10-Q/APeriod: Q1 FY2003

NEWMONT Corp /DE/ Quarterly Report (Amendment) for Q1 Ended Mar 31, 2003

Filed October 24, 2003For Securities:NEMNEMCL

Summary

Newmont Mining Corporation (NEM) reported a significant turnaround in the first quarter of 2003 compared to the same period in 2002. The company posted a net income of $117.3 million, or $0.29 per share, a substantial improvement from a net loss of $8.7 million, or ($0.03) per share, in Q1 2002. This financial performance was driven by a strong increase in gold sales, which rose to $714.6 million from $482.2 million in the prior year, reflecting higher gold prices and increased production from recently acquired operations. The company's strategic acquisitions in 2002, particularly Normandy and Franco-Nevada, appear to be integrating well, contributing to improved operational efficiency and a broader asset base. While the company incurred a significant loss from the adoption of SFAS No. 143 for asset retirement obligations, this was a non-cash accounting adjustment. Overall, Newmont demonstrated robust operational performance and a positive swing in profitability, signaling a healthier financial trajectory.

Key Highlights

  • 1Newmont reported a net income of $117.3 million ($0.29/share) for Q1 2003, a significant improvement from a net loss of $8.7 million ($0.03/share) in Q1 2002.
  • 2Gold sales increased by approximately 48% to $714.6 million in Q1 2003, driven by higher gold prices and increased equity gold sales ounces.
  • 3The company's total cash costs per ounce decreased to $201 in Q1 2003 from $238 in Q1 2002, indicating improved operational efficiency.
  • 4A gain on investments of $84.3 million was recognized from the exchange of Echo Bay shares for Kinross Gold Corporation shares.
  • 5The adoption of SFAS No. 143 for asset retirement obligations resulted in a $34.5 million net-of-tax charge in the first quarter of 2003.
  • 6Net cash provided by operating activities increased to $136.0 million in Q1 2003, up from $71.2 million in Q1 2002.
  • 7The company repurchased $135.8 million of its debt during the quarter, resulting in a $19.5 million loss on extinguishment of debt.

Frequently Asked Questions

The primary drivers for the substantial increase in net income were higher gold sales volumes, benefiting from the full integration of acquired operations from Normandy and Franco-Nevada, and an increase in the average realized gold price.

The acquisitions of Normandy and Franco-Nevada in early 2002 contributed significantly to the increase in gold sales and operational scale. The company experienced improved operational efficiency, as evidenced by lower cash costs per ounce, and benefited from a broader asset base and royalty interests.

Yes, there are several significant items. The company recorded an $84.3 million pre-tax gain on investments from an exchange of shares, a $19.5 million loss on extinguishment of debt from debt repurchases, and a $34.5 million charge related to the adoption of SFAS No. 143 for asset retirement obligations. These items should be considered when evaluating the company's core operational performance.

Newmont expects to spend approximately $560 million to $580 million on capital projects in 2003, primarily for mine development and replacement capital. The company anticipates replacing depletion of approximately 9.0 million ounces of gold during the year through its exploration programs, which are expected to total $85 million for the full year.