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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, 2010 filed February 24, 2011 on Form 10-K. The year-end balance sheet data was derived from the audited financial statements, but does not include all disclosures required by United States generally accepted accounting principles (“GAAP”).
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
Business Combinations
In December 2010, the ASC guidance for business combinations was updated to clarify existing guidance which requires a public entity to disclose pro forma revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual period only. The update also expands the supplemental pro forma disclosures required to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. Adoption of the updated guidance, effective for the Company's fiscal year beginning January 1, 2011, had no impact on the Company's condensed consolidated financial position, results of operations or cash flows.
Fair Value Accounting
In January 2010, ASC guidance for fair value measurements and disclosure was updated to require enhanced detail in the level 3 reconciliation. Adoption of the updated guidance, effective for the Company's fiscal year beginning January 1, 2011, had no impact on the Company's condensed consolidated financial position, results of operations or cash flows. Refer to Note 15 for further details regarding the Company's assets and liabilities measured at fair value.
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NOTE 3 SEGMENT INFORMATION
Costs | Advanced | |||||||||||||||||||||
Applicable to | Projects and | Pre-Tax | Total | Capital | ||||||||||||||||||
Sales | Sales | Amortization | Exploration | Income | Assets | Expenditures(1) | ||||||||||||||||
Three Months Ended March 31, 2011 | ||||||||||||||||||||||
Nevada | $ | 582 | $ | 272 | $ | 72 | $ | 17 | $ | 216 | $ | 3,414 | $ | 95 | ||||||||
La Herradura | 65 | 18 | 4 | 6 | 36 | 254 | 16 | |||||||||||||||
Hope Bay | - | - | 3 | 44 | (48) | 2,259 | 19 | |||||||||||||||
Other North America | - | - | - | - | (2) | 125 | - | |||||||||||||||
North America | 647 | 290 | 79 | 67 | 202 | 6,052 | 130 | |||||||||||||||
Yanacocha | 362 | 153 | 53 | 6 | 149 | 2,677 | 41 | |||||||||||||||
Other South America | - | - | - | 10 | (10) | 371 | 64 | |||||||||||||||
South America | 362 | 153 | 53 | 16 | 139 | 3,048 | 105 | |||||||||||||||
Boddington: | ||||||||||||||||||||||
Gold | 232 | 100 | 28 | |||||||||||||||||||
Copper | 53 | 28 | 7 | |||||||||||||||||||
Total | 285 | 128 | 35 | 1 | 104 | 4,393 | 49 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 140 | 34 | 7 | |||||||||||||||||||
Copper | 369 | 89 | 20 | |||||||||||||||||||
Total | 509 | 123 | 27 | - | 323 | 3,627 | 40 | |||||||||||||||
Other Australia/New Zealand | 415 | 166 | 35 | 12 | 197 | 1,049 | 62 | |||||||||||||||
Other Asia Pacific | - | - | 1 | 1 | - | 548 | 2 | |||||||||||||||
Asia Pacific | 1,209 | 417 | 98 | 14 | 624 | 9,617 | 153 | |||||||||||||||
Ahafo | 247 | 80 | 22 | 7 | 136 | 1,049 | 15 | |||||||||||||||
Other Africa | - | - | - | 1 | (2) | 316 | 28 | |||||||||||||||
Africa | 247 | 80 | 22 | 8 | 134 | 1,365 | 43 | |||||||||||||||
Corporate and Other | - | - | 4 | 25 | (126) | 6,772 | 14 | |||||||||||||||
Consolidated | $ | 2,465 | $ | 940 | $ | 256 | $ | 130 | $ | 973 | $ | 26,854 | $ | 445 | ||||||||
(1) | Includes an increase in accrued capital expenditures of $43; consolidated capital expenditures on a cash basis were $402. |
Costs | Advanced | |||||||||||||||||||||
Applicable to | Projects and | Pre-Tax | Total | Capital | ||||||||||||||||||
Sales | Sales | Amortization | Exploration | Income | Assets | Expenditures(1) | ||||||||||||||||
Three Months Ended March 31, 2010 | ||||||||||||||||||||||
Nevada | $ | 468 | $ | 252 | $ | 62 | $ | 17 | $ | 126 | $ | 3,250 | $ | 48 | ||||||||
La Herradura | 44 | 14 | 4 | 1 | 25 | 155 | 14 | |||||||||||||||
Hope Bay | - | - | 3 | 17 | (20) | 1,965 | 9 | |||||||||||||||
Other North America | - | - | - | - | (1) | 55 | - | |||||||||||||||
North America | 512 | 266 | 69 | 35 | 130 | 5,425 | 71 | |||||||||||||||
Yanacocha | 460 | 154 | 37 | 7 | 243 | 2,501 | 40 | |||||||||||||||
Other South America | - | - | - | 5 | (5) | 145 | 17 | |||||||||||||||
South America | 460 | 154 | 37 | 12 | 238 | 2,646 | 57 | |||||||||||||||
Boddington | ||||||||||||||||||||||
Gold | 167 | 80 | 22 | |||||||||||||||||||
Copper | 38 | 24 | 6 | |||||||||||||||||||
Total | 205 | 104 | 28 | 1 | 68 | 4,108 | 48 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 165 | 34 | 10 | |||||||||||||||||||
Copper | 455 | 91 | 27 | |||||||||||||||||||
Total | 620 | 125 | 37 | - | 407 | 2,988 | 28 | |||||||||||||||
Other Australia/New Zealand | 314 | 156 | 31 | 5 | 126 | 864 | 36 | |||||||||||||||
Other Asia Pacific | - | - | 1 | 5 | 17 | 314 | 2 | |||||||||||||||
Asia Pacific | 1,139 | 385 | 97 | 11 | 618 | 8,274 | 114 | |||||||||||||||
Ahafo | 131 | 64 | 17 | 3 | 42 | 981 | 21 | |||||||||||||||
Other Africa | - | - | - | 4 | (4) | 214 | 6 | |||||||||||||||
Africa | 131 | 64 | 17 | 7 | 38 | 1,195 | 27 | |||||||||||||||
Corporate and Other | - | - | 4 | 24 | (138) | 5,105 | 3 | |||||||||||||||
Consolidated | $ | 2,242 | $ | 869 | $ | 224 | $ | 89 | $ | 886 | $ | 22,645 | $ | 272 | ||||||||
(1) | Includes a decrease in accrued capital expenditures of $37; consolidated capital expenditures on a cash basis were $309. |
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NOTE 4 RECLAMATION AND REMEDIATION
At March 31, 2011 and December 31, 2010, $913 and $904, 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 March 31, 2011 and December 31, 2010, $142 and $144, respectively, were accrued for such obligations. These amounts are also included in Reclamation and remediation liabilities.
The following is a reconciliation of reclamation and remediation liabilities
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Balance at beginning of period | $ | 1,048 | $ | 859 | ||||
Additions, changes in estimates and other | 1 | (3) | ||||||
Liabilities settled | (8) | (8) | ||||||
Accretion expense | 14 | 13 | ||||||
Balance at end of period | $ | 1,055 | $ | 861 |
The current portion of Reclamation and remediation liabilities of $62 and $64 at March 31, 2011 and December 31, 2010, respectively, are included in Other current liabilities (see Note 22).
The Company's reclamation and remediation expenses consisted of:
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Accretion - operating | $ | 12 | $ | 11 | ||||
Accretion - non-operating | 2 | 2 | ||||||
$ | 14 | $ | 13 |
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NOTE 5 ADVANCED PROJECTS, RESEARCH AND DEVELOPMENT
Three Months Ended March 31, | |||||||||
2011 | 2010 | ||||||||
Major projects: | |||||||||
Hope Bay | $ | 38 | $ | 10 | |||||
Conga | 1 | 1 | |||||||
Akyem | - | 3 | |||||||
Other projects: | |||||||||
Technical and project services | 15 | 12 | |||||||
Corporate | 3 | 12 | |||||||
Other | 11 | 8 | |||||||
$ | 68 | $ | 46 | ||||||
Three Months Ended March 31, | |||||||||
2011 | 2010 | ||||||||
Major projects: | |||||||||
Hope Bay | $ | 38 | $ | 10 | |||||
Conga | 1 | 1 | |||||||
Akyem | - | 3 | |||||||
Other projects: | |||||||||
Technical and project services | 15 | 12 | |||||||
Corporate | 3 | 12 | |||||||
Other | 11 | 8 | |||||||
$ | 68 | $ | 46 | ||||||
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NOTE 6 OTHER EXPENSE, NET | ||||||||
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Indonesian value added tax settlement | $ | 21 | $ | - | ||||
Community development | 17 | 55 | ||||||
Regional administration | 16 | 13 | ||||||
Western Australia power plant | 4 | 6 | ||||||
World Gold Council dues | 2 | 3 | ||||||
Other | 13 | 12 | ||||||
$ | 73 | $ | 89 |
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NOTE 7 OTHER INCOME, NET | ||||||||
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Income from developing projects, net | $ | 24 | $ | - | ||||
Canadian Oil Sands distributions | 6 | 10 | ||||||
Interest income | 4 | 3 | ||||||
Gain on asset sales, net | 3 | 33 | ||||||
Foreign currency exchange losses, net | (11) | (9) | ||||||
Other | 5 | 11 | ||||||
$ | 31 | $ | 48 |
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NOTE 8 EMPLOYEE PENSION AND OTHER BENEFIT PLANS | |||||||||
Three Months Ended March 31, | |||||||||
2011 | 2010 | ||||||||
Pension benefit costs, net | |||||||||
Service cost | $ | 6 | $ | 5 | |||||
Interest cost | 10 | 9 | |||||||
Expected return on plan assets | (10) | (7) | |||||||
Amortization, net | 5 | 4 | |||||||
$ | 11 | $ | 11 | ||||||
Three Months Ended March 31, | |||||||||
2011 | 2010 | ||||||||
Other benefit costs, net | |||||||||
Service cost | $ | 1 | $ | 1 | |||||
Interest cost | 1 | 1 | |||||||
$ | 2 | $ | 2 | ||||||
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NOTE 9 STOCK BASED COMPENSATION | ||||||||
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Stock options | $ | 3 | $ | 3 | ||||
Restricted stock units | 7 | 4 | ||||||
Performance leveraged stock units | 2 | 3 | ||||||
Common stock | 1 | 1 | ||||||
Restricted stock | - | 1 | ||||||
Deferred stock | 2 | 2 | ||||||
$ | 15 | $ | 14 |
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NOTE 10 INCOME AND MINING TAXES
During the first quarter of 2011, the Company recorded estimated income and mining tax expense of $305 resulting in an effective tax rate of 31%. Estimated income and mining tax expense during the first quarter of 2010 was $141 for an effective tax rate of 16%. The lower effective tax rate in 2010 resulted from a tax benefit of $127 recorded in connection with the conversion of non-US tax-paying entities to entities currently subject to U.S. income tax which resulted in an increase in net deferred tax assets. Aside from the above mentioned 2010 transaction, the effective tax rates in the first quarter of 2011 and 2010 are different from the United States statutory rate of 35% primarily due to the U.S. percentage depletion deduction.
The Company operates in numerous countries around the world and accordingly it is subject to, and pays annual income taxes under, the various income tax regimes in the countries in which it operates. Some of these tax regimes are defined by contractual agreements with the local government, and others are defined by the general corporate income tax laws of the country. The Company has historically filed, and continues to file, all required income tax returns and pay the income taxes reasonably determined to be due. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time the Company is subject to a review of its historic income tax filings and in connection with such reviews, disputes can arise with the taxing authorities over the interpretation or application of certain rules to the Company's business conducted within the country involved.
At March 31, 2011, the Company's total unrecognized tax benefit was $128 for uncertain income tax positions taken or expected to be taken on income tax returns. Of this, $37 represents the amount of unrecognized tax benefits that, if recognized, would affect the Company's effective income tax rate.
As a result of the statute of limitations that expire in the next 12 months in various jurisdictions, and possible settlements of audit-related issues with taxing authorities in various jurisdictions with respect to which none of the issues are individually significant, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits will decrease by approximately $5 to $10 in the next 12 months.
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 March 31, | |||||||||||
2011 | 2010 | ||||||||||
Income before income and mining tax and other items | $ | 973 | $ | 886 | |||||||
United States statutory corporate income tax rate | 35 | % | 35 | % | |||||||
Income and mining tax expense computed at United States | |||||||||||
statutory corporate income tax rate | (341) | (310) | |||||||||
Reconciling items: | |||||||||||
Tax benefit generated on change in form of a non- | |||||||||||
U.S. subsidiary | - | 127 | |||||||||
Percentage depletion | 55 | 33 | |||||||||
Other | (19) | 9 | |||||||||
Income and mining tax expense | $ | (305) | $ | (141) |
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NOTE 11 NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | ||||||||
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Batu Hijau | $ | 102 | $ | 118 | ||||
Yanacocha | 56 | 80 | ||||||
Other | (2) | (1) | ||||||
$ | 156 | $ | 197 |
In June 2010, PT Pakuafu Indah (“PTPI”), an unrelated noncontrolling partner of PT Newmont Nusa Tenggara (“PTNNT”), completed the sale of a 2.2% interest in PTNNT to PT Indonesia Masbaga Investama (“PTIMI”). To enable the transaction to proceed, the Company released its rights to the dividends payable on this 2.2% interest and released the security interest in the associated shares. The Company further agreed to advance certain funds to PTIMI to enable it to purchase the interest in exchange for an assignment by PTIMI to the Company of the dividends payable on the 2.2% interest (net of withholding tax), a pledge of the shares as security on the advance, and certain voting rights and obligations. The funds that the Company advanced to PTIMI and which it paid to PTPI for the shares were used by PTPI to reduce its outstanding balance with the Company. Upon completion of this transaction, PTPI requested and was allowed to borrow additional funds under the Company's agreement with PTPI. The Company's economic interest in PTPI's and PTIMI's combined 20% interest in PTNNT remains at 17% and has not changed as a result of these transactions.
In March 2010, the Company, through Nusa Tengarra Partnership (“NTP”), a partnership between Newmont and an affiliate of Sumitomo, completed the sale and transfer of shares for a 7% interest in PTNNT, to PT Multi Daerah Bersaing (“PTMDB”) in compliance with divestiture obligations under the Contract of Work, reducing NTP's ownership interest to 56% from 63%. The 2010 share transfers resulted in gains of approximately $15 (after tax of $34) that were recorded as Additional paid-in capital. For information on the Batu Hijau Contract of Work and divestiture requirements, see the discussion in Note 26 to the Condensed Consolidated Financial Statements.
At March 31, 2011, Newmont had a 48.5% effective economic interest in PTNNT. Based on ASC guidance for variable interest entities, Newmont continues to consolidate 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 COMPREHENSIVE INCOME | |||||||||
Three Months Ended March 31, | |||||||||
2011 | 2010 | ||||||||
Net income | $ | 670 | $ | 743 | |||||
Other comprehensive income, net of tax: | |||||||||
Unrealized gain on marketable securities | 168 | 49 | |||||||
Foreign currency translation adjustments | 89 | 56 | |||||||
Pension and other benefit liability adjustments | 4 | 2 | |||||||
Change in fair value of cash flow hedge instruments: | |||||||||
Net change from periodic revaluations | 55 | 29 | |||||||
Net amount reclassified to income | (33) | (19) | |||||||
Net unrecognized gain on derivatives | 22 | 10 | |||||||
283 | 117 | ||||||||
Comprehensive income | $ | 953 | $ | 860 | |||||
Comprehensive income attributable to: | |||||||||
Newmont stockholders | $ | 795 | $ | 663 | |||||
Noncontrolling interests | 158 | 197 | |||||||
$ | 953 | $ | 860 |
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NOTE 14 CHANGES IN EQUITY | ||||||||||
Three Months Ended March 31, | ||||||||||
2011 | 2010 | |||||||||
Common stock: | ||||||||||
At beginning of period | $ | 778 | $ | 770 | ||||||
Stock based awards | 1 | 1 | ||||||||
Shares issued in exchange for exchangeable shares | - | 2 | ||||||||
At end of period | 779 | 773 | ||||||||
Additional paid-in capital: | ||||||||||
At beginning of period | 8,279 | 8,158 | ||||||||
Stock based awards | 25 | 17 | ||||||||
Shares issued in exchange for exchangeable shares | - | (2) | ||||||||
Sale of subsidiary shares to noncontrolling interests | - | 15 | ||||||||
At end of period | 8,304 | 8,188 | ||||||||
Accumulated other comprehensive income: | ||||||||||
At beginning of period | 1,108 | 626 | ||||||||
Other comprehensive income | 281 | 117 | ||||||||
At end of period | 1,389 | 743 | ||||||||
Retained earnings: | ||||||||||
At beginning of period | 3,180 | 1,149 | ||||||||
Net income attributable to Newmont stockholders | 514 | 546 | ||||||||
Dividends paid | (74) | (49) | ||||||||
At end of period | 3,620 | 1,646 | ||||||||
Noncontrolling interests: | ||||||||||
At beginning of period | 2,371 | 1,910 | ||||||||
Net income attributable to noncontrolling interests | 156 | 197 | ||||||||
Dividends paid | 0 | (220) | ||||||||
Other comprehensive income | 2 | 0 | ||||||||
Sale of subsidiary shares to noncontrolling interests, net | 0 | 168 | ||||||||
At end of period | 2,529 | 2,055 | ||||||||
Total equity | $ | 16,621 | $ | 13,405 | ||||||
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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 March 31, 2011 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 2,022 | $ | 2,022 | $ | - | $ | - | |||||||
Marketable equity securities: | |||||||||||||||
Extractive industries | 1,796 | 1,796 | - | - | |||||||||||
Other | 6 | 6 | - | - | |||||||||||
Marketable debt securities: | |||||||||||||||
Asset backed commercial paper | 20 | - | - | 20 | |||||||||||
Corporate | 11 | 11 | - | - | |||||||||||
Auction rate securities | 5 | - | - | 5 | |||||||||||
Trade receivable from provisional copper | |||||||||||||||
and gold concentrate sales, net | 342 | 342 | - | - | |||||||||||
Derivative instruments, net: | |||||||||||||||
Foreign exchange forward contracts | 319 | - | 319 | - | |||||||||||
Diesel forward contracts | 20 | - | 20 | - | |||||||||||
Interest rate swap contracts | 3 | - | 3 | - | |||||||||||
$ | 4,544 | $ | 4,177 | $ | 342 | $ | 25 | ||||||||
Liabilities: | |||||||||||||||
8 5/8% debentures ($222 hedged portion) | $ | 226 | $ | - | $ | 226 | $ | - | |||||||
Boddington contingent consideration | 76 | - | - | 76 | |||||||||||
$ | 302 | $ | - | $ | 226 | $ | 76 |
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 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 at least 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 probabilistic cash flow assumptions. The Company estimated the fair value of the asset backed commercial paper using a probability of return to each class of notes reflective of information reviewed regarding the separate classes of securities. The auction rate securities and asset backed commercial paper are classified within Level 3 of the fair value hierarchy. The Company's corporate marketable debt securities are valued using quoted market prices in active markets and as such are classified within Level 1 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 Company has fixed to floating swap contracts to hedge a portion of the interest rate risk exposure of its 8 5/8% debentures due May 2011. The hedged portion of the Company's 8 5/8% debentures are valued using pricing models which require inputs, including risk-free interest rates and credit spreads. Because the inputs are derived from observable market data, the hedged portion of the 8 5/8% debentures is classified within Level 2 of the fair value hierarchy.
The Company recorded a contingent consideration liability related to the 2009 acquisition of the final 33.33% interest in Boddington. The value of the contingent consideration was determined using a valuation model which simulates future gold and copper prices and costs applicable to sales to estimate fair value. The contingent consideration 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 three months ended March 31, 2011:
Auction Rate Securities | Asset Backed Commercial Paper | Total Assets | Boddington Contingent Consideration | Total Liabilities | ||||||||||||||
Balance at beginning of period | $ | 5 | $ | 19 | $ | 24 | $ | 83 | $ | 83 | ||||||||
Unrealized gain | - | 1 | 1 | - | - | |||||||||||||
Settlements | - | - | - | (7) | (7) | |||||||||||||
Balance at end of period | $ | 5 | $ | 20 | $ | 25 | $ | 76 | $ | 76 |
Unrealized gains of $1 were included in Accumulated other comprehensive income as a result of changes in C$ exchange rates from December 31, 2010. At March 31, 2011, assets and liabilities classified within Level 3 of the fair value hierarchy represent 1% and 25%, respectively, of total assets and liabilities measured at fair value.
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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. Newmont continues to manage certain risks associated with commodity input costs, interest rates and foreign currencies using the derivative market. All of the cash flow and fair value derivative instruments described below were transacted for risk management purposes and qualify as hedging instruments. The maximum period over which hedged transactions are expected to occur is five years.
Cash Flow Hedges
The foreign currency and diesel contracts are designated as cash flow hedges, and as such, the effective portion of unrealized changes in market value have been recorded in Accumulated other comprehensive income 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.
Newmont had the following foreign currency derivative contracts outstanding at March 31, 2011:
Expected Maturity Date | ||||||||||||||||||||||||
Total/ | ||||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | 2016 | Average | ||||||||||||||||||
A$ Fixed Forward Contracts: | ||||||||||||||||||||||||
A$ notional (millions) | 843 | 781 | 473 | 353 | 163 | 10 | 2,623 | |||||||||||||||||
Average rate ($/A$) | 0.84 | 0.86 | 0.87 | 0.85 | 0.82 | 0.86 | 0.85 | |||||||||||||||||
Expected hedge ratio | 78 | % | 54 | % | 35 | % | 27 | % | 13 | % | 3 | % | ||||||||||||
NZ$ Fixed Forward Contracts: | ||||||||||||||||||||||||
NZ$ notional (millions) | 50 | 29 | 1 | - | - | - | 80 | |||||||||||||||||
Average rate ($/NZ$) | 0.70 | 0.70 | 0.72 | - | - | - | 0.70 | |||||||||||||||||
Expected hedge ratio | 58 | % | 25 | % | 5 | % | - | - | - | |||||||||||||||
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 two years from the date of issue.
Newmont had the following diesel derivative contracts outstanding at March 31, 2011:
Expected Maturity Date | |||||||||||||||
Total/ | |||||||||||||||
2011 | 2012 | 2013 | Average | ||||||||||||
Diesel Fixed Forward Contracts: | |||||||||||||||
Diesel gallons (millions) | 17 | 10 | 1 | 28 | |||||||||||
Average rate ($/gallon) | 2.43 | 2.62 | 3.15 | 2.51 | |||||||||||
Expected hedge ratio | 55 | % | 25 | % | 5 | % |
Fair Value Hedges
Interest Rate Swap Contracts
At March 31, 2011, Newmont had $222 fixed to floating swap contracts designated as a hedge against its 8 5/8% debentures due May 2011. The interest rate swap contracts assist in managing the Company's mix of fixed and floating rate debt. Under the hedge contract terms, Newmont receives fixed-rate interest payments at 8.63% and pays floating-rate interest amounts based on periodic London Interbank Offered Rate (“LIBOR”) settings plus a spread, ranging from 2.60% to 7.63%. The interest rate swap contracts were designated as fair value hedges and changes in fair value have been recorded in income in each period, consistent with recording changes to the mark-to-market value of the underlying hedged liability in income.
Derivative Instrument Fair Values
Newmont had the following derivative instruments designated as hedges at March 31, 2011 and December 31, 2010:
Fair Value | ||||||||||||||
At March 31, 2011 | ||||||||||||||
Other Current Assets | Other Long-Term Assets | |||||||||||||
Foreign currency exchange contracts: | ||||||||||||||
A$ fixed forward contracts | $ | 183 | $ | 131 | ||||||||||
NZ$ fixed forward contracts | 4 | 1 | ||||||||||||
Diesel fixed forward contracts | 17 | 3 | ||||||||||||
Interest rate swap contracts | 3 | - | ||||||||||||
Total derivative instruments (Note 20) | $ | 207 | $ | 135 | ||||||||||
Fair Value | ||||||||||||||
At December 31, 2010 | ||||||||||||||
Other Current Assets | Other Long-Term Assets | |||||||||||||
Foreign currency exchange contracts: | ||||||||||||||
A$ fixed forward contracts | $ | 181 | $ | 114 | ||||||||||
NZ$ fixed forward contracts | 5 | 1 | ||||||||||||
Diesel fixed forward contracts | 7 | 1 | ||||||||||||
Interest rate swap contracts | 3 | - | ||||||||||||
Total derivative instruments (Note 20) | $ | 196 | $ | 116 |
The following tables show the location and amount of gains 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 | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
For the three months ended March 31, | ||||||||||||||||
Cash flow hedging relationships: | ||||||||||||||||
Gain recognized in other comprehensive income (effective portion) | $ | 67 | $ | 41 | $ | 15 | $ | 1 | ||||||||
Gain reclassified from Accumulated other comprehensive income into income (effective portion) (1) | 42 | 24 | 4 | 1 | ||||||||||||
(1) The gain for the effective portion of foreign exchange and diesel cash flow hedges reclassified from Accumulated other comprehensive income is included in Costs applicable to sales.
Interest Rate | 8 5/8% Debentures | ||||||||||||||
Swap Contracts | (Hedged Portion) | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
For the three months ended March 31, | |||||||||||||||
Fair value hedging relationships: | |||||||||||||||
Gain (loss) recognized in income (effective portion) (1)? | $ | 2 | $ | 2 | $ | (5) | $ | - | |||||||
Loss recognized in income (ineffective portion) (2)? | (1) | - | - | - |
(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 $141.
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.
LME copper prices averaged $4.38 per pound during the first quarter of 2011, compared with the Company's recorded average provisional price of $4.37 per pound before mark-to-market losses and treatment and refining charges. During the first quarter of 2011, changes in copper prices resulted in a provisional pricing mark-to-market loss of $12 ($0.12 per pound). At March 31, 2011, Newmont had copper sales of 111 million pounds priced at an average of $4.27 per pound, subject to final pricing over the next several months.
The average London P.M. fix for gold was $1,386 per ounce during the first quarter of 2011, consistent with the Company's recorded average provisional price before mark-to-market gains and treatment and refining charges. During the first quarter of 2011, changes in gold prices resulted in a provisional pricing mark-to-market gain of $8 ($5 per ounce). At March 31, 2011, Newmont had gold sales of 146,000 ounces priced at an average of $1,439 per ounce, subject to final pricing over the next several months.
|
NOTE 17 INVESTMENTS | ||||||||||||||||
At March 31, 2011 | ||||||||||||||||
Cost/Equity | Unrealized | Fair/Equity | ||||||||||||||
Basis | Gain | Loss | Basis | |||||||||||||
Current: | ||||||||||||||||
Marketable Equity Securities: | ||||||||||||||||
New Gold Inc. | $ | 5 | $ | 67 | $ | - | $ | 72 | ||||||||
Other | 19 | 39 | (1) | 57 | ||||||||||||
$ | 24 | $ | 106 | $ | (1) | $ | 129 | |||||||||
Long-term: | ||||||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Asset backed commercial paper | $ | 26 | $ | - | $ | (6) | $ | 20 | ||||||||
Auction rate securities | 7 | - | (2) | 5 | ||||||||||||
Corporate | 7 | 4 | - | 11 | ||||||||||||
40 | 4 | (8) | 36 | |||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Canadian Oil Sands Ltd. | 318 | 721 | - | 1,039 | ||||||||||||
Gabriel Resources Ltd. | 80 | 297 | - | 377 | ||||||||||||
Regis Resources Ltd. | 23 | 139 | - | 162 | ||||||||||||
Other | 54 | 41 | - | 95 | ||||||||||||
475 | 1,198 | - | 1,673 | |||||||||||||
Other investments, at cost | 9 | - | - | 9 | ||||||||||||
Investment in Affiliates: | ||||||||||||||||
La Zanja | 61 | - | - | 61 | ||||||||||||
$ | 585 | $ | 1,202 | $ | (8) | $ | 1,779 | |||||||||
At December 31, 2010 | ||||||||||||||||
Cost/Equity | Unrealized | Fair/Equity | ||||||||||||||
Basis | Gain | Loss | Basis | |||||||||||||
Current: | ||||||||||||||||
Marketable Equity Securities: | ||||||||||||||||
New Gold Inc. | $ | 5 | $ | 54 | $ | - | $ | 59 | ||||||||
Other | 19 | 35 | - | 54 | ||||||||||||
$ | 24 | $ | 89 | $ | - | $ | 113 | |||||||||
Long-term: | ||||||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Asset backed commercial paper | $ | 25 | $ | - | $ | (6) | $ | 19 | ||||||||
Auction rate securities | 7 | - | (2) | 5 | ||||||||||||
Corporate | 7 | 3 | - | 10 | ||||||||||||
39 | 3 | (8) | 34 | |||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Canadian Oil Sands Ltd. | 308 | 508 | - | 816 | ||||||||||||
Gabriel Resources Ltd. | 78 | 325 | - | 403 | ||||||||||||
Regis Resources Ltd. | 23 | 148 | - | 171 | ||||||||||||
Other | 39 | 37 | - | 76 | ||||||||||||
448 | 1,018 | - | 1,466 | |||||||||||||
Other investments, at cost | 11 | - | - | 11 | ||||||||||||
Investment in Affiliates: | ||||||||||||||||
La Zanja | 57 | - | - | 57 | ||||||||||||
$ | 555 | $ | 1,021 | $ | (8) | $ | 1,568 |
Included in Investments at March 31, 2011 and December 31, 2010 are $11 and $10, respectively, of long-term marketable debt securities and $6 and $6 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 first quarter of 2011 and 2010, the Company purchased other marketable securities for $12 and $3, respectively.
The following tables present the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by length of time that the individual securities have been in a continuous unrealized loss position:
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||
At March 31, 2011 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||
Asset backed commercial paper | $ | - | $ | - | $ | 20 | $ | 6 | $ | 20 | $ | 6 | |||||
Auction rate securities | - | - | 5 | 2 | 5 | 2 | |||||||||||
Marketable equity securities | 2 | 1 | - | - | 2 | 1 | |||||||||||
$ | 2 | $ | 1 | $ | 25 | $ | 8 | $ | 27 | $ | 9 | ||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||
At December 31, 2010 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||
Asset backed commercial paper | $ | - | $ | - | $ | 19 | $ | 6 | $ | 19 | $ | 6 | |||||
Auction rate securities | - | - | 5 | 2 | 5 | 2 | |||||||||||
$ | - | $ | - | $ | 24 | $ | 8 | $ | 24 | $ | 8 |
Included in the tables above are the unrealized loss of $9 and $8 at March 31, 2011 and December 31, 2010, respectively, relate to the Company's investments in asset backed commercial paper, auction rate securities and marketable equity securities as listed in the tables above. While the fair values of these investments 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.
|
NOTE 18 INVENTORIES | ||||||||
At March 31, | At December 31, | |||||||
2011 | 2010 | |||||||
In-process | $ | 81 | $ | 142 | ||||
Concentrate | 101 | 111 | ||||||
Precious metals | 11 | 4 | ||||||
Materials, supplies and other | 414 | 401 | ||||||
$ | 607 | $ | 658 |
|
NOTE 19 STOCKPILES AND ORE ON LEACH PADS | ||||||||
At March 31, | At December 31, | |||||||
2011 | 2010 | |||||||
Current: | ||||||||
Stockpiles | $ | 402 | $ | 389 | ||||
Ore on leach pads | 255 | 228 | ||||||
$ | 657 | $ | 617 | |||||
Long-term: | ||||||||
Stockpiles | $ | 1,498 | $ | 1,397 | ||||
Ore on leach pads | 348 | 360 | ||||||
$ | 1,846 | $ | 1,757 |
At March 31, | At December 31, | |||||||
2011 | 2010 | |||||||
Stockpiles and ore on leach pads: | ||||||||
Nevada | $ | 466 | $ | 479 | ||||
La Herradura | 10 | 6 | ||||||
Yanacocha | 518 | 496 | ||||||
Boddington | 306 | 248 | ||||||
Batu Hijau | 924 | 879 | ||||||
Other Australia/New Zealand | 151 | 145 | ||||||
Ahafo | 128 | 121 | ||||||
$ | 2,503 | $ | 2,374 |
|
NOTE 20 OTHER ASSETS | ||||||||
At March 31, | At December 31, | |||||||
2011 | 2010 | |||||||
Other current assets: | ||||||||
Refinery metal inventory and receivable | $ | 813 | $ | 617 | ||||
Derivative instruments | 207 | 196 | ||||||
Prepaid assets | 128 | 65 | ||||||
Other | 80 | 84 | ||||||
$ | 1,228 | $ | 962 | |||||
Other long-term assets: | ||||||||
Goodwill | $ | 188 | $ | 188 | ||||
Intangible assets | 154 | 91 | ||||||
Derivative instruments | 135 | 116 | ||||||
Income tax receivable | 119 | 119 | ||||||
Debt issuance costs | 37 | 39 | ||||||
Restricted cash | 26 | 25 | ||||||
Other receivables | 17 | 19 | ||||||
Other | 139 | 144 | ||||||
$ | 815 | $ | 741 |
|
NOTE 21 DEBT | ||||||||||||
At March 31, 2011 | At December 31, 2010 | |||||||||||
Current | Non-Current | Current | Non-Current | |||||||||
Sale-leaseback of refractory ore treatment plant | $ | 28 | $ | 106 | $ | 30 | $ | 134 | ||||
8 5/8% debentures, net of discount (due 2011) | 221 | - | 217 | - | ||||||||
2012 convertible senior notes, net of discount | 494 | - | - | 488 | ||||||||
2014 convertible senior notes, net of discount | - | 495 | - | 489 | ||||||||
2017 convertible senior notes, net of discount | - | 438 | - | 434 | ||||||||
2019 senior notes, net of discount | - | 896 | - | 896 | ||||||||
2035 senior notes, net of discount | - | 598 | - | 598 | ||||||||
2039 senior notes, net of discount | - | 1,087 | - | 1,087 | ||||||||
Ahafo project facility | 10 | 55 | 10 | 55 | ||||||||
Other capital leases | 1 | 1 | 2 | 1 | ||||||||
$ | 754 | $ | 3,676 | $ | 259 | $ | 4,182 | |||||
Scheduled minimum debt repayments are $232 for the remainder of 2011, $565 in 2012, $42 in 2013, $538 in 2014, $18 in 2015 and $3,035 thereafter.
|
NOTE 22 OTHER LIABILITIES | ||||||||
At March 31, | At December 31, | |||||||
2011 | 2010 | |||||||
Other current liabilities: | ||||||||
Refinery metal payable | $ | 813 | $ | 617 | ||||
Accrued operating costs | 240 | 217 | ||||||
Accrued capital expenditures | 124 | 83 | ||||||
Taxes other than income and mining | 97 | 135 | ||||||
Interest | 92 | 66 | ||||||
Reclamation and remediation liabilities | 62 | 64 | ||||||
Deferred income tax | 58 | 54 | ||||||
Royalties | 44 | 90 | ||||||
Boddington contingent consideration | 38 | 32 | ||||||
Other | 45 | 60 | ||||||
$ | 1,613 | $ | 1,418 | |||||
Other long-term liabilities: | ||||||||
Power supply agreements | $ | 45 | $ | 45 | ||||
Boddington contingent consideration | 38 | 51 | ||||||
Income and mining taxes | 29 | 36 | ||||||
Other | 84 | 89 | ||||||
$ | 196 | $ | 221 | |||||
|
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:
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Decrease (increase) in operating assets: | ||||||||
Trade and accounts receivable | $ | 119 | $ | (52) | ||||
Inventories, stockpiles and ore on leach pads | (56) | (69) | ||||||
EGR refinery assets | (175) | 185 | ||||||
Other assets | (38) | (23) | ||||||
Increase (decrease) in operating liabilities: | ||||||||
Accounts payable and other accrued liabilities | 4 | (21) | ||||||
EGR refinery liabilities | 175 | (185) | ||||||
Reclamation liabilities | (8) | (8) | ||||||
$ | 21 | $ | (173) |
|
NOTE 24 SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Income and mining taxes, net of refunds | $ | 278 | $ | 209 | ||||
Interest, net of amounts capitalized | $ | 20 | $ | 26 |
|
NOTE 25 CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Newmont USA, a 100% owned subsidiary of Newmont Mining Corporation, has fully and unconditionally guaranteed the 5 7/8%, 5 1/8% and 6 1/4% publicly traded notes and the 2012, 2014 and 2017 convertible senior notes. 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 March 31, 2011 | ||||||||||||||||
Newmont | ||||||||||||||||
Newmont | Mining | |||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||
Sales | $ | - | $ | 1,518 | $ | 947 | $ | - | $ | 2,465 | ||||||
Costs and expenses | ||||||||||||||||
Costs applicable to sales (1) | - | 566 | 384 | (10) | 940 | |||||||||||
Amortization | - | 159 | 97 | - | 256 | |||||||||||
Reclamation and remediation | 1 | 10 | 3 | - | 14 | |||||||||||
Exploration | - | 34 | 28 | - | 62 | |||||||||||
Advanced projects, research and development | - | 27 | 41 | - | 68 | |||||||||||
General and administrative | - | 34 | 1 | 10 | 45 | |||||||||||
Other expense, net | - | 54 | 19 | - | 73 | |||||||||||
1 | 884 | 573 | - | 1,458 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income, net | (5) | 25 | 11 | - | 31 | |||||||||||
Interest income - intercompany | 36 | 2 | 2 | (40) | - | |||||||||||
Interest expense - intercompany | (3) | - | (37) | 40 | - | |||||||||||
Interest expense, net | (54) | (9) | (2) | - | (65) | |||||||||||
(26) | 18 | (26) | - | (34) | ||||||||||||
Income before income and mining tax and other items | ||||||||||||||||
items | (27) | 652 | 348 | - | 973 | |||||||||||
Income and mining tax expense | 10 | (208) | (107) | - | (305) | |||||||||||
Equity income (loss) of affiliates | 531 | 1 | 89 | (619) | 2 | |||||||||||
Net income | 514 | 445 | 330 | (619) | 670 | |||||||||||
Net income attributable to noncontrolling interests | - | (192) | (20) | 56 | (156) | |||||||||||
Net income attributable to Newmont stockholders | $ | 514 | $ | 253 | $ | 310 | $ | (563) | $ | 514 |
(1) Excludes Amortization and Reclamation and remediation.
Three Months Ended March 31, 2010 | ||||||||||||||||
Newmont | ||||||||||||||||
Newmont | Mining | |||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||
Sales | $ | - | $ | 1,592 | $ | 650 | $ | - | $ | 2,242 | ||||||
Costs and expenses | ||||||||||||||||
Costs applicable to sales (1) | - | 545 | 329 | (5) | 869 | |||||||||||
Amortization | - | 143 | 81 | - | 224 | |||||||||||
Reclamation and remediation | - | 9 | 4 | - | 13 | |||||||||||
Exploration | - | 24 | 19 | - | 43 | |||||||||||
Advanced projects, research and development | - | 29 | 17 | - | 46 | |||||||||||
General and administrative | - | 38 | 1 | 6 | 45 | |||||||||||
Other expense, net | - | 76 | 14 | (1) | 89 | |||||||||||
- | 864 | 465 | - | 1,329 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income, net | - | 1 | 47 | - | 48 | |||||||||||
Interest income - intercompany | 36 | 2 | 1 | (39) | - | |||||||||||
Interest expense - intercompany | (2) | - | (37) | 39 | - | |||||||||||
Interest expense, net | (62) | (12) | (1) | - | (75) | |||||||||||
(28) | (9) | 10 | - | (27) | ||||||||||||
Income before income and mining tax and other | ||||||||||||||||
items | (28) | 719 | 195 | - | 886 | |||||||||||
Income and mining tax expense | 141 | (239) | (43) | - | (141) | |||||||||||
Equity income (loss) of affiliates | 433 | - | 67 | (502) | (2) | |||||||||||
Net income | 546 | 480 | 219 | (502) | 743 | |||||||||||
Net income attributable to noncontrolling interests | - | (243) | 5 | 41 | (197) | |||||||||||
Net income attributable to Newmont stockholders | $ | 546 | $ | 237 | $ | 224 | $ | (461) | $ | 546 |
(1) Excludes Amortization and Reclamation and remediation.
Three Months Ended March 31, 2011 | ||||||||||||||||||
Newmont | ||||||||||||||||||
Newmont | Mining | |||||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Operating activities: | ||||||||||||||||||
Net income | $ | 514 | $ | 445 | $ | 330 | $ | (619) | $ | 670 | ||||||||
Adjustments | 21 | 174 | (516) | 619 | 298 | |||||||||||||
Net change in operating assets and liabilities | 8 | (54) | 67 | - | 21 | |||||||||||||
Net cash provided from operations | 543 | 565 | (119) | - | 989 | |||||||||||||
Investing activities: | ||||||||||||||||||
Additions to property, plant and mine development | - | (238) | (164) | - | (402) | |||||||||||||
Purchases of marketable securities | - | (1) | (11) | - | (12) | |||||||||||||
Acquisitions, net | - | - | (7) | - | (7) | |||||||||||||
Proceeds from sale of other assets | - | 6 | - | - | 6 | |||||||||||||
Other | - | - | (3) | - | (3) | |||||||||||||
Net cash used in investing activities | - | (233) | (185) | - | (418) | |||||||||||||
Financing activities: | ||||||||||||||||||
Net repayments | - | (31) | - | - | (31) | |||||||||||||
Net intercompany borrowings (repayments) | (472) | (1,948) | 2,420 | - | - | |||||||||||||
Dividends paid to common stockholders | (74) | - | - | - | (74) | |||||||||||||
Dividends paid to noncontrolling interests | - | (15) | - | - | (15) | |||||||||||||
Proceeds from stock issuance, net | 3 | - | - | - | 3 | |||||||||||||
Net cash used in financing activities | (543) | (1,994) | 2,420 | - | (117) | |||||||||||||
Effect of exchange rate changes on cash | - | (1) | 24 | - | 23 | |||||||||||||
Net change in cash and cash equivalents | - | (1,663) | 2,140 | - | 477 | |||||||||||||
Cash and cash equivalents at beginning of period | - | 3,877 | 179 | - | 4,056 | |||||||||||||
Cash and cash equivalents at end of period | $ | - | $ | 2,214 | $ | 2,319 | $ | - | $ | 4,533 |
Three Months Ended March 31, 2010 | ||||||||||||||||||
Newmont | ||||||||||||||||||
Newmont | Mining | |||||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Operating activities: | ||||||||||||||||||
Net income | $ | 546 | $ | 480 | $ | 219 | $ | (502) | $ | 743 | ||||||||
Adjustments | (121) | 174 | (397) | 502 | 158 | |||||||||||||
Net change in operating assets and liabilities | 30 | (98) | (105) | - | (173) | |||||||||||||
Net cash provided from continuing operations | 455 | 556 | (283) | - | 728 | |||||||||||||
Net cash used in discontinued operations | - | (13) | - | - | (13) | |||||||||||||
Net cash provided from operations | 455 | 543 | (283) | - | 715 | |||||||||||||
Investing activities: | ||||||||||||||||||
Additions to property, plant and mine development | - | (146) | (163) | - | (309) | |||||||||||||
Purchases of marketable securities | - | - | (3) | - | (3) | |||||||||||||
Proceeds from sale of other assets | - | - | 38 | - | 38 | |||||||||||||
Other | - | - | (11) | - | (11) | |||||||||||||
Net cash used in investing activities | - | (146) | (139) | - | (285) | |||||||||||||
Financing activities: | ||||||||||||||||||
Net repayments | - | (250) | - | - | (250) | |||||||||||||
Net intercompany borrowings (repayments) | (417) | (28) | 492 | (47) | - | |||||||||||||
Sale of subsidiary shares to noncontrolling interests | - | 229 | - | - | 229 | |||||||||||||
Acquisition of subsidiary shares from noncontrolling | ||||||||||||||||||
interest | - | - | (39) | - | (39) | |||||||||||||
Dividends paid to common stockholders | (49) | - | - | - | (49) | |||||||||||||
Dividends paid to noncontrolling interests | - | (267) | - | 47 | (220) | |||||||||||||
Proceeds from stock issuance, net | 3 | - | - | - | 3 | |||||||||||||
Change in restricted cash and other | - | 47 | (1) | - | 46 | |||||||||||||
Net cash used in financing activities | (463) | (269) | 452 | - | (280) | |||||||||||||
Effect of exchange rate changes on cash | - | - | (1) | - | (1) | |||||||||||||
Net change in cash and cash equivalents | (8) | 128 | 29 | - | 149 | |||||||||||||
Cash and cash equivalents at beginning of period | 8 | 3,067 | 140 | - | 3,215 | |||||||||||||
Cash and cash equivalents at end of period | $ | - | $ | 3,195 | $ | 169 | $ | - | $ | 3,364 |
At March 31, 2011 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | - | $ | 2,214 | $ | 2,319 | $ | - | $ | 4,533 | |||||||
Trade receivables | - | 342 | 97 | - | 439 | ||||||||||||
Accounts receivable | 1,621 | 2,263 | 198 | (3,969) | 113 | ||||||||||||
Investments | - | 86 | 43 | - | 129 | ||||||||||||
Inventories | - | 359 | 248 | - | 607 | ||||||||||||
Stockpiles and ore on leach pads | - | 543 | 114 | - | 657 | ||||||||||||
Deferred income tax assets | - | 171 | 7 | - | 178 | ||||||||||||
Other current assets | - | 153 | 1,075 | - | 1,228 | ||||||||||||
Current assets | 1,621 | 6,131 | 4,101 | (3,969) | 7,884 | ||||||||||||
Property, plant and mine development, net | - | 5,394 | 7,699 | (19) | 13,074 | ||||||||||||
Investments | - | 24 | 1,755 | - | 1,779 | ||||||||||||
Investments in subsidiaries | 15,165 | 36 | 2,032 | (17,233) | - | ||||||||||||
Stockpiles and ore on leach pads | - | 1,375 | 471 | - | 1,846 | ||||||||||||
Deferred income tax assets | 638 | 697 | 121 | - | 1,456 | ||||||||||||
Other long-term assets | 2,596 | 560 | 594 | (2,935) | 815 | ||||||||||||
Total assets | $ | 20,020 | $ | 14,217 | $ | 16,773 | $ | (24,156) | $ | 26,854 | |||||||
Liabilities | |||||||||||||||||
Debt | $ | 494 | $ | 250 | $ | 10 | $ | - | $ | 754 | |||||||
Accounts payable | 1,770 | 743 | 1,873 | (3,966) | 420 | ||||||||||||
Employee-related benefits | - | 178 | 62 | - | 240 | ||||||||||||
Income and mining taxes | 2 | 288 | 184 | - | 474 | ||||||||||||
Other current liabilities | 81 | 343 | 3,155 | (1,966) | 1,613 | ||||||||||||
Current liabilities | 2,347 | 1,802 | 5,284 | (5,932) | 3,501 | ||||||||||||
Debt | 3,514 | 107 | 55 | - | 3,676 | ||||||||||||
Reclamation and remediation liabilities | - | 682 | 311 | - | 993 | ||||||||||||
Deferred income tax liabilities | - | 510 | 1,021 | - | 1,531 | ||||||||||||
Employee-related benefits | 4 | 246 | 86 | - | 336 | ||||||||||||
Other long-term liabilities | 373 | 45 | 2,732 | (2,954) | 196 | ||||||||||||
Total liabilities | 6,238 | 3,392 | 9,489 | (8,886) | 10,233 | ||||||||||||
Equity | |||||||||||||||||
Preferred stock | - | - | 61 | (61) | - | ||||||||||||
Common stock | 779 | - | 1 | (1) | 779 | ||||||||||||
Additional paid-in capital | 7,994 | 2,722 | 5,955 | (8,367) | 8,304 | ||||||||||||
Accumulated other comprehensive income | 1,389 | (58) | 1,443 | (1,385) | 1,389 | ||||||||||||
Retained earnings | 3,620 | 5,103 | (807) | (4,296) | 3,620 | ||||||||||||
Newmont stockholders’ equity | 13,782 | 7,767 | 6,653 | (14,110) | 14,092 | ||||||||||||
Noncontrolling interests | - | 3,058 | 631 | (1,160) | 2,529 | ||||||||||||
Total equity | 13,782 | 10,825 | 7,284 | (15,270) | 16,621 | ||||||||||||
Total liabilities and equity | $ | 20,020 | $ | 14,217 | $ | 16,773 | $ | (24,156) | $ | 26,854 | |||||||
At December 31, 2010 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | - | $ | 3,877 | $ | 179 | $ | - | $ | 4,056 | |||||||
Trade receivables | - | 501 | 81 | - | 582 | ||||||||||||
Accounts receivable | 2,222 | 802 | 265 | (3,201) | 88 | ||||||||||||
Investments | - | 72 | 41 | - | 113 | ||||||||||||
Inventories | - | 388 | 270 | - | 658 | ||||||||||||
Stockpiles and ore on leach pads | - | 513 | 104 | - | 617 | ||||||||||||
Deferred income tax assets | - | 170 | 7 | - | 177 | ||||||||||||
Other current assets | - | 77 | 885 | - | 962 | ||||||||||||
Current assets | 2,222 | 6,400 | 1,832 | (3,201) | 7,253 | ||||||||||||
Property, plant and mine development, net | - | 5,364 | 7,562 | (19) | 12,907 | ||||||||||||
Investments | - | 25 | 1,543 | - | 1,568 | ||||||||||||
Investments in subsidiaries | 12,295 | 35 | 1,909 | (14,239) | - | ||||||||||||
Stockpiles and ore on leach pads | - | 1,347 | 410 | - | 1,757 | ||||||||||||
Deferred income tax assets | 638 | 690 | 109 | - | 1,437 | ||||||||||||
Other long-term assets | 2,675 | 496 | 584 | (3,014) | 741 | ||||||||||||
Total assets | $ | 17,830 | $ | 14,357 | $ | 13,949 | $ | (20,473) | $ | 25,663 | |||||||
Liabilities | |||||||||||||||||
Debt | $ | - | $ | 249 | $ | 10 | $ | - | $ | 259 | |||||||
Accounts payable | 355 | 1,269 | 1,996 | (3,193) | 427 | ||||||||||||
Employee-related benefits | - | 222 | 66 | - | 288 | ||||||||||||
Income and mining taxes | 19 | 261 | 75 | - | 355 | ||||||||||||
Other current liabilities | 56 | 373 | 2,959 | (1,970) | 1,418 | ||||||||||||
Current liabilities | 430 | 2,374 | 5,106 | (5,163) | 2,747 | ||||||||||||
Debt | 3,991 | 135 | 56 | - | 4,182 | ||||||||||||
Reclamation and remediation liabilities | - | 676 | 308 | - | 984 | ||||||||||||
Deferred income tax liabilities | - | 513 | 975 | - | 1,488 | ||||||||||||
Employee-related benefits | 5 | 244 | 76 | - | 325 | ||||||||||||
Other long-term liabilities | 375 | 56 | 2,824 | (3,034) | 221 | ||||||||||||
Total liabilities | 4,801 | 3,998 | 9,345 | (8,197) | 9,947 | ||||||||||||
Equity | |||||||||||||||||
Preferred stock | - | - | 61 | (61) | - | ||||||||||||
Common stock | 778 | - | - | - | 778 | ||||||||||||
Additional paid-in capital | 7,963 | 2,722 | 3,894 | (6,300) | 8,279 | ||||||||||||
Accumulated other comprehensive income | 1,108 | (75) | 1,180 | (1,105) | 1,108 | ||||||||||||
Retained earnings | 3,180 | 4,850 | (1,109) | (3,741) | 3,180 | ||||||||||||
Newmont stockholders’ equity | 13,029 | 7,497 | 4,026 | (11,207) | 13,345 | ||||||||||||
Noncontrolling interests | - | 2,862 | 578 | (1,069) | 2,371 | ||||||||||||
Total equity | 13,029 | 10,359 | 4,604 | (12,276) | 15,716 | ||||||||||||
Total liabilities and equity | $ | 17,830 | $ | 14,357 | $ | 13,949 | $ | (20,473) | $ | 25,663 | |||||||
|
NOTE 26 COMMITMENTS AND CONTINGENCIES
General
The Company follows ASC guidance in determining its accruals and disclosures with respect to loss contingencies. Accordingly, estimated losses from loss contingencies are accrued by a charge to income when information available prior to issuance of the financial statements indicates that it is probable (greater than a 75% probability) 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 loss contingency 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 PT Newmont Nusa Tenggara matters relate to the Asia Pacific reportable segment. The Minera Yanacocha S.R.L. 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 March 31, 2011 and December 31, 2010, $913 and $904, 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 $46 at March 31, 2011 and December 31, 2010, respectively, are included in Other current liabilities.
In addition, 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, $142 and $144 were accrued for such obligations at March 31, 2011 and December 31, 2010, 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 165% greater or 4% lower than the amount accrued at March 31, 2011. 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.
Dawn Mining Company LLC (“Dawn”) - 51% Newmont Owned
Midnite Mine Site. Dawn previously leased an open pit uranium mine, currently inactive, on the Spokane Indian Reservation in the State of Washington. The mine site is subject to regulation by agencies of the U.S. Department of Interior (the Bureau of Indian Affairs and the Bureau of Land Management), as well as the United States Environmental Protection Agency (“EPA”).
In 1991, Dawn's mining lease at the mine was terminated. As a result, Dawn was required to file a formal mine closure and reclamation plan. The Department of Interior commenced an analysis of Dawn's proposed plan and alternate closure and reclamation plans for the mine. Work on this analysis has been suspended indefinitely. In mid-2000, the mine was included on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). In March 2003, the EPA notified Dawn and Newmont that it had thus far expended $12 on the Remedial Investigation/Feasibility Study (“RI/FS”) under CERCLA. In October 2005, the EPA issued the RI/FS on this property in which it indicated a preferred remedy that it estimated to cost approximately $150. Newmont and Dawn filed comments on the RI/FS with the EPA in January 2006. On October 3, 2006, the EPA issued a final Record of Decision in which it formally selected the preferred remedy identified in the RI/FS.
On January 28, 2005, the EPA filed a lawsuit against Dawn and Newmont under CERCLA in the U.S. District Court for the Eastern District of Washington. The EPA has asserted that Dawn and Newmont are liable for reclamation or remediation work and costs at the mine. Dawn does not have sufficient funds to pay for the reclamation plan it proposed or for any alternate plan, or for any additional remediation work or costs at the mine.
On July 14, 2008, after a bench trial, the Court held Newmont liable under CERCLA as an “operator” of the Midnite Mine. The Court previously ruled on summary judgment that both the U.S. Government and Dawn were liable under CERCLA. On October 17, 2008 the Court issued its written decision in the bench trial. The Court found Dawn and Newmont jointly and severally liable under CERCLA for past and future response costs, and ruled that each of Dawn and Newmont are responsible to pay one-third of such costs. The Court also found the U.S. Government liable on Dawn's and Newmont's contribution claim, and ruled that the U.S. Government is responsible to pay one-third of all past and future response costs. In November 2008, all parties appealed the Court's ruling. Also in November 2008, the EPA issued an Administrative Order pursuant to Section 106 of CERCLA ordering Dawn and Newmont to conduct water treatment, testing and other preliminary remedial actions. Newmont has initiated those preliminary remedial actions.
Newmont intends to continue to vigorously defend this matter and cannot reasonably predict the outcome of this lawsuit or the likelihood of any other action against Dawn or Newmont arising from this matter.
Dawn Mill Site. Dawn also owns a uranium mill site facility, located on private land near Ford, Washington, which is subject to state and federal regulation. In late 1999, Dawn sought and later received approval from the State of Washington for a revised closure plan that expedites the reclamation process at the site. The currently approved plan for the site is guaranteed by Newmont.
Newmont Canada Corporation (“Newmont Canada”) - 100% Newmont Owned
On November 11, 2008, St. Andrew Goldfields Ltd. (“St. Andrew”) filed an Application in the Superior Court of Justice in Ontario, Canada, seeking a declaration to clarify St. Andrew's royalty obligations regarding certain mineral rights and property formerly owned by Newmont Canada and now owned by St. Andrew.
Newmont Canada purchased the property, called the Holt-McDermott property (“Holt Property”), from Barrick Gold Corporation (“Barrick”) in October 2004. At that time, Newmont Canada entered into a royalty agreement with Barrick (the “Barrick Royalty”), allowing Barrick to retain a royalty on the Holt Property. In August 2006, Newmont Canada sold all of its interests in the Holt Property to Holloway Mining Company (“Holloway”) in exchange for common stock issued by Holloway. In September 2006, Newmont Canada entered into a purchase and sale agreement with St. Andrew (the “2006 Agreement”), under which St. Andrew acquired all the common stock of Holloway. In 2008, Barrick sold its Barrick Royalty to Royal Gold, Inc. (“Royal Gold”).
In the court proceedings, St. Andrew alleged that in the 2006 Agreement it only agreed to assume royalty obligations equal to 0.013% of net smelter returns from operations on the Holt Property. Such an interpretation of the 2006 Agreement would make Newmont responsible for any royalties exceeding that amount payable to Royal Gold pursuant to the Barrick Royalty, which is a royalty determined by multiplying 0.00013 by the quarterly average gold price. On July 23, 2009, the Superior Court issued a decision finding in favor of St. Andrews' interpretation. On August 21, 2009, Newmont Canada appealed the decision. If the Court of Appeals upholds the lower court ruling, Newmont will be liable for the sliding scale royalty, which would equal a 13% royalty at a quarterly average gold price of $1,000, minus a 0.013% of net smelter returns. There is no cap on the royalty at issue and it increases or decreases with the gold price, based upon the multiplication of 0.00013 by the quarterly average gold price. The court of appeals heard oral argument on the matter on March 28, 2011 and is expected to issue a ruling within six months following the date of such oral argument. Newmont Canada intends to continue to vigorously defend this matter but cannot reasonably predict the outcome.
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 and Mineral Resources and Ministry for the Environment, alleging pollution from the disposal of mine 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. The appeal by WALHI is being reviewed by the South Jakarta District Court before review by 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. 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 20 complaints alleging grounds to nullify the settlements entered between Yanacocha and the plaintiffs. Yanacocha has answered the complaints and 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 Direct Ownership
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 PTPI, an Indonesian national, has 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 to be offered for sale to the Indonesian parties is the highest of the then-current replacement cost, the price at which shares would be accepted for listing on the Indonesian Stock Exchange, or the fair market value of such interest 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. In the arbitration proceeding, PTNNT sought a declaration that the Indonesian government was not entitled to terminate the Contract of Work and additional declarations pertaining to the procedures for divesting the shares. For its part, the Indonesian government sought declarations that PTNNT was in default of its divestiture obligations, that the government may terminate the Contract of Work and recover damages for breach of the Contract of Work, and that PTNNT must cause shares subject to divestiture to be sold to certain local governments.
An international arbitration panel (the “Panel”) was appointed to resolve these claims and other claims that had arisen in relation to divestment and a hearing was held in Jakarta in December 2008. 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. The Panel granted PTNNT 180 days from the date of notification of the final award to effect transfer of the 2006 3% interest and the 2007 7% interest in PTNNT to the local governments or their respective nominees. The Panel also applied a 180-day cure period to the 2008 7% interest, requiring that PTNNT effect the offer of the 2008 7% interest to the Indonesian government or its nominee within such 180-day period, and ensure the transfer of such shares if, after agreement on the transfer price, the Indonesian government invoked its right of first refusal under the Contract of Work. On July 14, 2009, the Company reached agreement with the Indonesian government on the price of the 2008 7% interest and the 2009 7% interest. PTNNT effected the reoffer of the 2008 7% interest and the 2009 7% interest to the Indonesian government at this newly agreed price. In November and December 2009, sale agreements were concluded pursuant to which the 2006, 2007 and 2008 shares were transferred to 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 April 18, 2011, the Company's subsidiaries and PIP reached an agreement under which the parties, acting in good faith, intend to finalize the terms for the purchase and sale, which is anticipated to occur by mid-2011. 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.
Additionally, in February 2010, PTNNT was notified by the tax authorities of the Indonesian government that PTNNT may be obligated to pay value added taxes on certain goods imported after the year 2000. PTNNT believed that pursuant to the terms of its Contract of Work, it was only required to pay value added taxes on these types of goods imported after February 28, 2010. The Company and PTNNT worked with the applicable government authorities and were able to settle this matter on March 31, 2011.
Effective as of 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. Further disputes with the local government could arise in relation to these regulations. PTNNT intends to vigorously defend its position in this dispute.
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 has filed a notice of appeal of the court's ruling.
Subsequent to its initial claim, PTPI filed numerous additional lawsuits, two 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 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 Sumitomo'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 which 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. 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.
Despite the rulings in the civil cases, 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 are in the process of enforcing the interim award in Indonesian and Singapore courts but it is not known the extent to which the courts will enforce the order or whether PTPI and its shareholders will, in any event, abide by the order.
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. The Company has aggressively sought enforcement of the interim order and will continue to do so with regard to the April 7, 2001 order in Indonesian and Singapore courts.
The Company intends to continue vigorously defending the PTPI lawsuits and pursuing its claims against PTPI.
Other Commitments and Contingencies
Tax contingencies are provided for in accordance with ASC income tax guidance (see Note 10).
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 2011, $28 in 2012 through 2015 and $251 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 March 31, 2011 and December 31, 2010, there were $1,339 and $1,191, 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.
|
NOTE 27 SUPPLEMENTARY DATA
Ratio of Earnings to Fixed Charges
The ratio of earnings to fixed charges for the three months ended March 31, 2011 was 13.8. The ratio of earnings to fixed charges represents income before income and mining tax expense, equity income (loss) of affiliates 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.
|
NOTE 28 SUBSEQUENT EVENTS
On February 3, 2011, we announced an agreement with Fronteer Gold, Inc. (“Fronteer”) to acquire all of the outstanding common shares of Fronteer. On April 6, 2011, Newmont acquired 153 million common shares of Fronteer pursuant to the Company's offer. Under the Arrangement, shareholders of Fronteer received C$14.00 in cash and one common share in Pilot Gold, which retained certain exploration assets of Fronteer, for each common share of Fronteer. Fronteer owns, among other assets, the exploration stage Long Canyon project, which is located approximately one hundred miles from the Company's existing infrastructure in Nevada and provides the potential for significant development and operating synergies.
In connection with the acquisition, Newmont incurred transaction costs of $1 in the first quarter of 2011, which were recorded in Other Expense, net.
The Fronteer purchase price of $2,259 was preliminarily allocated based on the estimated fair values of assets acquired and liabilities assumed at the April 6, 2011 acquisition date as follows:
Assets: | ||||||
Cash | $ | 2 | ||||
Property, plant and mine development, net | 3,107 | |||||
Investments | 281 | |||||
Other assets | 4 | |||||
$ | 3,394 | |||||
Liabilities: | ||||||
Deferred income tax liability | $ | 1,127 | ||||
Other liabilities | 8 | |||||
1,135 | ||||||
Net assets acquired | $ | 2,259 |
The allocation of the purchase price will be completed later in the year.
The pro forma impact of the acquisition on Net Income was not material.
|
Business Combinations
In December 2010, the ASC guidance for business combinations was updated to clarify existing guidance which requires a public entity to disclose pro forma revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual period only. The update also expands the supplemental pro forma disclosures required to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. Adoption of the updated guidance, effective for the Company's fiscal year beginning January 1, 2011, had no impact on the Company's condensed consolidated financial position, results of operations or cash flows.
Fair Value Accounting
In January 2010, ASC guidance for fair value measurements and disclosure was updated to require enhanced detail in the level 3 reconciliation. Adoption of the updated guidance, effective for the Company's fiscal year beginning January 1, 2011, had no impact on the Company's condensed consolidated financial position, results of operations or cash flows. Refer to Note 15 for further details regarding the Company's assets and liabilities measured at fair value.
|
Costs | Advanced | |||||||||||||||||||||
Applicable to | Projects and | Pre-Tax | Total | Capital | ||||||||||||||||||
Sales | Sales | Amortization | Exploration | Income | Assets | Expenditures(1) | ||||||||||||||||
Three Months Ended March 31, 2011 | ||||||||||||||||||||||
Nevada | $ | 582 | $ | 272 | $ | 72 | $ | 17 | $ | 216 | $ | 3,414 | $ | 95 | ||||||||
La Herradura | 65 | 18 | 4 | 6 | 36 | 254 | 16 | |||||||||||||||
Hope Bay | - | - | 3 | 44 | (48) | 2,259 | 19 | |||||||||||||||
Other North America | - | - | - | - | (2) | 125 | - | |||||||||||||||
North America | 647 | 290 | 79 | 67 | 202 | 6,052 | 130 | |||||||||||||||
Yanacocha | 362 | 153 | 53 | 6 | 149 | 2,677 | 41 | |||||||||||||||
Other South America | - | - | - | 10 | (10) | 371 | 64 | |||||||||||||||
South America | 362 | 153 | 53 | 16 | 139 | 3,048 | 105 | |||||||||||||||
Boddington: | ||||||||||||||||||||||
Gold | 232 | 100 | 28 | |||||||||||||||||||
Copper | 53 | 28 | 7 | |||||||||||||||||||
Total | 285 | 128 | 35 | 1 | 104 | 4,393 | 49 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 140 | 34 | 7 | |||||||||||||||||||
Copper | 369 | 89 | 20 | |||||||||||||||||||
Total | 509 | 123 | 27 | - | 323 | 3,627 | 40 | |||||||||||||||
Other Australia/New Zealand | 415 | 166 | 35 | 12 | 197 | 1,049 | 62 | |||||||||||||||
Other Asia Pacific | - | - | 1 | 1 | - | 548 | 2 | |||||||||||||||
Asia Pacific | 1,209 | 417 | 98 | 14 | 624 | 9,617 | 153 | |||||||||||||||
Ahafo | 247 | 80 | 22 | 7 | 136 | 1,049 | 15 | |||||||||||||||
Other Africa | - | - | - | 1 | (2) | 316 | 28 | |||||||||||||||
Africa | 247 | 80 | 22 | 8 | 134 | 1,365 | 43 | |||||||||||||||
Corporate and Other | - | - | 4 | 25 | (126) | 6,772 | 14 | |||||||||||||||
Consolidated | $ | 2,465 | $ | 940 | $ | 256 | $ | 130 | $ | 973 | $ | 26,854 | $ | 445 | ||||||||
(1) | Includes an increase in accrued capital expenditures of $43; consolidated capital expenditures on a cash basis were $402. |
Costs | Advanced | |||||||||||||||||||||
Applicable to | Projects and | Pre-Tax | Total | Capital | ||||||||||||||||||
Sales | Sales | Amortization | Exploration | Income | Assets | Expenditures(1) | ||||||||||||||||
Three Months Ended March 31, 2010 | ||||||||||||||||||||||
Nevada | $ | 468 | $ | 252 | $ | 62 | $ | 17 | $ | 126 | $ | 3,250 | $ | 48 | ||||||||
La Herradura | 44 | 14 | 4 | 1 | 25 | 155 | 14 | |||||||||||||||
Hope Bay | - | - | 3 | 17 | (20) | 1,965 | 9 | |||||||||||||||
Other North America | - | - | - | - | (1) | 55 | - | |||||||||||||||
North America | 512 | 266 | 69 | 35 | 130 | 5,425 | 71 | |||||||||||||||
Yanacocha | 460 | 154 | 37 | 7 | 243 | 2,501 | 40 | |||||||||||||||
Other South America | - | - | - | 5 | (5) | 145 | 17 | |||||||||||||||
South America | 460 | 154 | 37 | 12 | 238 | 2,646 | 57 | |||||||||||||||
Boddington | ||||||||||||||||||||||
Gold | 167 | 80 | 22 | |||||||||||||||||||
Copper | 38 | 24 | 6 | |||||||||||||||||||
Total | 205 | 104 | 28 | 1 | 68 | 4,108 | 48 | |||||||||||||||
Batu Hijau: | ||||||||||||||||||||||
Gold | 165 | 34 | 10 | |||||||||||||||||||
Copper | 455 | 91 | 27 | |||||||||||||||||||
Total | 620 | 125 | 37 | - | 407 | 2,988 | 28 | |||||||||||||||
Other Australia/New Zealand | 314 | 156 | 31 | 5 | 126 | 864 | 36 | |||||||||||||||
Other Asia Pacific | - | - | 1 | 5 | 17 | 314 | 2 | |||||||||||||||
Asia Pacific | 1,139 | 385 | 97 | 11 | 618 | 8,274 | 114 | |||||||||||||||
Ahafo | 131 | 64 | 17 | 3 | 42 | 981 | 21 | |||||||||||||||
Other Africa | - | - | - | 4 | (4) | 214 | 6 | |||||||||||||||
Africa | 131 | 64 | 17 | 7 | 38 | 1,195 | 27 | |||||||||||||||
Corporate and Other | - | - | 4 | 24 | (138) | 5,105 | 3 | |||||||||||||||
Consolidated | $ | 2,242 | $ | 869 | $ | 224 | $ | 89 | $ | 886 | $ | 22,645 | $ | 272 | ||||||||
(1) | Includes a decrease in accrued capital expenditures of $37; consolidated capital expenditures on a cash basis were $309. |
|
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Balance at beginning of period | $ | 1,048 | $ | 859 | ||||
Additions, changes in estimates and other | 1 | (3) | ||||||
Liabilities settled | (8) | (8) | ||||||
Accretion expense | 14 | 13 | ||||||
Balance at end of period | $ | 1,055 | $ | 861 |
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Accretion - operating | $ | 12 | $ | 11 | ||||
Accretion - non-operating | 2 | 2 | ||||||
$ | 14 | $ | 13 |
|
Three Months Ended March 31, | |||||||||
2011 | 2010 | ||||||||
Major projects: | |||||||||
Hope Bay | $ | 38 | $ | 10 | |||||
Conga | 1 | 1 | |||||||
Akyem | - | 3 | |||||||
Other projects: | |||||||||
Technical and project services | 15 | 12 | |||||||
Corporate | 3 | 12 | |||||||
Other | 11 | 8 | |||||||
$ | 68 | $ | 46 | ||||||
|
NOTE 6 OTHER EXPENSE, NET | ||||||||
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Indonesian value added tax settlement | $ | 21 | $ | - | ||||
Community development | 17 | 55 | ||||||
Regional administration | 16 | 13 | ||||||
Western Australia power plant | 4 | 6 | ||||||
World Gold Council dues | 2 | 3 | ||||||
Other | 13 | 12 | ||||||
$ | 73 | $ | 89 |
|
NOTE 7 OTHER INCOME, NET | ||||||||
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Income from developing projects, net | $ | 24 | $ | - | ||||
Canadian Oil Sands distributions | 6 | 10 | ||||||
Interest income | 4 | 3 | ||||||
Gain on asset sales, net | 3 | 33 | ||||||
Foreign currency exchange losses, net | (11) | (9) | ||||||
Other | 5 | 11 | ||||||
$ | 31 | $ | 48 |
|
NOTE 8 EMPLOYEE PENSION AND OTHER BENEFIT PLANS | |||||||||
Three Months Ended March 31, | |||||||||
2011 | 2010 | ||||||||
Pension benefit costs, net | |||||||||
Service cost | $ | 6 | $ | 5 | |||||
Interest cost | 10 | 9 | |||||||
Expected return on plan assets | (10) | (7) | |||||||
Amortization, net | 5 | 4 | |||||||
$ | 11 | $ | 11 | ||||||
Three Months Ended March 31, | |||||||||
2011 | 2010 | ||||||||
Other benefit costs, net | |||||||||
Service cost | $ | 1 | $ | 1 | |||||
Interest cost | 1 | 1 | |||||||
$ | 2 | $ | 2 | ||||||
|
NOTE 9 STOCK BASED COMPENSATION | ||||||||
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Stock options | $ | 3 | $ | 3 | ||||
Restricted stock units | 7 | 4 | ||||||
Performance leveraged stock units | 2 | 3 | ||||||
Common stock | 1 | 1 | ||||||
Restricted stock | - | 1 | ||||||
Deferred stock | 2 | 2 | ||||||
$ | 15 | $ | 14 |
|
Three Months Ended March 31, | |||||||||||
2011 | 2010 | ||||||||||
Income before income and mining tax and other items | $ | 973 | $ | 886 | |||||||
United States statutory corporate income tax rate | 35 | % | 35 | % | |||||||
Income and mining tax expense computed at United States | |||||||||||
statutory corporate income tax rate | (341) | (310) | |||||||||
Reconciling items: | |||||||||||
Tax benefit generated on change in form of a non- | |||||||||||
U.S. subsidiary | - | 127 | |||||||||
Percentage depletion | 55 | 33 | |||||||||
Other | (19) | 9 | |||||||||
Income and mining tax expense | $ | (305) | $ | (141) |
|
NOTE 11 NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | ||||||||
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Batu Hijau | $ | 102 | $ | 118 | ||||
Yanacocha | 56 | 80 | ||||||
Other | (2) | (1) | ||||||
$ | 156 | $ | 197 |
|
NOTE 13 COMPREHENSIVE INCOME | |||||||||
Three Months Ended March 31, | |||||||||
2011 | 2010 | ||||||||
Net income | $ | 670 | $ | 743 | |||||
Other comprehensive income, net of tax: | |||||||||
Unrealized gain on marketable securities | 168 | 49 | |||||||
Foreign currency translation adjustments | 89 | 56 | |||||||
Pension and other benefit liability adjustments | 4 | 2 | |||||||
Change in fair value of cash flow hedge instruments: | |||||||||
Net change from periodic revaluations | 55 | 29 | |||||||
Net amount reclassified to income | (33) | (19) | |||||||
Net unrecognized gain on derivatives | 22 | 10 | |||||||
283 | 117 | ||||||||
Comprehensive income | $ | 953 | $ | 860 | |||||
Comprehensive income attributable to: | |||||||||
Newmont stockholders | $ | 795 | $ | 663 | |||||
Noncontrolling interests | 158 | 197 | |||||||
$ | 953 | $ | 860 |
|
NOTE 14 CHANGES IN EQUITY | ||||||||||
Three Months Ended March 31, | ||||||||||
2011 | 2010 | |||||||||
Common stock: | ||||||||||
At beginning of period | $ | 778 | $ | 770 | ||||||
Stock based awards | 1 | 1 | ||||||||
Shares issued in exchange for exchangeable shares | - | 2 | ||||||||
At end of period | 779 | 773 | ||||||||
Additional paid-in capital: | ||||||||||
At beginning of period | 8,279 | 8,158 | ||||||||
Stock based awards | 25 | 17 | ||||||||
Shares issued in exchange for exchangeable shares | - | (2) | ||||||||
Sale of subsidiary shares to noncontrolling interests | - | 15 | ||||||||
At end of period | 8,304 | 8,188 | ||||||||
Accumulated other comprehensive income: | ||||||||||
At beginning of period | 1,108 | 626 | ||||||||
Other comprehensive income | 281 | 117 | ||||||||
At end of period | 1,389 | 743 | ||||||||
Retained earnings: | ||||||||||
At beginning of period | 3,180 | 1,149 | ||||||||
Net income attributable to Newmont stockholders | 514 | 546 | ||||||||
Dividends paid | (74) | (49) | ||||||||
At end of period | 3,620 | 1,646 | ||||||||
Noncontrolling interests: | ||||||||||
At beginning of period | 2,371 | 1,910 | ||||||||
Net income attributable to noncontrolling interests | 156 | 197 | ||||||||
Dividends paid | 0 | (220) | ||||||||
Other comprehensive income | 2 | 0 | ||||||||
Sale of subsidiary shares to noncontrolling interests, net | 0 | 168 | ||||||||
At end of period | 2,529 | 2,055 | ||||||||
Total equity | $ | 16,621 | $ | 13,405 | ||||||
|
Fair Value at March 31, 2011 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 2,022 | $ | 2,022 | $ | - | $ | - | |||||||
Marketable equity securities: | |||||||||||||||
Extractive industries | 1,796 | 1,796 | - | - | |||||||||||
Other | 6 | 6 | - | - | |||||||||||
Marketable debt securities: | |||||||||||||||
Asset backed commercial paper | 20 | - | - | 20 | |||||||||||
Corporate | 11 | 11 | - | - | |||||||||||
Auction rate securities | 5 | - | - | 5 | |||||||||||
Trade receivable from provisional copper | |||||||||||||||
and gold concentrate sales, net | 342 | 342 | - | - | |||||||||||
Derivative instruments, net: | |||||||||||||||
Foreign exchange forward contracts | 319 | - | 319 | - | |||||||||||
Diesel forward contracts | 20 | - | 20 | - | |||||||||||
Interest rate swap contracts | 3 | - | 3 | - | |||||||||||
$ | 4,544 | $ | 4,177 | $ | 342 | $ | 25 | ||||||||
Liabilities: | |||||||||||||||
8 5/8% debentures ($222 hedged portion) | $ | 226 | $ | - | $ | 226 | $ | - | |||||||
Boddington contingent consideration | 76 | - | - | 76 | |||||||||||
$ | 302 | $ | - | $ | 226 | $ | 76 |
Auction Rate Securities | Asset Backed Commercial Paper | Total Assets | Boddington Contingent Consideration | Total Liabilities | ||||||||||||||
Balance at beginning of period | $ | 5 | $ | 19 | $ | 24 | $ | 83 | $ | 83 | ||||||||
Unrealized gain | - | 1 | 1 | - | - | |||||||||||||
Settlements | - | - | - | (7) | (7) | |||||||||||||
Balance at end of period | $ | 5 | $ | 20 | $ | 25 | $ | 76 | $ | 76 |
|
Expected Maturity Date | ||||||||||||||||||||||||
Total/ | ||||||||||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2015 | 2016 | Average | ||||||||||||||||||
A$ Fixed Forward Contracts: | ||||||||||||||||||||||||
A$ notional (millions) | 843 | 781 | 473 | 353 | 163 | 10 | 2,623 | |||||||||||||||||
Average rate ($/A$) | 0.84 | 0.86 | 0.87 | 0.85 | 0.82 | 0.86 | 0.85 | |||||||||||||||||
Expected hedge ratio | 78 | % | 54 | % | 35 | % | 27 | % | 13 | % | 3 | % | ||||||||||||
NZ$ Fixed Forward Contracts: | ||||||||||||||||||||||||
NZ$ notional (millions) | 50 | 29 | 1 | - | - | - | 80 | |||||||||||||||||
Average rate ($/NZ$) | 0.70 | 0.70 | 0.72 | - | - | - | 0.70 | |||||||||||||||||
Expected hedge ratio | 58 | % | 25 | % | 5 | % | - | - | - | |||||||||||||||
Expected Maturity Date | |||||||||||||||
Total/ | |||||||||||||||
2011 | 2012 | 2013 | Average | ||||||||||||
Diesel Fixed Forward Contracts: | |||||||||||||||
Diesel gallons (millions) | 17 | 10 | 1 | 28 | |||||||||||
Average rate ($/gallon) | 2.43 | 2.62 | 3.15 | 2.51 | |||||||||||
Expected hedge ratio | 55 | % | 25 | % | 5 | % |
Fair Value | ||||||||||||||
At March 31, 2011 | ||||||||||||||
Other Current Assets | Other Long-Term Assets | |||||||||||||
Foreign currency exchange contracts: | ||||||||||||||
A$ fixed forward contracts | $ | 183 | $ | 131 | ||||||||||
NZ$ fixed forward contracts | 4 | 1 | ||||||||||||
Diesel fixed forward contracts | 17 | 3 | ||||||||||||
Interest rate swap contracts | 3 | - | ||||||||||||
Total derivative instruments (Note 20) | $ | 207 | $ | 135 | ||||||||||
Fair Value | ||||||||||||||
At December 31, 2010 | ||||||||||||||
Other Current Assets | Other Long-Term Assets | |||||||||||||
Foreign currency exchange contracts: | ||||||||||||||
A$ fixed forward contracts | $ | 181 | $ | 114 | ||||||||||
NZ$ fixed forward contracts | 5 | 1 | ||||||||||||
Diesel fixed forward contracts | 7 | 1 | ||||||||||||
Interest rate swap contracts | 3 | - | ||||||||||||
Total derivative instruments (Note 20) | $ | 196 | $ | 116 |
Foreign Currency Exchange Contracts | Diesel Forward Contracts | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
For the three months ended March 31, | ||||||||||||||||
Cash flow hedging relationships: | ||||||||||||||||
Gain recognized in other comprehensive income (effective portion) | $ | 67 | $ | 41 | $ | 15 | $ | 1 | ||||||||
Gain reclassified from Accumulated other comprehensive income into income (effective portion) (1) | 42 | 24 | 4 | 1 | ||||||||||||
(1) The gain for the effective portion of foreign exchange and diesel cash flow hedges reclassified from Accumulated other comprehensive income is included in Costs applicable to sales.
Interest Rate | 8 5/8% Debentures | ||||||||||||||
Swap Contracts | (Hedged Portion) | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
For the three months ended March 31, | |||||||||||||||
Fair value hedging relationships: | |||||||||||||||
Gain (loss) recognized in income (effective portion) (1)? | $ | 2 | $ | 2 | $ | (5) | $ | - | |||||||
Loss recognized in income (ineffective portion) (2)? | (1) | - | - | - |
(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 March 31, 2011 | ||||||||||||||||
Cost/Equity | Unrealized | Fair/Equity | ||||||||||||||
Basis | Gain | Loss | Basis | |||||||||||||
Current: | ||||||||||||||||
Marketable Equity Securities: | ||||||||||||||||
New Gold Inc. | $ | 5 | $ | 67 | $ | - | $ | 72 | ||||||||
Other | 19 | 39 | (1) | 57 | ||||||||||||
$ | 24 | $ | 106 | $ | (1) | $ | 129 | |||||||||
Long-term: | ||||||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Asset backed commercial paper | $ | 26 | $ | - | $ | (6) | $ | 20 | ||||||||
Auction rate securities | 7 | - | (2) | 5 | ||||||||||||
Corporate | 7 | 4 | - | 11 | ||||||||||||
40 | 4 | (8) | 36 | |||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Canadian Oil Sands Ltd. | 318 | 721 | - | 1,039 | ||||||||||||
Gabriel Resources Ltd. | 80 | 297 | - | 377 | ||||||||||||
Regis Resources Ltd. | 23 | 139 | - | 162 | ||||||||||||
Other | 54 | 41 | - | 95 | ||||||||||||
475 | 1,198 | - | 1,673 | |||||||||||||
Other investments, at cost | 9 | - | - | 9 | ||||||||||||
Investment in Affiliates: | ||||||||||||||||
La Zanja | 61 | - | - | 61 | ||||||||||||
$ | 585 | $ | 1,202 | $ | (8) | $ | 1,779 | |||||||||
At December 31, 2010 | ||||||||||||||||
Cost/Equity | Unrealized | Fair/Equity | ||||||||||||||
Basis | Gain | Loss | Basis | |||||||||||||
Current: | ||||||||||||||||
Marketable Equity Securities: | ||||||||||||||||
New Gold Inc. | $ | 5 | $ | 54 | $ | - | $ | 59 | ||||||||
Other | 19 | 35 | - | 54 | ||||||||||||
$ | 24 | $ | 89 | $ | - | $ | 113 | |||||||||
Long-term: | ||||||||||||||||
Marketable Debt Securities: | ||||||||||||||||
Asset backed commercial paper | $ | 25 | $ | - | $ | (6) | $ | 19 | ||||||||
Auction rate securities | 7 | - | (2) | 5 | ||||||||||||
Corporate | 7 | 3 | - | 10 | ||||||||||||
39 | 3 | (8) | 34 | |||||||||||||
Marketable Equity Securities: | ||||||||||||||||
Canadian Oil Sands Ltd. | 308 | 508 | - | 816 | ||||||||||||
Gabriel Resources Ltd. | 78 | 325 | - | 403 | ||||||||||||
Regis Resources Ltd. | 23 | 148 | - | 171 | ||||||||||||
Other | 39 | 37 | - | 76 | ||||||||||||
448 | 1,018 | - | 1,466 | |||||||||||||
Other investments, at cost | 11 | - | - | 11 | ||||||||||||
Investment in Affiliates: | ||||||||||||||||
La Zanja | 57 | - | - | 57 | ||||||||||||
$ | 555 | $ | 1,021 | $ | (8) | $ | 1,568 |
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||
At March 31, 2011 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||
Asset backed commercial paper | $ | - | $ | - | $ | 20 | $ | 6 | $ | 20 | $ | 6 | |||||
Auction rate securities | - | - | 5 | 2 | 5 | 2 | |||||||||||
Marketable equity securities | 2 | 1 | - | - | 2 | 1 | |||||||||||
$ | 2 | $ | 1 | $ | 25 | $ | 8 | $ | 27 | $ | 9 | ||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||||||||
At December 31, 2010 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||
Asset backed commercial paper | $ | - | $ | - | $ | 19 | $ | 6 | $ | 19 | $ | 6 | |||||
Auction rate securities | - | - | 5 | 2 | 5 | 2 | |||||||||||
$ | - | $ | - | $ | 24 | $ | 8 | $ | 24 | $ | 8 |
|
NOTE 18 INVENTORIES | ||||||||
At March 31, | At December 31, | |||||||
2011 | 2010 | |||||||
In-process | $ | 81 | $ | 142 | ||||
Concentrate | 101 | 111 | ||||||
Precious metals | 11 | 4 | ||||||
Materials, supplies and other | 414 | 401 | ||||||
$ | 607 | $ | 658 |
|
NOTE 19 STOCKPILES AND ORE ON LEACH PADS | ||||||||
At March 31, | At December 31, | |||||||
2011 | 2010 | |||||||
Current: | ||||||||
Stockpiles | $ | 402 | $ | 389 | ||||
Ore on leach pads | 255 | 228 | ||||||
$ | 657 | $ | 617 | |||||
Long-term: | ||||||||
Stockpiles | $ | 1,498 | $ | 1,397 | ||||
Ore on leach pads | 348 | 360 | ||||||
$ | 1,846 | $ | 1,757 |
At March 31, | At December 31, | |||||||
2011 | 2010 | |||||||
Stockpiles and ore on leach pads: | ||||||||
Nevada | $ | 466 | $ | 479 | ||||
La Herradura | 10 | 6 | ||||||
Yanacocha | 518 | 496 | ||||||
Boddington | 306 | 248 | ||||||
Batu Hijau | 924 | 879 | ||||||
Other Australia/New Zealand | 151 | 145 | ||||||
Ahafo | 128 | 121 | ||||||
$ | 2,503 | $ | 2,374 |
|
NOTE 20 OTHER ASSETS | ||||||||
At March 31, | At December 31, | |||||||
2011 | 2010 | |||||||
Other current assets: | ||||||||
Refinery metal inventory and receivable | $ | 813 | $ | 617 | ||||
Derivative instruments | 207 | 196 | ||||||
Prepaid assets | 128 | 65 | ||||||
Other | 80 | 84 | ||||||
$ | 1,228 | $ | 962 | |||||
Other long-term assets: | ||||||||
Goodwill | $ | 188 | $ | 188 | ||||
Intangible assets | 154 | 91 | ||||||
Derivative instruments | 135 | 116 | ||||||
Income tax receivable | 119 | 119 | ||||||
Debt issuance costs | 37 | 39 | ||||||
Restricted cash | 26 | 25 | ||||||
Other receivables | 17 | 19 | ||||||
Other | 139 | 144 | ||||||
$ | 815 | $ | 741 |
|
NOTE 21 DEBT | ||||||||||||
At March 31, 2011 | At December 31, 2010 | |||||||||||
Current | Non-Current | Current | Non-Current | |||||||||
Sale-leaseback of refractory ore treatment plant | $ | 28 | $ | 106 | $ | 30 | $ | 134 | ||||
8 5/8% debentures, net of discount (due 2011) | 221 | - | 217 | - | ||||||||
2012 convertible senior notes, net of discount | 494 | - | - | 488 | ||||||||
2014 convertible senior notes, net of discount | - | 495 | - | 489 | ||||||||
2017 convertible senior notes, net of discount | - | 438 | - | 434 | ||||||||
2019 senior notes, net of discount | - | 896 | - | 896 | ||||||||
2035 senior notes, net of discount | - | 598 | - | 598 | ||||||||
2039 senior notes, net of discount | - | 1,087 | - | 1,087 | ||||||||
Ahafo project facility | 10 | 55 | 10 | 55 | ||||||||
Other capital leases | 1 | 1 | 2 | 1 | ||||||||
$ | 754 | $ | 3,676 | $ | 259 | $ | 4,182 | |||||
|
NOTE 22 OTHER LIABILITIES | ||||||||
At March 31, | At December 31, | |||||||
2011 | 2010 | |||||||
Other current liabilities: | ||||||||
Refinery metal payable | $ | 813 | $ | 617 | ||||
Accrued operating costs | 240 | 217 | ||||||
Accrued capital expenditures | 124 | 83 | ||||||
Taxes other than income and mining | 97 | 135 | ||||||
Interest | 92 | 66 | ||||||
Reclamation and remediation liabilities | 62 | 64 | ||||||
Deferred income tax | 58 | 54 | ||||||
Royalties | 44 | 90 | ||||||
Boddington contingent consideration | 38 | 32 | ||||||
Other | 45 | 60 | ||||||
$ | 1,613 | $ | 1,418 | |||||
Other long-term liabilities: | ||||||||
Power supply agreements | $ | 45 | $ | 45 | ||||
Boddington contingent consideration | 38 | 51 | ||||||
Income and mining taxes | 29 | 36 | ||||||
Other | 84 | 89 | ||||||
$ | 196 | $ | 221 | |||||
|
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Decrease (increase) in operating assets: | ||||||||
Trade and accounts receivable | $ | 119 | $ | (52) | ||||
Inventories, stockpiles and ore on leach pads | (56) | (69) | ||||||
EGR refinery assets | (175) | 185 | ||||||
Other assets | (38) | (23) | ||||||
Increase (decrease) in operating liabilities: | ||||||||
Accounts payable and other accrued liabilities | 4 | (21) | ||||||
EGR refinery liabilities | 175 | (185) | ||||||
Reclamation liabilities | (8) | (8) | ||||||
$ | 21 | $ | (173) |
|
NOTE 24 SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Income and mining taxes, net of refunds | $ | 278 | $ | 209 | ||||
Interest, net of amounts capitalized | $ | 20 | $ | 26 |
|
Three Months Ended March 31, 2011 | ||||||||||||||||
Newmont | ||||||||||||||||
Newmont | Mining | |||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||
Sales | $ | - | $ | 1,518 | $ | 947 | $ | - | $ | 2,465 | ||||||
Costs and expenses | ||||||||||||||||
Costs applicable to sales (1) | - | 566 | 384 | (10) | 940 | |||||||||||
Amortization | - | 159 | 97 | - | 256 | |||||||||||
Reclamation and remediation | 1 | 10 | 3 | - | 14 | |||||||||||
Exploration | - | 34 | 28 | - | 62 | |||||||||||
Advanced projects, research and development | - | 27 | 41 | - | 68 | |||||||||||
General and administrative | - | 34 | 1 | 10 | 45 | |||||||||||
Other expense, net | - | 54 | 19 | - | 73 | |||||||||||
1 | 884 | 573 | - | 1,458 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income, net | (5) | 25 | 11 | - | 31 | |||||||||||
Interest income - intercompany | 36 | 2 | 2 | (40) | - | |||||||||||
Interest expense - intercompany | (3) | - | (37) | 40 | - | |||||||||||
Interest expense, net | (54) | (9) | (2) | - | (65) | |||||||||||
(26) | 18 | (26) | - | (34) | ||||||||||||
Income before income and mining tax and other items | ||||||||||||||||
items | (27) | 652 | 348 | - | 973 | |||||||||||
Income and mining tax expense | 10 | (208) | (107) | - | (305) | |||||||||||
Equity income (loss) of affiliates | 531 | 1 | 89 | (619) | 2 | |||||||||||
Net income | 514 | 445 | 330 | (619) | 670 | |||||||||||
Net income attributable to noncontrolling interests | - | (192) | (20) | 56 | (156) | |||||||||||
Net income attributable to Newmont stockholders | $ | 514 | $ | 253 | $ | 310 | $ | (563) | $ | 514 |
(1) Excludes Amortization and Reclamation and remediation.
Three Months Ended March 31, 2010 | ||||||||||||||||
Newmont | ||||||||||||||||
Newmont | Mining | |||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||
Condensed Consolidating Statement of Income | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||
Sales | $ | - | $ | 1,592 | $ | 650 | $ | - | $ | 2,242 | ||||||
Costs and expenses | ||||||||||||||||
Costs applicable to sales (1) | - | 545 | 329 | (5) | 869 | |||||||||||
Amortization | - | 143 | 81 | - | 224 | |||||||||||
Reclamation and remediation | - | 9 | 4 | - | 13 | |||||||||||
Exploration | - | 24 | 19 | - | 43 | |||||||||||
Advanced projects, research and development | - | 29 | 17 | - | 46 | |||||||||||
General and administrative | - | 38 | 1 | 6 | 45 | |||||||||||
Other expense, net | - | 76 | 14 | (1) | 89 | |||||||||||
- | 864 | 465 | - | 1,329 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income, net | - | 1 | 47 | - | 48 | |||||||||||
Interest income - intercompany | 36 | 2 | 1 | (39) | - | |||||||||||
Interest expense - intercompany | (2) | - | (37) | 39 | - | |||||||||||
Interest expense, net | (62) | (12) | (1) | - | (75) | |||||||||||
(28) | (9) | 10 | - | (27) | ||||||||||||
Income before income and mining tax and other | ||||||||||||||||
items | (28) | 719 | 195 | - | 886 | |||||||||||
Income and mining tax expense | 141 | (239) | (43) | - | (141) | |||||||||||
Equity income (loss) of affiliates | 433 | - | 67 | (502) | (2) | |||||||||||
Net income | 546 | 480 | 219 | (502) | 743 | |||||||||||
Net income attributable to noncontrolling interests | - | (243) | 5 | 41 | (197) | |||||||||||
Net income attributable to Newmont stockholders | $ | 546 | $ | 237 | $ | 224 | $ | (461) | $ | 546 |
(1) Excludes Amortization and Reclamation and remediation.
Three Months Ended March 31, 2011 | ||||||||||||||||||
Newmont | ||||||||||||||||||
Newmont | Mining | |||||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Operating activities: | ||||||||||||||||||
Net income | $ | 514 | $ | 445 | $ | 330 | $ | (619) | $ | 670 | ||||||||
Adjustments | 21 | 174 | (516) | 619 | 298 | |||||||||||||
Net change in operating assets and liabilities | 8 | (54) | 67 | - | 21 | |||||||||||||
Net cash provided from operations | 543 | 565 | (119) | - | 989 | |||||||||||||
Investing activities: | ||||||||||||||||||
Additions to property, plant and mine development | - | (238) | (164) | - | (402) | |||||||||||||
Purchases of marketable securities | - | (1) | (11) | - | (12) | |||||||||||||
Acquisitions, net | - | - | (7) | - | (7) | |||||||||||||
Proceeds from sale of other assets | - | 6 | - | - | 6 | |||||||||||||
Other | - | - | (3) | - | (3) | |||||||||||||
Net cash used in investing activities | - | (233) | (185) | - | (418) | |||||||||||||
Financing activities: | ||||||||||||||||||
Net repayments | - | (31) | - | - | (31) | |||||||||||||
Net intercompany borrowings (repayments) | (472) | (1,948) | 2,420 | - | - | |||||||||||||
Dividends paid to common stockholders | (74) | - | - | - | (74) | |||||||||||||
Dividends paid to noncontrolling interests | - | (15) | - | - | (15) | |||||||||||||
Proceeds from stock issuance, net | 3 | - | - | - | 3 | |||||||||||||
Net cash used in financing activities | (543) | (1,994) | 2,420 | - | (117) | |||||||||||||
Effect of exchange rate changes on cash | - | (1) | 24 | - | 23 | |||||||||||||
Net change in cash and cash equivalents | - | (1,663) | 2,140 | - | 477 | |||||||||||||
Cash and cash equivalents at beginning of period | - | 3,877 | 179 | - | 4,056 | |||||||||||||
Cash and cash equivalents at end of period | $ | - | $ | 2,214 | $ | 2,319 | $ | - | $ | 4,533 |
Three Months Ended March 31, 2010 | ||||||||||||||||||
Newmont | ||||||||||||||||||
Newmont | Mining | |||||||||||||||||
Mining | Newmont | Other | Corporation | |||||||||||||||
Condensed Consolidating Statement of Cash Flows | Corporation | USA | Subsidiaries | Eliminations | Consolidated | |||||||||||||
Operating activities: | ||||||||||||||||||
Net income | $ | 546 | $ | 480 | $ | 219 | $ | (502) | $ | 743 | ||||||||
Adjustments | (121) | 174 | (397) | 502 | 158 | |||||||||||||
Net change in operating assets and liabilities | 30 | (98) | (105) | - | (173) | |||||||||||||
Net cash provided from continuing operations | 455 | 556 | (283) | - | 728 | |||||||||||||
Net cash used in discontinued operations | - | (13) | - | - | (13) | |||||||||||||
Net cash provided from operations | 455 | 543 | (283) | - | 715 | |||||||||||||
Investing activities: | ||||||||||||||||||
Additions to property, plant and mine development | - | (146) | (163) | - | (309) | |||||||||||||
Purchases of marketable securities | - | - | (3) | - | (3) | |||||||||||||
Proceeds from sale of other assets | - | - | 38 | - | 38 | |||||||||||||
Other | - | - | (11) | - | (11) | |||||||||||||
Net cash used in investing activities | - | (146) | (139) | - | (285) | |||||||||||||
Financing activities: | ||||||||||||||||||
Net repayments | - | (250) | - | - | (250) | |||||||||||||
Net intercompany borrowings (repayments) | (417) | (28) | 492 | (47) | - | |||||||||||||
Sale of subsidiary shares to noncontrolling interests | - | 229 | - | - | 229 | |||||||||||||
Acquisition of subsidiary shares from noncontrolling | ||||||||||||||||||
interest | - | - | (39) | - | (39) | |||||||||||||
Dividends paid to common stockholders | (49) | - | - | - | (49) | |||||||||||||
Dividends paid to noncontrolling interests | - | (267) | - | 47 | (220) | |||||||||||||
Proceeds from stock issuance, net | 3 | - | - | - | 3 | |||||||||||||
Change in restricted cash and other | - | 47 | (1) | - | 46 | |||||||||||||
Net cash used in financing activities | (463) | (269) | 452 | - | (280) | |||||||||||||
Effect of exchange rate changes on cash | - | - | (1) | - | (1) | |||||||||||||
Net change in cash and cash equivalents | (8) | 128 | 29 | - | 149 | |||||||||||||
Cash and cash equivalents at beginning of period | 8 | 3,067 | 140 | - | 3,215 | |||||||||||||
Cash and cash equivalents at end of period | $ | - | $ | 3,195 | $ | 169 | $ | - | $ | 3,364 |
At March 31, 2011 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | - | $ | 2,214 | $ | 2,319 | $ | - | $ | 4,533 | |||||||
Trade receivables | - | 342 | 97 | - | 439 | ||||||||||||
Accounts receivable | 1,621 | 2,263 | 198 | (3,969) | 113 | ||||||||||||
Investments | - | 86 | 43 | - | 129 | ||||||||||||
Inventories | - | 359 | 248 | - | 607 | ||||||||||||
Stockpiles and ore on leach pads | - | 543 | 114 | - | 657 | ||||||||||||
Deferred income tax assets | - | 171 | 7 | - | 178 | ||||||||||||
Other current assets | - | 153 | 1,075 | - | 1,228 | ||||||||||||
Current assets | 1,621 | 6,131 | 4,101 | (3,969) | 7,884 | ||||||||||||
Property, plant and mine development, net | - | 5,394 | 7,699 | (19) | 13,074 | ||||||||||||
Investments | - | 24 | 1,755 | - | 1,779 | ||||||||||||
Investments in subsidiaries | 15,165 | 36 | 2,032 | (17,233) | - | ||||||||||||
Stockpiles and ore on leach pads | - | 1,375 | 471 | - | 1,846 | ||||||||||||
Deferred income tax assets | 638 | 697 | 121 | - | 1,456 | ||||||||||||
Other long-term assets | 2,596 | 560 | 594 | (2,935) | 815 | ||||||||||||
Total assets | $ | 20,020 | $ | 14,217 | $ | 16,773 | $ | (24,156) | $ | 26,854 | |||||||
Liabilities | |||||||||||||||||
Debt | $ | 494 | $ | 250 | $ | 10 | $ | - | $ | 754 | |||||||
Accounts payable | 1,770 | 743 | 1,873 | (3,966) | 420 | ||||||||||||
Employee-related benefits | - | 178 | 62 | - | 240 | ||||||||||||
Income and mining taxes | 2 | 288 | 184 | - | 474 | ||||||||||||
Other current liabilities | 81 | 343 | 3,155 | (1,966) | 1,613 | ||||||||||||
Current liabilities | 2,347 | 1,802 | 5,284 | (5,932) | 3,501 | ||||||||||||
Debt | 3,514 | 107 | 55 | - | 3,676 | ||||||||||||
Reclamation and remediation liabilities | - | 682 | 311 | - | 993 | ||||||||||||
Deferred income tax liabilities | - | 510 | 1,021 | - | 1,531 | ||||||||||||
Employee-related benefits | 4 | 246 | 86 | - | 336 | ||||||||||||
Other long-term liabilities | 373 | 45 | 2,732 | (2,954) | 196 | ||||||||||||
Total liabilities | 6,238 | 3,392 | 9,489 | (8,886) | 10,233 | ||||||||||||
Equity | |||||||||||||||||
Preferred stock | - | - | 61 | (61) | - | ||||||||||||
Common stock | 779 | - | 1 | (1) | 779 | ||||||||||||
Additional paid-in capital | 7,994 | 2,722 | 5,955 | (8,367) | 8,304 | ||||||||||||
Accumulated other comprehensive income | 1,389 | (58) | 1,443 | (1,385) | 1,389 | ||||||||||||
Retained earnings | 3,620 | 5,103 | (807) | (4,296) | 3,620 | ||||||||||||
Newmont stockholders’ equity | 13,782 | 7,767 | 6,653 | (14,110) | 14,092 | ||||||||||||
Noncontrolling interests | - | 3,058 | 631 | (1,160) | 2,529 | ||||||||||||
Total equity | 13,782 | 10,825 | 7,284 | (15,270) | 16,621 | ||||||||||||
Total liabilities and equity | $ | 20,020 | $ | 14,217 | $ | 16,773 | $ | (24,156) | $ | 26,854 | |||||||
At December 31, 2010 | |||||||||||||||||
Newmont | |||||||||||||||||
Newmont | Mining | ||||||||||||||||
Mining | Newmont | Other | Corporation | ||||||||||||||
Condensed Consolidating Balance Sheet | Corporation | USA | Subsidiaries | Eliminations | Consolidated | ||||||||||||
Assets | |||||||||||||||||
Cash and cash equivalents | $ | - | $ | 3,877 | $ | 179 | $ | - | $ | 4,056 | |||||||
Trade receivables | - | 501 | 81 | - | 582 | ||||||||||||
Accounts receivable | 2,222 | 802 | 265 | (3,201) | 88 | ||||||||||||
Investments | - | 72 | 41 | - | 113 | ||||||||||||
Inventories | - | 388 | 270 | - | 658 | ||||||||||||
Stockpiles and ore on leach pads | - | 513 | 104 | - | 617 | ||||||||||||
Deferred income tax assets | - | 170 | 7 | - | 177 | ||||||||||||
Other current assets | - | 77 | 885 | - | 962 | ||||||||||||
Current assets | 2,222 | 6,400 | 1,832 | (3,201) | 7,253 | ||||||||||||
Property, plant and mine development, net | - | 5,364 | 7,562 | (19) | 12,907 | ||||||||||||
Investments | - | 25 | 1,543 | - | 1,568 | ||||||||||||
Investments in subsidiaries | 12,295 | 35 | 1,909 | (14,239) | - | ||||||||||||
Stockpiles and ore on leach pads | - | 1,347 | 410 | - | 1,757 | ||||||||||||
Deferred income tax assets | 638 | 690 | 109 | - | 1,437 | ||||||||||||
Other long-term assets | 2,675 | 496 | 584 | (3,014) | 741 | ||||||||||||
Total assets | $ | 17,830 | $ | 14,357 | $ | 13,949 | $ | (20,473) | $ | 25,663 | |||||||
Liabilities | |||||||||||||||||
Debt | $ | - | $ | 249 | $ | 10 | $ | - | $ | 259 | |||||||
Accounts payable | 355 | 1,269 | 1,996 | (3,193) | 427 | ||||||||||||
Employee-related benefits | - | 222 | 66 | - | 288 | ||||||||||||
Income and mining taxes | 19 | 261 | 75 | - | 355 | ||||||||||||
Other current liabilities | 56 | 373 | 2,959 | (1,970) | 1,418 | ||||||||||||
Current liabilities | 430 | 2,374 | 5,106 | (5,163) | 2,747 | ||||||||||||
Debt | 3,991 | 135 | 56 | - | 4,182 | ||||||||||||
Reclamation and remediation liabilities | - | 676 | 308 | - | 984 | ||||||||||||
Deferred income tax liabilities | - | 513 | 975 | - | 1,488 | ||||||||||||
Employee-related benefits | 5 | 244 | 76 | - | 325 | ||||||||||||
Other long-term liabilities | 375 | 56 | 2,824 | (3,034) | 221 | ||||||||||||
Total liabilities | 4,801 | 3,998 | 9,345 | (8,197) | 9,947 | ||||||||||||
Equity | |||||||||||||||||
Preferred stock | - | - | 61 | (61) | - | ||||||||||||
Common stock | 778 | - | - | - | 778 | ||||||||||||
Additional paid-in capital | 7,963 | 2,722 | 3,894 | (6,300) | 8,279 | ||||||||||||
Accumulated other comprehensive income | 1,108 | (75) | 1,180 | (1,105) | 1,108 | ||||||||||||
Retained earnings | 3,180 | 4,850 | (1,109) | (3,741) | 3,180 | ||||||||||||
Newmont stockholders’ equity | 13,029 | 7,497 | 4,026 | (11,207) | 13,345 | ||||||||||||
Noncontrolling interests | - | 2,862 | 578 | (1,069) | 2,371 | ||||||||||||
Total equity | 13,029 | 10,359 | 4,604 | (12,276) | 15,716 | ||||||||||||
Total liabilities and equity | $ | 17,830 | $ | 14,357 | $ | 13,949 | $ | (20,473) | $ | 25,663 | |||||||
|
Assets: | ||||||
Cash | $ | 2 | ||||
Property, plant and mine development, net | 3,107 | |||||
Investments | 281 | |||||
Other assets | 4 | |||||
$ | 3,394 | |||||
Liabilities: | ||||||
Deferred income tax liability | $ | 1,127 | ||||
Other liabilities | 8 | |||||
1,135 | ||||||
Net assets acquired | $ | 2,259 |
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