10-QPeriod: Q3 FY2011

NEWMONT Corp /DE/ Quarterly Report for Q3 Ended Sep 30, 2011

Filed October 27, 2011For Securities:NEMNEMCL

Summary

Newmont Mining Corporation (NEM) reported a decrease in net income attributable to stockholders for the third quarter and the first nine months of 2011 compared to the same periods in 2010. Despite higher realized gold prices, the company was impacted by lower copper prices, reduced sales volumes, and increased production costs. A significant factor affecting profitability was a $174 million impairment of marketable equity securities in the third quarter and a $175 million impairment for the nine-month period. The company also incurred a loss from discontinued operations related to a royalty claim. Despite these challenges, Newmont continued to advance its project pipeline, with key developments at Akyem (Ghana), Conga (Peru), and Tanami Shaft (Australia). Capital expenditures increased substantially, driven by these projects and the acquisition of Fronteer Gold, Inc. The company's balance sheet reflects a notable increase in property, plant, and mine development, indicating ongoing investment in long-term assets. Newmont also announced an enhanced gold price-linked dividend policy, demonstrating confidence in its future performance.

Financial Highlights

54 data points
Beta

Net Income

$493.00M

EPS (Diluted)

$0.98

Total Assets

$29.14B

Cash & Equivalents

$2.13B

Free Cash Flow

$1.26B

Financial Statements
Beta
Gross Profit$1.46B
R&D Expenses$93.00M
Operating Expenses$1.57B
Operating Income$493.00M
Interest Expense$65.00M
Net Income$493.00M
EPS (Basic)$1.00
EPS (Diluted)$0.98
Shares Outstanding (Basic)494.00M
Shares Outstanding (Diluted)504.00M

Key Highlights

  • 1Net income attributable to Newmont stockholders decreased to $493 million ($1.00 per share) for Q3 2011 from $537 million ($1.09 per share) in Q3 2010.
  • 2For the first nine months of 2011, net income attributable to Newmont stockholders was $1,394 million ($2.82 per share), down from $1,465 million ($2.98 per share) in the same period of 2010.
  • 3A significant factor impacting results was a $174 million impairment of marketable equity securities in Q3 2011 and a $175 million impairment for the nine-month period.
  • 4The company reported record sales of $2,744 million for Q3 2011 and $7,593 million for the first nine months of 2011.
  • 5Capital expenditures significantly increased to $1,781 million for the nine months ended September 30, 2011, compared to $972 million in the prior year period, primarily due to project development and the acquisition of Fronteer Gold.
  • 6Newmont advanced key development projects including Akyem (Ghana), Conga (Peru), and the Tanami Shaft (Australia).
  • 7The company announced an enhanced gold price-linked dividend policy and declared a Q4 2011 dividend of $0.35 per share, an increase of 133% over Q4 2010.

Frequently Asked Questions

The decrease in net income was primarily due to a significant impairment loss of $174 million on marketable equity securities in the third quarter and $175 million for the nine-month period. Additionally, lower copper prices, reduced sales volumes, and higher production costs, along with a loss from discontinued operations related to a royalty claim, also contributed to the decline.

Newmont is actively advancing these projects. Akyem in Ghana is proceeding with construction, with first production anticipated in late 2013 to early 2014. Conga in Peru is progressing with infrastructure and construction works, targeting first production in late 2014 to early 2015. The Tanami Shaft project in Australia is also on track, with first production expected in late 2014 to early 2015.

The acquisition of Fronteer Gold in April 2011 contributed $2,259 million to the 'Acquisitions, net' line item in investing activities and incurred $22 million in transaction costs, recorded under 'Other Expense, net.' While Fronteer was not in production, thus not materially impacting net income, the acquisition positions Newmont to develop the Long Canyon project, expected to start production in 2017.

The enhanced dividend policy, announced in September 2011, allows for an increase in the annual dividend based on the average realized gold price. It includes step-ups for quarterly dividends when the realized gold price exceeds $1,700 and $2,000 per ounce, with a potential for the annual dividend to reach $4.70 per share if the average realized gold price exceeds $2,500 per ounce. The Q4 2011 dividend of $0.35 per share reflects an increase driven by higher gold prices.