10-QPeriod: Q2 FY2008

NEWMONT Corp /DE/ Quarterly Report for Q2 Ended Jun 30, 2008

Filed July 24, 2008For Securities:NEMNEMCL

Summary

Newmont Mining Corporation's (NEM) second-quarter 2008 results showed a significant turnaround from the prior year, with a net income of $277 million ($0.61 per share) compared to a loss of $2.06 billion ($4.57 per share) in Q2 2007. This improvement was driven by higher realized gold and copper prices, increased gold sales volume, and the absence of a substantial loss recognized in the prior year related to the settlement of price-capped forward sales contracts. Revenues increased to $1.52 billion from $1.28 billion year-over-year. Despite these positive trends, copper sales volume decreased, and costs applicable to sales increased due to higher input prices and unfavorable foreign exchange rates, particularly impacting the Australian operations.

Financial Highlights

27 data points
Beta

Net Income

$271.00M

EPS (Diluted)

$0.59

Cash & Equivalents

$1.04B

Free Cash Flow

$370.00M

Financial Statements
Beta
R&D Expenses$39.00M
Operating Expenses$1.19B
Operating Income$627.00M
Interest Expense$35.00M
Net Income$271.00M
EPS (Basic)$0.60
EPS (Diluted)$0.59
Shares Outstanding (Basic)454.00M
Shares Outstanding (Diluted)456.00M

Key Highlights

  • 1Net income for Q2 2008 was $277 million ($0.61/share), a significant improvement from a net loss of $2.06 billion ($4.57/share) in Q2 2007.
  • 2Total revenues increased to $1.52 billion from $1.28 billion year-over-year, primarily driven by higher gold prices and sales volume.
  • 3Realized gold prices averaged $900 per ounce in Q2 2008, up from $665 per ounce in Q2 2007.
  • 4Consolidated gold ounces sold increased to 1.504 million in Q2 2008 from 1.408 million in Q2 2007.
  • 5Copper sales volume decreased significantly in Q2 2008, impacting overall revenue despite higher copper prices.
  • 6Costs applicable to sales increased due to higher input costs (diesel, labor) and unfavorable foreign exchange rates, particularly impacting Australian operations.
  • 7Newmont completed the acquisition of Miramar Mining Corporation, gaining control of the Hope Bay Project.

Frequently Asked Questions

The primary driver was a significant increase in realized gold prices and higher gold sales volume, combined with the absence of a substantial loss recorded in the prior year related to the settlement of price-capped forward sales contracts. Higher copper prices also contributed, although copper sales volume decreased.

Costs applicable to sales generally increased in Q2 2008 compared to Q2 2007. Key influences included higher input costs such as diesel and labor, unfavorable foreign exchange rate movements (particularly the Australian dollar), and lower copper production volumes at Batu Hijau. Some operations also saw cost increases due to higher royalty payments and maintenance expenses.

The acquisition of Miramar Mining Corporation was completed in Q2 2008, giving Newmont 100% control of the Hope Bay Project in Nunavut, Canada. Management views this as a strategic move to add higher-grade ore reserves and develop a new core gold mining district in a stable jurisdiction.

Yes, Newmont is involved in several environmental and legal matters. Notably, a lawsuit regarding the Midnite Mine site resulted in a court holding Newmont liable under CERCLA. Additionally, there are ongoing arbitration proceedings related to divestiture requirements at the Batu Hijau mine in Indonesia, and discussions regarding the extension of a forest use permit at the same location. While the company believes it has strong defenses in many of these matters, they represent potential financial risks.