10-K 1 d65086e10vk.htm FORM 10-K e10vk
Table of Contents

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
 
     
(Mark One)    
þ
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
    For the Fiscal Year Ended December 31, 2008
or
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
    For the Transition Period From          to
 
Commission File Number 001-31240
Newmont Mining Corporation
(Exact Name of Registrant as Specified in Its Charter)
 
     
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
  84-1611629
(I.R.S. Employer
Identification No.)
     
6363 South Fiddler’s Green Circle
Greenwood Village, Colorado
(Address of Principal Executive Offices)
  80111
(Zip Code)
 
Registrant’s telephone number, including area code
(303) 863-7414
 
Securities registered pursuant to Section 12(b) of the Act:
 
     
Title of Each Class
 
Name of Each Exchange on Which Registered
 
Common Stock, $1.60 par value
  New York Stock Exchange
 
Securities registered pursuant to Section 12(g) of the Act:
None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ     No o
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes o     No þ
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ
 
As of June 30, 2008, the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant was $23,670,310,860 based on the closing sale price as reported on the New York Stock Exchange. There were 478,507,759 shares of common stock outstanding (and 10,687,382 exchangeable shares exchangeable into Newmont Mining Corporation common stock on a one-for-one basis) on February 11, 2009.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
Portions of Registrant’s definitive Proxy Statement submitted to the Registrant’s stockholders in connection with our 2009 Annual Stockholders Meeting to be held on April 29, 2009, are incorporated by reference into Part III of this report.
 


Table of Contents

 
TABLE OF CONTENTS
 
             
        Page
 
  BUSINESS     1  
    Introduction     1  
    Segment Information, Export Sales, etc.      2  
    Products     2  
    Hedging Activities     4  
    Exploration     4  
    Licenses and Concessions     5  
    Condition of Physical Assets and Insurance     6  
    Environmental Matters     6  
    Employees     6  
    Forward-Looking Statements     7  
    Available Information     8  
  RISK FACTORS     8  
    Risks Related to the Mining Industry Generally     8  
    Risks Related to Newmont     10  
  PROPERTIES     18  
    Gold and Copper Processing Methods     18  
    Production Properties     19  
    Other Property     24  
    Operating Statistics     25  
    Proven and Probable Equity Reserves     27  
  LEGAL PROCEEDINGS     32  
  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS     32  
  EXECUTIVE OFFICERS OF THE REGISTRANT     33  
 
PART II
  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES     35  
  SELECTED FINANCIAL DATA     36  
  MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS     37  
    Overview     37  
    Accounting Developments     40  
    Critical Accounting Policies     44  
    Consolidated Financial Results     50  
    Results of Consolidated Operations     60  
    Recently Issued Accounting Pronouncements     70  
    Liquidity and Capital Resources     72  
    Environmental     80  
    Forward-Looking Statements     81  


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        Page
 
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK     81  
    Metal Price     81  
    Foreign Currency     81  
    Hedging     82  
    Fixed and Variable Rate Debt     86  
  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA     87  
  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE     177  
  CONTROLS AND PROCEDURES     177  
 
PART III
  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT     178  
  EXECUTIVE COMPENSATION     178  
  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS     178  
  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS     179  
  PRINCIPAL ACCOUNTANT FEES AND SERVICES     179  
 
PART IV
  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES     180  
    S-1  
EXHIBIT INDEX
    E-1  
 EX-10.1
 EX-10.2
 EX-10.13
 EX-10.14
 EX-10.20
 EX-10.24
 EX-12.1
 EX-21
 EX-23.1
 EX-24
 EX-31.1
 EX-31.2
 EX-32.1
 EX-32.2
 INSTANCE DOCUMENT
 SCHEMA DOCUMENT
 CALCULATION LINKBASE DOCUMENT
 LABELS LINKBASE DOCUMENT
 PRESENTATION LINKBASE DOCUMENT
 DEFINITION LINKBASE DOCUMENT


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This document (including information incorporated herein by reference) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which involve a degree of risk and uncertainty due to various factors affecting Newmont Mining Corporation and our affiliates and subsidiaries. For a discussion of some of these factors, see the discussion in Item 1A, Risk Factors, of this report.
 
PART I
 
ITEM 1.   BUSINESS (dollars in millions except per share, per ounce and per pound amounts)
 
 
Newmont Mining Corporation is primarily a gold producer with significant assets or operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico. At December 31, 2008, Newmont had proven and probable gold reserves of 85.0 million equity ounces and an aggregate land position of approximately 38,840 square miles (100,600 square kilometers). Newmont is also engaged in the production of copper, principally through its Batu Hijau operation in Indonesia. Newmont Mining Corporation’s original predecessor corporation was incorporated in 1921 under the laws of Delaware.
 
Newmont’s corporate headquarters are in Greenwood Village, Colorado, USA. In this report, “Newmont,” the “Company,” “our” and “we” refer to Newmont Mining Corporation and/or our affiliates and subsidiaries.
 
Newmont’s revenues and long-lived assets are geographically distributed as follows:
 
                                                 
    Revenues     Long-Lived Assets  
    2008     2007     2006     2008     2007     2006  
 
United States
    31 %     29 %     29 %     26 %     29 %     24 %
Peru
    26 %     20 %     32 %     13 %     13 %     11 %
Australia/New Zealand
    17 %     15 %     15 %     20 %     15 %     20 %
Indonesia
    16 %     28 %     19 %     17 %     17 %     17 %
Canada
                1 %     14 %     16 %     18 %
Ghana
    7 %     6 %     3 %     9 %     9 %     9 %
Other(1)
    3 %     2 %     1 %     1 %     1 %     1 %
 
 
(1) Other includes Mexico and Bolivia.
 
On January 27, 2009, we entered into a definitive sale and purchase agreement with AngloGold Ashanti Australia Limited (“AngloGold”) to acquire its 33.33% interest in the Boddington project in Western Australia. Upon expected completion of the acquisition, we will own 100% of the Boddington project. Consideration for the acquisition consists of $750 payable in cash at closing, $240 payable in cash and/or Newmont common stock, at our option, in December 2009, and a royalty capped at $100, equal to 50% of the average realized operating margin (Revenue less Costs applicable to sales on a by-product basis), if any, exceeding $600 per ounce, payable on one-third of gold sales from Boddington. The valuation date for the transaction is January 2009 and the transaction is expected to close in March 2009, subject to satisfaction or waiver of certain conditions and approvals. We can make no assurances that the pending acquisition of the remaining interest in the Boddington project will be consummated. See Item 1A, Risk Factors, Risks Related to Newmont Operations, below.
 
On February 3, 2009, we completed a public offering of $450 convertible senior notes, maturing on February 15, 2012. The notes will pay interest semi-annually at a rate of 3.00% per annum. The notes are convertible, at the holder’s option, equivalent to a conversion price of $46.25 per share of common stock. We granted the underwriters an option to purchase $68 in additional convertible senior notes at the public offering price, less the underwriting discount, to cover over-allotments, if any. The


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over-allotment option was exercised in full and delivery of the convertible notes was made to purchasers on February 3, 2009. Additionally, on February 3, 2009, we completed a public offering of 30,000,000 shares of common stock at a public offering price of $37.00, less an underwriting discount of $1.17 per share. We also granted the underwriters an option to purchase up to 4,500,000 additional shares of common stock at the public offering price, less the underwriting discount, to cover over-allotments. The overallotment option was exercised in full and delivery of shares was made to purchasers on February 3, 2009. Such offerings were made pursuant to our shelf registration statement on Form S-3. See Item 7, Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations — Shelf Registration Statement.
 
For additional information, see Item 7, Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations.
 
Segment Information, Export Sales, etc.
 
We have operating segments of Nevada, Yanacocha in Peru, Australia/New Zealand, Batu Hijau in Indonesia, Africa and Other Operations comprised of smaller operations in Bolivia and Mexico. We also have our Hope Bay segment in Canada, following the acquisition of Miramar Mining Corporation, and an Exploration Segment. See Item 1A, Risk Factors, Risks Related to Newmont Operations, below and Note 31 to the Consolidated Financial Statements for information relating to our business segments, our domestic and export sales, and our non-dependence on a limited number of customers.
 
Products
 
Gold
 
General.  We had consolidated sales of 6.3 million ounces of gold (5.2 million equity ounces) in 2008, 6.2 million ounces (5.3 million equity ounces) in 2007 and 7.2 million ounces (5.9 million equity ounces) in 2006. For 2008, 2007 and 2006, 88%, 78% and 86%, respectively, of our net revenues were attributable to gold sales. Of our 2008 gold sales, approximately 35% came from Nevada, 30% from Yanacocha, 19% from Australia/New Zealand, 5% from Batu Hijau and 8% from Africa. References in this report to “equity ounces” or “equity pounds” mean that portion of gold or copper produced, sold or included in proven and probable reserves that is attributable to our ownership or economic interest.
 
Most of our revenue comes from the sale of refined gold in the international market. The end product at our gold operations, however, is generally doré bars. Doré is an alloy consisting mostly of gold but also containing silver, copper and other metals. Doré is sent to refiners to produce bullion that meets the required market standard of 99.95% pure gold. Under the terms of our refining agreements, the doré bars are refined for a fee, and our share of the refined gold and the separately-recovered silver and copper are credited to our account or delivered to buyers. Gold sold from Batu Hijau and a portion of the gold from Phoenix, in Nevada, is contained in a saleable concentrate.
 
Gold Uses.  Gold has two main categories of use: fabrication and investment. Fabricated gold has a variety of end uses, including jewelry, electronics, dentistry, industrial and decorative uses, medals, medallions and official coins. Gold investors buy gold bullion, official coins and jewelry.
 
Gold Supply.  The supply of gold consists of a combination of current production from mining and the draw-down of existing stocks of gold held by governments, financial institutions, industrial organizations and private individuals. Based on public information available for the years 2006 through 2008, current mine production has, on average accounted for approximately 71% of the annual supply of gold.


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Gold Price.  The following table presents the annual high, low and average daily afternoon fixing prices for gold over the past ten years, expressed in U.S. dollars per ounce, on the London Bullion Market.
 
                         
Year
  High     Low     Average  
 
1999
  $ 326     $ 253     $ 279  
2000
  $ 313     $ 264     $ 279  
2001
  $ 293     $ 256     $ 271  
2002
  $ 349     $ 278     $ 310  
2003
  $ 416     $ 320     $ 363  
2004
  $ 454     $ 375     $ 410  
2005
  $ 536     $ 411     $ 444  
2006
  $ 725     $ 525     $ 604  
2007
  $ 841     $ 608     $ 695  
2008
  $ 1,011     $ 713     $ 872  
2009 (through February 11, 2009)
  $ 938     $ 810     $ 874  
 
 
Source: Kitco, Reuters and the London Bullion Market Association
 
On February 11, 2009, the afternoon fixing price for gold on the London Bullion Market was $938 per ounce and the spot market price of gold on the New York Commodity Exchange was $940 per ounce.
 
We generally sell our gold at the prevailing market price during the month in which the gold is delivered to the customer. We recognize revenue from a sale when the price is determinable, the gold has been delivered, the title has been transferred to the customer and collection of the sales price is reasonably assured.
 
Copper
 
General.  We had consolidated sales of 290 million pounds of copper (130 million equity pounds) in 2008, 428 million pounds (204 million equity pounds) in 2007 and 435 million pounds (230 million equity pounds) in 2006. For 2008, 2007 and 2006, 12%, 22% and 14%, respectively, of our net revenues were attributable to copper. As of December 31, 2008, we had a 45% ownership interest in the Batu Hijau operation in Indonesia, which began production in 1999. Production at Batu Hijau is in the form of a copper/gold concentrate that is sold to smelters for further treatment and refining.
 
Copper Uses.  Refined copper is incorporated into wire and cable products for use in the construction, electric utility, communications and transportation industries. Copper is also used in industrial equipment and machinery, consumer products and a variety of other electrical and electronic applications, and is also used to make brass. Copper substitutes include aluminum, plastics, stainless steel and fiber optics. Refined, or cathode, copper is also an internationally traded commodity.
 
Copper Supply.  The supply of copper consists of a combination of current production from mining and recycled scrap material.


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Copper Price.  The price of copper is quoted on the London Metal Exchange in terms of dollars per metric ton of high grade copper. The following table presents the dollar per pound equivalent of the annual high, low and average daily prices of high grade copper on the London Metal Exchange over the past ten years.
 
                         
Year
  High     Low     Average  
 
1999
  $ 0.84     $ 0.61     $ 0.71  
2000
  $ 0.91     $ 0.73     $ 0.82  
2001
  $ 0.83     $ 0.60     $ 0.72  
2002
  $ 0.77     $ 0.64     $ 0.71  
2003
  $ 1.05     $ 0.70     $ 0.81  
2004
  $ 1.49     $ 1.06     $ 1.30  
2005
  $ 2.11     $ 1.39     $ 1.67  
2006
  $ 3.99     $ 2.06     $ 3.05  
2007
  $ 3.77     $ 2.37     $ 3.24  
2008
  $ 4.08     $ 1.26     $ 3.15  
2009 (through February 11, 2009)
  $ 1.60     $ 1.38     $ 1.48  
 
 
Source: London Metal Exchange
 
On February 11, 2009, the closing price of high grade copper was $1.53 per pound on the London Metal Exchange. Our historic ability to sell copper at market prices was limited in some cases by hedging activities, more particularly described in Item 7A, Quantitative and Qualitative Disclosures about Market Risk, and Note 14 to the Consolidated Financial Statements.
 
Hedging Activities
 
Our strategy is to provide shareholders with leverage to changes in the gold price by selling our gold production at market prices. Prior to 2007, however, we entered into derivative contracts to protect the selling price for certain anticipated gold and copper production. During 2007, we delivered into the last of the copper collar contracts and net settled all price-capped forward gold sales contracts. We continue to manage risks associated with commodity inputs, interest rates and foreign currencies using the derivative market.
 
For additional information, see Hedging in Item 7A, Quantitative and Qualitative Disclosures about Market Risk, and Note 14 to the Consolidated Financial Statements.
 
Exploration
 
Our exploration group is responsible for our global efforts to discover new mineralized material and convert it into proven and probable reserves. We conduct near-mine exploration around our existing mines and greenfields exploration in other prospective regions globally. Near-mine exploration can result in the discovery of additional deposits, which will receive the economic benefit of existing operating, processing, and administrative infrastructures; whereas the discovery of new mineralization through greenfields exploration efforts will likely require capital investment to build a separate, stand-alone operation. Our exploration group employs state-of-the-art technology, including airborne geophysical data acquisition systems, satellite location devices and field-portable imaging systems, as well as geochemical and geological prospecting methods, to identify prospective mineralization targets. We expensed $214 in 2008, $177 in 2007 and $166 in 2006 on Exploration.
 
As of December 31, 2008, we had proven and probable gold reserves of 85.0 million equity ounces. We added 5.2 million equity ounces to proven and probable reserves, and depleted 6.7 million equity ounces during 2008. 2008 reserves were calculated at a $725, A$850 or NZ$1,000 per ounce


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gold price. A reconciliation of the changes in proven and probable reserves during the past three years is as follows:
 
                         
    2008     2007     2006  
    (millions of equity ounces)  
 
Opening balance
    86.5       93.9       93.2  
Total additions(1)
    5.2       0.8       5.9  
Acquisitions(2)
                3.7  
Depletion
    (6.7 )     (7.3 )     (7.4 )
Other divestments(3)
          (0.9 )     (1.5 )
                         
Closing balance
    85.0       86.5       93.9  
                         
 
 
(1) The impact of the change in gold price assumption on reserve additions was 1.9 million, 0.7 million and 3.1 million equity ounces in 2008, 2007 and 2006, respectively.
 
(2) In March 2006, reserves were increased by 2.6 million equity ounces from the acquisition of an additional 22.22% interest in the Boddington project. In January 2006, reserves were increased by 1.1 million equity ounces from the acquisition of the remaining 15% interest in Akyem.
 
(3) In December 2007, we sold the Pajingo operation. In May 2007, Newmont’s economic interest in Batu Hijau was reduced from 52.875% to 45% when a minority owner fully repaid a loan from a Newmont subsidiary. In August 2006, the government of Uzbekistan expropriated the Company’s 50% interest in the Zarafshan-Newmont Joint Venture.
 
In Nevada, proven and probable gold reserves decreased to 28.1 million equity ounces after additions of 1.8 million equity ounces and depletion of 3.1 million equity ounces.
 
At Yanacocha in Peru, proven and probable gold reserves decreased after downward revisions of 0.1 million equity ounces and depletion of 1.2 million equity ounces. As of December 31, 2008, we reported reserves of 6.7 million equity ounces at Yanacocha and 6.1 million equity ounces at Conga.
 
In Australia/New Zealand, proven and probable gold reserves increased to 20.9 million equity ounces after additions of 2.8 million equity ounces and depletion of 1.3 million equity ounces, primarily from Boddington (66.67%) and Jundee.
 
At Batu Hijau in Indonesia, proven and probable reserves decreased to 3,950 million equity pounds of copper and 4.1 million equity ounces of gold after depletion of 170 million equity pounds of copper and 0.2 million equity ounces of gold.
 
At Ahafo in Ghana, proven and probable gold reserves decreased by 0.3 million equity ounces as a result of 0.2 million equity ounces of additions offset by depletion of 0.5 million equity ounces. As of December 31, 2008, we reported reserves of 9.3 million equity ounces at Ahafo and 7.7 million equity ounces at Akyem.
 
For additional information, see Item 2, Properties, Proven and Probable Reserves.
 
Licenses and Concessions
 
Other than operating licenses for our mining and processing facilities, there are no third party patents, licenses or franchises material to our business. In many countries, however, we conduct our mining and exploration activities pursuant to concessions granted by, or under contract with, the host government. These countries include, among others, Australia, Bolivia, Canada, Ghana, Indonesia, Mexico, New Zealand and Peru. The concessions and contracts are subject to the political risks associated with foreign operations. See Item 1A, Risk Factors, Risks Related to Newmont, below. For a more detailed description of our Indonesian Contract of Work, see Item 2, Properties, below.


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Condition of Physical Assets and Insurance
 
Our business is capital intensive, requiring ongoing capital investment for the replacement, modernization or expansion of equipment and facilities. For more information, see Item 7, Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations, Liquidity and Capital Resources, below.
 
We maintain insurance policies against property loss and business interruption and insure against risks that are typical in the operation of our business, in amounts that we believe to be reasonable. Such insurance, however, contains exclusions and limitations on coverage, particularly with respect to environmental liability and political risk. There can be no assurance that claims would be paid under such insurance policies in connection with a particular event. See Item 1A, Risk Factors, Risks Related to Newmont, below.
 
Environmental Matters
 
Our United States mining and exploration activities are subject to various federal and state laws and regulations governing the protection of the environment, including the Clean Air Act; the Clean Water Act; the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Endangered Species Act; the Federal Land Policy and Management Act; the National Environmental Policy Act; the Resource Conservation and Recovery Act; and related state laws. These laws and regulations are continually changing and are generally becoming more restrictive. Our activities outside the United States are also subject to governmental regulations for the protection of the environment.
 
We conduct our operations so as to protect public health and the environment and believe our operations are in compliance with applicable laws and regulations in all material respects. Each operating mine has a reclamation plan in place that meets all applicable legal and regulatory requirements. We have made, and expect to make in the future, expenditures to comply with such laws and regulations. We have made estimates of the amount of such expenditures, but cannot precisely predict the amount of such future expenditures. Estimated future reclamation costs are based principally on legal and regulatory requirements. As of December 31, 2008, $617 was accrued for reclamation costs relating to currently developed and producing properties.
 
We are also involved in several matters concerning environmental obligations associated with former, primarily historic, mining activities. Generally, these matters concern developing and implementing remediation plans at the various sites. We believe that the related environmental obligations associated with these sites are similar in nature with respect to the development of remediation plans, their risk profile and the activities required to meet general environmental standards. Based upon our best estimate of our liability for these matters, $163 was accrued as of December 31, 2008 for such obligations associated with properties previously owned or operated by us or our subsidiaries. These amounts are included in Other current liabilities and Reclamation and remediation liabilities. Depending upon the ultimate resolution of these matters, we believe that it is reasonably possible that the liability for these matters could be as much as 126% greater or 7% lower than the amount accrued as of December 31, 2008. The amounts accrued for these matters are reviewed periodically based upon facts and circumstances available at the time. Changes in estimates are charged to costs and expenses in the period when estimates are revised.
 
For a discussion of the most significant reclamation and remediation activities, see Item 7, Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations, and Notes 25 and 33 to the Consolidated Financial Statements, below.
 
Employees
 
There were approximately 15,450 people employed by Newmont as of December 31, 2008.


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Forward-Looking Statements
 
Certain statements contained in this report (including information incorporated by reference) are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provided for under these sections. Our forward-looking statements include, without limitation:
 
  •  Statements regarding future earnings;
 
  •  Estimates of future mineral production and sales, for specific operations and on a consolidated or equity basis;
 
  •  Estimates of future costs applicable to sales, other expenses and taxes for specific operations and on a consolidated basis;
 
  •  Estimates of future cash flows;
 
  •  Estimates of future capital expenditures and other cash needs, for specific operations and on a consolidated basis, and expectations as to the funding thereof;
 
  •  Estimates regarding timing of future capital expenditures, construction, production or closure activities;
 
  •  Statements as to the projected development of certain ore deposits, including the timing of such development, the costs of such development and financing plans for these deposits;
 
  •  Estimates of reserves and statements regarding future exploration results and reserve replacement and the sensitivity of reserves to metal price changes;
 
  •  Statements regarding the availability, terms and costs related to future borrowing, debt repayment and financing;
 
  •  Statements regarding modifications to hedge and derivative positions;
 
  •  Statements regarding political, economic or governmental conditions and environments;
 
  •  Statements regarding future transactions;
 
  •  Statements regarding the impacts of changes in the legal and regulatory environment in which we operate; and
 
  •  Estimates of future costs and other liabilities for certain environmental matters.
 
Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by those forward-looking statements. Such risks include, but are not limited to: the price of gold, copper and other commodities; currency fluctuations; geological and metallurgical assumptions; operating performance of equipment, processes and facilities; labor relations; timing of receipt of necessary governmental permits or approvals; domestic and foreign laws or regulations, particularly relating to the environment and mining; domestic and international economic and political conditions; the ability of Newmont to obtain or maintain necessary financing; and other risks and hazards associated with mining operations. More detailed information regarding these factors is included in Item 1, Business, Item 1A, Risk Factors, and elsewhere throughout this report. Given these uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements.
 
All subsequent written and oral forward-looking statements attributable to Newmont or to persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Newmont disclaims any intention or obligation to update publicly any forward-looking statements, whether as a


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result of new information, future events or otherwise, except as may be required under applicable securities laws.
 
Available Information
 
Newmont maintains an internet web site at www.newmont.com. Newmont makes available, free of charge, through the Investor Information section of the web site, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Section 16 filings and all amendments to those reports, as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission. Newmont’s Corporate Governance Guidelines, the charters of key committees of its Board of Directors and its Code of Business Ethics and Conduct are also available on the web site. Any of the foregoing information is available in print to any stockholder who requests it by contacting Newmont’s Investor Relations Department.
 
The Company filed with the New York Stock Exchange (“NYSE”) on May 21, 2008, the annual certification by its Chief Executive Officer, certifying that, as of the date of the certification, he was not aware of any violation by the Company of the NYSE’s corporate governance listing standards, as required by Section 303A.12(a) of the NYSE Listed Company Manual. The Company has filed the required certifications under Section 302 of the Sarbanes-Oxley Act of 2002 regarding the quality of its public disclosures as Exhibits 31.1 and 31.2 to this report.
 
ITEM 1A.   RISK FACTORS (dollars in millions except per share, per ounce and per pound amounts)
 
Every investor or potential investor in Newmont should carefully consider the following risks, which have been separated into two groups:
 
  •  Risks related to the mining industry generally; and
 
  •  Risks related to Newmont.
 
Risks Related to the Mining Industry Generally
 
A Substantial or Extended Decline in Gold or Copper Prices Would Have a Material Adverse Effect on Newmont
 
Our business is dependent on the realized price of gold and copper, which are affected by numerous factors beyond our control. Factors tending to put downward pressure on prices include:
 
  •  Sales or leasing of gold by governments and central banks;
 
  •  U.S. dollar strength;
 
  •  Recession or reduced economic activity;
 
  •  Speculative selling;
 
  •  Decreased industrial, jewelry or investment demand;
 
  •  Increased supply from production, disinvestment and scrap;
 
  •  Sales by producers in forward and other hedging transactions; and
 
  •  Devaluing local currencies (relative to gold and copper priced in U.S. dollars) leading to lower production costs and higher production in certain regions.
 
Any drop in the realized price of gold or copper adversely impacts our revenues, net income and cash flows, particularly in light of our strategy of not hedging revenues. We have recorded asset write-downs in the past and may experience additional impairments as a result of low gold or copper prices in the future.


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In addition, sustained low gold or copper prices can:
 
  •  Reduce revenues further through production declines due to cessation of the mining of deposits, or portions of deposits, that have become uneconomic at the then-prevailing gold or copper price;
 
  •  Reduce or eliminate the profit that we currently expect from ore stockpiles and ore on leach pads;
 
  •  Halt or delay the development of new projects;
 
  •  Reduce funds available for exploration; and
 
  •  Reduce existing reserves by removing ores from reserves that can no longer be economically processed at prevailing prices.
 
Also see the discussion in Item 1, Business, Gold or Copper Price.
 
Gold and Copper Producers Must Continually Replace Reserves Depleted By Production
 
Gold and copper producers must continually replace reserves depleted by production. Depleted reserves must be replaced by expanding known ore bodies or by locating new deposits in order to maintain production levels over the long term. Exploration is highly speculative in nature, involves many risks and frequently is unproductive. Our new or ongoing exploration programs may not result in new mineral producing operations. In addition, for the year 2009, we anticipate that the global exploration budget will be reduced significantly, which may adversely affect the timing and extent of new mineral discoveries and the replacement of reserves. Once mineralization is discovered, it will likely take many years from the initial phases of exploration until production, during which time the economic feasibility of production may change.
 
Estimates of Proven and Probable Reserves Are Uncertain
 
Estimates of proven and probable reserves are subject to considerable uncertainty. Such estimates are, to a large extent, based on the price of gold and interpretations of geologic data obtained from drill holes and other exploration techniques. Producers use feasibility studies to derive estimates of capital and operating costs based upon anticipated tonnage and grades of ore to be mined and processed, the predicted configuration of the ore body, expected recovery rates of metals from the ore, the costs of comparable facilities, the costs of operating and processing equipment and other factors. Actual operating costs and economic returns on projects may differ significantly from original estimates. Further, it may take many years from the initial phase of exploration before production and, during that time, the economic feasibility of exploiting a discovery may change.
 
Increased Costs Could Affect Profitability
 
Costs at any particular mining location frequently are subject to variation due to a number of factors, such as changing ore grade, changing metallurgy and revisions to mine plans in response to the physical shape and location of the ore body. In addition, costs are affected by the price of input commodities, such as fuel, electricity and labor. Commodity costs are at times subject to volatile price movements, including increases that could make production at certain operations less profitable. Reported costs may also be affected by changes in accounting standards. A material increase in costs at any significant location could have a significant effect on our profitability and cash flow. In 2008 and 2007, we incurred significant increases in the costs of labor, fuel, power and other bulk consumables, which increased reported Costs applicable to sales, in addition to increasing the costs of capital projects.
 
We anticipate significant capital expenditures over the next several years in connection with the development of new projects and sustaining existing operations. Costs associated with capital expenditures have escalated on an industry-wide basis over the last several years, as a result of


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major factors beyond our control, including the prices of oil, steel and other commodities and labor. Increased costs for capital expenditures may have an adverse effect on the profitability of existing mining operations and economic returns anticipated from new mining projects.
 
Shortages of Critical Parts, Equipment and Skilled Labor May Adversely Affect Our Operations and Development Projects
 
The industry has been impacted by increased demand for critical resources such as input commodities, drilling equipment, tires and skilled labor. These shortages have caused unanticipated cost increases and delays in delivery times, thereby impacting operating costs, capital expenditures and production schedules.
 
Mining Accidents or Other Adverse Events or Conditions at a Mining Location Could Reduce Our Production Levels
 
At any of our operations, production may fall below historic or expected levels as a result of mining accidents such as a pit wall failure in an open pit mine, cave-ins or flooding at underground mines. In addition, production may be unexpectedly reduced at a location if, during the course of mining, unfavorable ground conditions or seismic activity, extreme or prolonged storm events, or prolonged adverse climate changes are encountered; ore grades are lower than expected; the physical or metallurgical characteristics of the ore are less amenable to mining or treatment than expected; or our equipment, processes or facilities fail to operate properly or as expected.
 
Mining Companies Are Subject to Extensive Environmental Laws and Regulations
 
Our exploration, mining and processing operations are regulated in all countries in which we operate under various federal, state, provincial and local laws relating to the protection of the environment, which generally include air and water quality, hazardous waste management and reclamation. Delays in obtaining, or failure to obtain, government permits and approvals may adversely impact our operations. The regulatory environment in which we operate could change in ways that would substantially increase costs to achieve compliance, or otherwise could have a material adverse effect on our operations or financial position. For a more detailed discussion of potential environmental liabilities, see the discussion in Environmental Matters, Note 33 to the Consolidated Financial Statements.
 
Risks Related to Newmont
 
Our Operations Outside North America and Australia/New Zealand Are Subject to Risks of Doing Business Abroad
 
Exploration, development, production and closure activities outside of North America and Australia/New Zealand are potentially subject to heightened political and economic risks, including:
 
  •  Cancellation or renegotiation of contracts;
 
  •  Disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the Foreign Corrupt Practices Act;
 
  •  Changes in foreign laws or regulations;
 
  •  Royalty and tax increases or claims by governmental entities, including retroactive claims;
 
  •  Expropriation or nationalization of property;
 
  •  Currency fluctuations (particularly in countries with high inflation);
 
  •  Foreign exchange controls;


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  •  Restrictions on the ability of local operating companies to sell gold offshore for U.S. dollars, or on the ability of such companies to hold U.S. dollars or other foreign currencies in offshore bank accounts;
 
  •  Import and export regulations, including restrictions on the export of gold;
 
  •  Restrictions on the ability to pay dividends offshore;
 
  •  Risk of loss due to civil strife, acts of war, guerrilla activities, insurrection and terrorism;
 
  •  Risk of loss due to disease and other potential endemic health issues; and
 
  •  Other risks arising out of foreign sovereignty over the areas in which our operations are conducted, including risks inherent in contracts with government owned entities.
 
Consequently, our exploration, development and production activities outside of North America and Australia/New Zealand may be substantially affected by factors beyond our control, some of which could materially adversely affect our financial position or results of operations. Furthermore, if a dispute arises from such activities, we may be subject to the exclusive jurisdiction of courts outside North America or Australia/New Zealand, which could adversely affect the outcome of a dispute.
 
Our Batu Hijau Operation in Indonesia is Subject to Political and Economic Risks
 
We have a substantial investment in Indonesia, a nation that since 1997 has undergone financial crises and devaluation of its currency, outbreaks of political and religious violence, changes in national leadership, and the secession of East Timor, one of its former provinces. These factors heighten the risk of abrupt changes in the national policy toward foreign investors, which in turn could result in unilateral modification of concessions or contracts, increased taxation, denial of permits or permit renewals or expropriation of assets. Subsequent to the commencement of operations, the government purported to designate the land surrounding the Batu Hijau operation as a “protection” forest, which has made operating permits more difficult to obtain. In 2009, presidential and parliamentary elections are scheduled to take place, the results of which may affect the position of the Indonesian government relating to mining in general or relative to our assets and operations.
 
Recent violence committed by radical elements in Indonesia and other countries, and the presence of U.S. forces in Iraq and Afghanistan, may increase the risk that operations owned by U.S. companies will be the target of violence. If our Batu Hijau operation was so targeted it could have an adverse effect on our business.
 
Our Batu Hijau Operation in Indonesia May be Adversely Affected by a Delay in Receiving Certain Permits
 
For over three years, we have been in discussions with the Indonesian government to renew a forest use permit (called a “Pinjam Pakai”) related to Batu Hijau. In 2005, Indonesian governmental authorities reviewed the contractual requirements for extension of the Pinjam Pakai and determined that P.T. Newmont Nusa Tenggara, the subsidiary that owns Batu Hijau (“PTNNT”) met those requirements. This permit is a key requirement to continue to operate Batu Hijau efficiently, in addition to the ultimate life of the mine and recoverability of reserves. However, the permit extension has not been received as of the date of this Annual Report. The resulting delay has adversely impacted the Batu Hijau mine plan, and may adversely impact future operating and financial results, including deferment or cancellation of future development and operations.
 
Our Interest in PT Newmont Nusa Tenggara (“PTNNT”) in Indonesia May be Reduced or Terminated under the Contract of Work
 
We operate Batu Hijau, a producer of copper/gold concentrates, and currently have a 45% ownership interest in the Batu Hijau mine, held through the Nusa Tenggara Partnership (“NTP”) with an affiliate of Sumitomo Corporation of Japan. We have a 56.25% interest in NTP and the Sumitomo


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affiliate holds the remaining 43.75%. NTP in turn owns 80% of PTNNT, the Indonesian subsidiary that owns Batu Hijau. The remaining 20% interest in PTNNT is owned by P.T. Pukuafu Indah (“PTPI”), an unrelated Indonesian company.
 
Under the Contract of Work executed between the Indonesian government and PTNNT, beginning in 2006 and continuing through 2010, a portion of PTNNT’s shares must be offered for sale, first, to the Indonesian government or, second, to Indonesian nationals, such portion equal to the difference between the following percentages and the percentage of shares already owned by the Indonesian government or Indonesian nationals (if such number is positive): 23% by March 31, 2006; 30% by March 31, 2007; 37% by March 31, 2008; 44% by March 31, 2009; and 51% by March 31, 2010. The price at which such interest must be offered for sale to the Indonesian parties is the highest of the then-current replacement cost, the price at which shares would be accepted for listing on the Jakarta Stock Exchange, or the fair market value of such interest as a going concern, as agreed with the Indonesian government. Pursuant to this provision, it is possible that the ownership interest of the Newmont-Sumitomo partnership in PTNNT could be reduced to 49%, thus reducing our ability to control the operation at Batu Hijau.
 
PTPI has owned and continues to own a 20% interest in PTNNT, and therefore NTP was required to offer a 3% interest in the shares of PTNNT for sale in 2006 and an additional 7% interest in each of 2007 and 2008. A further 7% interest in the shares of PTNNT will be offered for sale in March 2009. In accordance with the Contract of Work, an offer to sell a 3% interest was made to the government of Indonesia in 2006 and an offer for an additional 7% interest was made in each of 2007 and 2008. While the central government declined to participate in the offer, local governments in the area in which Batu Hijau is located have expressed interest in acquiring shares, as have various Indonesian nationals. In January 2008, NTP agreed to sell, under a carried interest arrangement, 2% of PTNNT’s shares to Kabupaten Sumbawa, one of the local governments, subject to satisfaction of closing conditions. On February 11, 2008, PTNNT received a notification from the Department of Energy and Mineral Resources (the “DEMR”) alleging that PTNNT was in breach of its divestiture requirements under the Contract of Work and threatening to issue a notice to terminate the Contract of Work if PTNNT did not agree to divest, by February 22, 2008, the 2006 and 2007 shares, in accordance with the direction of the DEMR. A second Notice of Default was received relating to the alleged failure to divest the 2008 shares. Newmont and Sumitomo believe there is no basis under the Contract of Work for these notifications and no grounds for terminating the Contract of Work. In March 2008, both the DEMR and PTNNT filed for international arbitration as provided under the Contract for Work and an arbitration hearing was held in Jakarta in December 2008. We anticipate a ruling will be issued in the first half of 2009. If the Contract of Work were to be terminated pursuant to the pending ruling, PTNNT’s rights to conduct mining may be curtailed or terminated.
 
Our Operations in Peru are Subject to Political Risks
 
During the last several years, Yanacocha, in which we own a 51.35% interest, has been the target of numerous local political protests, including ones that blocked the road between the Yanacocha mine complex and the City of Cajamarca in Peru. In 2004, local opposition to the Cerro Quilish project (which is located adjacent to Yanacocha) became so pronounced that Yanacocha decided to relinquish its drilling permit for Cerro Quilish and the deposit was reclassified from proven and probable reserves to non-reserve mineralization. In 2006 a road blockade was carried out by members of the Combayo community. This blockade was unrelated to Cerro Quilish and resulted in a brief cessation of mining activities. We cannot predict whether similar or more significant incidents will occur and the recurrence of significant community opposition or protests could adversely affect Yanacocha’s assets and operations. In 2007, 2008 and thus far in 2009, no material roadblocks or protests occurred involving Yanacocha.
 
Presidential, congressional and regional elections took place in Peru in 2006, with the new national government taking office in July 2006. In December 2006, Yanacocha, along with other mining companies in Peru, entered into an agreement with the central government to contribute


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3.75% of net profits to fund social development projects. Although the current government has generally taken positions promoting private investment, we cannot predict future government positions on foreign investment, mining concessions, land tenure, environmental regulation or taxation. A change in government positions on these issues could adversely affect Yanacocha’s assets and operations.
 
Our Success Depends on Our Social and Environmental Performance
 
Our ability to operate successfully in communities around the world will likely depend on our ability to develop, operate and close mines in a manner that is consistent with the health and safety of our employees, the protection of the environment, and the creation of long-term economic and social opportunities in the communities in which we operate. We have implemented a management system designed to promote continuous improvement in health and safety, environmental performance and community relations. However, our ability to operate could be adversely impacted by accidents or events detrimental (or perceived to be detrimental) to the health and safety of our employees, the environment or the communities in which we operate.
 
Remediation Costs for Environmental Liabilities May Exceed the Provisions We Have Made
 
We have conducted extensive remediation work at two inactive sites in the United States. We are conducting mill remediation activities at a third site in the United States, an inactive uranium mine and mill formerly operated by a subsidiary of Newmont, but remediation at the mine is subject to dispute. In late 2008, the EPA issued an order regarding water management at the mine. Remediation work at the mine site has not yet commenced. The environmental standards that may ultimately be imposed at this site remain uncertain and a risk exists that the costs of remediation may exceed the financial accruals that have been made for such remediation by a material amount. For a more detailed discussion of potential environmental liabilities, see the discussion in Environmental Matters, Note 33 to the Consolidated Financial Statements.
 
Whenever a previously unrecognized remediation liability becomes known, or a previously estimated reclamation cost is increased, the amount of that liability and additional cost will be recorded at that time and could materially reduce net income in that period.
 
Currency Fluctuations May Affect Costs
 
Currency fluctuations may affect the costs that we incur at our operations. Gold is sold throughout the world based principally on the U.S. dollar price, but a portion of our operating expenses are incurred in local currencies. The appreciation of non-U.S. dollar currencies against the U.S. dollar increases the costs of gold production in U.S. dollar terms at mines located outside the United States.
 
The foreign currency that primarily impacts our results of operations is the Australian dollar. We estimate that every $0.10 increase in U.S. dollar / Australian dollar exchange rate increases annually the U.S. dollar Costs applicable to sales by approximately $35 or $40 for each ounce of gold produced from operations in Australia before taking into account the impact of currency hedging. During 2008, the Australian dollar depreciated by approximately $0.19 per U.S. dollar, or approximately 22%. In mid-2007, we implemented derivative programs to hedge up to 75% of our future forecasted Australian dollar denominated operating and capital expenditures to reduce the variability in our Australian dollar denominated expenditures. As of December 31, 2008, we have hedged 66%, 38% and 12% of our forecasted Australian denominated operating costs in 2009, 2010 and 2011, respectively. We have also hedged 83% of our 66.67% ownership forecasted Australian denominated capital expenditures at Boddington in 2009. Our Australian dollar derivative programs will limit the benefit to the Company of future decreases if any, in the US dollar/Australian dollar exchange rates. For additional information, see Item 7, Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations, Results of Consolidated Operations, Foreign Currency Exchange Rates, below. For a


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more detailed description of how currency exchange rates may affect costs, see discussion in Foreign Currency in Item 7A, Quantitative and Qualitative Discussions About Market Risk.
 
Future Funding Requirements May Affect Our Business
 
The construction of the Boddington project in Australia, as well as potential future investments including the Akyem project in Ghana, the Conga project in Peru, the Hope Bay project in Nunavut, Canada, and various exploration projects will require significant funding. Our operating cash flow may become insufficient to meet all of these expenditures, depending on the timing and costs of development of these and other projects. As a result, new sources of capital may be needed to meet the funding requirements of these investments, fund our ongoing business activities and pay dividends. Our ability to raise and service significant new sources of capital will be a function of macroeconomic conditions, future gold and copper prices, our operational performance and our current cash flow and debt position, among other factors. Given the limited global availability of credit for use in connection with capital projects, and given our existing debt position, we may determine that in order to retain our investment grade rating, we may need to issue additional equity or other securities, defer projects or sell assets. In the event of lower gold and copper prices, unanticipated operating or financial challenges, or new funding limitations, our ability to pursue new business opportunities, invest in existing and new projects, fund our ongoing business activities, retire or service all outstanding debt and pay dividends could be significantly constrained.
 
Any Downgrade in the Credit Ratings Assigned to our Debt Securities could Increase our Future Borrowing Costs and Adversely Affect the Availability of New Financing
 
Currently, Standard & Poor’s Rating Services rates Newmont Mining Corporation BBB+, with negative outlook, and Moody’s Investors Service rates Newmont Mining Corporation Baa2, with stable outlook. There can be no assurance that any rating assigned will remain for any given period of time or that a rating will not be lowered if, in that rating agency’s judgment, future circumstances relating to the basis of the rating, so warrant. If we are unable to maintain our outstanding debt and financial ratios at levels acceptable to the credit rating agencies, or should our business prospects deteriorate, our ratings could be downgraded by the rating agencies, which could adversely affect the value of our outstanding securities, our existing debt and the availability of other new financing on favorable terms, if at all, increase our borrowing costs and impair our results of operations and financial condition. See also “Future Funding Requirements may Affect our Business” and “Current Global Financial Conditions could Adversely Affect the Availability of New Financing and our Operations.”
 
Current Global Financial Conditions could Adversely Affect the Availability of New Financing and our Operations
 
Current global financial conditions have been characterized by increased market volatility. Several financial institutions have either gone into bankruptcy or have had to be re-capitalized by governmental authorities. Access to financing has been negatively impacted by both the rapid decline in value of sub-prime mortgages and the liquidity crisis affecting the asset-backed commercial paper market. These factors may adversely affect our ability to obtain equity or debt financing in the future on terms favorable to us. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. If such increased levels of volatility and market turmoil continue, our operations could be adversely impacted.


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Cost Estimates and Timing of New Projects Are Uncertain
 
The capital expenditures and time required to develop new mines or other projects are considerable and changes in costs, construction schedules, or both, can affect project economics. There are a number of factors that can affect costs and construction schedules, including, among others:
 
  •  Availability of labor, power, transportation, commodities and infrastructure;
 
  •  Changes in input commodity prices and labor costs;
 
  •  Fluctuations in currency exchange rates;
 
  •  Availability and terms of financing;
 
  •  Difficulty of estimating construction costs over a period of years;
 
  •  Delays in obtaining environmental or other government permits;
 
  •  Weather and severe climate impacts; and
 
  •  Potential delays related to social and community issues.
 
Our Operations May Be Adversely Affected By Power Shortages
 
We have periodically experienced power shortages in Ghana resulting primarily from a nationwide drought, increasing demands for electricity, and insufficient hydroelectric or other generating capacity which caused curtailment of production at our Ahafo operations. As a result of the mining industry’s initiative to construct and install an 80 mega-watt power plant during 2007, the Ghanaian government has agreed, if required, to curtail power consumption as a result of power shortages, to distribute power proportionately between participating mines and other industrial and commercial users. Alternative sources of power may result in higher than anticipated costs, which will affect operating costs. Continued power shortages and increased costs may adversely affect our results of operations and financial condition.
 
Occurrence of Events for Which We Are Not Insured May Affect Our Cash Flow and Overall Profitability
 
We maintain insurance policies that mitigate against certain risks related to our operations. This insurance is maintained in amounts that we believe are reasonable depending upon the circumstances surrounding each identified risk. However, we may elect not to have insurance for certain risks because of the high premiums associated with insuring those risks or for various other reasons; in other cases, insurance may not be available for certain risks. Some concern always exists with respect to investments in parts of the world where civil unrest, war, nationalist movements, political violence or economic crises are possible. These countries may also pose heightened risks of expropriation of assets, business interruption, increased taxation or unilateral modification of concessions and contracts. We do not maintain insurance policies against political risk. Occurrence of events for which we are not insured may affect our cash flow and overall profitability.
 
Our Business Depends on Good Relations with Our Employees
 
Due to union activities or other employee actions, we could experience labor disputes, work stoppages or other disruptions in production that could adversely affect us. As of December 31, 2008, union represented employees constituted approximately 44% of our worldwide work force. Currently, there are labor agreements in effect for all of these workers. We may be unable to resolve any future disputes without disruption to operations.


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Title to Some of Our Properties May Be Defective or Challenged
 
Although we have conducted title reviews of our properties, title review does not necessarily preclude third parties from challenging our title or related property rights. While we believe that we have satisfactory title to our properties, some risk exists that some titles may be defective or subject to challenge. In addition, certain of our Australian properties could be subject to native title or traditional landowner claims, but such claims would not deprive us of the properties. For information regarding native title or traditional landowner claims, see the discussion under the Australia/New Zealand section of Item 2, Properties, below.
 
Competition from Other Mining Companies May Harm our Business
 
We compete with other mining companies to attract and retain key executives, skilled labor, contractors and other employees. We compete with other mining companies for the services of skilled personnel and contractors and for specialized equipment, components and supplies, such as drill rigs, necessary for exploration and development. We also compete with other mining companies for rights to mine properties containing gold and other minerals. We may be unable to continue to attract and retain skilled and experienced employees, to obtain the services of skilled personnel and contractors or specialized equipment or supplies, or to acquire additional rights to mine properties.
 
Certain Factors Outside of Our Control May Affect Our Ability to Support the Carrying Value of Goodwill
 
As of December 31, 2008, the carrying value of goodwill was approximately $188 or 1% of our total assets. Goodwill was assigned to various mine site reporting units in the Australia/New Zealand Segment in connection with our February 2002 acquisition of Normandy and represents the excess of the aggregate purchase price over the fair value of the identifiable net assets acquired. We evaluate, on at least an annual basis, the carrying amount of goodwill to determine whether current events and circumstances indicate that such carrying amount may no longer be recoverable. This evaluation involves a comparison of the estimated fair value of our reporting units to their carrying values. If the carrying amount of goodwill for any reporting unit exceeds its estimated fair value, a non-cash impairment charge could result. Material risks that could potentially result in an impairment of goodwill include: (i) a significant decrease in our long-term gold price assumption; (ii) a decrease in reserves; (iii) a lack of exploration success which could result in a significant reduction in the estimated fair value of mine site exploration potential; and (iv) any event that might otherwise adversely affect mine site production levels, operating costs or capital costs. For a more detailed description of the estimates and assumptions involved in assessing the recoverability of the carrying value of goodwill, see Item 7, Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations, Critical Accounting Policies, below.
 
Our Ability to Recognize the Benefits of Deferred Tax Assets is Dependent on Future Cash Flows and Taxable Income
 
We recognize the expected future tax benefit from deferred tax assets when the tax benefit is considered to be more likely than not of being realized. Otherwise, a valuation allowance is applied against deferred tax assets. Assessing the recoverability of deferred tax assets requires management to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, our ability to realize the deferred tax assets could be impacted. Additionally, future changes in tax laws could limit our ability to obtain the future tax benefits represented by our deferred tax assets. As of December 31, 2008, the Company’s current and long-term deferred tax assets were $286 and $1,145, respectively.


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Returns for Investments in Pension Plans Are Uncertain
 
We maintain pension plans for certain employees which provide for specified payments after retirement. The ability of the pension plans to provide the specified benefits depends on our funding of the plans and returns on investments made by the plans. Returns, if any, on investments are subject to fluctuations based on investment choices and market conditions. A sustained period of low returns or losses on investments could require us to fund the pension plans to a greater extent than anticipated. During the second half of 2008, the value of the investments in our pension plans decreased significantly. While the plans have sufficient assets to meet benefit payments in the near term, the plans are underfunded for purposes of long-term sustainable payout to all employees. If the plan investment values do not recover sufficiently, we may be required to increase the amount of future cash contributions. For a more detailed discussion of the funding status and expected benefit payments to plan participants, see the discussion in Employee-Related Benefits, Note 22 to the Consolidated Financial Statements.
 
The Acquisition of the Boddington Project is subject to the Receipt of Approvals from Regulatory Authorities, which may Impose Conditions that could Delay or Prevent the Completion of the Acquisition
 
We can make no assurances that the pending acquisition of the remaining interest in the Boddington project will be completed. The completion of the acquisition is subject to satisfaction or waiver of certain conditions, including the receipt of approvals from the Australian Foreign Investment Review Board, Western Australia Ministry of Mines and South African Reserve Bank and the receipt of consents and agreements from third parties. These regulators may impose conditions on the completion, or require changes to the terms, of the acquisition. Any such conditions or changes could have the effect of delaying or preventing the closing of the acquisition or imposing additional costs on us or limiting our revenues following the acquisition.


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ITEM 2.   PROPERTIES (dollars in millions except per share, per ounce and per pound amounts)
 
Gold and Copper Processing Methods
 
Gold is extracted from naturally-oxidized ores by either heap leaching or milling, depending on the amount of gold contained in the ore, the amenability of the ore to treatment and related capital and operating costs. Higher grade oxide ores are generally processed through mills, where the ore is ground into a fine powder and mixed with water in slurry, which then passes through a carbon-in-leach circuit. Lower grade oxide ores are generally processed using heap leaching. Heap leaching consists of stacking crushed or run-of-mine ore on impermeable pads, where a weak cyanide solution is applied to the surface of the heap to dissolve the gold. In both cases, the gold-bearing solution is then collected and pumped to process facilities to remove the gold by collection on carbon or by zinc precipitation.
 
Gold contained in ores that are not naturally oxidized can be directly milled if the gold is amenable to cyanidation, generally known as free milling sulfide ores. Ores that are not amenable to cyanidation, known as refractory ores, require more costly and complex processing techniques than oxide or free milling ore. Higher-grade refractory ores are processed through either roasters or autoclaves. Roasters heat finely ground ore to a high temperature, burn off the carbon and oxidize the sulfide minerals that prevent efficient leaching. Autoclaves use heat, oxygen and pressure to oxidize sulfide ores.
 
Some sulfide ores may be processed through a flotation plant or by bio-milling. In flotation, ore is finely ground, turned into slurry, then placed in a tank known as a flotation cell. Chemicals are added to the slurry causing the gold-containing sulfides to float attached to air bubbles to the top of the tank. The sulfides are removed from the cell and converted into a concentrate that can then be processed in an autoclave or roaster to recover the gold. Bio-milling incorporates patented technology that involves inoculation of suitable crushed ore on a leach pad with naturally occurring bacteria strains, which oxidize the sulfides over a period of time. The ore is then processed through an oxide mill.
 
At Batu Hijau, ore containing copper and gold is crushed to a coarse size at the mine and then transported from the mine via conveyor to a concentrator, where it is finely ground and then treated by successive stages of flotation, resulting in a concentrate containing approximately 30% copper. The concentrate is dewatered and stored for loading onto ships for transport to smelters.
 
(MAP)


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Production Properties
 
Set forth below is a description of Newmont’s significant production properties. Operating statistics for each operation are presented in a table in the next section of Item 2.
 
Nevada
 
We have been mining gold in Nevada since 1965. Nevada operations include Carlin, located west of the city of Elko on the geologic feature known as the Carlin Trend, the Twin Creeks mine, located approximately 15 miles north of Golconda, and the Midas mine near the town of the same name. We also participate in the Turquoise Ridge joint venture with a subsidiary of Barrick Gold Corp. (“Barrick”), which utilizes mill capacity at Twin Creeks. The Phoenix mine, located 10 miles south of Battle Mountain, commenced commercial production in the fourth quarter of 2006. The Leeville underground mine, located on the Carlin Trend northwest of the Carlin East underground mine, also commenced commercial production in the fourth quarter of 2006.
 
Gold sales from Nevada totaled approximately 2.2 million ounces for 2008 with ore mined from nine open pit and five underground mines. At year-end 2008, we reported 28.1 million equity ounces of gold reserves in Nevada, with 81% of those ounces in open pit mines and 19% in underground mines.
 
The Nevada operations produce gold from a variety of ore types requiring different processing techniques depending on economic and metallurgical characteristics. To ensure the best use of processing capacity, we use a linear programming model to guide the flow of both mining sequence selection and routing of ore streams to various plants. Refractory ores, which require more complex, higher cost processing methods, generated 72% of Nevada’s gold production in 2008, compared with 75% in 2007, and 72% in 2006. With respect to remaining reserves, we estimate that approximately 81% are refractory ores and 19% are oxide ores. Higher-grade oxide ores are processed by conventional milling and cyanide leaching at Carlin (Mill 5) and Twin Creeks (Juniper). Lower-grade material with suitable cyanide solubility is treated on heap leach pads at Carlin and Twin Creeks. Higher-grade refractory ores are processed through either a roaster at Carlin (Mill 6) or autoclaves at Twin Creeks (Sage). Lower-grade refractory ores are processed at Carlin by either bio-oxidation/flotation or direct flotation at Mill 5. Ore from the Midas mine is processed by conventional milling and Merrill-Crowe zinc precipitation. Activated carbon from the various leaching circuits is treated to produce gold ore at the Carlin or Twin Creeks refineries. Zinc precipitate at Midas is refined on-site.
 
We own, or control through long-term mining leases and unpatented mining claims, all of the minerals and surface area within the boundaries of the present Nevada mining operations (except for the Turquoise Ridge joint venture described below). The long-term leases extend for at least the anticipated mine life of those deposits. With respect to a significant portion of the Gold Quarry mine at Carlin, we own a 10% undivided interest in the mineral rights and lease the remaining 90%, on which we pay a royalty equivalent to 18% of the mineral production. We wholly-own or control the remainder of the Gold Quarry mineral rights, in some cases subject to additional royalties. With respect to certain smaller deposits in Nevada, we are obligated to pay royalties on production to third parties that vary from 1% to 8% of production.
 
We have a 25% interest in a joint venture with Barrick to operate the Turquoise Ridge mine. Newmont has an agreement to provide up to 2,000 tons per day of milling capacity at Twin Creeks to the joint venture. Barrick is the operator of the joint venture. Gold sales of 50,065 ounces in 2008, 62,844 ounces in 2007 and 58,300 ounces in 2006 were attributable to Newmont, based on our 25% ownership interest.
 
We have ore sale agreements with Barrick and Yukon-Nevada Gold Corp. (“Yukon-Nevada”) to process the Company’s ore. We recognized attributable gold sales, net of treatment charges, of 8,012 ounces in 2008, 58,624 ounces in 2007, and 99,500 ounces in 2006, pursuant to these


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agreements. During 2008, Yukon-Nevada discontinued operations and it is unclear when they will resume.
 
We have sales and refining agreements with Gerald Metals, Peñoles, Johnson Matthey, Just Refiners and Glencore to process intermediate gold bearing product.
 
Yanacocha, Peru
 
The properties of Minera Yanacocha S.R.L. (“Yanacocha”) are located approximately 375 miles (604 kilometers) north of Lima and 30 miles (48 kilometers) north of the city of Cajamarca, in Peru. Yanacocha began production in 1993. We hold a 51.35% interest in Yanacocha with the remaining interests held by Compañia de Minas Buenaventura, S.A.A. (43.65%) and the International Finance Corporation (5%).
 
Yanacocha has mining rights with respect to a large land position consisting of concessions granted by the Peruvian government to Yanacocha and a related entity. These mining concessions provide for both the right to explore and exploit. However, Yanacocha must first obtain the respective exploration and exploitation permits, which are generally granted in due course. Yanacocha may retain mining concessions indefinitely by paying annual fees and, during exploitation, complying with production obligations or paying assessed fines. Mining concessions are freely assignable or transferable.
 
Yanacocha currently has three active open pit mines, Cerro Yanacocha, La Quinua and Chaquicocha. Reclamation and/or backfilling activities at Carachugo, San José and Maqui Maqui are currently underway. Yanacocha has four leach pads, three processing facilities, and a new mill, which achieved commercial production in the second quarter of 2008. Yanacocha’s gold sales for 2008 totaled 1.8 million ounces (0.9 million equity ounces). At year-end 2008, we reported 12.8 million equity ounces of gold reserves at Yanacocha, including 6.1 million equity ounces at Conga.The Yanacocha district contains the Conga deposit, for which we continue to evaluate the development plan for Conga.
 
Yanacocha, along with other mining companies in Peru, agreed with the central government in 2006 to contribute 3.75% of its net profits to fund social development projects for a period of up to five years, contingent upon metal prices remaining high.
 
Australia/New Zealand
 
In Australia, mineral exploration and mining titles are granted by the individual states or territories. Mineral titles may also be subject to native title legislation or, in the Northern Territory, to Aboriginal freehold title legislation that entitles indigenous persons to compensation calculated by reference to the gross value of production. In 1992, the High Court of Australia held that Aboriginal people who have maintained a continuing connection with their land according to their traditions and customs may hold certain rights in respect of the land (such rights commonly referred to as “native title”). Since the High Court’s decision, Australia has passed legislation providing for the protection of native title and established procedures for Aboriginal people to claim these rights. The fact that native title is claimed with respect to an area, however, does not necessarily mean that native title exists, and disputes may be resolved by the courts.
 
Generally, under native title legislation, all mining titles granted before January 1, 1994 are valid. Titles granted between January 1, 1994 and December 23, 1996, however, may be subject to invalidation if they were not obtained in compliance with applicable legislative procedures, though subsequent legislation has validated some of these titles. After December 23, 1996, mining titles over areas where native title is claimed to exist became subject to legislative processes that generally give native title claimants the “right to negotiate” with the title applicant for compensation and other conditions. Native title holders do not have a veto over the granting of mining titles, but if agreement cannot be reached, the matter can be referred to the National Native Title Tribunal for decision.


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We do not expect that native title claims will have a material adverse effect on any of our operations in Australia. The High Court of Australia determined in an August 2002 decision, which refined and narrowed the scope of native title, that native title does not subsist in minerals in Western Australia and that the rights granted under a mining title would, to the extent inconsistent with asserted native title rights, operate to extinguish those native title rights. Generally, native title is only an issue for Newmont with respect to obtaining new mineral titles or moving from one form of title to another, for example, from an exploration title to a mining title. In these cases, the requirements for negotiation and the possibility of paying compensation may result in delay and increased costs for mining in the affected areas. Similarly, the process of conducting Aboriginal heritage surveys to identify and locate areas or sites of Aboriginal cultural significance can result in additional costs and delay in gaining access to land for exploration and mining-related activities.
 
In Australia, various ad valorem royalties are paid to state and territorial governments, typically based on a percentage of gross revenues and earnings.
 
Tanami.  The Tanami operations (100% owned) include The Granites treatment plant and associated mining operations, which are located in the Northern Territory approximately 342 miles (550 kilometers) northwest of Alice Springs, adjacent to the Tanami highway, and the Dead Bullock Soak mining operations, approximately 25 miles (40 kilometers) west of The Granites. The Tanami operations have been wholly-owned since April 2003, when Newmont acquired the minority interests.
 
The Tanami operations are predominantly focused on the Callie underground mine at Dead Bullock Soak. Ore from the Tanami operations is processed through The Granites treatment plant. During 2008, the Tanami operations sold 364,900 ounces of gold. At year-end 2008, we reported 1.5 million equity ounces of gold reserves at Tanami.
 
Kalgoorlie.  The Kalgoorlie operations comprise the Fimiston open pit (commonly referred to as the Super Pit) and Mt. Charlotte underground mine at Kalgoorlie-Boulder, 373 miles (600 kilometers) east of Perth. The mines are managed by Kalgoorlie Consolidated Gold Mines Pty Ltd for the joint venture owners, Newmont and Barrick, each of which holds a 50% interest. The Super Pit is one of Australia’s largest gold mines in terms of gold production and annual mining volume. During 2008, the Kalgoorlie operations sold 304,400 equity ounces of gold. At year-end 2008, we reported 4.4 million equity ounces of gold reserves at Kalgoorlie.
 
Jundee.  The Jundee operation (100% owned) is situated approximately 435 miles (700 kilometers) northeast of Perth in Western Australia. We mined ore at Jundee solely from underground sources in 2008, with mill feed supplemented from oxide stockpiles for blending purposes. Jundee sold 376,900 ounces of gold in 2008. At year-end 2008, we reported 1.3 million equity ounces of gold reserves at Jundee.
 
Waihi.  The Waihi operations (100% owned) are located within the town of Waihi, located approximately 68 miles (110 kilometers) southeast of Auckland, New Zealand and consist of the Favona underground deposit and the Martha open pit. The Waihi operation sold 141,000 ounces of gold in 2008. At year-end 2008, we reported 0.4 million equity ounces of gold reserves at Waihi.
 
Boddington.  Boddington is a development project located 81 miles (130 kilometers) southeast of Perth in Western Australia. At December 31, 2008, Boddington was owned by Newmont (66.67%) and AngloGold Ashanti Limited (“AngloGold”) (33.33%). On January 27, 2009, the Company entered into a definitive sale and purchase agreement with AngloGold to acquire its 33.33% interest in the Boddington project. Upon expected completion of the acquisition, Newmont will own 100% of the project. Development of the Boddington project was approximately 89% complete as of December 31, 2008, with mill start-up expected in mid-2009. At year-end 2008, we reported 13.4 million equity ounces of gold reserves at Boddington.


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Batu Hijau, Indonesia
 
The Batu Hijau mine is located on the island of Sumbawa, approximately 950 miles (1,529 kilometers) east of Jakarta. Batu Hijau is a large porphyry copper/gold deposit, which Newmont discovered in 1990. Development and construction activities began in 1997 and start-up occurred in late 1999. In 2008, copper sales were 289.7 million pounds (130.4 million equity pounds), while gold sales were 298,900 ounces (134,500 equity ounces). At year-end 2008, we reported 3,950 million equity pounds of copper reserves and 4.1 million equity ounces of gold reserves at Batu Hijau.
 
We own 45% of the Batu Hijau mine through the Nusa Tenggara Partnership (“NTP”) with an affiliate of Sumitomo Corporation of Japan. We have a 56.25% interest in NTP and the Sumitomo affiliate holds the remaining 43.75%. NTP in turn owns 80% of P.T. Newmont Nusa Tenggara (“PTNNT”), the Indonesian subsidiary that owns Batu Hijau. The remaining 20% interest in PTNNT is owned by P.T. Pukuafu Indah (“PTPI”), an unrelated Indonesian company. We are the operator of the Batu Hijau mine.
 
In Indonesia, rights are granted to foreign investors to explore for and to develop mineral resources within defined areas through Contracts of Work entered into with the Indonesian government. In 1986, PTNNT entered into a Contract of Work with the Indonesian government covering Batu Hijau, under which PTNNT was granted the exclusive right to explore in the contract area, construct any required facilities, extract and process the mineralized materials, and sell and export the minerals produced, subject to certain requirements including Indonesian government approvals and payment of royalties to the government. Under the Contract of Work, PTNNT has the right to continue operating the project for 30 years from operational start-up, or longer if approved by the Indonesian government.
 
Under the Contract of Work, beginning in 2006 and continuing through 2010, a portion of PTNNT’s shares must be offered for sale, first, to the Indonesian government or, second, to Indonesian nationals, equal to the difference between the following percentages and the percentage of shares already owned by the Indonesian government or Indonesian nationals (if such number is positive): 23% by March 31, 2006; 30% by March 31, 2007; 37% by March 31, 2008; 44% by March 31, 2009; and 51% by March 31, 2010. The price at which such interest must be offered for sale to the Indonesian parties is the highest of the then-current replacement cost, the price at which shares would be accepted for listing on the Indonesian Stock Exchange, or the fair market value of such interest as a going concern, as agreed with the Indonesian government. Pursuant to this provision, it is possible that the ownership interest of NTP in PTNNT could be reduced to 49%.
 
PTPI has owned and continues to own a 20% interest in PTNNT, and therefore NTP (the Newmont-Sumitomo partnership) was required to offer a 3% interest in PTNNT for sale in 2006 and an additional 7% interest in each of 2007 and 2008. In accordance with the Contract of Work, an offer to sell a 3% interest was made to the Indonesian government in 2006 and an offer for an additional 7% interest was made in each of 2007 and 2008. While the central government declined to participate in the 2006 and 2007 offers, local governments in the area in which the Batu Hijau mine is located have expressed interest in acquiring shares, as have various Indonesian companies and nationals. In January 2008, NTP agreed to sell, under a carried interest arrangement, 2% of PTNNT’s shares to Kabupaten Sumbawa, one of the local governments, subject to satisfaction of closing conditions. The Indonesian government has subsequently stated that it will not approve the transfer of shares under this agreement. On February 11, 2008, PTNNT received notification from the Department of Energy and Mineral Resources (“DEMR”) alleging that PTNNT is in breach of its divestiture requirements under the Contract of Work and threatening to issue a notice to terminate the Contract of Work if PTNNT did not agree to divest the 2006 and 2007 shares, in accordance with the direction of the DEMR, by February 22, 2008, which date was extended to March 3, 2008. A second Notice of Default was received relating to the alleged failure to divest the 2008 shares as well. On March 3, 2008, the Indonesian government filed for international arbitration, as did PTNNT, as provided under the Contract of Work. In the arbitration proceeding, PTNNT seeks a declaration that the Indonesian government is not entitled to terminate the Contract of Work and additional declarations pertaining to


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the procedures for divesting the shares. For its part, the Indonesian government seeks declarations that PTNNT is in default of its divestiture obligations, that the Government may terminate the Contract of Work, and that PTNNT must cause shares subject to divestiture to be sold to certain local governments. An international arbitration panel was appointed and an arbitration hearing was held in Jakarta in December 2008. We anticipate a ruling will be issued in the first half of 2009. Newmont and Sumitomo believe there is no basis under the Contract of Work for the notifications and no grounds for terminating the Contract of Work, and PTNNT is vigorously defending the matter.
 
In 1997, to enable development of the Batu Hijau project, PTNNT secured an aggregate $1,000 in financing from the United States Export-Import Bank, the Japan Bank for International Cooperation (formerly the Japan Export-Import Bank), and Kreditanstalt fur Wiederaufbau (the German Export-Import Bank) (collectively, the “Senior Lenders”). The Senior Lenders required PTNNT’s shareholders to pledge 100% of the shares of PTNNT as security for repayment of the loans and interest. As part of that process, on October 30, 1997, the Minister of Energy and Mineral Resources approved the share pledge arrangements.
 
Subsequent to an additional 7% interest in PTNNT being offered by NTP for sale on March 28, 2008 (as required under the Contract of Work), the Director General of Mineral, Coal and Geothermal Resources at DEMR claimed that PTNNT breached its obligations under the Contract of Work by allowing shares to be offered for sale that are pledged to the Senior Lenders as security for the repayment of the senior debt. In the letter, the Director General claimed that NTP would be in default under the Contract of Work if the shares of PTNNT offered for sale in March 2008, together with the shares offered in 2006 and 2007, were not in the possession of “Indonesian government and/or government owned entities,” free of any such senior pledge, by July 13, 2008. Consequently, on July 10, 2008, PTNNT filed a notice to commence an additional international arbitration proceeding, as provided for under the Contract of Work, to resolve the claim that PTNNT breached its obligations under the Contract of Work by allowing shares to be offered that are subject to pledge obligations to the Senior Lenders. This pledge of shares issue has since been incorporated into, and will be resolved as part of the initial arbitration proceeding.
 
In addition, PTNNT has been in discussions to extend the forest use permit (called a “Pinjam Pakai”) for over three years. In 2005, Indonesian governmental authorities reviewed the contractual requirements for extension of the Pinjam Pakai and determined that PTNNT met those requirements. This permit is a key requirement to continue to operate Batu Hijau efficiently, in addition to the ultimate life of the mine and recoverability of reserves. However, the permit extension has not been received as of the date of this Annual Report. The resulting delay has adversely impacted Batu Hijau, and may adversely impact future operating and financial results, including deferment or cancellation of future mine development and operations.
 
Africa
 
Ahafo.  The Ahafo operation (100% owned) is located in the Brong-Ahafo Region of Ghana, approximately 180 miles (290 kilometers) northwest of Accra. Ahafo poured its first gold on July 18, 2006 and commenced commercial production in August 2006. Ahafo sold 520,800 ounces of gold in 2008.
 
We currently operate three open pits at Ahafo with reserves contained in 17 pits. The process plant consists of a conventional mill and carbon-in-leach circuit. Ahafo reserves as of December 31, 2008, were 9.3 million equity ounces.
 
In December 2003, Ghana’s Parliament unanimously ratified an Investment Agreement between Newmont and the Government of Ghana. The Agreement establishes a fixed fiscal and legal regime, including fixed royalty and tax rates, for the life of any Newmont project in Ghana. Under the Agreement, we will pay corporate income tax at the Ghana statutory tax rate (presently 25% but not to exceed 32.5%) and fixed gross royalties on gold production of 3.0% (3.6% for any production from forest reserve areas). The Government of Ghana is also entitled to receive 10% of a project’s net cash flow after we have recouped our investment and may acquire up to 20% of a project’s equity at


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fair market value on or after the 15th anniversary of such project’s commencement of production. The Investment Agreement also contains commitments with respect to job training for local Ghanaians, community development, purchasing of local goods and services and environmental protection.
 
Akyem.  We have one development project in Ghana, currently the subject of further optimization studies. The Akyem project (100% owned) is located approximately 80 miles (125 kilometers) northwest of Accra. We continue to evaluate the development plan for Akyem.
 
Other Operations
 
Bolivia.  The Kori Kollo open pit mine is on a high plain in northwestern Bolivia near Oruro, on government mining concessions issued to a Bolivian corporation, Empresa Minera Inti Raymi S.A. (“Inti Raymi”), in which we have an 88% interest. The remaining 12% is owned by Mrs. Beatriz Rocabado. Inti Raymi owns and operates the mine. The mill was closed in October 2003 and production continued from residual leaching. In 2005, additional material from the stockpiles and Lla Llagua pit were placed on the existing leach pad and ore from the Kori Chaca pit was processed on a new leach pad. In 2008, Inti Raymi sold 75,300 equity ounces of gold. At year-end 2008, we reported 0.2 million equity ounces of gold reserves at Inti Raymi.
 
Mexico.  We have a 44% interest in La Herradura, which is located in Mexico’s Sonora desert. La Herradura is operated by Fresnillo PLC (which owns the remaining 56% interest) and comprises an open pit operation with run-of-mine heap leach processing. La Herradura sold 95,200 equity ounces of gold in 2008. At year-end 2008, we reported 1.9 million equity ounces of gold reserves at La Herradura.
 
Other Property
 
Hope Bay.  With the successful completion of the acquisition of Miramar Mining Corporation in March 2008, we now own 100% of the Hope Bay project, a large undeveloped gold project in the Nunavut Territory of Canada. The acquisition and development of the Hope Bay project is consistent with the Company’s strategic focus on generating value through exploration and project development and was acquired with the intention of adding higher grade ore reserves and developing a new core gold mining district in a AAA-rated country.


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Operating Statistics
 
The following tables detail operating statistics related to gold production, sales and production costs.
 
                                                 
    Nevada, USA     Yanacocha, Peru  
Year Ended December 31,
  2008     2007     2006     2008     2007     2006  
 
Tons mined (000 dry short tons):
                                               
Open pit
    194,092       214,127       191,438       211,525       208,871       217,501  
Underground
    2,500       1,942       1,651                    
Tons processed (000 dry short tons):
                                               
Mill
    24,755       25,526       17,882       4,196              
Leach
    19,843       14,042       22,138       97,823       98,319       118,511  
Average ore grade (oz/ton):
                                               
Mill
    0.093       0.098       0.127       0.082              
Leach
    0.027       0.035       0.026       0.018       0.019       0.026  
Average mill recovery rate
    81.8 %     81.2 %     81.1 %     88.2 %            
Ounces produced (000):
                                               
Mill
    1,878       2,004       2,059       304              
Leach
    381       332       364       1,505       1,565       2,612  
Incremental start-up(1)
    1       6       100                    
                                                 
      2,260       2,342       2,523       1,809       1,565       2,612  
                                                 
Ounces sold (000)
    2,225       2,341       2,534       1,843       1,565       2,572  
                                                 
Production costs per ounce:
                                               
Direct mining and production costs
  $ 464     $ 445     $ 398     $ 354     $ 310     $ 175  
By-product credits
    (39 )     (26 )     (15 )     (27 )     (22 )     (16 )
Royalties and production taxes
    30       15       8       16       13       14  
Other
    5       3       3       3       12       2  
                                                 
Costs applicable to sales
    460       437       394       346       313       175  
Amortization
    111       94       74       92       103       67  
Reclamation/accretion expense
    3       2       3       5       6       3  
                                                 
Total production costs
  $ 574     $ 533     $ 471     $ 443     $ 422     $ 245  
                                                 
 
                                                 
    Australia/New Zealand     Batu Hijau, Indonesia  
Year Ended December 31,
  2008     2007     2006     2008     2007     2006  
 
Tons mined (000 dry short tons):
                                               
Open pit
    48,416       56,259       54,221       195,804       244,907       293,159  
Underground
    3,896       3,547       3,658                    
Tons milled (000 dry short tons)
    12,256       11,932       13,070       37,818       46,782       47,026  
Average ore grade (oz/ton)
    0.106       0.102       0.102       0.009       0.014       0.012  
Average mill recovery rate
    91.5 %     91.3 %     90.9 %     75.2 %     81.9 %     79.5 %
Ounces produced (000)
    1,195       1,117       1,216       269       548       448  
                                                 
Ounces sold (000)
    1,187       1,153       1,176       299       494       435  
                                                 
Production costs per ounce:
                                               
Direct mining and production costs
  $ 526     $ 449     $ 353     $ 406     $ 225     $ 193  
By-product credits
    (9 )     (5 )     (10 )     (10 )     (8 )     (9 )
Royalties and production taxes
    32       29       28       18       15       13  
Other
    3       6       2                    
                                                 
Costs applicable to sales
    552       479       373       414       232       197  
Amortization
    103       94       78       85       50       46  
Reclamation/accretion expense
    5       5       5       6       3       2  
                                                 
Total production costs
  $ 660     $ 578     $ 456     $ 505     $ 285     $ 245  
                                                 


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    Africa  
Year Ended December 31,
  2008     2007     2006  
 
Tons mined (000 dry short tons):
                       
Open pit
    50,567       44,235       19,999  
Tons milled (000 dry short tons)
    8,262       8,090       3,515  
Average ore grade (oz/ton)
    0.075       0.060       0.065  
Average mill recovery rate
    89.7 %     92.0 %     88.3 %
Ounces produced (000):
                       
Mill
    506       456       197  
Incremental start-up(1)
    19             5  
                         
      525       456       202  
                         
Ounces sold (000)
    521       446       202  
                         
Production costs per ounce:
                       
Direct mining and production costs
  $ 380     $ 355     $ 237  
By-product credits and other
    (1 )     (1 )     (1 )
Royalties and production taxes
    27       21       18  
Other
    2       1       3  
                         
Costs applicable to sales
    408       376       257  
Amortization
    126       96       94  
Reclamation/accretion expense
    3       1       1  
                         
Total production costs
  $ 537       473       352  
                         
 
                                                 
    Other Operations     Total Gold  
Year Ended December 31,
  2008     2007     2006     2008     2007     2006  
 
Ounces produced (000):
                                               
Mill
          12       59       4,152       4,137       3,979  
Leach
    181       175       208       2,067       2,072       3,184  
Incremental start-up(1)
                      20       6       105  
                                                 
      181       187       267       6,239       6,215       7,268  
                                                 
Ounces sold (000)
    180       185       267       6,255       6,184       7,186  
                                                 
Production costs per ounce:
                                               
Direct mining and production costs
  $ 451     $ 334     $ 214     $ 433     $ 384     $ 285  
By-product credits
    (15 )     (18 )     (11 )     (25 )     (18 )     (13 )
Royalties and production taxes
    27       (1 )           26       17       14  
Other
    103       7       10       6       6       2  
                                                 
Costs applicable to sales
    566       322       213       440       389       288  
Amortization
    100       91       69       104       93       71  
Reclamation/accretion expense
    9       10       9       4       4       3  
                                                 
Total production costs
  $ 675     $ 423     $ 291     $ 548     $ 486     $ 362  
                                                 
 
 
(1) Incremental start-up includes the removal and production of de minimis saleable materials during development and is recorded as Other income, net of incremental mining and processing costs.


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The following table details operating statistics related to Batu Hijau copper production, sales and production costs.
 
                         
    Batu Hijau, Indonesia  
Year Ended December 31,
  2008     2007     2006  
 
Tons milled (000 dry short tons)
    37,818       46,782       47,026  
Average copper grade
    0.47 %     0.60 %     0.55 %
Average copper recovery rate
    80.6 %     86.1 %     87.3 %
Copper pounds produced (millions)
    285       484       454  
Copper pounds sold (millions)
    290       428       435  
Production costs per pound:
                       
Costs applicable to sales
  $ 1.38     $ 1.05     $ 0.67  
Amortization
    0.28       0.22       0.15  
Reclamation/accretion expense
    0.02       0.01       0.01  
                         
Total production costs
  $ 1.68     $ 1.28     $ 0.83  
                         
 
Proven and Probable Equity Reserves
 
We had proven and probable gold reserves of 85.0 million equity ounces as of December 31, 2008.
 
For 2008, reserves were calculated at a $725, A$850 or NZ$1,000 per ounce gold price assumption. Our 2008 reserves would decline by approximately 10% (8.2 million ounces), if calculated at a $675 per ounce gold price. An increase in the gold price to $775 per ounce would increase reserves by approximately 4% (3.3 million ounces), all other assumptions remaining constant. For 2007, reserves were calculated at a $575, A$750 or NZ$850 per ounce gold price assumption.
 
As of December 31, 2008, our proven and probable gold reserves in Nevada were 28.1 million equity ounces. Outside of Nevada, year-end proven and probable gold reserves were 56.9 million equity ounces, including 20.9 million equity ounces in Australia/New Zealand, 17.0 million equity ounces in Ghana, 12.8 million equity ounces in Peru, 4.1 million equity ounces in Indonesia and 2.1 million equity ounces at Other Operations.
 
Our proven and probable copper reserves as of December 31, 2008 were 7,780 million equity pounds. For 2008, reserves were calculated at a price of $2.00 or A$2.40 per pound assumption. For 2007, reserves were calculated at a price of $1.75 or A$2.00 per pound assumption.
 
Under our current mining plans, all of our reserves are located on fee property or mining claims or will be depleted during the terms of existing mining licenses or concessions, or where applicable, any assured renewal or extension periods for such licenses or concessions.
 
Proven and probable equity reserves are based on extensive drilling, sampling, mine modeling and metallurgical testing from which we determined economic feasibility. The price sensitivity of reserves depends upon several factors including grade, metallurgical recovery, operating cost, waste-to-ore ratio and ore type. Metallurgical recovery rates vary depending on the metallurgical properties of each deposit and the production process used. The reserve tables below list the average metallurgical recovery rate for each deposit, which takes into account the several different processing methods that we use. The cut-off grade, or lowest grade of mineralized material considered economic to process, varies with material type, metallurgical recoveries and operating costs.
 
The proven and probable equity reserve figures presented herein are estimates based on information available at the time of calculation. No assurance can be given that the indicated levels of recovery of gold and copper will be realized. Ounces of gold or pounds of copper included in the proven and probable reserves are calculated without regard to any losses during metallurgical treatment. Reserve estimates may require revision based on actual production. Market fluctuations in the price of gold and copper, as well as increased production costs or reduced metallurgical recovery


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rates, could render certain proven and probable reserves containing relatively lower grades of mineralization uneconomic to exploit and might result in a reduction of reserves.
 
We publish reserves annually, and we will recalculate reserves as of December 31, 2009, taking into account metal prices, changes, if any, in future production and capital costs, divestments and depletion as well as any acquisitions and additions to reserves during 2009.
 
The following tables detail gold proven and probable equity reserves(1) reflecting only those reserves owned by Newmont as of December 31, 2008 and 2007:
 
                                                                                         
          December 31, 2008        
          Proven Reserves     Probable Reserves     Proven and Probable Reserves        
    Newmont
          Grade
                Grade
                Grade
          Metallurgical
 
Deposits/Districts
  Share     Tonnage(2)     (oz/ton)     Ounces(3)     Tonnage(2)     (oz/ton)     Ounces(3)     Tonnage(2)     (oz/ton)     Ounces(3)     Recovery(3)  
          (000)           (000)     (000)           (000)     (000)           (000)        
 
Nevada(4)
                                                                                       
Carlin Open Pit(5)
    100 %     12,000       0.072       860       190,400       0.043       8,190       202,400       0.045       9,050       74 %
Carlin Underground
    100 %     1,700       0.256       430       10,000       0.322       3,220       11,700       0.313       3,650       89 %
Midas(6)
    100 %     600       0.498       280       300       0.332       110       900       0.436       390       95 %
Phoenix(7)
    100 %                       299,800       0.021       6,310       299,800       0.021       6,310       72 %
Turquoise Ridge(8)
    25 %     1,900       0.507       970       700       0.483       360       2,600       0.500       1,330       92 %
Twin Creeks
    100 %     9,200       0.098       900       42,500       0.072       3,060       51,700       0.077       3,960       80 %
Nevada In-Process(9)
    100 %     36,000       0.026       940                         36,000       0.026       940       66 %
Nevada Stockpiles(10)
    100 %     32,000       0.075       2,400       2,200       0.030       60       34,200       0.072       2,460       78 %
                                                                                         
              93,400       0.073       6,780       545,900       0.039       21,310       639,300       0.044       28,090       78 %
                                                                                         
Yanacocha, Peru
                                                                                       
Conga(11)
    51.35 %                       317,200       0.019       6,080       317,200       0.019       6,080       79 %
Yanacocha In-Process(9)(12)
    51.35 %     20,800       0.026       530                         20,800       0.026       530       74 %
Yanacocha Open Pits(12)
    51.35 %     19,200       0.023       430       188,300       0.030       5,720       207,500       0.030       6,150       69 %
                                                                                         
              40,000       0.024       960       505,500       0.023       11,800       545,500       0.023       12,760       74 %
                                                                                         
Australia/New Zealand
                                                                                       
Boddington, Western Australia(13)
    66.67 %     125,500       0.026       3,310       457,700       0.022       10,060       583,200       0.023       13,370       81 %
Jundee, Western Australia(14)
    100 %     3,500       0.096       340       2,800       0.337       930       6,300       0.202       1,270       91 %
Kalgoorlie Open Pits and Underground
    50 %     23,100       0.061       1,410       40,600       0.063       2,560       63,700       0.062       3,970       85 %
Kalgoorlie Stockpiles(10)
    50 %     14,400       0.031       450                         14,400       0.031       450       76 %
                                                                                         
Total Kalgoorlie, Western Australia(15)
    50 %     37,500       0.049       1,860       40,600       0.063       2,560       78,100       0.056       4,420       84 %
Tanami, Northern Territory(16)
    100 %     4,000       0.167       660       7,500       0.108       820       11,500       0.129       1,480       96 %
Waihi, New Zealand(17)
    100 %     300       0.267       80       2,600       0.107       280       2,900       0.124       360       89 %
                                                                                         
              170,800       0.037       6,250       511,200       0.029       14,650       682,000       0.031       20,900       83 %
                                                                                         
Batu Hijau, Indonesia
                                                                                       
Open Pit(18)
    45 %     166,000       0.013       2,110       182,800       0.009       1,570       348,800       0.011       3,680       76 %
Stockpiles(10)(18)
    45 %                       131,400       0.003       410       131,400       0.003       410       72 %
                                                                                         
              166,000       0.013       2,110       314,200       0.006       1,980       480,200       0.009       4,090       76 %
                                                                                         
Africa
                                                                                       
Ahafo, Ghana(19)
    100 %     5,900       0.039       230       119,200       0.077       9,150       125,100       0.075       9,380       87 %
Akyem, Ghana(20)
    100 %                       147,200       0.052       7,660       147,200       0.052       7,660       89 %
                                                                                         
              5,900       0.039       230       266,400       0.063       16,810       272,300       0.063       17,040       88 %
                                                                                         
Other Operations
                                                                                       
Kori Kollo, Bolivia(21)
    88 %     9,100       0.018       160       2,400       0.014       30       11,500       0.017       190       52 %
La Herradura, Mexico(22)
    44 %     36,900       0.025       910       39,200       0.025       980       76,100       0.025       1,890       66 %
                                                                                         
              46,000       0.023       1,070       41,600       0.024       1,010       87,600       0.024       2,080       65 %
                                                                                         
Total Gold
            522,100       0.033       17,400       2,184,800       0.031       67,560       2,706,900       0.031       84,960       80 %
                                                                                         
 


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          December 31, 2007        
          Proven Reserves     Probable Reserves     Proven and Probable Reserves        
    Newmont
          Grade
                Grade
                Grade
          Metallurgical
 
Deposits/Districts
  Share     Tonnage(2)     (oz/ton)     Ounces(3)     Tonnage(2)     (oz/ton)     Ounces(3)     Tonnage(2)     (oz/ton)     Ounces(3)     Recovery(3)  
          (000)           (000)     (000)           (000)     (000)           (000)        
 
Nevada
                                                                                       
Carlin Open Pit
    100 %     17,700       0.065       1,140       195,800       0.043       8,380       213,500       0.045       9,520       71 %
Carlin Underground
    100 %     1,500       0.318       490       5,700       0.407       2,330       7,200       0.388       2,820       94 %
Midas
    100 %     600       0.539       340       400       0.428       190       1,000       0.493       530       95 %
Phoenix
    100 %                       278,100       0.027       7,600       278,100       0.027       7,600       75 %
Turquoise Ridge(8)
    25 %     2,100       0.477       990       700       0.402       290       2,800       0.458       1,280       92 %
Twin Creeks
    100 %     4,200       0.072       300       47,900       0.079       3,780       52,100       0.078       4,080       80 %
Nevada In-Process(9)
    100 %     40,200       0.026       1,060                         40,200       0.026       1,060       66 %
Nevada Stockpiles(10)
    100 %     30,900       0.079       2,440       1,500       0.030       40       32,400       0.077       2,480       77 %
                                                                                         
              97,200       0.070       6,760       530,100       0.043       22,610       627,300       0.047       29,370       77 %
                                                                                         
Yanacocha, Peru
                                                                                       
Conga
    51.35 %                       317,200       0.019       6,080       317,200       0.019       6,080       79 %
Yanacocha In-Process(9)
    51.35 %     20,700       0.027       560                         20,700       0.027       560       76 %
Yanacocha Open Pits
    51.35 %     26,400       0.023       600       229,200       0.030       6,940       255,600       0.029       7,540       69 %
                                                                                         
              47,100       0.025       1,160       546,400       0.024       13,020       593,500       0.024       14,180       74 %
                                                                                         
Australia/New Zealand
                                                                                       
Boddington, Western Australia
    66.67 %     124,900       0.026       3,240       352,000       0.022       7,850       476,900       0.023       11,090       82 %
Jundee, Western Australia
    100 %     3,000       0.148       450       3,700       0.283       1,040       6,700       0.222       1,490       91 %
Kalgoorlie Open Pits and Underground
    50 %     32,500       0.061       1,980       33,600       0.065       2,190       66,100       0.063       4,170       86 %
Kalgoorlie Stockpiles(10)
    50 %     13,500       0.031       420                         13,500       0.031       420       79 %
                                                                                         
Total Kalgoorlie, Western Australia
    50 %     46,000       0.052       2,400       33,600       0.065       2,190       79,600       0.058       4,590       85 %
Tanami, Northern Territory
    100 %     6,600       0.140       920       6,700       0.115       770       13,300       0.127       1,690       95 %
Waihi, New Zealand
    100 %                       3,800       0.131       500       3,800       0.131       500       89 %
                                                                                         
              180,500       0.039       7,010       399,800       0.031       12,350       580,300       0.033       19,360       85 %
                                                                                         
Batu Hijau, Indonesia
                                                                                       
Open Pit
    45 %     132,700       0.013       1,780       246,200       0.008       2,050       378,900       0.010       3,830       77 %
Stockpiles(10)
    45 %                       114,300       0.004       410       114,300       0.004       410       64 %
                                                                                         
              132,700       0.013       1,780       360,500       0.007       2,460       493,200       0.009       4,240       76 %
                                                                                         
Africa
                                                                                       
Ahafo, Ghana
    100 %                       124,000       0.078       9,720       124,000       0.078       9,720       87 %
Akyem, Ghana
    100 %                       147,200       0.052       7,660       147,200       0.052       7,660       89 %
                                                                                         
                                271,200       0.064       17,380       271,200       0.064       17,380       88 %
                                                                                         
Other Operations
                                                                                       
Kori Kollo, Bolivia
    88 %     7,800       0.018       140       17,400       0.016       280       25,200       0.017       420       59 %
La Herradura, Mexico
    44 %     32,600       0.023       760       35,100       0.023       820       67,700       0.023       1,580       66 %
                                                                                         
              40,400       0.022       900       52,500       0.021       1,100       92,900       0.022       2,000       65 %
                                                                                         
Total Gold
            497,900       0.035       17,610       2,160,500       0.032       68,920       2,658,400       0.033       86,530       80 %
                                                                                         
 
 
(1) The term “reserve” means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination.
 
The term “economically,” as used in the definition of reserve, means that profitable extraction or production has been established or analytically demonstrated in a full feasibility study to be viable and justifiable under reasonable investment and market assumptions.
 
The term “legally,” as used in the definition of reserve, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved. However, for a reserve to exist, Newmont must have a justifiable expectation, based on

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applicable laws and regulations, that issuance of permits or resolution of legal issues necessary for mining and processing at a particular deposit will be accomplished in the ordinary course and in a timeframe consistent with Newmont’s current mine plans.
 
The term “proven reserves” means reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; (b) grade and/or quality are computed from the results of detailed sampling; and (c) the sites for inspection, sampling and measurements are spaced so closely and the geologic character is sufficiently defined that size, shape, depth and mineral content of reserves are well established.
 
The term “probable reserves” means reserves for which quantity and grade are computed from information similar to that used for proven reserves, but the sites for sampling are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.
 
References to “equity ounces” or “equity pounds” mean that portion of gold or copper produced, sold or included in proven and probable reserves that is attributable to our ownership or economic interest.
 
Proven and probable equity reserves were calculated using different cut-off grades. The term “cut-off grade” means the lowest grade of mineralized material considered economic to process. Cut-off grades vary between deposits depending upon prevailing economic conditions, mineability of the deposit, by-products, amenability of the ore to gold or copper extraction, and type of milling or leaching facilities available.
 
2008 reserves were calculated at a $725, A$850 or NZ$1,000 per ounce gold price unless otherwise noted.
 
2007 reserves were calculated at a $575, A$750 or NZ$850 per ounce gold price unless otherwise noted.
 
(2) Tonnages include allowances for losses resulting from mining methods. Tonnages are rounded to the nearest 100,000.
 
(3) Ounces or pounds are estimates of metal contained in ore tonnages and do not include allowances for processing losses. Metallurgical recovery rates represent the estimated amount of metal to be recovered through metallurgical extraction processes. Ounces are rounded to the nearest 10,000.
 
(4) Cut-off grades utilized in Nevada 2008 reserves were as follows: oxide leach material not less than 0.006 ounce per ton; oxide mill material not less than 0.025 ounce per ton; refractory leach material not less than 0.025 ounce per ton; and refractory mill material not less than 0.052 ounce per ton.
 
(5) Includes undeveloped reserves at Castle Reef and Emigrant deposits for combined total undeveloped reserves of 1.4 million ounces.
 
(6) Also contains reserves of 5.9 million ounces of silver with a metallurgical recovery of 88%.
 
(7) Gold cut-off grade varies with level of copper credits.
 
(8) Reserve estimates provided by Barrick, the operator of the Turquoise Ridge joint venture.
 
(9) In-process material is the material on leach pads at the end of the year from which gold remains to be recovered. In-process material reserves are reported separately where tonnage or ounces are greater than 5% of the total site-reported reserves and ounces are greater than 100,000.
 
(10) Stockpiles are comprised primarily of material that has been set aside to allow processing of higher grade material in the mills. Stockpiles increase or decrease depending on current mine plans. Stockpile reserves are reported separately where tonnage or ounces are greater than 5% of the total site-reported reserves and ounces are greater than 100,000.
 
(11) Deposit is currently undeveloped. Gold cut-off grade varies with level of copper credits.


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(12) Reserves include the currently undeveloped deposit at Corimayo, which contains reserves of 1.2 million equity ounces. Cut-off grades utilized in 2008 reserves were as follows: oxide leach material not less than 0.004 ounce per ton; and oxide mill material not less than 0.030 ounce per ton.
 
(13) Deposit is currently being developed. Mill startup is expected in mid-2009. Gold cut-off grade varies with level of copper credits. In March 2009, we expect to close the acquisition transaction for the additional 33.33% interest in Boddington from AngloGold Ashanti Ltd., which would increase Newmont’s share to 100% and add approximately 6.7 million ounces to our equity reserves.
 
(14) Cut-off grade utilized in 2008 reserves not less than 0.020 ounce per ton.
 
(15) Cut-off grade utilized in 2008 reserves not less than 0.026 ounce per ton.
 
(16) Cut-off grade utilized in 2008 reserves not less than 0.029 ounce per ton.
 
(17) Cut-off grade utilized in 2008 reserves not less than 0.023 ounce per ton.
 
(18) Gold cut-off grade varies with level of copper credits.
 
(19) Includes undeveloped reserves at Amoma, Yamfo South, Yamfo Central, Techire West, Subenso South, Subenso North, Yamfo Northeast and Susuan totaling 3.7 million ounces. Cut-off grade utilized in 2008 reserves not less than 0.018 ounce per ton.
 
(20) Deposit is undeveloped. Cut-off grade utilized in 2008 reserves not less than 0.012 ounce per ton.
 
(21) Cut-off grade utilized in 2008 reserves not less than 0.004 ounce per ton.
 
(22) Cut-off grade utilized in 2008 reserves not less than 0.009 ounce per ton.
 
The following tables detail copper proven and probable equity reserves(1) reflecting only those reserves owned by Newmont as of December 31, 2008 and 2007:
 
                                                                                         
    December 31, 2008  
          Proven Reserves     Probable Reserves     Proven and Probable Reserves        
    Newmont
          Grade
                Grade
                Grade
          Metallurgical
 
Deposits/Districts
  Share     Tonnage(2)     (Cu %)     Pounds(3)     Tonnage(2)     (Cu %)     Pounds(3)     Tonnage(2)     (Cu %)     Pounds(3)     Recovery(3)  
          (000)                 (000)                 (000)                    
                      (millions)                 (millions)                 (millions)        
 
                                                                                         
Batu Hijau Open Pit(4)
    45 %     166,000       0.48 %     1,600       182,800       0.40 %     1,460       348,800       0.44 %     3,060       77 %
                                                                                         
Batu Hijau Stockpiles(4)(5)
    45 %                       131,400       0.34 %     890       131,400       0.34 %     890       67 %
                                                                                         
                                                                                         
Total Batu Hijau, Indonesia
    45 %     166,000       0.48 %     1,600       314,200       0.37 %     2,350       480,200       0.41 %     3,950       75 %
                                                                                         
Boddington, Western Australia(6)
    66.67 %     125,500       0.11 %     280       457,700       0.11 %     1,000       583,200       0.11 %     1,280       83 %
                                                                                         
Conga, Peru(7)
    51.35 %                       317,200       0.26 %     1,660       317,200       0.26 %     1,660       85 %
                                                                                         
Phoenix, Nevada(8)
    100 %                       302,000       0.15 %     890       302,000       0.15 %     890       61 %
                                                                                         
                                                                                         
Total Copper
            291,500       0.32 %     1,880       1,391,100       0.21 %     5,900       1,682,600       0.23 %     7,780       77 %
                                                                                         
 
                                                                                         
    December 31, 2007  
          Proven Reserves     Probable Reserves     Proven and Probable Reserves        
    Newmont
          Grade
                Grade
                Grade
          Metallurgical
 
Deposits/Districts
  Share     Tonnage(2)     (Cu %)     Pounds(3)     Tonnage(2)     (Cu %)     Pounds(3)     Tonnage(2)     (Cu %)     Pounds(3)     Recovery(3)  
          (000)                 (000)                 (000)                    
                      (millions)                 (millions)                 (millions)        
 
                                                                                         
Batu Hijau Open Pit
    45 %     132,700       0.50 %     1,330       246,200       0.40 %     1,970       378,900       0.43 %     3,300       79 %
                                                                                         
Batu Hijau Stockpiles(5)
    45 %                       114,300       0.36 %     820       114,300       0.36 %     820       64 %
                                                                                         
                                                                                         
Total Batu Hijau, Indonesia
    45 %     132,700       0.50 %     1,330       360,500       0.39 %     2,790       493,200       0.42 %     4,120       76 %
                                                                                         
Boddington, Western Australia
    66.67 %     124,900       0.11 %     280       351,600       0.11 %     750       476,500       0.11 %     1,030       83 %
                                                                                         
Conga, Peru
    51.35 %                       317,200       0.26 %     1,660       317,200       0.26 %     1,660       85 %
                                                                                         
Phoenix, Nevada
    100 %                       279,600       0.13 %     740       279,600       0.13 %     740       66 %
                                                                                         
                                                                                         
Total Copper
            257,600       0.31 %     1,610       1,308,900       0.23 %     5,940       1,566,500       0.24 %     7,550       78 %
                                                                                         
 
 
(1) See footnote (1) to the Gold Proven and Probable Equity Reserves tables above. Copper reserves for 2008 were calculated at a $2.00 or A$2.40 per pound copper price. Copper reserves for 2007 were calculated at a $1.75 or A$2.00 per pound copper price.


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(2) See footnote (2) to the Gold Proven and Probable Equity Reserves tables above. Tonnages are rounded to nearest 100,000.
 
(3) See footnote (3) to the Gold Proven and Probable Equity Reserves tables above. Pounds are rounded to the nearest 10 million.
 
(4) Copper cut-off grade varies with level of gold credits.
 
(5) Stockpiles are comprised primarily of material that has been set aside to allow processing of higher grade material in the mills. Stockpiles increase or decrease depending on current mine plans. Stockpiles are reported separately where tonnage or contained metal are greater than 5% of the total site reported reserves.
 
(6) Deposit is currently being developed. Mill startup is expected in mid-2009. Copper cut-off grade varies with level of gold grade. In March 2009, we expect to close the acquisition transaction for the additional 33.33% interest in Boddington from AngloGold Ashanti Ltd., which would increase Newmont’s share to 100% and add approximately 640 million pounds to our equity reserves.
 
(7) Deposit is undeveloped. Copper cut-off grade varies with level of gold grade.
 
(8) Copper cut-off grade varies with level of gold grade.
 
The following table reconciles year-end 2008 and 2007 gold proven and probable equity reserves:
 
         
    Equity
 
    Ounces  
    (in millions)  
 
December 31, 2007
    86.5  
Depletion(1)
    (6.7 )
Revisions and Additions, net(2)
    5.2  
         
December 31, 2008
    85.0  
         
 
 
(1) Reserves mined and processed in 2008.
 
(2) Revisions and additions are due to reserve conversions, optimizations, model updates, metal price changes and updated operating costs and recoveries.
 
ITEM 3.   LEGAL PROCEEDINGS
 
For a discussion of legal proceedings, see Note 33 to the Consolidated Financial Statements.
 
ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
No matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the quarter ended December 31, 2008.


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ITEM 4A.   EXECUTIVE OFFICERS OF THE REGISTRANT
 
Newmont’s executive officers as of February 11, 2009 were:
 
             
Name
  Age  
Office
 
Richard T. O’Brien
    54     President and Chief Executive Officer
Russell Ball
    40     Executive Vice President and Chief Financial Officer
Alan R. Blank
    52     Executive Vice President, Legal and External Affairs
Randy Engel
    42     Executive Vice President, Strategic Development
Brian A. Hill
    49     Executive Vice President, Operations
Guy Lansdown
    48     Executive Vice President, Development
Brant Hinze
    53     Senior Vice President, North American Operations
Jeffrey R. Huspeni
    53     Senior Vice President, African Operations
Carlos Santa Cruz
    53     Senior Vice President, South American Operations
David Gutierrez
    54     Vice President, Accounting and Tax
Roger Johnson
    51     Vice President and Chief Accounting Officer
Thomas P. Mahoney
    53     Vice President and Treasurer
 
There are no family relationships by blood, marriage or adoption among any of the above executive officers of Newmont. All executive officers are elected annually by the Board of Directors of Newmont to serve for one year or until his respective successor is elected and qualified. There is no arrangement or understanding between any of the above executive officers and any other person pursuant to which he was selected as an executive officer.
 
Mr. O’Brien was elected President and Chief Executive Officer in July 2007, having served as President and Chief Financial Officer from April 2007 to July 2007, Executive Vice President and Chief Financial Officer from September 2006 to April 2007 and Senior Vice President and Chief Financial Officer during 2005 and 2006. Mr. O’Brien was Executive Vice President and Chief Financial Officer of AGL Resources from 2001 to 2005.
 
Mr. Ball was elected Executive Vice President and Chief Financial Officer in October 2008, having served as Senior Vice President and Chief Financial Officer since July 2007. Mr. Ball served as Vice President and Controller from 2004 to 2007. Previously, he served as Group Executive, Investor Relations, from 2002 to 2004.
 
Mr. Blank was elected Executive Vice President, Legal and External Affairs, in October 2008, having served as Senior Vice President, Legal and External Affairs since July 2008. Prior to joining Newmont, Mr. Blank was a partner at the law firm of Stoel Rives LLP in Portland, Oregon, where he practiced since 1988.
 
Mr. Engel was elected Executive Vice President, Strategic Development, in October 2008, having served as Senior Vice President, Strategy and Corporate Development, since July 2007. Mr. Engel served as Vice President, Strategic Planning and Investor relations from 2006 to 2007; Group Executive, Investor Relations from 2004 to 2006; and Assistant Treasurer from 2001 to 2004.
 
Mr. Hill was elected Executive Vice President, Operations, in October 2008, having served as Vice President, Asia Pacific Operations, since January 2008. Mr. Hill previously served as Managing Director and Chief Executive Officer of Norilsk Nickel Australia Pty Ltd in 2007; Managing Director and Chief Executive Officer of Equatorial Mining Ltd from 2004 to 2006; and Managing Director of Falconbridge (Australia) Pty Ltd from 2000 to 2004.
 
Mr. Lansdown was elected Executive Vice President, Development, in October 2008, having previously served as Senior Vice President, Project Development and Operations Services, since


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July 2007. Mr. Lansdown served as Vice President, Project Engineering from 2006 to 2007; Project Executive, Boddington, from 2005 to 2006; and Operations Manager, Yanacocha from 2003 to 2005.
 
Mr. Hinze was elected Senior Vice President, North American Operations, in October 2008, having served as Vice President, North American Operations, since 2005. He previously served as General Manager of the Minera Yanacocha operations in Peru from 2003 to 2005 and managed the Minahasa project in Indonesia from 2001 to 2002.
 
Mr. Huspeni was elected Senior Vice President, African Operations, in October 2008, having served as Vice President, African Operations, since January 2008. Mr. Huspeni previously served as Vice President, Exploration Business Development from 2005 to 2008 and Vice President, Mineral District Exploration, from 2002 to 2005.
 
Mr. Santa Cruz was named Senior Vice President, South American Operations, in October 2008, having served as Vice President, South American Operations, since 2001. He served as General Manager of Minera Yanacocha S.R.L. from 1997 to 2001.
 
Mr. Gutierrez was named Vice President, Accounting and Tax in July 2007, having served as Vice President, Tax, from 2005 to 2007. Prior to joining Newmont, he was a partner with KPMG LLP from 2002 to 2005, serving as the Denver office Tax Managing Partner from 2003 to 2005.
 
Mr. Johnson was elected Vice President and Chief Accounting Officer in February 2008. Mr. Johnson previously served as Controller and Chief Accounting Officer from July 2007 to February 2008; Assistant Controller from 2004 to 2007; Operations Controller and Regional Controller, Australia from 2003 to 2004. Before joining Newmont, Mr. Johnson served as Senior Vice President, Finance and Administration at Pasminco Zinc, Inc.
 
Mr. Mahoney was elected Vice President and Treasurer of Newmont in 2002. He served as Treasurer of Newmont from 2001 to 2002. Previously, he served as Assistant Treasurer from 1997 to 2001.


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PART II
 
ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES
 
Newmont’s common stock is listed and principally traded on the New York Stock Exchange (under the symbol “NEM”) and is also listed in the form of CHESS Depositary Interests (“CDIs”) (under the symbol “NEM”) on the Australian Stock Exchange (“ASX”). In Australia, Newmont is referred to as “Newmont Mining Corporation ARBN 099 065 997 organized in Delaware with limited liability.” Since July 1, 2002, Newmont CDIs have traded on the ASX as a Foreign Exempt Listing granted by the ASX, which provides an ancillary trading facility to Newmont’s primary listing on NYSE. Newmont Mining Corporation of Canada Limited’s exchangeable shares (“Exchangeable Shares”) are listed on the Toronto Stock Exchange (under the symbol “NMC”). The following table sets forth, for the periods indicated, the closing high and low sales prices per share of Newmont’s common stock as reported on the New York Stock Exchange Composite Tape.
 
                                 
    2008     2007  
    High     Low     High     Low  
 
First quarter
  $ 56.22     $ 45.30     $ 47.71     $ 41.42  
Second quarter
  $ 52.68     $ 42.93     $ 45.00     $ 38.53  
Third quarter
  $ 53.37     $ 33.73     $ 48.26     $ 39.44  
Fourth quarter
  $ 40.70     $ 21.54     $ 54.50     $ 44.75  
 
On February 11, 2009, there were outstanding 478,507,759 shares of Newmont’s common stock (including shares represented by CDIs), which were held by approximately 14,814 stockholders of record. A dividend of $0.10 per share of common stock outstanding was declared in each quarter of 2008 and 2007, for a total of $0.40 during each year.
 
The determination of the amount of future dividends will be made by Newmont’s Board of Directors from time to time and will depend on Newmont’s future earnings, capital requirements, financial condition and other relevant factors.
 
On February 11, 2009, there were outstanding 10,687,382 Exchangeable Shares, which were held by 46 holders of record. The Exchangeable Shares are exchangeable at the option of the holders into Newmont common stock. Holders of Exchangeable Shares are therefore entitled to receive dividends equivalent to those that Newmont declares on its common stock.
 
Issuer purchases of equity securities:
 
                                 
    (a)     (b)     (c)     (d)  
                      Maximum Number
 
                Total Number of
    (or Approximate
 
    Total
          Shares Purchased
    Dollar Value)
 
    Number of
    Average
    as Part of Publicly
    of Shares That May Yet
 
    Shares
    Price Paid
    Announced Plans
    be Purchased under
 
Period
  Purchased     per Share     or Programs     the Plans or Programs  
 
October 1, 2008 through October 31, 2008
    4,275 (1)   $ 22.83             N/A  
November 1, 2008 through November 30, 2008
        $             N/A  
December 1, 2008 through December 31, 2008
        $             N/A  
 
 
(1) Represents shares delivered to the Company from restricted stock held by a Company employee upon vesting for purposes of covering the recipient’s tax withholding obligation.


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ITEM 6.   SELECTED FINANCIAL DATA (dollars in millions, except per share)
 
                                         
    Years Ended December 31,  
    2008     2007     2006     2005     2004  
 
Revenues
  $ 6,199     $ 5,526     $ 4,882     $ 4,265     $ 4,222  
Income (loss) from continuing operations
  $ 829     $ (963 )   $ 563     $ 278     $ 416  
Net income (loss) applicable to common shares(1)(2)
  $ 853     $ (1,886 )   $ 791     $ 322     $ 443  
Basic income (loss) per common share:
                                       
From continuing operations
  $ 1.83     $ (2.13 )   $ 1.25     $ 0.62     $ 0.94  
Discontinued operations
    0.05       (2.04 )     0.51       0.10       0.17  
Cumulative effect of a change in accounting principle
                            (0.11 )
                                         
Net income (loss) per common share, basic
  $ 1.88     $ (4.17 )   $ 1.76     $ 0.72     $ 1.00  
                                         
Diluted income (loss) per common share:
                                       
From continuing operations
  $ 1.82     $ (2.13 )   $ 1.25     $ 0.62     $ 0.93  
Discontinued operations
    0.05       (2.04 )     0.51       0.10       0.17  
Cumulative effect of a change in accounting principle
                            (0.11 )
                                         
Net income (loss) per common share, diluted
  $ 1.87     $ (4.17 )   $ 1.76     $ 0.72     $ 0.99  
                                         
Dividends declared per common share
  $ 0.40     $ 0.40     $ 0.40     $ 0.40     $ 0.30  
 
                                         
    At December 31,  
    2008     2007     2006     2005     2004  
 
Total assets
  $ 15,839     $ 15,598     $ 15,601     $ 13,992     $ 12,776  
Long-term debt, including current portion
  $ 3,542     $ 2,938     $ 1,911     $ 1,918     $ 1,590  
Stockholders’ equity
  $ 7,102     $ 7,548     $ 9,337     $ 8,376     $ 7,938  
 
 
(1) Net income includes the cumulative effect of a change in accounting principle related to a net expense for the consolidation of Batu Hijau of $47 ($0.11 per share, basic) net of tax and minority interest in 2004.
 
(2) Net income (loss) includes income (loss) from discontinued operations for Merchant Banking, Pajingo, Zarafshan, Holloway and Golden Grove of $24 ($0.05 per share, basic), ($923) ($2.04 per share, basic), $228 ($0.51 per share, basic), $44 ($0.10 per share, basic) and $74 ($0.17 per share, basic) net of tax in 2008, 2007, 2006, 2005 and 2004, respectively.


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ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollars in millions, except per share, per ounce and per pound amounts)
 
The following discussion provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Newmont Mining Corporation and its subsidiaries (collectively, “Newmont,” the “Company,” “our” and “we”). References to “A$” refer to Australian currency, “C$” to Canadian currency, “NZ$” to New Zealand currency, “IDR” to Indonesian currency and “$” to United States currency.
 
This discussion addresses matters we consider important for an understanding of our financial condition and results of operations as of and for the three years ended December 31, 2008, as well as our future results. It consists of the following subsections:
 
  •  “Overview,” which provides a brief summary of our consolidated results and financial position and the primary factors affecting those results, as well as a summary of our expectations for 2009;
 
  •  “Accounting Developments,” which provides a discussion of recent changes to our accounting policies that have affected our consolidated results and financial position;
 
  •  “Critical Accounting Policies,” which provides an analysis of the accounting policies we consider critical because of their effect on the reported amounts of assets, liabilities, income and/or expenses in our consolidated financial statements and/or because they require difficult, subjective or complex judgments by our management;
 
  •  “Consolidated Financial Results,” which includes a discussion of our consolidated financial results for the last three years;
 
  •  “Results of Consolidated Operations,” which sets forth an analysis of the operating results for the last three years;
 
  •  “Recently Issued Accounting Pronouncements,” which summarizes recently published authoritative accounting guidance, how it might apply to us and how it might affect our future results; and
 
  •  “Liquidity and Capital Resources,” which contains a discussion of our cash flows and liquidity, investing activities and financing activities, contractual obligations and off-balance sheet arrangements.
 
This item should be read in conjunction with our consolidated financial statements and the notes thereto included in this annual report.
 
Overview
 
Newmont is one of the world’s largest gold producers and is the only gold company included in the S&P 500 Index and Fortune 500, and was the first gold company included in the Dow Jones Sustainability Index-World. We are also engaged in the exploration for and acquisition of gold properties. We have significant assets or operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico.
 
We face key risks associated with our business. One of the most significant risks is fluctuation in the prices of gold and copper, which are affected by numerous factors beyond our control. Other challenges we face include capital and production cost increases and social, political and environmental issues. Operating costs at our mines are subject to variation due to a number of factors, such as changing commodity prices, ore grades, metallurgy, revisions to mine plans and changes in accounting principles. At foreign locations, operating costs are also influenced by currency fluctuations that may affect our U.S. dollar operating costs. In addition, we must continually replace reserves depleted


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through production by expanding known ore bodies, by acquisition or by locating new deposits in order to offset the organic decline in production levels which occurs over the long term.
 
Summary of Consolidated Financial and Operating Performance
 
The table below highlights key financial and operating results:
 
                         
    Years Ended December 31,  
    2008     2007     2006  
 
Revenues
  $ 6,199     $ 5,526     $ 4,882  
Income (loss) from continuing operations
  $ 829     $ (963 )   $ 563  
Net income (loss)
  $ 853     $ (1,886 )   $ 791  
Net income (loss) per common share, basic:
                       
Income (loss) from continuing operations
  $ 1.83     $ (2.13 )   $ 1.25  
Net income (loss)
  $ 1.88     $ (4.17 )   $ 1.76  
Consolidated gold ounces sold (thousands)(1)
    6,255       6,184       7,186  
Consolidated copper pounds sold (millions)
    290       428       435  
Average price received, net(2)
                       
Gold (per ounce)
  $ 874     $ 697     $ 594  
Copper (per pound)
  $ 2.59     $ 2.86     $ 1.54  
Costs applicable to sales(3)
                       
Gold (per ounce)
  $ 440     $ 389     $ 288  
Copper (per pound)
  $ 1.38     $ 1.05     $ 0.67  
 
 
(1) Includes incremental start-up ounces of 20, 6 and 100 in 2008, 2007 and 2006, respectively. Incremental start-up includes the removal and production of de minimis saleable materials during development and is recorded as Other income, net of incremental mining and processing costs.
 
(2) After treatment and refining charges and excluding settlement of price-capped forward sales contracts.
 
(3) Excludes Amortization, Accretion, the 2007 Loss on settlement of price-capped forward sales contracts and the 2007 Midas redevelopment.
 
Consolidated Financial Performance
 
Gold revenues increased in 2008 compared to 2007 primarily due to an increase in the average realized price and an increase in consolidated gold ounces sold. Gold sales increased to 6.3 million ounces in 2008 from 6.2 million ounces in 2007, primarily due to higher production at Yanacocha, Ahafo and Australia/New Zealand, partially offset by lower production at Batu Hijau and Nevada. Copper revenues decreased in 2008 from 2007 due to lower throughput, grade and recovery at Batu Hijau and a decrease in the average realized price (see Results of Consolidated Operations below).
 
The gold price increases over the last three years were partially offset by lower production and higher production costs as we have seen significant increases in the costs of labor, fuel, power and other bulk consumables. In addition, our 2008 financial and operating results were impacted by the following:
 
  •  Reclamation and remediation costs ($102, primarily at former mining operations);
 
  •  Advanced projects, research and development expense ($166, primarily at our Fort a la Corne JV diamond, Hope Bay, Euronimba and Ghana investments);
 
  •  Losses on write-down of marketable equity securities and other assets ($251, as the credit crisis affected the market for junior mining companies);


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  •  Write-down of property, plant and mine development ($137, primarily related to assets in Canada, Indonesia and Nevada); and
 
  •  Tax planning and restructuring ($159).
 
Liquidity
 
Our financial position was as follows:
 
                 
    December 31,  
    2008     2007  
 
Total debt
  $ 3,542     $ 2,938  
Total stockholders’ equity
  $ 7,102     $ 7,548  
Cash and cash equivalents
  $ 435     $ 1,231  
Marketable equity securities
  $ 621     $ 1,500  
 
During 2008 our debt and liquidity positions were affected by the following:
 
  •  Net proceeds from the issuance of debt of $591;
 
  •  Net cash provided from continuing operations of $1,403;
 
  •  Capital expenditures of $1,875;
 
  •  Completion of the Miramar acquisition for $325;
 
  •  Dividends paid to common shareholders of $182;
 
  •  Dividends paid to minority interests of $389; and
 
  •  Changes in the value of our marketable equity securities as a result of broad declines in the equity markets.
 
Looking Forward
 
Certain key factors will affect our future financial and operating results. These include, but are not limited to, the following:
 
  •  Fluctuations in gold and copper prices;
 
  •  We expect higher 2009 consolidated gold sales of approximately 6.35 to 6.85 million ounces, primarily as a result of the start-up of Boddington, completion of the acquisition of the remaining 33.33% of Boddington, as well as increased gold sales at Yanacocha and Batu Hijau, partially offset by lower sales in Nevada;
 
  •  Costs applicable to sales — gold for 2009 are expected to be approximately $400 to $440 per ounce due to the start-up of lower cost production from Boddington (100%), higher expected gold sales from our Yanacocha and Batu Hijau operations, as well as lower oil price and Australian dollar exchange rate assumptions, partially offset by lower by-product credits resulting from lower copper price assumptions;
 
  •  We expect 2009 consolidated copper sales of approximately 460 to 510 million pounds at Costs applicable to sales of approximately $0.65 to $0.75 per pound as a result of higher expected sales, processing higher grade ore and lower waste removal costs.
 
  •  We anticipate capital expenditures of approximately $1,400 to $1,600 in 2009, with approximately 60% in Australia/New Zealand, 15% in Nevada and the remaining 25% invested at other locations. Approximately 45% of the 2009 capital budget is allocated to sustaining investments, with the remaining 55% allocated to project development initiatives, including completion of the Boddington project (100%) in Australia;


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  •  In March 2009, we expect to close the acquisition transaction for the additional 33.33% interest in Boddington from AngloGold Ashanti Ltd. for $750 payable in cash at closing, $240 payable in cash and/or Newmont common stock, at our option, in December 2009, and a royalty capped at $100, equal to 50% of the average realized operating margin (Revenue less Costs applicable to sales on a by-product basis), if any, exceeding $600 per ounce, payable on one-third of gold sales from Boddington.
 
  •  We expect 2009 exploration expenditures of approximately $165 to $175 and 2009 advanced projects, research and development expenditures of approximately $120 to $150.
 
  •  In February 2009, we completed a public offering of $518 convertible senior notes, maturing February 15, 2012 for net proceeds of $504.
 
  •  In February 2009, we completed a public offering of 34,500,000 of our common shares for net proceeds of $1,233.
 
  •  The completion of the Boddington project as well as potential future investments in the Hope Bay project in Canada, the Akyem project in Ghana and the Conga project in Peru will require significant funding. Our operating cash flow may become insufficient to meet the funding requirements of these investments, fund our ongoing business activities and pay dividends. Our ability to raise and service significant new sources of capital will be a function of macroeconomic conditions, future gold and copper prices and our operational performance, among other factors. In the event of lower gold and copper prices, unanticipated operating or financial challenges, or new funding limitations, our ability to pursue new business opportunities, invest in existing and new projects, fund our ongoing business activities and pay dividends could be significantly constrained; and
 
  •  Our 2009 expectations, particularly with respect to sales volumes and costs applicable to sales per ounce or pound, may differ significantly from actual quarter and full year results due to the start-up of our Boddington project (100%) and variations in: mine planning and sequencing, ore grades and hardness, metal recoveries, waste removal, commodity input prices, foreign currency exchange rates and gold and copper sales prices.
 
Accounting Developments
 
Variable Interest Entities
 
In December 2008, the Financial Accounting Standards Board (“FASB”) issued Staff Position No. FAS 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities” (“FSP FAS 140-4 and FIN 46(R)-8”). This FSP amends FASB Statement No. 140 “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” to require public entities to provide additional disclosures about transfers of financial assets. It also amends FASB Interpretation No. 46 “Consolidation of Variable Interest Entities” as revised to require public enterprises to provide additional disclosures about their involvement with Variable Interest Entities (“VIEs”). FSP FAS 140-4 and FIN 46(R)-8 are effective for the Company’s fiscal year ending December 31, 2008. Newmont has adopted the disclosure requirements of FSP FAS 140-4 and FIN 46(R)-8 in the Company’s VIE disclosures.
 
Hierarchy of Generally Accepted Accounting Principles
 
In May 2008, the FASB issued FASB Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“FAS 162”) which identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with U.S. generally accepted accounting principles (“GAAP”). FAS 162 was effective November 15, 2008, which was 60 days following the Security and Exchange Commission’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with GAAP.” The


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adoption of FAS 162 has had no impact on our consolidated financial position, results of operations or cash flows.
 
Fair Value Accounting
 
In September 2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of FAS 157 were adopted January 1, 2008. In February 2008, the FASB staff issued FSP No. 157-2 “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”). FSP FAS 157-2 delayed the effective date of FAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The provisions of FSP FAS 157-2 are effective for our fiscal year beginning January 1, 2009, and are not expected to have a significant impact on the Company.
 
In October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP FAS 157-3”), which clarifies the application of FASB Statement No. 157, “Fair Value Measurements” (“FAS 157”) in an inactive market. The intent of this FSP is to provide guidance on how the fair value of a financial asset is to be determined when the market for that financial asset is inactive. FSP FAS 157-3 states that determining fair value in an inactive market depends on the facts and circumstances, requires the use of significant judgment and in some cases, observable inputs may require significant adjustment based on unobservable data. Regardless of the valuation technique used, an entity must include appropriate risk adjustments that market participants would make for nonperformance and liquidity risks when determining fair value of an asset in an inactive market. FSP FAS 157-3 was effective upon issuance. We have incorporated the principles of FSP FAS 157-3 in determining the fair value of financial assets when the market for those assets is not active, specifically its marketable debt securities.
 
FAS 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FAS 157 are described below:
 
     
Level 1
  Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2
  Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3
  Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).


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The following table sets forth our financial assets and liabilities measured at fair value by level within the fair value hierarchy. As required by FAS 157, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
 
                                 
    Fair Value at December 31, 2008  
    Total     Level 1     Level 2     Level 3  
 
Assets:
                               
Cash equivalents
  $ 14     $ 14     $     $  
Marketable equity securities
    621       621              
Marketable debt securities
    27                   27  
                                 
    $ 662     $ 635     $     $ 27  
                                 
Liabilities:
                               
Trade payable from provisional copper and gold concentrate sales, net
  $ 5     $ 5     $     $  
Derivative instruments, net
    140             140        
85/8% debentures (hedged portion)
    92             92        
                                 
    $ 237     $ 5     $ 232     $  
                                 
 
Our cash equivalent instruments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The cash instruments that are valued based on quoted market prices in active markets are primarily money market securities and U.S. Treasury securities.
 
Our marketable equity securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The fair value of the marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by us.
 
Our marketable debt securities include investments in auction rate securities and asset backed commercial paper. We review fair value for auction rate securities and asset backed commercial paper on at least a quarterly basis. The auction rate securities are traded in markets that are not active, trade infrequently and have little price transparency. We estimated the fair values based on weighted average risk calculations using probabilistic cash flow assumptions. In January 2009, the investments in our asset backed commercial paper were restructured under court order. The restructuring allowed an interest distribution to be made to investors. The auction rate securities and asset backed commercial paper are classified within Level 3 of the fair value hierarchy.
 
Our net trade payable from provisional copper and gold concentrate sales is valued using quoted market prices based on the forward London Metal Exchange (“LME”) (copper) and the London Bullion Market Association P.M. fix (“London P.M. fix”) (gold) and, as such, is classified within Level 1 of the fair value hierarchy.
 
Our derivative instruments are valued using pricing models and we generally use similar models to value similar instruments. Where possible, we verify the values produced by our pricing models to market prices. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs. Our derivatives trade in liquid markets, and as such, model inputs can generally be verified and do not involve significant management judgment. Such instruments are classified within Level 2 of the fair value hierarchy.
 
We have fixed to floating swap contracts to hedge a portion of the interest rate risk exposure of our 85/8% uncollateralized debentures due May 2011. The hedged portion of our 85/8% debentures are valued using pricing models which require inputs, including risk-free interest rates and credit spreads. Because the inputs are derived from observable market data, the hedged portion of the 85/8% debentures is classified within Level 2 of the fair value hierarchy.


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The table below sets forth a summary of changes in the fair value of our Level 3 financial assets (asset backed commercial paper and auction rate securities) for the year ended December 31, 2008.
 
         
Balance at beginning of period
  $ 31  
Unrealized losses
    (7 )
Transfers in — auction rate securities
    3  
         
Balance at end of period
  $ 27  
         
 
Unrealized losses of $6 for the period were included in Accumulated other comprehensive (loss) income as a result of changes in C$ exchange rates from December 31, 2007. Unrealized losses of $1 for the period were included in Accumulated other comprehensive (loss) income as a result of mark-to-market changes from December 31, 2007. As of December 31, 2008, the assets classified within Level 3 of the fair value hierarchy represent 4% of the total assets measured at fair value.
 
In February 2007, the FASB issued FASB Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS 159”). FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value, with the objective of improving financial reporting by mitigating volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The provisions of FAS 159 were adopted January 1, 2008. We did not elect the Fair Value Option for any of our financial assets or liabilities, and therefore, the adoption of FAS 159 had no impact on our consolidated financial position, results of operations or cash flows.
 
Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards
 
In June 2007, the Emerging Issues Task Force (“EITF”) reached consensus on Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards” (“EITF 06-11”). EITF 06-11 requires that the tax benefit related to dividend and dividend equivalents paid on equity-classified nonvested shares and nonvested share units, which are expected to vest, be recorded as an increase to additional paid-in capital. EITF 06-11 has been applied prospectively for tax benefits on dividends declared in our fiscal year beginning January 1, 2008. The adoption of EITF 06-11 had an insignificant impact on our consolidated financial position, results of operations or cash flows.
 
Income Taxes
 
On January 1, 2007, we adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN 48”) an interpretation of FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 clarifies the accounting and reporting for uncertainties in the application of the income tax laws to our operations. The interpretation prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax provisions taken or expected to be taken in income tax returns. The cumulative effects of applying this interpretation were recorded as a decrease in retained earnings of $108, an increase of $5 in goodwill, an increase of $4 in minority interest, a decrease in net deferred tax assets of $37 (primarily, as a result of utilization of foreign tax credits and net operating losses as part of the FIN 48 measurement process, offset, in part, by the impact of the interaction of the Alternative Minimum Tax rules) and an increase of $72 in the net liability for unrecognized income tax benefits.
 
Pensions
 
As of December 31, 2006, we adopted the provisions of FASB Statement No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Post-Retirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R)” (“FAS 158”). FAS 158 requires employers that sponsor one or more defined benefit plans to (i) recognize the funded status of a benefit plan in its statement of financial position, (ii) recognize the gains or losses and prior service costs or credits that arise during the period as a component of other comprehensive income, net of tax, (iii) measure the defined


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benefit plan assets and obligations as of the date of the employer’s fiscal year-end statement of financial position, and (iv) disclose in the notes to the financial statements additional information about certain effects on net periodic cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. The impact of adopting FAS 158 decreased Accumulated other comprehensive income by $27 as of December 31, 2006.
 
Stock Based Compensation
 
On January 1, 2006, we adopted the fair value recognition provisions of FASB Statement No. 123(R), “Share-Based Payment ” (“FAS 123(R)”). We adopted FAS 123(R) using the modified prospective transition method. Under this method, compensation cost recognized in 2006 included: a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of FAS 123, and b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of FAS 123(R). As a result of adopting FAS 123(R), our Income from continuing operations and Net income for 2008 and 2006 was $10 ($0.02 per share) and $19 ($0.04 per share) lower, respectively, and Loss from continuing operations and Net loss for 2007 was $11 ($0.02 per share) higher than if we had continued to account for share-based compensation under APB 25 as we did prior to January 1, 2006.
 
Deferred Stripping Costs
 
On January 1, 2006 we adopted Emerging Issues Task Force Issue No. 04-06 (“EITF 04-06”), “Accounting for Stripping Costs Incurred during Production in the Mining Industry.” EITF 04-06 addresses the accounting for stripping costs incurred during the production phase of a mine and refers to these costs as variable production costs that should be included as a component of inventory to be recognized in Costs applicable to sales in the same period as the revenue from the sale of inventory. As a result, capitalization of post-production stripping costs is appropriate only to the extent product inventory exists at the end of a reporting period. The guidance required the recognition of a cumulative effect adjustment to opening retained earnings in the period of adoption, with no charge to earnings in the period of adoption for prior periods. The cumulative effect adjustment reduced retained earnings by $81 (net of tax and minority interests). Adoption of EITF 04-06 had no impact on our cash position or net cash from operations.
 
Critical Accounting Policies
 
Listed below are the accounting policies that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved and the magnitude of the asset, liability, revenue or expense being reported.
 
Carrying Value of Goodwill
 
As of December 31, 2008, the carrying value of goodwill was approximately $188. Goodwill represents the excess of the aggregate purchase price over the fair value of the identifiable net assets. Goodwill was assigned to various mine site reporting units in the Australia/New Zealand Segment. Our approach to allocating goodwill was to identify those reporting units that we believed had contributed to such excess purchase price. We then performed valuations to measure the incremental increases in the fair values of such reporting units that were attributable to the acquisitions, and that were not already captured in the fair values assigned to such units’ identifiable net assets.
 
We evaluate, on at least an annual basis, the carrying amount of goodwill to determine whether current events and circumstances indicate that such carrying amount may no longer be recoverable.


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To accomplish this, we compare the estimated fair values of the reporting units to their carrying amounts. If the carrying value of a reporting unit exceeds its fair value at the time of the evaluation, we would compare the implied fair value of the reporting unit’s goodwill to its carrying amount and any shortfall would be charged to earnings. Assumptions underlying fair value estimates are subject to risks and uncertainties.
 
Mine Site Goodwill
 
The assignment of goodwill to mine site reporting units was based on synergies that have been incorporated into our operations and business plans over time. The amount of goodwill assigned to each segment or reporting unit was based on discounted cash flow analyses that assumed risk-adjusted discount rates over the remaining lives of the applicable mining operations. We believe that triggering events with respect to the goodwill assigned to mine site reporting units could include, but are not limited to: (i) a significant decrease in our long-term gold and copper price assumptions; (ii) a decrease in reserves; (iii) a significant reduction in the estimated fair value of mine site exploration potential; and (iv) any event that might otherwise adversely affect mine site production levels or costs. We performed our annual impairment test of mine site goodwill as of December 31, 2008 and determined that the fair value of each mine site reporting unit was in excess of the relevant carrying value as of December 31, 2008. For more information on the discounted cash flows used to value mine site reporting units, see Carrying Value of Long-Lived Assets, below.
 
Exploration Segment Goodwill
 
In the fourth quarter of 2007, the Exploration Segment was impaired and the full value of goodwill was written-off. The Exploration Segment is responsible for all activities, whether near-mine or greenfield, associated with the Company’s efforts to discover new mineralized material that could ultimately advance into proven and probable reserves. As discussed in greater detail below, when performing its Exploration Segment goodwill impairment testing, the Company used historic additions to proven and probable reserves as an indication of the expected future performance of the Exploration Segment.
 
The Exploration Segment’s valuation model attributed all cash flows expected to be derived from future greenfield exploration discoveries, to the Exploration Segment. The valuation model included management’s best estimates of future reserve additions from exploration activities and all revenues and costs associated with their discovery, development and production. Historical proven and probable reserve additions, excluding acquisitions, were used as an indicator of the Exploration Segment’s ability to discover additional reserves in the future. The valuation model assumed that the Company would be able to perpetually develop and produce the assumed additions to proven and probable reserves from future discoveries at existing or new mine site reporting units. Actual reserve additions have varied significantly from year to year due to the time required to advance a deposit from initial discovery to proven and probable reserves and based on the timing of when proven and probable reserves can be reported under the Securities and Exchange Commission Industry Guide 7.
 
In the fourth quarter of 2007, we performed an impairment test of the Exploration Segment goodwill. Based on the Exploration Segment’s historic additions to proven and probable reserves and management’s best estimates of future reserve additions from exploration activities and all revenues and costs associated with their discovery, development and production, the Exploration Segment’s estimated fair value was negligible. The decreased value attributable to the Exploration Segment resulted primarily from adverse changes in valuation assumptions and the application of a revised industry definition of value beyond proved and probable reserves (“VBPP”). The changes to valuation assumptions included: (i) a significantly lower assumed annual reserve growth rate (from 4% to 3%), (ii) a significant change in the financial markets resulting in a significant increase in the discount rate (from 8% to 10%), and (iii) an increase in finding costs due to a combination of increased spending and reduced exploration success. The revised definition of VBPP ascribes more value to tangible mineral interest than the original definition used by the Company. As a result of applying the new


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definition of VBPP, the higher value ascribed to the Exploration Segment’s tangible mineral interests reduced the implied value of the Exploration Segment’s goodwill to a negligible value. Based on the negligible valuation, the Exploration Segment goodwill was impaired and the full $1,122 of goodwill was recorded as a non-cash write-down as of December 31, 2007.
 
Merchant Banking Goodwill
 
During June 2007, our Board of Directors approved a plan to cease Merchant Banking activities. Merchant Banking previously provided advisory services to assist in managing our portfolio of operating and property interests. Merchant Banking was also engaged in developing value optimization strategies for operating and non-operating assets, business development activities, merger and acquisition analysis and negotiations, monetizing inactive exploration properties, capitalizing on proprietary technology and know-how and acting as an internal resource for other corporate groups to improve and maximize business outcomes. As a result of the Board’s approval of management’s plan to cease Merchant Banking activities, we recorded a $1,665 non-cash charge to impair the goodwill associated with the Merchant Banking Segment during the second quarter of 2007.
 
Amortization
 
Expenditures for new facilities or equipment and expenditures that extend the useful lives of existing facilities or equipment are capitalized and depreciated using the straight-line method at rates sufficient to depreciate such costs over the estimated future lives of such facilities or equipment. These lives do not exceed the estimated mine life based on proven and probable reserves as the useful lives of these assets are considered to be limited to the life of the relevant mine.
 
Costs incurred to develop new properties are capitalized as incurred, where it has been determined that the property can be economically developed based on the existence of proven and probable reserves. At our surface mines, these costs include costs to further delineate the ore body and remove overburden to initially expose the ore body. At our underground mines, these costs include the cost of building access ways, shaft sinking and access, lateral development, drift development, ramps and infrastructure development. All such costs are amortized using the units-of-production (“UOP”) method over the estimated life of the ore body based on estimated recoverable ounces to be produced from proven and probable reserves.
 
Major development costs incurred after the commencement of production are amortized using the UOP method based on estimated recoverable ounces to be produced from proven and probable reserves. To the extent that such costs benefit the entire ore body, they are amortized over the estimated recoverable ounces or pounds in proven and probable reserves of the entire ore body. Costs incurred to access specific ore blocks or areas that only provide benefit over the life of that block or area are amortized over the estimated recoverable ounces or pounds in proven and probable reserves of that specific ore block or area.
 
The calculation of the UOP rate of amortization, and therefore the annual amortization charge to operations, could be materially impacted to the extent that actual production in the future is different from current forecasts of production based on proven and probable reserves. This would generally occur to the extent that there were significant changes in any of the factors or assumptions used in determining reserves. These factors could include: (i) an expansion of proven and probable reserves through exploration activities; (ii) differences between estimated and actual costs of production, due to differences in grade, metal recovery rates and foreign currency exchange rates; and (iii) differences between actual commodity prices and commodity price assumptions used in the estimation of reserves. If reserves decreased significantly, amortization charged to operations would increase; conversely, if reserves increased significantly, amortization charged to operations would decrease. Such changes in reserves could similarly impact the useful lives of assets depreciated on a straight-line basis, where those lives are limited to the life of the mine, which in turn is limited to the life of the proven and probable reserves.


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The expected useful lives used in amortization calculations are determined based on applicable facts and circumstances, as described above. Significant judgment is involved in the determination of useful lives, and no assurance can be given that actual useful lives will not differ significantly from the useful lives assumed for the purpose of amortization calculations.
 
Carrying Value of Stockpiles
 
Stockpiles represent ore that has been extracted from the mine and is available for further processing. Stockpiles are measured by estimating the number of tons added and removed from the stockpile, the number of contained ounces or pounds (based on assay data), and the estimated metallurgical recovery rates (based on the expected processing method). Stockpile ore tonnages are verified by periodic surveys. Costs are allocated to stockpiles based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the ore, including applicable overhead and amortization relating to mining operations. Costs are added to a stockpile based on current mining costs and removed at each stockpile’s average cost per recoverable ounce of gold or pound of copper in the stockpile. Stockpiles are reduced as material is removed and processed further. As of December 31, 2008 and 2007, our stockpiles had a total carrying value of $993 (Batu Hijau, $612; Nevada, $214; Australia/New Zealand, $98; others, $69) and $732, respectively.
 
Costs that are incurred in or benefit from the productive process are accumulated as stockpiles. We record stockpiles at the lower of average cost or net realizable value (“NRV”), and carrying values are evaluated at least quarterly. NRV represents the estimated future sales price based on short-term and long-term metals prices, less estimated costs to complete production and bring the product to sale. The primary factors that influence the need to record write-downs of stockpiles include short-term and long-term metals prices and costs for production inputs such as labor, fuel and energy, materials and supplies, as well as realized ore grades and actual production levels. The significant assumptions in determining the NRV for each mine site reporting unit as of December 31, 2008, included production cost and capitalized expenditure assumptions unique to each operation, and a long-term gold price of $800 per ounce. If short-term and long-term metals prices decrease, the value of the stockpiles decrease, and it may be necessary to record a write-down of stockpiles to NRV. During 2008, 2007 and 2006, write-downs of stockpiles to NRV totaled $2, $14 and $2, respectively.
 
Cost allocation to stockpiles and the NRV measurement involves the use of estimates and assumptions unique to each mining operation regarding current and future operating and capital costs, metal recoveries, production levels, commodity prices, proven and probable reserve quantities, engineering data and other factors. A high degree of judgment is involved in determining such assumptions and estimates and no assurance can be given that actual results will not differ significantly from those estimates and assumptions.
 
Carrying Value of Ore on Leach Pads
 
Ore on leach pads represent ore that has been mined, crushed, and placed on leach pads where a weak cyanide solution is applied to the surface of the heap to dissolve the gold. Costs are added to ore on leach pads based on current mining costs, including applicable amortization relating to mining operations. Costs are removed from ore on leach pads as ounces are recovered based on the average cost per estimated recoverable ounce of gold on the leach pad.
 
The estimates of recoverable gold on the leach pads are calculated from the quantities of ore placed on the leach pads (measured tons added to the leach pads), the grade of ore placed on the leach pads (based on assay data) and a recovery percentage (based on ore type). In general, leach pads recover between 50% and 95% of the recoverable ounces in the first year of leaching, declining each year thereafter until the leaching process is complete.
 
Although the quantities of recoverable gold placed on the leach pads are reconciled by comparing the grades of ore placed on pads to the quantities of gold actually recovered (metallurgical balancing),


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the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored and estimates are refined based on actual results over time. Historically, the Company’s operating results have not been materially impacted by variations between the estimated and actual recoverable quantities of gold on its leach pads. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to NRV are accounted for on a prospective basis. The significant assumptions in determining the NRV for each mine site reporting unit as of December 31, 2008, apart from production cost and capitalized expenditure assumptions unique to each operation, included a long-term gold price of $800 per ounce, a long-term copper price of $2.25 per pound and U.S. to Australian dollar exchange rate of $0.75 per A$1.00. If short-term and long-term metals prices decrease, the value of the ore on leach pads decrease, and it may be necessary to record a write-down of ore on leach pads to NRV. During 2008, the Company recorded write-downs of $18 to reduce the carrying value of ore on leach pads to NRV, primarily related to Kori Kollo (Other operations).
 
Carrying Value of Long-Lived Assets
 
We review and evaluate our long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An asset impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the asset, including goodwill, if any. An impairment loss is measured and recorded based on discounted estimated future cash flows. Future cash flows are estimated based on estimated quantities of recoverable minerals, expected gold and other commodity prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. The significant assumptions in determining the NRV for each mine site reporting unit as of December 31, 2008, apart from production cost and capitalized expenditure assumptions unique to each operation, included a long-term gold price of $800 per ounce, a long-term copper price of $2.25 per pound and U.S. to Australian dollar exchange rate of $0.75 per A$1.00. During 2008, the Company recorded write-downs of $137 to reduce the carrying value of property, plant and mine development, primarily related to mineral interests and other assets in Canada, Indonesia and Nevada.
 
Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization other than proven and probable reserves and other material that is not part of the measured, indicated or inferred resource base, are included when determining the fair value of mine site reporting units at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of gold or other commodities that will be obtained after taking into account losses during ore processing and treatment. Estimates of recoverable minerals from such exploration stage mineral interests are risk adjusted based on management’s relative confidence in such materials. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups.
 
As discussed above under Amortization, various factors could impact our ability to achieve our forecasted production schedules from proven and probable reserves. Additionally, production, capital and reclamation costs could differ from the assumptions used in the cash flow models used to assess impairment. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material could ultimately be mined economically. Assets classified as exploration potential have the highest level of risk that the carrying value of the asset can be ultimately realized, due to the still lower level of geological confidence and economic modeling.


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Derivative Instruments
 
With the exception of the Call Spread Transactions (as described below in Note 21), all financial instruments that meet the definition of a derivative are recorded on the balance sheet at fair market value. Changes in the fair market value of derivatives are recorded in the statements of consolidated income (loss), except for the effective portion of the change in fair market value of derivatives that are designated as a cash flow hedge and qualify for cash flow hedge accounting. Management applies significant judgment in estimating the fair value of instruments that are highly sensitive to assumptions regarding commodity prices, market volatilities, foreign currency exchange rates and interest rates. Variations in these factors could materially affect amounts credited or charged to earnings to reflect the changes in fair market value of derivatives. Certain derivative contracts are accounted for as cash flow hedges, whereby the effective portion of changes in fair market value of these instruments are deferred in Accumulated other comprehensive (loss) income and will be recognized in the statements of consolidated income (loss) when the underlying transaction designated as the hedged item impacts earnings. All derivative contracts accounted for as cash flow hedges are designated against future foreign currency expenditures or future diesel expenditures, where management believes the forecasted transaction is probable of occurring. To the extent that management determines that such future foreign currency or diesel expenditures are no longer probable of occurring, gains and losses deferred in Accumulated other comprehensive (loss) income would be reclassified to the statements of consolidated income (loss) immediately.
 
Reclamation and Remediation Obligations (Asset Retirement Obligations)
 
Reclamation costs are allocated to expense over the life of the related assets and are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and remediation costs. The asset retirement obligation is based on when the spending for an existing environmental disturbance will occur. We review, on at least an annual basis, the asset retirement obligation at each mine site in accordance with FASB Statement No. 143, “Accounting for Asset Retirement Obligations.”
 
Future remediation costs for inactive mines are accrued based on management’s best estimate of the costs expected to be incurred at a site. Such cost estimates include, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimates at inactive mines are reflected in earnings in the period an estimate is revised.
 
Accounting for reclamation and remediation obligations requires management to make estimates unique to each mining operation of the future costs we will incur to complete the reclamation and remediation work required to comply with existing laws and regulations. Actual costs incurred in future periods could differ from amounts estimated. Additionally, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required. Any such increases in future costs could materially impact the amounts charged to earnings for reclamation and remediation.
 
Income and Mining Taxes
 
We recognize the expected future tax benefit from deferred tax assets when the tax benefit is considered to be more likely than not of being realized. Assessing the recoverability of deferred tax assets requires management to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecasted cash flows and the application of existing tax laws in each jurisdiction. Refer above under Carrying Value of Long-Lived Assets for a discussion of the factors that could cause future cash flows to differ from estimates. To the extent that future cash flows and taxable income differ significantly from estimates, our ability to realize deferred tax assets recorded at the balance sheet date could be impacted. Additionally, future changes in tax laws in the jurisdictions in which we operate could limit our ability to obtain the future tax benefits represented by our deferred tax assets recorded at the reporting date.


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Our operations involve dealing with uncertainties and judgments in the application of complex tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state, and international tax audits. We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due. As of January 1, 2007, we adopted FIN 48 guidance to record these liabilities (refer to Note 8 of the Consolidated Financial Statements for additional information). We adjust these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. If our estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.
 
Consolidated Financial Results
 
Sales — gold, net for 2008 increased $1,142 compared to 2007 due to a $177 per ounce increase in the average realized price after treatment and refining charges and 57,000 additional ounces sold. Sales — gold, net for 2007 increased $94 compared to 2006 due to a $103 per ounce increase in the average realized price after treatment and refining charges partially offset by 908,000 fewer ounces sold. The following analysis summarizes the change in consolidated gold sales revenue:
 
                         
    Years Ended December 31,  
    2008     2007     2006  
 
Consolidated gold sales:
                       
Gross
  $ 5,460     $ 4,332     $ 4,241  
Less: Treatment and refining charges
    (13 )     (27 )     (30 )
                         
Net
  $ 5,447     $ 4,305     $ 4,211  
                         
Consolidated gold ounces sold (thousands):
                       
Gross
    6,255       6,184       7,186  
Less: Incremental start-up sales(1)
    (20 )     (6 )     (100 )
                         
Net
    6,235       6,178       7,086  
                         
Average realized gold price per ounce:
                       
Before treatment and refining charges
  $ 876     $ 701     $ 599  
After treatment and refining charges
  $ 874     $ 697     $ 594  
 
The change in consolidated gold sales is due to:
 
                 
    2008 vs.
    2007 vs.
 
    2007     2006  
 
Increase (decrease) in consolidated ounces sold
  $ 40     $ (544 )
Increase in average realized gold price
    1,088       635  
Decrease in treatment and refining charges
    14       3  
                 
    $ 1,142     $ 94  
                 
 
 
(1) Incremental start-up includes the removal and production of de minimis saleable materials during development and is recorded as Other income, net of incremental mining and processing costs.


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Sales — copper, net decreased in 2008 compared to 2007 due to lower sales volume and lower realized prices. Sales — copper, net increased in 2007 compared to 2006 due to higher realized prices as the final deliveries were made pursuant to the copper collar contracts through February 2007, partially offset by lower production. For a complete discussion regarding variations in copper volumes, see Results of Consolidated Operations below.
 
The following analysis reflects the changes in consolidated copper sales:
 
                         
    Years Ended December 31,  
    2008     2007     2006  
 
Consolidated copper sales:
                       
Gross before derivative contracts
  $ 878     $ 1,409     $ 1,333  
Provisional pricing mark-to-market
    (47 )     (34 )     165  
Hedging losses
          (1 )     (633 )
                         
Gross after derivative contracts
    831       1,374       865  
Less: Treatment and refining charges
    (79 )     (153 )     (194 )
                         
Net
  $ 752     $ 1,221     $ 671  
                         
Consolidated copper pounds sold (millions)
    290       428       435  
Average realized price per pound:
                       
Gross before derivative contracts
  $ 3.03     $ 3.30     $ 3.07  
Provisional pricing mark-to-market
    (0.16 )     (0.09 )     0.38  
Hedging losses
                (1.46 )
                         
Gross after derivative contracts
    2.87       3.21       1.99  
Less: Treatment and refining charges
    (0.28 )     (0.35 )     (0.45 )
                         
Net
  $ 2.59     $ 2.86     $ 1.54  
                         
 
The change in consolidated copper sales is due to:
 
                 
    2008 vs.
    2007 vs.
 
    2007     2006  
 
Decrease in consolidated pounds sold
  $ (443 )   $ (15 )
(Decrease) increase in average realized copper price
    (100 )     524  
Decrease in treatment and refining charges
    74       41  
                 
    $ (469 )   $ 550  
                 


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The following is a summary of consolidated gold and copper sales, net:
 
                         
    Years Ended December 31,  
    2008     2007     2006  
 
Gold
                       
Nevada, USA
  $ 1,929     $ 1,616     $ 1,441  
Yanacocha, Peru
    1,613       1,093       1,543  
Australia/New Zealand:
                       
Tanami, Australia
    321       305       250  
Kalgoorlie, Australia
    264       224       198  
Jundee, Australia
    342       214       190  
Waihi, New Zealand
    123       66       71  
                         
      1,050       809       709  
                         
Batu Hijau, Indonesia
    261       351       264  
Africa Ahafo, Ghana
    435       306       124  
Other Operations:
                       
La Herradura, Mexico
    83       61       48  
Kori Kollo, Bolivia
    75       60       77  
Golden Giant, Canada
          8       35  
                         
      158       129       160  
                         
Corporate
    1       1       (30 )
                         
    $ 5,447     $ 4,305     $ 4,211  
                         
Copper
                       
Batu Hijau, Indonesia
  $ 752     $ 1,221     $ 671  
                         
 
Costs applicable to sales — gold increased in 2008 compared to 2007 due to higher diesel costs and higher royalty and workers participation expenses, partially offset by lower waste removal costs at Batu Hijau and higher by-product sales. The increase in 2007 from 2006 resulted from increased labor and diesel costs, the strengthening of the Australian dollar, a full year of operations at Ahafo in Ghana and Phoenix and Leeville in Nevada and higher waste removal costs at Batu Hijau. Costs applicable to sales — copper decreased in 2008 from 2007 due to lower waste removal costs, partially offset by higher diesel, labor and milling costs. Costs applicable to sales — copper increased in 2007 from 2006 due to higher waste removal costs at Batu Hijau. For a complete discussion regarding variations in operations, see Results of Consolidated Operations below.
 
Amortization increased in 2008 from 2007 due to increased production at Australia/New Zealand and Ahafo, a larger portion of Nevada production being sourced from the Phoenix and Leeville operations and the start-up of the gold mill at Yanacocha and the power plant in Nevada. Amortization increased in 2007 from 2006 due to a full year of operations at Phoenix and Leeville in Nevada and Ahafo in Ghana. Amortization expense fluctuates as capital expenditures increase or decrease and as production levels increase or decrease due to the use of the units-of production amortization method for mineral interests and mine development. For a complete discussion, see Results of Consolidated Operations, below. We expect Amortization to increase to approximately $775 to $825 in 2009 (with 100% ownership of the Boddington project).


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The following is a summary of Costs applicable to sales and Amortization by operation:
 
                                                 
    Costs Applicable to Sales     Amortization  
    Years Ended December 31,     Years Ended December 31,  
    2008     2007     2006     2008     2007     2006  
 
Gold
                                               
Nevada, USA
  $ 1,022     $ 1,021     $ 960     $ 246     $ 220     $ 180  
Yanacocha, Peru
    637       490       450       170       160       172  
Australia/New Zealand:
                                               
Tanami, Australia
    220       181       150       39       37       30  
Kalgoorlie, Australia
    231       191       158       16       24       25  
Jundee, Australia
    149       138       107       34       26       26  
Waihi, New Zealand
    55       42       23       33       22       10  
                                                 
      655       552       438       122       109       91  
                                                 
Batu Hijau, Indonesia
    124       114       86       25       25       20  
Africa
                                               
Ahafo, Ghana
    205       168       52       63       43       19  
Other Operations:
                                               
La Herradura, Mexico
    38       29       19       8       7       8  
Kori Kollo, Bolivia
    64       28       26       10       10       9  
Golden Giant, Canada
          2       12                   1  
                                                 
      102       59       57       18       17       18  
                                                 
      2,745       2,404       2,043       644       574       500  
                                                 
Copper
                                               
Batu Hijau, Indonesia
    399       450       292       80       96       66  
                                                 
Other
                                               
Exploration
                      1       1       3  
Australia/New Zealand
                      3       3       3  
Other Operations
                                  1  
Hope Bay, Canada
                      1              
Corporate and Other
                      18       21       16  
                                                 
                        23       25       23  
                                                 
    $ 3,144     $ 2,854     $ 2,335     $ 747     $ 695     $ 589  
                                                 
 
The Loss on settlement of price-capped forward sales contracts of $531 in 2007 resulted from the elimination of the entire 1.85 million ounces of forward sales contracts that would have impacted results in 2008 and beyond.
 
Midas redevelopment of $11 in 2007 resulted from activities undertaken, during the period in which operations were suspended, to regain entry into the mine in order to resume commercial production following a fatal accident that occurred in June 2007.
 
Exploration increased to $214 in 2008 from $177 in 2007 reflecting increased activity in response to higher gold prices and increased drilling, labor and consumable costs primarily at Hope Bay, Ghana and Conga. We expect Exploration spending to be approximately $165 to $175 in 2009, a decrease from 2008, due to a reduced drilling program related to the Company’s focus on net cash flow generation and a more selective and strategic exploration program. The decrease may adversely


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affect the timing and extent of new mineral discoveries and the replacement of reserves. Once mineralization is discovered, it will likely take many years from the initial phases of exploration until production, during which time the economic feasibility of production may change.
 
Advanced Projects, research and development includes the following:
 
                         
    Years Ended December 31,  
    2008     2007     2006  
 
Hope Bay
  $ 39     $     $  
Fort a la Corne JV
    26              
Technical and project services
    23       15       25  
Euronimba
    15       7       3  
Akyem
    7       6       15  
Phoenix
    6       7       10  
Conga
    4       3       6  
Other
    46       24       22  
                         
    $ 166     $ 62     $ 81  
                         
 
Advanced projects, research and development includes project management costs, feasibility studies and drilling costs. Significant projects include the Hope Bay gold project in Nunavut, Canada purchased with the December 2007 Miramar acquisition; the Fort a la Corne JV diamond project in Saskatchewan, Canada; the Euronimba iron ore project in Guinea; the Akyem gold project in Ghana and the Conga copper and gold project in Peru. Fort a la Corne JV was included in Exploration in 2007 and 2006 with spending of $17 and $6, respectively. We expect Advanced projects, research and development spending to be approximately $120 to $150 in 2009, a decrease from 2008, due to a focus on net cash flow generation. The decrease in project development spending may adversely affect the timing of our ability to complete certain projects.
 
General and administrative expense remained stable over the period from 2006 to 2008. General and administrative expense as a percentage of revenues was 2.3% in 2008, compared to 2.6% and 2.8% in 2007 and 2006, respectively. We expect General and administrative expenses to be approximately $140 to $150 in 2009.
 
Write-down of goodwill in 2007 was $1,122 ($nil for 2008 and 2006) and was related to the Exploration segment. The impairment resulted primarily from adverse changes in valuation assumptions and the application of a revised industry definition of value beyond proven and probable reserves (“VBPP”). The changes to valuation assumptions included: (i) a significantly lower assumed annual reserve growth rate (from 4% to 3%), (ii) a significant change in the financial markets resulting in a significant increase in the discount rate (from 8% to 10%), and (iii) an increase in finding costs due to a combination of increased spending and reduced exploration success. The revised definition of VBPP ascribes more value to tangible mineral interest than the original definition used by the Company. As a result of applying the new definition of VBPP, the higher value ascribed to the Exploration Segment’s tangible mineral interests reduced the implied value of the Exploration Segment’s goodwill to a negligible value.
 
Write-down of property, plant and mine development totaled $137, $10 and $3 for 2008, 2007 and 2006, respectively. The 2008 write-down primarily related to mineral interests and other assets in Canada, Indonesia and Nevada. The Fort a la Corne JV assets were impaired based on 2008 geologic results and potential project economics leading to our decision to cease funding our share of project development costs after January 2009. The assets were written-down to estimated recoverable value. The 2007 write-down primarily related to assets in Indonesia and Australia. The 2006 write-down related to assets in Peru and Indonesia.
 
For a discussion of our policy for assessing the carrying value of goodwill and long-lived assets for impairment, see Critical Accounting Policies, above.


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Other expense, net includes the following:
 
                         
    Years Ended December 31,  
    2008     2007     2006  
 
Reclamation estimate revisions
  $ 102     $ 29     $ 47  
Community development
    65       58       55  
Regional administration
    48       38       38  
Western Australia power plant
    18       11       1  
Peruvian royalty
    18       10       22  
Batu Hijau divestiture and arbitration
    15       3        
Pension settlement loss
    13       17        
World Gold Council dues
    11       11       13  
Accretion, non-operating
    10       8       3  
Provision for bad debts
    9       1        
Buyat Bay settlement and other
    3       12       22  
Other
    48       48       50  
                         
    $ 360     $ 246