10-QPeriod: Q3 FY2013

NEWMONT Corp /DE/ Quarterly Report for Q3 Ended Sep 30, 2013

Filed October 31, 2013For Securities:NEMNEMCL

Summary

Newmont Mining Corporation's (NEM) third-quarter 2013 report shows a net income attributable to stockholders of $408 million, or $0.82 per share, an increase from $367 million, or $0.74 per share, in the prior-year period. However, for the first nine months of 2013, the company reported a net loss of $1.296 billion, or ($2.61) per share, a significant reversal from the $1.136 billion income, or $2.29 per share, reported for the same period in 2012. This year-to-date loss was heavily impacted by asset impairments recorded in the second quarter, primarily due to lower gold and copper price assumptions and increased operating costs. Sales for the quarter and nine months declined compared to the prior year, reflecting lower realized gold and copper prices and reduced production volumes from key operations like Yanacocha and Batu Hijau. The company provided updates on several key development projects, including the Akyem project in Ghana and the Phoenix Copper Leach project in Nevada, both of which neared completion and expected commercial production by the end of 2013. Management also provided forward-looking guidance for production and costs for the remainder of the year and highlighted continued focus on operational efficiency and capital discipline amidst a challenging commodity price environment.

Financial Highlights

53 data points
Beta

Net Income

$398.00M

EPS (Diluted)

$0.80

Total Assets

$26.80B

Cash & Equivalents

$1.48B

Free Cash Flow

$440.00M

Financial Statements
Beta
Gross Profit$623.00M
R&D Expenses$67.00M
Operating Expenses$1.66B
Operating Income$419.00M
Net Income$398.00M
EPS (Basic)$0.80
EPS (Diluted)$0.80
Shares Outstanding (Basic)498.00M
Shares Outstanding (Diluted)498.00M

Key Highlights

  • 1Net income attributable to stockholders was $408 million ($0.82/share) for Q3 2013, up from $367 million ($0.74/share) in Q3 2012.
  • 2The company reported a net loss of $1.296 billion ($2.61/share) for the first nine months of 2013, a significant decrease from a net income of $1.136 billion ($2.29/share) in the comparable 2012 period, heavily influenced by asset impairments.
  • 3Sales revenue decreased in both the third quarter and the first nine months of 2013 compared to the prior year, driven by lower realized gold and copper prices and reduced sales volumes.
  • 4Consolidated gold production was 1.382 million ounces for Q3 2013, with costs applicable to sales of $649/ounce, while copper production was 54 million pounds with costs of $2.63/pound.
  • 5Significant asset impairments, totaling $2.265 billion, were recorded in the first nine months of 2013, primarily affecting property, plant, and mine development, due to lower long-term commodity price assumptions.
  • 6Capital expenditures for the first nine months of 2013 were $1.528 billion for property, plant, and mine development, with major investments in projects like Akyem and Phoenix Copper Leach.
  • 7The company sold its investment in Canadian Oil Sands Limited, resulting in a pre-tax gain of $280 million, recorded in 'Other income, net'.

Frequently Asked Questions

The substantial net loss for the first nine months of 2013 was primarily driven by asset impairments totaling $2.265 billion, recorded in the second quarter. These impairments were a result of a decrease in the company's long-term gold and copper price assumptions and rising operating costs, which necessitated an evaluation for impairment of its reporting units.

Sales revenue declined in both periods. For the third quarter of 2013, sales were $1.983 billion, down from $2.480 billion in the same period of 2012. For the first nine months, sales were $6.153 billion, down from $7.392 billion in 2012. These decreases were attributed to lower realized gold and copper prices and reduced production volumes from key operations.

The Akyem project in Ghana completed construction activities in September 2013 on schedule and budget, with first gold pour occurring in October and commercial production targeted for Q4 2013. Similarly, the Phoenix Copper Leach project in Nevada completed construction in September 2013, with first copper cathode produced in October and commercial production targeted for Q4 2013. Both projects are key to the company's growth strategy.

The company's financial performance is significantly impacted by gold and copper prices. Newmont has adjusted its long-term price assumptions to $1,400 per ounce for gold and $3.00 per pound for copper, which influenced the recorded impairments. The company continues to manage its business assuming these lower price levels, while also hedging certain input costs like diesel and foreign currencies to mitigate volatility.