10-K 1 d263670d10k.htm FORM 10-K Form 10-K
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, 2011

or

¨             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

 

 

LOGO

NEWMONT MINING 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

(Zip Code)

(Address of Principal Executive Offices)  

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  ¨

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  ¨    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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

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.  ¨

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 definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer     þ               Accelerated file  ¨     Non-accelerated filer  ¨      Smaller reporting company  ¨
    (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  ¨    No  þ

At June 30, 2011, the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant was $26,633,084,783 based on the closing sale price as reported on the New York Stock Exchange. There were 490,150,298 shares of common stock outstanding (and 4,914,758 exchangeable shares exchangeable into Newmont Mining Corporation common stock on a one-for-one basis) on February 15, 2012.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant’s definitive Proxy Statement submitted to the Registrant’s stockholders in connection with our 2012 Annual Stockholders Meeting to be held on April 24, 2012, are incorporated by reference into Part III of this report.

 

 

 


Table of Contents

TABLE OF CONTENTS

 

         Page  
PART I  
ITEM 1.   BUSINESS      1   
  Introduction      1   
  Segment Information, Export Sales, etc.      1   
  Products      1   
  Hedging Activities      4   
  Gold and Copper Reserves      4   
  Licenses and Concessions      6   
  Condition of Physical Assets and Insurance      6   
  Environmental Matters      7   
  Employees and Contractors      7   
  Forward-Looking Statements      8   
  Available Information      9   
ITEM 1A.   RISK FACTORS      9   
ITEM 2.   PROPERTIES      25   
  Production and Development Properties      25   
  Operating Statistics      32   
  Proven and Probable Reserves      34   
ITEM 3.   LEGAL PROCEEDINGS      42   
ITEM 4A.   EXECUTIVE OFFICERS OF THE REGISTRANT      42   
ITEM 4B.   MINE SAFETY DISCLOSURE      44   
PART II   
ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES      45   
ITEM 6.   SELECTED FINANCIAL DATA      47   
ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS      48   
  Overview      48   
  Accounting Developments      54   
  Critical Accounting Policies      54   
  Consolidated Financial Results      59   
  Results of Consolidated Operations      68   
  Liquidity and Capital Resources      75   
  Environmental      83   
  Forward Looking Statements      83   
  Non-GAAP Financial Measures      83   
ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      86   
  Metal Price      86   
  Foreign Currency      87   
  Hedging      87   
  Fixed and Variable Rate Debt      90   

 

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         Page  
ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA      91   
ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE      168   
ITEM 9A.   CONTROLS AND PROCEDURES      168   
PART III  
ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE      168   
ITEM 11.   EXECUTIVE COMPENSATION      168   
ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS      169   
ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE      169   
ITEM 14.   PRINCIPAL ACCOUNTING FEES AND SERVICES      169   
PART IV   
ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES       170   

SIGNATURES

     S-1   

EXHIBIT INDEX

     E-1   

 

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NEWMONT MINING CORPORATION

PART I

 

ITEM 1. BUSINESS (dollars in millions except per share, per ounce and per pound amounts)

Introduction

Newmont Mining Corporation is primarily a gold producer with significant operations and/or assets in the United States, Australia, Peru, Indonesia, Ghana, New Zealand and Mexico. At December 31, 2011, Newmont had attributable proven and probable gold reserves of 98.8 million ounces and an aggregate land position of approximately 31,500 square miles (81,500 square kilometers). Newmont is also engaged in the production of copper, principally through its Batu Hijau operation in Indonesia and Boddington operation in Australia. 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 together with our affiliates and subsidiaries, unless the context otherwise requires. 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.

Newmont’s Sales and long-lived assets are geographically distributed as follows:

 

     Sales     Long-Lived Assets  
     2011     2010     2009     2011     2010     2009  

Australia/New Zealand

     28     24     16     29     33     33

United States

     26     22     25     35     20     21

Peru

     19     19     26     14     11     10

Indonesia

     15     26     24     13     14     14

Ghana

     8     7     7     8     8     8

Mexico

     4     2     2     1     1     1

Canada

                     13     13

On April 6, 2011, Newmont acquired all of the outstanding common shares of Fronteer Gold Inc. (“Fronteer”). Pursuant to the terms of the acquisition, shareholders of Fronteer received C$14.00 in cash and one-fourth of a common share in Pilot Gold Inc., a Canadian corporation, which retained certain exploration assets of Fronteer, for each common share of Fronteer. Newmont acquired, among other assets, the exploration stage Long Canyon project, which is located approximately one hundred miles from the Company’s existing infrastructure in Nevada and provides the potential for significant development and operating synergies.

Segment Information, Export Sales, etc.

Our operating segments include North America, South America, Asia Pacific and Africa. Our North America segment consists primarily of Nevada in the United States, La Herradura in Mexico and Hope Bay in Canada. Our South America segment consists primarily of Yanacocha and Conga in Peru. Our Asia Pacific segment consists primarily of Boddington in Australia, Batu Hijau in Indonesia and other smaller operations in Australia and New Zealand. Our Africa segment consists primarily of Ahafo and Akyem in Ghana. See Item 1A, Risk Factors, below and Note 3 to the Consolidated Financial Statements for information relating to our operating segments, domestic and export sales and lack of dependence on a limited number of customers.

Products

References in this report to “attributable gold ounces” or “attributable copper pounds” mean that portion of gold or copper produced, sold or included in proven and probable reserves based on our ownership and/or economic interest, unless otherwise noted.

 

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Gold

General.    We had consolidated gold production of 5.9 million ounces (5.2 million ounces attributable to Newmont) in 2011, 6.5 million ounces (5.4 million ounces) in 2010 and 6.5 million ounces (5.2 million ounces) in 2009. Of our 2011 consolidated gold production, approximately 33% came from North America, 22% from South America, 35% from Asia Pacific and 10% from Africa.

For 2011, 2010 and 2009, 88%, 81% and 83%, respectively, of our Sales were attributable to gold. Most of our Sales 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 primarily of gold but also containing silver and other metals. Doré is sent to refiners to produce bullion that meets the required market standard of 99.95% 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 is credited to our account or delivered to buyers. Gold sold from Batu Hijau in Indonesia and a portion of the gold from Boddington in Australia, Phoenix in Nevada and Yanacocha in Peru, is sold in a concentrate containing other metals such as copper and silver.

Gold Uses.     Gold generally is used for fabrication or 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.    A combination of current mine production, recycling and draw-down of existing gold stocks held by governments, financial institutions, industrial organizations and private individuals make up the annual gold supply. Based on public information available for the years 2008 through 2011, on average, current mine production has accounted for approximately 64% of the annual gold supply.

Gold Price.    The following table presents the annual high, low and average daily afternoon fixing prices for gold over the past ten years on the London Bullion Market ($/ounce):

 

Year

   High      Low      Average  

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

   $ 1,213      $ 810      $ 972  

2010

   $ 1,421      $ 1,058      $ 1,225  

2011

   $ 1,895      $ 1,319      $ 1,572  

2012 (through February 15, 2012)

   $ 1,751      $ 1,598      $ 1,683  

 

Source: Kitco, Reuters and the London Bullion Market Association

On February 15, 2012, the afternoon fixing gold price on the London Bullion Market was $1,733 per ounce and the spot market gold price on the New York Commodity Exchange was $1,726 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 and collection of the sales price is reasonably assured.

 

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Copper

General.     We had consolidated copper production of 352 million pounds (206 million pounds attributable to Newmont) in 2011, 600 million pounds (327 million pounds) in 2010 and 504 million pounds (227 million pounds) in 2009. Copper production is in the form of saleable concentrate that is sold to smelters for further treatment and refining. For 2011, 2010 and 2009, 12%, 19% and 17%, respectively, of our Sales were attributable to copper.

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.     A combination of current mine production and recycled scrap material make up the annual copper supply.

Copper Price.     The copper price 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 ($/pound):

 

Year

   High      Low      Average  

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

   $ 3.33      $ 1.38      $ 2.36  

2010

   $ 4.38      $ 2.75      $ 3.43  

2011

   $ 4.62      $ 3.05      $ 4.00  

2012 (through February 15, 2012)

   $ 3.96      $ 3.71      $ 3.81  

 

Source: London Metal Exchange

On February 15, 2012, the high grade copper closing price on the London Metal Exchange was $3.79 per pound.

We generally sell our copper based on the monthly average market price for the third month following the month in which the delivery to the customer takes place. We recognize revenue from a sale when the price is determinable, the concentrate has been loaded on a vessel, the title has been transferred and collection of the sales price is reasonably assured. For revenue recognition, we use a provisional price based on the average prevailing market price during the two week period prior to completion of vessel loading. The copper concentrate is marked to market through earnings as an adjustment to revenue until final settlement.

Gold and Copper Processing Methods

Gold is extracted from naturally-oxidized ores by either milling or heap leaching, 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

 

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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 attach to air bubbles and float 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 26% to 31% copper. The concentrate is dewatered and stored for loading onto ships for transport to smelters.

At Boddington, ore containing copper and gold is crushed to a coarse size at the mine and then transported via conveyor to a process plant, where it is further crushed and then finely ground as a slurry. The ore is initially treated by flotation which produces a copper/gold concentrate containing approximately 20% copper. Flotation concentrates are processed via a gravity circuit to recover fine liberated gold and then dewatered and stored for loading onto ships for transport to smelters. The flotation tailing has a residual gold content that is recovered in a carbon-in-leach circuit.

Hedging Activities

Our strategy is to provide shareholders with leverage to changes in gold and copper prices by selling our gold and copper at current market prices and consequently, we do not hedge our gold and copper sales. We continue to manage certain risks associated with commodity input costs, treasury 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 17 to the Consolidated Financial Statements.

Gold and Copper Reserves

At December 31, 2011, we had 98.8 million ounces of proven and probable gold reserves attributable to Newmont. We added 11.6 million ounces to proven and probable reserves, and depleted 6.3 million ounces during 2011. 2011 reserves were calculated at a gold price assumption of $1,200,

 

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A$1,250 or NZ$1,600 per ounce. A reconciliation of the changes in proven and probable gold reserves during the past three years is as follows:

 

      2011     2010     2009  
     (millions of ounces)   

Opening balance 

     93.5       91.8       85.0  

Depletion

     (6.3     (6.5     (6.8

Additions(1)

     11.6       8.2       6.4  

Acquisitions(2)

            0.3       8.2  

Divestments(3)

            (0.3     (1.0
  

 

 

   

 

 

   

 

 

 

Closing balance 

     98.8       93.5       91.8  
  

 

 

   

 

 

   

 

 

 

A reconciliation of the changes in proven and probable gold reserves for 2011 by region is as follows:

 

     North
America
    South
America
    Asia
Pacific
    Africa  
  

 

(millions of ounces)

  

Opening balance 

     33.5       11.4       31.4       17.2  

Depletion

     (2.7     (0.9     (2.1     (0.6

Additions 

     6.2       0.3       2.2       2.9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Closing balance 

     37.0       10.8       31.5       19.5  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

The impact of the change in gold price assumption on reserve additions was approximately 3.3 million, 1.7 million and 1.7 million ounces in 2011, 2010 and 2009, respectively. The gold price assumption was $1,200 per ounce in 2011, $950 per ounce in 2010 and $800 per ounce in 2009.

 

(2) 

In 2010, we recognized our attributable interest in Regis Resources Ltd. and their reserves in the Duketon belt of Western Australia for an attributable reserve of 0.3 million ounces. In 2009, reserves were increased by 6.7 million ounces through the acquisition of the remaining 33.33% interest in Boddington. At December 31, 2009, our economic interest in Batu Hijau increased to 52.44% as a result of transactions with a noncontrolling partner, increasing reserves by 1.5 million ounces.

 

(3) 

In April 2010, our direct ownership interest in Batu Hijau decreased from 35.44% to 31.5% (economic interest decreased from 52.44% to 48.50%) as a result of the divestiture required under the Contract of Work. In November and December 2009, our direct ownership interest in Batu Hijau decreased from 45% to 35.44% as a result of the divestiture required under the Contract of Work. In July 2009 we sold the Kori Kollo operation in Bolivia.

At December 31, 2011, we had 9,720 million pounds of proven and probable copper reserves. We added 630 million pounds to proven and probable reserves and depleted 330 million pounds during 2011. 2011 reserves were calculated at a copper price of $3.00 or A$3.15 per pound. A reconciliation of the changes in proven and probable copper reserves during the past three years is as follows:

 

      2011     2010     2009  
     (millions of pounds)  

Opening balance 

     9,420       9,120       7,780  

Depletion

     (330     (370     (310

Additions(1)

     630       1,000       400  

Acquisitions(2)

                   2,040  

Divestments(3)

            (330     (790
  

 

 

   

 

 

   

 

 

 

Closing balance 

     9,720       9,420       9,120  
  

 

 

   

 

 

   

 

 

 

 

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A reconciliation of changes in proven and probable copper reserves for 2011 by region is as follows:

 

     North
America
    South
America
     Asia
Pacific
 
     (millions of pounds)  

Opening balance

     1,640       1,660        6,120  

Depletion

     (50             (280

Additions

     450       30        150  
  

 

 

   

 

 

    

 

 

 

Closing balance

     2,040       1,690        5,990  
  

 

 

   

 

 

    

 

 

 

 

(1) 

The impact of the change in copper price assumption on reserve additions was 370 million, 150 million and 290 million pounds in 2011, 2010 and 2009, respectively. The copper price assumption was $3.00 per pound in 2011, $2.50 per pound in 2010 and $2.00 per pound in 2009.

 

(2) 

In 2009, reserves were increased by 640 million pounds through the acquisition of the remaining 33.33% interest in Boddington. At December 31, 2009, our economic interest in Batu Hijau increased to 52.44% as a result of transactions with a noncontrolling partner, increasing reserves by 1,400 million pounds.

 

(3) 

In April 2010, our direct ownership interest in Batu Hijau decreased from 35.44% to 31.5% (economic interest decreased from 52.44% to 48.50%) as a result of the divestiture required under the Contract of Work. In November and December 2009, our direct ownership interest in Batu Hijau decreased from 45% to 35.44% as a result of the divestiture required under the Contract of Work.

Our exploration efforts are directed to the discovery of new mineralized material and converting it into proven and probable reserves. We conduct near-mine exploration around our existing mines and greenfields exploration in other regions globally. Near-mine exploration can result in the discovery of additional deposits, which may receive the economic benefit of existing operating, processing, and administrative infrastructures. In contrast, the discovery of mineralization through greenfields exploration efforts will likely require capital investment to build a stand-alone operation. Our Exploration expense was $350, $218 and $187 in 2011, 2010 and 2009, respectively.

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, Canada, Ghana, Indonesia, Mexico, New Zealand, Peru and Suriname. The concessions and contracts are subject to the political risks associated with foreign operations. See Item 1A, Risk Factors, below. For a more detailed description of our Indonesian Contract of Work, see Item 2, Properties, below.

Condition of Physical Assets and Insurance

Our business is capital intensive and requires 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

 

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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, 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. At December 31, 2011, $1,070 was accrued for reclamation costs relating to current or recently producing properties.

We are 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. Based upon our best estimate of our liability for these matters, $170 was accrued at December 31, 2011 for such obligations associated with properties previously owned or operated by us or our subsidiaries. The amounts accrued for these matters are reviewed periodically based upon facts and circumstances available at the time.

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 4 and 31 to the Consolidated Financial Statements, below.

In addition to legal and regulatory compliance, we have developed complementary programs to guide our company toward achieving transparent and sustainable environmental and socially responsible performance objectives. Evidencing our management’s commitment towards these objectives, our corporate headquarters are located in an environmentally sustainable, LEED, gold-certified building. We are committed to managing climate change related risks and responsibly managing our greenhouse gas emissions. We have reported our greenhouse gas emissions annually to the Carbon Disclosure Project since 2004, became a Founding Reporter on The Climate Registry in 2008, and by 2010, established programs to publically report our independently-verified greenhouse gas emissions for all of our global operations. We actively participate in the International Council on Mining and Metals (“ICMM”) and are committed to the ICMM’s 10 Principles of Sustainable Development and its commitment to implement the UN Global Compact’s 10 principles on human rights, bribery and corruption, labor and the environment. To ensure sound environmental management systems, 100% of Newmont’s operations have achieved ISO 14001 certification by year-end 2011. We transparently report on our sustainability performance in accordance with the Global Reporting Initiative guidelines, including the Mining and Metals Sector Supplement. As a result of our efforts, we continue to achieve milestones, such as being the first gold company listed on the Dow Jones Sustainability Index World (“DJSI”), remaining a member of the DJSI World Index for five consecutive years, and receiving International Cyanide Management Code certification at 100% of Newmont operated sites as of the end of 2011.

Employees and Contractors

Approximately 17,100 people were employed by Newmont at December 31, 2011. In addition, approximately 25,800 people were working as contractors in support of Newmont’s operations.

 

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NEWMONT MINING CORPORATION

 

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. Words such as “expect(s)”, “feel(s)”, “believe(s)”, “will”, “may”, “anticipate(s)”, “estimate(s)”, “should”, “intend(s)” and similar expressions are intended to identify forward-looking statements. Our forward-looking statements may include, without limitation:

 

   

Estimates regarding future earnings and the sensitivity of earnings to gold and other metal prices;

 

   

Estimates of future mineral production and sales;

 

   

Estimates of future production costs, other expenses and taxes for specific operations and on a consolidated basis;

 

   

Estimates of future cash flows and the sensitivity of cash flows to gold and other metal prices;

 

   

Estimates of future capital expenditures, construction, production or closure activities and other cash needs, for specific operations and on a consolidated basis, and expectations as to the funding or timing thereof;

 

   

Estimates as to the projected development of certain ore deposits, including the timing of such development, the costs of such development and other capital costs, financing plans for these deposits and expected production commencement dates;

 

   

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 of, and terms and costs related to, future borrowing, debt repayment and financing;

 

   

Estimates regarding future exploration expenditures, results and reserves;

 

   

Statements regarding fluctuations in financial and currency markets;

 

   

Estimates regarding potential cost savings, productivity, operating performance and ownership and cost structures;

 

   

Expectations regarding the completion and timing of acquisitions or divestitures and projected synergies and costs associated with acquisitions;

 

   

Expectations regarding the start-up time, design, mine life, production and costs applicable to sales and exploration potential of our projects;

 

   

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;

 

   

Estimates of future costs and other liabilities for certain environmental matters;

 

   

Estimates of income taxes; and

 

   

Estimates of pension and other post-retirement costs.

 

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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;

 

   

The cost of operations;

 

   

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;

 

   

Changes in tax laws;

 

   

Domestic and international economic and political conditions;

 

   

Our ability 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. We disclaim any intention or obligation to update publicly any forward-looking statements, whether as a 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 Relations 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. Certain other information, including 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.

 

ITEM 1A.  RISK FACTORS (dollars in millions except per share, per ounce and per pound amounts)

Our business activities are subject to significant risks, including those described below. Every investor or potential investor in our securities should carefully consider these risks. If any of the described risks actually occurs, our business, financial position and results of operations could be materially adversely affected. Such risks are not the only ones we face and additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business.

 

 

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A substantial or extended decline in gold or copper prices would have a material adverse effect on Newmont.

Our business is dependent on the prices of gold and copper, which fluctuate on a daily basis and are affected by numerous factors beyond our control. Factors tending to influence prices include:

 

   

gold sales or leasing by governments and central banks or changes in their monetary policy, including gold inventory management and reallocation of reserves;

 

   

speculative short positions taken by significant investors or traders in gold or copper;

 

   

the relative strength of the U.S. dollar;

 

   

expectations of the future rate of inflation;

 

   

interest rates;

 

   

recession or reduced economic activity in the United States, China, India and other industrialized or developing countries;

 

   

decreased industrial, jewelry or investment demand;

 

   

increased supply from production, disinvestment and scrap;

 

   

forward sales by producers in hedging or similar transactions; and

 

   

availability of cheaper substitute materials.

Any decline in our realized gold or copper price adversely impacts our revenues, net income and operating cash flows, particularly in light of our strategy of not engaging in hedging transactions with respect to gold or copper. We have recorded asset write-downs in the past and may experience additional write-downs as a result of lower gold or copper prices in the future.

In addition, sustained lower 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 prevailing gold or copper prices;

 

   

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 with the result that depleted reserves may not be replaced; 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.

We may be unable to replace gold and copper reserves as they become depleted.

Gold and copper producers must continually replace reserves depleted by production to maintain production levels over the long term and provide a return on invested capital. Depleted reserves can be replaced in several ways, including by expanding known ore bodies, by locating new deposits, or by acquiring interests in reserves from third parties. Exploration is highly speculative in nature, involves many risks and frequently is unproductive. Our current or future exploration programs may not result in new mineral producing operations. Even if significant mineralization is discovered, it will likely take many years from the initial phases of exploration until commencement of production, during which time the economic feasibility of production may change.

We may consider, from time to time, the acquisition of ore reserves related to development properties and operating mines. Such acquisitions are typically based on an analysis of a variety of factors including historical operating results, estimates of and assumptions regarding the extent of ore reserves, the timing of production from such reserves and cash and other operating costs. Other factors that affect our decision to make any such acquisitions may also include our assumptions for

 

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future gold or copper prices or other mineral prices and the projected economic returns and evaluations of existing or potential liabilities associated with the property and its operations and projections of how these may change in the future. In addition, in connection with future acquisitions we may rely on data and reports prepared by third parties and which may contain information or data that we are unable to independently verify or confirm. Other than historical operating results, all of these factors are uncertain and may have an impact on our revenue, our cash and other operating issues, as well as contributing to the uncertainties related to the process used to estimate ore reserves. In addition, there may be intense competition for the acquisition of attractive mining properties.

As a result of these uncertainties, our exploration programs and any acquisitions which we may pursue may not result in the expansion or replacement of our current production with new ore reserves or operations, which could have a material adverse effect on our business, prospects, results of operations and financial position.

Estimates of proven and probable reserves and non reserve mineralization are uncertain and the volume and grade of ore actually recovered may vary from our estimates.

The reserves stated in this report represent the amount of gold and copper that we estimated, at December 31, 2011, could be economically and legally extracted or produced at the time of the reserve determination. Estimates of proven and probable reserves are subject to considerable uncertainty. Such estimates are, to a large extent, based on the prices of gold and copper 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 phases of exploration until commencement of production, during which time, the economic feasibility of production may change.

In addition, if the price of gold or copper declines from recent levels, if production costs increase or recovery rates decrease or if applicable laws and regulations are adversely changed, we can offer no assurance that the indicated level of recovery will be realized or that mineral reserves as currently reported can be mined or processed profitably. If we determine that certain of our ore reserves have become uneconomic, this may ultimately lead to a reduction in our aggregate reported reserves. Consequently, if our actual mineral reserves and resources are less than current estimates, our business, prospects, results of operations and financial position may be materially impaired.

Increased operating costs could affect our profitability.

Costs at any particular mining location 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, labor, chemical reagents, explosives, steel and concrete. Commodity costs are, at times, subject to volatile price movements, including increases that could make production at certain operations less profitable. Further, changes in laws and regulations can affect commodity prices, uses and transport. 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 operating cash flow.

We could have significant increases in capital and operating costs over the next several years in connection with the development of new projects in challenging jurisdictions and in sustaining existing operations. Costs associated with capital expenditures have escalated on an industry-wide basis over the last several years, as a result of factors beyond our control, including the prices of oil, steel and

 

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other commodities and labor. Increased costs for capital expenditures may have an adverse effect on the profitability of existing operations and economic returns anticipated from new projects.

Estimates relating to new development projects are uncertain and we may incur higher costs and lower economic returns than estimated.

Mine development projects typically require a number of years and significant expenditures during the development phase before production is possible. Such projects could experience unexpected problems and delays during development, construction and mine start-up.

Our decision to develop a project is typically based on the results of feasibility studies, which estimate the anticipated economic returns of a project. The actual project profitability or economic feasibility may differ from such estimates as a result of any of the following factors, among others:

 

   

changes in tonnage, grades and metallurgical characteristics of ore to be mined and processed;

 

   

higher input commodity and labor costs;

 

   

the quality of the data on which engineering assumptions were made;

 

   

adverse geotechnical conditions;

 

   

availability of adequate and skilled labor force and supply and cost of water and power;

 

   

fluctuations in inflation and currency exchange rates;

 

   

availability and terms of financing;

 

   

delays in obtaining environmental or other government permits or approvals or changes in the laws and regulations related to our operations or project development;

 

   

changes in tax laws;

 

   

weather or severe climate impacts; and

 

   

potential delays relating to social and community issues, including, without limitation, issues resulting in protests, road blockages or work stoppages.

Our future development activities may not result in the expansion or replacement of current production with new production, or one or more of these new production sites or facilities may be less profitable than currently anticipated or may not be profitable at all, any of which could have a material adverse effect on our results of operations and financial position.

We may experience increased costs or losses resulting from the hazards and uncertainties associated with mining.

The exploration for natural resources and the development and production of mining operations are activities that involve a high level of uncertainty. These can be difficult to predict and are often affected by risks and hazards outside of our control. These factors include, but are not limited to:

 

   

environmental hazards, including discharge of metals, pollutants or hazardous chemicals;

 

   

industrial accidents, including in connection with the operation of mining transportation equipment and accidents associated with the preparation and ignition of large-scale blasting operations, milling equipment and conveyor systems;

 

   

underground fires or floods;

 

   

unexpected geological formations or conditions (whether in mineral or gaseous form);

 

   

ground and water conditions;

 

   

fall-of-ground accidents in underground operations;

 

   

failure of mining pit slopes and tailings dam walls;

 

   

seismic activity; and

 

   

other natural phenomena, such as lightning, cyclonic or tropical storms, floods or other inclement weather conditions.

 

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The occurrence of one or more of these events in connection with our exploration activities and development and production of mining operations may result in the death of, or personal injury to, our employees, other personnel or third parties, the loss of mining equipment, damage to or destruction of mineral properties or production facilities, monetary losses, deferral or unanticipated fluctuations in production, environmental damage and potential legal liabilities, all of which may adversely affect our reputation, business, prospects, results of operations and financial position.

Shortages of critical parts and equipment may adversely affect our operations and development projects.

The mining industry has been impacted by increased demand for critical resources such as input commodities, drilling equipment and tires. These shortages have, at times, impacted the efficiency of our operations, and resulted in cost increases and delays in construction of projects; thereby impacting operating costs, capital expenditures and production and construction schedules.

Mining companies are increasingly required to consider and provide benefits to the communities and countries in which they operate, and are subject to extensive environmental, health and safety laws and regulations.

As a result of public concern about the real or perceived detrimental effects of economic globalization and global climate impacts, businesses generally and large multinational corporations in natural resources industries, such as Newmont, in particular, face increasing public scrutiny of their activities. These businesses are under pressure to demonstrate that, as they seek to generate satisfactory returns on investment to shareholders, other stakeholders, including employees, governments, communities surrounding operations and the countries in which they operate, benefit and will continue to benefit from their commercial activities. Such pressures tend to be particularly focused on companies whose activities are perceived to have a high impact on their social and physical environment. The potential consequences of these pressures include reputational damage, legal suits and social investment obligations.

In addition, our ability to successfully obtain key permits and approvals to explore for, develop and operate mines and to successfully operate 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 creation of social and economic benefits in the surrounding communities, which may or may not be required by law. Our ability to obtain permits and approvals and to successfully operate in particular communities may be adversely impacted by real or perceived detrimental events associated with our activities or those of other mining companies affecting the environment, human health and safety of communities in which we operate. Delays in obtaining or failure to obtain government permits and approvals may adversely affect our operations, including our ability to explore or develop properties, commence production or continue operations. Key permits and approvals may be revoked or suspended or may be varied in a manner that adversely affects our operations, including our ability to explore or develop properties, commence production or continue operations.

Our exploration, development, mining and processing operations are subject to extensive laws and regulations governing worker health and safety and land use and the protection of the environment, which generally apply to air and water quality, protection of endangered, protected or other specified species, hazardous waste management and reclamation. Some of the countries in which we operate have implemented, and are developing, laws and regulations related to climate change and greenhouse gas emissions. We have made, and expect to make in the future, significant expenditures to comply with such laws and regulations. Compliance with these laws and regulations imposes substantial costs and burdens, and can cause delays in obtaining, or failure to obtain, government permits and approvals which may adversely impact our closure processes and operations.

 

 

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Future changes in applicable laws, regulations, permits and approvals or changes in their enforcement or regulatory interpretation could substantially increase costs to achieve compliance, lead to the revocation of existing or future exploration or mining rights or otherwise have an adverse impact on our results of operations and financial position. For instance, the operation of our mines in the United States is subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects our mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. If such inspections result in an alleged violation, we may be subject to fines, penalties or sanctions and our mining operations could be subject to temporary or extended closures, which could have an adverse effect on our results of operations and financial position. Over the past several years MSHA has significantly increased the numbers of citations and orders charged against mining operations and increased the dollar penalties assessed for citations issued.

In addition, the United States Environmental Protection Agency (“EPA”) is currently seeking to regulate as hazardous waste under the Resource Conservation and Recovery Act (“RCRA”) process solution streams derived from core beneficiation operations, such as our roasting operations, in Nevada. Historically, such streams have been considered exempt from RCRA and have been regulated by the Nevada Division of Environmental Protection. The regulation of these streams as hazardous waste under RCRA could subject us to civil and criminal penalties for past practices and require us to incur substantial future costs to modify our waste water collection systems and retrofit our tailings storage facilities at our Nevada mining operations, which could have an adverse effect on our results of operations and financial position.

Increased global attention or regulation on water quality discharge, such as recently enacted water quality legislation applicable to our operations in Peru, and on restricting or prohibiting the use of cyanide and other hazardous substances in processing activities could similarly have an adverse impact on our results of operations and financial position due to increased compliance and input costs.

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, and thus, our results of operations and our financial position, could be adversely affected 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.

Mine closure and remediation costs for environmental liabilities may exceed the provisions we have made.

Natural resource companies are required to close their operations and rehabilitate the lands that they mine in accordance with a variety of environmental laws and regulations. Estimates of the total ultimate closure and rehabilitation costs for gold and copper mining operations are significant and based principally on current legal and regulatory requirements and mine closure plans that may change materially. For example, we have conducted extensive remediation work at two inactive sites in the United States. We are conducting remediation activities at a third site in the United States, an inactive uranium mine and mill site formerly operated by a subsidiary of Newmont.

Any underestimated or unanticipated rehabilitation costs could materially affect our financial position, results of operations and cash flows. Environmental liabilities are accrued when they become known, are probable and can be reasonably estimated. 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 our consolidated net income attributable to Newmont stockholders in the related period. In addition, regulators are increasingly requesting security in the form of cash collateral, credit, trust arrangements or guarantees to secure the performance of environmental obligations, which could have an adverse

 

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effect on our financial position. For a more detailed discussion of potential environmental liabilities, see the discussion in Environmental Matters, Note 31 to the Consolidated Financial Statements.

The laws and regulations governing mine closure and remediation in a particular jurisdiction are subject to review at any time and may be amended to impose additional requirements and conditions which may cause our provisions for environmental liabilities to be underestimated and could materially affect our financial position or results of operations.

Regulations and pending legislation governing issues involving climate change could result in increased operating costs which could have a material adverse effect on our business.

Producing gold is an energy-intensive business, resulting in a significant carbon footprint. Energy costs account for about a quarter of our overall operating costs, with our principal energy sources being purchased electricity, diesel fuel, gasoline, natural gas and coal.

A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to the potential impacts of climate change that are viewed as the result of emissions from the combustion of carbon-based fuels. The December 1997 Kyoto Protocol, which ends in 2012, established a set of greenhouse gas emission reduction targets for developed countries that have ratified the Protocol, which include Australia and New Zealand. The United States signed but never ratified the Protocol and Canada recently pulled out of the Protocol. Ghana, Indonesia, and Peru ratified the Protocol but as developing countries are not subject to greenhouse gas emission reductions. The Conference of Parties 15 (“COP15”) of the United Nations Framework Convention on Climate Change held in Copenhagen, Denmark in December 2009 was to determine the path forward after the Kyoto Protocol ends. COP15 resulted in the Copenhagen Accord (the “Accord”), a non-binding document calling for economy-wide emissions targets for 2020. Prior to the January 31, 2010 deadline, the United States, Australia, New Zealand, Indonesia, Ghana and Peru re-affirmed their commitment to the Accord.

Some of the countries in which we operate have implemented, and are developing, laws and regulations related to climate change and greenhouse gas emissions. In December 2009, the EPA issued an endangerment finding under the U.S. Clean Air Act that current and projected concentrations of certain mixed greenhouse gases, including carbon dioxide, in the atmosphere threaten the public health and welfare. Regulations have been adopted and additional laws or regulations may be promulgated in the United States to address the concerns raised by such endangerment finding. To date, U.S. regulations do not impose carbon tax on our operations but may in the future. Australia passed the Clean Energy Act in 2011 that sets up a mechanism to combat climate change by imposing a “carbon tax” on greenhouse gas emissions and encourages investment in clean energy. The legislation takes effect on July 1, 2012 and will have an impact to our Australian operations of $30 - $40 million annually.

Non-governmental climate change requirements are beginning to be implemented. For example, Hope Bay is required to comply with the Mining Association of Canada’s Toward Sustainable Mining initiative to reduce energy consumption and greenhouse gas emissions and Conga is required to comply with International Finance Corporation Performance Standards to report and reduce greenhouse gas emissions. This is a trend that is likely to continue.

Legislation and increased regulation and requirements regarding climate change could impose increased costs on us, our venture partners and our suppliers, including increased energy, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Until the timing, scope and extent of any future requirements becomes known, we cannot predict the effect on our financial condition, financial position, results of operations and ability to compete.

 

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The potential physical impacts of climate change on our operations are highly uncertain, and would be particular to the geographic circumstances in areas in which we operate. These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. These impacts may adversely impact the cost, production and financial performance of our operations.

Our operations are subject to risks of doing business.

Exploration, development, production and mine closure activities are subject to regional, political, economic, community and other risks of doing business, including:

 

   

disadvantages of competing against companies from countries that are not subject to the rigorous laws and regulations of the U.S. or other jurisdictions, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act;

 

   

changes in laws or regulations;

 

   

royalty and tax increases or claims, including retroactive increases and claims and requests to renegotiate terms of existing royalties and taxes, by governmental entities, including such increases, claims and/or requests by the governments of Ghana, Indonesia, Australia, Peru, the United States and the State of Nevada;

 

   

increases in training and other costs and challenges relating to requirements by governmental entities to employ the nationals of the country in which a particular operation is located;

 

   

delays in obtaining or renewing, or the inability to obtain, maintain or renew, necessary governmental permits and approvals;

 

   

claims for increased mineral royalties or ownership interests by local or indigenous communities;

 

   

expropriation or nationalization of property;

 

   

currency fluctuations, particularly in countries with high inflation;

 

   

foreign exchange controls;

 

   

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;

 

   

increases in costs relating to, or restrictions or prohibitions on, the use of ports for concentrate storage and shipping, such as in relation to our Boddington and Batu Hijau operations where use of alternative ports is not currently economically feasible or in relation to our ability to procure economically feasible ports for developing projects;

 

   

restrictions on the ability to pay dividends offshore or to otherwise repatriate funds;

 

   

risk of loss due to civil strife, acts of war, guerrilla activities, insurrection and terrorism;

 

   

risk of loss due to criminal activities such as trespass, illegal mining, theft and vandalism;

 

   

risk of loss due to disease and other potential endemic health issues;

 

   

disadvantages relating to submission to the jurisdiction of foreign courts or arbitration panels or enforcement or appeals of judgments at foreign courts or arbitration panels against a sovereign nation within its own territory; 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 such as unilateral cancellation or renegotiation of contracts, licenses or other mining rights.

Consequently, our exploration, development and production activities may be affected by these and other factors, many of which are beyond our control, some of which could materially adversely affect our financial position or results of operations.

 

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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 and acts of terrorism, changes in national leadership, devolution of authority to regional governments, 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 and royalties (at both the national and regional level), denial of permits or permit renewals or expropriation of assets. In regard to issues of resource nationalism, certain government officials and members of parliament may have a preference for national mining companies to own Indonesia’s mineral assets and the government has advocated policies intended to result in development of additional in-country processing of minerals mined in Indonesia and restrictions on exportation including the smelting and exportation of copper concentrates.

Violence committed by radical elements in Indonesia and other countries and the presence of U.S. forces in Afghanistan, as well as U.S. involvement in other conflicts in the Middle East, may increase the risk that operations owned by U.S. companies will be the target of violence. If our Batu Hijau operation were so targeted it could have an adverse effect on our business.

Our Batu Hijau operation faced demonstrations by the local community in 2011 relating to a worker recruitment process, including protests and roadblocks. We cannot predict whether similar or more significant incidents will occur and the recurrence of significant opposition from the local community could disrupt mining activities and, thereby, adversely affect Batu Hijau’s assets and operations. Batu Hijau also faced a temporary work stoppage in 2011 arising from a dispute regarding overtime pay, and the operation’s collective bargaining agreement with the workforce is subject to renewal later this year. Indonesia has seen greater worker and union activism in recent times, and a strike or protracted labor agreement negotiation could adversely affect Batu Hijau’s operations.

Over the years, we are required to apply for renewals of certain key permits related to Batu Hijau. PT Newmont Nusa Tenggara (“PTNNT”), the entity operating Batu Hijau, employs a submarine tailings placement (“STP”) system. The STP system is operated pursuant to a permit from the government of Indonesia that was renewed in 2011, but is subject to challenge in connection with certain legal proceedings. See Note 31 to the Consolidated Financial Statements for a more detailed discussion of pending litigation. A loss of the STP permit would be expected to adversely impact Batu Hijau operations and may adversely impact our future operating and financial results.

Our ownership interest in Batu Hijau has been reduced in accordance with the Contract of Work issued by the Indonesian Government and future reductions in our interest in PTNNT may result in our loss of control over the Batu Hijau operations.

We currently have a 31.5% direct ownership interest in PTNNT, held through Nusa Tenggara Partnership B.V. (“NTPBV”), which is owned with an affiliate of Sumitomo Corporation of Japan (“Sumitomo”). We have a 56.25% interest in NTPBV and a Sumitomo affiliate holds the remaining 43.75%. NTPBV in turn owns 56% of PTNNT, the Indonesian subsidiary that owns Batu Hijau. In December 2009, Newmont entered into a transaction with P.T. Pukuafu Indah (“PTPI”), an unrelated non-controlling shareholder in PTNNT, whereby we agreed to advance certain funds to PTPI in exchange for (i) a pledge of PTPI’s 20% shareholding in PTNNT, (ii) an assignment of dividends payable on the shares, net of withholding tax, (iii) a commitment to support the application of our standards to the operation of the Batu Hijau mine, and (iv) as of September 16, 2011, powers of attorney to vote and sell the PTNNT shares in support of the pledge, enforceable in an event of default as further security for the funding. On June 25, 2010, to effectuate PTPI’s desire to sell the shares, PTPI completed the sale of approximately a 2.2% interest in PTNNT to PT Indonesia Masbaga Investama (“PTIMI”), and Newmont entered into a transaction with PTIMI whereby we agreed to

 

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advance certain funds to PTIMI in exchange for (i) a pledge of PTIMI’s 2.2% shareholding in PTNNT, (ii) an assignment of dividends payable on the shares, net of withholding tax, and (iii) a commitment to support the application of our standards to the operation of the Batu Hijau mine. Under the terms of the transaction, the Company has no powers of attorney or other right to vote PTIMI’s shares. Based on the above transactions, Newmont recognizes an additional 17% effective economic interest in PTNNT. Combined with Newmont’s 56.25% ownership in NTPBV, Newmont has a 48.5% effective economic interest in PTNNT and continues to consolidate Batu Hijau in its Consolidated Financial Statements.

Under the Contract of Work executed in 1986 between the Indonesian government and PTNNT (the “Contract of Work”), 51% of PTNNT’s shares were required to be offered for sale, first, to the Indonesian government or, second, to Indonesian nationals by March 31, 2010. On May 6, 2011 we announced that a definitive agreement was signed with an agency of the Indonesian Government’s Ministry of Finance for the sale of the final 7% divestiture stake in PTNNT. Subsequently, a dispute over the legality of the purchase under relevant laws and regulations has arisen between certain members of parliament and the Ministry of Finance, and the transaction has not yet closed. Upon closing of the transaction, our ownership interest in the Batu Hijau mine’s production, assets and proven and probable equity reserves will be reduced to a 27.56% direct ownership interest as NTPBV’s ownership interest in PTNNT will be reduced to 49%, thus potentially reducing our ability to control the operation at Batu Hijau. In addition, we will have a 17% effective economic interest in PTNNT following the closing of the transaction through financing arrangements with existing shareholders, and we have identified Variable Interest Entities in connection with our economic interests in PTNNT due to certain funding arrangements and shareholder commitments. Therefore, we expect to continue to consolidate PTNNT in our Consolidated Financial Statements after the final 7% sale is completed. Loss of control over PTNNT operations may result in our deconsolidation of PTNNT for accounting purposes, which would reduce our reported consolidated sales, total assets and operating cash flows. See Note 31 to the Consolidated Financial Statements for more information about the PTNNT share divestiture.

As part of the negotiation of the divestiture share sale agreements with PT Multi Daerah Bersaing (“PTMDB”), the nominee of the local governments, the parties executed an operating agreement (the “Operating Agreement”), under which each recognizes the rights of Newmont and Sumitomo to apply their operating standards to the management of PTNNT’s operations, including standards for safety, environmental stewardship and community responsibility. The Operating Agreement became effective in February 2010 and will continue for so long as Newmont and Sumitomo collectively own more shares of PTNNT than PTMDB. If the Operating Agreement terminates, then Newmont may lose control over the applicable operating standards for Batu Hijau and will be at risk for operations conducted in a manner that either detracts from value or results in safety, environmental or social standards below those adhered to by Newmont and Sumitomo.

The Contract of Work has been and may continue to be the subject of dispute, legal review, or requests for renegotiation by the Indonesian government, and is subject to termination by the Indonesian government if we do not comply with our obligations, which would result in the loss of all or much of the value of Batu Hijau.

The divestiture provisions of the Contract of Work have been the subject of dispute. In 2008, the Ministry of Energy and Mineral Resources of the Indonesian government (the “MEMR”) alleged that PTNNT was in breach of its divestiture requirements under the Contract of Work and threatened to terminate the Contract of Work if PTNNT did not agree to divest shares in accordance with the direction of the MEMR. The matter was resolved by an international arbitration panel in March 2009. The arbitration decision led to NTPBV divesting 24% of PTNNT’s shares to PTMDB, the party nominated by the MEMR.

Although the Indonesian government has acknowledged that PTNNT is currently in compliance with the Contract of Work, future disputes may arise under the Contract of Work. Moreover, there have

 

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been statements, from time to time, by some within the Indonesian government who advocate elimination of Contracts of Work and who may try to instigate future disputes surrounding the Contract of Work, particularly given that Batu Hijau is one of the largest businesses within the country. Although any dispute under the Contract of Work is subject to international arbitration, there can be no assurance that we would prevail in any such dispute and any termination of the Contract of Work could result in substantial diminution in the value of our interests in PTNNT. See Note 31 to the Consolidated Financial Statements for more information about the disputes involving the Contract of Work.

In January 2009, the Indonesian Government passed a new mining law. While the law preserves the right of PTNNT to operate our Batu Hijau operations pursuant to the Contract of Work, the Indonesian government is seeking to renegotiate certain provisions of the Contract of Work to conform to certain provisions of the new mining law, which could include requests for, among other things, higher royalty rates. In January 2012, the President of Indonesia appointed a committee to evaluate the process of conforming Contracts of Work to the 2009 mining law.

Our operations at Yanacocha and the development of our Conga Project in Peru are subject to political and social unrest risks, which have resulted most recently in the suspension of construction activities in our Conga project.

 

During the last several years, Minera Yanacocha S.R.L. (“Yanacocha”), in which we own a 51.35% interest, and whose properties include the mining operations at Yanacocha and the Conga project in Peru, has been the target of local political and community protests, some of which blocked the road between the Yanacocha mine and Conga project complexes and the City of Cajamarca in Peru and resulted in vandalism and equipment damage. We cannot predict whether similar or more significant incidents will occur in the future. The recurrence of significant political or community opposition or protests could adversely affect Conga’s development and the continued operation of Yanacocha.

Most recently, construction activities on our Conga project were suspended on November 30, 2011 at the request of Peru’s central government following increasing protests in Cajamarca by anti-mining activists led by the regional president. At the request of the Peruvian central government, the environmental impact assessment prepared in connection with the project, which was previously approved by the central government in October 2010, will be reviewed by independent experts, in an effort to resolve allegations around the environmental viability of Conga. Construction will remain suspended for the duration of the review or longer, except for sediment control works that are being conducted in the project area. However, progress continues on engineering and procurement work. Should the Company be unable to continue with the current development plan at Conga, the Company may in the future reprioritize and reallocate capital to development alternatives in Nevada, Australia, Ghana and Indonesia, which may result in a potential impairment of the Conga project.

In the second quarter of 2011, Presidential and Congressional elections resulted in a change in government in Peru. While the new government has ratified its intention to support mining as a driver for continued growth and future development of Peru, we are unable to predict the positions that will be taken by the new administration or new laws that will be passed by the recently elected Congress, whether the regional government of Cajamarca will support or oppose such positions or laws, or how any change in such position or law will affect Yanacocha or Conga. Such changes may include increased labor regulations, environmental and other regulatory requirements, and additional taxes and royalties. For example, during the third quarter of 2011, the new government enacted four new tax laws. We cannot predict future positions of either the Central or regional government on foreign investment, mining concessions, land tenure or other regulation. Any change in government positions or laws on these issues could adversely affect the assets and operations of Yanacocha or Conga, which could have a material adverse effect on our results of operations and financial position. Additionally, any inability to continue to develop the Conga project or operate at Yanacocha could have an adverse impact on our growth if we are not able to replace its expected production.

 

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Our Company and the mining industry are facing continued geotechnical challenges, which could adversely impact our production and profitability.

Newmont and the mining industry are facing continued geotechnical challenges due to the older age of certain of our mines and a trend toward mining deeper pits and more complex deposits. This leads to higher pit walls, more complex underground environments and increased exposure to geotechnical instability and hydrological impacts. As our operations are maturing, the open pits at many of our sites are getting deeper and we have experienced certain geotechnical failures at some of our mines, including, without limitation, in Indonesia at the Batu Hijau open-pit mine and at our operations in Nevada and Peru.

No assurances can be given that unanticipated adverse geotechnical and hydrological conditions, such as landslides and pit wall failures, will not occur in the future or that such events will be detected in advance. Geotechnical instabilities can be difficult to predict and are often affected by risks and hazards outside of our control, such as severe weather and considerable rainfall, which may lead to periodic floods, mudslides, wall instability and seismic activity, which may result in slippage of material.

Geotechnical failures could result in limited or restricted access to mine sites, suspension of operations, government investigations, increased monitoring costs, remediation costs, loss of ore and other impacts, which could cause one or more of our projects to be less profitable than currently anticipated and could result in a material adverse effect on our results of operations and financial position.

Currency fluctuations may affect our costs.

Currency fluctuations may affect the costs that we incur at our operations. Gold and copper 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 those local currencies against the U.S. dollar increases our costs of 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 the U.S. dollar/Australian dollar exchange rate increases annually the U.S. dollar Costs applicable to sales by approximately $90 for each ounce of gold sold from operations in Australia before taking into account the impact of currency hedging. During the majority of 2011, the Australian dollar was relatively stronger than the U.S. dollar compared to 2010. The annual average Australia dollar exchange rate appreciated by approximately 12% from 2010 to 2011. We hedge up to 90% of our future forecasted Australian dollar denominated operating expenditures to reduce the variability of our Australian dollar exposure. At December 31, 2011 we have hedged 76%, 62%, 46%, 26% and 10% of our forecasted Australian denominated operating costs in 2012, 2013, 2014, 2015 and 2016, respectively. Our Australian dollar derivative programs will limit the benefit to Newmont of future decreases, if any, in the U.S. 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 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.

Our business requires substantial capital investment and we may be unable to raise additional funding on favorable terms.

The construction and operation of potential future projects including the Akyem project in Ghana, the Conga project in Peru and various exploration projects will require significant funding. Our operating cash flow and other sources of funding may become insufficient to meet all of these requirements, 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,

 

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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. In the event of lower gold and copper prices, unanticipated operating or financial challenges, or a further dislocation in the financial markets as experienced in recent years, our ability to pursue new business opportunities, invest in existing and new projects, fund our ongoing operations, retire or service all of our 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.

There can be no assurance that any rating currently assigned by Standard & Poor’s Rating Services or Moody’s Investors Service to Newmont will remain unchanged 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 our ability to obtain new financing on favorable terms, if at all, and increase our borrowing costs, which in turn could impair our results of operations and financial position.

To the extent that we seek to expand our operations and increase our reserves through acquisitions, we may experience issues in executing acquisitions or integrating acquired operations.

From time to time, we examine opportunities to make selective acquisitions in order to expand our operations and reported reserves. The success of any acquisition would depend on a number of factors, including, but not limited to:

 

   

identifying suitable candidates for acquisition and negotiating acceptable terms;

 

   

obtaining approval from regulatory authorities and potentially Newmont’s shareholders;

 

   

maintaining our financial and strategic focus and avoiding distraction of management during the process of integrating the acquired business;

 

   

implementing our standards, controls, procedures and policies at the acquired business and addressing any pre-existing liabilities or claims involving the acquired business; and

 

   

to the extent the acquired operations are in a country in which we have not operated historically, understanding the regulations and challenges of operating in that new jurisdiction.

There can be no assurance that we will be able to conclude any acquisitions successfully, or that any acquisition will achieve the anticipated synergies or other positive results. Any material problems that we encounter in connection with such an acquisition could have a material adverse effect on our business, results of operations and financial position.

Our operations may be adversely affected by energy shortages.

Our mining operations and development projects require significant amounts of energy. Our principal energy sources are electricity, purchased petroleum products, natural gas and coal. Some of our operations are in remote locations requiring long distance transmission of power, and in some locations we compete with other companies for access to third party power generators or electrical supply networks. A disruption in the transmission of energy, inadequate energy transmission infrastructure or the termination of any of our energy supply contracts could interrupt our energy supply and adversely affect our operations.

 

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We have periodically experienced power shortages in Ghana resulting primarily from 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 agreement 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 and to distribute available power proportionately between participating mines and other industrial and commercial users. The need to use 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 position.

Continuation of our mining production is dependent on the availability of sufficient water supplies to support our mining operations.

Our mining operations require significant quantities of water for mining, ore processing and related support facilities. Our operations in North and South America and Australia are in areas where water is scarce and competition among users for continuing access to water is significant. Continuous production at our mines is dependent on our ability to maintain our water rights and claims and defeat claims adverse to our current water uses in legal proceedings. Although each of our operations currently has sufficient water rights and claims to cover its operational demands, we cannot predict the potential outcome of pending or future legal proceedings relating to our water rights, claims and uses. The loss of some or all water rights for any of our mines, in whole or in part, or shortages of water to which we have rights could require us to curtail or shut down mining production and could prevent us from pursuing expansion opportunities. Laws and regulations may be introduced in some jurisdictions in which we operate which could limit our access to sufficient water resources in our operations, thus adversely affecting our operations.

We are dependent upon information technology systems, which are subject to disruption, damage, failure and risks associated with implementation and integration.

We are dependent upon information technology systems in the conduct of our operations. Our information technology systems are subject to disruption, damage or failure from a variety of sources, including, without limitation, computer viruses, security breaches, cyber attacks, natural disasters and defects in design. Damage, disruption, or failure of one or more information technology systems may result in interruptions to our operations in the interim or may require a significant investment to fix or replace them. Various measures have been implemented to manage our risks related to the information technology systems and network disruptions, but our business, financial position or results of our operations could be adversely impacted by such interruptions or such investments.

We could also be adversely affected by system or network disruptions if new or upgraded information technology systems are defective, not installed properly or not properly integrated into our operations. We have begun the implementation of new enterprise software that we will use for various operational functions, financial reporting and controls management. The implementation of this new system carries risks such as cost overruns, delays and interruptions. If we are not able to successfully implement our new system in a timely manner, we will have to rely on manual reporting processes and controls over financial reporting that have not been planned, designed or tested. Various measures have been implemented to manage our risks related to the system implementation, but system implementation failures could have a material adverse effect on our business, financial position and results of operations and could, if not successfully implemented, adversely impact the effectiveness of our internal controls over financial reporting.

 

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The 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 results of operations and financial position.

Our business depends on good relations with our employees.

Production at our mines is dependent upon the efforts of our employees and, consequently, our maintenance of good relationships 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. At December 31, 2011, union represented employees constituted approximately 42% of our worldwide work force. There can be no assurance that any future disputes will be resolved without disruptions to operations.

We rely on contractors to conduct a significant portion of our operations and construction projects.

A significant portion of our operations and construction projects are currently conducted in whole or in part by contractors. As a result, our operations are subject to a number of risks, some of which are outside our control, including:

 

   

negotiating agreements with contractors on acceptable terms;

 

   

the inability to replace a contractor and its operating equipment in the event that either party terminates the agreement;

 

   

reduced control over those aspects of operations which are the responsibility of the contractor;

 

   

failure of a contractor to perform under its agreement;

 

   

interruption of operations or increased costs in the event that a contractor ceases its business due to insolvency or other unforeseen events;

 

   

failure of a contractor to comply with applicable legal and regulatory requirements, to the extent it is responsible for such compliance; and

 

   

problems of a contractor with managing its workforce, labor unrest or other employment issues.

In addition, we may incur liability to third parties as a result of the actions of our contractors. The occurrence of one or more of these risks could adversely affect our results of operations and financial position.

We are subject to litigation and may be subject to additional litigation in the future.

We are currently, or may in the future become, subject to litigation, arbitration or other legal proceedings with other parties. If decided adversely to Newmont, these legal proceedings, or others that could be brought against us in the future, could have a material adverse effect on our financial position or prospects. For a more detailed discussion of pending litigation, see Note 31 to the Consolidated Financial Statements.

 

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In the event of a dispute arising at our foreign operations, we may be subject to the exclusive jurisdiction of foreign courts or arbitral panels, or may not be successful in subjecting foreign persons to the jurisdiction of courts or arbitral panels in the United States. Our inability to enforce our rights and the enforcement of rights on a prejudicial basis by foreign courts or arbitral panels could have an adverse effect on our results of operations and financial position.

Title to some of our properties may be defective or challenged.

Although we have conducted title reviews of our properties, title review does not preclude third parties from challenging our title or related property rights. While we believe that we have satisfactory title to our properties, 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, and our ability to use these properties is dependent on agreements with traditional owners 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 natural resource companies may harm our business.

We compete with other natural resource companies to attract and retain key executives, skilled labor, contractors and other employees. We also compete with other natural resource companies for specialized equipment, components and supplies, such as drill rigs, necessary for exploration and development, as well as for rights to mine properties containing gold, copper 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.

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. At December 31, 2011, the Company’s current and long-term deferred tax assets were $396 and $1,605, respectively.

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 and early 2009, market conditions caused the value of the investments in our pension plans to decrease significantly. As a result, we contributed $27 and $161 to the pension plans in 2011 and 2010, respectively. If future plan investment returns are not sufficient, 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 8 to the Consolidated Financial Statements.

 

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Holders of our common stock may not receive dividends on the common stock.

Holders of our common stock are entitled to receive only such dividends as our board of directors may declare out of funds legally available for such payments. We are incorporated in Delaware and governed by the Delaware General Corporation Law. Delaware law allows a corporation to pay dividends only out of surplus, as determined under Delaware law or, if there is no surplus, out of net profits for the fiscal year in which the dividend was declared and for the preceding fiscal year. Under Delaware law, however, we cannot pay dividends out of net profits if, after we pay the dividend, our capital would be less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets. Furthermore, holders of our common stock may be subject to the prior dividend rights of holders of our preferred stock or depositary shares representing such preferred stock then outstanding. Our ability to pay dividends will be subject to our future earnings, capital requirements and financial condition, as well as our compliance with covenants and financial ratios related to existing or future indebtedness. Although we have historically declared cash dividends on our common stock and recently adopted the enhanced gold price-linked dividend policy described under Item 5, Market for Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchase of Equity Securities, we are not required to declare cash dividends on our common stock and our board of directors may reduce, defer or eliminate our common stock dividend in the future.

 

ITEM 2. PROPERTIES (dollars in millions except per share, per ounce and per pound amounts)

 

LOGO

Production and Development Properties

Newmont’s significant production and development properties are described below. Operating statistics for each operation are presented in a table in the next section of Item 2.

North America

Nevada, USA.    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 Phoenix mine, located 10 miles south of Battle Mountain, 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 Corporation (“Barrick”), which utilizes mill capacity at Twin Creeks.

Gold production from Nevada was approximately 1.7 million ounces for 2011 with ore mined from seven open pit and eight underground mines. At December 31, 2011, we reported 34.7 million ounces

 

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of gold reserves in Nevada, with 77% of those ounces in open pit mines and 23% in underground mines. We are advancing several development opportunities in Nevada, including Long Canyon, with significant reserve expansion potential.

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 79% of Nevada’s gold production in 2011, compared with 79% in 2010 and 77% in 2009. With respect to remaining reserves, we estimate that approximately 85% are refractory ores and 15% 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 flotation or direct flotation at Mill 5. Mill 5 flotation concentrates are then processed at the Carlin roaster or the Twin Creeks autoclaves and additional gold is recovered from the flotation tails by cyanide leaching. The Phoenix mill produces a gravity gold concentrate and a copper/gold flotation concentrate and recovers additional gold from cyanide leaching of the flotation tails. 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 pay a royalty equivalent to 16.2% 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.

In Nevada, mining taxes are assessed on up to 5% of net proceeds of a mine. Net proceeds are calculated as the excess of gross yield over direct costs. Gross yield is determined as the value received when minerals are sold, exchanged for anything of value or removed from the state. Direct costs generally include the costs to develop, extract, produce, transport and refine minerals.

We have a 25% interest in a joint venture with Barrick in 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 production of 44,000 ounces in 2011, 38,000 ounces in 2010 and 39,000 ounces in 2009 were attributable to Newmont, based on our 25% ownership interest.

We had ore sale agreements with Yukon-Nevada Gold Corporation (“Yukon-Nevada”) and Barrick to process the Company’s ore. We recognized attributable gold sales, net of treatment charges, of 47,000 ounces in 2011, 15,000 ounces in 2010 and 700 ounces in 2009, pursuant to these agreements.

On April 6, 2011, the Company completed the acquisition of Fronteer Gold Inc. (“Fronteer”). Fronteer owned among other assets, the exploration stage Long Canyon project, which is located approximately one hundred miles from the Company’s existing infrastructure in Nevada and we believe provides the potential for significant development and operating synergies. During 2011, the project entered into the pre-feasibility stage as we further develop our understanding of what we expect could be another Carlin-type trend at Long Canyon. We have received an expanded exploration area permit

 

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allowing access to project targets. We continue to make progress on the drilling program. A total of 72 kilometers of drilling was completed in 2011 and we anticipate an additional 65 kilometers to be drilled in 2012. Our intention is to bring the project into production in 2017 with initial estimated gold production of approximately 200,000 to 300,000 ounces per year.

Mexico.    We have a 44% interest in the La Herradura joint venture and related gold properties (Herradura, Soledad-Dipolos and Noche Buena), which are located in Mexico’s Sonora desert. La Herradura is operated by Fresnillo PLC (which owns the remaining 56% interest) and comprises open pit operations with run-of-mine heap leach processing. Herradura, located in Sonara, Mexico has been in operation since 1998. Soledad-Dipolos is located 9 kilometers northwest of Herradura and commenced operations in January, 2010. Noche Buena is located 23 kilometers northwest of Herradura and operations are expected to commence in the first half of 2012. La Herradura produced 212,000 attributable ounces of gold in 2011, and at December 31, 2011 we reported 2.3 million attributable ounces of gold reserves.

South America

The properties of Minera Yanacocha S.R.L. (“MYSRL”) include the mining operations at Yanacocha and the Conga project. We hold a 51.35% interest in MYSRL with the remaining interests held by Compañia de Minas Buenaventura, S.A.A. (“Buenaventura”) (43.65%) and the International Finance Corporation (5%).

MYSRL has mining rights with respect to a large land position consisting of concessions granted by the Peruvian government to MYSRL and a related entity. These mining concessions provide for both the right to explore and exploit. However, MYSRL must first obtain the respective exploration and exploitation permits, which are generally granted in due course. MYSRL 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. During 2011, Peru enacted a new mining tax and royalty regime, replacing a 3.75% voluntary contribution that expired in 2010. Beginning October 1, 2011, mining companies are subject to a revised royalty and special mining tax, dependent on whether or not a stabilization agreement is in effect. The revised royalty and special mining taxes are based on a sliding scale and are expected to be 5% to 7%.

Yanacocha, Peru.    Yanacocha is 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 and currently has active open pit mines at Cerro Yanacocha, La Quinua and Chaquicocha, and in 2011, mining operations were reinitiated at Maqui Maqui and Carachugo. Yanacocha has four leach pads, three processing facilities, and one mill, which began commercial production in the second quarter of 2008. Yanacocha’s gold production for 2011 was 1.3 million ounces (728,000 attributable ounces) and at December 31, 2011 we reported 4.0 million attributable ounces of gold reserves.

Conga, Peru.    The Conga project is located within close proximity of existing operations at Yanacocha. In July 2011, the project progressed infrastructure works, earthworks construction, drilling, detailed engineering and procurement of equipment and materials. Construction activities were suspended on November 30, 2011, at the request of Peru’s central government following increasing protests in Cajamarca by anti-mining activists led by the regional president. At the request of the Peruvian central government, the environmental impact assessment prepared in connection with the project, which was previously approved in October 2010, will be reviewed by independent experts, in an effort to resolve the alleged concerns around the environmental viability of Conga. Construction will remain suspended for the duration of the review, however, progress continues on engineering and procurement. Should we be unable to continue with the current development plan at Conga, we may reprioritize and reallocate capital to development alternatives in Nevada, Australia, Ghana and Indonesia. If the project proceeds, average annual estimated attributable gold production of

 

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approximately 300,000 to 350,000 ounces and average annual estimated attributable copper production of approximately 80 to 120 million pounds per year are expected during the first five years of production. At December 31, 2011, we reported 6.5 million attributable ounces of gold reserves and 1,690 million attributable pounds of copper reserves.

La Zanja, Peru.    We hold a 46.94% interest in La Zanja, a gold mine near the city of Cajamarca, Peru. The mine commenced operations in September 2010 and is operated by Buenaventura. The site consists of two small open pits and one oxide leach pad. La Zanja produced 64,000 attributable gold ounces in 2011 and at December 31, 2011 we reported 0.3 million attributable ounces of gold reserves.

Merian, Suriname.    We hold a 50% interest in the Merian gold project, a joint venture with a subsidiary of Alcoa. We will earn an 80% interest on completion of the feasibility study, which commenced in the third quarter of 2011 and is expected to be completed in the fourth quarter of 2012. Once we earn our 80% interest, Alcoa may, within 30 days, elect to purchase a 10% interest in the joint venture from us (reducing our interest to 70%). If Alcoa elects this option, it will be required to solely fund the joint venture expenditures in an amount equal to two-thirds of the expenditures we incurred to complete the feasibility study. Negotiations with the government of Suriname on a mineral agreement are continuing, which may affect our equity participation in the project.

Asia Pacific

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.

Native title claims are not expected to 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.

 

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In Australia, various ad valorem royalties and taxes are paid to state and territorial governments, typically based on a percentage of gross revenues or earnings. Indigenous communities have negotiated royalty payments as a condition to granting access to areas where they have native title or other property rights. A carbon dioxide tax will commence in Australia beginning July 1, 2012, whereby the largest emitters of carbon dioxide will be required to pay A$23.00 per metric ton of carbon dioxide released into the atmosphere. The carbon price is indexed for inflation through June 30, 2015, when a cap and trade system will be in place. Carbon costs will primarily be driven by electricity and diesel fuel consumption.

Boddington.    Boddington (100% owned) is located 81 miles (130 kilometers) southeast of Perth in Western Australia. Boddington has been wholly owned since June 2009 when Newmont acquired the final 33.33% interest from AngloGold Ashanti Australia Limited (“AngloGold”). Boddington poured its first gold in September 2009 and commenced commercial production in November 2009. Boddington produced 741,000 ounces of gold and 69 million pounds of copper in 2011, and at December 31, 2011 we reported 19.5 million ounces of gold reserves and 2,260 million pounds of copper reserves.

Kalgoorlie.    Kalgoorlie (50% owned) comprises 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 in Western Australia. The mines are managed by Kalgoorlie Consolidated Gold Mines Pty Ltd for the joint venture owners, Newmont and Barrick. The Super Pit is one of Australia’s largest gold mines in terms of gold production and annual tons mined. During 2011, the Kalgoorlie operations produced 750,000 ounces of gold (375,000 attributable ounces), and at December 31, 2011 we reported 4.4 million attributable ounces of gold reserves.

Jundee.    Jundee (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 2011, with mill feed supplemented from oxide stockpiles for blending purposes. Jundee produced 333,000 ounces of gold in 2011 and at December 31, 2011 we reported 0.6 million ounces of gold reserves.

Tanami.    Tanami (100% owned) includes 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. Operations are predominantly focused on the Callie underground mine at Dead Bullock Soak and ore is processed through the Granites treatment plant. In July 2011, a project to develop a shaft to support underground operations was approved by the Board of Directors. The project will support underground expansion at the Callie and Auron ore bodies, reduce cut-off grade, enhance productivity and facilitate possible additional mine expansion. The project is expected to add gold production of approximately 60,000 to 90,000 ounces per year during the first five years of production. First production is expected in 2015. During 2011, the Tanami operations produced 221,000 ounces of gold and at December 31, 2011 we reported 2.5 million ounces of gold reserves.

Waihi.    Waihi (100% owned) is located within the town of Waihi, approximately 68 miles (110 kilometers) southeast of Auckland, New Zealand and currently consists of the Favona and Trio (currently under development) underground deposits and the Martha open pit mine. The Waihi operation produced 97,000 ounces of gold in 2011 and at December 31, 2011 we reported 0.4 million ounces of gold reserves.

Duketon.    We have a 16.85% interest in Regis Resources Ltd. (“Regis”), which owns 100% of the Duketon gold mine, located approximately 200 miles northeast of Kalgoorlie. Duketon commenced production in the third quarter of 2010 and produced 17,000 attributable ounces of gold in 2011. At December 31, 2011, we reported 0.5 million attributable ounces of gold reserves.

Batu Hijau, Indonesia.    Batu Hijau 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

 

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discovered in 1990. Development and construction activities began in 1997 and start-up occurred in late 1999. In 2011, Batu Hijau produced 283 million pounds of copper (137 million attributable pounds) and 318,000 ounces of gold (154,000 attributable ounces). At December 31, 2011, we reported 3,730 million attributable pounds of copper reserves and 3.6 million attributable ounces of gold reserves at Batu Hijau.

We own 31.50% of the Batu Hijau mine through Nusa Tenggara Partnership B.V. (“NTPBV”), which we own with an affiliate of Sumitomo Corporation of Japan. We have a 56.25% interest in NTPBV and the Sumitomo affiliate holds the remaining 43.75%. NTPBV in turn owns 56% of PT Newmont Nusa Tenggara (“PTNNT”), the Indonesian subsidiary that owns the Batu Hijau copper and gold mine. The remaining 44% interest in PTNNT is owned by PT Multi Daerah Bersaing (“PTMDB”), 24%; P.T. Pukuafu Indah (“PTPI”), 17.8%; and PT Indonesia Masbaga Investama (“PTIMI”), 2.2%.

On May 6, 2011, we announced that a definitive agreement was signed with an agency of the Indonesian Government’s Ministry of Finance for the sale of the final 7% divestiture stake, as required under the terms of PTNNT’s Contract of Work with the Indonesian Government. NTPBV entered into the agreement with Pusat Investasi Pemerintah (“PIP”). The Government of Indonesia designated PIP as the buyer for the final 7% interest by exercising a right of first refusal set out in the Contract of Work. Upon closing of the transaction, NTPBV’s interest in Batu Hijau will be reduced to 49%, as required under the Contract of Work. The price agreed for the 7% stake is approximately $247. Closing of the transaction is pending receipt of approvals from certain Indonesian government ministries. Subsequent to signing the agreement, a disagreement arose between the Ministry of Finance and the Indonesian parliament in regard to whether parliamentary approval was required to allow PIP to make the share purchase. The Ministry of Finance continues to dispute the need for parliamentary approval and further disputes may arise in regard to the divestiture of the 2010 shares. NTPBV and PIP agreed to extend the period for satisfying the closing conditions of the agreement until May 6, 2012. Our ownership interest in PTNNT following the closing of the transaction will be 27.56%.

We have identified Variable Interest Entities (“VIEs”) (see Note 2 to the Consolidated Financial Statements) in connection with our economic interests in PTNNT due to certain funding arrangements and shareholder commitments. We have financing arrangements with PTPI and PTIMI, unrelated noncontrolling shareholders of PTNNT, whereby we agreed to advance certain funds to them in exchange for (i) a pledge of their combined 20% share of PTNNT, (ii) an assignment of dividends payable on the shares, net of withholding tax, (iii) a commitment from them to support the application of our standards to the operation of the Batu Hijau mine, and (iv) as of September 16, 2011 in respect of PTPI only, powers of attorney to vote and sell PTNNT shares in support of the pledge, enforceable in an event of default as further security for the funding. As a result, PTPI and PTIMI were determined to be VIEs and our effective economic interest in PTNNT increased by 17% (20% interest net of withholding tax) to 48.50% during 2010. We currently provide management for the Batu Hijau operation and our standards are applied at Batu Hijau.

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 our ownership interest in the Batu Hijau mine’s proven and probable reserves may be reduced in the future to as low as 27.56% and ownership interest of NTPBV in PTNNT could be reduced to 49%, thus potentially reducing our ability to control the operation at Batu

 

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Hijau or apply our operating standards. As part of the negotiation of the divestiture sale agreements with PTMDB, the parties executed an operating agreement under which each party recognizes the right of Newmont and Sumitomo to apply their operating standards at Batu Hijau and binds the parties to adhere to our standards for safety, environmental stewardship and community responsibility. The operating agreement remains in effect for so long as NTPBV owns more shares of PTNNT than PTMDB. If the operating agreement terminates, then we could lose effective control over the operations of Batu Hijau and will be at risk for operations conducted in a manner that could potentially reduce the value of PTNNT or result in safety, environmental or social standards below those adhered to by us. Such loss of control may cause us to deconsolidate PTNNT for accounting purposes, which would reduce our reported consolidated sales, cost applicable to sales, amortization, total assets and operating cash flow attributable to PTNNT. See Note 31 to the Consolidated Financial Statements.

Africa

Ahafo, Ghana.    Ahafo (100% owned) is located in the Brong-Ahafo Region of Ghana, approximately 180 miles (290 kilometers) northwest of Accra. We currently operate four open pits at Ahafo with reserves contained in 11 operating and planned pits. Commercial production in the fourth pit, Amoma, began in October 2010. The process plant consists of a conventional mill and carbon-in-leach circuit. Ahafo produced 566,000 ounces of gold in 2011, and at December 31, 2011 we reported 12.1 million ounces of gold reserves.

Akyem, Ghana.    Akyem (100% owned) is located approximately 80 miles (125 kilometers) northwest of Accra. The Akyem project is advancing with awarding of 95% of all construction contracts, commencement of bulk earthworks, major civil work and underground utilities. The first structural concrete was placed in August 2011. Establishment of the first set of households at the resettlement villages took place in October 2011. First production is anticipated in late 2013 to early 2014, with approximately three to six months expected for ramp-up from construction completion to commercial production. Gold production is expected to be approximately 350,000 to 450,000 ounces per year for the first five years of the mine’s operating life of approximately 16 years (based on current gold reserves). At December 31, 2011, we reported 7.4 million ounces of gold reserves.

In December 2003, Ghana’s Parliament unanimously ratified an Investment Agreement (the “Investment Agreement”) between Newmont and the government of Ghana. The Investment 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 Investment 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 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. In 2009, the Minister of Finance implemented the National Fiscal Stabilization Levy, which is an additional tax of profits. Negotiations are ongoing with the commissioner of the Ghana Internal Revenue Service on the applicability of the levy, given Newmont’s Investment Agreement. While negotiations are pending, we have paid and included $39 in Income and mining tax expense to date under the levy.

In 2011, the Minister of Finance proposed the following changes in Ghana’s tax laws: (i) an increase in the corporate income tax from 25% to 35%, (ii) the elimination of the National Fiscal Stabilization Levy, (iii) the introduction of a windfall tax of 10% and (iv) a change in capital allowances to 20% over 5 years from the previously allowed 80% deduction in year one and then 50% per year on the remaining balance. Per our Investment Agreement, the increase in the corporate income tax rate would be limited to 32.5% and the windfall tax of 10% would not be applicable to our Ghana operations.

 

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In addition, the government of Ghana recently established a National Re-Negotiation Team to review fiscal regimes and mining agreements with a view to ensuring that Ghana benefits adequately and fairly from gains in the mining sector. As a result, our Investment Agreement could be subject to requests for renegotiation by the government of Ghana. See Risk Factor “Our operations are subject to risks of doing business” for a description of risks inherent in contracts with governments.

Operating Statistics

The following tables detail operating statistics related to gold production, sales and production costs per ounce:

 

    North America     South America  

Year Ended December 31,

  2011     2010     2009     2011     2010     2009  

Tons mined (000 dry short tons):

           

Open pit 

    236,120       233,359       239,102       164,946       199,467       197,559  

Underground 

    2,685       2,452       2,740                       

Tons processed (000 dry short tons):

           

Mill 

    23,860       23,497       24,702       6,843       6,832       6,242  

Leach 

    23,050       17,240       19,697       43,173       58,691       136,293  

Average ore grade (oz/ton):

           

Mill 

    0.081       0.085       0.085       0.102       0.081       0.118  

Leach 

    0.018       0.019       0.022       0.020       0.019       0.018  

Average mill recovery rate 

    78.6     78.9     81.8     84.6     82.5     86.4

Ounces produced (000):

           

Mill 

    1,577       1,540       1,700       560       421       630  

Leach 

    361       366       398       709       1,038       1,428  

Development(1)

    15       3       1       24       3         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated

    1,953       1,909       2,099       1,293       1,462       2,058  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to Newmont

    1,953       1,909       2,099       728       771       1,057  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated ounces sold (000)

    1,933       1,898       2,117       1,271       1,463       2,068  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Production costs per ounce sold:

           

Direct mining and production costs 

  $ 658     $ 601     $ 535     $ 555     $ 444     $ 318  

By-product credits 

    (100     (72     (55     (36     (50     (31

Royalties and production taxes 

    25       15       15       38       32       18  

Other 

    11       7       6       3       5       5  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs applicable to sales 

    594       551       501       560       431       310  

Amortization 

    153       153       128       184       111       81  

Reclamation and remediation

    4       4       3       15       10       6  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total production costs 

  $ 751     $ 708     $ 632     $ 759     $ 552     $ 397  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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    Asia Pacific     Africa  

Year Ended December 31,

  2011     2010     2009     2011     2010     2009  

Tons mined (000 dry short tons):

           

Open pit 

    306,796       238,725       204,814       52,332       51,054       51,971  

Underground 

    3,159       3,564       3,778                       

Tons milled (000 dry short tons) 

    81,689       89,293       58,853       8,614       8,372       8,335  

Average ore grade (oz/ton) 

    0.030       0.033       0.034       0.078       0.077       0.074  

Average mill recovery rate 

    85.4     86.3     88.3     89.8     86.1     87.2

Ounces produced (000):

           

Mill

    2,083       2,535       1,776       559       529       532  

Development(1)

    2              56       7       16         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated

    2,085       2,535       1,832       566       545       532  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to Newmont

    1,938       2,167       1,517       566       545       532  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated ounces sold (000)

    2,058       2,407       1,803       558       528       546  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Production costs per ounce sold:

           

Direct mining and production costs 

  $ 621     $ 457     $ 395     $ 427     $ 411     $ 414  

By-product credits 

    (24     (14     (10     (2     (1     (1

Royalties and production taxes 

    38       28       24       47       38       29  

Other 

    4       3       1       2       2       2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs applicable to sales 

    639       474       410       474       450       444  

Amortization 

    142       109       100       137       150       125  

Reclamation and remediation

    7       5       4       4       4       4  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total production costs 

  $ 788     $ 588     $ 514     $ 615     $ 604     $ 573  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     Total Gold  

Year Ended December 31,

   2011     2010     2009  

Ounces produced (000):

      

Mill 

     4,779       5,025       4,638  

Leach 

     1,070       1,404       1,826  

Development(1)

     48       22       57  
  

 

 

   

 

 

   

 

 

 

Consolidated

     5,897       6,451       6,521  
  

 

 

   

 

 

   

 

 

 

Attributable to Newmont(2)

     5,185       5,392       5,237  
  

 

 

   

 

 

   

 

 

 

Consolidated ounces sold (000)

     5,820       6,296       6,534  
  

 

 

   

 

 

   

 

 

 

Production costs per ounce sold:

      

Direct mining and production costs 

   $ 600     $ 493     $ 418  

By-product credits 

     (50     (39     (30

Royalties and production taxes 

     35       26       20  

Other 

     6       5       3  
  

 

 

   

 

 

   

 

 

 

Costs applicable to sales 

     591       485       411  

Amortization 

     154       126       105  

Reclamation and remediation

     7       6       4  
  

 

 

   

 

 

   

 

 

 

Total production costs 

   $ 752     $ 617     $ 520  
  

 

 

   

 

 

   

 

 

 

 

(1) 

Ounces from the removal and production of de minimis saleable materials during development. Related sales are recorded in Other income, net of incremental mining and processing costs.

 

(2) 

Includes 32 thousand ounces from discontinued operations at Kori Kollo, Bolivia in 2009.

 

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The following table details operating statistics related to copper production, sales and production costs per pound.

 

     Asia Pacific  

Year Ended December 31,

   2011     2010     2009  

Tons milled (000 dry short tons) 

     70,487       77,155       47,087  

Average grade 

     0.33     0.46     0.60

Average recovery rate 

     76.4     85.1     89.2

Consolidated pounds produced (millions) 

     352       600       504  
  

 

 

   

 

 

   

 

 

 

Attributable to Newmont(1)

     206       327       227  
  

 

 

   

 

 

   

 

 

 

Consolidated pounds sold (millions)

     356       539       507  
  

 

 

   

 

 

   

 

 

 

Production costs per pound sold:

      

Costs applicable to sales 

   $ 1.26     $ 0.80     $ 0.64  

Amortization 

     0.28       0.21       0.16  

Reclamation and remediation

     0.02       0.01       0.01  
  

 

 

   

 

 

   

 

 

 

Total production costs 

   $ 1.56     $ 1.02     $ 0.81  
  

 

 

   

 

 

   

 

 

 

Proven and Probable Reserves

We had attributable proven and probable gold reserves of 98.8 million ounces at December 31, 2011, calculated at a gold price assumption of $1,200, A$1,250 or NZ$1,600 per ounce. Our 2011 reserves would decline by approximately 5% (4.7 million ounces), if calculated at a $1,100 per ounce gold price. An increase in the gold price to $1,300 per ounce would increase reserves by approximately 4% (3.9 million ounces), all other assumptions remaining constant. For 2010, reserves were calculated at a gold price assumption of $950, A$1,100 or NZ$1,350 per ounce.

At December 31, 2011, our proven and probable gold reserves in North America were 37.0 million ounces. Outside of North America, year-end proven and probable gold reserves were 61.8 million ounces, including 31.5 million ounces in Asia Pacific, 19.5 million ounces in Africa and 10.8 million ounces in South America.

Our proven and probable copper reserves at December 31, 2011 were 9,720 million pounds. For 2011, reserves were calculated at a copper price assumption of $3.00 or A$3.15 per pound, increased from $2.50 or A$2.95 per pound, used in 2010.

Our proven and probable silver reserves at December 31, 2011 were 195 million ounces. For 2011, reserves were calculated at a silver price assumption of $22.00 or A$23.00 per ounce. Silver reserves are generally a by-product of gold and/or copper reserves, with significant enough levels to be estimated and included in calculations for mine planning and operations. While details of silver reserves were not provided in 2010, reserves disclosed in footnotes used price assumptions of $15.00 or A$17.50 per ounce in 2010.

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.

 

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NEWMONT MINING CORPORATION

 

Proven and probable reserves are based on extensive drilling, sampling, mine modeling and metallurgical testing from which we determined economic feasibility. Metal price assumptions follow U.S. Securities and Exchange Commission guidance not to exceed a three year trailing average. 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 relevant processing methods. The cut-off grade, or lowest grade of mineralized material considered economic to process, varies with material type, price, metallurgical recoveries, operating costs and co- or by-product credits.

The proven and probable 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 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 will recalculate reserves at December 31, 2012, taking into account metal prices, changes, if any, in future production and capital costs, divestments and depletion as well as any acquisitions and additions during 2012.

 

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The following tables detail gold proven and probable reserves reflecting only those reserves attributable to Newmont’s ownership or economic interest at December 31, 2011 and 2010:

 

          December 31, 2011(1)  
          Proven Reserves     Probable Reserves     Proven and Probable
Reserves
       

Deposits/Districts

  Newmont
Share
    Tonnage(2)     Grade
(oz/ton)
    Ounces(3)     Tonnage(2)     Grade
(oz/ton)
    Ounces(3)     Tonnage(2)     Grade
(oz/ton)
    Ounces(3)     Metallurgical
Recovery(3)
 
          (000)           (000)     (000)           (000)     (000)           (000)        

North America

                     

Carlin Open Pits, Nevada(4)

    100     92,600        0.058       5,410        239,100        0.030       7,210        331,700        0.038       12,620        77

Carlin Underground, Nevada

    100     11,300        0.271       3,070        6,700        0.300       2,020        18,000        0.282       5,090        86

Midas, Nevada

    100     300        0.315       80        500        0.177       80        800        0.226       160        95

Phoenix, Nevada(5)

    100     24,900        0.018       460        422,200        0.016       6,790        447,100        0.016       7,250        72

Twin Creeks, Nevada

    100     10,600        0.097       1,020        37,700        0.073       2,760        48,300        0.078       3,780        80

Turquoise Ridge, Nevada(6)

    25     1,700        0.444       740        2,300        0.440       1,020        4,000        0.442       1,760        92

Nevada In-Process(7)

    100     23,000        0.020       460                        23,000        0.020       460        65

Nevada Stockpiles(8)

    100     65,100        0.053       3,440        3,100        0.028       90        68,200        0.052       3,530        76
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Nevada(9)

      229,500        0.064       14,680        711,600        0.028       19,970        941,100        0.037       34,650        78

La Herradura, Mexico(10)

    44     51,000        0.021       1,090        60,400        0.020       1,240        111,400        0.021       2,330        62
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      280,500        0.056       15,770        772,000        0.027       21,210        1,052,500        0.035       36,980        77
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

South America

                     

Conga, Peru(11)

    51.35                     303,400        0.021       6,460        303,400        0.021       6,460        75

Yanacocha, Peru Open Pits(12)

    51.35     34,200        0.050       1,710        85,700        0.022       1,860        119,900        0.030       3,570        72

Yanacocha, Peru In -Process(7)(12)

    51.35     13,100        0.025       330        2,100        0.027       60        15,200        0.025       390        78
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Yanacocha, Peru

    51.35     47,300        0.043       2,040        87,800        0.022       1,920        135,100        0.029       3,960        72

La Zanja, Peru(13)

    46.94     7,300        0.016       120        14,100        0.015       210        21,400        0.016       330        66
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      54,600        0.040       2,160        405,300        0.021       8,590        459,900        0.023       10,750        73
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Asia Pacific

                     

Batu Hijau Open Pit(14)

    48.50     127,600        0.017       2,110        196,100        0.005       1,040        323,700        0.010       3,150        75

Batu Hijau Stockpiles(8)(14)

    48.50                     156,900        0.003       490        156,900        0.003       490        70
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Batu Hijau, Indonesia

    48.50     127,600        0.017       2,110        353,000        0.004       1,530        480,600        0.008       3,640        75

Boddington, Western Australia

    100     181,800        0.020       3,600        871,700        0.018       15,890        1,053,500        0.019       19,490        81

Duketon, Western Australia(15)

    16.85     2,000        0.044       90        8,800        0.045       400        10,800        0.045       490        95

Jundee, Western Australia(16)

    100     3,100        0.160       490        700        0.237       160        3,800        0.174       650        91

Kalgoorlie Open Pit and Underground

    50     13,300        0.059       790        41,700        0.056       2,350        55,000        0.057       3,140        85

Kalgoorlie Stockpiles(8)

    50     53,900        0.023       1,260                        53,900        0.023       1,260        78
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Kalgoorlie, Western Australia(17)

    50     67,200        0.030       2,050        41,700        0.056       2,350        108,900        0.040       4,400        83

Tanami, Northern Territories(18)

    100     6,200        0.156       960        10,500        0.149       1,560        16,700        0.152       2,520        94

Waihi, New Zealand(19)

    100                     3,200        0.112       360        3,200        0.112       360        89
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      387,900        0.024       9,300        1,289,600        0.017       22,250        1,677,500        0.019       31,550        82
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Africa

                     

Ahafo Open Pits(20)

    100                     194,700        0.055       10,790        194,700        0.055       10,790        87

Ahafo Underground

    100                     5,900        0.112       660        5,900        0.112       660        89

Ahafo Stockpiles(8)

    100     21,000        0.030       630                        21,000        0.030       630        86
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Ahafo, Ghana

    100     21,000        0.030       630        200,600        0.057       11,450        221,600        0.055       12,080        87

Akyem, Ghana(21)

    100                     144,500        0.051       7,390        144,500        0.051       7,390        88
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      21,000        0.030       630        345,100        0.055       18,840        366,100        0.053       19,470        87
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Gold

      744,000        0.037       27,860        2,812,000        0.025       70,890        3,556,000        0.028       98,750        80
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

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          December 31, 2010(1)
          Proven Reserves     Probable Reserves     Proven and Probable
Reserves
     

Deposits/Districts

  Newmont
Share
    Tonnage(2)     Grade
(oz/ton)
    Ounces(3)     Tonnage(2)     Grade
(oz/ton)
    Ounces(3)     Tonnage(2)     Grade
(oz/ton)
    Ounces(3)     Metallurgical
Recovery(3)
          (000)           (000)     (000)           (000)     (000)           (000)      

North America

                     

Carlin Open Pits, Nevada 

    100     36,600        0.064       2,340        226,900        0.040       8,980        263,500        0.043       11,320      75%

Carlin Underground, Nevada 

    100     5,800        0.272       1,570        8,800        0.330       2,910        14,600        0.307       4,480      88%

Midas, Nevada

    100     200        0.394       100        300        0.264       90        500        0.319       190      95%

Phoenix, Nevada

    100                     329,800        0.018       6,090        329,800        0.018       6,090      73%

Twin Creeks, Nevada

    100     11,400        0.097       1,110        46,400        0.071       3,280        57,800        0.076       4,390      79%

Turquoise Ridge, Nevada(6)

    25     1,400        0.458       640        1,700        0.456       770        3,100        0.457       1,410      92%

Nevada In-Process(7)

    100     28,500        0.022       610                        28,500        0.022       610      62%

Nevada Stockpiles(8)

    100     33,900        0.077       2,630        2,800        0.028       80        36,700        0.074       2,710      78%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Nevada

      117,800        0.076       9,000        616,700        0.036       22,200        734,500        0.042       31,200      78%

La Herradura, Mexico

    44     44,600        0.023       1,010        61,100        0.021       1,280        105,700        0.022       2,290      66%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      162,400        0.062       10,010        677,800        0.035       23,480        840,200        0.040       33,490      77%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

South America

                     

Conga, Peru

    51.35                     317,200        0.019       6,080        317,200        0.019       6,080      79%

Yanacocha, Peru Open Pits 

    51.35     23,500        0.028       650        118,800        0.032       3,790        142,300        0.031       4,440      70%

Yanacocha, Peru In-Process(7)

    51.35     21,300        0.025       540                        21,300        0.025       540      74%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Yanacocha, Peru

    51.35     44,800        0.027       1,190        118,800        0.032       3,790        163,600        0.030       4,980      71%

La Zanja, Peru

    46.94     10,100        0.018       180        10,500        0.016       160        20,600        0.017       340      66%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      54,900        0.025       1,370        446,500        0.022       10,030        501,400        0.023       11,400      75%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Asia Pacific

                     

Batu Hijau Open Pit

    48.50     168,800        0.014       2,420        124,600        0.006       700        293,400        0.011       3,120      78%

Batu Hijau Stockpiles(8)

    48.50                     170,700        0.004       610        170,700        0.004       610      69%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Batu Hijau, Indonesia 

    48.50     168,800        0.014       2,420        295,300        0.004       1,310        464,100        0.008       3,730      76%

Boddington, Western Australia 

    100     181,900        0.021       3,760        885,900        0.019       16,540        1,067,800        0.019       20,300      82%

Duketon, Western Australia 

    16.22     1,800        0.056       100        4,500        0.055       250        6,300        0.055       350      94%

Jundee, Western Australia 

    100     3,100        0.051       160        1,600        0.373       600        4,700        0.160       760      91%

Kalgoorlie Open Pit and Underground

    50     15,000        0.061       910        40,700        0.059       2,390        55,700        0.059       3,300      85%

Kalgoorlie Stockpiles(8)

    50     15,100        0.031       470                        15,100        0.031       470      78%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Kalgoorlie, Western Australia

    50     30,100        0.046       1,380        40,700        0.059       2,390        70,800        0.053       3,770      84%

Tanami, Northern Territories 

    100     6,400        0.151       970        7,900        0.134       1,070        14,300        0.142       2,040      95%

Waihi, New Zealand

    100                     4,200        0.110       460        4,200        0.110       460      89%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      392,100        0.022       8,790        1,240,100        0.018       22,620        1,632,200        0.019       31,410      83%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Africa

                     

Ahafo Open Pits

    100                     148,300        0.064       9,540        148,300        0.064       9,540      87%

Ahafo Stockpiles(8)

    100     14,100        0.033       460                        14,100        0.033       460      86%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Ahafo, Ghana

    100     14,100        0.033       460        148,300        0.064       9,540        162,400        0.062       10,000      87%

Akyem, Ghana

    100                     137,900        0.052       7,200        137,900        0.052       7,200      88%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      14,100        0.033       460        286,200        0.059       16,740        300,300        0.057       17,200      88%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Gold 

      623,500        0.033       20,630        2,650,600        0.027       72,870        3,274,100        0.029       93,500      81%
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

(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.

Proven and probable reserves include gold, copper or silver attributable to Newmont’s ownership or economic interest.

Proven and probable 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, copper or silver extraction and type of milling or leaching facilities available.

2011 reserves were calculated at a gold price of $1,200, A$1,250 or NZ$1,600 per ounce unless otherwise noted.

2010 reserves were calculated at a gold price of $950, A$1,100 or NZ$1,350 per ounce 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) 

Includes reserves currently being developed at the Emigrant deposit of 1.6 million ounces of gold.

 

(5) 

Gold cut-off grade varies with level of copper and silver credits.

 

(6) 

Reserve estimates provided by Barrick, the operator of the Turquoise Ridge joint venture.

 

(7) 

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.

 

(8) 

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.

 

(9) 

Cut-off grades utilized in Nevada 2011 gold reserves were as follows: oxide leach material not less than 0.006 ounce per ton; oxide mill material not less than 0.026 ounce per ton; flotation material not less than 0.016 ounce per ton; and refractory mill material not less than 0.032 ounce per ton.

 

(10) 

Cut-off grade utilized in 2011 reserves not less than 0.009 ounce per ton.

 

(11) 

Project is currently under development. Gold cut-off grade varies with level of copper and silver credits.

 

(12) 

Reserves include the currently undeveloped deposit at La Quinua Sur, which contains attributable reserves of 0.9 million ounces. Cut-off grades utilized in 2011 reserves were as follows: oxide leach material not less than 0.004 ounce per ton; and oxide mill material not less than 0.013 ounce per ton.

 

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NEWMONT MINING CORPORATION

 

(13) 

Reserve estimates provided by Buenaventura, the operator of the La Zanja project. Cut-off grade utilized in 2011 reserves not less than 0.004 ounce per ton.

 

(14) 

Percentage reflects Newmont’s economic interest since December 31, 2010.

 

(15) 

Reserve estimates provided by Regis Resources Ltd., in which Newmont holds a 16.85% interest, up from a 16.22% interest in 2010. Gold cut-off grades utilized in 2011 reserves not less than 0.015 ounce per ton.

 

(16) 

Cut-off grade utilized in 2011 reserves not less than 0.020 ounce per ton.

 

(17) 

Cut-off grade utilized in 2011 reserves not less than 0.015 ounce per ton.

 

(18) 

Cut-off grade utilized in 2011 reserves not less than 0.045 ounce per ton.

 

(19) 

Cut-off grade utilized in 2011 reserves not less than 0.015 ounce per ton.

 

(20) 

Includes undeveloped reserves at seven pits in the Ahafo trend totaling 3.2 million ounces. Cut-off grade utilized in 2011 reserves not less than 0.019 ounce per ton.

 

(21) 

Project is currently under development. Cut-off grade utilized in 2011 reserves not less than 0.018 ounce per ton.

The following tables detail copper proven and probable reserves reflecting only those reserves attributable to Newmont’s ownership or economic interest at December 31, 2011 and 2010:

 

    December 31, 2011(1)  
           Proven Reserves     Probable Reserves     Proven and Probable Reserves        

Deposits/Districts

  Newmont
Share
    Tonnage(2)     Grade
(Cu %)
    Pounds(3)     Tonnage(2)     Grade
(Cu %)
    Pounds(3)     Tonnage(2)     Grade
(Cu %)
    Pounds(3)     Metallurgical
Recovery(3)
 
                     
           (000)           (millions)
    (000)           (millions)
    (000)           (millions)
       

North America

                     

Phoenix Mill, Nevada(4)

    100     24,900         0.15     70         425,400         0.14     1,230         450,300         0.15     1,300         61

Phoenix Copper Leach, Nevada(5)

    100     9,900         0.24     50         160,300         0.22     690         170,200         0.22     740         55
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      34,800         0.17     120         585,700         0.16     1,920         620,500         0.16     2,040         58
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

South America

                     

Conga, Peru(6)

    51.35     —            —          303,400         0.28     1,690         303,400         0.28     1,690         85
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      —            —          303,400         0.28     1,690         303,400         0.28     1,690         85
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Asia Pacific

                     

Batu Hijau Open Pit(7)

    48.50     127,600         0.51     1,300         196,100         0.35     1,370         323,700         0.41     2,670         76

Batu Hijau Stockpiles(7)(8)

    48.50     —            —          156,900         0.34     1,060         156,900         0.34     1,060         66
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Batu Hijau, Indonesia 

    48.50     127,600         0.51     1,300         353,000         0.34     2,430         480,600         0.39     3,730         73

Boddington, Western Australia(9)

    100     181,800         0.10     350         871,700         0.11     1,910         1,053,500         0.11     2,260         83
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      309,400         0.27     1,650         1,224,700         0.18     4,340         1,534,100         0.20     5,990         77
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Copper 

      344,200         0.26     1,770         2,113,800         0.19     7,950         2,458,000         0.20     9,720         74
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

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    December 31, 2010(1)  
           Proven Reserves     Probable Reserves     Proven and Probable
Reserves
       

Deposits/Districts

  Newmont
Share
    Tonnage(2)     Grade
(Cu %)
    Pounds(3)     Tonnage(2)     Grade
(Cu %)
    Pounds(3)     Tonnage(2)     Grade
(Cu %)
    Pounds(3)     Metallurgical
Recovery(3)
 
                     
           (000)           (millions)
    (000)           (millions)
    (000)           (millions)
       

North America

                     

Phoenix Mill, Nevada

    100     —            —          332,600         0.15     1,030         332,600         0.15     1,030         61

Phoenix Copper Leach, Nevada

    100     —            —          132,900         0.23     610         132,900         0.23     610         53
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      —            —          465,500         0.18     1,640         465,500         0.18     1,640         58
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

South America

                     

Conga, Peru

    51.35     —            —          317,200         0.26     1,660         317,200         0.26     1,660         85
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      —            —          317,200         0.26     1,660         317,200         0.26     1,660         85
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Asia Pacific

                     

Batu Hijau Open Pit

    48.50     168,800         0.50     1,700         124,600         0.34     860         293,400         0.44     2,560         80

Batu Hijau Stockpiles(8)

    48.50     —            —          170,700         0.35     1,200         170,700         0.35     1,200         66
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Batu Hijau, Indonesia 

    48.50     168,800         0.50     1,700         295,300         0.35     2,060         464,100         0.40     3,760         76

Boddington, Western Australia

    100     181,900         0.10     380         885,900         0.11     1,980         1,067,800         0.11     2,360         84
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      350,700         0.30     2,080         1,181,200         0.17     4,040         1,531,900         0.20     6,120         79
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

Total Copper 

      350,700         0.30     2,080         1,963,900         0.19     7,340         2,314,600         0.20     9,420         76
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

(1) 

See footnote (1) to the Gold Proven and Probable Reserves tables above. Copper reserves for 2011 were calculated at a copper price of $3.00 or A$3.15 per pound. 2010 copper reserves were calculated at a copper price of $2.50 or A$2.95 per pound.

 

(2) 

See footnote (2) to the Gold Proven and Probable Reserves tables above. Tonnages are rounded to nearest 100,000.

 

(3) 

See footnote (3) to the Gold Proven and Probable Reserves tables above. Pounds are rounded to the nearest 10 million.

 

(4) 

Copper cut-off grade varies with level of gold and silver credits.

 

(5) 

Copper cut-off grade varies with level of leach solubility. Leach pad and associated facilities under construction.

 

(6) 

Project is currently under development. Copper cut-off grade varies with level of gold and silver credits.

 

(7) 

Percentage reflects Newmont’s economic interest since December 31, 2010. Copper cut-off grade varies with level of gold and silver credits.

 

(8) 

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 is greater than 5% of the total site reported reserves.

 

(9) 

Copper cut-off grade varies with level of gold credits.

 

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NEWMONT MINING CORPORATION

 

The following table details silver proven and probable reserves reflecting only those reserves attributable to Newmont’s ownership or economic interest at December 31, 2011:

 

     December 31, 2011(1)  
           Proven Reserves     Probable Reserves     Proven and Probable
Reserves
       

Deposits/Districts

  Newmont
Share
    Tonnage(2)     Grade
(oz/ton)
    Ounces(3)     Tonnage(2)     Grade
(oz/ton)
    Ounces(3)     Tonnage(2)     Grade
(oz/ton)
    Ounces(3)     Metallurgical
Recovery(3)
 
           (000)           (000)     (000)           (000)     (000)           (000)        

North America

                     

Midas, Nevada(4)

    100     300         4.624       1,200         500         8.629       4,050         800         7.201       5,250         88

Phoenix, Nevada(5)

    100     24,900         0.250       6,250         425,400         0.244       103,730         450,300         0.244       109,980         36
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   
      25,200         0.296       7,450         425,900         0.253       107,780         451,100         0.255       115,230         38
   

 

 

     

 

 

   

 

 

     

 

 

   

 

 

     

 

 

   

South America

                     

Conga, Peru

    51.35     —            —          303,400         0.064       19,400         303,400         0.064       19,400         70

Yanacocha Open Pits

    51.35     18,500         0.081       1,490         71,100         0.137       9,750         89,600         0.125       11,240         25

Yanacocha Stockpiles(6)

    51.35     1,300         0.363       460         4,800         1.466       6,970         6,100         1.235       7,430         36

Yanacocha In-Process(7)

    51.35     —            —          59,500