nem-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2020

☐ 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 CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

84-1611629

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

6363 South Fiddler’s Green Circle

Greenwood Village, Colorado

80111

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code (303) 863-7414

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, par value $1.60 per share

NEM

New York Stock Exchange

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 ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12-b2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act). ☐ Yes ☒ No

There were 803,071,105 shares of common stock outstanding on July 23, 2020.

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TABLE OF CONTENTS


		Page
	PART I – FINANCIAL INFORMATION
SECOND QUARTER 2020 RESULTS AND HIGHLIGHTS			1
ITEM 1.	FINANCIAL STATEMENTS	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Income (Loss)	6
	Condensed Consolidated Statements of Cash Flows	7
	Condensed Consolidated Balance Sheets	8
	Condensed Consolidated Statement s of Changes in Equity	9
	Notes to Condensed Consolidated Financial Statements	11
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	43
	Overview	43
	Consolidated Financial Results	44
	Results of Consolidated Operations	52
	Foreign Currency Exchange Rates	63
	Liquidity and Capital Resources	64
	Environmental	68
	Non-GAAP Financial Measures	68
	Accounting Developments	80
	Safe Harbor Statement	80
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	82
ITEM 4.	CONTROLS AND PROCEDURES	83
	PART II – OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	84
ITEM 1A.	RISK FACTORS	84
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	84
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	84
ITEM 4.	MINE SAFETY DISCLOSURES	84
ITEM 5.	OTHER INFORMATION	85
ITEM 6.	EXHIBITS	86
SIGNATURES			87

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NEWMONT CORPORATION

SECOND QUARTER 2020 RESULTS AND HIGHLIGHTS

(unaudited, in millions, except per share, per ounce and per pound)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Financial Results:
Sales	$	2,365	$	2,257	$	4,946	$	4,060
Gold	$	2,166	$	2,154	$	4,487	$	3,893
Copper	$	37	$	59	$	58	$	123
Silver	$	76	$	31	$	199	$	31
Lead	$	23	$	13	$	62	$	13
Zinc	$	63	$	—	$	140	$	—
Costs applicable to sales⁽¹⁾	$	1,058	$	1,366	$	2,390	$	2,344
Gold	$	940	$	1,245	$	2,080	$	2,180
Copper	$	25	$	44	$	50	$	87
Silver	$	35	$	41	$	103	$	41
Lead	$	13	$	20	$	39	$	20
Zinc	$	45	$	16	$	118	$	16
Net income (loss) from continuing operations	$	415	$	26	$	1,254	$	171
Net income (loss)	$	347	$	—	$	1,171	$	119
Net income (loss) from continuing operations attributable to Newmont stockholders	$	412	$	1	$	1,249	$	114
Per common share, diluted:
Net income (loss) from continuing operations attributable to Newmont stockholders	$	0.51	$	—	$	1.55	$	0.18
Net income (loss) attributable to Newmont stockholders	$	0.43	$	(0.03)	$	1.45	$	0.10
Adjusted net income (loss) ⁽²⁾	$	261	$	92	$	587	$	268
Adjusted net income (loss) per share, diluted ⁽²⁾	$	0.32	$	0.12	$	0.73	$	0.41
Earnings before interest, taxes and depreciation and amortization⁽²⁾	$	1,156	$	589	$	2,582	$	1,234
Adjusted earnings before interest, taxes and depreciation and amortization⁽²⁾	$	984	$	679	$	2,102	$	1,366
Net cash provided by (used in) operating activities of continuing operations					$	1,607	$	875
Free Cash Flow ⁽²⁾					$	999	$	270
Regular cash dividends declared per common share in the period ended June 30	$	0.25	$	0.14	$	0.39	$	0.28
Regular cash dividends declared per common share for the period ended June 30	$	0.25	$	0.14	$	0.50	$	0.28
Special dividend declared per common share in the period ended June 30 related to the 2019 Newmont Goldcorp transaction	$	—	$	0.88	$	—	$	0.88

____________________________

⁽¹⁾Excludes Depreciation and amortization and Reclamation and remediation.

⁽²⁾See “Non-GAAP Financial Measures” within Part I, Item 2, Management's Discussion and Analysis.

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NEWMONT CORPORATION

SECOND QUARTER 2020 RESULTS AND HIGHLIGHTS

(unaudited, in millions, except per share, per ounce and per pound)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Operating Results:
Consolidated gold ounces (thousands):
Produced	1,239		1,612		2,715		2,949
Sold	1,255		1,636		2,715		2,974
Attributable gold ounces (thousands):
Produced ⁽¹⁾	1,255		1,587		2,734		2,817
Sold ⁽²⁾	1,198		1,539		2,567		2,774
Consolidated and attributable - other metals:
Produced copper (million pounds)	13		26		26		46
Sold copper (million pounds)	13		24		26		46
Produced silver (thousand ounces)	3,554		1,743		13,051		1,743
Sold silver (thousand ounces)	5,211		2,167		13,889		2,167
Produced lead (million pounds)	22		12		84		12
Sold lead (million pounds)	31		17		91		17
Produced zinc (million pounds)	43		25		178		25
Sold zinc (million pounds)	91		—		215		—
Average realized price:
Gold (per ounce)	$	1,724	$	1,317	$	1,652	$	1,310
Copper (per pound)	$	2.91	$	2.48	$	2.21	$	2.68
Silver (per ounce)	$	14.70	$	14.20	$	14.35	$	14.20
Lead (per pound)	$	0.75	$	0.76	$	0.68	$	0.76
Zinc (per pound)	$	0.70	$	—	$	0.65	$	—
Consolidated costs applicable to sales: ⁽³⁾⁽⁴⁾
Gold (per ounce)	$	748	$	759	$	766	$	733
Gold equivalent ounces - other metals (per ounce) ⁽⁵⁾	$	555	$	1,308	$	583	$	1,146
All-in sustaining costs: ⁽⁴⁾
Gold (per ounce)	$	1,097	$	1,016	$	1,061	$	967
Gold equivalent ounces - other metals (per ounce) ⁽⁵⁾	$	974	$	1,646	$	906	$	1,413

____________________________

⁽¹⁾Attributable gold ounces produced includes 74 thousand ounces and 169 thousand ounces for the three and six months ended June 30, 2020, respectively, and 75 thousand ounces for the three and six months ended June 30, 2019, respectively, related to the Pueblo Viejo mine, which is 40 percent owned by Newmont and accounted for as an equity method investment.

⁽²⁾Attributable gold ounces sold excludes ounces related to the Pueblo Viejo mine, which is 40 percent owned by Newmont and accounted for as an equity method investment.

⁽³⁾Excludes Depreciation and amortization and Reclamation and remediation.

⁽⁴⁾See “Non-GAAP Financial Measures” within Part I, Item 2, Management's Discussion and Analysis.

⁽⁵⁾For the definition of gold equivalent ounces see “Results of Consolidated Operations" within Part I, Item 2, Management's Discussion and Analysis.

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Second Quarter 2020 Highlights (dollars in millions, except per share, per ounce and per pound amounts)

•Net income: Delivered Net income (loss) from continuing operations attributable to Newmont stockholders of $412 or $0.51 per diluted share, an increase of $411 from the prior-year quarter primarily due to higher average realized gold prices, the increase in fair value of investments, lower operating costs and lower transaction and integration costs; partially offset by lower sales volumes from certain sites being placed in care and maintenance and the sale of Kalgoorlie.

•Adjusted net income: Delivered Adjusted net income of $261 or $0.32 per diluted share, an increase of $0.20 from the prior-year quarter (See “Non-GAAP Financial Measures” within Part I, Item 2, Management's Discussion and Analysis).

•Adjusted EBITDA: Generated $984 in Adjusted EBITDA, an increase of 45% from the prior-year quarter (See “Non-GAAP Financial Measures” within Part I, Item 2, Management's Discussion and Analysis).

•Cash Flow: Reported Net cash provided by (used in) operating activities of continuing operations of $1,607 for the six months ended June 30, 2020, an increase of 84% from the prior year, and free cash flow of $999 (See “Non-GAAP Financial Measures” within Part I, Item 2, Management's Discussion and Analysis).

•Attributable gold production: Produced 1.3 million ounces of gold, a decrease of 21% over the prior-year quarter.

•Financial strength: Ended the quarter with $3.8 billion of consolidated cash and approximately $6.7 billion of liquidity.

Our global project pipeline

Newmont’s capital-efficient project pipeline supports stable production with improving margins and mine life. Near-term development capital projects are presented below. Additional projects represent incremental improvements to production and cost guidance.

Tanami Expansion 2, Australia. This project secures Tanami’s future as a long-life, low cost producer with potential to extend mine life to 2040 through the addition of a hoisting shaft and supporting infrastructure to achieve higher production and provide a platform for future growth. The expansion is expected to increase average annual gold production by approximately 150,000 to 200,000 ounces per year for the first five years beginning in 2023, and is expected to reduce operating costs by approximately 10 percent. Development capital costs (excluding capitalized interest) since approval were $49, of which $23 related to the second quarter of 2020.

Musselwhite Materials Handling, North America. This project improves material movement from Musselwhite’s two main zones below Lake Opapimiskan. An underground shaft will hoist ore from the underground crushers, reducing haulage distances and ventilation costs. The project is on track for completion at the end of 2020.

We manage our wider project portfolio to maintain flexibility to address the development risks associated with our projects including permitting, local community and government support, engineering and procurement availability, technical issues, escalating costs and other associated risks that could adversely impact the timing and costs of certain opportunities.

COVID-19 Update

In December 2019, an outbreak of a novel strain of coronavirus originated in Wuhan, China (“COVID-19”) and has since spread worldwide, posing public health risks across the globe. In March 2020, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and workforce participation and created significant volatility and disruption of financial markets. The extent of the impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute our 2020 business plan in the expected time frame, will depend on future developments, including the duration and severity of the pandemic and related restrictions, all of which are uncertain and cannot be predicted.

In response to the COVID-19 pandemic we fully mobilized our business continuity plans and rapid response crisis management teams in early March 2020 and continue to work closely with host and indigenous communities, regional and national governments and medical experts to protect our workforce and nearby communities, while also taking steps to preserve the long-term value of our business.

Health and safety

We have implemented robust controls at our operations and offices around the globe, including heightened levels of health screening, canceling non-essential travel, establishing temperature and questionnaire screening at entry points to sites, establishing flexible and remote working plans for employees, establishing screening for fly-in-fly-out employees prior to their departures from their home communities, mandatory self-quarantine for anyone who has travelled internationally or has any flu-like symptoms and implementing “social distancing” protocols. As a global business with operations in eight countries, we are committed to doing our part to combat this disease and protect people and their livelihoods.

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In April 2020, we established the Newmont Global Community Support Fund, a $20 fund to help host communities, governments and employees combat the COVID-19 pandemic, of which approximately $6 has been distributed through June 30, 2020. The fund is designed to focus on employee and community health, food security and local economic resilience through partnerships with local governments, medical institutions, charities and non-governmental organizations to address the greatest needs with long-term resiliency and future community development in mind.

Impact on business and operations

Our operations have been affected by a range of external factors related to the COVID-19 pandemic that are not within our control. For example, during the first quarter and into April 2020, we placed five sites into care and maintenance including Musselwhite and Éléonore in Canada, Peñasquito in Mexico, Yanacocha in Peru and Cerro Negro in Argentina to protect nearby communities and align with country mandated travel restrictions or health considerations. During the second quarter, we worked closely with local stakeholders to resume operations at all five of the above mine sites and activity was in various stages of ramping up as of June 30, 2020.

Liquidity considerations

We believe we have sufficient liquidity on hand to manage the near-term and long-term impacts of the COVID-19 pandemic on our business. As of June 30, 2020, our available liquidity totals $6.7 billion consisting of our cash and cash equivalents of $3.8 billion and borrowing capacity of $2.9 billion available under our unsecured revolving credit facility. We will continue to review and assess the COVID-19 pandemic and its impacts on our business, our people, the communities in which we operate, our suppliers and our customers to be responsive to developments while maintaining financial flexibility.

Refer to “Consolidated Financial Results,” “Results of Consolidated Operations” and “Liquidity and Capital Resources” within Part I, Item 2, Management’s Discussion and Analysis for additional information about the impact of COVID-19 on our business and operations. For a discussion of COVID-19 related risks to the business, see Part II, Item 1A, Risk Factors.

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

NEWMONT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions except per share)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Sales (Note 5)	$	2,365	$	2,257	$	4,946	$	4,060

Costs and expenses:
Costs applicable to sales ⁽¹⁾	1,058		1,366		2,390		2,344
Depreciation and amortization	528		487		1,093		799
Reclamation and remediation (Note 6)	40		73		78		103
Exploration	26		69		70		110
Advanced projects, research and development	26		32		53		59
General and administrative	72		81		137		140
Care and maintenance (Note 7)	125		—		145		—

Other expense, net (Note 8)	59		137		92		205
	1,934		2,245		4,058		3,760
Other income (expense):

Gain on asset and investment sales, net (Note 9)	(1)		32		592		33
Other income, net (Note 10)	198		58		9		102
Interest expense, net of capitalized interest	(78)		(82)		(160)		(140)
	119		8		441		(5)
Income (loss) before income and mining tax and other items	550		20		1,329		295
Income and mining tax benefit (expense) (Note 11)	(164)		(20)		(141)		(145)
Equity income (loss) of affiliates (Note 12)	29		26		66		21
Net income (loss) from continuing operations	415		26		1,254		171
Net income (loss) from discontinued operations (Note 13)	(68)		(