 | |||||||||||||||
Other South America | - | - | - | 14 | (15) | 37 | - | |||||||||||||||
South America | 886 | 343 | 120 | 41 | 355 | 3,233 | 378 | |||||||||||||||
Boddington: | ||||||||||||||||||||||
Gold | 501 | 217 | 59 | N/A | N/A | N/A | N/A | |||||||||||||||
Copper | 107 | 55 | 14 | N/A | N/A | N/A | N/A | |||||||||||||||
Total | 608 | 272 | 73 | 3 | 244 | 4,419 | 75 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 232 | 64 | 14 | N/A | N/A | N/A | N/A | |||||||||||||||
Copper | 611 | 168 | 38 | N/A | N/A | N/A | N/A | |||||||||||||||
Total | 843 | 232 | 52 | 1 | 509 | 3,513 | 88 | |||||||||||||||
Other Australia/New Zealand | 790 | 324 | 66 | 22 | 365 | 1,124 | 134 | |||||||||||||||
Other Asia Pacific | - | - | 1 | 6 | (34) | 625 | 4 | |||||||||||||||
Asia Pacific | 2,241 | 828 | 192 | 32 | 1,084 | 9,681 | 301 | |||||||||||||||
Ahafo | 465 | 145 | 42 | 15 | 255 | 1,037 | 37 | |||||||||||||||
Akyem | - | - | - | 2 | (2) | 351 | 67 | |||||||||||||||
Other Africa | - | - | - | 3 | (6) | 6 | - | |||||||||||||||
Africa | 465 | 145 | 42 | 20 | 247 | 1,394 | 104 | |||||||||||||||
Corporate and Other | - | - | 8 | 51 | (299) | 4,979 | 18 | |||||||||||||||
Consolidated | $ | 4,849 | $ | 1,857 | $ | 506 | $ | 305 | $ | 1,820 | $ | 28,638 | $ | 1,097 | ||||||||
(1) | Includes an increase in accrued capital expenditures of $77; consolidated capital expenditures on a cash basis were $1020. |
|
Six Months Ended June 30, | ||||||||
2012 | 2011 | |||||||
Balance at beginning of period | $ | 1,240 | $ | 1,048 | ||||
Additions, changes in estimates and other | 105 | 32 | ||||||
Liabilities settled | (41) | (15) | ||||||
Accretion expense | 32 | 29 | ||||||
Balance at end of period | $ | 1,336 | $ | 1,094 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||
Reclamation | $ | - | $ | 28 | $ | - | $ | 28 | ||||||
Accretion - operating | 13 | 13 | 27 | 25 | ||||||||||
Accretion - non-operating | 3 | 2 | 5 | 4 | ||||||||||
$ | 16 | $ | 43 | $ | 32 | $ | 57 | |||||||
|
NOTE 5 OTHER EXPENSE, NET
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||
Hope Bay care and maintenance | $ | 52 | $ | - | $ | 102 | $ | - | ||||||
Community development | 20 | 23 | 51 | 40 | ||||||||||
Regional administration | 29 | 21 | 50 | 37 | ||||||||||
Acquisiton costs | 12 | 20 | 12 | 21 | ||||||||||
Western Australia power plant | 4 | 5 | 8 | 9 | ||||||||||
Indonesian value added tax settlement | - | - | - | 21 | ||||||||||
Other | 9 | 18 | 23 | 32 | ||||||||||
$ | 126 | $ | 87 | $ | 246 | $ | 160 |
|
NOTE 6 OTHER INCOME, NET
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Income (loss) from developing projects, net | $ | 19 | $ | (4) | $ | 33 | $ | 20 | |||||||
Reduction of allowance for loan receivable | - | - | 21 | - | |||||||||||
Canadian Oil Sands | 11 | 10 | 20 | 16 | |||||||||||
Gain on asset sales, net | - | - | 10 | 3 | |||||||||||
Refinery income, net | 2 | - | 7 | - | |||||||||||
Interest | 2 | 2 | 7 | 6 | |||||||||||
Gain on sale of investments, net | - | 50 | - | 50 | |||||||||||
Foreign currency exchange, net | 12 | (18) | (3) | (29) | |||||||||||
Impairment of marketable securities | (8) | (1) | (32) | (1) | |||||||||||
Other | (2) | 9 | 6 | 14 | |||||||||||
$ | 36 | $ | 48 | $ | 69 | $ | 79 |
|
NOTE 7 EMPLOYEE PENSION AND OTHER BENEFIT PLANS
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Pension benefit costs, net | |||||||||||||||
Service cost | $ | 8 | $ | 6 | $ | 15 | $ | 12 | |||||||
Interest cost | 11 | 10 | 21 | 20 | |||||||||||
Expected return on plan assets | (11) | (11) | (22) | (21) | |||||||||||
Amortization | 8 | 7 | 14 | 12 | |||||||||||
$ | 16 | $ | 12 | $ | 28 | $ | 23 | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Other benefit costs, net | |||||||||||||||
Service cost | $ | - | $ | - | $ | 1 | $ | 1 | |||||||
Interest cost | 2 | 1 | 3 | 2 | |||||||||||
$ | 2 | $ | 1 | $ | 4 | $ | 3 |
|
NOTE 8 STOCK BASED COMPENSATION
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||
Stock options | $ | 3 | $ | 7 | $ | 7 | $ | 10 | ||||||
Restricted stock units | 6 | 11 | 11 | 21 | ||||||||||
Performance leveraged stock units | 3 | 1 | 6 | 3 | ||||||||||
Strategic stock units | 1 | - | 1 | - | ||||||||||
$ | 13 | $ | 19 | $ | 25 | $ | 34 |
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||
Income before income and mining | ||||||||||||||||||||||||||
tax and other items | $ | 557 | $ | 847 | $ | 1,593 | $ | 1,820 | ||||||||||||||||||
Tax on income at statutory rate | 35 | % | 195 | 35 | % | 296 | 35 | % | 558 | 35 | % | 637 | ||||||||||||||
Reconciling items: | ||||||||||||||||||||||||||
Tax benefit generated on change | ||||||||||||||||||||||||||
in form of a non-U.S. subsidiary | - | (8) | % | (65) | - | (4) | % | (65) | ||||||||||||||||||
Percentage depletion | (6) | % | (34) | (7) | % | (56) | (7) | % | (108) | (6) | % | (111) | ||||||||||||||
Change in valuation allowance on | ||||||||||||||||||||||||||
deferred tax assets | 2 | % | 13 | - | 3 | % | 46 | - | ||||||||||||||||||
Other | 1 | % | 1 | 2 | % | 12 | 2 | % | 22 | 2 | % | 31 | ||||||||||||||
Income and mining tax expense | 32 | % | $ | 175 | 22 | % | $ | 187 | 33 | % | $ | 518 | 27 | % | $ | 492 |
|
NOTE 11 NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||
Yanacocha | $ | 97 | $ | 72 | $ | 195 | $ | 126 | ||||||
Batu Hijau | (5) | 64 | 8 | 166 | ||||||||||
Other | - | 1 | 2 | 1 | ||||||||||
$ | 92 | $ | 137 | $ | 205 | $ | 293 |
|
NOTE 13 CHANGES IN EQUITY
Six Months Ended June 30, | ||||||||||
2012 | 2011 | |||||||||
Common stock: | ||||||||||
At beginning of period | $ | 784 | $ | 778 | ||||||
Stock based awards | 2 | 2 | ||||||||
At end of period | 786 | 780 | ||||||||
Additional paid-in capital: | ||||||||||
At beginning of period | 8,408 | 8,279 | ||||||||
Stock based awards | 55 | 52 | ||||||||
Conversion premium on convertible notes | (172) | 0 | ||||||||
Shares issued in exchange for exchangeable shares | 0 | (1) | ||||||||
At end of period | 8,291 | 8,330 | ||||||||
Accumulated other comprehensive income: | ||||||||||
At beginning of period | 652 | 1,108 | ||||||||
Other comprehensive income | (291) | 202 | ||||||||
At end of period | 361 | 1,310 | ||||||||
Retained earnings: | ||||||||||
At beginning of period | 3,052 | 3,180 | ||||||||
Net income attributable to Newmont stockholders | 769 | 901 | ||||||||
Dividends paid | (347) | (173) | ||||||||
At end of period | 3,474 | 3,908 | ||||||||
Noncontrolling interests: | ||||||||||
At beginning of period | 2,875 | 2,371 | ||||||||
Net income attributable to noncontrolling interests | 205 | 293 | ||||||||
Dividends paid | (3) | (2) | ||||||||
Other comprehensive income | - | 3 | ||||||||
At end of period | 3,077 | 2,665 | ||||||||
Total equity | $ | 15,989 | $ | 16,993 | ||||||
|
Fair Value at June 30, 2012 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 503 | $ | 503 | $ | - | $ | - | |||||||
Marketable equity securities: | |||||||||||||||
Extractive industries | 1,110 | 1,110 | - | - | |||||||||||
Other | 10 | 10 | - | - | |||||||||||
Marketable debt securities: | |||||||||||||||
Asset backed commercial paper | 19 | - | - | 19 | |||||||||||
Corporate | 98 | - | 98 | - | |||||||||||
Auction rate securities | 5 | - | - | 5 | |||||||||||
Trade receivable from provisional copper | |||||||||||||||
and gold concentrate sales, net | 179 | 179 | - | - | |||||||||||
Derivative instruments, net: | |||||||||||||||
Foreign exchange forward contracts | 223 | - | 223 | - | |||||||||||
$ | 2,147 | $ | 1,802 | $ | 321 | $ | 24 | ||||||||
Liabilities: | |||||||||||||||
Diesel forward contracts | 8 | - | 8 | - | |||||||||||
Boddington contingent consideration | 44 | - | - | 44 | |||||||||||
Holt property royalty | 243 | - | - | 243 | |||||||||||
$ | 295 | $ | - | $ | 8 | $ | 287 |
Auction Rate Securities | Asset Backed Commercial Paper | Total Assets | Boddington Contingent Royalty | Holt Property Royalty | Total Liabilities | ||||||||||||||||
Balance at beginning of period | $ | 5 | $ | 19 | $ | 24 | $ | 54 | $ | 176 | $ | 230 | |||||||||
Settlements | - | - | - | (22) | (8) | (30) | |||||||||||||||
Revaluation | - | - | - | 12 | 75 | 87 | |||||||||||||||
Balance at end of period | $ | 5 | $ | 19 | $ | 24 | $ | 44 | $ | 243 | $ | 287 |
|
Expected Maturity Date | ||||||||||||||||||||||||
Total/ | ||||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | Average | ||||||||||||||||||
A$ Operating Fixed Forward Contracts: | ||||||||||||||||||||||||
A$ notional (millions) | 641 | 1,048 | 762 | 471 | 244 | 28 | 3,194 | |||||||||||||||||
Average rate ($/A$) | 0.93 | 0.93 | 0.90 | 0.89 | 0.90 | 0.88 | 0.91 | |||||||||||||||||
Expected hedge ratio | 78 | % | 68 | % | 50 | % | 33 | % | 17 | % | 4 | % | ||||||||||||
A$ Capital Fixed Forward Contracts: | ||||||||||||||||||||||||
A$ notional (millions) | 27 | 51 | 22 | - | - | - | 100 | |||||||||||||||||
Average rate ($/A$) | 1.00 | 0.98 | 0.96 | - | - | - | 0.98 | |||||||||||||||||
Expected hedge ratio | 37 | % | 28 | % | 40 | % | - | - | - | |||||||||||||||
NZ$ Operating Fixed Forward Contracts: | ||||||||||||||||||||||||
NZ$ notional (millions) | 41 | 37 | 4 | - | - | - | 82 | |||||||||||||||||
Average rate ($/NZ$) | 0.78 | 0.78 | 0.78 | - | - | - | 0.78 | |||||||||||||||||
Expected hedge ratio | 60 | % | 29 | % | 8 | % | - | - | - |
Expected Maturity Date | ||||||||||||||||||
Total/ | ||||||||||||||||||
2012 | 2013 | 2014 | 2015 | Average | ||||||||||||||
Diesel Fixed Forward Contracts: | ||||||||||||||||||
Diesel gallons (millions) | 16 | 22 | 10 | 1 | 49 | |||||||||||||
Average rate ($/gallon) | 2.91 | 2.92 | 2.88 | 2.85 | 2.91 | |||||||||||||
Expected hedge ratio | 71 | % | 50 | % | 24 | % | 8 | % |
Fair Value | ||||||||||||||
At June 30, 2012 | ||||||||||||||
Other Current Assets | Other Long-Term Assets | Other Current Liabilities | Other Long-Term Liabilities | |||||||||||
Foreign currency exchange contracts: | ||||||||||||||
A$ operating fixed forwards | $ | 102 | $ | 121 | $ | 2 | $ | 1 | ||||||
A$ capital fixed forwards | 1 | 1 | - | - | ||||||||||
NZ$ operating fixed forwards | 1 | - | - | - | ||||||||||
Diesel fixed forwards | 1 | - | 6 | 3 | ||||||||||
Total derivative instruments (Note ##OthAssetsNote and ##OthLiabNote) | $ | 105 | $ | 122 | $ | 8 | $ | 4 | ||||||
Fair Value | ||||||||||||||
At December 31, 2011 | ||||||||||||||
Other Current Assets | Other Long-Term Assets | Other Current Liabilities | Other Long-Term Liabilities | |||||||||||
Foreign currency exchange contracts: | ||||||||||||||
A$ operating fixed forwards | $ | 121 | 112 | 6 | 4 | |||||||||
A$ capital fixed forwards | - | - | - | 1 | ||||||||||
NZ$ operating fixed forwards | 2 | - | 1 | - | ||||||||||
Diesel fixed forwards | 4 | - | 2 | 1 | ||||||||||
Forward starting interest rate swaps | - | - | 399 | - | ||||||||||
Total derivative instruments (Note ##OthAssetsNote and ##OthLiabNote) | $ | 127 | $ | 112 | $ | 408 | $ | 6 |
Foreign Currency Exchange Contracts | Diesel Forward Contracts | Forward Starting Swap Contracts | |||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | ||||||||||||||
For the three months ended June 30, | |||||||||||||||||||
Cash flow hedging relationships: | |||||||||||||||||||
Gain (loss) recognized in other comprehensive income (effective portion) | $ | 23 | $ | 126 | $ | (16) | $ | (5) | $ | - | $ | - | |||||||
Gain (loss) reclassified from Accumulated other comprehensive income into income (effective portion) (1)? | 38 | 49 | 1 | 5 | (3) | - | |||||||||||||
For the six months ended June 30, | |||||||||||||||||||
Cash flow hedging relationships: | |||||||||||||||||||
Gain (loss) recognized in other comprehensive income (effective portion) | $ | 85 | $ | 193 | $ | (4) | $ | 10 | $ | 36 | $ | - | |||||||
Gain(loss) reclassified from Accumulated other comprehensive income into income (effective portion) (1)? | 85 | 91 | 4 | 9 | (4) | - | |||||||||||||
Gain reclassified from Accumulated other comprehensive income into income (ineffective portion) (2)? | - | - | - | - | 2 | - |
(1) The gain (loss) for the effective portion of the foreign exchange and diesel cash flow hedges reclassified from Accumulated other comprehensive income is included in Costs applicable to sales. The loss for the effective portion of the forward starting swaps reclassified from Accumulated other comprehensive income is included in Interest Expense.
(2) The ineffective portion recognized for cash flow hedges is included in Other Income, net.
Interest Rate | 8 5/8% Debentures | |||||||||||||
Swap Contracts | (Hedged Portion) | |||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||
For the three months ended June 30, | ||||||||||||||
Fair value hedging relationships: | ||||||||||||||
Gain (loss) recognized in income (effective portion) (1)? | $ | - | $ | 1 | $ | - | $ | (1) | ||||||
(Loss) recognized in income (ineffective portion) (2)? | - | (1) | - | - | ||||||||||
For the six months ended June 30, | ||||||||||||||
Fair value hedging relationships: | ||||||||||||||
Gain (loss) recognized in income (effective portion) (1)? | $ | - | $ | 3 | $ | - | $ | (6) | ||||||
(Loss) recognized in income (ineffective portion) (2)? | - | (2) | - | - |
(1) The gain (loss) recognized for the effective portion of fair value hedges and the underlying hedged debt is included in Interest expense, net.
(2) The ineffective portion recognized for fair value hedges and the underlying hedged debt is included in Other income, net.
|
NOTE 17 INVESTMENTS
At June 30, 2012 | ||||||||||||||||
Cost/Equity | Unrealized | Fair/Equity | ||||||||||||||
Basis | Gain | Loss | Basis | |||||||||||||
Current: | ||||||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Paladin Energy Ltd. | $ | 60 | $ | 7 | $ | - | $ | 67 | ||||||||
Other | 14 | 6 | (3) | 17 | ||||||||||||
74 | 13 | (3) | 84 | |||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Corporate | 48 | - | - | 48 | ||||||||||||
$ | 122 | $ | 13 | $ | (3) | $ | 132 | |||||||||
Long-term: | ||||||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Asset backed commercial paper | $ | 25 | $ | - | $ | (6) | $ | 19 | ||||||||
Auction rate securities | 8 | - | (3) | 5 | ||||||||||||
Corporate | 48 | 2 | - | 50 | ||||||||||||
81 | 2 | (9) | 74 | |||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Canadian Oil Sands Ltd. | 303 | 296 | - | 599 | ||||||||||||
Gabriel Resources Ltd. | 76 | 1 | - | 77 | ||||||||||||
Regis Resources Ltd. | 36 | 260 | - | 296 | ||||||||||||
Other | 68 | 8 | (12) | 64 | ||||||||||||
483 | 565 | (12) | 1,036 | |||||||||||||
Other investments, at cost | 12 | - | - | 12 | ||||||||||||
Investment in Affiliates: | ||||||||||||||||
Euronimba Ltd. | 2 | - | - | 2 | ||||||||||||
Minera La Zanja S.R.L. | 61 | - | - | 61 | ||||||||||||
$ | 639 | $ | 567 | $ | (21) | $ | 1,185 | |||||||||
At December 31, 2011 | ||||||||||||||||
Cost/Equity | Unrealized | Fair/Equity | ||||||||||||||
Basis | Gain | Loss | Basis | |||||||||||||
Current: | ||||||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Paladin Energy Ltd. | $ | 60 | $ | 13 | $ | - | $ | 73 | ||||||||
Other | 15 | 7 | (1) | 21 | ||||||||||||
$ | 75 | $ | 20 | $ | (1) | $ | 94 | |||||||||
Long-term: | ||||||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Asset backed commercial paper | $ | 25 | $ | - | $ | (6) | $ | 19 | ||||||||
Auction rate securities | 7 | - | (2) | 5 | ||||||||||||
Corporate | 10 | 1 | - | 11 | ||||||||||||
42 | 1 | (8) | 35 | |||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Canadian Oil Sands Trust | 302 | 401 | - | 703 | ||||||||||||
Gabriel Resources Ltd. | 76 | 236 | - | 312 | ||||||||||||
Regis Resources Ltd. | 36 | 218 | - | 254 | ||||||||||||
Other | 92 | 16 | (17) | 91 | ||||||||||||
506 | 871 | (17) | 1,360 | |||||||||||||
Other investments, at cost | 11 | - | - | 11 | ||||||||||||
Investment in Affiliates: | ||||||||||||||||
Minera La Zanja S.R.L. | 66 | - | - | 66 | ||||||||||||
$ | 625 | $ | 872 | $ | (25) | $ | 1,472 |
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||
At June 30, 2012 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||
Marketable equity securities | $ | 34 | $ | 14 | $ | - | $ | - | $ | 34 | $ | 14 | |||||
Asset backed commercial paper | - | - | 19 | 6 | 19 | 6 | |||||||||||
Auction rate securities | - | - | 5 | 3 | 5 | 3 | |||||||||||
$ | 34 | $ | 14 | $ | 24 | $ | 9 | $ | 58 | $ | 23 | ||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||
At December 31, 2011 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||
Marketable equity securities | $ | 42 | $ | 18 | $ | - | $ | - | $ | 42 | $ | 18 | |||||
Asset backed commercial paper | - | - | 19 | 6 | 19 | 6 | |||||||||||
Auction rate securities | - | - | 5 | 2 | 5 | 2 | |||||||||||
$ | 42 | $ | 18 | $ | 24 | $ | 8 | $ | 66 | $ | 26 |
|
NOTE 18 INVENTORIES
At June 30, | At December 31, | |||||||
2012 | 2011 | |||||||
In-process | $ | 123 | $ | 159 | ||||
Concentrate | 192 | 116 | ||||||
Precious metals | 36 | 12 | ||||||
Materials, supplies and other | 452 | 427 | ||||||
$ | 803 | $ | 714 |
|
NOTE 19 STOCKPILES AND ORE ON LEACH PADS
At June 30, | At December 31, | |||||||
2012 | 2011 | |||||||
Current: | ||||||||
Stockpiles | $ | 590 | $ | 506 | ||||
Ore on leach pads | 208 | 165 | ||||||
$ | 798 | $ | 671 | |||||
Long-term: | ||||||||
Stockpiles | $ | 2,187 | $ | 1,904 | ||||
Ore on leach pads | 392 | 367 | ||||||
$ | 2,579 | $ | 2,271 |
NOTE 19 STOCKPILES AND ORE ON LEACH PADS
At June 30, | At December 31, | |||||||
2012 | 2011 | |||||||
Stockpiles and ore on leach pads: | ||||||||
Nevada | $ | 608 | $ | 536 | ||||
La Herradura | 21 | 6 | ||||||
Yanacocha | 591 | 512 | ||||||
Boddington | 456 | 435 | ||||||
Batu Hijau | 1,331 | 1,119 | ||||||
Other Australia/New Zealand | 165 | 161 | ||||||
Ahafo | 205 | 173 | ||||||
$ | 3,377 | $ | 2,942 |
|
NOTE 20 OTHER ASSETS
At June 30, | At December 31, | |||||||
2012 | 2011 | |||||||
Other current assets: | ||||||||
Refinery metal inventory and receivable | $ | 393 | $ | 796 | ||||
Prepaid assets | 176 | 93 | ||||||
Derivative instruments | 105 | 127 | ||||||
Restricted cash | 2 | 20 | ||||||
Note receivable | - | 12 | ||||||
Other | 62 | 85 | ||||||
$ | 738 | $ | 1,133 | |||||
Other long-term assets: | ||||||||
Goodwill | $ | 188 | $ | 188 | ||||
Income tax receivable | 185 | 142 | ||||||
Intangible assets | 142 | 147 | ||||||
Derivative instruments | 122 | 112 | ||||||
Restricted cash | 91 | 48 | ||||||
Debt issuance costs | 79 | 59 | ||||||
Other receivables | 16 | 17 | ||||||
Other | 179 | 144 | ||||||
$ | 1,002 | $ | 857 |
|
NOTE 21 DEBT
At June 30, 2012 | At December 31, 2011 | |||||||||||
Current | Non-Current | Current | Non-Current | |||||||||
Sale-leaseback of refractory ore treatment plant | $ | 30 | $ | - | $ | 165 | $ | - | ||||
Corporate revolving credit facility | - | - | - | 33 | ||||||||
2012 Convertible Senior Notes, net | - | - | 514 | - | ||||||||
2014 Convertible Senior Notes, net | - | 523 | - | 512 | ||||||||
2017 Convertible Senior Notes, net | - | 461 | - | 452 | ||||||||
2019 Senior Notes, net | - | 897 | - | 896 | ||||||||
2022 Senior Notes, net | - | 1,489 | - | - | ||||||||
2035 Senior Notes, net | - | 598 | - | 598 | ||||||||
2039 Senior Notes, net | - | 1,087 | - | 1,087 | ||||||||
2042 Senior Notes, net | - | 992 | - | - | ||||||||
Ahafo project finance facility | 10 | 40 | 10 | 45 | ||||||||
Other capital leases | - | 1 | - | 1 | ||||||||
$ | 40 | $ | 6,088 | $ | 689 | $ | 3,624 | |||||
|
NOTE 22 OTHER LIABILITIES
At June 30, | At December 31, | |||||||
2012 | 2011 | |||||||
Other current liabilities: | ||||||||
Refinery metal payable | $ | 393 | $ | 796 | ||||
Accrued capital expenditures | 237 | 248 | ||||||
Accrued operating costs | 231 | 231 | ||||||
Interest | 79 | 55 | ||||||
Taxes other than income and mining | 78 | 93 | ||||||
Reclamation and remediation liabilities | 66 | 71 | ||||||
Deferred income tax | 54 | 50 | ||||||
Royalties | 38 | 53 | ||||||
Boddington contingent consideration | 28 | 24 | ||||||
Holt property royalty | 17 | 17 | ||||||
Derivative instruments | 8 | 408 | ||||||
Other | 58 | 87 | ||||||
$ | 1,287 | $ | 2,133 | |||||
Other long-term liabilities: | ||||||||
Holt property royalty | $ | 226 | $ | 159 | ||||
Income and mining taxes | 75 | 88 | ||||||
Power supply agreements | 45 | 45 | ||||||
Boddington contingent consideration | 16 | 30 | ||||||
Derivative instruments | 4 | 6 | ||||||
Other | 37 | 36 | ||||||
$ | 403 | $ | 364 | |||||
|
Six Months Ended June 30, | ||||||||
2012 | 2011 | |||||||
Decrease (increase) in operating assets: | ||||||||
Trade and accounts receivable | $ | (14) | $ | 121 | ||||
Inventories, stockpiles and ore on leach pads | (443) | (230) | ||||||
EGR refinery assets | 406 | (437) | ||||||
Other assets | (43) | (67) | ||||||
Increase (decrease) in operating liabilities: | ||||||||
Accounts payable and other accrued liabilities | (227) | (349) | ||||||
EGR refinery liabilities | (406) | 437 | ||||||
Reclamation liabilities | (41) | (15) | ||||||
$ | (768) | $ | (540) |
|
NOTE 24 SUPPLEMENTAL CASH FLOW INFORMATION
Six Months Ended June 30, | ||||||||
2012 | 2011 | |||||||
Income and mining taxes, net of refunds | $ | 746 | $ | 892 | ||||
Interest, net of amounts capitalized | $ | 105 | $ | 92 |
|
Three Months Ended June 30, 2012 | ||||||||||||||||
Newmont | ||||||||||||||||
Newmont | Mining | |||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||
Sales | $ | - | $ | 1,383 | $ | 846 | $ | - | $ | 2,229 | ||||||
Costs and expenses | ||||||||||||||||
Costs applicable to sales (1) | - | 550 | 464 | (12) | 1,002 | |||||||||||
Amortization | - | 135 | 113 | - | 248 | |||||||||||
Reclamation and remediation | - | 12 | 4 | - | 16 | |||||||||||
Exploration | - | 71 | 35 | - | 106 | |||||||||||
Advanced projects, research and development | - | 64 | 17 | 1 | 82 | |||||||||||
General and administrative | - | 44 | 2 | 11 | 57 | |||||||||||
Other expense, net | - | 42 | 84 | - | 126 | |||||||||||
- | 918 | 719 | - | 1,637 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income, net | (6) | 12 | 30 | - | 36 | |||||||||||
Interest income - intercompany | 39 | 1 | 6 | (46) | - | |||||||||||
Interest expense - intercompany | (3) | (1) | (42) | 46 | - | |||||||||||
Interest expense, net | (62) | (7) | (2) | - | (71) | |||||||||||
(32) | 5 | (8) | - | (35) | ||||||||||||
Income before income and mining tax and other items | (32) | 470 | 119 | - | 557 | |||||||||||
Income and mining tax expense | 11 | (83) | (103) | - | (175) | |||||||||||
Equity income (loss) of affiliates | 300 | (2) | 50 | (359) | (11) | |||||||||||
Net income | 279 | 385 | 66 | (359) | 371 | |||||||||||
Net income attributable to noncontrolling interests | - | (91) | (31) | 30 | (92) | |||||||||||
Net income attributable to Newmont stockholders | $ | 279 | $ | 294 | $ | 35 | $ | (329) | $ | 279 | ||||||
Comprehensive income | $ | (18) | $ | 357 | $ | (190) | $ | (77) | $ | 72 | ||||||
Comprehensive income attributable to | ||||||||||||||||
noncontrolling interests | - | (91) | (29) | 30 | (90) | |||||||||||
Comprehensive income attributable to Newmont | ||||||||||||||||
stockholders | $ | (18) | $ | 266 | $ | (219) | $ | (47) | $ | (18) |
Three Months Ended June 30, 2011 | ||||||||||||||||
Newmont | ||||||||||||||||
Newmont | Mining | |||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||
Sales | $ | - | $ | 1,468 | $ | 916 | $ | - | $ | 2,384 | ||||||
Costs and expenses | ||||||||||||||||
Costs applicable to sales (1) | - | 551 | 375 | (9) | 917 | |||||||||||
Amortization | - | 156 | 94 | - | 250 | |||||||||||
Reclamation and remediation | - | 37 | 6 | - | 43 | |||||||||||
Exploration | - | 47 | 42 | - | 89 | |||||||||||
Advanced projects, research and development | - | 41 | 46 | (1) | 86 | |||||||||||
General and administrative | - | 39 | 1 | 10 | 50 | |||||||||||
Other expense, net | - | 67 | 20 | - | 87 | |||||||||||
- | 938 | 584 | - | 1,522 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income, net | (2) | 41 | 9 | - | 48 | |||||||||||
Interest income - intercompany | 40 | 2 | 2 | (44) | - | |||||||||||
Interest expense - intercompany | (3) | - | (41) | 44 | - | |||||||||||
Interest expense, net | (59) | (3) | (1) | - | (63) | |||||||||||
(24) | 40 | (31) | - | (15) | ||||||||||||
Income before income and mining tax and other items | (24) | 570 | 301 | - | 847 | |||||||||||
Income and mining tax expense | 5 | (111) | (81) | - | (187) | |||||||||||
Equity income (loss) of affiliates | 406 | 2 | 50 | (458) | - | |||||||||||
Income from continuing operations | 387 | 461 | 270 | (458) | 660 | |||||||||||
Loss from discontinued operations | - | 7 | (143) | - | (136) | |||||||||||
Net income (loss) | 387 | 468 | 127 | (458) | 524 | |||||||||||
Net income attributable to noncontrolling interests | - | (173) | 30 | 6 | (137) | |||||||||||
Net income attributable to Newmont stockholders | $ | 387 | $ | 295 | $ | 157 | $ | (452) | $ | 387 | ||||||
Comprehensive income | $ | 308 | $ | 419 | $ | 230 | $ | (511) | $ | 446 | ||||||
Comprehensive income attributable to noncontrolling | ||||||||||||||||
interests | - | (173) | 29 | 6 | (138) | |||||||||||
Comprehensive income attributable to Newmont | ||||||||||||||||
stockholders | $ | 308 | $ | 246 | $ | 259 | $ | (505) | $ | 308 |
Six Months Ended June 30, 2012 | ||||||||||||||||
Newmont | ||||||||||||||||
Newmont | Mining | |||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||
Sales | $ | - | $ | 3,000 | $ | 1,912 | $ | - | $ | 4,912 | ||||||
Costs and expenses | ||||||||||||||||
Costs applicable to sales (1) | - | 1,113 | 929 | (23) | 2,019 | |||||||||||
Amortization | - | 265 | 214 | - | 479 | |||||||||||
Reclamation and remediation | - | 23 | 9 | - | 32 | |||||||||||
Exploration | - | 124 | 70 | - | 194 | |||||||||||
Advanced projects, research and development | - | 152 | 31 | 1 | 184 | |||||||||||
General and administrative | - | 86 | 3 | 22 | 111 | |||||||||||
Other expense, net | - | 89 | 157 | - | 246 | |||||||||||
- | 1,852 | 1,413 | - | 3,265 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income, net | (9) | 25 | 53 | - | 69 | |||||||||||
Interest income - intercompany | 79 | 3 | 11 | (93) | - | |||||||||||
Interest expense - intercompany | (8) | (1) | (84) | 93 | - | |||||||||||
Interest expense, net | (108) | (12) | (3) | - | (123) | |||||||||||
(46) | 15 | (23) | - | (54) | ||||||||||||
Income before income and mining tax and other items | (46) | 1,163 | 476 | - | 1,593 | |||||||||||
Income and mining tax expense | 16 | (229) | (305) | - | (518) | |||||||||||
Equity income (loss) of affiliates | 799 | (13) | 117 | (933) | (30) | |||||||||||
Income from continuing operations | 769 | 921 | 288 | (933) | 1,045 | |||||||||||
Loss from discontinued operations | - | 4 | (75) | - | (71) | |||||||||||
Net income | 769 | 925 | 213 | (933) | 974 | |||||||||||
Net income attributable to noncontrolling interests | - | (207) | (63) | 65 | (205) | |||||||||||
Net income attributable to Newmont stockholders | $ | 769 | $ | 718 | $ | 150 | $ | (868) | $ | 769 | ||||||
Comprehensive income | $ | 478 | $ | 898 | $ | (51) | $ | (642) | $ | 683 | ||||||
Comprehensive income attributable to | ||||||||||||||||
noncontrolling interests | - | (207) | (63) | 65 | (205) | |||||||||||
Comprehensive income attributable to Newmont | ||||||||||||||||
stockholders | $ | 478 | $ | 691 | $ | (114) | $ | (577) | $ | 478 |
Six Months Ended June 30, 2011 | ||||||||||||||||
Newmont | ||||||||||||||||
Newmont | Mining | |||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||
Sales | $ | - | $ | 2,986 | $ | 1,863 | $ | - | $ | 4,849 | ||||||
Costs and expenses | ||||||||||||||||
Costs applicable to sales (1) | - | 1,117 | 759 | (19) | 1,857 | |||||||||||
Amortization | - | 315 | 191 | - | 506 | |||||||||||
Reclamation and remediation | - | 48 | 9 | - | 57 | |||||||||||
Exploration | - | 81 | 70 | - | 151 | |||||||||||
Advanced projects, research and development | - | 68 | 87 | (1) | 154 | |||||||||||
General and administrative | - | 73 | 2 | 20 | 95 | |||||||||||
Other expense, net | - | 121 | 39 | - | 160 | |||||||||||
- | 1,823 | 1,157 | - | 2,980 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income, net | (8) | 67 | 20 | - | 79 | |||||||||||
Interest income - intercompany | 76 | 4 | 4 | (84) | - | |||||||||||
Interest expense - intercompany | (6) | - | (78) | 84 | - | |||||||||||
Interest expense, net | (113) | (12) | (3) | - | (128) | |||||||||||
(51) | 59 | (57) | - | (49) | ||||||||||||
Income before income and mining tax and other items | (51) | 1,222 | 649 | - | 1,820 | |||||||||||
Income and mining tax expense | 15 | (319) | (188) | - | (492) | |||||||||||
Equity income (loss) of affiliates | 937 | 3 | 139 | (1,077) | 2 | |||||||||||
Income (loss) from continuing operations | 901 | 906 | 600 | (1,077) | 1,330 | |||||||||||
Income (loss) from discontinued operations | - | 7 | (143) | - | (136) | |||||||||||
Net income | 901 | 913 | 457 | (1,077) | 1,194 | |||||||||||
Net income attributable to noncontrolling interests | - | (365) | 10 | 62 | (293) | |||||||||||
Net income attributable to Newmont stockholders | $ | 901 | $ | 548 | $ | 467 | $ | (1,015) | $ | 901 | ||||||
Comprehensive income | $ | 1,103 | $ | 881 | $ | 825 | $ | (1,410) | $ | 1,399 | ||||||
Comprehensive income attributable to noncontrolling | ||||||||||||||||
interests | - | (365) | 7 | 62 | (296) | |||||||||||
Comprehensive income attributable to Newmont | ||||||||||||||||
stockholders | $ | 1,103 | $ | 516 | $ | 832 | $ | (1,348) | $ | 1,103 |
Six Months Ended June 30, 2012 | |||||||||||||||||||
Newmont | |||||||||||||||||||
Newmont | Mining | ||||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Operating activities: | |||||||||||||||||||
Net income (loss) | $ | 769 | $ | 925 | $ | 213 | $ | (933) | $ | 974 | |||||||||
Adjustments | 32 | 273 | (480) | 933 | 758 | ||||||||||||||
Net change in operating assets and liabilities | (7) | (514) | (247) | - | (768) | ||||||||||||||
Net cash provided from (used in) continuing operations | 794 | 684 | (514) | - | 964 | ||||||||||||||
Net cash used in discontinued operations | - | - | (8) | - | (8) | ||||||||||||||
Net cash provided from (used in) operations | 794 | 684 | (522) | - | 956 | ||||||||||||||
Investing activities: | |||||||||||||||||||
Additions to property, plant and mine development | - | (1,090) | (488) | - | (1,578) | ||||||||||||||
Sale of marketable securities | - | - | 106 | - | 106 | ||||||||||||||
Purchases of marketable securities | - | (91) | (105) | - | (196) | ||||||||||||||
Acquisitions, net | - | - | (22) | - | (22) | ||||||||||||||
Proceeds from sale of other assets | - | 9 | 4 | - | 13 | ||||||||||||||
Other | - | - | (37) | - | (37) | ||||||||||||||
Net cash used in investing activities | - | (1,172) | (542) | - | (1,714) | ||||||||||||||
Financing activities: | |||||||||||||||||||
Net borrowings (repayments) | 1,543 | (136) | (5) | - | 1,402 | ||||||||||||||
Payment of conversion premium on debt | (172) | - | - | - | (172) | ||||||||||||||
Net intercompany borrowings (repayments) | (1,833) | 692 | 1,141 | - | - | ||||||||||||||
Dividends paid to common stockholders | (347) | - | - | - | (347) | ||||||||||||||
Dividends paid to noncontrolling interests | - | (3) | - | - | (3) | ||||||||||||||
Proceeds from stock issuance, net | 15 | - | - | - | 15 | ||||||||||||||
Other | - | - | (1) | - | (1) | ||||||||||||||
Net cash provided from (used in) financing activities | (794) | 553 | 1,135 | - | 894 | ||||||||||||||
Effect of exchange rate changes on cash | - | (1) | 2 | - | 1 | ||||||||||||||
Net change in cash and cash equivalents | - | 64 | 73 | - | 137 | ||||||||||||||
Cash and cash equivalents at beginning of period | - | 1,526 | 234 | - | 1,760 | ||||||||||||||
Cash and cash equivalents at end of period | $ | - | $ | 1,590 | $ | 307 | $ | - | $ | 1,897 |
Six Months Ended June 30, 2011 | |||||||||||||||||||
Newmont | |||||||||||||||||||
Newmont | Mining | ||||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Operating activities: | |||||||||||||||||||
Net income (loss) | $ | 901 | $ | 913 | $ | 457 | $ | (1,077) | $ | 1,194 | |||||||||
Adjustments | 39 | 362 | (729) | 1,077 | 749 | ||||||||||||||
Net change in operating assets and liabilities | (27) | (509) | (4) | - | (540) | ||||||||||||||
Net cash provided from (used in) continuing operations | 913 | 766 | (276) | - | 1,403 | ||||||||||||||
Net cash used in discontinued operations | - | - | (2) | - | (2) | ||||||||||||||
Net cash provided from (used in) operations | 913 | 766 | (278) | - | 1,401 | ||||||||||||||
Investing activities: | |||||||||||||||||||
Additions to property, plant and mine development | - | (671) | (349) | - | (1,020) | ||||||||||||||
Sale of marketable securities | - | 55 | - | - | 55 | ||||||||||||||
Purchases of marketable securities | - | - | (15) | - | (15) | ||||||||||||||
Acquisitions, net | - | - | (2,291) | - | (2,291) | ||||||||||||||
Proceeds from sale of other assets | - | (56) | 62 | - | 6 | ||||||||||||||
Other | - | - | (15) | - | (15) | ||||||||||||||
Net cash used in investing activities | - | (672) | (2,608) | - | (3,280) | ||||||||||||||
Financing activities: | |||||||||||||||||||
Net borrowings (repayments) | 83 | (276) | (5) | - | (198) | ||||||||||||||
Net intercompany borrowings (repayments) | (831) | (2,018) | 2,849 | - | - | ||||||||||||||
Dividends paid to common stockholders | (173) | - | - | - | (173) | ||||||||||||||
Dividends paid to noncontrolling interests | - | (17) | - | - | (17) | ||||||||||||||
Proceeds from stock issuance, net | 8 | - | - | - | 8 | ||||||||||||||
Other | - | 1 | (1) | - | - | ||||||||||||||
Net cash provided from (used in) financing activities | (913) | (2,310) | 2,843 | - | (380) | ||||||||||||||
Effect of exchange rate changes on cash | - | 1 | 57 | - | 58 | ||||||||||||||
Net change in cash and cash equivalents | - | (2,215) | 14 | - | (2,201) | ||||||||||||||
Cash and cash equivalents at beginning of period | - | 3,877 | 179 | - | 4,056 | ||||||||||||||
Cash and cash equivalents at end of period | $ | - | $ | 1,662 | $ | 193 | $ | - | $ | 1,855 |
At June 30, 2012 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | - | $ | 1,590 | $ | 307 | $ | - | $ | 1,897 | |||||||
Trade receivables | - | 183 | 107 | - | 290 | ||||||||||||
Accounts receivable | 3,854 | 4,642 | 293 | (8,430) | 359 | ||||||||||||
Investments | 67 | 48 | 17 | - | 132 | ||||||||||||
Inventories | - | 400 | 403 | - | 803 | ||||||||||||
Stockpiles and ore on leach pads | - | 669 | 129 | - | 798 | ||||||||||||
Deferred income tax assets | 5 | 250 | - | - | 255 | ||||||||||||
Other current assets | 9 | 147 | 582 | - | 738 | ||||||||||||
Current assets | 3,935 | 7,929 | 1,838 | (8,430) | 5,272 | ||||||||||||
Property, plant and mine development, net | - | 7,675 | 9,293 | (32) | 16,936 | ||||||||||||
Investments | - | 72 | 1,113 | - | 1,185 | ||||||||||||
Investments in subsidiaries | 15,184 | 2 | 2,967 | (18,153) | - | ||||||||||||
Stockpiles and ore on leach pads | - | 1,882 | 697 | - | 2,579 | ||||||||||||
Deferred income tax assets | 800 | 833 | 53 | - | 1,686 | ||||||||||||
Other long-term assets | 3,791 | 752 | 899 | (4,440) | 1,002 | ||||||||||||
Total assets | $ | 23,710 | $ | 19,145 | $ | 16,860 | $ | (31,055) | $ | 28,660 | |||||||
Liabilities | |||||||||||||||||
Debt | $ | - | $ | 30 | $ | 10 | $ | - | $ | 40 | |||||||
Accounts payable | 4,420 | 3,161 | 1,321 | (8,328) | 574 | ||||||||||||
Employee-related benefits | - | 206 | 87 | - | 293 | ||||||||||||
Income and mining taxes | - | 53 | 120 | - | 173 | ||||||||||||
Other current liabilities | 78 | 539 | 2,735 | (2,065) | 1,287 | ||||||||||||
Current liabilities | 4,498 | 3,989 | 4,273 | (10,393) | 2,367 | ||||||||||||
Debt | 6,047 | 1 | 40 | - | 6,088 | ||||||||||||
Reclamation and remediation liabilities | - | 908 | 362 | - | 1,270 | ||||||||||||
Deferred income tax liabilities | - | 601 | 1,455 | - | 2,056 | ||||||||||||
Employee-related benefits | 5 | 370 | 112 | - | 487 | ||||||||||||
Other long-term liabilities | 527 | 51 | 4,297 | (4,472) | 403 | ||||||||||||
Total liabilities | 11,077 | 5,920 | 10,539 | (14,865) | 12,671 | ||||||||||||
Equity | |||||||||||||||||
Preferred stock | - | - | 61 | (61) | - | ||||||||||||
Common stock | 786 | - | 5 | (5) | 786 | ||||||||||||
Additional paid-in capital | 8,012 | 3,050 | 5,698 | (8,469) | 8,291 | ||||||||||||
Accumulated other comprehensive income | 361 | (216) | 905 | (689) | 361 | ||||||||||||
Retained earnings | 3,474 | 6,776 | (1,603) | (5,173) | 3,474 | ||||||||||||
Newmont stockholders’ equity | 12,633 | 9,610 | 5,066 | (14,397) | 12,912 | ||||||||||||
Noncontrolling interests | - | 3,615 | 1,255 | (1,793) | 3,077 | ||||||||||||
Total equity | 12,633 | 13,225 | 6,321 | (16,190) | 15,989 | ||||||||||||
Total liabilities and equity | $ | 23,710 | $ | 19,145 | $ | 16,860 | $ | (31,055) | $ | 28,660 | |||||||
At December 31, 2011 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | - | $ | 1,526 | $ | 234 | $ | - | $ | 1,760 | |||||||
Trade receivables | - | 205 | 95 | - | 300 | ||||||||||||
Accounts receivable | 1,415 | 3,447 | 264 | (4,806) | 320 | ||||||||||||
Investments | 72 | - | 22 | - | 94 | ||||||||||||
Inventories | - | 333 | 381 | - | 714 | ||||||||||||
Stockpiles and ore on leach pads | - | 532 | 139 | - | 671 | ||||||||||||
Deferred income tax assets | 134 | 257 | 5 | - | 396 | ||||||||||||
Other current assets | - | 91 | 1,042 | - | 1,133 | ||||||||||||
Current assets | 1,621 | 6,391 | 2,182 | (4,806) | 5,388 | ||||||||||||
Property, plant and mine development, net | - | 6,917 | 8,990 | (26) | 15,881 | ||||||||||||
Investments | - | 29 | 1,443 | - | 1,472 | ||||||||||||
Investments in subsidiaries | 14,675 | 43 | 2,825 | (17,543) | - | ||||||||||||
Stockpiles and ore on leach pads | - | 1,641 | 630 | - | 2,271 | ||||||||||||
Deferred income tax assets | 708 | 838 | 59 | - | 1,605 | ||||||||||||
Other long-term assets | 3,423 | 641 | 927 | (4,134) | 857 | ||||||||||||
Total assets | $ | 20,427 | $ | 16,500 | $ | 17,056 | $ | (26,509) | $ | 27,474 | |||||||
Liabilities | |||||||||||||||||
Debt | $ | 514 | $ | 165 | $ | 10 | $ | - | $ | 689 | |||||||
Accounts payable | 2,698 | 1,327 | 1,343 | (4,807) | 561 | ||||||||||||
Employee-related benefits | - | 222 | 85 | - | 307 | ||||||||||||
Income and mining taxes | - | 45 | 205 | - | 250 | ||||||||||||
Other current liabilities | 450 | 459 | 3,186 | (1,962) | 2,133 | ||||||||||||
Current liabilities | 3,662 | 2,218 | 4,829 | (6,769) | 3,940 | ||||||||||||
Debt | 3,578 | 1 | 45 | - | 3,624 | ||||||||||||
Reclamation and remediation liabilities | - | 809 | 360 | - | 1,169 | ||||||||||||
Deferred income tax liabilities | - | 732 | 1,415 | - | 2,147 | ||||||||||||
Employee-related benefits | 5 | 355 | 99 | - | 459 | ||||||||||||
Other long-term liabilities | 567 | 61 | 3,895 | (4,159) | 364 | ||||||||||||
Total liabilities | 7,812 | 4,176 | 10,643 | (10,928) | 11,703 | ||||||||||||
Equity | |||||||||||||||||
Preferred stock | - | - | 61 | (61) | - | ||||||||||||
Common stock | 784 | - | - | - | 784 | ||||||||||||
Additional paid-in capital | 8,127 | 3,050 | 5,702 | (8,471) | 8,408 | ||||||||||||
Accumulated other comprehensive income | 652 | (189) | 1,168 | (979) | 652 | ||||||||||||
Retained earnings | 3,052 | 6,055 | (1,744) | (4,311) | 3,052 | ||||||||||||
Newmont stockholders’ equity | 12,615 | 8,916 | 5,187 | (13,822) | 12,896 | ||||||||||||
Noncontrolling interests | - | 3,408 | 1,226 | (1,759) | 2,875 | ||||||||||||
Total equity | 12,615 | 12,324 | 6,413 | (15,581) | 15,771 | ||||||||||||
Total liabilities and equity | $ | 20,427 | $ | 16,500 | $ | 17,056 | $ | (26,509) | $ | 27,474 | |||||||
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