10-Q/APeriod: Q3 FY2002

NEWMONT Corp /DE/ Quarterly Report (Amendment) for Q3 Ended Sep 30, 2002

Filed April 11, 2003For Securities:NEMNEMCL

Summary

Newmont Mining Corporation's Q3 2002 Form 10-Q/A filing reveals a return to profitability, with net income applicable to common shares reaching $20.8 million ($0.05 per share) for the quarter, a significant improvement from a net loss of $72.5 million ($0.37 per share) in the same period of the prior year. This turnaround is driven by strong gold sales, bolstered by higher gold prices and the inclusion of results from the Normandy and Franco-Nevada acquisitions. The company reported total equity gold sales of 2,088,000 ounces for the quarter, with an average realized price of $315 per ounce. The filing also highlights a substantial increase in assets and liabilities due to these significant acquisitions, with goodwill amounting to $2.6 billion. Several accounting adjustments and restatements were made, primarily related to the accounting treatment of financial contracts, depreciation on mining assets, and inventory valuation, which impacted prior period results. Despite these adjustments, the overall financial performance shows a positive trend, supported by strategic operational improvements and favorable market conditions for gold.

Key Highlights

  • 1Newmont reported a net income of $20.8 million ($0.05 per share) for Q3 2002, compared to a net loss of $12.1 million ($0.06 per share) in Q3 2001, indicating a strong operational turnaround.
  • 2Total equity gold sales for Q3 2002 were 2,088,000 ounces, with an average realized price of $315 per ounce, up from $274 per ounce in Q3 2001, reflecting higher gold market prices.
  • 3The company completed significant acquisitions of Normandy and Franco-Nevada in early 2002, contributing to a substantial increase in assets and resulting in approximately $2.6 billion in goodwill.
  • 4Several accounting restatements were made to prior periods, primarily concerning the accounting for prepaid forward sales and purchase contracts, depreciation on mining assets, and inventory valuation, impacting prior period net income and equity.
  • 5Operating income improved significantly due to higher gold prices and increased sales volumes, partially offset by higher production costs.
  • 6The company's cash flow from operations remained robust, providing sufficient liquidity for capital expenditures and debt management.
  • 7Despite the positive performance, the company holds a significant amount of derivative instruments, with a negative mark-to-market valuation on the Normandy hedge book of $422 million at the end of Q3 2002.

Frequently Asked Questions

The improved financial performance was primarily driven by higher gold prices, which led to increased average realized prices per ounce sold. Additionally, the inclusion of results from the recently acquired Normandy and Franco-Nevada operations contributed to higher sales volumes.

The filing notes several restatements to previously issued financial statements, primarily related to the accounting treatment of financial contracts, depreciation on certain mining assets, and the capitalization of depreciation, depletion, and amortization into inventory. These restatements were necessary to correct accounting errors and ensure compliance with accounting principles, and they impacted prior period net income and equity.

The acquisitions significantly increased Newmont's asset base, including property, plant, mine development, and mineral interests. The transactions also resulted in the recognition of approximately $2.6 billion in goodwill, reflecting the premium paid over the fair value of net assets acquired.

For the full year 2002, Newmont projected equity gold sales of 7.5 million ounces at a total cash cost of approximately $185 per ounce. The company anticipated higher production and lower cash costs in Q4 2002 due to higher-grade ore. The preliminary 2003 forecast indicated sales of 7.0 to 7.2 million equity ounces of gold.